UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

CUSTOM CLASSIC AUTOMOBILES &

COLLISION REPAIR, INC.,

Plaintiff,

v.

AXALTA COATING SYSTEMS, LLC,

STANDOX NORTH AMERICA INC., and

LINDA WILLIAMS,

Defendants.

No. 20 CV 5079

Judge Manish S. Shah

MEMORANDUM OPINION AND ORDER

Axalta Coating Systems, LLC, makes coating and refinishing products for

vehicles. Together with its employee, Linda Williams, Axalta promised to pay Custom 

Classic Automobiles & Collision Repair, Inc. for transporting and repairing a car with 

a defective paint job. But they failed to pay. Custom Classic sued them in state court, 

alleging breach of contract, breach of express warranty, fraud, and violations of the 

Illinois Consumer Fraud and Deceptive Business Practices Act. Axalta removed the 

case to federal court and moved to transfer or dismiss the case. Custom Classic moved 

to remand. For the reasons set forth below, the motion to remand and motion to 

transfer are denied, and the motion to dismiss is granted in part, denied in part. 

I. Legal Standard

A defendant can remove a lawsuit filed in state court to federal court if the 

federal court has original jurisdiction over the dispute. 28 U.S.C. § 1441(a). Federal 

district courts have original jurisdiction over civil actions where the amount in 

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controversy exceeds $75,000 and the parties are citizens of different states. 28 U.S.C. 

§ 1332(a). Under the fraudulent joinder doctrine, a district court may dismiss nondiverse defendants if the plaintiff has no chance of success against them and retain 

jurisdiction over a case. Morris v. Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013). To remove 

a case based on fraudulent joinder, a defendant has the “heavy” burden of proving 

that, after the court resolves all issues of law and fact in the plaintiff’s favor, there is 

no possibility that the plaintiff can establish a cause of action against the non-diverse 

defendant in state court. Id.1; see also Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 

(7th Cir. 1993) (courts should interpret the removal statute, 28 U.S.C. § 1441, 

narrowly and resolve doubts in favor of the states). The court must examine the 

allegations in the plaintiff’s complaint at the time of removal. See In re Burlington 

Northern Santa Fe Ry. Co., 606 F.3d 379, 380–81 (7th Cir. 2010). If the non-diverse 

defendant is not dismissed, the federal court does not have jurisdiction and must 

remand the case back to state court. See Morris, 718 F.3d at 666. 

A district court may transfer a civil action to another district or division “[f]or 

the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. 

§ 1404(a). A district court has broad discretion to assess all the relevant factors, like 

distance to the forum and judicial economy, on a case by case basis. See Research 

Automation, Inc. v. Schrader-Bridgeport Intern., Inc., 626 F.3d 973, 977–78 (7th Cir. 

1 “Some courts, including district courts within this circuit, have suggested that the burden 

is even more favorable to the plaintiff than the standard that applies to a motion to dismiss 

under Federal Rule of Civil Procedure 12(b)(6).” Schur v. L.A. Weight Loss Centers, Inc., 577 

F.3d 752, 764 (7th Cir. 2009). 

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2010). I assume the truth of the allegations in the plaintiff’s complaint unless 

contradicted by the defendant’s affidavits and may consider supplemental 

evidentiary materials and additional facts set forth in the briefs. See Deb v. SIRVA, 

Inc., 832 F.3d 800, 808–09 (7th Cir. 2016) (Unlike Federal Rule of Civil Procedure 

12(b)(6), “Rule 12(b)(3) is a somewhat unique context of dismissal in that a court may 

look beyond the mere allegations of a complaint, and need not view the allegations of 

the complaint as the exclusive basis for its decision.”).

To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), 

a complaint must contain a short and plain statement that plausibly suggests the 

violation of a legal right. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 556–58 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 677–80 (2009). I accept the 

plaintiff’s factual allegations as true and draw all reasonable inferences in its favor. 

Iqbal at 678–79. I do not accept allegations that are unsupported, conclusory, or legal 

conclusions. Id. I may consider documents attached to the complaint and documents 

that are referenced in and central to its claims. Reed v. Palmer, 906 F.3d 540, 548 

(7th Cir. 2018).

II. Facts 

Axalta Coating Systems, LLC, filed a lawsuit in the Eastern District of 

Pennsylvania alleging that Custom Classic Automobiles & Collision Repair, Inc. 

breached an exclusive requirements contract when it switched to a competitor’s paint 

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product. [7-1] at 3, 10–18; [7-3] at 2.2 Among its “miscellaneous” terms, the contract 

stated:

The Master Agreement and each Incentive Agreement shall be governed by, 

and construed and enforced in accordance with, the laws of the Commonwealth 

of Pennsylvania without regard to its conflict of laws rules that would require 

the application of the laws of any other jurisdiction. Each party consents and 

submits to the exclusive jurisdiction of, and service of process by, the United 

States District Court for the Eastern District of Pennsylvania and the state 

courts of Pennsylvania.

