United States District Court, Central District of Illinois
February 1, 1991
OAK STATE PRODUCTS, INC., PLAINTIFF,
ECOLAB, INC., DEFENDANT.
The opinion of the court was delivered by: Mihm, District Judge.
Before the Court is the Defendant Ecolab's Motion to Dismiss
(# 5). The Magistrate recommended that the Motion to Dismiss be
denied. This Court affirms the recommendation of the Magistrate
and denies the Motion to Dismiss.
Before the Court is an action for damages filed pursuant to
Illinois tort and contract law. This Court has jurisdiction
pursuant to 28 U.S.C. § 1332 because there is complete
diversity of citizenship between the parties. Ecolab is a
Delaware corporation with its principal place of business in
St. Paul, Minnesota. Oak State Products, Inc. is an Illinois
corporation with its principal place of business in Illinois.
The Complaint alleges that Oak State Products (hereinafter
referred to as Oak State), which is in the business of
manufacturing and distributing foodstuffs, made an oral
contract with Ecolab to provide pest fumigation at Oak State's
place of business, including the flour storage bins. Ecolab
allegedly represented that it would not be necessary to empty
the storage bins in order to perform the fumigation because the
chemicals used would not harm the flour in the bins. The
fumigation took place on September 5, 1988. Allegedly, within
a few days thereafter, the flour smelled tainted and the
products made from the flour were not fit for sale. Oak State
alleges that the fumigation was the cause of the tainted flour.
The Complaint is in four counts. Count I alleges a breach of
an express warranty. Count II alleges that Ecolab negligently
chose the wrong solution to fumigate the flour bins and
negligently applied the solution to the flour bins. Count III
alleges a negligence action based upon res ipsa loquitur. And,
Count IV alleges a breach of an oral contract. Oak State seeks
damages for the loss of the flour, the replacement of the
tainted food products, the loss of good will, and the lost
profits. The Defendant has moved to dismiss the entire
Complaint under Rule 12(b)(6) of the Federal Rules of Civil
Procedure because it contends that the Complaint fails to state
any claim for which relief may be granted.
Ecolab asserts that Count I should be dismissed because the
transaction in question was predominated by the sale of
services, rendering the provisions of Article 2 of the Illinois
Commercial Code inapplicable. However, Oak State concedes that
the contract in question was a service contract, and it
concedes that the Uniform Commercial Code does not apply. Oak
State asserts that it is seeking relief for an express warranty
under general contractual law.
Ecolab contends that there is no common law warranty outside
the Uniform Commercial Code on which Oak State may rely and
that warranties are limited to the sales of goods and do not
attach to the performance of services. Rosos Litho Supply Corp.
v. Hansen, 123 Ill. App.3d 290, 296, 462 N.E.2d 566, 571-572,
78 Ill.Dec. 447, 452-453 (1st Dist.Ill. 1984). Further, Ecolab
asserts that, as a service, no warranties can be made or
implied as a matter of law because the specific rights and
remedies addressed by the Uniform Commercial Code preempt any
common law remedy. See, Bickett v. Buffalo Bills, Inc.,
122 Misc.2d 880, 472 N.Y.S.2d 245, 248 (1983); Alaska Airlines,
Inc. v. Lockheed Aircraft Corp., 430 F. Supp. 134 (D.Ala. 1977).
Thus, Ecolab asserts that Count I must be dismissed
because express warranties are limited to the sales of goods.
Oak State contends that the Rosos case is distinguishable.
This Court agrees. The plaintiff in the Rosos case was
asserting that an architect's contractual duties (or
warranties) encompass not only those expressed in the contract
but also other duties implied by the contract. Rosos, 462
N.E.2d at 571, 78 Ill.Dec. at 452. The court simply concluded
that the Uniform Commercial Code was inapplicable to the
provision of professional services; therefore, it could not
allow the Plaintiff to assert a cause of action for an implied
warranty. Id. The court went on to explain:
Nor is there any other implied common law or
statutory warranty applicable to an architect's
services. (Citation omitted). In Illinois "in the
absence of a special agreement . . . [the
architect] does not imply or guaranty a perfect
plan or a satisfactory result." (Citation
omitted). The absence of implied warranties in
architect's services makes it possible for an
architect to effectively insulate himself from
liability by omitting certain express warranty
terms from his contract.
Id. 462 N.E.2d at 571-572, 78 Ill.Dec. at 452-453.
This quotation from the Rosos case makes it clear that the
court was talking about implied warranties. This Court simply
cannot agree with the proposition that express warranties
cannot exist in service contracts. If this were the case, this
would severely limit a party's ability to freely contract. The
argument that Article 2 of the Uniform Commercial Code, which
applies to transactions in goods (see, Ill.Rev.Stat. ch. 26, §
2-102), preempts all express warranties in service contracts is
simply too broad for this Court to accept.
With regard to the out of state cases cited by Ecolab, this
Court adopts the reasoning of the Magistrate and finds that
these cases are not persuasive and are distinguishable on their
facts. Further, even if the cases are not distinguishable, they
do not apply because this Court is obligated to apply Illinois
law. Based upon Illinois case law, this Court believes that Oak
State can state a cause of action for the breach of an express
warranty in a service contract as several Illinois cases have
implicitly recognized that such a cause of action exists.
