Procedure 12(b)(7).” Jd.

Defendant argues that NSC is an indispensable party under Rule 19 because: (1) in NSC’s
absence, complete relief cannot be accorded among the parties and (2) NSC has an interest
relating to the subject of this casc and is so situated that the disposition of the casc may (a) as a
practical matter impair or impede its ability to protect that interest or (b) leave Defendant subject
to a substantial risk of incurring inconsistent obligations. Defendant argues that it contracted
with NSC to provide the paint for the Paper Cars in this case, not with Plaintiff. Williams-
Hayward contends that it never had an express contract with Plaintiff regarding the Paper Cars,
thus NSC is a necessary party. CP Rail, Defendant argues, is a third party beneficiary of the
contractual relationship between NSC and Defendant.

{in support of its motion, Defendant attaches the affidavit of Wayne E. Kurez (the “Kurez
Affidavit”), an officer of Williams-Hayward. In deciding a casc under Rule 12(b)(7), the Court
may review materials submitted outside of the pleadings and consider extrinsic evidence. Davis
Cos. v. Emerald Casino, inc., 268 F.3d 477, 480 n.4. (7" Cir. 2001) (citations omitted). The
Kurez Affidavit confirms that Williams-Hayward provided paint to NSC. Kurez states that
Williams-Hayward provided the paint “in response to certain purchase orders it received from”
NSC. (Kurez Affidavit 2.) Kurez is “informed and believe(s] that the paint supplicd to [NSC]
by Williams-Hayward . . . was used by [NSC} in the course of manufacturing certain box cars
for” CP Rail. (/d.4[3.) Kurez also noted that Williams-Hayward has not been paid for this
paint. (ld. ¥ 4.)

Plaintiff counters that NSC is not indispensable because the complaint alleges that a

direct contract existed between Plaintiff and Defendant. It also argues that Defendant has failed



reasonable and justifiable reliance by the party to whom the promise was made; (3) the reliance
was expected and foreseeable by the promisor; and (4) the promisee relied upon the promise to
his or her detriment.” Fischer v. First Chicago Capital Markets, Inc., 195 F.3d 279, 283 (7 Cir.
1999), citing A-Abart Elec. Supply, Inc. v, Emerson Elec. Co., 956 F.2d 1399, 1404 (7" Cir.
1992),

CP Rail alleges that Defendant “unambiguously promised to CP Rail that (among other
things) the Williams-Hayward Thermalbond was suitable for CP Rail’s intended purpose, that
any problems associated with the paint sticking to paper were problems with application
techniques, and/or that such problems could be remedied.” (Compl. 57.) Plaintiff further
alleges that it reasonably relied on these promises, that Defendant expected and could foresee
that Plaintiff would do so and that such reliance was detrimental. (Id. ¥[ 58-60.) CP Rail states
that it has been injured as a result of this detrimental reliance. (Jd. 61.)

Defendant argues for dismissal on the basis that Plaintiff has not alleged an unambiguous
promise. In viewing the complaint in the light most favorable to Plaintiff and in applying the
notice pleading requirements of Federal Rule of Civil Procedure 8, Plaintiff's allegations satisfy

its burden.


identified a problem with the paint and subsequently informed Plaintiff and Defendant that the
paint had failed the testing on the sample Paper Car, (/d. 4| 17.) Defendant and NSC then
worked together to remedy the problem. (Jd. 4} 19.) When the problem was not fixed, NSC
stopped accepting Paper Cars treated with Williams-Hayward Thermalbond paint. (/d 4 20.)

NSC’s absence also subjects Defendant to a substantial risk of incurring inconsistent or
double obligations. NSC could subsequently sue Defendant based on the same contract at issue
herc, and NSC could be awarded damages for the same conduct. Darush v. Northern Trust Co.,
1996 WL 99903 at *1 (N.D. Ill. Feb, 29, 1996). Williams-Hayward would then be subject to
inconsistent rulings on its damage obligations to both NSC and Plaintiff.

Accordingly, the Court finds NSC to be an indispensable party under Rule 19. Plaintiff
has not set forth any reason why NSC cannot be joincd in this lawsuit. Thus, rather than
dismissing the case, the Court orders that CP Rail join NSC as an indispensable parly to the case
pursuant to Rule 19.

