United States District Court, E.D. Wisconsin
DECISION AND ORDER ON DEFENDANT'S MOTION TO
JOSEPH UNITED STATES MAGISTRATE JUDGE
Inc., d/b/a Ampersand (“Ampersand”) purchased a
used Heidelberg ST-400 Saddle Stitcher-a machine design to
bind and staple paper products-from Best Graphics, Inc.
Ampersand alleges that the machine is non-functional and
useless, with value only as scrap metal. Ampersand sues Best
Graphics for false advertising under Wis.Stat. § 100.18
and breach of the implied duty of good faith and fair
dealing. Best Graphics moves to dismiss Ampersand's
amended complaint pursuant to Fed.R.Civ.P. 12(b)(6) on the
grounds that it fails to state a claim upon which relief can
be granted. For the reasons that follow, the defendant's
motion to dismiss is granted in part and denied in part.
September 2018, Ampersand's president, Damian McDonald,
inquired into purchasing a used Heidelberg ST-400 Saddle
Stitcher (the “Machine”) from Best Graphics by
emailing Best Graphics' Service Manager, Gary Martin, and
Best Graphics' Sales Representative, A.J. Brahm. (Am.
Compl. ¶ 6, Docket # 13.) The Machine is designed to
bind and staple paper products, such as books, pamphlets, and
magazines. (Id. ¶ 7.) McDonald viewed the
Machine on Best Graphics' website, which listed the
machine as low-usage, specifically stating “Approx.
Book Count: 75, 000, 000 - Single Shift Operation.”
(Id. ¶ 8.) On September 28, 2018, Martin
explained to McDonald that McDonald could not inspect the
Machine because it was dismantled, but a video of it running
a job pre-tear down was available on Best Graphics'
website. (Id. ¶ 9.) After viewing the video,
McDonald was concerned about the Machine's performance
and emailed Brahm on October 9, 2018 stating as follows:
“The machine is running quite slow for an ST400, are
there any mechanically/electronically limiting issues that
you're aware of that I need to plan for?”
(Id. ¶ 10.) That same day, Brahm responded to
McDonald stating: “No issues governing the
machine's speed; frankly, they are a union shop - which
might have something to do with it - and also the fact that
they frequently run very small size formats (which we know
from their Osako demo days, purchase order), so perhaps they
ran slower to ensure all pockets were ‘firing'
without misfeeds.” (Id. ¶ 11.)
October 12, 2018, McDonald emailed Brahm expressing several
(Id. ¶ 12.) Brahm called McDonald and said that
he would “circle back” with his team and Raff
Printing, Inc. (the Machine's previous owner) to make
sure there was a clear understanding on the Machine's
functionality by speaking with the operator to determine
which components were operational and which components were
not working. (Id. ¶¶ 13, 23.) Brahm's
statement reassured McDonald regarding his concerns outlined
in the October 12 email. (Id. ¶ 13.)
October 15, 2018, Brahm emailed McDonald forwarding a formal
ST-400 machine quotation and making several observations
regarding the Machine, as outlined below:
(Id. ¶ 14.) Ampersand alleges that it relied on
Best Graphics' representations about the condition of the
machine and on October 17, 2018, the parties entered into a
Purchase Agreement under which Best Graphics sold the Machine
to Ampersand for a total unit and shipping cost of $60,
500.00. (Id. ¶¶ 15-16.)
Machine arrived at Ampersand's facility on November 15,
2018. (Id. ¶ 17.) Immediately upon inspection,
McDonald notified Best Graphics that the Machine's main
stitching unit was damaged. (Id. ¶ 18.) Brahm
assured McDonald that the damage was cosmetic and told
McDonald to continue the Machine's installation.
(Id. ¶ 19.) When the Machine was fully
installed and powered, McDonald noticed several undisclosed
problems with the Machine's functionality. (Id.
¶ 20.) McDonald further discovered the main stitching
assembly bearings were broken and required replacement.
(Id. ¶ 21.) McDonald contacted the
Machine's manufacturer for a repair quote and learned
from the manufacturer that it had previously attempted to
repair the exact Machine when it was at Raff Printing, but
discovered the Machine was not salvageable because it
required over $343, 076.00 in total repairs. (Id.
¶¶ 22-23.) The manufacturer declined to repair the
Machine because its condition was so flawed that it could not
get the Machine to minimum operational standards.
(Id. ¶ 26.) Ampersand alleges that in its
current condition, the Machine does not operate as designed
and is useless to Ampersand-its only value is scrap metal.
(Id. ¶¶ 27- 28.) Ampersand alleges that it
has expended a total of $93, 118.54 related to the Machine.
(Id. ¶ 29.)
Graphics moves to dismiss for failure to state a claim upon
which relief may be granted pursuant to Fed.R.Civ.P.
12(b)(6). A complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). The Supreme Court has
interpreted this language to require that the plaintiff plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). In Ashcroft v.
Iqbal, the Supreme Court elaborated further on the
pleadings standard, explaining that a “claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged, ”
though this “standard is not akin to a
‘probability requirement.'” 556 U.S. 662, 678
(2009). The allegations in the complaint “must be
enough to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555 (internal
citation omitted). Rule 12(b)(6) does not permit the court to
consider matters outside the complaint without converting the
motion into a motion for summary judgment, Fed.R.Civ.P.
12(d). However, the court may consider matters outside the
pleadings without converting the motion into a motion for
summary judgment if the matters were referred to in the
complaint and are central to the plaintiff's claim.
Verfuerth v. Orion Energy Sys., Inc., 65 F.Supp.3d
640, 649 (E.D. Wis. 2014). The Seventh Circuit posited that
this exception should “perhaps . . . be limited to
cases in which the suit is on a contract or the plaintiff, if
he has not attached, ...