Opinion
No. 03 C 7494
January 29, 2004
MEMORANDUM OPINION AND ORDER
This case comes before the Court on Plaintiffs Motion to Dismiss Count II of Defendant's Counterclaim for failure to state a claim, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated in this opinion, Plaintiffs Motion is granted.
Factual and Procedural Background
Plaintiff Indeck Power Equipment Company is an Illinois corporation in the business of buying and leasing permanent and temporary power plant equipment. Defendant Ring Power Corporation is in the business of, among other things, selling and leasing such power plant equipment. In March 2001, Indeck contracted to purchase from Ring twenty-four Caterpillar XQ2000 Trailer Generators. Indeck and Ring entered into twenty-four written Purchase Orders, each five-pages in length, to effectuate the sales. The purchase price of the twenty-four generators exceeded $15,505,000.
From a cursory examination of the purchase orders, which were attached to the original state court complaint, it appears that the essential terms of the purchase orders are identical.
On September 26, 2003, Plaintiff Indeck Power Equipment Company ("Plaintiff or "Indeck") filed a two-count complaint in state court alleging that Defendant Ring Power Corporation ("Defendant" or "Ring") breached the express and implied warranties in the Purchase Orders between the parties. On October 23, 2003, Defendant Ring removed this case to federal court. Jurisdiction of the federal court in this case is based on the diverse citizenship of the parties: Indeck is an Illinois corporation and Ring is a Florida corporation.
In its Complaint, Indeck alleges that Ring delivered generators that are not in compliance with the purchase order. Specifically, Indeck asserts that the generators Ring shipped were "Utility Convertible [generators], not Utility Grade [generators]". (Pl. Comp. ¶ 12.) Ring, in its Answer, denied that it shipped the wrong generators to Indeck.
Ring also asserted a two-count Counterclaim against Indeck. In the first Count of the Counterclaim, Ring seeks reformation of the contract to reflect the understanding of the parties at the time of the contract. In Count II of the Counterclaim, Ring states a claim for unjust enrichment against Indeck. Indeck seeks dismissal of Count II for failure to state a claim upon which relief may be granted.
LEGAL STANDARD
The purpose of a motion to dismiss is to test the legal sufficiency of the claim, not to decide the merits of the case. In evaluating the motion, the Court accepts as true all facts and allegations in the claim and makes all reasonable inferences in the non-movant's favor. See Holman v. Indiana, 211 F.3d 399, 402 (7th Cir. 2000). Claims should only be dismissed if it is clear that no set of facts in support of the claim would entitle the party to relief. See Ledford v. Sullivan, 105 F.3d 354, 356 (7th Cir. 1997) (quoting Hishon v. King Spalding, 467 U.S. 69. 73 (1984)).
DISCUSSION
Plaintiff Indeck seeks to dismiss Count II of the counterclaim because it asserts that, under Illinois law, unjust enrichment claims cannot be brought against parties to a contract. Both parties agree that Illinois law governs the dispute in this case. The legal question underlying this motion is whether under Illinois law a party to a contract can sustain a claim for unjust enrichment as a matter of law.Illinois law is fairly clear on the subject. The Illinois Supreme Court clearly enunciated the principle in 1977'. "[W]here there is a specific contract which governs the relationship of the parties, the doctrine of unjust enrichment has no application." LaThrop v. Bell Federal Sav. Loan Ass'n, 370 N.E.2d 188, 195 (Ill. 1977). There can be no doubt that this principle remains in force in Illinois law today.See Adams v. American Intern. Group, Inc. 791 N.E.2d 26, 31 (Ill.App.Ct. 2003) ("an action for unjust enrichment that seeks imposition of an implied contract . . . cannot be maintained where an express contract governs the parties"); B B Land Acquisition, Inc. v. Mandell, 714 N.E.2d 58, 63 (Ill.App.Ct. 1999) ("Because the theory [of unjust enrichment] is based on an implied contract, it has no application when an express contract governs the relationship between the parties.").
The Defendant seeks to sustain its counterclaim under its permissive capacity to plead in the alternative. Defendant Ring makes clear its belief that it is "entitled to prevail on the Purchase Orders as written" in Count I of its counterclaim. (Def. Counterclaim, Count I, ¶ 4.) In federal court, parties are entitled to plead alternative theories of relief, "even if the pleadings are inconsistent." See Alper v. Altheimer Gray, 257 F.3d 680, 681 (7th Cir. 2000). While parties are entitled to plead in the alternative, they can also plead themselves out of court by admitting facts that would be inconsistent with relief. As discussed above, Illinois law clearly holds that the existence of a contract governing the relationship between two parties precludes relief on an unjust enrichment theory. In its answer, Defendant admits that the parties "entered into twenty-four written Purchase Orders pursuant to which Plaintiff contracted to purchase from Defendant twenty-four Caterpillar XQ2000, trailer generators. . . ." (Def. Ans., ¶ 5) Consequently, the Defendant has pled itself out of court on its unjust enrichment claim.
In the briefing on the motion, Defendant asserts that its "precautionary, alternative unjust enrichment claim" (Def. Mem. L. at 2) is offered as a hedge "against the theoretical rescission" (Def. Mem. L. at 2) that Plaintiff seeks in its Complaint, (Pl. Comp. ¶ 14). Should the Court order rescission to remedy Plaintiffs alleged damages, Defendant would be entitled to appropriate restitution to restore the parties to the position before the contract. As Defendant points out, the Illinois Supreme Court has announced that "rescission means to restore the parties to their former position; a termination of a contract with restitution." Chicago Limousine Service, Inc. v. Hartigan Cadillac, Inc., 564 N.E.2d 797, 802 (Ill. 1990). Consequently, any moneys that the Defendant would be entitled to under its improperly pled unjust enrichment theory are already accounted for as a necessary concomitant of the rescission remedy.
CONCLUSION
For the reasons set forth in this opinion, the Court grants Plaintiffs Motion to Dismiss Count II of Defendant's Counterclaim for failure to state a claim upon which relief can be granted.