B, Count Four — Fraud

Defendant argues that the Court should dismiss count four for failure to mect the
heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Defendant argues that
Plaintiff merely alleges that Williams Hayward “misrepresented material facts to CP Rail”
without providing any of the specifics of the misrepresentations. Defendant further argucs that
the alleged misrepresentations are not actionable because they were merely statements of
opinion.

Federal Rule of Civil Procedure 9(b) requires that a plaintiff plead “the circumstances

constituting fraud... with particularity.” / re HealthCare Compare Corp. See. Litig., 75 F.3d



to make the requisite showing that NSC is a necessary party to the litigation.

In viewing the allegations in the complaint as well as the affidavit of Kurtz, it appears that
Plaintiff and NSC entered an agreement for the purchase of the Paper Cars and that Williams-
Hayward was a subcontractor to NSC. Although Plaintiff alleges that “as of June 21, 2000, a
valid contract existed between CP Rail and Williams-Hayward whereby Williams-Hayward
expressly agreed to supply NSC with a high rubber thermalbond paint suitable for use on the
interiors of the Paper Cars,” Plaintiff also alleges that CP Rail awarded the Paper Cars contract to
NSC and CP Rail requested that NSC use and treat Defendant as a “speciality vendor” for the
purpose of supplying the paint (reatment for the interior of the Paper Cars.” (Compl. { 12).
Plaintiff also alleges that CP Rail notified NSC, not Defendant, of its paint preference. (/d. § 10).
CP Rail’s purchase orders in the case were with NSC. (/d. { 13). Under this set of allegations, it
is clear that NSC is an indispensable party.

First, NSC is an indispensable party undcr Rule 19(a)(1). Based on the Kurez Affidavit
and the allegations in the compliant, it is clear that NSC and Williams-Hayward entered a
contract where Williams-Hayward agreed to supply NSC with the paint for the interior of the
Paper Cars. (See Compl. {| 28, 34, 41.) The lawsuit certainly is going to involve some
interpretation of the contract between NSC and Williams-Hayward. NSC is a central party to
that contract. Furthcrmore, even Plaintiff alleges that Defendant contended that the problems
pertaining (o the paint arose from NSC’s application of it. (/d. 417.) The absence of NSC in
light of these allegations could deprive the parties of complete relief.

Second, NSC is an indispensable party under Rule 19(a)(2). Based on the allegations in

the complaint, NSC has an interest in the subject of the action. Plaintiff alleges that NSC



Where a specific contract governs the relationship of the parties, “the doctrine of unjust
enrichment has no application.” People ex rel. Llartigan v. E & E Hauling, Inc., 607 N.E.2d 165,
177 (Il. 1992) (citations and quotations omitted), Defendant contends that the Court should
dismiss Plaintiff's claim for unjust enrichment in count five because an unjust enrichment clam
cannot coexist when a contract governs the partics relations.’ Plaintiff argues that it is pleading
unjust enrichment in the altcrnative to its claim that a contract existed between the parties.

The Complaint does not comport, however, with Plaintiff's alternative pleading theory
argument. In count five, CP Rail incorporates by reference all of the allegations in paragraphs
one through fifty-one of the complaint. In paragraph 28, CP Rail expressly alleges that a valid
contract existed between it and Williams-Hayward. Accordingly, this cxpress contract allegation
is incorporated into Plaintiff's unjust enrichment claims. While Plaintiff is entitled under Federal
Rule of Civil Procedure 8(e)(2) to plead the alternative claims of breach of contract and unjust
enrichment despite ihe inconsistency between those claims, Plaintiff's unjust enrichment claim
must not include allegations of a specific contract governing the parties relationship. See
Vanguard Fin, Serv. Corp. v. R W Prof't Leasing Servs. Corp., No. 98 C 1741, 1998 WL
774984, at *4 (N.D. Ill. Oct 27, 1998). Accordingly, count five is dismissed without prejudice.
D. Count Six — Promissory Estoppel

Defendant seeks to dismiss count six under Rule 12(b)(6) on the basis that Plaintiff has
failed to state a claim for promissory estoppel. In order to state a claim for promissory estoppel

in Illinois, Plaintiff must plead the following elements: “(1) an unambiguous promise; (2)

? Defendant also argues that CP Rail has failed to sufficiently plead unjust enrichment.
The Court need not address this argument as it is dismissing count five.

8



Minute Order Farm (06/87)

United States District Court, Northern District of Llinois

Name of Assigned Judge Amy J. St. Eve Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 8800 DATE 4/16/2003
CASE Canadian Pacific vs. Hayward
TITLE

[In the following box (u) indicute the purly filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the mation being presented. }

MOTION:

DOCKET ENTRY;

a) Oo Filed motion of [ ust listing in “Motion” box above.]

