The opinion of the court was delivered by: Alesia, District Judge.
MEMORANDUM OPINION AND ORDER
Before the court is plaintiff MAN Roland Incorporated's motion
to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6),
defendant Quantum Color Corporation's amended counterclaims. For
the following reasons, the court grants in part and denies in
part plaintiff MAN Roland Incorporated's motion to dismiss
Quantum Color Corporation's amended counterclaims.
Plaintiff MAN Roland Incorporated ("MAN Roland") brings this
diversity action against the defendant Quantum Color Corporation
("Quantum"). MAN Roland is a business incorporated under the laws
of Delaware with its principal place of business in Illinois.
Quantum is a business incorporated under the laws of New York
with its principal place of business in New York. The amount in
controversy exceeds $75,000. Thus, this court has original
subject matter jurisdiction pursuant to 28 U.S.C. § 1332.
This action allegedly arises out of a June 27, 1997 used
machinery contract between
the two parties.*fn1 In this contract, MAN Roland agreed to sell
a 1987 used press to Quantum for $405,000. According to MAN
Roland, Quantum agreed to pay $5,000 upon execution of the
contract, $265,000 upon delivery of the press, and the balance of
$135,000 upon commercial operation of the press. MAN Roland
alleges that it never received the balance even though Quantum
allegedly put the press into operation long ago. Any additional
facts, the court will discuss in further detail under the
A. Standard for deciding a Rule 12(b)(6) motion to dismiss
In addressing MAN Roland's motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6), the court assumes that
the well-pleaded allegations of Quantum's amended counterclaims
are true and considers them in the light most favorable to
Quantum. See Gomez v. Illinois State Bd. of Educ.,
811 F.2d 1030, 1039 (7th Cir. 1987). If, when viewed in the light most
favorable to Quantum, the counterclaim fails to state a claim
upon which relief can be granted, the court must dismiss it.
See FED.R.CIV.P. 12(b)(6); Gomez, 811 F.2d at 1039. However,
the court may dismiss the counterclaim only if it appears beyond
a doubt that Quantum can prove no set of facts in support of its
claim that would entitle it to relief. See Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Even under the liberal notice pleading standard of the Federal
Rules of Civil Procedure, however, the counterclaim must include
either direct or inferential allegations respecting all material
elements of the claim asserted. Perkins v. Silverstein,
939 F.2d 463, 466 (7th Cir. 1991). Bare legal conclusions attached to
narrated facts will not suffice. Strauss v. City of Chicago,
760 F.2d 765, 768 (7th Cir. 1985).
B. First and second amended counterclaims — Breach of
Quantum styles both its first and second amended counterclaims
as allegations of a breach of contract. Although, in reality,
Quantum is asking this court to rescind the contract because MAN
Roland failed to deliver the "standard equipment" and failed to
install the equipment. Thus, the court will treat the first and
second amended counterclaims as allegations to state a claim for
recission of the contract.
Quantum has the right to rescind a contract of sale, if it
offered to return the article. See American Sanitary Rag Co. v.
United States Hoffman Machinery Corp., 320 Ill. App. 556,
51 N.E.2d 809, 811 (1943). Quantum did offer to return the press to
MAN Roland, (D.Countercl. ¶ 162), but MAN Roland would not accept
the return. (D.Countercl. ¶ 162). Thus, Quantum has fulfilled one
of the requirements for a claim of recission.
Furthermore, a party may seek recission of a contract only when
there has been a material breach by another party. See Arrow
Master, Inc. v. Unique Forming Ltd., 12 F.3d 709, 714 (7th Cir.
1993); Unique Watch Crystal Co. v. Kotler, 344 Ill. App. 54,
99 N.E.2d 728, 733 (1951). A material breach occurs when a party to
the contract "fails to perform an element of the agreement
without which the contract would not have been made." Stowe v.
Balsier, No. 88 C 4929, 1989 WL 32932, at *3 (N.D.Ill. Apr.4,
1989) (citing Trapkus v. Edstrom's, 140 Ill. App.3d 720, 95
Ill.Dec. 119, 489 N.E.2d 340, 344-45 (1986)).
Quantum's first and second amended counterclaims allege facts
sufficient to establish that MAN Roland materially breached the
contract because Quantum alleges, that without the standard
provision and the installment provision, it would not have agreed
to the contract. More specifically, the counterclaims state that
because MAN Roland (1) failed to "deliver goods of the kind,
quality and quantity required" by the contract, (D.Countercl. ¶
125-26), and (2) failed to install the press "so that it would
operate in accordance with its design specification . . . and
accepted mean time between service call[s]," (D.Countercl. ¶¶ 131,
134), that MAN Roland breached material terms of the contract.
Thus, Quantum has sufficiently alleged "a material breach," the
second requirement, for a claim of recission.
MAN Roland also alleges that Quantum's second amended
counterclaim fails to state a claim because the term "install"
does not require MAN Roland to install the press so that it would
(1) "produce commercially acceptable two color process work in a
commercially acceptable manner," (D.Countercl. ¶ 129), and (2)
"operate in accordance with its design specifications . . . and
accepted mean time between service call specifications"
(D.Countercl. ¶¶ 131, 132). Thus, MAN Roland alleges it did not
breach the contract.
Despite that the contract does not specifically state that MAN
Roland had any obligation to install the press so that it would
function as Quantum claims,*fn2 both parties interpretation of
the term "install" is reasonable. Thus, the court finds this
term, "install," to be ambiguous, see ECHO, Inc. v. Whitson
Co., 52 F.3d 702, 705 (7th Cir. 1995) (quoting Metalex Corp. v.
Uniden Corp. of Am., 863 F.2d 1331, 1333 (7th Cir. 1988)
(stating that ambiguity exists if the language of the contract is
"`reasonably and fairly susceptible to more than one
meaning.'")); and therefore, at this stage of the litigation, the
court can not rule as a matter of law ...