Purchase Order, a contract still within the scope of the UCC, Mr. Horbach has not changed my decision that his claim for breach of the Purchase Order is barred by the UCC statute of limitations. Accordingly, Count I will again be dismissed.
In Count III, Mr. Horbach alleges fraud. Initially, I dismissed this claim because I concluded that it was barred by the statute of limitations. The parties agree that in Illinois, the statute of limitations for fraud is five years. See 735 ILCS 5/13-205 (Smith-Hurd 1992). Under the "discovery rule," a plaintiff has five years to file suit from the point that he "'knows or reasonably should know that he has been injured and that his injury was wrongfully caused.'" Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 651 N.E.2d 1132, 1135, 209 Ill. Dec. 684 (1995) (quoting Jackson Jordan, Inc. v. Leydig, Voit & Mayer, 158 Ill. 2d 240, 633 N.E.2d 627, 630-631, 198 Ill. Dec. 786 (1994)). This complaint was filed on September 11, 1995, and because I concluded in my decision on the first motion to dismiss that Mr. Horbach reasonably should have discovered the alleged fraud before September of 1990, I found his fraud claim to be time barred.
Mr. Horbach has provided additional allegations in his Second Amended Complaint, and he contends that these allegations demonstrate that he could not reasonably have known of the fraud before September of 1990 and that, therefore, his claim is timely. For example, Mr. Horbach alleges that he was without the "technical knowledge and skill" to assess the quality of the equipment. He also alleges that he requested Shred Pax to modify the equipment after the February, 1990 delivery date. The parties dispute whether these and other new allegations should change my decision that Mr. Horbach's fraud claim is time barred.
Mr. Horbach first argues that the highly complex nature of the equipment and his own lack of technical expertise meant that the only way to determine whether the equipment met the specifications of the Purchase Order was to test it, which he could not do before September of 1990. Mr. Horbach acknowledges, however, that he discovered the alleged fraud without testing the equipment when an agent inspected it on his behalf in February of 1991. The equipment therefore did not need to be "tested" to discover that it was not ready and did not meet the Purchase Order specifications.
Moreover, Mr. Horbach alleges that when his agent finally inspected the equipment, it consisted of "only scattered components." If the equipment were only in scattered parts as late as February 1991, then certainly even a lay person such as Mr. Horbach would have been able to recognize the alleged fraud in an inspection before September of 1990. Furthermore, if Mr. Horbach could not determine himself whether the equipment was ready and in compliance with the contract, ordinary diligence requires that he have had someone qualified inspect the equipment. Mr. Horbach relied on a representative to inspect the equipment in February of 1991, and there appears to be no reason why a representative could not have performed an inspection before September of 1990.
Mr. Horbach also argues that it was not unreasonable to wait until February of 1991 to inspect the equipment, because TyrRee had requested changes to the equipment. Shred Pax first informed TyrRee that the equipment was finished in February of 1990, but at that time, TyrRee requested several modifications. After Shred Pax reported on April 6, 1990 that the requested modifications had been completed and that the equipment was finished, however, TyrRee did not request additional changes until September 25, 1990. Thus, for more than five months, TyrRee thought that the equipment was ready for delivery and testing. Mr. Horbach does not explain why TyrRee did not inspect the equipment during these five months, but clearly the additional changes did not keep him from doing so.
Mr. Horbach also claims that the equipment was not inspected because TyrRee had not yet completed its search for a site to install the equipment. At the request of Shred Pax, TyrRee agreed to wait and have the equipment tested at the eventual operating site rather than at a temporary location. Shred Pax tried to help TyrRee with its efforts to locate a suitable operating site, and in February of 1990, it informed TyrRee of a possible location in West Virginia. By April 6, 1990 when TyrRee still had not obtained the West Virginia (or any other) site, however, Shred Pax announced that it would go ahead and test the equipment at a site of its choosing if TyrRee was unable to find a satisfactory location within 14 days. TyrRee acknowledged this deadline, but failed to secure a testing site by April 20th as requested.
Ignoring its pledge, Shred Pax never chose its own site or tested the equipment. Nevertheless, TyrRee still did not inspect the equipment for another 10 months. Although Shred Pax's failure to begin testing might have alerted TyrRee to the alleged fraud, TyrRee still did not inspect the equipment.
The new allegations in Mr. Horbach's Second Amended Complaint do not show that it was reasonable for TyrRee not to inspect the equipment by September of 1990. I therefore again find that Mr. Horbach reasonably should have known of the alleged fraud before September of 1990, and consequently, Mr. Horbach's fraud claim is still time barred.
In Count VIII, Mr. Horbach has attempted to state a claim for conversion. To state a claim for conversion under Illinois law, Mr. Horbach "'must show a tortious conversion of the chattel, a right to property in it, and a right to immediate possession which is absolute.'" National Union Fire Ins. Co. v. Wilkins-Lowe & Co., 29 F.3d 337, 340 (7th Cir. 1994) (quoting In re Thebus, 108 Ill. 2d 255, 483 N.E.2d 1258, 1260, 91 Ill. Dec. 623 (1985)). Although an action for conversion may be maintained to recover money, "'it must be shown that the money claimed . . . at all times belonged to the plaintiff and that the defendant converted it to his own use.'" Wilkins-Lowe, 29 F.3d at 340 (quoting Thebus, 483 N.E.2d at 1261) (emphasis added in Wilkins-Lowe).
Mr. Horbach cannot show that the funds allegedly converted by Mr. Kaczmarek and Shred Pax have always belonged to him. Mr. Kaczmarek and Shred Pax accepted the money as advance payments for the equipment and its storage. Under the terms of the agreement, the money belonged to Mr. Kaczmarek and Shred Pax. When the equipment was not completed on time, Mr. Horbach's proper remedy was for breach of contract.
Moreover, under Illinois law, "in order for money to be the proper subject of a conversion action, it must be capable of being described as a 'specific chattel.' In order to satisfy this requirement, the plaintiff must have a 'right to a specific fund or specific money in coin or bills.'" Sutherland v. O'Malley, 882 F.2d 1196, 1200 (7th Cir. 1989) (applying Illinois law) (citations omitted). With this conversion claim, Mr. Horbach seeks only a certain amount of money rather than a specifically identifiable fund or account. Thus, Mr. Horbach cannot state a claim for conversion, and consequently, Count VIII will be dismissed.
For the reasons stated above, Counts I, II, III, IV, V, and VIII will be dismissed.
Elaine E. Bucklo
United States District Judge
Dated: July 22, 1996