[7-1] at 12. Custom Classic made an offer of judgment, which Axalta accepted. [7-3] 

at 2. Three days later, Custom Classic filed this lawsuit in Illinois state court against 

Axalta, Standox North America, Inc., and Linda Williams. [1-1] at 3. 

According to the complaint, Custom Classic used Standox paint on a 1970 

Chevrolet Camaro. [1-1] at 6, ¶ 8. Standox provided a lifetime warranty for the 

paintwork. [1-1] at 6, ¶ 8. Under the warranty, a Standox technician needed to inspect 

any defect, and the Standox-authorized body shop that performed the original work 

had to repair it. [1-1] at 6, ¶ 8. If the consumer had moved away, the vehicle could be 

taken to any Standox-authorized body shop. [1-1] at 7, ¶ 8. The body shop would 

contact Standox to settle the car owner’s claim. [1-1] at 7, ¶ 8. 

Years after the paint job, the paint on the Camaro blistered and peeled. [1-1] 

at 7, ¶¶ 9–10. Custom Classic called Williams, its longtime representative for 

automobile paint products, about the defect. [1-1] at 6–7, ¶¶ 4, 10. Williams worked 

2 Bracketed numbers refer to entries on the district court docket. Referenced page numbers 

are from the CM/ECF header placed at the top of documents.

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for Axalta, which owns Standox. [1-1] at 7, ¶ 10.3 Because the car had moved from 

Illinois to Florida, an Axalta representative in Florida inspected the car, obtained 

samples from the defective product, and found that every panel had blistering except 

one door. [1-1] at 7, ¶ 11. The representative asked Williams for instructions about 

how to proceed. [1-1] at 7, ¶ 11. An Axalta representative told Custom Classic’s 

customer to take the Camaro to a repair shop in Florida pursuant to the warranty. 

[1-1] at 7, ¶ 12. After the customer could not find an authorized body shop, an Axalta 

representative told the customer and Custom Classic to transport the car to Custom 

Classic’s shop in Illinois for repair. [1-1] at 7, ¶ 13. Williams met with Custom 

Classic’s owner in Illinois and said that Axalta would compensate Custom Classic for 

repairing the defect, saying that Axalta would “take care” of the situation. [1-1] at 8, 

¶ 14. Custom Classic transported the Camaro to its body shop in Illinois and began 

repairs. [1-1] at 8, ¶¶ 15–16. An Axalta representative visited to obtain more samples 

of the defective product. [1-1] at 8, ¶ 16. Custom Classic reconfirmed with its

customer the representations made by Williams and Axalta that they “are paying to 

skim coat the whole body, prep, prime, prep, and paint” the Camaro. [1-1] at 8, ¶ 17. 

An Axalta representative also said Axalta would pay the cost of transportation. [1-1] 

3 The complaint does not allege the exact relationship between Axalta and Standox. Axalta’s 

removal notice states Standox ceased to exist as a corporate entity in 2003. [1] ¶ 11. The 

briefs and supplemental exhibits (undisputed by the parties) indicate that Standox merged 

into DuPont Performance Coatings, which was renamed Axalta Coating Systems. [6] at 8, 

n.1; [16] at 4, n.1; [17-1]; [17-2] at 5. In a recent SEC filing, Axalta stated it has a “large color 

library and several well-known, long-standing premium brands, including ... Standox.” 

Axalta Coating Systems Ltd., Annual Report (Form 10-K) (Feb. 19, 2020); see Hennessy v. 

Penril Datacomm Networks, Inc., 69 F.3d 1344, 1354 (7th Cir. 1995) (judicial notice of SEC 

filings may be appropriate when the fact in question is undisputed). The Clerk is directed to 

terminate Standox North America, Inc. as a party to the case. 

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at 8, ¶ 13. Custom Classic alleges that Williams and Axalta made the same or similar 

promises about repairing defective Standox products on other automobiles in the past 

and had compensated Custom Classic for these repairs. [1-1] at 11, ¶ 35. 

Custom Classic spent $45,445.77 transporting and repairing the Camaro. [1-

1] at 8, ¶¶ 15–16, 18–19. After Custom Classic sent the invoice to an Axalta 

representative, Axalta and Williams refused to pay. [1-1] at 9, ¶ 20. Axalta first 

claimed that Williams’s statements about compensation may have been 

unauthorized. [1-1] at 9, ¶ 21. Axalta then claimed Williams’s representations were 

untrue and that the company never agreed to compensate Custom Classic for the 

repair work. [1-1] at 9, ¶ 22. 

