Scullin Steel Co. v. Evans Products Co., 83 C 253.

• Decision Date: 02 June 1983
• Docket Number: No. 83 C 253.,83 C 253.
• Citation: 563 F. Supp. 825
• Parties: SCULLIN STEEL COMPANY, Plaintiff, v. EVANS PRODUCTS COMPANY and Evans Transportation Company, Defendants.
• Court: U.S. District Court — Northern District of Illinois

563 F. Supp. 825

SCULLIN STEEL COMPANY, Plaintiff, v. EVANS PRODUCTS COMPANY and Evans Transportation Company, Defendants.

No. 83 C 253.

United States District Court, N.D. Illinois, E.D.

June 2, 1983.

James J. Shoemake, Francis G. Slay, Deborah L. Ober, Guilfoil, Symington, Petzall & Shoemake, St. Louis, Mo., Stanley M. Lipnick, Arnstein, Gluck & Lehr, Chicago, Ill., for plaintiff.

Leonard Schanfield, Robert R. Tepper, Erica Tina Helfer, Rosenthal & Schanfield, Chicago, Ill., Thomas E. Wack, St. Louis, Mo., for defendants.

MEMORANDUM AND ORDER

BUA, District Judge.

This matter comes before this Court on a motion by defendants Evans Products Company and Evans Transportation Company (Evans Transportation) to dismiss for failure to state a claim upon which relief may be based pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff, Scullin Steel Company (Scullin), is seeking punitive damages as a consequence of defendants' breach of contract. For the reasons stated herein, Evans Transportation's motion to dismiss is granted.

Scullin, a Delaware corporation, having its principal place of business in Missouri, is engaged in the manufacturing of steel castings used in the construction of railroad cars. Evans Transportation, both incorporated and having its principal place of business in Illinois, is engaged in the manufacturing and leasing of railroad cars.¹ On June 19, 1978, the parties entered into a sales agreement in which Evans Transportation was to purchase, at a stated price over a period of years, a specified amount of car sets of side frame and bolster steel castings. As of April 15, 1980, Evans Transportation had not purchased the required amount of steel castings stipulated in the sales agreement. Subsequently, Scullin demanded and received written assurances of Evans Transportation's full compliance in the future. However, Evans Transportation breached the contract by continuing to order fewer castings than it had agreed to purchase.

The complaint consists of two counts. In Count I, Scullin alleges that Evans Transportation materially breached the contract by failing to purchase the requisite amount of steel castings. In Count II, Scullin claims that Evans' conduct, in relation to the breach of contract, was sufficiently egregious to rise to the level of an independent tort and thus serve as a basis for an award of punitive damages. The motion before the Court concerns Count II. There are two discernible issues raised by this Count. First, whether, under Missouri law, a breach of contract can ever create liability in tort, and second, whether Scullin has alleged sufficient facts in support of its claim that Evans' conduct constitutes an independent tort.

In the instant case, the defendant has asked this Court to dismiss Count II for failure to state a claim upon which relief may be granted. In evaluating a motion of this nature, a federal district court's role is a fairly narrow one, for a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

Where, as here, an action has been removed to a federal court and subsequently transferred to another district, the Court must carefully determine the applicable law of the case since it may ultimately have an outcome determinative effect on the final decision. The Supreme Court has held on two occasions concerning actions on contracts made and to be performed in states other than that of the forum, that the Erie Doctrine requires a federal court to ascertain and apply the conflict of laws rules of the forum state, and to declare as a matter of state policy that the rights and liabilities of the parties shall be determined according to the law of the forum or of the state which is the locus of the contract or cause of action. See Klaxon Co. v. Stentor Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481 (1942). In the instant matter, prior to transfer, Missouri law was properly chosen as the applicable law since Missouri was both the forum and locus of the contract. In addition, where the defendant seeks and is granted a transfer pursuant to 28 U.S.C. § 1404(a), as happened in this case, the transferee district court is obligated to apply the state law that would have been applied if there had been no change of venue. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). Thus, in this particular case, Missouri law, as agreed to by the parties, is binding and will be implemented to determine their respective rights and liabilities.

As a general rule,...