Contract analysis

I. BACKGROUND OF THE LITIGATION

1. On August 8, 2022, Cardinal Peak commenced this action by filing its Complaint in the Circuit Court of Cook County, Illinois, County Department, Law Division, asserting three causes of action against Nexford: (1) Breach of Contract (Count I); (2) Unjust Enrichment (Count II); and (3) Account Stated (Count III). The Complaint arises from Nexford's alleged failure to pay approximately $4.73 million in raw-material s

2. On September 19, 2022, Nexford filed its Answer and Affirmative Defenses to the Complaint. In its Answer, Nexford denied liability in whole and asserted several affirmative defenses, including, inter alia: (a) waiver, on the ground that Cardinal Peak had previously accepted reduced surcharge payments without objection during the relevant period; (b) failure of a condition precedent, specifically that Cardinal Peak

3. On October 3, 2022, Nexford filed a Counterclaim against Cardinal Peak asserting two causes of action: (a) Breach of Contract (Counterclaim Count I), alleging that Cardinal Peak breached the MSA by applying an inflated surcharge methodology that resulted in overcharges to Nexford; and (b) Declaratory Judgment (Counterclaim Count II), seeking a judicial declaration of Nexford's rights under MSA Section 7.4 with res

4. On November 14, 2022, following full briefing and oral argument, the Court entered an order denying Cardinal Peak's Motion to Dismiss the Counterclaim, finding that Nexford had stated plausible claims for breach of contract and declaratory judgment and that the issues raised by the Counterclaim were intertwined with the claims in the Complaint.

5. Since December 2022, the parties have engaged in extensive written discovery. Cardinal Peak served its First Set of Interrogatories (Nos. 1–25) and First Request for Production of Documents (Nos. 1–42) on Nexford, and Nexford served corresponding discovery requests on Cardinal Peak. Both parties have produced substantial volumes of documents, including internal communications, pricing spreadsheets, surcharge calcu

6. On March 15, 2023, the parties exchanged expert reports in accordance with the Court's Scheduling Order. Nexford's expert, Dr. Anita Rosenthal, CPA, ABV, of Meridian Bridge Consulting LLC, submitted a damages rebuttal report analyzing the surcharge calculations at issue and opining that Cardinal Peak's claimed surcharges exceeded the amounts properly recoverable under the Exhibit C Surcharge Methodology by a signi

7. On April 12, 2023, Cardinal Peak's damages expert, Dr. Theodore Voss of Pinnacle Economics Group LLC, submitted his expert report. Dr. Voss opined that Cardinal Peak sustained total damages of $5.11 million, comprising $4.73 million in principal surcharge amounts owed and $0.38 million in prejudgment interest calculated at the statutory rate under 815 ILCS 205/2 from the respective invoice due dates through the da

8. In sum, this litigation has progressed through the pleadings stage, substantial fact discovery, and the exchange of expert reports. The factual record is well-developed, and the parties are now positioned to engage in meaningful settlement discussions.

II. THE MSA REQUIRES MANDATORY MEDIATION BEFORE LITIGATION

9. The MSA, executed on January 15, 2020, between Nexford (as Buyer) and Cardinal Peak (as Seller), is the governing agreement for the purchase and sale of hot-rolled coil and cold-rolled coil steel products. The MSA establishes the commercial terms, pricing mechanisms, surcharge methodologies, delivery obligations, and dispute resolution procedures applicable to the parties' ongoing supply relationship.

10. Section 14.3 of the MSA contains a mandatory dispute resolution provision that requires the parties to submit any dispute, claim, or controversy arising out of or relating to the MSA to mediation in Chicago, Illinois, before a mutually agreed-upon neutral mediator, prior to initiating or pursuing any litigation or other adversarial proceeding. Section 14.3 provides, in relevant part: "Any dispute, claim, or contr

11. Additionally, Section 7.4(d) of the MSA specifically addresses disputes related to surcharge calculations and pricing adjustments, and provides a tiered dispute resolution process. Under Section 7.4(d), surcharge disputes that cannot be resolved through informal discussions between the parties' designated commercial representatives must be escalated to a meeting of senior officers (defined as individuals at the V

12. The MSA is governed by and shall be construed in accordance with the laws of the State of Illinois, without regard to conflict-of-laws principles. See MSA § 14.1.