(2) a] Briefin support of motion due.

(3) a Answer brief to motion due , Reply to answer briefdue__.

(4) oO Ruling/Hearing on setfor at

(3) im) Status hearing[held/continued to] [set for/re-set for]on___—ssetfor_ att

(6) a Pretrial conference[held/continucd to] [set for/re-set for]on___—ssetfor_at__
(7) a ‘Trial(set for/re-set for] on at

(8) a [Bench/Jury trial] [Hearing] held/continued to at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to)

COFRCP4(m) CLocal Rule 41.1 CFRCP41(a)(1) COFRCP41(a)(2),

ao) of [Other docket entry) Enter Memorandum Opinion and Order, Defendant's Motion to Dismiss All Claims
is granted in part and denied in part. Plaintiff is directed to file an amended complaint adding National Steel Car,
Ltd. as an indispensable party under Federal Rule of Civil Procedure 19. Defendant's motion is granted with respect
to counts four and five. Counts four and five are dismissed without prejudice. Itis denied with respect to count six.
Plaintiff should file its amended complaint on or before 5/14/03.

Rd f
(11) [For further detail see order attached to the original minute Gye \

No notices required, advised in open court

3

umber of novices

APR 172003

No notices required

a | Notices mailed by judge's staff:

Notified counsel by telephone.

Docketing to mail notices

Mail AQ 450 form.

Copy to judge/magistrate judge.

4n162003
courtroom a er } date mailed nove

THY deputy's 7
initials

DateAime received irr
central Clerk's Office smasiling deputy initials



CONCLUSION
Defendant’s motion is granted in part and denied in part. Plaintiff is directed to file an
amended complaint adding NSC as an indispensable party under Rule 19. Defendant’s motion is

granted with respect to counts four and five which arc dismissed without prejudice. Defendant’s

motion is denied with respect to count six.

Dated: April 16, 2003 ENTERED

Chae Loa ©

AMY 1 ST. AY
United States Bisgict Court Judge

10



276, 281 (7" Cir. 1996). As the Seventh Circuit has explained, “this means the who, what, when,
where, and how: the first paragraph of any newspaper story.” DiLeo v, Ernst & Young, 901 F.2d
624, 627 (7" Cir. 1990). The particularity mandate requires “the plaintiff to conduct a
precomplaint investigation in sufficient depth to assure that the charge of fraud is responsible and
supported, rather than defamatory and extortionate.” Ackerman v. Northwestern Mut. Life Ins.
Co., 172 F.3d 467, 469 (7 Cir. 1999).

Plaintiff has failed to meet its burden under Rule 9(b). Plaintiff alleges that the fraud
occurred “[f]rom July 2000 to January 2002, Williams-Hayward, by and through its agents
Nicholson, Black and Kurez (among others), by [Defendant] stating that the high rubber
thermalbond paint would be suitable for application to the interior of box cars designed and
intended to haul rolled paper products.” (Compl. { 47.) This statement is deficient in that it does
not identify who said what to whom. It further does not particularize when such statements were
made or where they allegedly took place. Accordingly, Plaintiff docs not meet the requirements
of Rule 9(b).

Plaintiff argues that it has alleged statements made by specific individuals from
Defendant in paragraphs 7, 8, 10 and 15 through 18 of the Complaint, and that such allegations
meet the Rule 9(b) requirements, As Defendant notes, however, Plaintiff fails to allege that any
of these statements were false or known to be false when made. Accordingly, they cannot serve
as the basis of a false misrepresentation.'

c Count Five --Unjust Enrichment

Acclaim for unjust enrichment is based upon an implied, rather than a specific, contract.

' The Court need not address Defendant’s argument that the statements arc not actionable.

