of the Robotic Cell and related equipment that was designed exclusively for machining the hubs and rings that were to be sold to FNGP. FNGP has failed to demonstrate that there was any valid contract under which Tibor was obliged to provide that same performance. Accordingly, we will not dismiss Count III.
The doctrine of equitable recoupment applies when a contract is terminated without just cause before a party has a chance to recoup its investment. Cox v. Doctor's Associates, Inc., 245 Ill. App. 3d 186, 613 N.E.2d 1306, 1316, 184 Ill. Dec. 714 (Ill. App. Ct. 1993).
Relying on Cox, FNGP argues that in order to establish a recoupment claim, the plaintiff must allege the following: (1) a contract terminable at will; (2) that was terminated without just cause; and (3) substantial unrecovered expenses incurred by the plaintiff due to the termination. Tibor argues that only one element is required: termination without just cause. In support of its argument, Tibor points out that the court in Cox stated that the "one significant factor underlying claims for equitable recoupment" is that "the termination of the working relationship was without just cause." Id., 613 N.E.2d at 1316. However, we doubt that a claim for recoupment could stand in the absence of any contract. We do not believe that Tibor has sufficiently alleged the existence of a contract and therefore dismiss this claim with leave to amend to include allegations of what, if any, contract Tibor believes FNGP terminated without just cause.
FNGP advances two additional arguments which we believe have no merit. FNGP maintains that Tibor cannot maintain a claim for recoupment because Tibor was not required to make the investments it attempts to recoup. In Nichols Motorcycle Supply, the court found that the equitable recoupment claim failed where, although plaintiff alleged that it made substantial investments, there was no evidence that defendant "required" plaintiff to make such investments; therefore, defendant was not responsible for investments not recouped due to plaintiff's termination. 913 F. Supp. at 1142-43. The complaint merely stated that the defendant "encouraged" the expenditures. Id. at 1143. Contrary to the plaintiff in Nichols Motorcycle Supply, Tibor clearly alleges that FNGP "required" the investments it seeks to recoup. It states that: (1) the FNGP representatives "instructed Tibor to order the Robotic Cell" and (2) that they called "to confirm that Tibor had ordered the Robotic Cell." Thus, we will not dismiss Tibor's recoupment claim for failure to allege that Tibor required the expenditures.
Lastly, FNGP argues that Tibor's claim for recoupment fails because it is devoid of allegations of an agency relationship. We do not believe that the existence of an agency relationship is a condition precedent to a claim for recoupment. In support of its argument, FNGP cites DuPage Fork Lift Service, Inc. v. Machinery Distribution, Inc., 1995 WL 125774 (N.D. Ill. March 14, 1995). In that case, the plaintiff attempted to base its breach of contract action "on the franchisor's termination prior to franchisee's recoupment of investment." Id. at *12. The court dismissed the claim, finding that plaintiff had "not asserted a cause of action based on agency, but rather is suing for damages of a contractual nature based on the parties' contractual arrangement." Id. at *13. However, unlike the plaintiff in DuPage Fork Lift, Tibor is not attempting to bring a claim for breach of contract under a theory of recoupment. Furthermore, we do not read DuPage Fork Lift to stand for the proposition that an agency relationship is a necessary component of a recoupment claim.
Thus, we will not dismiss Tibor's recoupment claim for failure to allege an agency relationship.
For the forgoing reasons, defendant's motion to dismiss is denied as to Counts I, II, and III. Defendant's motion is granted as to Count V with leave to amend to allege the contract plaintiff believes was terminated without just cause.
DATED: September 18, 1996
John F. Grady, United States District Judge