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Toll Processing Services, LLC v. Kastalon, Inc.

United States District Court, N.D. Illinois, Eastern Division

April 8, 2014

TOLL PROCESSING SERVICES, LLC, Plaintiffs,
v.
KASTALON, INC., KASTALON POLYURETHANE PRODUCTS, and KASTALON, INC. t/d/b/a KASTALON POLYURETHANE PRODUCTS, Defendants. KASTALON, INC., Counter-Plaintiff,
v.
TOLL PROCESSING SERVICES, LLC, Counter-Defendant.

MEMORANDUM OPINION AND ORDER

SHARON JOHNSON COLEMAN, District Judge.

Plaintiff, Toll Processing Services, LLC, ("Toll Processing") filed a three-count First Amended Complaint, alleging conversion, negligence, and breach of contract against defendants, Kastalon, Inc., et al, (collectively "Kastalon") in connection with Kastalon's handling and storage of polyurethane-coated steel rolls. Kastalon moves to dismiss Count III for failure to state a claim of breach of an oral contract [51]. Toll Processing moves to partially dismiss Kastalon's counterclaim [59]. For the reasons stated herein, Kastalon's motion to dismiss Count III is denied and Toll Processing's partial motion to dismiss is granted.

Background

The following facts from the First Amended Complaint are taken as true for purposes of this ruling. Plaintiff, Toll Processing, is a Delaware limited liability company with its principal place of business in Pittsburgh, Pennsylvania. Defendant, Kastalon Inc. and Kastalon Polyurethane Products, is an Illinois corporation. Toll Processing is engaged in, among other things, the business of acquiring, constructing and/or operating a pickle line facility.

In 2006, Toll Processing purchased a used pickle line from Joseph T. Ryerson & Sons, Inc. in Chicago, Illinois. As part of this purchase, Toll Processing also acquired a number of polyurethane-coated steel rolls (the "rolls"), which form part of a pickle line. In early 2008, Toll Processing arranged with Kastalon to have the rolls moved from Ryerson's facility to Kastalon's facility, to be stored indoors by Kastalon until Toll Processing could issue a purchase order to Kastalon for reconditioning of the rolls. Kastalon agreed to store the rolls at their facility for no change until such purchase order for reconditioning issued.

In February and March 2008, the rolls were shipped to Kastalon's facility for storage in four separate shipments. Each shipment had a separate bill of lading with an equipment list showing the items that were shipped to Kastalon and the dates of shipment, receiving tickets, and an email chain between Kastalon and Toll Processing confirming that Kastalon had the rolls in storage. On October 21, 2008, Gus Schempp, a senior official for Toll Processing, telephoned Michael DeMent, Vice President and co-owner of Kastalon, to confirm that Kastalon would not charge a storage fee for the rolls and that a date for the reconditioning of the rolls and the issuance of a purchase order were still to be determined. DeMent confirmed that information for Schempp.

Kastalon stored the rolls in an indoor facility for approximately two years, while Toll Processing's project to re-install the rolls at another location was in development. Kastalon later decided, without consulting Toll Processing, to grease and wrap the rolls and move them outdoors for storage. Toll Processing alleges, on information and belief, that Kastalon stored the rolls outside until approximately December 2010. Kastalon allowed the rolls to rust.

Apart from the October 21, 2008, telephone call from Gus Schempp to Michael DeMent, neither DeMent nor any other officer or employee of Kastalon ever attempted to contact or to follow up with Schempp or with anyone else from Toll Processing to inquire about the status of rolls. Kastalon sold the rolls to Smith Salvage Company for their scrap metal value in December 2010 without the knowledge or consent of Toll Processing. On June 13, 2011, Schempp contacted Kastalon to request a quote for the reconditioning of the rolls because Toll Processing had located a buyer for the pickle line. Kastalon informed Schempp that it had sold the rolls for scrap and they were no longer in Kastalon's possession.

Count III of the First Amended Complaint alleges breach of an oral contract.

Legal Standard

In order to survive a motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim, a complaint must contain sufficient factual allegations to state a claim of relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Federal Rule of Civil Procedure 8(a)(2) sets forth the basic pleading requirement of a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Although Rule 8 does not require a plaintiff to plead particularized facts, the factual allegations in the complaint must sufficiently raise a plausible right to relief above a speculative level. Arnett v. Webster, 658 F.3d 742, 751-52 (7th Cir. 2011). Rule 8 does not impose a probability requirement but rather calls for "enough fact to raise a reasonable expectation that discovery will reveal evidence" that would support the plaintiff's claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). When ruling on a motion to dismiss a court must accept all well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor. Erickson v. Pardus, 551 U.S. 89, 94 (2007).

Discussion

I. Kastalon's Motion to Dismiss Count III

Kastalon moves to dismiss Count III of Toll Processing's First Amended Complaint for failure to state a claim for breach of an oral contract because the factual allegations in the complaint are insufficient to establish the material terms of the contract. Alternatively, Kastalon argues that Count III is barred by ...


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