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STEPAN CO. v. WINTER PANEL CORP.

December 26, 1996

STEPAN COMPANY, Plaintiff,
v.
WINTER PANEL CORPORATION, Defendant.



The opinion of the court was delivered by: ASHMAN

 I. Relevant Background

 Stepan is a manufacturer of Polyurethane foam products, including a product called "Stepanfoam," used in the manufacture of insulation panels. Stepan and Winter Panel have had an on-going relationship since 1990. On April 27, 1993, Stepan and Winter Panel entered into a contract for the purchase of Stepanfoam. Pursuant to the terms of the contract, Stepan delivered the chemicals used to make Stepanfoam. Winter Panel ultimately used the foam to manufacture insulating panels, which were then sold to its customers for use in residential and commercial construction. Subsequently, some of Winter Panel's customers complained that the panels manufactured from the Stepanfoam were unacceptable due to shrinkage and deflection. Consequently, Winter Panel refused to pay the $ 83,000 it owed Stepan under the contract. Stepan then sued Winter Panel to collect the amount owed and Winter Panel counterclaimed for breach of warranty and contract, seeking $ 1 million in damages resulting from the alleged defects in the product.

 On July 9, 1996, this Court entered an order precluding Defendant from recovering consequential damages in connection with its breach of warranty and contract counterclaims, based on a contractual limitation of remedies provision contained in the parties' agreement. Defendant then filed an amended counterclaim, adding claims for violations of the Illinois Consumer Fraud Act and for negligence. Stepan responded by filing this motion to dismiss.

 II. Standard of Law

 For purposes of a motion to dismiss under FED. R. Civ. P. 12(b)(6), the Court must accept all allegations as true and draw all reasonable inferences in favor of the non-moving party. Hishon v. King and Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984); Henson v. CSC Credit Services, 29 F.3d 280, 284 (7th Cir. 1994). The purpose of a motion under FED. P. Civ. P. 12(b)(6) is to test the formal sufficiency of the statement of the claim for relief; it is not a procedure for resolving a contest about the facts or the merits of the case. 5A WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE, ┬ž 1356 (1990). This provision must be read in conjunction with FED. P. Civ. P. 8(a) "which sets forth the pleading requirements and mandates a short and plain statement of the claim showing that the pleader is entitled to relief." FED. P. Civ. P. 8(a). Since federal courts only require "notice pleading," the pleadings must be liberally construed and mere vagueness or lack of detail alone cannot be sufficient grounds for dismissal. Lomas Mortg. U.S.A., Inc. v. W.E. O'Neil Construction Co., 812 F. Supp. 841 (N.D. Ill. 1993). Thus, the test under 12(b)(6) is whether it appears beyond doubt that the non-movant can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Antonelli v. Sheahan, 81 F.3d 1422, 1427 (7th Cir. 1996).

 III. Analysis

 Plaintiff moves to dismiss Defendant's Consumer Fraud Act counterclaim (Count II) and Negligence counterclaim (Count III). Each count will be addressed in turn.

 A. Count II - Consumer Fraud Act Violation

 Plaintiff first argues that Winter Panel's Consumer Fraud Act claim must be dismissed because it fails to allege a nexus between the wrongful conduct and consumer protection concerns.

 In 1990, the Act was amended to provide that "proof of a public injury, a pattern, or an effect on consumers generally shall not be required." 815 ILCS 505/1Oa(a). However, the decisions of this district have consistently held that the 1990 amendment to the Consumer Fraud Act "did not eliminate the requirement of a connection to consumers." *fn1" Athey Products, 89 F.3d at 436-37; Industrial Specialty Chemicals, Inc. v. Cummins Engine Co., Inc., 902 F. Supp. 805 (N.D. Ill. 1995).

 Courts have continued to find an inherent consumer nexus requirement, in part, due to the concern that, without such a requirement, contract law would be subsumed by causes of action brought under the Act. See Scarsdale Builders, Inc. v. Ryland Group, Inc., 911 F. Supp. 337, 338 (N.D. Ill. 1996). Failure to find a consumer nexus requirement could potentially result in any broken promise being characterized as a false promise, thereby coming within the scope of the Act. Scarsdale Builders, 911 F. Supp. at 338. Consequently, merely by alleging a fraudulent breach of contract, a plaintiff's common-law contract action would be augmented by an additional and redundant remedy under the Act; a result courts have not viewed as ...


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