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Frain Group, Inc. v. Steve's Frozen Chillers

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

March 10, 2015

THE FRAIN GROUP, INC., Plaintiff,
v.
STEVE'S FROZEN CHILLERS, Defendant.

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

The Frain Group, Inc. instituted this action against Steve's Frozen Chillers, Inc. after the parties' business relationship surrounding a purchase agreement went sour. Frain's three-count Complaint seeks (1) a declaratory judgment that the purchase agreement is valid and enforceable and brings state law claims for (2) defamation and (3) tortious interference with prospective business relationships. Frain alleges that it sold a refurbished Prodo Pak Form & Fill Machine to Steve's for use in the production of Steve's Healthy Fruit Chillers Freezer Tubes. After Steve's experienced numerous problems with the Prodo Pak Machine, Frain alleges that Steve's posted a number of defamatory statements on Frain's Facebook page that were false and interfered with Frain's relationships with its current and prospective customers. In response, Steve's filed a three-count Counterclaim, alleging (1) breach of contract, (2) violation of the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1 et seq., and (3) breach of implied warranties.

Both parties move to partially dismiss the claims filed by the other pursuant to Federal Rule of Civil Procedure 12(b)(6). Steve's moves to dismiss Frain's defamation and tortious interference claims while Frain moves to dismiss Steve's breach of implied warranties claim. Frain also moves to strike both of Steve's affirmative defenses in its Answer pursuant to Federal Rule of Civil Procedure 12(f). For the reasons set forth below, the Court grants in part and denies in part Steve's motion to dismiss Counts II and III of Frain's Complaint (Dkt. No. 11), grants Frain's motion to dismiss Count III of Steve's Counterclaim (Dkt. No. 18), and grants in part and denies in part Frain's motion to strike (Dkt. No. 21). Count III of Frain's Complaint is dismissed without prejudice, Count III of Steve's Counterclaim is dismissed with prejudice, and Steve's first affirmative defense is stricken without prejudice.

BACKGROUND

The Court takes the following allegations from the Complaint and Counterclaim and treats them as true for purposes of these motions. See Vinson v. Vermillion County, Ill., No. 12-3790, 2015 WL 343673, at *1 (7th Cir. Jan. 27, 2015).

Frain is an Illinois corporation with its principal place of business in Carol Stream, Illinois that refurbishes, sells, and services pre-owned packaging and processing equipment. (Dkt. No. 1, Compl. at ¶ 1.) Steve's is a Florida corporation with its principal place of business in Boynton Beach, Florida that manufactures and supplies pre-packaged drink mixes. ( Id. at ¶ 2.) Between March and May 2014, Frain and Steve's negotiated a contract for the reconditioning, sale, and setup of a used Prodo Pak Machine for use in Steve's drink production. ( Id. at ¶¶ 6-7.) On May 20, 2014, Steve's agreed to purchase the Prodo Pak Machine on an expedited basis and Frain agreed to complete the project in four weeks for an additional fee. ( Id. ) Steve's agreed to Frain's terms and conditions by signing Frain's Project Acceptance. ( Id. at ¶¶ 12-13.)

Frain received the preliminary material needed to refurbish the Prodo Pak Machine on June 6, 2014. ( Id. at ¶ 15.) After Steve's agent, David Schoenberg, conducted a Factory Acceptance Test for Steve's, Frain shipped the Prodo Pak Machine on June 30, 2014. ( Id. at ¶¶ 17, 18.) Steve's encountered numerous problems with the Prodo Pak Machine after its delivery. ( Id. at ¶ 19.) On multiple occasions, Frain serviced the Prodo Pak Machine and trained Steve's employees on its proper operation and maintenance. ( Id. ) After several visits, Steve's refused to pay the costs of Frain's additional service and training and Frain accordingly ceased servicing the Prodo Pak Machine. ( Id at ¶ 20.) Frain alleges that Steve's problems with the Prodo Pak Machine stemmed from improper operation and not from any structural or mechanical deficiencies. ( Id. )

Steve's posted a full-page statement on Frain's Facebook page regarding the Prodo Pak Machine on August 23, 2014. ( Id. at ¶ 31; Dkt. No. 1-1, Ex. I, Facebook Post.)[1] Steve's titled the Facebook Post "Don't Get Ripped Off By The Frain Group!" (Compl. ¶ 32(a).) The Facebook Post contained a number of other statements regarding the efficacy of the Prodo Pak Machine, including: "John Frain told me it was a 6 year old machine. It is 18 years old!, " "It was a shell of an 18 year old ProdoPak machine, " "machine [] had been incorrectly rebuilt and could not work properly, " "butchered piece of junk, " "The person [Frain] sent had NEVER operated this type of machine and could not keep it running, " "the machine could not handle" the temperatures required by Steve's process, and "[Frain] refused to come back and fix it." ( Id. at ¶ 32(b-h); Facebook Post.) Frain disputes the veracity of every statement Steve's made in its post. ( Id. ) Frain contends that Steve's refused to remove the post or issue an apology and that Frain has suffered damages as a result. ( Id. at ¶¶ 33-35.)

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6); Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). To survive a motion to dismiss under Rule 12(b)(6), the complaint must provide enough factual information to "state a claim to relief that is plausible on its face" and "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). All well-pled facts are taken as true and viewed in the light most favorable to the plaintiff, Hatmaker v. Mem'l Med. Ctr., 619 F.3d 741, 742-43 (7th Cir. 2010), but "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

DISCUSSION

I. Steve's Motion to Dismiss Counts II and III of Frain's Complaint

Steve's moves to dismiss Frain's defamation and tortious interference claims, arguing primarily that (1) the alleged defamatory statements are nothing more than non-actionable opinions and (2) Frain failed to factually substantiate its tortious interference claim and only alleged conclusory statements. Because a majority of Steve's alleged statements on the Facebook Post constitute objectively verifiable facts, the Court denies Steve's motion to dismiss Frain's defamation claim. The Court grants Steve's motion with respect to Frain's tortious interference claim, however, because Frain failed to plausibly allege it had a reasonable expectation of entering ...


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