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R & L GRAIN CO. v. CHICAGO EASTERN CORP.

April 16, 1981

R & L GRAIN COMPANY, A WISCONSIN CORPORATION ON BEHALF OF ITSELF AND ON BEHALF OF ALL OWNERS OF 105' DIAMETER GRAIN BINS MANUFACTURED BY DEFENDANT, PLAINTIFFS,
v.
CHICAGO EASTERN CORPORATION, AN ILLINOIS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Marovitz, District Judge.

  MEMORANDUM OPINION

Motion to Dismiss

Introduction

Plaintiff R & L Grain Company brings this action against defendant Chicago Eastern Corporation seeking recovery for certain losses allegedly sustained by it as a result of its purchase of a grain storage bin manufactured by defendant. Plaintiff's amended complaint also contains class allegations on behalf of all owners of bins manufactured by defendant of the variety purchased by plaintiff. Plaintiff is a Wisconsin corporation with its principal place of business in Wisconsin. Defendant is an Illinois corporation with its principal place of business in Illinois. The jurisdiction of the Court is invoked pursuant to 28 U.S.C. § 1332.

Plaintiff's amended complaint alleges that in the fall of 1978, after consultations with Porter Grain Systems, Inc. (Porter), an Indiana corporation, it decided to purchase a grain storage bin (the "bin") manufactured by defendant. Porter purchased the material components of the bin from defendant for $311,738. Only plaintiff and Porter were parties to the contract of sale.*fn1 Porter assembled the bin after defendant made delivery at plaintiff's Monroe, Wisconsin facility.

Plaintiff alleges that the bin contains certain design defects which cause it to be unsuitable for its intended purpose and unsafe to persons working in and around the bin.*fn2 On January 14, 1979, the roof of the bin collapsed causing damage to the bin and related equipment. Repairs to the bin were made at a cost of $57,394.76. Plaintiff also alleges that the collapse of the roof of the bin cost plaintiff $100,000 in lost profits from anticipated grain storage rentals.

In addition, plaintiff alleges that the bin is in need of further repairs at an estimated cost of $210,000. These repairs, plaintiff alleges, will occasion additional lost rental revenues of $25,000.

Plaintiff seeks recovery of both its allegedly already incurred and anticipated repair costs and lost rentals. Plaintiff also seeks to recover the purchase price of the bin. Lastly, plaintiff seeks recovery of those financing costs for its purchase of the bin that accrued during the period the bin was in disuse due to the collapse of the roof; i.e., $32,250. The total recovery sought by plaintiff is $700,000, plus attorney's fees.

Plaintiff's theories of recovery are set forth in the four counts of its amended complaint. Count I alleges defendant's liability in strict tort. Count II alleges liability upon a negligence theory. Count III seeks recovery pursuant to defendant's alleged express warranties and implied warranties of merchantability and fitness for a particular purpose. See Ill.Rev.Stat. ch. 26, §§ 2-313, 2-314, and 2-315. Count IV contains plaintiff's class allegations made pursuant to Rule 23 of the Federal Rules of Civil Procedure.

Pending before the Court is defendant's motion to dismiss each count in plaintiff's amended complaint. Motions to dismiss are not to be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). When ruling upon a motion to dismiss a court shall accept as true all well-plead factual allegations. Cruz v. Beto, 405 U.S. 319, 92 S.Ct. 1079, 31 L.Ed.2d 263 (1972). For the reasons set forth below, the Court denies defendant's motion in part and grants the motion in part.

Counts I and II — Tort

Before addressing defendant's challenge to the sufficiency of plaintiff's tort claims, the Court must ascertain what law governs those claims.*fn3 This being an action founded upon the Court's diversity jurisdiction, it is bound to apply state substantive law, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and the choice-of-law principles of Illinois in order to determine which state's law shall govern. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). With respect to tort law claims, Illinois courts apply the substantive law of the place of injury unless the application of those factors set forth in the Restatement (Second) of Conflict of Laws §§ 6 and 145*fn4 (1971) indicate that another forum has a more significant relationship to the claim. Ingersoll v. Klein, 46 Ill.2d 42, 48, 262 N.E.2d 593, 596 (1973).

In the instant case, only Illinois and Wisconsin bear any significant relationship to plaintiff's tort claims. Between the relevant tort law of those jurisdictions, a true conflict exists. Because plaintiff alleges only injury related to the bin itself and consequent lost income, plaintiff's claims are for economic loss only.*fn5 See Alfred N. Koplin Co. v. Chrysler Corp., 49 Ill. App.3d 194, 199, 7 Ill.Dec. 113, 116-17, 364 N.E.2d 100, 103-04 (1977). State jurisdictions are divided as to whether purely economic loss is recoverable pursuant to tort law theory.*fn6 See id. at 200, 7 Ill.Dec. at 118-19, 364 N.E.2d at 105-06, and cases cited therein. Wisconsin is among the minority of jurisdictions which permit the recovery in tort of economic loss. LaCrosse v. Schubert, Schroeder & Associates, Inc., 72 Wis.2d 38, 44-45, 240 N.W.2d 124, 127 (1976). The issue is one which the Illinois Supreme Court has yet to address and there is a conflict between those Appellate Courts of Illinois that have decided the issue. Compare Alfred N. Koplin Co. v. Chrysler Corp., 49 Ill. App.3d 194, 7 Ill.Dec. 113, 364 N.E.2d 100 ...


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