Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MIDWEST MFG. HOLDING v. DONNELLY CORP.

August 28, 1997

MIDWEST MANUFACTURING HOLDING, L.L.C., and I.P. ACQUISITION, L.L.C., Plaintiffs,
v.
DONNELLY CORPORATION, DONNELLY TECHNOLOGY, INC., and DON-TECH, INC., Defendants.



The opinion of the court was delivered by: ALESIA

 Before the court are defendant Donnelly Corporation's ("Donnelly"), Donnelly Technology, Inc.'s ("Donnelly Tech"), and Don-Tech, Inc.'s ("Don-Tech") (collectively, "defendants") motion to dismiss plaintiff Midwest Manufacturing Holding, L.L.C.'s ("Midwest"), and I.P. Acquisition, L.L.C.'s ("I.P. Acquisition"), (collectively, "plaintiffs") complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. For the following reasons, the court grants in part and denies in part defendants' motion.

 I. BACKGROUND1

 Midwest is a leading manufacturer of heat reflective glass used in commercial and residential appliances throughout the United States. I.P. Acquisition, a wholly owned subsidiary of Midwest, was created for the specific purpose of acquiring Donnelly's Information Products Division ("I.P. business").

 Donnelly is a manufacturer of automobile glass for the domestic and international automobile industry and has over 24 manufacturing facilities worldwide. Donnelly's I.P. business is the only supplier of bent, coated glass used in touch screen monitors in the United States, and possesses trade secrets, patents, and technology in relation to bent glass and glass coating. Donnelly Technology, a wholly owned subsidiary of Donnelly, possesses certain intellectual property rights related to this technology. Don-Tech, also a wholly owned subsidiary of Donnelly, was created to hold the assets of the I.P. business pending the sale of the I.P. business to Midwest.

 In early 1996, Midwest began negotiating with Donnelly for the acquisition of its I.P. business, which possesses numerous patents, trade secrets, technology, and operating knowledge regarding bent glass and the glass industry generally. The parties entered a confidentiality agreement in April 1996.

 On October 28, 1996, the parties signed their final letter of intent. The terms, which were subject to modification, included that: (1) Midwest would acquire substantially all of the assets of the I.P. business, except for real estate and the "E-Beam Coater;" (2) the parties would share, pursuant to an agreement, the "E-Beam Coater" and "Glass Bender No. 1;" (3) the purchase price would be $ 10,750,000; (4) Donnelly would lease to Midwest approximately 85,000 to 90,000 square feet of Donnelly's facility; and (5) Midwest would offer employment to Donnelly's employees while Donnelly would use its best efforts to arrange that employees of the I.P. business who wanted to remain Donnelly employees would be leased to Donnelly under an agreement.

 The letter of intent was subject to the approval of Midwest's and Donnelly's boards of directors. The letter of intent also called for the parties to execute a definitive agreement by December 15, 1996, and provided that if such an agreement were not executed by then, the letter of intent would terminate and the transaction be deemed abandoned.

 On December 6, 1996, the Donnelly board of directors approved a resolution that approved the sale of the I.P. business to Midwest under the terms of the October 28, 1996, letter of intent. The resolution authorized William Jellison, Donnelly's chief financial officer, and Dwane Baumgardner, Donnelly's chairman and chief executive officer, to continue negotiations on behalf of Donnelly and to execute documents necessary to consummate the sale of the I.P. business's assets.

 Although the parties failed to reach an agreement by December 15, 1996, the parties continued to negotiate towards a final agreement, with the same essential terms as in the letter of intent and with Jellison negotiating directly with Midwest on Donnelly's behalf. On January 14, 1997, counsel for Donnelly and Midwest jointly authored a memorandum detailing the still open issues regarding the specific terms of agreement.

 On January 17, 1997, Jellison and lead outside counsel for Donnelly conducted a conference call with Midwest representative Robert Perille. During the call, Jellison agreed that all the open issues had been resolved and that Donnelly would sell the I.P. business to Midwest. The closing on the sale was to take place during meetings on January 20, 21, and 22, 1997.

 During this phone conversation, Jellison told Perille that he agreed to all the essential terms of the underlying transaction on Donnelly's behalf; that any further approval of the terms of the underlying transaction by Donnelly personnel had been secured or would be secured without difficulty; and that Donnelly would consummate the transaction during a closing to take place in Chicago on the foregoing dates. At the conclusion of the conversation, it was Midwest's understanding that the closing would take place on the foregoing dates, that Jellison had executed the necessary documents, and that all that was necessary to complete the sale was Jellison's verbal authorization.

