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Latex Glove Co. v. Gruen





Appeal from the Circuit Court of Cook County; the Hon. Myron Gomberg, Judge, presiding.


Plaintiff, Latex Glove Company, Inc., appeals an order of the trial court dismissing its complaint against defendant, Alfred J. Gruen, individually and doing business as Marco-Gruen Printers. The issue on appeal is whether the trial court erred when it dismissed the action with prejudice and denied plaintiff the opportunity to further amend its complaint.

Plaintiff filed an original and three amended complaints, and unsuccessfully requested leave to file a fourth amended complaint. On May 18, 1982, plaintiff filed the original complaint, alleging that defendant produced a catalog for plaintiff pursuant to an oral agreement. In response to plaintiff's subsequent demand, however, defendant refused to deliver various color separations used for the production of the catalog. Plaintiff sought specific performance and damages.

On July 28, 1982, defendant filed an answer. On September 6, 1983, after defense counsel was substituted, defendant was granted leave to withdraw his answer. On the same day, defendant filed a motion to dismiss the complaint pursuant to section 2-615 of the Code of Civil Procedure. (Ill. Rev. Stat. 1981, ch. 110, par. 2-615.) The motion alleged that the complaint failed to state a cause of action for specific performance, failed to state a claim for injunctive relief, and failed to adequately allege damages. Thereafter, plaintiff learned through discovery that color separations and other by-products it sought were no longer in defendant's possession. On September 28, 1983, the trial court granted plaintiff's motion to withdraw its original complaint in chancery, and to file its amended complaint at law.

On November 10, 1983, plaintiff filed its first amended complaint at law. It alleged that defendant had orally agreed to produce a catalog for plaintiff and that an additional term, requiring the delivery of the by-products of the catalog production, was implied by trade usage. Plaintiff requested specific damages, along with damages for lost profits. On February 8, 1984, defendant filed a motion to strike and dismiss pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, pars. 2-615, 2-619). The motion maintained that the action was barred by the Statute of Frauds (Ill. Rev. Stat. 1983, ch. 59, par. 1 et seq.) and the parol-evidence rule, and that the lost-profit damages were insufficiently alleged. On March 19, 1984, the trial court found that the complaint was barred by the Statute of Frauds and dismissed the action with prejudice. On June 14, 1984, however, at a hearing on plaintiffs motion to vacate the order, the trial court modified its order by allowing plaintiff to file a second amended complaint. The court also transferred the matter to the law division because the equitable issues had been withdrawn.

Plaintiff's second amended complaint contained additional allegations regarding the by-products having been specifically manufactured, and having been expressly included in defendant's written proposal. Defendant renewed the motion to strike and dismiss the complaint, arguing that the by-products were separately identifiable goods and thus ownership could not be a term implied in the catalog contract by trade usage. Defendant again argued that the allegations regarding lost profits were legally insufficient, and that the agreement was barred by the Statute of Frauds. On February 28, 1985, the trial court ordered the second amended complaint stricken without prejudice. The court found ambiguities in the factual allegations, along with conflicts between the exhibits and the pleadings which rendered the complaint factually insufficient.

On March 26, 1985, plaintiff filed its third amended complaint which contained additional factual allegations and which is the subject of this appeal. The third amended complaint alleged that in 1980 defendant submitted a written proposal, attached to the complaint as Exhibit A, to plaintiff for the production of a catalog. Exhibit A was entitled "catalog quotation" and detailed various specifications, including listing "complete typesetting, photos, keylines, separation plates and 4 color printing." Alternative quantities and prices of 20,000 catalogs at $35,000 or 30,000 at $41,000 were also set forth in the proposal.

The third amended complaint alleged further that trade usage held that the by-products necessarily created from the production of a catalog, including films, negatives, color separations and plates, are retained by the catalog producer until requested by the purchaser, when they must be delivered to the purchaser for its use and benefit.