Custom Classic filed this lawsuit in state court for breach of contract, breach 

of express warranty, fraudulent misrepresentation, and violating the Illinois 

Consumer Fraud and Deceptive Business Practices Act. [1-1] at 9–13. Axalta removed 

the case to federal court. [1]. Axalta’s sole member is Axalta Coating Systems U.S. 

Holdings, Inc., which is a citizen of Delaware and Pennsylvania. [1-1] at 5, ¶ 2; [1] 

¶ 10. Williams is a resident of Illinois. [1-1] at 6, ¶ 4; [1] ¶ 12.4 Custom Classic is a 

citizen of Illinois. [1-1] at 6, ¶ 5; [1] ¶ 9. Axalta then filed a motion to transfer or 

dismiss the complaint, [5], and Williams filed a motion to join. [14]. Custom Classic 

filed a motion to remand. [15]. 

4 Domicile, not residence, determines an individual’s citizenship for purposes of jurisdiction.

Myrick v. WellPoint, Inc., 764 F.3d 662, 664 (7th Cir. 2014). Because the failure to properly 

allege Williams’s citizenship would defeat jurisdiction, Axalta’s fraudulent-joinder argument 

is amenable to resolution even though Williams’s domicile is not alleged.

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III. Analysis

Axalta argues that its motion to transfer should be resolved first. However, it 

is not in the interest of convenience, fairness, or judicial economy to transfer a case 

that should not be in federal court. See Sinochem Intern. Co. Ltd. v. Malaysia Intern. 

Shipping Corp., 549 U.S. 422, 431–32 (2007) (there is no mandatory sequencing of 

non-merits issues). I address removal first. 

A. Removal and Motion to Remand

Williams is not alleged to be a citizen of a different state than Custom Classic,

but her citizenship can be disregarded (and removal was proper) if there is no 

reasonable possibility that Custom Classic could prevail against her in state court.

See Morris, 718 F.3d at 666. The analysis is limited to the allegations in the complaint 

filed in state court. See Poulos v. Naas Foods, Inc., 959 F.2d 69, 74 (7th Cir. 1992) 

(analyzing fraudulent joinder based on the allegations in the original complaint, 

irrespective of whether the defects were curable).

Under Illinois law, an agent cannot be liable to a third party, even when the 

agent exceeds her actual authority, if the agent had apparent authority from the 

principal to enter into a contract. See Joe & Dan Intern. Corp. v. U.S. Fidelity & Guar. 

Co., 178 Ill.App.3d 741, 747 (1st Dist. 1988) (describing principles of agency law when 

the principal is fully or partially disclosed); see also Evanston Ins. Co. v. Riseborough, 

2014 IL 114271, ¶ 38 (discussing warranty of authority).5 Custom Classic alleges 

5 A federal court sitting in diversity applies the choice-of-law rules of the state in which it sits 

to determine what substantive law applies. Gunn v. Continental Casualty Company, 968 F.3d 

802, 808 (7th Cir. 2020). Illinois courts apply Illinois law unless a difference in law affects 

the outcome of the case or the parties agree that forum law does not 

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Williams may have exceeded her actual authority. [1-1] at 9, ¶¶ 21–22.6 Nevertheless, 

Custom Classic knew Williams worked as an agent on behalf of Axalta; had a 

longstanding business relationship with Williams for automobile paint products; and

had worked with Williams on repairing Standox defects on other automobiles. [1-1] 

at 6–7, 11, ¶¶ 4, 10, 35. Thus, Custom Classic cannot show Williams lacked apparent 

authority for the promises she made about the Camaro. See Patrick Engineering, Inc. 

v. City of Naperville, 2012 IL 113148, ¶ 34 (apparent authority exists when a 

reasonably prudent person, exercising diligence and discretion, in view of the 

principal’s conduct, would naturally suppose the agent to possess such authority) 

(citation and quotation omitted). Based on Williams’s status as an apparent agent of 

Axalta, Custom Classic has no chance of success against her on its breach of contract 

claim.7

apply. Id. (citing Bridgeview Health Care Center, Ltd. v. State Farm Fire & Cas. Co., 2014 IL 

116389, ¶ 14 and Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill.2d 325, 

351 (2002)). Here, the parties assume Illinois law governs all of their claims. See also Orgone 

Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019) (“choice of law issues 

may be waived or forfeited by declining to assert them in litigation.”). 

