The opinion of the court was delivered by: Alesia, District Judge.
MEMORANDUM OPINION AND ORDER
Before the court is defendants' motion to dismiss plaintiffs'
fourth amended complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6). For the reasons that follow, the court grants
in part and denies in part defendants' motion.
Plaintiffs Industrial Hard Chrome, Limited ("IHC"), IHC Limited
Partnerships ("IHCLP") and Bar Technologies ("Bar") (collectively
"plaintiffs") have filed a five-count complaint against
defendants Hetran, Incorporated ("Hetran") and Global Technology,
Incorporated ("Global") (collectively "defendants"). Count I is a
claim for breach of the sale contract, alleging that an
integrated series of machines (the "Cell") did not meet the
specifications contained in the agreement. 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 a surety agreement insofar as it failed to
correct Hetran's alleged default.*fn1 Count V is a claim for
breach of implied warranty of merchantability, alleging that the
Cell was not merchantable.
For the sake of brevity, the court will not restate the facts.
The facts may be found in Industrial Hard Chrome, Ltd. v.
Hetran, Inc., 64 F. Supp.2d 741 (N.D.Ill. 1999). Any additional
facts, the court will discuss in further detail under the
In this motion, defendants argue that various counts of
plaintiffs' fourth amended complaint be dismissed for failing to
state a cause of action.*fn2 Defendants argue that (1) IHCLP and
Bar should be dismissed from the complaint because they are not
parties to or third-party beneficiaries of the sale contract or
the surety agreement; (2) Counts I, III, and IV should be
dismissed because plaintiffs did not fully perform their own
obligations under the sale contract, which serves as the basis
for those counts; and (3) Count II should be dismissed because
plaintiffs cannot allege a particular purpose for the Cell as it
is a custom-built machine.
A. Standard for Deciding a Rule 12(b)(6) Motion to Dismiss
In addressing defendants' motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6), the court must accept all
factual allegations in the complaint as true and draw 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 only dismiss the claim if it appears beyond 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 (1957).
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
IHC and Hetran entered into an agreement for the design,
manufacture, and delivery of the Cell which would operate in
accordance with certain specifications contained in the contract.
In addition, IHC entered into a surety agreement with Global,
whereby Global agreed to act as the guarantor of the sale
contract between IHC and Hetran. While neither IHCLP nor Bar were
parties to the contracts, plaintiffs allege that IHCLP and Bar
have the right to sue as third-party beneficiaries of the
contracts. Defendants contend that IHCLP and Bar are not
third-party beneficiaries and, therefore, cannot bring this
action against the defendants.
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)).
While the third party does not need to be specifically named in
the contract, the contract must at least define a third party by
description of class, and the particular class-member must be
identified at the time performance is due. Id.
In deciding whether IHCLP and Bar should be dismissed from this
action, the court will first address Counts I, II, III and V,
which relate to the sale contract. Second, the court will ...