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Illinois Wholesale Cash Register, Inc. v. PCG Trading

November 13, 2008


The opinion of the court was delivered by: John F. Grady, United States District Judge


Before the court is defendant's motion to dismiss the complaint for lack of subject matter jurisdiction. For the reasons explained below, the motion is denied.


Plaintiff Illinois Wholesale Cash Register, Inc. ("Illinois Wholesale"), an Illinois citizen, brought this action for breach of contract against defendant PCG Trading, doing business as Converge ("Converge"). Converge is a single-member limited liability company, and its member is a Delaware corporation with a principal place of business in Massachusetts. (Supplemental Decl. of Frank Cavallaro ¶¶ 3-4.)

The following facts are drawn from the complaint. Illinois Wholesale is engaged in the purchase and sale of electronic cash register systems and components. Converge is an independent distributor of electronic components, computer products, and networking equipment. In April 2006, defendant contacted plaintiff by telephone and written solicitation to advertise approximately 605 units of a particular cash register (NCR Model 5964-7602N 15-inch color touchscreen) it was selling. "Negotiations culminated in Plaintiff issuing to Defendant a Purchase Order #20046-D, dated May 4, 2006, for 600 of [the cash registers] at approximately $225.00 each and shipping to Plaintiff in Illinois at approximately $1,500.00." (First Am. Compl. ¶ 7.) Purchase Order 20046-D is attached to the complaint as Exhibit 1. The complaint further alleges: "During negotiations, Plaintiff issued several revised Purchase Orders, including #20046-A through #20046-C, with #20046-C indicating that 604 of the [registers] were being sold. However, the final and only applicable Purchase Order in question herein is #20046-D for 600 of the [registers]." (Id. ¶ 7 n.1.)

At the time it sold the registers to plaintiff, defendant knew that plaintiff intended to resell them for a profit. Plaintiff alleges that implied in the parties' contract was defendant's representation that it possessed good and marketable title to the registers.

Before shipping the registers, defendant required that plaintiff pay $137,400, the total amount due, by wire transfer. Plaintiff transferred the payment on or about May 5, 2006.

Thereafter, on or about May 11, 2006, plaintiff received 600 registers from defendant. Because plaintiff did not receive all 604 registers that defendant initially offered, defendant gave plaintiff a credit of $675 to be applied to future purchases.

From May 2006 through November 15, 2007, plaintiff offered the registers for sale to its customers for approximately $385 each. On November 15, 2007, NCR Corporation ("NCR"), which is the manufacturer of the registers, notified plaintiff and at least one of plaintiff's customers (to which plaintiff had sold several of the registers) that several of the registers allegedly had been stolen from NCR several years prior. Plaintiff then obtained the serial numbers of the allegedly stolen registers, compared the numbers with those remaining in the inventory purchased from defendant, and determined that about 302 of the remaining registers in its possession were allegedly stolen.

Plaintiff then filed this action against defendant, claiming breach of the implied warranty of title. According to plaintiff, it has sustained damages in excess of $116,270 exclusive of interest and costs, "including, but not limited to, the cost of the goods, since NCR wants the [registers] returned, lost profits and damage to its reputation in the marketplace." (First Am. Compl. ¶ 13.)

Defendant now moves to dismiss the complaint.


Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of an action for lack of subject matter jurisdiction. When subject matter jurisdiction is not evident on the face of a complaint, "the motion to dismiss pursuant to Rule 12(b)(1) would be analyzed as any other motion to dismiss, by assuming for purposes of the motion that the allegations in the complaint are true." United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003). However, as here, "if the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction, the movant may use affidavits and other material to support the motion." Id. We are free to weigh the evidence to determine whether jurisdiction has been established. See id.

Jurisdiction based on diversity exists if the amount in controversy exceeds $75,000 and the suit is between citizens of different states. 28 U.S.C. ยง 1332(a)(1). There is no dispute that the parties are of diverse ...

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