The opinion of the court was delivered by: Alesia, District Judge.
MEMORANDUM OPINION AND ORDER
Before the court is defendants motion to dismiss, pursuant to
Federal Rules of Civil Procedure 12(b)(6) and 12(f), plaintiffs'
third amended complaint. For the following reasons, the court
grants in part and denies in part defendants' motion to dismiss.
Plaintiffs Industrial Hard Chrome, Limited ("IHC"), IHC Limited
Partnership ("IHCLP") and Bar Technologies, L.L.C. ("Bar")
(collectively "plaintiffs") bring this diversity action against
defendants Hetran, Incorporated ("Hetran") and Global Technology,
Incorporated ("Global") (collectively "defendants"). IHC, IHCLP,
and Bar are all located in Illinois with their principal places
of business in Illinois. Hetran is a New York corporation with
its principal place of business in Pennsylvania. Global is a
Pennsylvania corporation with its principal place of business in
Pennsylvania. The amount in controversy exceeds $75,000. Thus,
this court has original subject matter jurisdiction pursuant to
28 U.S.C. § 1332.
This action arises out of a contract dispute between plaintiffs
and defendants for the design, manufacture and delivery of an
integrated series of machines (the "Cell"). Pursuant to this
contract, Hetran agreed to manufacture a Cell that would function
in accordance with certain specifications. Those specifications
required that the Cell operate at a rate of eighty feet per
minute in order to straighten steel rods, that are one to six
inches in diameter, in a single pass. In turn, IHC agreed to pay
Hetran a modified amount of $5,452,325.28 for the Cell. Further,
IHC entered into a surety agreement in which Global agreed to act
as a surety, or guarantor, of the sales agreement between IHC and
Hetran. Plaintiffs now allege that the Cell delivered by Hetran
failed to function pursuant to the contract specifications and
that Global failed to correct this alleged default.*fn1 Any
additional facts, the court will
discuss in further detail under the relevant claim.
As a result of this dispute, IHC, IHCLP, and Bar have filed a
five-count complaint against Hetran and Global. Count I is a
claim for breach of contract, alleging that the Cell did not meet
the specifications contained in the sale contract. Count II is a
claim for breach of implied warranty of fitness for a particular
purpose, alleging that Hetran did not design or manufacture a
Cell that was fit to operate at particular specifications. Count
III is a claim for breach of express warranty, alleging that the
Cell delivered breached the equipment warranty contained in the
sale contract. Count IV is a breach of contract claim, alleging
that Global breached the surety agreement insofar as it failed to
correct Hetran's alleged default. Count V is a claim for breach
of implied warranty of merchantability, alleging that the Cell
was not merchantable.
Defendants argue all five counts should be dismissed for
various reasons. In addition, defendants argue that IHCLP and Bar
should be dismissed because they are not proper plaintiffs. The
court addresses defendants' arguments below.
A. Standard for Deciding a Rule 12(b)(6) Motion to Dismiss
In addressing defendants' motion to dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(6) and 12(f),*fn2 the court
assumes that all factual allegations in the complaint are true
and draws all reasonable inferences in favor of plaintiffs.
Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th
Cir. 1987); Cromley v. Board of Educ. of Lockport, 699 F. Supp. 1283,
1285 (N.D.Ill. 1988). If, when viewed in the light most
favorable to the plaintiffs, the complaint 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 claim only if it appears
beyond a doubt that the plaintiffs can prove no set of facts in
support of their claim that would entitle them to relief. See
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80
While the Federal Rules of Civil Procedure provide a liberal
notice pleading standard, the complaint must include either
direct or inferential allegations with respect to all material
elements of the claims 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. IHCLP and Bar's Claims as Third-Party Beneficiaries
IHCLP and Bar join IHC in the complaint against Hetran and
Global. All of the claims alleged in plaintiffs' third amended
complaint are based upon the contract entered into between IHC
and Hetran for the manufacture and sale of the Cell. Neither
IHCLP nor Bar was a party to the contract. However, plaintiffs
allege that IHCLP and Bar have the right to sue as third-party
beneficiaries to the contract.
It is well-settled under Illinois law that a third party may
sue for breach of contract if that contract was entered into for
the direct benefit of that third party. F.W. Hempel & Co., Inc.
v. Metal World, Inc., 721 F.2d 610, 613 (7th Cir. 1983) (citing
"the seminal and still vital Illinois authority" Carson Pirie
Scott & Co. v. Parrett, 346 Ill. 252, 178 N.E. 498, 501 (1931)).
A party is a "direct" beneficiary — and therefore a third-party
beneficiary to the contract — if the parties to the agreement
manifested an intent to confer a benefit upon that third party.
Hunter v. Old Ben Coal Co., 844 F.2d 428, 432 (7th Cir. 1988).
While a third party does not have to be specifically named in the
contract, the contract must at least define a