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COMBINED METALS OF CHICAGO L.P. v. AIRTEK

December 2, 1997

COMBINED METALS OF CHICAGO LIMITED PARTNERSHIP, Plaintiff,
v.
AIRTEK, INC., Defendant.



The opinion of the court was delivered by: ALESIA

 This cause is before the court on plaintiff's motion to dismiss defendant's counterclaim pursuant to Federal Rule of Civil Procedure 12.

 The motion is granted in part and denied in part.

 I. BACKGROUND

 Plaintiff Combined Metals of Chicago Limited Partnership ("Combined Metals") is in the business of supplying and fabricating steel to the specifications of its customers. Defendant Airtek Inc. is in the business of selling its unique design of catalytic converters. Airtek is a customer of Combined Metals.

 Airtek and Combined Metals entered into an agreement whereby Combined Metals would fabricate and supply specified parts for Airtek. Airtek agreed to pay specified charges per part. The contract was to run through December 1998.

 Pursuant to the contract, Airtek agreed to provide designs and blueprints for the tooling necessary for Combined Metals to fabricate the catalytic converter shells for Airtek (the "Airtek die"). Combined Metals agreed to build the Airtek die pursuant to this design. Combined Metals agreed to assume the initial costs of the building the Airtek die and to amortize Airtek's payment for the cost of building the Airtek die over the term of the contract as part of the price paid by Airtek for each shell. Airtek, in turn, agreed to assist representatives of Combined Metals in the development of the Airtek die so that the Airtek die produced catalytic converter shells in accordance with Airtek's specifications.

 Pursuant to the contract, Combined Metals began fabricating and supplying catalytic converter shells and other parts for Airtek. Airtek, in turn, paid for the catalytic converter shells and other parts.

 Apparently, some of the shells did not fully meet Airtek's specifications. Nevertheless, Airtek paid the agreed price for the shells. Airtek's personnel assisted Combined Metals to correct the problem.

 The information Airtek supplied -- including the design information and development assistance -- to Combined Metals regarding the Airtek die process was propriety information developed over the course of many years. The information was supplied purely for purposes of the contract between the parties; Combined Metals was not permitted to manufacture catalytic converter shells by way of the Airtek die process for any other entity.

 In July of 1997, Combined Metals used the Airtek die to produce and sell catalytic converter shells to competitors of Airtek without the knowledge or authorization of Airtek. After learning of Combined Metals' conduct, Airtek terminated the contract; Airtek then requested the return of the refined and completed Airtek die and the complete design specifications. At this time, Airtek tendered payment to Combined Metals for the amounts expended in building the Airtek die which remained unpaid under the amortization schedule and for all other amounts Combined Metals claimed due and owing under the contract.

 Combined Metals refused Airtek's tender and refused to return the refined and completed Airtek die and design specifications. Combined Metals continues to sell Airtek die to Airtek's competitors.

 As a result of the dispute between the parties, Combined Metals filed a breach of contract action against Airtek. Airtek responded by filing a six count counterclaim against Combined Metals. *fn1"

 II. MOTION TO DISMISS - LEGAL STANDARD

 In ruling on a motion to dismiss, the Court "must accept well pleaded allegations of the complaint as true. In addition, the Court must view these allegations in the light most favorable to the plaintiff." Gomez v. Illinois State Board of Education, 811 F.2d 1030, 1039 (7th Cir. 1987). Although a complaint is not required to contain a detailed outline of the claim's basis, it nevertheless "must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984), cert. denied, 470 U.S. 1054, 84 L. Ed. 2d 821, 105 S. Ct. 1758 (1985). Dismissal is not granted "unless it appears ...


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