6 Custom Classic may plead theories in the alternative. Fed. R. Civ. P. 8(d)(2). Axalta’s factual 

concession—that Williams was acting within the scope of her employment—is for a later 

stage in the case. 

7 Williams’s contract defense based on agency law is unique to her. Axalta cannot assert it. 

Consequently, the common defense doctrine does not apply. The common defense doctrine is 

an exception to the fraudulent joinder rule and bars federal jurisdiction. The district court 

must remand the case to state court if assessing the non-diverse defendant’s chances of 

success forecloses all of the diverse defendants’ claims, because such an analysis amounts to 

a judgment on the merits of the entire case. See Walton v. Bayer Corp., 643 F.3d 994, 1001 

(7th Cir. 2011) (citing cases where the common defense doctrine only applied when the nondiverse defendant’s claim effectively decided the entire case against the diverse defendants); 

see also Tile Unlimited, Inc. v. Blanke Corp., 788 F.Supp.2d 734, 742 (N.D.Ill. 2011) 

(reviewing appellate case law and concluding that the common defense doctrine does not 

apply when the plaintiff’s claims against the non-diverse and diverse defendants are based, 

at least in part, on distinct theories of recovery). 

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Custom Classic’s breach of warranty claim against Williams also fails based 

on Williams’s alleged role. Under Illinois law, a party without a warranty assignment 

must be in privity of contract to enforce an express warranty alleging economic loss. 

Collins Co., Ltd. v. Carboline Co., 125 Ill.2d 498, 511 (Ill. 1988) (privity requires a 

contractual relationship, like a valid assignment of the contract); see also Collins Co., 

Ltd. v. Carboline Co., 837 F.2d 299 (7th Cir. 1988) (certifying question about the 

privity requirement for express warranties to the Illinois Supreme Court). Because 

Custom Classic alleges that Williams acted as its longstanding agent for Axalta paint 

products, [1-1] at 6–7, 11, ¶¶ 4, 10, 35, it is not reasonable to infer Williams personally 

assumed the obligations for the Standox lifetime warranty. Custom Classic cannot 

prevail on a breach of express warranty claim against Williams.8

To state a claim for fraudulent misrepresentation, a plaintiff must allege: 1) a 

false statement of material fact; 2) known or believed to be false by the person making 

it; 3) an intent to induce the plaintiff to act; 4) action by the plaintiff in justifiable 

reliance on the truth of the statement; and 5) damage to the plaintiff resulting from 

such reliance. Newman v. Metropolitan Life Insurance Company, 885 F.3d 992, 1003 

8 Generally, a district court exercising diversity jurisdiction must apply state substantive law 

and federal procedural law. Erie R.R. v. Tompkins, 304 U.S. 64 (1938). However, under the 

theory of fraudulent joinder, a court must determine whether a plaintiff can establish a cause 

of action against the non-diverse defendant in state court. Morris v. Nuzzo, 718 F.3d 660, 666 

(7th Cir. 2013) (emphasis added). The Seventh Circuit has not expressly stated whether a 

federal or state pleading standard applies when evaluating claims based on fraudulent 

joinder. See footnote 10, below. Illinois requires fact pleading, a more rigorous standard than 

federal notice pleading. Windy City Metal Fabricators & Supply, Inc. v. CIT Technology 

Financing Services, Inc., 536 F.3d 663, 670 (7th Cir. 2008). Custom Classic’s contract claims 

have no chance of success under either pleading standard. 

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(7th Cir. 2018) (citing Doe v. Dilling, 228 Ill.2d 324, 342–43 (2008)).9 The false 

statement must concern a present or past fact, not future conduct or intent. Wigod v. 

Wells Fargo Bank, N.A., 673 F.3d 547, 570 (7th Cir. 2012) (promissory fraud is 

generally not actionable in Illinois) (citing Seventh Circuit and Illinois cases). 

However, an exception exists where the misrepresentations are part of a “scheme to 

defraud.” HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill.2d 145, 

168 (1989). While the distinction between promissory fraud and a scheme of 

promissory fraud is “elusive,” a scheme occurs when the fraud is particularly 

egregious or embedded in a larger pattern of deception. Desnick v. American 

Broadcasting Companies, Inc., 44 F.3d 1345, 1354 (7th Cir. 1995) (interpreting 

Illinois cases).10

Williams’s statements that Custom Classic would pay for the repair, [1-1] at 8, 

¶ 14, was a promise to pay in the future and is not actionable under Illinois law. See 

Zarins v. Bob Rohrman Auto Group, 2013 IL App (1st) 113798-U, ¶ 63 (holding a 

warranty to pay for costs in the future amounted to non-actionable promissory fraud) 

9 Custom Classic can bring a common law tort claim under Illinois law against both Axalta 

and Williams. See Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 765 (7th Cir. 2009) 

(whether the employer is held vicariously liable for the agent’s conduct does not affect the 

agent’s independent tort liability) (citing Illinois cases). 

