Westfield Ins. Co. A/s/o Sandrock Enter.S Inc v. Birkey's Farm Store Inc

• Decision Date: 17 March 2010
• Docket Number: No. 3-09-0501.,3-09-0501.
• Citation: Westfield Ins. Co. v. Birkey's Farm Store, Inc., 399 Ill.App.3d 219, 924 N.E.2d 1231, 338 Ill.Dec. 705 (Ill. App. 2010)
• Parties: WESTFIELD INSURANCE COMPANY a/s/o Sandrock Enterprises, Inc., an Illinois Corporation, d/b/a Sandrock Farms, and Gary L. Sandrock, Plaintiff-Appellant,v.BIRKEY'S FARM STORE, INC., d/b/a Birkey's Construction Equipment Company, an Illinois Corporation, and CNH America, LLC, a Foreign Business Corporation, Defendants-Appellees.
• Court: Appellate Court of Illinois

399 Ill.App.3d 219

924 N.E.2d 1231

338 Ill.Dec. 705

WESTFIELD INSURANCE COMPANY a/s/o Sandrock Enterprises, Inc., an Illinois Corporation, d/b/a Sandrock Farms, and Gary L. Sandrock, Plaintiff-Appellant,v.BIRKEY'S FARM STORE, INC., d/b/a Birkey's Construction Equipment Company, an Illinois Corporation, and CNH America, LLC, a Foreign Business Corporation, Defendants-Appellees.

No. 3-09-0501.

Appellate Court of Illinois Third District.

March 17, 2010.

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Roland S. Keske (argued), Robert Ostojic, Alexander W. Ross, Leahy, Eisenberg & Fraenkel, Ltd., Chicago, for Westfield Insurance Company.

Charles Peter Rantis, Meghan M. Sciortino, David M. Macksey, Garrett L. Boehm (argued), John W. Bell, William G. Beatty, Johnson & Bell, Ltd., Chicago, for CNH America, LLC.

Troy A. Lundquist (argued), Stacy K. Shelly, Langhenry, Gillen, Lundquist & Johnson, LLC, Rockford, for Birkey's Farm Store, Inc.

Justice CARTER delivered the opinion of the court:

Plaintiff, Westfield Insurance Company (Westfield), filed a fourth amended complaint against defendants Birkey's Farm Store Inc. (Birkey's), and CNH America, LLC (CNH), under a theory of subrogation, seeking damages related to a tractor fire. Defendants moved to dismiss seven of the eight counts of the fourth amended complaint for various reasons. The trial court granted the motions to dismiss and denied Westfield's request for leave to file a fifth amended complaint. Westfield appeals, arguing that: (1) the trial court erred in dismissing Westfield's tort causes of action against each defendant based upon a finding that the causes of action were barred by the economic loss doctrine; (2) the trial court erred in dismissing Westfield's breach of warranty claims against Birkey's based upon a finding that the warranties were effectively disclaimed by a valid warranty disclaimer; and (3) the trial court erred in denying Westfield's request for leave to file a fifth amended complaint. We affirm.

FACTS

In January of 2006, Sandrock Enterprises, Inc., an Illinois corporation doing business as Sandrock Farms, sought to purchase a Case IH farm tractor for its farming operations. Sandrock Farms negotiated a purchase through Birkey's since Birkey's was a certified dealer of Case IH tractors. Originally, Sandrock Farms agreed to purchase from Birkey's a Case IH Model STX 500 4WD tractor that did not include an auto steer system. However, some time after the original negotiations, Birkey's contacted Sandrock Farms and indicated that it was not able to find a tractor with the exact specifications that Sandrock Farms sought. Birkey's told Sandrock Farms further that it was able to find a Case IH Model STX 500 4WD tractor with the same or similar specifications but with extra equipment in the form of an auto steer system. In February of 2006, Sandrock Farms agreed to purchase that tractor instead and negotiated a price with Birkey's of $10,795 for the auto steer system. Sandrock Farms took delivery of the tractor from Birkey's with the auto steer system already installed. The total purchase price of the tractor with the auto steer system was $205,000. The tractor was manufactured by CNH.

Less than a year later, in October of 2006, the tractor caught on fire during normal agricultural use and was extensively damaged. Sandrock filed a claim for the damage with its insurer, Westfield, and Westfield paid out on the claim. Westfield later brought suit under a theory of subrogation against both Birkey's and CNH. In its suit, Westfield alleged both tort and contract causes of action.

