936 F. Supp. 2d 933
N.D. Ill.2013Background
- Al Maha Trading & Contracting Holding Co. (Saudi Arabia) sued W.S. Darley & Co. for six fire trucks sold under Petro Rabigh contract terms.
- Fire Trucks could not operate in Saudi Arabia due to ULSD/HSD fuel incompatibility and could not be retrofitted to run on High Sulfur Diesel.
- Four of six trucks were not new and carried significant mileage; Al Maha paid $2,931,000.
- Al Maha learned of the fuel issue and engine limitations after shipment, and in 2011 expert reports indicated likely engine destruction if more than minimal HSD used.
- Al Maha asserted multiple Illinois-law claims including implied warranties, misrepresentation, fraud, fiduciary duties, and unconscionability; jurisdiction is 28 U.S.C. § 1332(a)(2).
- Procedural posture: Darley moved to dismiss under Rule 12(b)(6); court granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Implied warranty of fitness (Count I) and timely rejection | Al Maha timely rejected/ revocation; defects breach fitness for particular purpose. | Al Maha failed to timely reject or revoke acceptance. | Count I dismissed with prejudice. |
| Implied warranty of fitness; damages under 2-714 (Count II) | Notice within reasonable time; may recover damages. | Delay in notice renders claim barred. | Count II denied; fact-intensive notice issue reserved. |
| Equitable rescission for unconscionable contract (Count III) | Contract unconscionable due to concealment of knowable defect. | No procedural unconscionability; no one-sided terms. | Count III dismissed with prejudice. |
| Mutual/unilateral mistake and rescission (Counts IV–V) | Equitable rescission available given the mistaken belief about fit for Saudi Arabia. | Dismiss unless present unconscionability and due care shown. | Counts IV and V denied (not dismissed) pending fuller record. |
| Fraud, fiduciary duty, constructive fraud, and related claims (Counts VI, VII, X, XI, XII) | Al Maha relied on Darley’s expertise; concealment/fiduciary duty alleged. | No fiduciary duty or misrepresentation; insufficient pleaded facts. | Counts VI, VII, X, XI dismissed with prejudice; Count XII denied. |
| ICFA claim (Count IX) and induced breach of fiduciary duties (Count XII) | ICFA based on concealment of defect; disclosure alleged. | Contract-based claim; lack of independent deceptive conduct. | Count IX denied; Count XII denied. |
Key Cases Cited
- Razor v. Hyundai Motor Am., 222 Ill.2d 75 (2006) (unconscionability analysis; procedural vs substantive factors)
- Connick v. Suzuki Motor Co., Ltd., 174 Ill.2d 482 (1996) (notice and cure; duty to disclose; framework for warranty interpretation)
- Pappas v. Pella Corp., 363 Ill.App.3d 795 (2006) (ICFA and misrepresentation distinctions; omission claims under ICFA)
- Championsworld, LLC v. U.S. Soccer Federation, Inc., 726 F.Supp.2d 961 (2010) (fiduciary-like conduct and misrepresentation context in ICFA/contract interplay)
- Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100 (2005) (ICFA when breach of contract alone is not actionable; need additional deceptive conduct)