10 In In Re Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability 

Litigation, the district court cited both federal and Illinois standards for pleading fraud. 692 

F.Supp.2d 1025, 1038 (S.D.Ill.2010), aff’d Walton v. Bayer Corp., 643 F.3d 994, 1001 (7th Cir. 

2011). Under the federal pleading standard, a complaint must allege “with particularity the 

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Under Illinois law, fraud 

claims must be pleaded with sufficient specificity, particularity, and certainty, including 

identifying the who, what, and when of the fraud. Bd. Of Educ. v. A C & S, Inc., 131 Ill.2d 

428, 457 (1989). Because the standards are similar, there is no difference in the outcome of 

the fraudulent joinder analysis for Custom Classic’s two fraud claims, regardless of whether 

the federal or state pleading standard applies.

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(citing Miller v. Sutliff, 241 Ill. 521 (1909)). Even assuming Williams said the 

defendants “are paying” for the repairs, Custom Classic understood her statement as 

a promise to pay in the future, since Custom Classic did not expect payment until 

months later, after it submitted an invoice. [1-1] at 8, ¶ 17.11 Custom Classic also fails 

to allege that Williams knew or believed the statements she made were false. Axalta’s 

knowledge that Williams’s statements may not have been authorized or true, [1-1] at 

9, ¶¶ 21–22, does not permit a reasonable inference about Williams’s state of mind. 

See Gerill Corp. v. Jack L. Hargrove Builders, Inc., 128 Ill.2d 179, 193 (1989) (the 

defendant must have knowingly made a false statement or a statement with reckless 

disregard for its truth or falsity). To the extent Custom Classic attempts to allege a 

“scheme to defraud,” its one allegation that Williams made the same or similar 

promises in the past fails to establish a pattern of fraud (with particularity) because 

Custom Classic was compensated in those instances—no fraud occurred. [1-1] at 11, 

¶ 35. Based on the allegations in the complaint, there is no reasonable possibility that 

Custom Classic could prevail against Williams on its claim of common law fraud. 

11 Axalta attributes only two statements to Williams—the phrases Custom Classic quoted 

Williams as saying. [1-1] at 8, ¶ 14. But Custom Classic is not required to allege verbatim 

quotations to state a claim against Williams. Custom Classic’s complaint states Williams 

“explicitly represented that Axalta and/or Standox would compensate Custom Classic for 

repairing the defective Standox product.” [1-1] at 8, ¶ 14. The complaint also permits a 

reasonable inference that Williams—not the customer—said Axalta “are paying to skim coat 

the whole body, prep, prime, prep, and paint.” [1-1] at 8, ¶ 17. At this stage in the pleadings, 

all issues of law and fact must be resolved in Custom Classic’s favor. See Morris v. Nuzzo, 

718 F.3d 660, 666 (7th Cir. 2013). Nevertheless, these allegations are promises of future

payment and therefore not fraudulent.

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Custom Classic’s claim against Williams under the Illinois Consumer Fraud 

and Deceptive Business Practices Act fails for a different reason.12 Under the Act, a 

plaintiff must show 1) a deceptive act or practice by the defendant; 2) the defendant’s 

intent that the plaintiff rely on the deception; 3) the deception occurred in the course 

of trade or commerce; and 4) the consumer fraud proximately caused actual damage 

to the plaintiff. Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100, 180 (2005). “A 

breach of contractual promise, without more, is not actionable” under the Act. Id. at 

169. The deceptive act or practice must involve “more than the mere fact that a 

defendant promised something and then failed to do it. That type of 

‘misrepresentation’ occurs every time a defendant breaches a contract.” Id. (citations 

and quotations omitted). Here, Custom Classic alleges that the fraud was “making 

knowingly false and fraudulent representations to Custom Classic,” specifically that 

the “[d]efendants would compensate Custom Classic for costs incurred” for the 

transportation and repair of the Camaro. [1-1] at 11–12, ¶¶ 34, 39. These allegations, 

at most, only establish that Williams “promised something and then failed to do it.”

Greenberger v. GEICO General Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011) (holding 

that allegations of false promises to restore vehicles and omissions about those 

promises were “nothing more than restatements of the claimed breach of contract, 

albeit using the language of fraud.”). Because Custom Classic fails to allege a 

12 Custom Classic may sue Williams under the Act. See Garcia v. Overland Bond & Inv. Co., 

282 Ill.App.3d 486, 496 (1st Dist. 1996) (“Section 10(a) of the Consumer Fraud Act states that 

those damaged by violations of the Act may sue ‘any person’ who violates the Act. Section 1(c) 

of the Act includes corporations and the salesmen and employees who work for these 

corporations within the definition of the term ‘person.’”). 

