Wabash Castings, Inc. v. Fuji Machine America Corporation

Filing 57

ORDER Signed by the Honorable Amy J. St. Eve on 9/13/2016: The Court denies Defendant/Counter-Plaintiff's motion to dismiss Counts V and VI of the Second Amended Complaint brought pursuant to Federal Rule of Civil Procedure 12(b)(6). 45 . Defendant/Counter-Plaintiffs answer is due on or before 9/27/16. [For further details, see Order.] Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
WABASH CASTINGS, INC., a Michigan
corporation,
Plaintiff/Counter-Defendant,
v.
FUJI MACHINE AMERICA
CORPORATION, an Illinois corporation,
Defendant/Counter-Plaintiff.

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Case No. 16 C 3629
Judge Amy J. St. Eve

ORDER
The Court denies Defendant/Counter-Plaintiff’s motion to dismiss Counts V and VI of
the Second Amended Complaint brought pursuant to Federal Rule of Civil Procedure 12(b)(6).
[45]. Defendant/Counter-Plaintiff’s answer is due on or before September 27, 2016.
STATEMENT
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 the present Rule 12(b)(6) motion to dismiss Counts V
and VI of Wabash’s Second Amended Complaint. For the following reasons, the Court denies
Fuji’s motion to dismiss.
BACKGROUND
Wabash alleges that it is an aluminum casting, machining, assembly, and testing producer
to the automotive industry. (R. 43, Second Am. Compl. ¶ 2.) Wabash was previously named
Harvey Acquisition I Inc. (“Harvey”) and holds title to the asserted claims after acquiring the
assets of the Harvey entities. (Id. ¶¶ 2, 5, 24, 25.) Further, Wabash alleges that this lawsuit
relates to various claims arising from Fuji’s failure to supply properly functioning machinery
used by Harvey in manufacturing automotive parts for Chrysler Group, LLC (“Chrysler”). (Id.
¶¶ 1, 11.) At issue in this lawsuit are the “Harvey Contracts,” which involve eleven purchase
orders. (Id. ¶ 10.)
In its Second Amended Complaint, Wabash brings the following claims: (1) a breach of
contract claim (Count I); (2) a breach of implied warranty of merchantability claim (Count II);
(3) a breach of implied warranty of fitness for particular purpose claim (Count III); (4) a breach
of express warranty claim (Count IV); (5) a promissory estoppel claim (Count V); and (6) an

