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CARL A. HAAS AUTO. IMPORTS v. LOLA CARS LTD.

July 26, 1996

CARL A. HAAS AUTOMOBILE IMPORTS, INC., Plaintiff,
v.
LOLA CARS LIMITED, Defendant.



The opinion of the court was delivered by: SHADUR

 Carl A. Haas Automobile Imports, Inc. ("Haas") has brought a four-count Complaint against Lola Cars Limited ("Lola")-- the counts are successively captioned "Promissory Estoppel," "Breach of Contract," "Illinois Franchise Disclosure Act" *fn1" and "Fraud"--in connection with Lola's termination of Haas as the exclusive North American distributor of Lola's race cars and parts. Lola has moved for dismissal of the Complaint under Fed. R. Civ. P. ("Rule") 12(b)(6), and the motion is fully briefed and ready for decision. For the reasons stated in this memorandum opinion and order, Lola's motion is granted in part and denied in part.

 Rule 12(b)(6) Standards

 Familiar Rule 12(b)(6) principles require this Court to accept as true the Complaint's well-pleaded factual allegations, together with all reasonable inferences in Haas' favor ( Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996)). Dismissal is appropriate only if it appears beyond doubt that Haas can prove no set of facts, consistent with the Complaint's allegations, that would entitle it to relief ( Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)). *fn2" Hence the following Facts section credits Haas' allegations in their entirety (all references to the Complaint are simply "P ," while its exhibits are cited "Ex. ").

 Facts

 Lola is an English company that designs and manufactures race cars and parts (P2). Since 1967 Illinois corporation Haas has been Lola's exclusive North American distributor (PP1, 6-7). While from time to time Lola and Haas have operated under written contracts, from the time that the last written agreement expired on October 31, 1990 until Lola terminated Haas (effective at the end of the 1996 racing season, P33) Haas has distributed Lola cars "under a series of agreements which are oral and implied by the parties' course of dealing" (P9).

 Indy Car Distributorship

 One of Lola's major products is the "Indy" race car ("Indy car"), a high-performance car designed for an annual series of races including the Indianapolis 500 (P8). *fn3" As Lola's Indy car distributor (P10, quoted verbatim):

 
a. Haas has purchased and arranged the sale and delivery of racing cars;
 
b. Haas has purchased and maintained a comprehensive inventory of racing car spare parts and has sold spare parts;
 
c. Haas has regularly solicited purchasers and prospective purchasers of Indy cars to obtain orders;
 
d. Haas maintains a full-time sales and support force for race cars and parts consisting of approximately 19 people, two of whom were added for the 1996 and subsequent race seasons;
 
e. Haas maintains a full-service warehouse facility designed to allow it to fulfill its distributorship obligations;
 
f. Haas has sent specially built and equipped semi-trailers carrying spare parts and equipment to each scheduled Indy car racing event (including practice and qualifying sessions), and has had its personnel available at those events to sell spare parts and provide consultation and advice to racing teams operating the Lola race cars;
 
h. Haas has directed the Newman-Haas Racing Team, which is under partial common ownership with Haas, to work closely with Lola's engineers on improvements and modifications to the Lola Indy cars, and to provide engineering services which Lola uses in the development and manufacture of its race cars.

 All of those services "were provided by Haas for Lola's benefit and at Lola's request, at no cost to Lola" (id.). Haas' efforts have been vital to the success of Lola's Indy cars (P11).

 Haas' Reynard Opportunity

 In 1992 Reynard Racing Cars Limited ("Reynard") began to plan the introduction of a race car that would compete with Lola's Indy car (P14). During 1992 and continuing until early May 1993, Reynard offered Haas the opportunity to be the exclusive North American distributor for the Reynard Indy car on a five-to ten-year basis beginning with the 1994 racing season (P15). Reynard also offered Haas the opportunity to invest in Reynard's newly-planned Indy car venture (id.).

 In May 1993 Haas advised Lola Chairman Eric Broadley ("Broadley") that it had an offer to become involved with a competitor and asked for Lola's assurance that Haas' Lola distributorship would continue (P16). In response Broadley told Haas that it would indeed continue to be Lola's exclusive North American distributor of Indy cars for at least an additional five years (through 1998). *fn4" But as a condition to Haas' maintaining that long-term relationship with Lola, Broadley insisted that Haas had to terminate all of its existing relations with Reynard (P18). *fn5" In reliance on Lola's promise Haas declined Reynard's offers, terminated its then-existing profitable relationship with Reynard and continued its diligent efforts to promote Lola cars, parts and related products (P19).

 "Indy Lights" Car

 Since 1993 Lola has also produced and Haas has also exclusively distributed an "Indy Lights" race car--a car that resembles the Indy car but is slower, less sophisticated and less expensive and is driven in an annual series of Indy Lights races conducted throughout the United States (PP 20, 23). As the result of extensive efforts on Haas' part with the primary promoter of the Indy Lights racing series, Patrick Racing, Inc. ("Patrick Racing"), Lola was designated to replace a competitor as the exclusive supplier of Indy Lights cars (P22, 29). *fn6"

 In consideration of the role that Patrick Racing had played in promoting the Indy Lights racing series and in selecting Lola as the exclusive supplier of cars, Lola required Haas to provide Patrick Racing (which also operates an Indy car team) with a substantial discount on Indy cars and parts (P29). Although the benefit of Lola's selection as exclusive Indy Lights car supplier flowed predominantly to Lola, it required Haas to bear the entire cost of that discount (id.).

 In a July 7, 1995 agreement between Lola and ARS ("1995 ARS agreement," Ex. B), also signed by Carl Haas (id. at 11), Lola again acknowledged Haas as its "established distribution channel in the USA" (id. Art. 2.1; P27). That agreement increased the fee payable by Haas to ARS on spare parts sales to 12.5% and upped ARS' share of Haas' profit on each race car sold to $ 8000, with a like provision for an additional 30% of profit geared to a low exchange rate (P27).

 While the specific terms of Haas' distributorship of the Indy Lights cars "have been based upon a series of oral agreements and a course of dealing between the parties," Haas has performed these services for Lola as to the Indy Lights cars (P28, also quoted verbatim):

 
a. Haas has purchased and arranged the sale and delivery of race cars;
 
b. Haas has purchased and maintained a comprehensive inventory of racing car spare parts and has sold spare parts;
 
c. Haas has regularly solicited purchasers and prospective purchasers of Indy Lights race car to obtain orders;
 
d. Haas maintains a full-time sales and support force for race cars and parts, in addition to administrative, accounting and clerical personnel;
 
e. Haas maintains a full-service warehouse facility designed to allow it to fulfill its distributorship obligations;
 
f. Haas has sent specially built and equipped semi-trailers carrying spare parts and equipment to each scheduled Indy Lights racing event (including practice and qualifying sessions), and has had its personnel available at those events to sell ...

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