7



jurisdiction. Plaintiffs complaint contains the following claims: breach of warranty, breach of
implied warranty of fitness, breach of implied warrant of merchantability, fraud, unjust
enrichment and promissory estoppel. Plaintiff did not sue NSC in any of the counts in its
complaint. Defendant argues that NSC is an indispensable party and seeks to dismiss the action
for Plaintiff{’s failure to join NSC.
ANALYSIS

A. Rule 12(b)(7) — Indispensable Party

Rule 12(b)(7) provides for dismissal of an action where there is a “failure to join a party
under Rule 19.” Fed. R. Civ. P. 12(b)(7). In assessing a Rule 12(b)(7) motion to dismiss, the
Court must apply a two step inquiry. Thomas v. United States, 189 F.3d 662, 666 (7" Cir. 1999).
“First, the court must determine whether a party is one that should be joined if feasible... .” fd.
This first step requires the court to analyze three factors: “(1) whether complete relief can be
accorded among the partics to the lawsuit without joinder, (2) whether the absent person's ability
to protect its interest in the subject-matter of the suit will be impaired, and (3) whether any
existing partics might be subjected to a substantial risk of multiple or inconsistent obligations
unless the absent person joins the suit.” /d. (citing Fed. R. Civ. P. 19(a)). See also Davis Cos.
y. Emerald Casino, Inc., 268 F.3d 477, 481 (7" Cir. 2001). “Only if the court concludes . . . that
the party should be included in the action but it cannot be, must it go on to decide whether the
litigation can proceed at all in the party's absence.” Thomas, 189 F.3d at 666; Fed. R. Civ. P.
19(b). “If there is no way to structure a judgment in the absence of the party that will protect
both the party’s own rights and the rights of the cxisting litigants, the unavailable party is

regarded as ‘indispensable’ and the action is subject to dismissal . .. under Federal Rule of Civil



On August 4, 2000, NSC submilted a bid proposal specifying that the interior of the
Paper Cars would be painted with a waterbome thermalbond coating manufactured by Williams-
Hayward. On September 1, 2000, NSC identified the color and part number of the Williams-
Hayward paint that was ultimately used to treat the intcrior of the Paper Cars. On September 7,
2000, CP Rail advised NSC that the Williams-Hayward paint identified by NSC was CP Rail’s
“paint preference.” In December 2000, CP Rail awarded the Paper Car contract to NSC.

On June 21, 2001, CP Rail entered a purchase agreement with NSC for the manufacture
and purchase of the Paper Cars. On approximately August 28, 2001, NSC identified a problem
with the Williams-Hayward Thermalbond being applied to the interior of a sample car, Namely,
NSC stated that paper fiber or particles from the paper being shipped were adhering to the paint
surface on the interior walls, NSC thereafter informed both CP Rail and Defendant that the paint
had failed the testing on the sample Paper Car, Defendant objected to the results of NSC’s tests
and asserted that the problems were with NSC’s application of the paint. Defendant
subsequently worked with NSC to remedy the problems with the Thermalbond paint.
Nonetheless, Plaintiff alleges that stickiness problems persisted with the Williams-Hayward
Thermalbond paint.

On December 7, 2001, CP Rail stopped accepting Paper Cars treated with Williams-
Hayward Thermalbond. Plaintiff alleges that Defendant subsequently agreed to pay for the
Papers Cars to be lined with cardboard to allow the Paper Cars to generate revenue. Plaintiff
further alleges that Defendant later, for the first time, noted that the problems with the paint were
accepted in the industry.

Plaintiff thereafter sucd Williams-Hayward in a five count complaint based on diversity



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CANADIAN PACIFIC RAILWAY COMPANY,
a Canadian Corporation,

Plaintiff,
No. 02 C 8800

WILLIAMS-HAY WARD PROTECTIVE
COATINGS, INC., an Illinois Corporation,

)
)
)
)
)
v. )
)
)
)
)
Defendant. )
MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge
Defendant has moved to dismiss the case pursuant to Rule 12(b)(7) for failure to join an
indispensable party under Rule 19. Defendant also seeks to dismiss count four pursuant to Rule
9(b) and counts four, five and six pursuant to Rule 12(b)(6) for failure to state a claim. For the
reasons set forth below, Defcndant’s motion is granted in part and denied in part.
BACKGROUND
Plaintiff Canadian Pacific Railway Company (“CP Rail”) is a Canadian corporation with
its principal place of business in Alberta, Canada. Defendant Williams-Hayward is an Illinois
corporation engaged in the business of manufacturing paint. In 2000, CP Rail began to solicit
bids from rail car manufacturers to manufacture 1000 rail cars. CP Rail intended to use 625 of
these rail cars to carry large rolls of paper used in the publishing of newspapers (hereinafter

referred to as the “Paper Cars”). National Steel Car, Ltd. (“NSC”), a rail car manufacturer,

tesponded to CP Rail’s solicitation and eventually received the contract for the Paper Cars.