IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION
JOINT MOTION TO STAY ALL PROCEEDINGS PENDING COMPLETION OF MEDIATION
Filed: May 22, 2023
Plaintiff Cardinal Peak Industries ("Cardinal Peak" or "CPI") and Defendant Nexford Industrial Holdings Inc. ("Nexford" or "NIH"), by and through their respective undersigned counsel — Blackwood Stein & Associates LLP for Cardinal Peak and Calderwood & Harkness LLP for Nexford — hereby jointly move this Honorable Court, pursuant to 735 ILCS 5/2-619 and the inherent authority of this Court to manage its docket, for an order staying all proceedings in this matter, including all discovery deadlines, motions deadlines, and other pretrial deadlines, pending the completion of mediation as required by the parties' Master Supply Agreement dated January 15, 2020 (the "MSA," Reference No. MSA-NIH-CPI-2020-001). A proposed order is attached hereto as Exhibit A.
In support of this Motion, the parties respectfully state as follows:
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 surcharge invoices issued by Cardinal Peak under the MSA for the invoicing period of March 2021 through May 2022. Cardinal Peak alleges that these surcharge invoices were properly calculated and submitted in accordance with the Surcharge Methodology set forth in Exhibit C to the MSA, and that Nexford failed and refused to remit payment despite repeated demand.
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 failed to comply with the mandatory dispute resolution procedures set forth in the MSA before initiating litigation; and (c) breach of the Exhibit C Surcharge Methodology by Cardinal Peak, on the basis that Cardinal Peak's surcharge calculations utilized incorrect baseline pricing indices and improperly included certain cost categories not contemplated by the MSA.
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 respect to the proper calculation and application of raw-material surcharges, and recovery of an alleged $0.21 million overpayment that Nexford contends it made to Cardinal Peak during the period in question.
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 calculation workpapers, and commercial correspondence spanning the period from January 2020 through August 2022. The parties have also conducted depositions of key fact witnesses, including the following:
(a) The deposition of Natalie Gunderson, Vice President of Sales & Commercial at Cardinal Peak Industries, was conducted on January 18, 2023. Ms. Gunderson testified regarding Cardinal Peak's surcharge calculation methodology, the commercial relationship between the parties, and the history of surcharge invoicing under the MSA.
(b) The deposition of Russell Okonkwo, Vice President of Procurement at Nexford Industrial Holdings Inc., was conducted on February 7, 2023. Mr. Okonkwo testified regarding Nexford's procurement practices, its understanding of the Exhibit C Surcharge Methodology, and the basis for Nexford's decision to withhold payment on the disputed invoices.
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 significant margin.
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 date of filing.
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 controversy arising out of or relating to this Agreement, including disputes regarding the interpretation, performance, or breach thereof, shall first be submitted to mediation in Chicago, Illinois, administered in accordance with the mediation procedures agreed upon by the parties or, in the absence of such agreement, in accordance with the mediation procedures of a nationally recognized dispute resolution organization. No party shall commence litigation with respect to any such dispute until mediation has been completed or the mediator has declared an impasse."
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 Vice President level or above) of each party. If the senior officer escalation does not result in a resolution within thirty (30) calendar days, the dispute must then be submitted to mediation in accordance with Section 14.3 of the MSA before either party may pursue litigation.
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 on discovery and case development. The parties now recognize that complying with the contractual mediation requirement is both appropriate and beneficial at this stage of the proceedings.
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 resolve the surcharge dispute. Those discussions did not result in a resolution, and accordingly, mediation is the contractually required next step in the dispute resolution process before this matter may properly proceed to trial.
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 experience and extensive experience mediating complex commercial disputes, including supply chain and pricing disputes in the industrial sector.
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 representative of Nexford authorized to negotiate and execute a settlement agreement on behalf of Nexford.
(b) Blackwood Stein & Associates LLP (717 Seventeenth Street, Suite 2200, Denver, Colorado 80202), counsel for Plaintiff Cardinal Peak Industries, will attend the mediation with Garrett Blackwood, Lead Partner, and a senior business representative of Cardinal Peak authorized to negotiate and execute a settlement agreement on behalf of Cardinal Peak.
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 disputes and avoiding litigation). The Illinois Supreme Court and the appellate courts have repeatedly emphasized that voluntary resolution of disputes through mediation serves the interests of justice, reduces the burden on the courts, and promotes outcomes that are tailored to the needs of the parties.
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 obligation. See 710 ILCS 35/4; see also Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1 (2006) (enforcing dispute resolution provisions in commercial agreements).
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 calculations, pricing data, internal correspondence, and commercial records, have been produced and reviewed.
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 opposes the respective positions in this litigation.
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 substantial.
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 assist the parties in finding practical, business-oriented solutions that account for the parties' ongoing commercial relationship and the economic realities of the steel supply market.
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 time and legal fees. A temporary stay to allow mediation to proceed is a far more efficient use of all parties' resources.
D. No Prejudice to Either Party
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 will promptly request that the Court set a new scheduling order to govern the remaining pretrial proceedings and trial.
V. PROPOSED TERMS OF THE STAY
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 provided herein.
