VLM Food Trading International v. Transportation Alliance Bank
748 F.3d 780
7th Cir.2014Background
- VLM Food (Canadian seller) shipped frozen potatoes to Illinois Trading (U.S. buyer) and was not paid for several invoices totaling roughly $184,000. VLM asserted a PACA statutory-trust claim to protect seller trust assets.
- VLM sued Illinois Trading and moved to consolidate a preliminary-injunction hearing (to preserve PACA trust assets) with a merits trial as to the Illinois Trading defendants; TAB Bank later was added as a defendant for converting PACA trust assets after it had seized Illinois Trading’s assets.
- The district court expressly limited the consolidation to the claims against Illinois Trading and reserved the bank-related claim (Count V) for later; no evidence on Count V was presented at the consolidated February 19 hearing.
- After the hearing the district court entered final judgment in favor of VLM on Counts I–IV and awarded fees and interest, but also (erroneously) entered judgment for TAB Bank on Count V, reasoning VLM presented no evidence on that claim.
- VLM appealed the Count V dismissal for lack of clear notice that the consolidated hearing would be final as to the bank; Illinois Trading cross-appealed the inclusion of attorney’s-fee and interest terms from VLM’s invoices into the parties’ contract, raising a choice-of-law dispute (UCC v. CISG).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the consolidated prelim-injunction/merits hearing was a final adjudication of Count V (bank) | VLM: limited consolidation excluded Count V; no clear notice that bank claim would be finally decided | TAB Bank: denial of continuance and court statements show matter was proceeding to merits and binding | Reversed as to Count V — court lacked "clear and unambiguous" notice that Count V would be finally decided; Count V reserved for later |
| Whether attorney’s-fee and interest terms in VLM’s post-shipment invoices became contract terms | VLM: invoice terms became part of contract under battle-of-the-forms (additional terms accepted) | Illinois Trading: invoices were later communications; CISG or UCC may treat them as counter-offers or material alterations and exclude them | Choice-of-law resolved for appeal: CISG (Convention) governs because VLM’s relevant place of business is Canada; district court’s application of Illinois UCC was reversible and matter remanded |
| Whether the Convention or UCC governs formation/"battle of the forms" | VLM: argued UCC applies (district court applied Illinois law) | Illinois Trading: the CISG (Convention) applies because parties have businesses in different states/countries and VLM’s place of business is Canada | Court: CISG governs; Article 19 differs materially from UCC §2-207 and likely treats fee/dispute-resolution terms as materially altering the offer |
| Proper standard to determine party’s place of business for CISG application | VLM: factual showing that main operations were in Canada (so CISG applies) | Illinois Trading: argued U.S. (New Jersey) office made VLM’s place of business the U.S. | Court: VLM’s business and contract performance occurred in Canada; VLM’s place of business is Canada; CISG applies |
Key Cases Cited
- Patterson Frozen Foods, Inc. v. Crown Foods Int’l, Inc., 307 F.3d 666 (7th Cir. 2002) (PACA trust priority over secured creditor)
- Pughsley v. 3750 Lake Shore Drive Coop. Bldg., 463 F.2d 1055 (7th Cir. 1972) (consolidated preliminary-injunction hearing requires clear, unambiguous notice before it may be treated as a final determination)
- Chi. Prime Packers, Inc. v. Northam Food Trading Co., 408 F.3d 894 (7th Cir. 2005) (discussing relationship between CISG and UCC and CISG’s role as international analogue to UCC Article 2)
- Thomas v. Gen. Motors Acceptance Corp., 288 F.3d 305 (7th Cir. 2002) (standard of review for mixed questions of law and fact)