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Nim Plastics Corp. v. Standex International Corp.
Levin, U.S. Magistrate
Plaintiff has brought this action against Defendant for breach of
contract and breach of implied warranty. Pending is Defendant's
motion, pursuant to Fed. R. Civ. P. 12(b)(6), to dismiss the breach of implied
warranty claim. For the reasons set forth below, this motion is granted.
FACTUAL BACKGROUND n1
Plaintiff NIM Plastics Corporation ("NIM") is in the business
of extruding polycarbonate resin into sheets and film which it then markets and sells to
its customers. Mold-Tech, a division of the Defendant corporation, is in the
business of applying textured and chemically "etched" finishes on rolls to be
used by customers to produce or manufacture sheets of film.
In or about 1992, NIM had one of its existing rolls refinished with a
textured matte finish (hereinafter referred to as the "Roll"). In or about
May of 1997, NIM and Mold-Tech entered into an oral contract. Under the agreement,
Mold-Tech agreed (a) to "refinish" NIM's existing Roll with a matte finish
replicating the matte finish then on the Roll, (b) to chemically "etch" the
matte finish onto the existing Roll, and (c) to complete the work on the Roll and return
it to NIM in approximately three weeks. Mold-Tech had the Roll sandblasted and
resurfaced and then returned it to NIM on or about June 9, 1997. The surface
applied to the Roll did not replicate the matte finish which was on the Roll when the Roll
was received by Mold-Tech.
NIM rejected the resurfaced Roll as non-conforming and seasonably
notified Mold-Tech of its rejection of the Roll. NIM
returned the Roll to Mold-Tech twice for the purpose of Mold-Tech repairing and
appropriately equating the finish on the Roll. Mold-Tech and its agent, Keystone
Rolls, Inc., however, were unable to repair the Roll so that it complied with Mold-Tech's
agreement with NIM.
Since Mold-Tech failed to repair or replace the Roll so that it
complied with the contract, NIM shipped the Roll to New Castle, a competitor of Mold-Tech,
which resurfaced the Roll with a matte finish replicating the original matte finish on
NIM's Roll.
On November 3, 1997, NIM filed a two-count complaint against Standex.
NIM sues Standex for breach of contract (Count I) and breach of implied warranty (Count
II). Standex now moves to dismiss the breach of implied warranty count for failure to
state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6).
STANDARDS FOR MOTION TO DISMISS
On a motion to dismiss, the court takes all of the well-pleaded factual
allegations as true and draws all reasonable inferences in the light most favorable to the
plaintiff. A complaint will not be dismissed on a motion to dismiss unless it
appears beyond doubt that the plaintiff can prove no set of facts in support of the claim
that would entitle him or her to relief.
ANALYSIS
As stated, in Count II of Plaintiff's Complaint, NIM makes a claim for
breach of implied warranty as to merchantability and fitness for a particular purpose. The
parties concur that Plaintiff's implied warranty claim here is a creation of the Uniform
Commercial Code (the "U.C.C."). The parties further agree that the U.C.C.
applies only to "transactions in goods." 810 ILCS
5/2-102.
The issue here, then, is discrete: whether NIM states a cause of action
that Mold-Tech provided NIM with a "good" within the meaning of the U.C.C.
The Illinois U.C.C. defines goods as "all things . . . which are
movable at the time of identification to the contract for sale[.]" 810 ILCS
5/2-105(1). "The definition of goods is based on the concept of moveability[.]
It is not intended to deal with things which are not fairly identifiable as moveables
before the contract is performed." 810 ILCS 5/2-105 cmt.
1. n3 Additionally, the U.C.C. defines a "sale"
as "the passing of title from the seller to the buyer for a price." 810 ILCS
5/2-106(1).
Where a sale of goods additionally requires the seller to perform
services, Illinois law classifies the agreement as "mixed" and requires courts
to apply a "predominant purpose" test to determine whether the U.C.C. governs
the contract. The central query of the test is whether the purpose of the agreement
"is the rendition of service, with goods incidentally involved (e.g., contract with
artist for painting) or is a transaction of sale, with labor incidentally involved (e.g.,
installation of a water heater in a bathroom)." Id. (quoting Meeker v. Hamilton Grain
Elevator Co., 110 Ill. App. 3d 668, 670, 442 N.E.2d 921, 922, 66 Ill. Dec. 360 (4th Dist.
