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TIBOR MACH. PRODS. v. FREUDENBERG-NOK GEN. PSHP.

September 18, 1996

TIBOR MACHINE PRODUCTS, INC., an Illinois Corporation, Plaintiff and Counter-Defendant,
v.
FREUDENBERG-NOK GENERAL PARTNERSHIP, Defendant and Counter-Plaintiff.



The opinion of the court was delivered by: GRADY

 Plaintiff Tibor Machine Products, Inc. ("Tibor") alleges claims for common law fraud (Count I), violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Count II), promissory estoppel (Count III), and recoupment (Count V). Defendant Freudenberg-Nok General Partnership ("FNGP") moves to dismiss the complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated in this opinion, the motion is granted in part and denied in part.

 BACKGROUND1

 Defendant FNGP manufactures, assembles and supplies parts and components to automobile manufacturers. Plaintiff Tibor machines component parts.

 Nissan Motor Manufacturing Corporation U.S.A. asked FNGP to supply torsional vibration dampers for its VG-30, 6 Cylinder engine ("VG-30 Project"). FNGP asked Tibor to give it a price quotation to machine rings and hubs, two principal components of torsional vibration dampers for the VG-30 Project. Representatives of FNGP stated that if the quote were accepted, FNGP would purchase all of its required rings and hubs from Tibor for five years. FNGP needed an outside source because it did not have the ability to manufacture the parts in-house.

 On April 10, 1992, Tibor submitted a quotation to FNGP for the machining of hubs and rings for the VG-30 Project for 120,000 to 150,000 hubs and rings per year at specific prices. FNGP selected Tibor to machine and supply those parts and submitted a written agreement on June 11, 1992, setting forth the material terms of the parties' agreement, including a provision that Tibor would be FNGP's exclusive supplier of hubs and rings for a period of five years. Tibor confirmed the terms of the agreement in a revised quotation submitted on June 22, 1992. FNGP then issued purchase orders to Tibor to manufacture sample rings and hubs. FNGP allegedly repeatedly assured Tibor that it was finalizing the terms of the agreement, although no agreement was ever completed.

 In March 1993, Tibor began to machine larger quantities of rings and hubs. One month earlier, FNGP's project manager allegedly directed Tibor to send him Tibor's confidential processing information. Tibor determined that its quoted prices to FNGP could not be maintained without investing in specialized automated equipment. It looked into purchasing highly automated and computerized equipment (the "Robotic Cell"). In May 1993, Tibor told FNGP that it could only justify investing in the Robotic Cell if FNGP would definitely purchase its rings and hubs for the VG-30 project exclusively from Tibor. FNGP allegedly represented that it would do so, failing to tell Tibor that in fact it intended to machine the parts in-house by the end of the year. FNGP reconfirmed its position at a meeting in June 1993, instructing Tibor to purchase the Robotic Cell.

 In July 1993, FNGP sought assurances that the Robotic Cell would be installed and operational by September 1993, once again failing to inform Tibor that it was in the process of taking steps to bring the machining of rings and hubs for the VG-30 project in-house. One month later, FNGP allegedly falsely represented that it was finalizing the parties written agreement, although this was never done. In October 1993, FNGP requested updated processing information from Tibor, which Tibor alleges FNGP was using to machine the parts in-house. Tibor also alleges that FNGP deliberately diverted certain raw materials used to produce rings and hubs called "castings," supposed to be delivered to Tibor, to FNGP's in-house facility. By November 1993, FNGP was seeking Nissan approval to machine the rings and hubs in-house.

 Tibor has filed its fourth amended complaint. FNGP moves to dismiss claims for common law fraud (Count I), violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Count II), promissory estoppel (Count III), and recoupment (Count V).

 DISCUSSION

 Dismissal is properly granted only if "'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Cushing v. City of Chicago, 3 F.3d 1156, 1159 (7th Cir. 1993) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)). The court will accept all facts alleged in the complaint as true, drawing all reasonable inferences therefrom in favor of the plaintiff. Jones v. General Electric Co., 87 F.3d 209, 211 (7th Cir. 1996); Wilson v. Formigoni, 42 F.3d 1060, 1062 (7th Cir. 1994).

 I. Common Law Fraud

 The elements of an action for fraudulent misrepresentation are as follows: (1) the representation must be a statement of a material fact, rather than a mere promise or opinion; (2) the representation must be false; (3) the person making the statement must know or believe that the representation is false; (4) the person to whom the representation is made must reasonably rely on the truth of the statement; (5) the statement must have been made for the purpose of causing the other party to rely upon it; and (6) the reliance by the person to whom the statement was made led to his injury. LaScola v. U.S. Sprint Communications, 946 F.2d 559, 568 (7th Cir. 1991).

 A. Fraudulent Scheme

 It is well established under Illinois law that a plaintiff does not state a cause of action for fraud merely by alleging that the defendant had no intention to perform when the contract was made. Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 395 n.5 (N.D. Ill. 1982). A misrepresentation about an intention to act in the future, however, may be actionable if it is part of a "scheme employed to accomplish the fraud." Ault v. C.C. Services, Inc., 232 Ill. App. 3d 269, 597 N.E.2d 720, 723, 173 Ill. Dec. 746 (Ill. App. Ct. 1992).

 The case of Roda v. Berko, 401 Ill. 335, 81 N.E.2d 912 (Ill. 1948), illustrates a scheme to defraud. In that case, Berko induced Roda to sell him a tract of land by promising to build a factory on the land. Instead, he intended to, and in fact did, lease the land to a third party for use as a junkyard which decreased the value of Roda's adjacent property. Berko knew that if he revealed his actual intention to use the land as a junkyard, Roda would not have agreed to the sale. The false representation, although pertaining to a future ...


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