obliged to contribute a percentage of their gross sales to the fund for advertising purposes, and Oil Express was responsible for providing an annual statement detailing the amount of contributions and expenditures as well as the nature of those expenditures. Complaint, Exh. A P 14. Given these contractual terms, the defendants' claim for breach of fiduciary duty rests on the mere trust it placed in Oil Express to fulfill its contractual duties. This is not enough to create a fiduciary duty. See Carey, 30 Ill. Dec. at 109, 392 N.E.2d at 764. In this District, Judge Kocoras also has dismissed a claim for breach of fiduciary duty involving identical facts, the identical plaintiff and similarly situated defendants. See Oil Express Nat'l, Inc. v. Burgstone, 958 F. Supp. 366, 1997 U.S. Dist. LEXIS 2561, No. 96 C 4816, 1997 WL 102547, at *4 (N.D. Ill. Mar. 5, 1997). I find his reasoning persuasive as well. Accordingly, Count III of the Counterclaim will be dismissed with prejudice.
In Count IV, the defendants seek an equitable accounting of the advertising fund which they allege was mishandled and misused by Oil Express. A claim for an equitable accounting may be maintained only in "the absence of an adequate remedy at law." Dairy Queen v. Wood, 369 U.S. 469, 478, 8 L. Ed. 2d 44, 82 S. Ct. 894 (1962). If an adequate remedy at law exists for a given claim, the party seeking an equitable accounting must demonstrate that the "'accounts between the parties' are of such a 'complicated nature' that only a court or equity can unravel them." Id. (footnote omitted).
The defendants have failed to allege that an adequate remedy at law does not exist for their claim of mishandling and misuse of the funds. Indeed, the defendants are pursuing a legal remedy, a breach of contract action, in Count I of the Counterclaim based on Oil Express' actions with respect to the funds. Furthermore, the defendants have not alleged that the parties' transactions are so complicated that only a court can understand them. In their Counterclaim, the defendants simply make the bald assertion that an expert is needed to review the records of the advertising fund because the amount of money deposited may exceed $ 2 million and numerous deposit, credit and debit entries have been made since the fund was created in 1990. Counterclaim P 52. Based on similar allegations, Judge Kocoras dismissed a claim for an equitable accounting because the counter-plaintiffs' allegations did not establish that "an examination of the fund is an exercise which the average person could not accomplish, and they do not meet the standards of Dairy Queen." Oil Express, 958 F. Supp. 366, 1997 U.S. Dist. LEXIS 2561, 1997 WL 102547, at *5. The need to examine Oil Express' business records is not a sufficient justification for an equitable accounting, and therefore Count IV will be dismissed. See Zell v. Jacoby-Bender, Inc., 542 F.2d 34, 36 (7th Cir. 1976).
Breach of Third-Party Beneficiary Contract
The defendants further contend in Count V that Oil Express breached a third-party beneficiary contract between Oil Express and Citgo Petroleum Corporation ("Citgo"). That contract created a supply channel between Citgo and Oil Express franchisees in which Citgo provided petroleum lubrication products for use in the franchisees' stores. Citgo-Oil Express Agreement, Plaintiff's Memorandum in Support of Motion to Dismiss, Exh. K P 2. The agreement also called for Citgo to contribute a set amount of its sales of these lubricants to an Oil Express advertising fund which was to be maintained as a separate account by Oil Express. Id. P 10(a)-(b), Exh. D. This advertising fund was to "be used by Oil Express for payment of advertising services performed on behalf of Oil Express or its franchisees." Id. P 10(b).
The defendants claim that Oil Express breached its agreement with Citgo by failing to deposit all of the monies contributed by Citgo into a segregated account and by not using the contributions for advertising that would have benefitted the defendants as well as other Oil Express franchisees. Oil Express maintains that the defendants are not third-party beneficiaries to the contract. In the alternative, Oil Express contends that the defendants are merely incidental rather than direct beneficiaries, and hence they do not have a right to sue on the contract.
Under Illinois law, a nonparty to a contract may be a third-party beneficiary of that contract if "the contracting parties intended to confer a benefit upon a nonparty to their agreement." XL Disposal Corp. v. John Sexton Contractors Co., 168 Ill. 2d 355, 213 Ill. Dec. 665, 669, 659 N.E.2d 1312, 1316 (Ill. 1995). In order to determine the contracting parties' intent, I must look to the contract itself and the surrounding circumstances. Id. (citation omitted). In this case, I need not look beyond the language of the Citgo-Oil Express agreement. As noted above, the contract states that the funds contributed by Citgo are to be used by Oil Express for "advertising services performed on behalf of Oil Express or its franchisees." Citgo-Oil Express Agreement P 10(b) (emphasis added). The contract clearly specifies that Oil Express' franchisees, including the defendants, are to be beneficiaries of advertising from the monies contributed by Citgo.
See Oil Express, 958 F. Supp. 366, 1997 U.S. Dist. LEXIS 2561, 1997 WL 102547, at *6. Hence, the defendants are third-party beneficiaries to the contract.
In addition, the defendants are direct, as opposed to incidental, third-party beneficiaries to the Oil Express-Citgo agreement. As Judge Kocoras held on this same issue, "franchisees of Oil Express are the clear beneficiaries of such advertising, and they are consequently direct beneficiaries under the Citgo-Oil Express agreement." Id. Accordingly, the defendants have stated a claim in Count V of the Counterclaim, and it will not be dismissed.
Oil Express' motion to dismiss is granted with respect to Counts III and IV of the Counterclaim. Count III is dismissed with prejudice, but Count IV is dismissed without prejudice. Oil Express' motion to dismiss Count V of the Counterclaim, however, is denied.
Elaine E. Bucklo
United States District Judge
Dated: May 5, 1997