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11/03/88 Ray Dancer, Inc., v. the Dmc Corporation

November 3, 1988





530 N.E.2d 605, 175 Ill. App. 3d 997, 125 Ill. Dec. 447 1988.IL.1607

Appeal from the Circuit Court of Du Page County; the Hon. William Black, Judge, presiding.


JUSTICE UNVERZAGT delivered the opinion of the court. LINDBERG, P.J., and REINHARD, J., concur.


Plaintiff, Ray Dancer, Inc., appeals from an order of the circuit court of Du Page County which dismissed counts X, XI, and XII of its second amended complaint against defendant, Leisure Arts, Inc. (Leisure). Count X of plaintiff's second amended complaint was dismissed on the basis of the statute of frauds provision of the Uniform Commercial Code (Ill. Rev. Stat. 1981, ch. 26, par. 2-201) (statute of frauds). (See Ill. Rev. Stat. 1985, ch. 110, par. 2-619(a)(7).) The trial court dismissed counts XI and XII after finding that those counts failed to state a cause of

Plaintiff raises four issues on appeal: (1) whether Leisure made a judicial admission in its pleadings; (2) whether either the letter to the German manufacturer or the purchase order is a sufficient memorandum to satisfy the statute of frauds; (3) whether Leisure waived its statute of frauds defense; and (4) whether the circuit court improperly dismissed the misrepresentation claims.

In 1984, plaintiff, Ray Dancer, Inc. (Dancer), entered the embroidery floss importing business. It aspired to compete with industry giant DMC Corporation , the largest manufacturer of floss in the United States. Leisure Arts, Inc., distributes knitting and needlepoint products. Embroidery floss is one of the products that Leisure distributes. Leisure had been one of DMC's largest United States distributors of floss.

In July 1985, Dancer offered its Madeira floss to Leisure for distribution. Madeira floss is a high grade embroidery floss on par with DMC's floss. Dancer imported the Madeira floss from West Germany. On July 31, 1985, Dancer and Leisure entered into a consignment sales agreement. Dancer drafted this contract. The relevant portions stated:

"1.2 Amount and Delivery : On or before September 1, 1985, Consignor shall deliver to the Consignee 50,000 boxes of the Goods . . . F.O.B. at Consignee's warehouse in North Little Rock, Arkansas.

3.1 Replenishment of Inventory : Upon receipt of payment for Goods sold by Consignee, Consignor shall deliver to Consignee sufficient boxes of Goods to increase Consignee's inventory to 50,000 boxes.

6.2 Entire Agreement : This Agreement includes all amendments and supplements thereto, and all assignments, instruments, documents, accounts and other writings submitted by Consignee to Consignor pursuant to this Agreement. All other agreements, whether verbal or written, are merged herein. This Agreement may not be modified except by writing, executed by the party or parties sought to be bound." (Emphasis added.)

The parties agreed that "Leisure would carry floss from Dancer-Madiera [ sic ] as a second brand," Leisure's private label floss.

When DMC learned that one of its major distributors intended to carry a competing brand of floss, it requested that Leisure not pursue the deal. When Leisure refused to be dissuaded, DMC threatened to terminate sales of DMC floss to Leisure. Leisure made the executive decision to carry the Dancer line, in spite of the threats. It did, however, take such threats seriously, since DMC was the industry standard, and the only manufacturer of high grade floss besides Dancer.

Dancer alleged that because of concern over the threatened cut-off, Leisure modified its agreement with Dancer. Allegedly, they entered into a requirement contract to insure Leisure's supply of high grade floss, if DMC did cut off its relations with Leisure.

On September 13, 1985, DMC terminated its distribution arrangement with Leisure, leaving Dancer as Leisure's only supplier of high grade floss. Dancer alleged that, at this point, Leisure increased its orders from Dancer. Dancer also alleged that, at Leisure's request, Dancer terminated its agreements with its other distributors and sold exclusively to Leisure.

Subsequently, Leisure sued DMC for alleged antitrust violations. DMC responded by filing suit in New York against Leisure, alleging trademark infringement. DMC alleged that Dancer's floss violated its trademarks and ...

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