(b) Duration of the Stay. The stay shall take effect upon entry of the Court's order and shall continue until the earlier of: (i) the filing of written notice with the Court by either party that the mediation has concluded without a full resolution of the dispute; or (ii) ninety (90) calendar days from the date of entry of the order, unless extended by written stipulation of the parties filed with the Court or by further order of the Court.
(c) Status Report Following Mediation. The parties shall jointly file a status report with the Court within fourteen (14) calendar days following the conclusion of the mediation. The status report shall advise the Court of the outcome of the mediation and, if applicable, shall include either: (i) a request for entry of a new scheduling order to govern the remaining pretrial proceedings and trial; or (ii) a stipulation of dismissal with prejudice, if the parties have reached a full and final settlement of all claims and counterclaims.
(d) Preservation of Emergency Relief. Nothing in the requested stay shall prevent either party from seeking emergency or provisional relief from the Court, including but not limited to temporary restraining orders, preliminary injunctions, or other relief necessary to preserve the status quo, if circumstances so require. Any such application for emergency relief shall not be deemed a waiver of the stay or of either party's agreement to participate in mediation.
(e) Preservation of Rights. The stay shall not constitute a waiver of any party's rights, claims, defenses, or counterclaims in this action. All rights, claims, defenses, and counterclaims shall be fully preserved during the pendency of the stay.
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@calderwoodharkness.com
Attorneys for Defendant Nexford Industrial Holdings Inc.
For Plaintiff Cardinal Peak Industries:
BLACKWOOD STEIN & ASSOCIATES LLP
By: ________
Garrett Blackwood Lead Partner
Megan Hsu Associate
717 Seventeenth Street, Suite 2200 Denver, Colorado 80202 Telephone: (303) 555-4100 Facsimile: (303) 555-4101 gblackwood@blackwoodstein.com mhsu@blackwoodstein.com
Attorneys for Plaintiff Cardinal Peak Industries
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on May 22, 2023, a true and correct copy of the foregoing Joint Motion to Stay All Proceedings Pending Completion of Mediation and the attached Exhibit A (Proposed Order) was served upon all counsel of record by electronic filing through the Odyssey eFileIL system, which will send notification of such filing to:
Priya Anand Simone Laroche Calderwood & Harkness LLP 200 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 panand@calderwoodharkness.com slaroche@calderwoodharkness.com Attorneys for Defendant Nexford Industrial Holdings Inc.
Garrett Blackwood Megan Hsu Blackwood Stein & Associates LLP 717 Seventeenth Street, Suite 2200 Denver, Colorado 80202 gblackwood@blackwoodstein.com mhsu@blackwoodstein.com Attorneys for Plaintiff Cardinal Peak Industries
By: ________
Priya Anand Calderwood & Harkness LLP
EXHIBIT A [PROPOSED] ORDER STAYING PROCEEDINGS PENDING COMPLETION OF MEDIATION
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION
ORDER STAYING ALL PROCEEDINGS PENDING COMPLETION OF MEDIATION
This matter coming before the Court on the Joint Motion to Stay All Proceedings Pending Completion of Mediation filed by Plaintiff Cardinal Peak Industries and Defendant Nexford Industrial Holdings Inc., the Court having reviewed the Motion and the record in this case, and the Court finding good cause shown:
IT IS HEREBY ORDERED that all proceedings in this action, including all discovery deadlines, motions deadlines, and other pretrial deadlines, are STAYED pending completion of mediation before the Honorable Catherine Lindström (Ret.) of the Great Lakes Dispute Resolution Center, 150 North Riverside Plaza, Suite 2700, Chicago, Illinois 60606, currently scheduled for August 2, 2023.
IT IS FURTHER ORDERED that the stay shall remain in effect until the earlier of: (a) the filing of written notice by either party that mediation has concluded without a full resolution of the dispute; or (b) ninety (90) calendar days from the date of this Order, whichever occurs first, unless extended by written stipulation of the parties filed with the Court or by further order of this Court.
IT IS FURTHER ORDERED that the parties shall file a joint status report within fourteen (14) calendar days of the conclusion of the mediation, advising the Court of the outcome and, if the matter has not been fully resolved, requesting entry of a new scheduling order.
IT IS FURTHER ORDERED that nothing in this Order shall prevent either party from seeking emergency or provisional relief from this Court if circumstances so require.
IT IS FURTHER ORDERED that all rights, claims, defenses, and counterclaims of the parties are preserved during the pendency of this stay.
SO ORDERED.
CARDINAL PEAK INDUSTRIES, a Colorado limited liability company,
<!-- indent:2 -->Plaintiff,<!-- /indent -->
v.
NEXFORD INDUSTRIAL HOLDINGS INC., a Delaware corporation,
<!-- indent:2 -->Defendant.<!-- /indent -->
CARDINAL PEAK INDUSTRIES, a Colorado limited liability company,
<!-- indent:2 -->Plaintiff,<!-- /indent -->
v.
NEXFORD INDUSTRIAL HOLDINGS INC., a Delaware corporation,
<!-- indent:2 -->Defendant.<!-- /indent -->
Date: ______
________
Judge, Circuit Court of Cook County
County Department, Law Division