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Wabash Castings Inc. v. Fuji Machine America Corp.

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

October 31, 2016

WABASH CASTINGS, INC., a Michigan corporation, Plaintiff/Counter-Defendant,
FUJI MACHINE AMERICA CORPORATION, an Illinois corporation, Defendant/Counter-Plaintiff.


          AMY J. ST. EVE United States District Court Judge.

         The Court denies Plaintiff/Counter-Defendant's motion to dismiss Counts I and II of the First Amended Counterclaim brought pursuant to Federal Rule of Civil Procedure 12(b)(6). [53]. Plaintiff/Counter-Defendant's answer to the First Amended Counterclaim is due on or before November 14, 2016. Status hearing set for November 30, 2016 is stricken and reset to November 16, 2016 at 8:30 a.m.


         On July 29, 2016, Plaintiff/Counter-Defendant Wabash Castings, Inc. (“Wabash”) filed a six-count Second Amended Complaint against Defendant/Counter-Plaintiff Fuji Machine America Corporation (“Fuji”) based on the Court's diversity jurisdiction. See 28 U.S.C. § 1332(a). On August 12, 2016, Fuji filed a two-count First Amended Counterclaim alleging breach of contract and account stated claims. Before the Court is Wabash's motion to dismiss both Counts I and II of Fuji's Counterclaim. For the following reasons, the Court denies Wabash's motion.


         “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.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). Under the federal notice pleading standards, a plaintiff's “factual allegations must be enough to raise a right to relief above the speculative level.” Id. Put differently, a “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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         In determining the sufficiency of a complaint under the plausibility standard, courts must “accept all well-pleaded facts as true and draw reasonable inferences in the plaintiffs' favor.” Roberts v. City of Chicago, 817 F.3d 561, 564 (7th Cir. 2016). Also, district courts can take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment. See Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir. 2012). Similarly, courts may consider documents attached to the pleadings without converting the motion to dismiss into a motion summary judgment, as long as the documents are referred to in the complaint and central to the plaintiff's claims. See Adams v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014); Fed.R.Civ.P. 10(c).


         In its Second Amended Complaint, Wabash, a Michigan corporation, alleges that it is an aluminum casting, machining, assembly, and testing producer in the automotive industry. (R. 43, Second Am. Compl. ¶ 2.) Wabash asserts that it holds title to certain claims after acquiring the assets of certain Harvey Entities, discussed below. (Id. ¶¶ 2, 5, 24, 25.) Further, Wabash alleges that the present lawsuit relates to various claims arising from Fuji's failure to supply properly functioning machinery used by the Harvey Entities. (Id. ¶¶ 1, 11.) At issue in this motion are the “Harvey Contracts, ” which involve certain purchase orders involving Fuji, an Illinois corporation that sells and services automated machines and tools, and certain Harvey Entities. (Id. ¶¶ 3, 10.) Fuji alleges that Wabash is the assignee of the “Harvey Contracts.” (R. 49, First Am. Counter. ¶¶ 27, 36.)

         In its First Amended Counterclaim, Fuji alleges that on or about July 17, 2012, Harvey Industries Die Castings, LLC (“Harvey Castings”) submitted to Fuji a purchase order for one Fuji lathe at the price of $666, 164.00 (“PO 2621”) and a purchase order for another Fuji lathe for $816, 500.00 (“PO 2622”). (Id. ¶ 4.) Pursuant to PO 2621, Fuji maintains that it delivered and installed two Fuji lathes, one bearing serial number SE0095413 (the “95413 Lathe”) and another bearing a serial number of SE0095414 (the “95414 Lathe”), at Harvey Castings' Aiken, South Carolina facility and that Harvey Castings accepted both lathes and placed them into production. (Id. ¶ 5.)

         In addition, Fuji alleges that on or about July 25, 2012, Harvey Industries, LLC (“Harvey Industries”) submitted to Fuji four purchase orders (PO 96932, 96933, 96934, and 96935) for the purchase of one Fuji lathe and other equipment for the aggregate purchase price of $712, 999.98. (Id. ¶ 6.) Fuji asserts that these four purchase orders were amended to reflect that the lathe and other equipment should be delivered to Harvey Castings' facility in Aiken, South Carolina instead of Harvey Industries in Laredo, Texas. (Id. ¶ 7.) Also, Fuji alleges that pursuant to PO 96932-35, Fuji delivered and installed a Fuji lathe, serial number SE007050, and other related equipment (collectively, the “97050 Lathe”) at Harvey Castings' Aiken, South Carolina facility, and Harvey accepted the 97050 Lathe and placed it into production. (Id. ¶ 8.) According to Fuji, Harvey made some, but not all, of the payments on POs 2621, 2622, and 96932-35 (collectively, “Purchase Orders”), and there remained, and still remains, an aggregate principal amount of $317, 041.40 due on these Purchase Orders. (Id. ¶ 9.)


         In its motion to dismiss, Wabash argues that “Fuji's Counterclaim is fatally flawed because Fuji fails to state a legal basis to recover against Wabash.” Specifically, Wabash argues that although Fuji alleges that it was an assignee to the applicable purchase orders, in fact, Wabash is not an assignee, but instead purchased certain claims and causes of actions relating to the Harvey Contracts pursuant to an earlier lawsuit and consequent Asset Purchase Agreement (“APA”). In support of its argument, Wabash asks the Court to take judicial notice of the court proceedings in Callidus Capital Corp. v. Harvey Industries LLC, No. 15-cv-10616 (E.D. Mich. March 26, 2015), based on Callidus Capital Corporation (“Callidus”) loans to Harvey Industries. See Spaine v. Cmty. Contacts, Inc., 756 F.3d 542, 545 (7th Cir. 2014) (courts “may take judicial notice of publicly available records of court proceedings”). Wabash also asks the Court to review documents attached to the parties' pleadings. See Fed.R.Civ.P. 10(c).

         In the Michigan lawsuit, Callidus extended commercial loans to Harvey Industries (although not Harvey Castings) in the amount of more than $41 million in principal. (Ex. 1, 3/26/15 Stipulated Order to Appoint Receiver, at 3-5.) After Callidus filed the Michigan lawsuit against Harvey Industries to recover its debt, on June 10, 2015, a Receiver conducted an auction of Harvey Industries' assets. (15-cv-10616, R. 37, Mot. Approve Sale Assets.) Callidus was the winning bidder, and on August 18, 2015, the Michigan district court entered an order approving the sale to Callidus as the purchaser. (Ex. 4, 8/18/15 Sale Order.) The Sale Order stated that the “Lender and Purchaser” shall not be liable for any claims “other than as expressly provided for in the [Asset] Purchase Agreement.” (Id. ¶ 11.) On October 30, 2015, the Receiver, Harvey Industries (but not Harvey Castings), Wabash, and Callidus entered into an APA and, as part of the APA, Wabash alleges that it purchased claims and causes of actions relating to Harvey Industries' and Fuji's business relationship. (Second Am. Compl. ¶ 25.) Wabash contends that the Harvey Contracts that are subject of Fuji's Counterclaim were not assigned to Wabash under the APA pursuant to the APA's Disclosure Schedule 1, which excludes: ...

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