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deceptive act or practice distinct from its breach of contract claims, Custom Classic 

has no chance of success against Williams under the Act.13 

Based on Custom Classic’s complaint at the time of removal, there is no 

possibility that Custom Classic can establish a cause of action against Williams. She 

was fraudulently joined.14 Williams is disregarded for jurisdictional purposes and 

dismissed without prejudice.15 

B. Motion to Transfer 

Axalta argues that the forum selection clause in the 2014 exclusive 

requirements contract, [7-1] at 12, requires transferring this case to the Eastern 

District of Pennsylvania. I interpret the forum selection clause under “the law 

designated in the [contract’s] choice of law clause.” Jackson v. Payday Fin., LLC, 764 

F.3d 765, 775 (7th Cir. 2014); see also Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 

421, 423 (7th Cir. 2007). The 2014 contract contained a Pennsylvania choice of law 

13 Because Custom Classic’s claim fails as alleged, I do not reach the parties’ other arguments 

under the Act. 

14 Because Williams was fraudulently joined, her consent was not required for removal. See 

Northern Illinois Gas Co. v. Airco Indus. Gases, A Division of Airco, Inc., 676 F.2d 270, 272 

(7th Cir. 1982) (nominal parties are disregarded for removal purposes and need not join in 

the petition).

15 While fraudulent joinder can be grounds for dismissing a non-diverse defendant with 

prejudice, see Walton v. Bayer Corp., 643 F.3d 994, 1001 (7th Cir. 2011), there is no brightline rule about whether fraudulently joined defendants should be dismissed with or without 

prejudice. Compare Henneberger v. Ticom Geomatics, Inc., 2016 WL 9663264, at *3 (S.D.Ill. 

2016) (dismissing claims against fraudulently joined defendant without prejudice), with

Sagez v. Columbus McKinnon Corporation, 2015 WL 13836836, at *4 (S.D.Ill. 2015) 

(dismissing claim against fraudulently joined defendant with prejudice). Ordinarily, courts 

in this circuit dismiss defendants without prejudice once before dismissing them with 

prejudice and here there is no reason to stray from that practice.

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provision, [7-1] at 12, so Pennsylvania law governs the forum selection clause and 

whether it applies to this dispute. 

Under Pennsylvania law, the scope of a forum selection clause is a matter of 

contract interpretation. See Morgan Trailer Mfg. Co. v. Hydraroll, Ltd., 2000 PA 

Super 228, ¶¶ 11–13.16 The 2014 contract between Axalta and Custom Classic said: 

“[e]ach party consents and submits to the exclusive jurisdiction of, and service of 

process by, the United States District Court for the Eastern District of Pennsylvania 

and the state courts of Pennsylvania.” [7-1] at 12. Axalta argues this sentence means 

Custom Classic agreed to litigate any issue in Pennsylvania, regardless of whether it 

pertained to the contract. But the sentence is in a paragraph that repeatedly refers 

to the Master Agreement; the surrounding text suggests that the forum selection 

clause relates to disputes arising out of the contract. Axalta fails to cite a single 

Pennsylvania case that interprets a forum selection clause to apply to matters outside 

the scope of the agreement. See Morgan Trailer Mfg. Co., 2000 PA Super 228, ¶¶ 11–

13 (tort claims unrelated to the sale of products were not subject to the contract’s 

forum selection clause); Autochoice Unlimited, Inc. v. Avangard Auto Finance, Inc., 9 

A.3d 1207, 1212 (Pa.Super. 2010) (the forum selection clause covered non-contract 

claims that arose in connection with the contractual relationship); see also John 

16 Under Pennsylvania’s rules of contract interpretation, the court must ascertain the intent 

of the contracting parties. Commonwealth by Shapiro v. UPMC, 208 A.3d 898, 909 (2019) 

(citations omitted). Clear and unambiguous terms are the best reflection of the parties’ intent. 

Id. If the terms are ambiguous, meaning they are susceptible to more than one reasonable 

interpretation, the court may resort to extrinsic evidence to ascertain their meaning. Id. at 

910. The entire contract should be read as a whole, and the interpretation of one provision 

cannot annul another. Id. at 911.