1982)). If the contract's "primary purpose" is the
sale of goods, then the entire contract falls within the ambit of the U.C.C. Id.
NIM asserts that its allegations sufficiently plead that Mold-Tech
provided NIM with a "good" within the meaning of the U.C.C. Plaintiff argues
that the new matte surface for its Roll that it contracted for from Mold-Tech was such a
"good." Plaintiff additionally argues that, even if Mold-Tech agreed to provide
services in connection with the application of the surface, the predominant purpose of the
agreement was a good, namely NIM's purchase of the new surface.
Upon reviewing the allegations in Plaintiff's Complaint and the legal
authorities relied upon by the parties, this court finds that the parties' contract for
Mold-Tech to provide a new matte surface for NIM's Roll was a service contract, not a sale
of "goods" as defined by the U.C.C. The agreement between NIM and Mold-Tech
called for Mold-Tech to "refinish" and "etch" NIM's existing Roll.
Mold-Tech's refinishing and etching work on NIM's Roll, which merely was to result
in a "new surface" on an existing roll, cannot be considered
"moveable" as required under the U.C.C.'s definition of goods. Further,
Mold-Tech's work on, and eventual refinishing of, the surface of the Roll -- which roll
NIM owned throughout the transaction at issue here -- does not constitute a
"sale," with a "passing of title," as defined by the U.C.C. In short,
the "new surface" is not an identifiable "moveable" "thing"
as contemplated by the U.C.C. definition of a "good," and the "new
surface" was not sold in the sense that "title" to it could be passed.
Nor, in any event, does this court find that the "predominant
purpose" of the agreement was NIM's purchase of a good. Instead, it is this court's
determination that the primary purpose of the agreement for Mold-Tech to perform
refinishing work on NIM's existing Roll -- like other types of work performed on another's
existing property, e.g., sanding someone's table, waxing someone's floor and painting
someone's chair -- was the performance of a service.
The cases cited by NIM in its brief are distinguishable. In Gross
Valentino Printing Co. v. Clarke, 120 Ill. App. 3d 907, 910-11, 458 N.E.2d 1027, 1030, 76
Ill. Dec. 373 (1st Dist. 1983), the court found that the predominant purpose of a contract
between a magazine publisher and printing company was the sale of goods -- the tangible
production and delivery of magazines -- even though the contract required the physical
printing of the magazines. In Republic Steel Corp. v. Pennsylvania Eng'g Corp., 785 F.2d
174, 181-82 (7th Cir.1985), the court found that the predominant purpose of a contract was
the sale of goods, i.e., the sale of furnaces, even though the contract additionally
called for the design, assembly and installation of the furnaces. In Analysts Int'l Corp.
v. Recycled Paper Prods., Inc., 1987 U.S. Dist. LEXIS 5611, No. 85 C 8637, 1987 WL 12917,
at 3-4 (N.D. Ill. June 19, 1987), the court found that the predominant purpose of a
contract was the sale of goods -- a computerized reordering system -- even though the
contract also involved work to produce the subject computer program.
Put simply, unlike here, the common thread in each of the above cases
cited by Plaintiff was the presence of an identifiable "moveable" item(s)
(magazines, furnaces, software) to which title would pass. Here, in contrast, Plaintiff's
contract for a refinished surface on Plaintiff's existing Roll -- unlike magazines,
furnaces, and computer software -- cannot be considered such a moveable item to which
title would pass. This court finds that, unlike the cited cases discussed above, the
contract at issue here predominately involved the rendition of service, with goods
incidentally involved. n4
CONCLUSION
Accordingly, Defendant Standex International's
motion to dismiss Plaintiff NIM Plastics Corporation's breach of implied warranty claim
(Count II of the Complaint), pursuant to Fed. R. Civ. P. 12(b)(6), is granted with
prejudice.