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Basler Electric Company v. Fortis Plastics


August 27, 2012


The opinion of the court was delivered by: J. Phil Gilbert District Judge


This matter comes before the Court on defendant Fortis Plastics, LLC's ("Fortis") motion to dismiss plaintiff Basler Electric Company's ("Basler") complaint in part (Doc. 12). Basler originally filed its four-count complaint in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois, alleging breach of contract, breach of warranty, tortious interference, and conversion. Thereafter, defendants removed the case to this Court. Fortis filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) alleging that Basler's conversion claim should be dismissed pursuant to Illinois' economic loss doctrine, also known as the Moorman doctrine. Basler filed a response (Doc. 16) stating that the economic loss doctrine does not bar intentional torts.

When considering a Rule 12(b)(6) motion to dismiss, the Court must "construe [the complaint] in the light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in [the non-moving] party's favor." Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir. 2010). The complaint must "contain sufficient factual matter, accepted as true to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

"'Economic loss' has been defined as 'damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits -- without any claim of personal injury or damage to other property.'" Moorman Mfg. Co. v. Nat'l Tank Co., 435 N.E.2d 443, 449 (Ill. 1982) (citing Note, Economic Loss in Products Liability Jurisprudence, 66 Colum. L. Rev. 917, 918 (1966)). In Moorman, the case from which Illinois' economic loss doctrine derives its name, the Illinois Supreme Court held that economic loss was not recoverable under the tort theories of strict liability, negligence, and innocent misrepresentation. Moorman, 435 N.E.2d at 449, 451-53. The policy reason underlying the Moorman doctrine states that "[w]hen the defect is of a qualitative nature and the harm relates to the consumer's expectation that a product is of a particular quality so that it is fit for ordinary use, contract, rather than tort, law provides the appropriate set of rules for recovery." Id. at 451.

Moorman recited the following three exceptions to the economic loss doctrine:

(1) where the plaintiff sustained damage, i.e., personal injury or property damage, resulting from a sudden or dangerous occurrence; (2) where the plaintiff's damages are proximately caused by a defendant's intentional, false representation, i.e., fraud; and (3) where the plaintiff's damages are proximately caused by a negligent misrepresentation by a defendant in the business of supplying information for the guidance of others in their business transactions.

In re Chi. Flood Litig., 680 N.E.2d 265, 275 (Ill. 1997). The Seventh Circuit has specifically recognized intentional torts as an exception to the Moorman doctrine. Dundee Cement Co. v. Chem. Labs., Inc., 712 F.2d 1166, 1170 (7th Cir. 1983); see also ABC Trans Nat'l Transp., Inc. v. Aeronautics Forwarders, Inc., 413 N.E.2d 1299, 1312-14 (Ill. App. Ct. 1980) (allowing recovery of lost profits where complaint alleged fraud, conspiracy, and breach of fiduciary duty); Int'l Bhd. of Teamsters Local 734 Health and Welfare Trust Fund v. Phillip Morris, Inc., 34 F. Supp. 2d 656, 661 (N.D. Ill. 1998) (acknowledging Moorman doctrine allows recovery where the economic loss resulted from an intentional tort).

Here, Basler alleges not merely a negligence claim that would invoke the Moorman doctrine. Rather, Basler has pleaded the intentional tort of conversion. As the Seventh Circuit recognized in Dundee, the Moorman doctrine is inapplicable to intentional torts. Accordingly, Basler's conversion claim is not inconsistent with the Moorman doctrine and it should not be dismissed. Thus, Fortis' motion to dismiss (Doc. 12) Basler's conversion claim is DENIED.


J. Phil Gilbert


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