See, Rogala v. Silva, 16 Ill. App.3d 63, 305 N.E.2d 571 (1st
Dist.Ill. 1973); Carroll v. Grabavoy, 77 Ill. App.3d 895,
396 N.E.2d 836, 33 Ill.Dec. 309 (3rd Dist. Ill. 1979); Illinois
Valley Asphalt v. LaSalle National Bank, 54 Ill. App.3d 317,
369 N.E.2d 525, 12 Ill.Dec. 28 (5th Dist. 1977); Elmore v.
Blume, 31 Ill. App.3d 643, 334 N.E.2d 431 (3rd Dist. Ill.
Ecolab also argues that Count I should be dismissed for
failure to state the warranty terms. The rule in Illinois is as
Under the theory of express warranty, an
actionable claim must be based on an affirmation
of fact or a promise which is not a statement
representing merely the seller's opinion or
commendation, and which is false. (Citation
Elmore, 334 N.E.2d at 433.
The Complaint state in relevant part:
That at the said time, agents, employees or
representatives of the defendant represented to
plaintiff, its agents, employees, or
representatives, that it would not be necessary to
empty the storage bins in order to perform the
fumigation as the chemicals to be used would not
harm the flour in said bins.
See, Plaintiff's First Amended Complaint filed October 10,
1990, Document No. 17. This Court agrees with the Magistrate's
determination that this pleading is sufficient to give notice
of the claim as required under Rule 8 of the Federal Rule of
COUNTS II AND III
Ecolab contends that Counts II and III of Oak State's Amended
Complaint alleging negligence and res ipsa loquitur are tort
theories which seek recovery of economic damages which are
barred under the Moorman economic loss doctrine. See, Moorman
Manufacturing Company v. National Tank Company, 91 Ill.2d 69,
435 N.E.2d 443, 61 Ill.Dec. 746 (S.Ct.Ill. 1982).
Ecolab asserts that because it supplied a service rather than
a good it is impossible to claim an injury from the alleged
product supplied as the chemicals used by Ecolab in fumigating
are merely incident to its service. Thus, Ecolab maintains that
the Court must look to recent court decisions which determine
the applicability of the economic loss doctrine to service
professions. Ecolab contends that it is clear that the Illinois
Supreme Court and appellate courts apply the
Moormaneconomic loss doctrine to service professions. See, 2314
Lincoln Park West Condominium Association v. Mann, 136 Ill.2d 302,
555 N.E.2d 346, 144 Ill.Dec. 227 (S.Ct.Ill. 1990); Collins
v. Reynard, 195 Ill. App.3d 1067, 553 N.E.2d 69, 142 Ill.Dec.
719 (4th Dist.Ill. 1990).
It is true that Illinois courts apply the Moorman economic
loss doctrine to service professions. However, this does not
necessarily mean that the economic loss doctrine will preclude
recovery in all cases. In the Lincoln Park case, the Illinois
Supreme Court stated:
The plaintiff does not deny that the recovery
requested in the present action is for what we
have termed economic loss. The plaintiff is
seeking an award of damages for the cost of
repairing defects in the property, and there is no
contention that the personal injury or damage to
other property has resulted. Like the plaintiffs in
Redarowicz [v. Ohlendorf, 92 Ill.2d 171, 65
Ill.Dec. 411, 441 N.E.2d 324 (1982)], Foxcroft
[Townhome Owners Association v. Hoffman Rosner
Corp., 96 Ill.2d 150, 70 Ill.Dec. 251,
449 N.E.2d 125 (1983)], and Morrow [v. L.A. Goldschmidt
Associates, Inc., 112 Ill.2d 87, 96 Ill.Dec. 939,
492 N.E.2d 181 (1986)], the plaintiff in the
present case seeks compensation for the cost of
repairing certain defects allegedly occurring in
the construction of the condominium unit owners'
Lincoln Park, 555 N.E.2d at 351, 144 Ill. Dec. at 232 (emphasis
added). Thus, the reason that the economic loss doctrine was
held to bar recovery in the Lincoln Park case was because the
plaintiff in that case only sought economic damages. The court
did not hold that damages were never recoverable in a case
involving services or professional malpractice. To the
contrary, the court stated:
While we do not intend in the present case to
determine the future application of
Moorman in all areas of professional malpractice,
we must reject the plaintiff's theory that denial
of the negligence claim against the present
architect would signal in general the end of
malpractice recovery in tort.
Id. 555 N.E.2d at 353, 144 Ill.Dec. at 234.
The question in this case is simply whether or not Oak State
is seeking damages for an economic loss or for something else.
In Moorman, the Illinois Supreme Court defined economic loss as
"Economic loss" has been defined as "damages for
inadequate value, costs of repair and replacement
of the defective product, or consequent loss of
profits — without any claim of personal injury or
damage to other property . . ." (citation omitted),
as well as "the diminution in the value of the
product because it is inferior in quality and does
not work for the general purposes for which it was
manufactured and sold." (Citation omitted). These
definitions are consistent with the policy of
warranty law to protect expectations of suitability
Moorman, 435 N.E.2d at 449, 61 Ill.Dec. at 752 (emphasis
In this case, Oak State seeks damages for loss of the flour,
replacement of the tainted food products, loss of good will,
and lost profits. Oak State contends that there has been damage
to "other property" because of the damage to the flour which
caused the other damage.
This Court agrees with Oak State. The product in this case
was the service provided. However, the service has various
components. The service included the selection of the
appropriate chemicals to use, the actual fumigation of the
flour bins, and the use of the chemicals themselves. The flour
was not part of the product provided;
therefore, there was damage to "other property" in this case.
In light of the foregoing, this Court DENIES Ecolab's Motion
to Dismiss (# 5) and AFFIRMS the recommendation of the
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