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Judge dismisses Unilever's first try to sue Johnson Controls over collapse of Melrose Park factory deal

By Robert Lawson | Mar 16, 2017

CHICAGO — A Chicago federal judge dismissed the first attempt at a lawsuit brought by Unilever against Johnson Controls over the collapse of a deal to sell a factory in Melrose Park.

Unilever PLC, a manufacturing company based in the United Kingdom, filed suit against Johnson Controls in February alleging the company failed to implement a security contract that ultimately cost the company $4 million from theft.

The lawsuit was filed in U.S. District Court for the Northern District of Illinois, with Judge Joan B. Gottschall presiding. 

Unilever, according to court documents, intended to sell off one of its large industrial facilities as a turnkey operation. In so doing, the company contracted with JCI, which was to provide security at the facility. According to Unilever's complaint, JCI failed to prevent the theft of electronic controls and other items at the facility.

Unilever filed the complaint for breach of contract. The company seeks around $4 million in damages, which it estimates to be the difference between the price for which they could have sold the facility had the thefts not taken place, and the actual sale price, according to court documents.

JCI filed a motion to dismiss the complaint, contending Unilever can't recover the decrease in the facility’s market value as general contract damages.

The court analyzed the case and found it to be within the New York choice of law regarding negligence as it relates to contract law in the case. Under such contract law, the court had to weigh whether Unilever suffered "consequential," "special" or "general" damages from the alleged negligence, assuming the plaintiff's assertions were true. 

The court said that because JCI knew there was intent to sell the facility, it was therefore liable for special damages. However, the court noted Unilever's burden to prove special damages included proving that JCI “contemplated at the time of the contract's execution that it assumed legal responsibility for these damages upon a breach of the contract,” citing Booth v. Spuyten Duyvil Rolling Mill Co.

Unilever contended JCI was liable for general damages as "[a] party injured by breach of contract is entitled to be placed in the position it would have occupied had the contract been fulfilled according to its terms,” adding that is the only condition needed to meet the general damages liability burden of proof as it relates to the security contract with JCI. 

The court relied upon another case, Reads Co. LLC v. Katz, to determine:

"As with lost profits, the parties to a contract must have contemplated the recovery of damages for an asset’s diminution in value when the contract was formed before general damages can be recovered."

The judge ultimately decided to grant JCI's motion to dismiss, but left Unilever the opportunity to amend its complaint by March 8, which Unilever did. 

U.S. District Court for the Northern District of Illinois case No. 16-CV-01849. 

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U.S. District Court for the Northern District of Illinois