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Polygroup Limited Commercial Offshore v. Tree Classics

November 22, 2010

POLYGROUP LIMITED (MACAO) COMMERCIAL OFFSHORE F/K/A POLYTREE GROUP LTD. (MACAO) COMMERCIAL OFFSHORE, PLAINTIFF/COUNTER-DEFENDANT,
v.
TREE CLASSICS, INC., DEFENDANT/COUNTER-PLAINTIFF.



The opinion of the court was delivered by: Blanche M. Manning United States District Judge

MEMORANDUM AND ORDER

There are numerous translations of "O Tannenbaum," a German Christmas carol dating to the 1500s. The most apt for this breach of contract case about artificial Christmas trees provides, in pertinent part, "O Christmas Tree! O Christmas Tree! Thy leaves are so unchanging; Not only green when summer's here, But also when 'tis cold and drear. O Christmas Tree! O Christmas Tree! Thy leaves are so unchanging!" True to the song, plaintiff Polytree designed and manufactured evergreen and other artificial Christmas trees. Polytree's customers include defendant Tree Classics, an artificial Christmas tree retailer.

Contending that Tree Classics failed to pay for the goods it ordered, Polytree filed a two-count complaint alleging that Tree Classics breached a contract requiring payment of Tree Classic's outstanding balance for 2008 trees and other items (Count I) and breached a contract for sale of goods (Count II). Tree Classics answered and raised affirmative defenses and counterclaims based on alleged flaws with Polytree's faux firs. Polytree's motion for judgment on the pleadings and its motion to dismiss three of Tree Classic's nine counterclaims (unjust enrichment, a claim under the Illinois Deceptive Business Practices Act, and a claim under the Illinois Deceptive Trade Practices Act, which are Counts IV, VIII and IX of Tree Classics's Second Amended Counterclaim, respectively) are before the court.

For the following reasons: (1) Polytree's motion for judgment on the pleadings as to Count I is granted; (2) Count II is dismissed because the recovery sought in that count duplicates the recovery sought in Count I; (3) Polytree is entitled to judgment on the pleadings as to Tree Classics' counterclaims; and (4) Polytree's motion to dismiss Counts IV, VIII, and IX of Tree Classics' counterclaims is denied as unnecessary.

I. Background

Through a series of purchase orders, Polytree sold artificial Christmas trees and related goods to Tree Classics, a retailer of artificial Christmas trees. This case centers around Tree Classics's 2008 orders. Beginning on April 23, 2008, Polytree began to deliver artificial Christmas trees and related products to Tree Classics for the 2008 holiday season and Tree Classics accepted Polytree's shipments. Tree Classics was dissatisfied with the lights on some of the pre-lit trees and complained to Polytree. It also did not pay the outstanding invoices totaling $3,209,913.98.

Polytree and Tree Classics subsequently entered into a payment agreement in May of 2009. The agreement stated that Tree Classics had an outstanding balance of $3,209,913.98 and that due to Tree Classics' "financial difficulties" and the "current economic climate," Tree Classics could not pay its bills when they were due. Dkt. 1-1. The agreement required Tree Classics to pay $100,000/month from April of 2009 to July of 2009, $150,000/ month from August of 2009 to September of 2009, and $500,000/month from October of 2009 to January of 2010. Tree Classics further agreed to pay the remainder by December 31, 2010. In consideration for the agreement, Polytree stipulated that it would "forego interest accrued from the original payment due date" if Tree Classics complied with the payment schedule. Id. However, the parties agreed that if Tree Classics failed to meet the payment schedule, interest would accrue "from the original payment due date compounded monthly at a rate of 1% per month." Id. Tree Classics's President, Leon Gamze, and one of Polytree's Directors, Paul Cheng, signed the agreement.

Tree Classics did not follow the payment schedule. As of July 12, 2010, Tree Classics had made only three payments to Polytree: $75,000 on May 18, 2009, $100,000 on July 16, 2009, and $100,000 on September 24, 2009. Thus, Polytree filed this action. In Count I, Polytree alleges that Tree Classics breached the payment agreement, while in Count II, it contends that Tree Classics breached the original sales agreements by accepting goods but not paying for them.

In response, Tree Classics asserted that Polytree's trees and products were sub-par and asserted affirmative defenses of set-off, non-merchantability of goods based on allegedly defective lights on pre-lit trees, and lack of consideration for the payment agreement. It also raised nine counterclaims: breach of express warranty (Count I), breach of written contract based on allegedly defective lights on pre-lit trees (Count II), breach of oral agreements to rectify alleged issues with lights (Count III), unjust enrichment because Polytree received money from Tree Classics, but Tree Classics lost more money due to returned trees and repair and shipping costs (Count IV), breach of the implied warranty of merchantability (Count V), breach of the implied warranty of fitness for a particular purpose (Count VI), promissory estoppel based on damages incurred by Tree Classics after it relied on Polytree's promise to deliver trees in the agreed-upon condition (Count VII), and breach of the Illinois Deceptive Business Practices Act (Count VII) and Illinois Deceptive Trade Practices Act (Count IX).

For the following reasons, the court finds that Polytree is entitled to judgment on the pleadings as to Count I. As Polytree notes, the damages it seeks for Count I duplicate those sought in Count II, so Polytree is not entitled to any relief with respect to Count II. In addition, the court agrees with Polytree that its victory on Count I of its complaint fells all of Tree Classics' counterclaims and that Tree Classics also waived those counterclaims by entering into the payment agreement. Moreover, Tree Classics' affirmative defenses have either already been rejected (lack of consideration of the payment agreement), are unavailing as discussed below (setoff) or duplicate a counterclaim (lack of merchantability of trees). Thus, Polytree is entitled to judgment on the pleadings as to Tree Classics' counterclaims and Polytree's motion to dismiss three of Tree Classics' counterclaims is denied as unnecessary.

II. Polytree's Motion for Judgment on the Pleadings as to Count I

Polytree moves for judgment on the pleadings as to Count I (breach of the payment agreement). It also contends that it is entitled to judgment on the pleadings as to all of Tree Classics' counterclaims because Tree Classics' agreement to pay the full contractual amount owed means that Tree Classics waived its ability to challenge the amount owed.

A. Standard of Review

Under Rule 12(c), "a party can move for judgment on the pleadings after the filing of the complaint and answer." Supreme Laundry Serv., LLC v. Hartford Cas. Ins. Co., 521 F.3d 743, 746 (7th Cir. 2008). A motion for judgment on the pleadings should be granted "only when it appears beyond a doubt" that the non-moving party "cannot prove any set of facts to support a claim for relief and the moving party demonstrates that there are no material issues of fact to be resolved." Id. In deciding the motion, the court must take the facts alleged in the complaint ...


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