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COCA-COLA FOODS DIV. v. OLMARC PACKAGING

October 4, 1985

THE COCA-COLA COMPANY FOODS DIVISION, A DELAWARE CORPORATION, PLAINTIFF,
v.
OLMARC PACKAGING COMPANY, AN ILLINOIS CORPORATION, DEFENDANT. OLMARC PACKAGING COMPANY, AN ILLINOIS CORPORATION, COUNTERPLAINTIFF, V. THE COCA-COLA COMPANY FOODS DIVISION, A DELAWARE CORPORATION, COUNTERDEFENDANTS.



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

  ORDER

Plaintiff, Coca-Cola Foods ("FOODS") sued Defendant, Olmarc Packaging Company ("OLMARC") for breach of contract. Foods filed a single count complaint. Olmarc answered and pleaded two affirmative defenses, along with two counterclaims. Foods' motion to strike the affirmative defenses and dismiss the counterclaims is the subject matter of this Order. For the following reasons, Foods' motion is granted in part and denied in part.

In early 1977 Foods and Olmarc entered into a Packing Agreement ("AGREEMENT"). Essentially Olmarc agreed to mix, package, store and ship dry powdered drink bases received from Foods in return for payment from Foods in accord with a set "Fee Schedule." The Agreement required Foods to furnish Olmarc with instructions and specifications for Olmarc's performance.

In addition to Olmarc's packaging and shipping obligations under the contract, Paragraph 8 required payments for certain losses and shortages of materials provided by Foods. Paragraph 8 states

Paragraph 5 of the Agreement required Olmarc to make certain reports to Foods "in such forms as [Foods] may from time to time request, including weekly reports showing packing supplies received and . . . used and inventories of packing supplies and daily reports of powders packed and . . . shipped and powders on hand."

Further, Olmarc was required to make periodic reports to Foods ("Daily report of Hi-C DM and MMC," "Weekly Co-Packer Production and Inventory Report") in accord with the "Co-Packers Accounting Procedures Manual." Based on the various reports submitted by Olmarc and its own annual inventory, Foods calculated Olmarc's "actual performance" and billed or credited Olmarc for "authorized or unauthorized usage, losses, variances, shortages and damages." Complt at 5.

Foods determined Olmarc had "unfavorable usage variations, and physical inventory shortages" totalling $92,829.29 for the period January through December, 1981. Further variations shortages and damaged goods were found for the period December, 1981 through December, 1982 ($38,309.96 and $329.19). The Agreement was terminated in January of 1983. Thereafter Foods billed Olmarc for "net unfavorable usage variations, physical inventory shortages and damages" ($10,432.11) and for 5,500 "pallets" which were unaccounted for by Olmarc ($24,700.00). Foods has repeatedly requested a total payment of $166,649.55 from Olmarc. Olmarc has repeatedly refused to pay Foods.

In its Answer Olmarc generally denies it is in breach of the Agreement and raises two affirmative defenses (estoppel and changed conditions) as well as two counterclaims (promissory estoppel and fraud by omission). Before the Court at this time is a motion by Foods to strike the affirmative defenses and to dismiss the counterclaims.

I. AFFIRMATIVE DEFENSES

Ruling on Foods' attack of Olmarc's affirmative defenses requires a three part analysis.

  1) Is the alleged "affirmative defense" really an
  affirmative defense, or is it simply a mistitled
  denial already contained in the answer?
  2) If the matter is properly designated an
  affirmative defense, is it adequately pleaded under
  the Federal Rules of Civil Procedure (e.g.,
  Fed.R.Civ.P. 8 and 9)?
  3) Finally, is the affirmative defense legally
  sufficient under the standard identified in
  Fed.R.Civ.P. 12(b)(6)?

See Instituto Nacional de Commercializacion Agricola v. Continental Illinois National Bank & Trust Co., 576 F. Supp. 985, 988 (N.D.Ill. 1983); Bobbitt v. Victorian House, Inc., 532 F. Supp. 734, 736-37 (N.D.Ill. 1982).

A. ESTOPPEL

In support of its first affirmative defense Olmarc alleges the following:

  1) Foods was informed of usage variations and
  inventory shortages in excess of those originally
  contemplated by the parties throughout the life of
  the Agreement;
  2) with that information in its possession, Foods
  took no ...

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