13. Both parties acknowledge and agree that the mandatory mediation provision in Section 14.3 of the MSA has not yet been satisfied with respect to the claims asserted in Cardinal Peak's Complaint or the counterclaims asserted in Nexford's Counterclaim. While Cardinal Peak commenced this litigation on August 8, 2022, and Nexford raised the failure to mediate as an affirmative defense, the parties subsequently focused

14. The parties have exhausted their efforts to resolve this dispute through informal negotiations and through the senior officer escalation process contemplated by Section 7.4(d) of the MSA. Senior officers from both Cardinal Peak and Nexford, including Ms. Gunderson and Mr. Okonkwo, participated in multiple telephonic and in-person discussions during the period from June 2022 through August 2022 in an effort to res

III. THE PARTIES HAVE SELECTED A MEDIATOR AND SCHEDULED THE MEDIATION

15. In furtherance of their obligations under Section 14.3 of the MSA, the parties have jointly selected the Honorable Catherine Lindström (Ret.) of the Great Lakes Dispute Resolution Center, located at 150 North Riverside Plaza, Suite 2700, Chicago, Illinois 60606, to serve as the neutral mediator in this matter. Hon. Lindström is a retired Circuit Court Judge of Cook County with over twenty years of judicial experi

16. Hon. Lindström has confirmed her availability, and the parties have agreed to conduct a full-day mediation session on August 2, 2023, in Chicago, Illinois, at the offices of the Great Lakes Dispute Resolution Center. The parties have further agreed that, in the event additional mediation sessions are needed, they will work with Hon. Lindström to schedule such sessions as promptly as practicable.

17. Both parties and their respective counsel have committed to participate in the mediation in good faith, with representatives possessing full settlement authority. Specifically: (a) Calderwood & Harkness LLP (200 South Wacker Drive, Suite 4400, Chicago, Illinois 60606), counsel for Defendant Nexford Industrial Holdings Inc., will attend the mediation with Priya Anand, Responsible Partner, and a senior business rep

18. The parties anticipate submitting confidential mediation statements to Hon. Lindström no later than July 19, 2023, in advance of the scheduled mediation session.

IV. A STAY IS APPROPRIATE PENDING COMPLETION OF MEDIATION A. Strong Public Policy Favoring Mediation

19. Illinois courts have long recognized a strong public policy favoring alternative dispute resolution, including mediation, as a means of resolving commercial disputes efficiently and conserving judicial resources. See 710 ILCS 35/2 (Uniform Mediation Act, stating the purpose of encouraging mediation); see also Salsitz v. Kreiss, 198 Ill. 2d 1, 13 (2001) (recognizing the strong public policy in favor of settling di

20. Where, as here, the parties have contractually agreed to mediate their disputes before resorting to litigation, Illinois courts routinely enforce such provisions and grant stays of litigation to facilitate the mediation process. Contractual mediation clauses are enforceable under Illinois law, and courts have held that parties should be held to their bargain to mediate in the same manner as any other contractual

21. Staying the proceedings in this action will honor the parties' freely negotiated contractual agreement set forth in MSA Section 14.3 and will promote the efficient use of judicial resources by allowing the parties a meaningful opportunity to resolve their dispute through mediation before consuming additional time and resources of this Court. B. Discovery Is Substantially Complete

22. As set forth in detail in Section I above, the parties have engaged in extensive fact discovery over the past several months. Written interrogatories and requests for production of documents have been served and responded to by both parties. Key fact witnesses, including Natalie Gunderson (Cardinal Peak) and Russell Okonkwo (Nexford), have been deposed. Substantial volumes of documents, including surcharge calcul

23. In addition, expert reports have been exchanged. Cardinal Peak's damages expert, Dr. Theodore Voss, has submitted his report opining on total damages of $5.11 million, and Nexford's damages expert, Dr. Anita Rosenthal, has submitted her rebuttal report challenging Cardinal Peak's surcharge calculations. The parties therefore have a thorough understanding of the factual and expert evidence that supports and oppose

24. The parties are well-positioned to engage in informed, productive, and meaningful mediation. The developed factual record ensures that the mediation will not be a premature exercise but rather a substantive effort at resolution, grounded in a full understanding of the documentary evidence, deposition testimony, and expert analyses that have been developed in this case.