unjust enrichment/quantum meruit claim (Count VI). Wabash unequivocally alleges that it is
bringing Counts V and VI in the alternative.
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.” 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).
ANALYSIS
In its motion to dismiss, Fuji argues that because Wabash has alleged an express contract
between the parties, the Court must dismiss the quasi-contract claims in Counts V and VI that
Wabash has alleged in the alternative. Here, the parties do not dispute that under the Erie
doctrine, federal courts sitting in diversity apply state substantive law and federal procedural
rules. See Goesel v. Boley Int’l (H.K.) Ltd., 806 F.3d 414, 419 (7th Cir. 2015). Under Federal
Rule of Civil Procedure 8(d)(2), a “party may set out 2 or more statements of a claim or defense
alternatively or hypothetically, either in a single count or defense or in separate ones.” Also,
under the federal procedural rules, a “party may state as many separate claims or defenses as it
has, regardless of consistency.” Fed.R.Civ.P. 8(d)(3). As the Supreme Court explains, the
“[r]ules recognize that a person may not be sure in advance upon which legal theory she will
succeed, and so permit parties” to plead inconsistent claims in the alternative. Cleveland v.
Policy Mgmt. Sys. Corp., 526 U.S. 795, 805 (1999); see also Peterson v. McGladrey & Pullen,
LLP, 676 F.3d 594, 597 (7th Cir. 2012); Pirelli Armstrong Tire Corp. Retiree Med. Benefits
Trust v. Walgreen Co., 631 F.3d 436, 448 (7th Cir. 2011); see, e.g., Santangelo v. Comcast
Corp., 162 F. Supp. 3d 691 (N.D. Ill. 2016) (“a plaintiff can bring an unjust enrichment claim in
the alternative to a breach of contract claim.”); In re Fluidmaster, Inc., 149 F. Supp. 3d 940, 963
(N.D. Ill. 2016) (“While Plaintiffs’ unjust enrichment claim may eventually give way to
Plaintiffs’ breach of contract and fraud claims, Plaintiffs may plead in the alternative at this stage
in the litigation.”). Therefore, under the federal procedural rules, Wabash may allege promissory
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estoppel and unjust enrichment/quantum meruit claims in the alternative to its breach of contract
claims even though it cannot recover under both breach of contract and quasi-contract theories.
See Prudential Ins. Co. of Am. v. Clark Consulting, Inc., 548 F. Supp. 2d 619, 623 (N.D. Ill.
2008).
In its reply brief, Fuji acknowledges that Rule 8(d) allows Wabash to plead in the
alternative under the federal procedural rules, but nevertheless argues that under Michigan
and/or Illinois substantive law, Wabash has failed to plausibly allege its quasi-contract claims
under the federal pleading standards. The Court thus turns to whether Wabash has sufficiently
alleged its promissory estoppel and unjust enrichment claims. In doing so, the Court notes that
many of the cases Fuji relies upon are distinguishable, including cases where the court
considered the parties’ evidence at summary judgment. See, e.g., Convergent Grp. Corp. v.
Cnty. of Kent, 266 F. Supp. 2d 647, 661-62 (W.D. Mich. 2003). Also, Fuji’s reliance on
Michigan and Illinois cases that apply state procedural rules and not federal procedural rules do
not inform the Court’s analysis. See, e.g., Romeo Inv. Ltd. v. Michigan Consol. Gas Co., No.
260320, 2007 WL 1264008, at *7 (Mich. Ct. App. May 1, 2007) (per curiam); Morris Pumps v.
Centerline Piping, Inc., 273 Mich. App. 187, 199 (Mich. Ct. App. 2006); Illinois Dept. of Cent.
Mgmt. Servs. v. 3500 W. Grand (Chicago), LLC, No. 1-13-2332, 2014 WL 2719293, at *8 (1st
Dist. June 12, 2014).
In Count V, Wabash brings a promissory estoppel claim against Fuji. A claim for
promissory estoppel in Illinois includes the following elements: (1) an unambiguous promise; (2)
reasonable and justifiable reliance by the party to whom the promise was made; (3) the reliance
was expected and foreseeable by the promissor; and (4) the promissee relied upon the promise to
his detriment. See Matthews v. Chicago Transit Auth., 51 N.E.3d 753, 780 (Ill. 2016);
Caterpillar, Inc. v. Usinor Industeel, 393 F. Supp. 2d 659, 679-80 (N.D. Ill. 2005). Similarly,
under Michigan law, the elements of a claim for promissory estoppel are: (1) a promise, (2) that
the promisor reasonably should have expected to induce action of a definite and substantial
character on the part of the promisee; (3) that in fact produced reliance; and (4) the promise must
be enforced to avoid injustice. See Etts v. Deutsche Bank Nat’l Trust Co., 126 F. Supp. 3d 889,
900 (E.D. Mich. 2015).
Here, Wabash alleges that Fuji unconditionally promised to deliver the Fuji turn-key
production machines to Harvey’s Aiken, South Carolina and Nuevo Laredo, Mexico facilities
and that these machines would be free of defects and would work as intended. (Second Am.
Compl. ¶ 51.) Wabash also alleges that Harvey reasonably and detrimentally relied on Fuji’s
promise and that Harvey was damaged as a result of Fuji’s failure to fulfill its promise, namely,
the machines were not built to specification, after which Chrysler ultimately terminated its
business relationship with Harvey. (Id. ¶¶ 19-23, 52, 53.) Further, Wabash asserts that to avoid
injustice to Harvey, Fuji’s promise must be enforced. (Id. ¶ 54.) Accepting Wabash’s wellpleaded facts as true and drawing all reasonable inferences in its favor, Wabash has set forth
sufficient factual details to state a plausible claim of promissory estoppel under the
circumstances because the Court can draw a reasonable inference that Fuji is liable for the
alleged misconduct. See Iqbal, 556 U.S. at 679 (“Determining whether a complaint states a
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plausible claim for relief” is “a context-specific task that requires the reviewing court to draw on
its judicial experience and common sense.”). Fuji’s argument that there is no factual dispute
regarding the existence of the express contracts does not change the Court’s analysis at the
procedural posture where the Court must determine whether Wabash’s allegations are sufficient
under the plausibility standard and where the Court is required to accept Wabash’s facts and all
reasonable inferences as true. See Roberts, 817 F.3d at 564.
In Count VI, Wabash alleges an unjust enrichment/quantum meruit claim in alternative to
its claims for breach of contract. “Unjust enrichment under Illinois law requires a plaintiff to
show that a defendant has ‘unjustly retained a benefit to the plaintiff’s detriment, and that
defendant’s retention of the benefit violates the fundamental principles of justice, equity, and
good conscience.’” Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., ___ F.3d ___,
2016 WL 4097439, at *12 (7th Cir. Aug. 2, 2016) (citing HPI Health Care Servs., Inc. v. Mt.
Vernon Hosp., Inc., 131 Ill.2d 145, 160, 137 Ill.Dec. 19, 545 N.E.2d 672, 679 (1989)). Under
Michigan law, to “proceed on a claim of unjust enrichment or quantum meruit, a plaintiff must
establish (1) the receipt of a benefit by defendant from plaintiff, and (2) an inequity resulting to
plaintiff because of the retention of the benefit by defendant.” Star of the W. Milling Co. v.
Sales, No. 15 CV 13086, 2016 WL 3753530, at *10 (E.D. Mich. July 14, 2016) (citation
omitted).
In its Second Amended Complaint, Wabash alleges that Fuji received monetary
compensation from Harvey in exchange for the promised delivery of the Fuji machines, Fuji has
been unjustly enriched at the expense of Harvey because it received compensation without
delivering machines in the operational condition requested by Harvey and as promised by Fuji,
and that Fuji is required to compensate Harvey for these benefits, as it would otherwise be
inequitable for Fuji to retain the compensation. (Second Am. Compl. ¶¶ 57-59.) Under these
facts, Wabash has sufficiently alleged a plausible claim for unjust enrichment/quantum meruit.
See Carlson v. CSX Transp., Inc., 758 F.3d 819, 827 (7th Cir. 2014) (to state a plausible claim, a
‘plaintiff must include ‘enough details about the subject-matter of the case to present a story that
holds together.”) (citation omitted).
Last, as Wabash admits, it cannot ultimately recover under both contract and quasicontract theories as this case moves forward. See Schlotfeldt v. Wells Fargo Home Mortgage,
Inc., No. 15 C 6656, 2016 WL 406341, at *4 (N.D. Ill. Feb. 3, 2016) (“although plaintiffs will
not be able to recover under both theories, they are permitted to plead them in the alternative”).
Nonetheless, because Wabash may plead contract and quasi-contract claims in the alternative
under the federal procedural rules, the Court denies Fuji’s motion to dismiss.

Dated: September 13, 2016

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

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