The complaint alleged that plaintiff's employees and defendant met on September 8, 1980, when defendant orally agreed to produce for plaintiff 25,000 copies of the catalog "and to furnish all by-products" for a cost of $38,000. The complaint stated that by a letter dated September 17, 1980, attached to the complaint as Exhibit Z, defendant confirmed this oral agreement. Exhibit Z is written on the letterhead of Age Advertising, Inc., not a party to this suit, and signed: "Age Advertising, Inc., [signature], Alfred J. Gruen." The letter states that the quantity of catalogs to be produced was 25,000 at a price of $38,000. It stated further that defendant would "furnish all photography in color, all typography, art and keyline pasteup, color proof and the final product" of a 44 page catalog. Nothing in the letter referred to the by-products at issue in this case.

The third amended complaint alleged further that defendant should have been, or was, aware of the trade usage; that the agreement was later supplemented to include additional products for an added cost of $13,670, as detailed in an invoice attached to the complaint; that plaintiff paid defendant in full and defendant produced and delivered the catalogs; that the by-products were not usable for any commercial purpose except producing publications for plaintiff; and that plaintiff had suffered damages, including delay in the production of a new catalog.

Defendant filed a motion to strike and dismiss the third amended complaint, maintaining that plaintiff failed to sufficiently allege offer and acceptance of the catalog contract. Defendant also renewed the arguments that trade usage could not be used to imply the obligation to deliver the by-products to plaintiff, and that the catalog contract was barred by the Statute of Frauds. On June 20, 1985, the trial court dismissed the complaint with prejudice. The court found that plaintiff "barely had enough ultimate facts" to establish the oral contract for the catalog. The court also found that "the pleadings relating to custom and usage [were] sufficient." The court based its dismissal partly on the complaint's failure to adequately plead damages for lost profits. The court also based the dismissal on the inadequacy of the allegation that the catalog agreement, including the by-products obligation, was confirmed by a letter, because the attached confirmation letter made no mention of the by-products.

On October 30, 1985, the trial court heard arguments regarding plaintiff's motions to vacate the June order and to file a proposed fourth amended complaint. The proposed fourth amended complaint contained allegations similar to those in the third amended complaint, plus several relevant charges. It added language stating that the plaintiff's right to the by-products "is a right which is expressly or implicitly contained in every contract, oral or written, for the production of catalogs." It also stated that Exhibit Z confirmed the oral contract and "set forth some, but not all, of its terms." The new pleading added a paragraph regarding damages: "It was within the contemplation of the parties when the agreement was made that the by-products, which were to be retained by defendant and delivered to plaintiff at its request in accordance with the Agreement and the trade usage implied therein, would be requested and used by plaintiff in production of subsequent catalogs, and that if the by-products were not so delivered, it would be necessary for plaintiff to recreate the same at additional cost, which would necessitate delays in the preparation and distribution of the new catalogs." Finally, it alleged that because of defendant's refusal to deliver the by-products, production of new catalogs was delayed and plaintiff suffered a loss of $6,500 in profits.

Plaintiff appeals from the trial court's dismissal of the third amended complaint with prejudice and the court's refusal to vacate the dismissal or grant leave to file a fourth amended complaint.

• 1 The first issue presented is whether the complaint was factually insufficient to state a cause of action for breach of the contract to produce catalogs. Section 2-601 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-601) requires that substantial averments of fact must be alleged in stating a cause of action. Properly pleaded allegations and well-pleaded facts must be taken as true for the purpose of considering a motion to dismiss, but conclusions of law or fact unsupported by allegations of specific facts will not be admitted by a motion to dismiss. (Pollack v. Marathon Oil Co. (1976), 34 Ill. App.3d 861, 341 N.E.2d 101.) A complaint which sets forth a cause of action for breach of contract must allege facts sufficient to indicate offer, acceptance and consideration. (34 Ill. App.3d 861, 341 N.E.2d 101.) In addition to the existence of a contract, the complaint must allege plaintiff's performance of ...

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