25. A stay at this juncture will not prejudice either party, as the factual record necessary for meaningful settlement discussions has already been substantially developed. No party will be disadvantaged by a temporary pause in the litigation while the mediation process is completed. C. Conservation of Party and Judicial Resources

26. If mediation results in a full or partial resolution of this dispute, the parties and the Court will be spared the significant time and expense associated with further motions practice, including anticipated summary judgment briefing, pretrial proceedings, preparation of trial exhibits and witness lists, and the trial itself. The savings to the parties and the judicial system from a successful mediation would be

27. The dispute at the heart of this litigation involves a commercial pricing disagreement under a supply agreement between two sophisticated business entities. The issues center on the proper interpretation and application of a surcharge methodology contained in a negotiated commercial contract. This is precisely the type of dispute that is well-suited to resolution through mediation, where a skilled neutral can ass

28. Continuing to litigate this matter while mediation is pending would result in unnecessary and duplicative expenditure of resources by both parties and by the Court. The parties anticipate that, absent a stay, the next phase of litigation would involve Daubert-type motions regarding expert testimony, cross-motions for summary judgment, and extensive pretrial preparation — all of which would consume significant tim

29. Both parties consent to this Motion. The stay is being sought jointly by Plaintiff and Defendant, and neither party opposes or objects to the entry of a stay pending mediation. This joint request reflects the parties' shared recognition that mediation offers the best opportunity for an efficient resolution of this dispute.

30. No statute of limitations, statute of repose, or other time-bar issue is implicated by a temporary stay of these proceedings. Cardinal Peak's claims were timely filed on August 8, 2022, well within the applicable limitations period, and Nexford's Counterclaim was likewise timely filed on October 3, 2022. A temporary stay of ninety (90) days or less will not give rise to any prejudice based on the passage of time.

31. The parties respectfully request that the stay remain in effect until the earlier of: (a) the completion of mediation, including any additional sessions agreed upon by the parties and the mediator; or (b) either party's filing of written notice with the Court that mediation has concluded without a full resolution of the dispute. In the event that mediation does not result in a complete resolution, the parties wil

32. The parties respectfully propose the following terms for the stay: (a) Scope of the Stay. All pending and future discovery deadlines, motions deadlines, and other pretrial deadlines in this action shall be stayed. No party shall be required to respond to any outstanding discovery requests, file any motions, or take any other action in furtherance of the litigation during the pendency of the stay, except as provid

VI. RELIEF REQUESTED WHEREFORE, Plaintiff Cardinal Peak Industries and Defendant Nexford Industrial Holdings Inc. jointly and respectfully request that this Honorable Court enter an order:

1. Staying all proceedings in this action, including all discovery deadlines, motions deadlines, and other pretrial deadlines, pending completion of mediation before the Honorable Catherine Lindström (Ret.) at the Great Lakes Dispute Resolution Center, currently scheduled for August 2, 2023;

2. Ordering the parties to file a joint status report within fourteen (14) calendar days following the conclusion of the mediation, advising the Court of the outcome and, if applicable, requesting entry of a new scheduling order or a stipulation of dismissal; and

3. Granting such other and further relief as this Court deems just and appropriate. Respectfully submitted, For Defendant Nexford Industrial Holdings Inc.: CALDERWOOD & HARKNESS LLP By: ________ Priya Anand Responsible Partner Simone Laroche Lead Associate 200 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 Telephone: (312) 555-7800 Facsimile: (312) 555-7801 panand@calderwoodharkness.com slaroche@calderwoodhar