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INDUSTRIAL STEEL SERVICE CTR. v. PRAXAIR DISTRIBUTION

INDUSTRIAL STEEL SERVICE CENTER, an Illinois corporation, Plaintiff,
v.
PRAXAIR DISTRIBUTION, INC., a Delaware corporation, f/k/a GAS TECH, INC., MG SYSTEMS & WELDING, INC., a Delaware corporation, Defendants.



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Praxair Distribution, Inc.'s ("PDI") motion to dismiss. For the reasons stated below, we deny the motion to dismiss in its entirety.

BACKGROUND

  Plaintiff Industrial Steel Service Center, Inc. ("ISSC") is engaged in the business of fabricating and supplying steel materials. ISSC alleges that in November of 1999, representatives of ISSC met with representatives of PDI and discussed the purchase of a burn table by ISSC from PDI. According to ISSC, on December 16, 1999, PDI, then known as Gas Tech, sent a proposal to ISSC for the purchase of the table. ISSC alleges that its representatives visited the offices of MG Systems & Welding, Inc. ("MG") to review the project and that representatives of MG and PDI indicated that the table would meet the requirements specified by ISSC. Specifically, ISSC claims that it asked during the visit whether a dual-drive machine was necessary to meet ISSC's needs and representatives from MG and PDI indicated that a single-drive machine would suffice.

  ISSC alleges that on January 23, 2000, PDI sent a proposal to ISSC indicating that the purchase price for the table would be $88,891.00 and that on January 26, 2000, ISSC executed a purchase order and tendered PDI a check in the amount of $31,112.00 pursuant to the terms of the proposal as a down payment for the table. According to ISSC, on March 31, 2000, it tendered a check to PDI in the amount of approximately $48,000 and that in March and April of 2000, the table was delivered to ISSC. ISSC claims that it then assembled and installed the table with instruction from MG and PDI. ISSC claims that on June 19, 2000, it tendered a final payment to PDI for the table in the amount of $8,889.00.

  ISSC claims that on June 23, 2000, PDI sent ISSC a proposal for a second burning table, indicating that the purchase price would be $62,535.00. ISSC contends that it accepted the proposal and that on June 27, 2000, it executed a purchase order and tendered PDI a check in the amount of $22,832.00, and on August 22, 2000, ISSC sent PDI another check in the amount of $35,879.00. According to ISSC, the second burning table was delivered to ISSC. ISSC claims that on October 31, 2000, ISSC tendered a check to PDI in the amount of $6,535 as final payment for the second burning table.

  ISSC claims that beginning in July of 2000, the torch lifters on the first table purchased from PSI began malfunctioning and that MG and PDI attempted to fix the table. ISSC alleges that the other table also began to malfunction and that new problems arose on both of the tables purchased from PDI. ISSC claims that MG and PDI made repeated visits to ISSC to try and fix the tables. According to ISSC, due to the malfunctioning tables, ISSC began finding defects in its products and was forced to hand cut and grind poorly cut steel plates. ISSC also claims that it had to replace other steel plates and materials that it had already produced. ISSC claims that MG sent a representative to review the machinery in June of 2001 and that in January 2002, MG indicated that it could not fix the tables.

  ISSC filed the instant action in state court and the case was removed to federal court. The complaint includes a breach of implied warranty of merchantability claim against PDI (Count I), a breach of implied warranty, fitness for a particular purpose claim against PDI (Count II), a breach of implied warranty of merchantability claim against MG (Count III), and a breach of implied warranty, fitness for a particular purpose claim against MG (Count II). LEGAL STANDARD

  In ruling on a motion to dismiss, the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The allegations of a complaint should not be dismissed for a failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High School, 144 F.3d 448, 454-55 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). The plaintiff need not allege all of the facts involved in the claim and can plead conclusions. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any conclusions pled must "provide the defendant with at least minimal notice of the claim," Id., and the plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the bases of [his] claim." Perkins, 939 F.2d at 466-67. DISCUSSION

  I. Implied Warranty of Merchantability Claim

  PDI seeks a dismissal of the implied warranty of merchantability claim against it because ISSC failed to allege the ordinary purposes of the machines and failed to allege that the tables were not merchantable at the time of sale. The implied warranty is codified in 810 ILCS 5/2-314 which states in part as follows:
ยง 2-314. Implied Warranty; Merchantability; Usage of Trade. (1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this Section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promises or affirmations of fact made on the container or label if any.
(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade. . . .
810 ILCS 5/2-314. A. Ordinary Purpose of Tables

  PDI argues that pursuant to 810 ILCS 5/2-314(2)(c), ISSC is required to "allege the ordinary use for the goods" in questions. (Mot. 4). Although, as indicated above, the statute requires a plaintiff to show that the goods "are fit for the ordinary purposes for which such goods are used," the requirement is not a pleading requirement. The notice pleading standard applies in the instant action rather than any state pleading standards. See M. Block & Sons, Inc. v. International Business Machines Corp., 2004 WL 1557631, at *3 (N.D. Ill. 2004) (applying notice pleading standard to state law claims); Viero v. Bufano, 901 F.Supp. 1387, 1396 (N.D. Ill. 1995) (stating that "Illinois pleading rules do not apply in this federal court although Illinois substantive law provides the rules of decision. . . ."); Resolution Trust Corp. v. KPMG Peat Marwick, 844 F.Supp. 431, 433 (N.D. Ill. 1994) (stating that federal pleading standard applies to state law claims).

  Also, PDI argues that the ordinary use is a pleading "requirement," (Reply 2), and thus argues that ISSC failed to allege one of the elements for a claim under 810 ILCS 5/2-314(2)(c), however, under the notice pleading standard a plaintiff is not required to plead elements. The Seventh Circuit has made it clear that there "is no requirement in federal suits of pleading the facts or the elements of a claim, with the exceptions . . . listed in Rule 9. . . ." Walker v. Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002). See also Head v. Chicago School Reform Bd. of Trustees, 225 F.3d 794, 801 (7th Cir. 2000) (stating that the plaintiff was not required under the notice pleading standard to plead with particularity facts to support each element of his claim); Sanjuan v. American Bd. of Psychiatry and Neurology, Inc, 40 F.3d 247, 251 (7th Cir. 1994) (stating that "[a]t this stage the plaintiff receives the benefit of imagination, so long as the hypotheses are consistent with the complaint" and that "[m]atching facts against legal elements comes later."). PDI attempts to distort the notice pleading standard by quoting Seventh Circuit case law out of its proper context and by relying on decisions made in 1977 and 1988.

  Also, regardless of the pleading requirements, ISSC has alleged the ordinary use of the tables. ISSC alleged that the tables were used to cut "straight, precise, accurate steel plates." (Compl. Par. 38). PDI refers to ISSC allegations as "conclusory." (Reply 2). However, a plaintiff is not required to plead all the facts for his claim. Higgs, 286 F.3d at 439; Kyle, 144 F.3d at 455. PDI also argues that ISSC merely alleges that the tables were ordinarily used to cut steel and ISSC does not deny that the machines cut steel. This argument is mere semantics. ISSC alleges that the tables were used to cut "straight, precise and accurate" steel plates and ISSC alleges that the machines could not be put to such a use. Perhaps the tables could have been used to make rough, imprecise cuts in steel, but ISSC did not use them for that purpose. ISSC cites to Industrial Hard Chrome Ltd. v. Hetran, Inc, 64 F.Supp.2d 741, 748 (N.D. Ill. 1999). The case is not controlling authority and in that case the plaintiff "failed to ...


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