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Wyeth & Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d 1070, 1073 (3d Cir. 1997)

(disputes that “arise in relation to” a contract must have some “logical or causal 

connection” to the agreement). This dispute does not arise out of and is not in relation 

to the 2014 contract, since Custom Classic could litigate this repair dispute—which 

is rooted in a 2006 warranty that predates the master and incentive agreements—

independent of its exclusive requirements relationship with Axalta. The forum 

selection clause in the 2014 contract does not apply to this lawsuit.17

Axalta’s argument that Custom Classic should have raised its claims as 

counterclaims in the earlier litigation similarly fails. Under Federal Rule of Civil 

Procedure 13(a), a defendant must raise any claim that 1) exists at the time of 

pleading; 2) arises out of the same transaction or occurrence as the opposing party’s 

claim; and 3) does not require parties over whom the court does not have jurisdiction. 

Burlington Northern R.Co. v. Strong, 907 F.2d 707, 710–11 (7th Cir. 1990). Otherwise 

17 Because I conclude the scope of the forum selection clause in the 2014 agreement does not 

cover this dispute, I do not reach the question of whether the clause is unenforceable. See 

Autochoice Unlimited, Inc. v. Avangard Auto Finance, Inc., 9 A.3d 1207, 1215 (Pa.Super. 

2010) (a valid forum selection clause may be deemed unenforceable if the clause was induced 

by fraud or overreaching; if the clause is so unfair or inconvenient that it will deprive a party 

of an opportunity to be heard; or if the clause violates public policy). Axalta’s arguments 

about an implied-in-fact contract defense are meritless since Custom Classic only alleges an 

express contract between Axalta and Custom Classic, through the oral representations made 

by Axalta representatives and the express warranty. See Bricklayers of Western Pennsylvania 

Combined Funds, Inc. v. Scott’s Development Co., 90 A.3d 682, 695 (2014) (an implied-in-fact 

contract arises when the intention of the parties is not expressed, but an agreement in fact 

creating an obligation is implied or presumed from their acts). Because there is no impliedin-fact contract, Axalta’s argument that this dispute relates to the 2014 contract based on an 

implied-in-fact defense fails. Other than its reliance on the forum selection clause, Axalta 

offers no argument that the Eastern District of Pennsulvania is more convenient for the 

parties or witnesses or that the interests of justice weigh toward transfer. Custom Classic is 

here, Williams is here, and Axalta is capable of litigating in this district. Transfer is not 

appropriate. 

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the claim is barred. Id. at 710.18 The rule encourages the simultaneous and final 

resolution of all claims that arise from a common factual background. Id. (citation 

and quotation omitted). To determine whether a claim arises out of the same 

transaction or occurrence, the court must consider the totality of the claims, the 

nature of the claims, the legal basis for recovery, the law involved, and the respective 

factual backgrounds. Id. at 711. Axalta’s earlier lawsuit concerned a different set of 

facts: Custom Classic allegedly breached the 2014 exclusive requirements contract 

and owed a termination fee and damages. [7-1] at 2–8. Custom Classic’s lawsuit here 

concerns a Standox product used in 2006 and the subsequent paint repairs required 

years later. [1-1] at 6–13. Axalta fails to show what provisions in the 2014 agreement 

apply to this lawsuit about an old, defective product. The claims from each lawsuit 

are not logically related. Custom Classic’s claims are not barred under the compulsory 

counterclaim rule.19

Axalta’s motion to transfer is denied. 

C. Motion to Dismiss 

Whether Custom Classic’s remaining counts against Axalta survive depends

on whether they state a claim under Federal Rule of Civil Procedure 12(b)(6). To state 

a breach of contract claim under Illinois law, a plaintiff must allege a valid and 

enforceable contract, performance by the plaintiff, a breach by the defendant, and the 

18 “The ‘compulsion’ of a compulsory counterclaim is a procedural implementation of the 

doctrine of res judicata.” Greene v. U.S. Dept. of Educ., 770 F.3d 667, 670 (7th Cir. 2014). 

19 Because the claims do not arise out of the same transaction or occurrence, I do not reach 

the issue of joining Williams as a third party for purposes of a compulsory counterclaim or 

whether Axalta’s compulsory counterclaim argument is procedurally defective.

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resultant injury to the plaintiff. American Remodal & Construction, Inc. v. 

Fernandez, 2020 IL App (1st) 192026-U, ¶ 36 (citing Burkhart v. Wolf Motors of 

Naperville, Inc. ex rel. Toyota of Naperville, 2016 IL App (2d) 151053, ¶ 14). A valid 

and enforceable contract requires an offer, an acceptance, and consideration. Id. ¶ 39 

(citing Talbert v. Home Savings of America, F.A., 265 Ill. App. 3d 376, 380 (1994)). 

