Pyramid Controls, Inc. v. Siemens Industrial Automations, Inc.

977 F. Supp. 892, 1997 U.S. Dist. LEXIS 14713, 1997 WL 595286
CourtDistrict Court, N.D. Illinois
DecidedSeptember 23, 1997
DocketNo. 97 C 3596
StatusPublished

This text of 977 F. Supp. 892 (Pyramid Controls, Inc. v. Siemens Industrial Automations, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pyramid Controls, Inc. v. Siemens Industrial Automations, Inc., 977 F. Supp. 892, 1997 U.S. Dist. LEXIS 14713, 1997 WL 595286 (N.D. Ill. 1997).

Opinion

MEMORANDUM OPINION AND ORDER

ALESIA, District Judge.

Before the court is defendants Siemens Industrial Automations, Inc. and Siemens Energy & Automation, Inc.’s (collectively “Siemens”) motion to dismiss plaintiff Pyramid Controls, Inc.’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the court grants Siemens’ motion to dismiss.

I. BACKGROUND

Pyramid alleges the following facts which, for the purposes of this motion, áre taken as true. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984). Siemens manufactures and sells industrial automation products and devices. In 1991, Pyramid entered into two distributor agreements with Siemens. The agreements gave Pyramid the right to offer, sell, and distribute Siemens’ products. The agreements provided that Pyramid was to sell the products under a marketing plan. In addition, the agreements required Pyramid to build a high-tech training center and to purchase from Siemens training and demonstration equipment which cost thousands of dollars. On June 14, 1995, Siemens advised Pyramid that Siemens was terminating the distributor agreements and was turning over the entire product line covered by the agreements to a competing distributor.

In January of 1997, during a conversation with its attorney, Pyramid learned for the first time that the distributor agreements created a franchise relationship between Pyramid and Siemens that was protected under the Illinois Franchise Disclosure Act of 1987 (the “IFDA”) and that Siemens had violated the IFDA. On May 15, 1997, Pyramid filed this lawsuit against Siemens. Pyramid alleges that Siemens terminated the franchise without good cause in violation of section 705/19 of the IFDA which caused Pyramid to suffer in excess of $75,000 in damages. This court has subject matter jurisdiction over the case pursuant to 28 U.S.C. § 1332, as there exists complete diversity between the parties and the amount in controversy exceeds $75,-000.

Siemens argues that Pyramid’s suit should be dismissed for two reasons. First, Siemens contends that Pyramid’s suit is time barred by the applicable statute of limitations. Second, Siemens contends that Pyramid’s complaint is insufficient to state a cause of action because Pyramid alleges no facts which support the allegation that Siemens terminated the franchise without good cause.

II. DISCUSSION

A. Legal standard

When deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must accept all factual allegations in the complaint as true and draw all reasonable .inferences in favor of the plaintiff. Cromley v. Board of Educ. of Lockport, 699 F.Supp. 1283, 1285 (N.D.Ill.1988). If, when viewed in the light most favorable to the plaintiff, the complaint fails to state a claim upon which relief can be granted, the court must dismiss the ease. See Fed.R.Civ.P. 12(b)(6); Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir.1987). However, the court may dismiss the complaint only if it appears beyond a doubt that the plaintiff can prove no set of facts in support of its claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

B. Whether the complaint is time barred

Siemens argues that Pyramid’s complaint is time barred by section 705/27 of the IFDA which provides the statute of limitations for IFDA claims. 815 ILCS § 705/27. Section 705/27 provides that a private plaintiff may not bring a cause of action under the IFDA

unless brought before the expiration of 3 years after the' act or transaction constituting the violation upon which it is based, the [894]*894expiration of one year after the franchisee becomes aware of facts or circumstances reasonably indicating that he may have a claim for relief in respect to conduct governed by this Act, or 90 days after delivery to the franchisee of a written notice disclosing the violation, whichever shall first expire.

815 ILCS § 705/27.

Pyramid filed its complaint on May 15, 1997. Siemens contends that the one-year limitation period bars Pyramid’s complaint because Pyramid had knowledge of facts or circumstances reasonably indicating a statutory claim for relief as of June 14, 1995, the date on which Siemens notified Pyramid of the termination. Pyramid responds that it did not have knowledge of a claim for relief until January of 1997 when it learned for the first time, during the course of a conversation with its attorney, that the distributor agreements were a franchise under the IFDA and that Siemens had violated the IFDA.

In order to determine whether Pyramid’s complaint was timely filed, the court must determine whether section 705/27 requires that the plaintiff be aware that he may have a cause of action under the IFDA or, alternatively, whether section 705/27 simply requires that the plaintiff be aware that he may have some cause of action. Unfortunately, neither the parties nor this court has found a case directly addressing this issue.

Illinois courts, however, have ruled on the predecessor to the current section 705/27. Before it was amended in 1987, section 705/27 provided that an IFDA claim may not be brought after “the expiration of one year after the discovery of the fact constituting the violation.” Ill.Rev.Stat. ch. 121$, § 722 (1987). Interpreting this section, the Illinois appellate court held that the one-year time period begins to run once the plaintiff has knowledge of a violation of the IFDA and whether the plaintiff has such knowledge is a “mixed question of law and fact on which laymen are entitled to acquire their first knowledge from an attorney.” Port City Leasing v. Loffredo, 114 Ill.App.3d 775, 70 Ill.Dec. 560, 562, 449 N.E.2d 907, 909 (1983). The reasoning underlying this holding was that a plaintiff might not know that he was protected by the IFDA until after he had consulted with an attorney. Brenkman v. Belmont Marketing, Inc., 87 Ill.App.3d 1060, 43 Ill.Dec. 500, 504, 410 N.E.2d 500, 504 (1980).

Effective January 1, 1988, the language of section 705/27 was amended to provide, in pertinent part, that a plaintiff must bring an IFDA claim before “the expiration of one year after the franchisee becomes aware of facts oí circumstances reasonably indicating that he may have a claim for relief in respect to conduct governed by this Act.” § 705/27.

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Related

Conley v. Gibson
355 U.S. 41 (Supreme Court, 1957)
Hishon v. King & Spalding
467 U.S. 69 (Supreme Court, 1984)
Hengel, Inc. v. Hot 'N Now, Inc.
825 F. Supp. 1311 (N.D. Illinois, 1993)
Cromley v. Bd. of Educ. of Lockport
699 F. Supp. 1283 (N.D. Illinois, 1988)
Servpro Industries, Inc. v. Schmidt
905 F. Supp. 475 (N.D. Illinois, 1995)
Brenkman v. Belmont Marketing, Inc.
410 N.E.2d 500 (Appellate Court of Illinois, 1980)
Port City Leasing v. Loffredo
449 N.E.2d 907 (Appellate Court of Illinois, 1983)

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Bluebook (online)
977 F. Supp. 892, 1997 U.S. Dist. LEXIS 14713, 1997 WL 595286, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pyramid-controls-inc-v-siemens-industrial-automations-inc-ilnd-1997.