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ORIX CREDIT ALLIANCE v. TAYLOR MACH. WORKS

December 28, 1993

ORIX CREDIT ALLIANCE, INC., Plaintiff,
v.
TAYLOR MACHINE WORKS, INC., Defendant.



The opinion of the court was delivered by: JOHN F. GRADY

 Before the court is the motion of defendant Taylor Machine Works, Inc. ("Taylor") for dismissal under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7). As explained below, the motion is granted in part and denied in part.

 FACTS

 For purposes of this motion, we take the allegations in the complaint as true: In early 1991, Gallo Equipment Company ("Gallo") asked plaintiff ORIX Credit Alliance, Inc. ("ORIX") to provide it with financing in the amount of $ 400,000.00 to acquire marine forklift equipment. Because ORIX doubted Gallo's credit-worthiness, Gallo asked Taylor -- a large manufacturer of marine forklift equipment and one of Gallo's suppliers -- to guarantee the loan. In June 1991, William D. Metts, Taylor's director of marketing, sent ORIX a letter promising that a division of Taylor would purchase the forklifts in the event Gallo defaulted on the proposed loan. The letter states in relevant part as follows:

 
If Gallo fails to meet the loan commitment on the above machines [specific model numbered forklifts] Tempco which is a division of Taylor Machines would buy these trucks from ORIX at the above prices.

 Complaint Ex. A. Metts sent ORIX another letter a few days later promising that Tempco would purchase another forklift if Gallo defaulted. Complaint Ex. B. In reliance on those letters, ORIX provided the requested financing. Gallo subsequently defaulted on the loan, and in October 1992 ORIX demanded that Taylor purchase the forklifts. Claiming the letters were forgeries, Taylor refused to purchase the forklifts, and ORIX filed suit.

 Counts I and II of the complaint seek a declaration of the existence of an enforceable contract binding Taylor to purchase the forklifts and $ 300,000.00 in damages for breach of that contract. Count III alleges that Taylor, by lying about its intention to purchase the forklifts in the event of Gallo's default, fraudulently induced ORIX to provide the financing. Count IV, entitled tortious interference with contractual rights -- has been voluntarily dismissed. See ORIX's Response to Motion to Dismiss, at 3 n.1. Taylor has moved to dismiss the complaint on several grounds, which the court addresses in turn.

 DISCUSSION

 In considering a motion to dismiss, a court must draw all reasonable inferences from the pleadings in plaintiff's favor. Gillman v. Burlington N. R.R. Co., 878 F.2d 1020, 1022 (7th Cir. 1989). Dismissal is appropriate "'only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Kunik v. Racine County, Wis., 946 F.2d 1574, 1579 (7th Cir. 1991) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)).

 Counts I and II -- Breach of Contract

 Taylor contends that ORIX has sued the wrong party, namely that Tempco (or Temtco), a separate and independent corporation, undertook the obligation to purchase the forklifts if Gallo defaulted on the loan. Taylor also argues Counts I and II should be dismissed in any event because ORIX does not specify the consideration for Taylor's promise to purchase the forklifts or satisfaction of the conditions precedent to Taylor's obligation.

 Contrary to Taylor's contention, the complaint adequately alleges that Taylor was a party to the contract. According to the letters attached to the complaint as exhibits, an officer of Taylor offered to purchase the forklifts on behalf of Tempco, which the officer described as a division of Taylor and not as a subsidiary with a separate corporate identity. The legal identity of Tempco and its relationship to Taylor are factual issues not appropriate for determination on this motion to dismiss.

 Assuming that Taylor is a proper defendant, Counts I and II state a cause of action for breach of contract. Orix has alleged, or the court may infer from ORIX's allegations, the following: (1) Taylor's offer to purchase the forklifts upon Gallo's default; (2) ORIX's acceptance of this offer; (3) the prices of the particular forklifts Taylor agreed to purchase; (4) ORIX's tender of the forklifts to Taylor for purchase; (5) Taylor's refusal to purchase the forklifts; and (6) damages. See Cleland v. Stadt, 670 F. Supp. 814, 817 (N.D. Ill. 1987) (listing elements of a cause of action for breach of contract).

 The complaint's allegations or inferences drawn from them also satisfy the requirement for pleading ORIX's satisfaction of the conditions precedent to Taylor's obligation, i.e., Gallo's default and the tender of the forklifts. Under Federal Rule of Civil Procedure 9(c), "it is sufficient to aver generally that all conditions precedent have been performed or have occurred." Taylor's contention that ORIX was not capable of ...


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