There must be a “meeting of the minds or mutual assent as to the terms of the 

contract.” Id. (citing Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 

306, 313 (1987)). The “conduct of the contracting parties indicates an agreement to 

the terms of the alleged contract.” Id. (citation and quotation omitted). Here, Axalta 

representatives expressly stated that Axalta would compensate Custom Classic for 

the transportation and repair of the Camaro. [1-1] at 7–8, ¶¶ 13–17. Custom Classic 

agreed and repaired the vehicle. [1-1] at 8, ¶¶ 15–16. The complaint alleges that 

Axalta, through Williams, established a relationship with Custom Classic and it is 

reasonable to infer at this stage that Axalta’s payment was in exchange for 

maintaining a positive relationship with Custom Classic. See Doyle v. Holy Cross 

Hosp., 186 Ill.2d 104, 112 (1999) (“Consideration consists of some detriment to the 

offeror, some benefit to the offeree, or some bargained-for exchange between them.”). 

Axalta’s actions were consistent with this agreement—Axalta representatives 

inspected the vehicle and coordinated the repair process with Custom Classic 

multiple times, including a visit to Custom Classic’s office. [1-1] at 6–8, ¶¶ 10–17. 

Custom Classic sufficiently alleges a “meeting of the minds” and a valid and 

enforceable contract based on Axalta’s oral representations.

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To state a breach of express warranty action under the Illinois Uniform 

Commercial Code, “the plaintiff must show a breach of an affirmation of fact or 

promise that was made a part of the basis of the bargain. Since express warranties 

are contractual in nature, the language of the warranty itself is what controls and 

dictates the obligations and rights of the various parties.” Hasek v. DaimlerChrysler 

Corp., 319 Ill.App.3d 780, 788 (1st Dist. 2001) (citations omitted). Custom Classic 

alleges a lifetime warranty between Standox and Custom Classic’s customer but does 

not explain how this contract involves the rights and obligations of Custom Classic 

and Axalta. [1-1] at 6–7, ¶ 8; [1-1] at 14–15. In the original complaint, Custom Classic 

does not allege Axalta is the successor-in-interest to the Standox warranty or that 

Custom Classic has a valid assignment of its customer’s rights under the express

warranty. See Collins Co., Ltd., 125 Ill.2d at 507 (to sue for economic loss under an 

express warranty, the plaintiff must be the warrantee or have a valid assignment to 

be in privity with the warrantor). Custom Classic fails to sufficiently plead a breach 

of warranty claim against Axalta. 

Custom Classic’s two remaining fraud claims against Axalta suffer from the 

same defects as its fraud claims against Williams. The statements Axalta made 

amount to a promise about future conduct, and promissory fraud is not actionable in 

Illinois. See Wigod, 673 F.3d at 570. Standing alone, Axalta’s after-the-fact 

admissions that Williams’s statements may have been unauthorized or untrue, [1-1] 

at 9, ¶¶ 21–22, do not permit a reasonable inference that Axalta knowingly or 

recklessly made false statements about compensating Custom Classic for the repair.

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Finally, the fraud Custom Classic alleges under the Illinois Consumer Fraud Act is 

not distinct from the conduct underlying its breach of contract claim and therefore 

does not constitute a “deceptive act or practice.” Avery, 216 Ill.2d at 169.20 Custom 

Classic fails to state a fraud claim under common law or the Act. All of Custom 

Classic’s claims are dismissed except the contract claim. The dismissal is without 

prejudice. See Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago and 

Northwest Indiana, 786 F.3d 510, 519 (7th Cir. 2015) (“a plaintiff whose original 

complaint has been dismissed under Rule 12(b)(6) should be given at least one 

opportunity to try to amend [its] complaint before the entire action is dismissed.”). 

20 While I do not reach the parties’ other arguments under the Illinois Consumer Fraud Act, 

if Custom Classic amends its complaint, it should sufficiently plead how it qualifies as a 

consumer or meets the consumer-nexus test under the Act. 

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V. Conclusion 

Custom Classic’s motion to remand, [15], is denied and Williams is dismissed 

without prejudice. Axalta’s motion to transfer, [5], is denied. Axalta’s motion to 

dismiss, [5], is granted in part, denied in part. Standox North America, Inc. is 

dismissed with prejudice and the Clerk shall terminate it as a party to the case.

Custom Classic has leave to amend its complaint by January 4, 2021. If an amended 

complaint is not filed, the dismissal of Counts II through IV will convert to a dismissal 

with prejudice, and the case will proceed on Count I. Axalta’s answer is due by 

January 25, 2021, and the parties shall file a status report with a proposed case 

schedule on January 25, 2021. 

ENTER:

___________________________

Manish S. Shah

United States District Judge

Date: December 11, 2020

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