In November of 2007, Westfield filed its five-count original complaint in this case in Kane County naming Birkey's and Case IH Agricultural Equipment, Inc. (Case IH), as defendants. The original complaint alleged the following causes of action: count I, strict products liability against Case IH; count II, negligence against Case IH; count III, negligence against Birkey's; count IV, breach of contract against Birkey's; and count V, breach of warranty of merchantability against Birkey's. With regard to its tort causes of action against CNH (counts I and II), Westfield merely alleged that the tractor ignited, “resulting in the fire which communicated to other portions of the [t]ractor, causing severe and extensive damage all to the ultimate loss and damage of Westfield.” Westfield made essentially that same allegation with regard to its tort cause of action against Birkey's (count III) but also added the allegation that “Sandrock's property sustained fire and fire related damage, including loss of business income.”

Attached to the original complaint (and to most of the later-filed amended complaints) was a copy of the two-page written purchase order between Birkey's and Sandrock Farms. The purchase order provided that on February 15, 2006, Sandrock Farms purchased a new Case IH STX 500 4WD tractor with an auto steer system from Birkey's for $205,000. About three-fourths of the way down on the first page of the purchase order, in small print with all capital letters, was the following text: “SELLER AND MANUFACTURER MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS) EXCEPT AS PROVIDED ON THE REVERSE SIDE.” Just below that text, in small print under a heading entitled, “NOTICE TO PURCHASER,” was additional text which, among other things, instructed the purchaser to read the contract before he or she signed it. The first page of the purchase order was signed at the bottom by someone on behalf of Birkey's (signature unreadable) and by Gary Sandrock of Sandrock Farms. Above the signature line in small print was the typewritten notation, “[i]t is understood that this is the entire agreement between the parties.”

On the second page (or possibly the reverse side) of the purchase order, in approximately the middle of the page, was the heading, “ WARRANTY,” in bold, all-capital letters, which were somewhat larger than the letters in the other text of the document. Specifically with regard to new equipment, the warranty section stated that, “[a]ny warranties provided by the Dealer on any NEW EQUIPMENT set forth on the reverse side hereof shall be given to Purchaser by separate statement, the receipt whereof is hereby acknowledged by Purchaser.” No signatures appear on the second page of the purchase order.

In February of 2008, CNH filed its answer and affirmative defenses in response to the original complaint. In its pleading, CNH alleged, among other things, that it had been incorrectly sued under the wrong name, Case IH, and that CNH was its appropriate designation for the purposes of the instant action. Later that same month, the Kane County trial court ordered Westfield to file a first amended complaint to correct the name of the defendant from Case IH to CNH. In addition, the Kane County trial court granted Birkey's leave to file a motion to dismiss count IV of the complaint, alleging that Westfield failed to state a cause of action for breach of contract.

In March of 2008, Westfield filed its first amended complaint in Kane County, as it had been directed to do by the Kane County trial court, to correct the name of the codefendant from Case IH to CNH.

In April of 2008, Birkey's filed a motion to transfer the case to Whiteside County based on forum non conveniens. Later that same month, the Kane County trial court entered an order, which, among other things, granted Birkey's motion to dismiss count IV of the first amended complaint, with leave to replead, and granted Westfield leave to file a second amended complaint.

In May of 2008, Westfield filed its second amended complaint in Kane County. The six-count second amended complaint alleged the following causes of action: count I, strict products liability against CNH; count II, negligence against CNH; count III, negligence against Birkey's; count IV, strict products liability against Birkey's; count V, breach of warranty of merchantability against Birkey's; and count VI, breach of warranty of fitness for a particular purpose against Birkey's. As for both tort causes of action against CNH (counts I and II) and the strict products liability cause of action against Birkey's (count IV), Westfield merely alleged that the tractor ignited, “resulting in the fire which communicated to other portions of the [t]ractor, causing severe and extensive damage all to the ultimate loss and damage of Westfield.” Westfield made essentially that same allegation with regard to its negligence cause of action against Birkey's as well (count III) but also added the allegation that “Sandrock's property sustained fire and fire related damage, including loss of business income.”

Later that same month, Birkey's filed a motion to dismiss count IV of the second amended complaint pursuant to section 2-621(b) of the Code of Civil Procedure (Code) (735 ILCS 5/2-621(b) (West 2008)), alleging that dismissal of count IV was mandated because Birkey's was not the manufacturer of the tractor in question and because the manufacturer was named in the complaint, had already been served, and had filed an answer in the proceedings. Attached to the motion was the certifying affidavit of Dennis Johnson, the manager of Birkey's. In the affidavit, Johnson attested that Birkey's was not the manufacturer of the tractor in question, that Birkey's did not exercise control over the design or manufacture of the tractor, that Birkey's did not provide any instructions or warnings to the manufacturer regarding any alleged defects in the tractor, and that Birkey's had no knowledge of any alleged defects in the tractor.

In July of 2008, the Kane County trial court entered an order granting Birkey's motion to transfer the case to Whiteside County. The Kane County trial court also gave CNH leave to file a motion to dismiss counts I and II of the second amended complaint, alleging that the counts were...