 The parties' agreement as of January 17, 1997, was reflected in a contract consisting of seven agreements. The Asset Purchase Agreement contained the parties' mutual intent and understanding regarding the purchase and sale of assets; manner of payment; representations and warranties; closing; and miscellaneous other issues. The Technology Transfer and License Agreement governed the transfer and licensing of intellectual property rights associated with the acquisition. The Employee Leasing Agreement provided for the retention of certain Donnelly employees after the acquisition. The Transition Services and Consulting Agreement provided for the immediate and transitional administrative, MIS, purchasing, and accounting services to be provided by Donnelly. The Sharing Agreement provided for the immediate sharing of common space, materials, and equipment. The Environmental Agreement provided for certain environmental liability indemnifications for the I.P. business's manufacturing facility. The Long Term Lease Agreement provided for a 10-year lease, with a five-year option, of Donnelly's manufacturing facility.

 Plaintiffs sued defendants in state court, alleging breach of contract (Count I), promissory estoppel (Count II), and breach of implied covenant of good faith and fair dealing (Count III). Defendants removed the action to this court. After removal, plaintiffs filed an amended complaint, alleging breach of contract (Count I), breach of duty to negotiate in good faith (Count II), and promissory estoppel (Count III). Defendants now move to dismiss all counts of the amended complaint for failure to state a claim.

 II. DISCUSSION

 A. Standard for deciding a motion to dismiss

 When deciding a motion to dismiss under Rule 12(b)(6), the court must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265, 89 L. Ed. 2d 574 (1986). The court may take into consideration documents incorporated by reference to the pleadings. United States v. Wood, 925 F.2d 1580, 1581 (7th Cir. 1991); see also FED. R. CIV. P. 10(c). If, when viewed in the light most favorable to the plaintiff, the complaint fails to state a claim upon which relief can be granted, the court must dismiss the case. See FED. R. CIV. P. 12(b)(6); Gomez v. Illinois State Board of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987). However, the court may dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claims that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957).

 B. Choice of law

 As a preliminary, but important, matter, the court notes that defendants raise the possibility that either Illinois or Michigan law may apply to this case, but do not take a position on what the applicable law is. In fact, defendants merely pay lip service to the possibility that Michigan law may apply, since they virtually ignore Michigan law in their briefs. Plaintiffs also do not take a position on what state's law applies to this case, and mention no particular law in their amended complaint. They, too, cite mostly Illinois law in their response to defendants' motion to dismiss.

 Because of the parties' somewhat cavalier treatment of the choice of law question, the court infers that they do not have a dispute as to what state's law applies to this case. As the Seventh Circuit has noted, "parties' agreement as to the application of a particular state's substantive law ... [can be] inferred from their failure to make an issue of it. .... Courts do not worry about conflict of laws unless the parties disagree on which state's law applies." Wood v. Mid-Valley Inc., 942 F.2d 425, 426-27 (7th Cir. 1991). Accordingly, the court will apply Illinois law. See ECHO, Inc. v. Whitson Co., Inc., 52 F.3d 702, 707 (7th Cir. 1995) ("where neither party argues that the forum state's choice of law rules require the court to apply the substantive law of another state, the court should apply the forum state's substantive law").

 Moreover, from the scant information relevant to the choice of law question that the court can glean from the amended complaint and parties' briefs, it appears that Illinois law would apply to this case. In deciding what state's law to apply, the court follows Illinois choice of law principles. See Klaxon Corp. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 1021, 85 L. Ed. 1477 (1941). In deciding choice of law issues, Illinois courts apply the "most significant contacts" test. Palmer v. Beverly Enterprises, 823 F.2d 1105, 1112 (7th Cir. 1987); Ingersoll v. Klein, 46 Ill. 2d 42, 48, 262 N.E.2d 593, 596 (1970). In contract cases under this test, the court considers the following factors: (1) the place of contracting; (2) the place of negotiations; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicile, residence, place of incorporation, and place of business of the parties. Palmer, 823 F.2d at 1108-09.

 In this case, the parties have provided no information in the pleadings or otherwise about the first two factors. However, the amended complaint alleges that the closing for the sale of the I.P. business was to take place in Chicago. Thus, it is a reasonable inference that Chicago was the place of at least part of the contracting and negotiations. In addition, plaintiffs' principal place of business was Chicago. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.