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Spiegel v. Sharp Electronics Corp.

OPINION FILED JUNE 25, 1984.

JOSEPH H. SPIEGEL (JOSEPH H. SPIEGEL, LTD.), PLAINTIFF-APPELLANT,

v.

SHARP ELECTRONICS CORPORATION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. William R. Quinlan, Judge, presiding.

JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

This appeal involves the purchase of a photocopier and a subsequent claim for damages regarding the proper functioning thereof. Joseph H. Spiegel (plaintiff) is an attorney. Joseph H. Spiegel, Ltd., a dissolved Illinois Professional Corporation, is included within the designation "plaintiff." Sharp Electronics Corporation (Sharp) is the only defendant. The appeal comes to this court after entry of a final order by the trial court to dismiss with prejudice a number of counts in plaintiff's complaint.

Defendant did not manufacture the copier. Defendant sold the machine to a distributor. This distributor, Coordinated Business Systems, Ltd. (CBS), was engaged in selling business equipment for defendant under the trade name of "Sharpfax." Plaintiff personally did not purchase the copier. The actual buyer was First United Leasing Corporation. Plaintiff executed an equipment lease with this corporation. This was plaintiff's method of financing the acquisition of the copier. The lease was subsequently assigned by First United Leasing to Michigan Avenue National Bank.

We will first restate the familiar applicable principles. Pleadings are liberally construed in an effort to accomplish substantial justice between the parties. (People ex rel. Scott v. College Hills Corp. (1982), 91 Ill.2d 138, 145, 435 N.E.2d 463.) Although pleadings are to be liberally construed, a basic legal deficiency in a pleading "may not be cured by liberal construction or argument." (People ex rel. Kucharski v. Loop Mortgage Co. (1969), 43 Ill.2d 150, 152, 251 N.E.2d 211, quoted in Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 427, 430 N.E.2d 976.) It has been repeatedly and strongly held that, "in considering a motion to dismiss, the pleadings are to be construed strictly against the pleader." Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 421.

The first 16 counts in the third amended complaint pray for damages: $2,275 paid on account and $7,331.50 the entire balance of payment for the copier; payments to "a licensed repair service" $700; cost of copies by other machines $600; "damage and inconvenience" to plaintiff's business $15,000; being a total of $25,906.50. Count XVII also prays for $100,000 in punitive damages. Finally, count XVIII adds $300,000 in punitive damages.

COUNTS I THROUGH IV

• 1 Counts I through IV of plaintiff's complaint are based upon the warranty provisions of the Uniform Commercial Code (UCC) (see Ill. Rev. Stat. 1983, ch. 26, pars. 2-313 through 2-315). Plaintiff concedes, however, that the copier did not cause personal injury or property damage but solely economic loss and that plaintiff is not in privity of contract with defendant. Thus, a threshold question is presented as to whether plaintiff can recover solely economic losses on a warranty theory in the absence of privity. See Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill.2d 69, 82, 435 N.E.2d 443 (defining economic loss).

Plaintiff takes the position that privity is unnecessary to recovery on a warranty theory. Plaintiff's reply brief cites literally dozens of cases decided by courts> throughout the United States relating to the need for privity of contact in a warranty action. We take the view that it is unnecessary for us to consider all or any of these cases in this opinion. On the contrary, we prefer to cite and be bound by the law of Illinois.

Although privity has been abolished as unnecessary in actions founded upon tort liability (Rozny v. Marnul (1969), 43 Ill.2d 54, 62, 250 N.E.2d 656), privity generally remains a requirement in all warranty actions in Illinois except an action for personal injury based upon breach of an express or implied warranty against a remote manufacturer. See, e.g., Frank's Maintenance & Engineering, Inc. v. C.A. Roberts Co. (1980), 86 Ill. App.3d 980, 992-93, 408 N.E.2d 403; Ill. Rev. Stat. 1983, ch. 26, par. 2-318.

Plaintiff's reply brief cites Crest Container Corp. v. R.H. Bishop Co. (1982), 111 Ill. App.3d 1068, 445 N.E.2d 19, appeal denied (1983), 93 Ill.2d 541, as foreshadowing the abolition of the privity requirements in cases involving only economic loss. Plaintiff describes this change in the law as "necessitated by a changing society." We do not agree that Crest Container foreshadows the abolition of the privity requirement. On the contrary, the case simply describes a very narrow situation in which recovery of economic loss may be had on a warranty theory in the absence of privity. The exception dealt with by the court is limited to cases where a "remote manufacturer knows `the identity, purpose and requirements of the dealer's customer and manufactured or delivered the goods specifically to meet those requirements.'" (Crest Container Corp. v. R.H. Bishop (1982), 111 Ill. App.3d 1068, 1076, quoting Frank's Maintenance & Engineering, Inc. v. C.A. Roberts Co. (1980), 86 Ill. App.3d 980, 993.) No facts are alleged in the instant case regarding such knowledge on the part of defendant.

During oral argument, plaintiff cited section 2-318 of the UCC (Ill. Rev. Stat. 1983, ch. 26, par. 2-318). This enactment provides that a seller's warranty may extend to any natural person who is in the family or household of the buyer or who is a guest in the buyer's home "who is injured in person by breach of the warranty." Manifestly the language of this statute has no application to the instant case. However, plaintiff cites Comment 3 of the Uniform Commercial Code Comment pertaining to this section (Ill. Ann. Stat., ch. 26, par. 2-318, Committee Comment, at 265 (Smith-Hurd 1963)). This Comment specifically states that section 2-318 "is neutral and is not intended to enlarge or restrict the developing case law on whether the seller's warranties, given to his buyer who resells, extend to other persons in the distributive chain." We cannot conclude that this portion of the UCC or the Comment advance plaintiff's contentions in any respect.

It follows necessarily that because plaintiff was not in privity with defendant, plaintiff cannot recover his economic losses from this defendant based on a theory of breach of warranty. It is therefore unnecessary to address the individual counts for breach of warranty contained in the complaint. Counts I through IV of the third amended complaint were properly dismissed.

COUNT VIII

Count VIII of the complaint alleges that count I is properly maintained as a class action. Since we have concluded that count I was properly dismissed, it follows necessarily that the attempted class action fails. See Kittay v. Allstate Insurance Co. (1979), 78 Ill. App.3d 335, 339, ...


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