Brass Reminders Co. v. RT Eng'g Corp.

• Decision Date: 28 May 2020
• Docket Number: Civil Action No. 5:19-243-DCR
• Citation: 462 F.Supp.3d 707
• Parties: BRASS REMINDERS CO., INC., Plaintiff/Counter-Defendant, v. RT ENGINEERING CORP., Defendant/Counter-Plaintiff.
• Court: U.S. District Court — Eastern District of Kentucky

462 F.Supp.3d 707

BRASS REMINDERS CO., INC., Plaintiff/Counter-Defendant,

v.RT ENGINEERING CORP., Defendant/Counter-Plaintiff.

Civil Action No. 5:19-243-DCR

United States District Court, E.D. Kentucky, Central Division. (at Lexington).

Signed May 28, 2020

Escum L. Moore, III, Moore & Moore, PLLC, Lexington, KY, for Plaintiff/Counter-Defendant.

David T. Royse, W. Keith Ransdell, Ransdell, Roach and Royse, PLLC, Lexington, KY, for Defendant/Counter-Plaintiff.

MEMORANDUM OPINION AND ORDER

Danny C. Reeves, Chief Judge

Defendant and Counter-Plaintiff RT Engineering Corp. ("RT" or "the defendant") has filed a motion for summary judgment requesting judgment as a matter of law on all claims asserted in this action. [Record No. 21] Specifically, RT requests that the Court dismiss Plaintiff and Counter-Defendant Brass Reminders Co., Inc.'s ("Brass Reminders" or "the plaintiff") breach of contract and Kentucky Consumer Protection Act ("KCPA") claims while granting summary judgment on the defendant's breach of contract counterclaim for the outstanding contract price. RT argues in the alternative that the contract at issue precludes Brass Reminders from seeking consequential damages. Having considered the matter, the Court agrees that summary judgment is appropriate. Summary judgment will be entered in favor of RT on all counts.

I. Background

Brass Reminders is incorporated in Kentucky with its principal place of business in Keene, Kentucky. [Record No. 1-1] The plaintiff business almost exclusively manufactures decals for colleges and tourist souvenir shops around the country. [Record No. 21-3, pp. 2-3] Brass Reminders is owned by its president, Brent Durham, and his wife. [Id. at p. 2]

RT is incorporated in Massachusetts with its principal place of business in Franklin, Massachusetts. [Record No. 1, p. 3] The defendant, inter alia , manufactures custom automation systems. [Record No. 21-4, p. 2]

Brass Reminders has traditionally packaged its decals by hand. [Record No. 21-3, p. 5] The decal and "a consistent size[d] piece chipboard" (a piece of cardboard providing some rigidity to the package) are placed into a clear bag. [Id. ] Then, Brass Reminders staples a cardboard header card onto the bag to seal off the product and complete the packaging. [Id. ]

Durham initially contacted RT in 2014 about the possibility of contracting for a custom automated decal packaging machine. [Id. at p. 9] But Durham decided not to order a machine in 2014 and lost contact with RT. [Id. ] Durham again contacted RT about the possibility of building a custom automated decal packaging machine in April 2016. [Id. at p. 10]

RT then provided Brass Reminders with a Quote dated May 18, 2016, proposing terms of an agreement and the course of the project going forward. [Record No. 21-6] The Quote estimates that the project would cost $279,083.00, with 40% due with the placement of an order. [Id. at p. 11] The other payment deadlines provided by the Quote are: 25% of the cost due upon completion of design review, 20% upon start of assembly, 10% upon completion of the Factory Acceptance Testing ("FAT") (several days of on-site testing and demonstrations of the completed machine at RT's facility prior to acceptance of the finished product), and 5% due after acceptance of the product. [Id. at pp. 10-11] The project was estimated to take 24 weeks between the date the parties agree to a Functional Specification Document ("FSD") that provides more details about the design and build criteria for the machine and the date of the FAT at RT's Massachusetts site. [Record Nos. 21-6, p. 11 and 21-14, p. 3] The Quote's Table of Contents and final page designate RT's Terms and Conditions as "Item P" of the document. [Record No. 21-6, pp. 3, 15] Item P states, "[s]ee our website for 2016 Terms [and] Conditions" and includes a hyperlink to the Terms and Conditions. [Id. at p. 15]

The Terms and Conditions listed on RT's website in 2016 generally account for terms that would govern RT contracts absent or in addition to terms provided in project proposals like the Quote in this case. [Record No. 21-7] A section of this document is dedicated to "delivery, delay, changes in scope, [and] customer responsibility." [Id. at pp. 3-5] As relevant here, that section states:

Seller reserves the right to modify the scheduled delivery of Product based upon changes in scope [and] delays in Customer response .... Changes to the scope of work may affect pricing of the system and/or the system delivery schedule .... Customer shall assign a contact that will be responsible for interfacing with Seller, answering questions, and promptly obtaining information and samples when required. Delays in response to Seller requests will result in delays in the delivery of the Product. Customer will be responsible for providing engineering drawings and sample parts during the design, debug, and testing phases of the project. Sample parts and documentation furnished will need to be a true and complete representation of the product to be processed with the Seller's equipment. Typical parts and tolerances or variations of the parts need to be identified. This will ensure that the Product is designed to accommodate the variances from part to part and to include the control features .... Specifically, dimensional tolerances of each product shall be provided along with all process specifications which will in any manner effect the performance of the Seller's equipment .... Failure on the part of Customer to meet any of its responsibilities may lead to delays in RT Engineering's performance or [its] inability to perform, for which RT Engineering will not be responsible.¹

[Id. at pp. 4-5] The Terms and Conditions also notably provide that "[t]his Agreement applies to any orders submitted by Customer in response to any Proposal from RT Engineering. Any additional or differing terms and conditions on Customer's Purchase Order do not apply unless expressly agreed to in writing by RT Engineering, signed by the President." [Id. at p. 1] Additionally, the Terms and Conditions relevantly exclude liability for "special, indirect, consequential, incidental, or punitive damages." [Id. at p. 7]

RT sent Brass Reminders a May 20, 2016 invoice requesting payment of 40% of the project's estimated cost with the placement of a purchase order for the decal packaging machine. [Record No. 21-8] Durham responded with a purchase order and tendered the payment shortly thereafter. [Record No. 21-9] Importantly, the purchase order reflected the payment schedule and delivery terms of the Quote but added "[d]elivery and install ASAP, within 2016 calendar year." [Id. ]

The parties held a project "on-boarding meeting" over the phone on June 8, 2016. After that meeting, Durham executed a Customer Introduction Agenda document that again referenced the Terms and Conditions on RT's website. [Record No. 21-11]

Darren LaBonne, RT's lead mechanical design engineer on the decal packaging machine project, then emailed Durham on June 28, 2016, requesting information previously discussed at the on-boarding meeting necessary for the completion of the forthcoming FSD. [Record No. 21-12] Durham responded on June 29 with dimension specifications for various sizes of decals, chipboards, and header cards that were to be packaged by the machine. [Record No. 21-13] He had previously represented to RT that he was familiar with automation and its tolerancing and dimensioning. [Record Nos. 21-3, p. 11 and 21-4, p. 12] However, he did not provide any information about materials' variances other than the general measurements of the materials used to package decals of different sizes. [Record No. 21-13] Durham signed the FSD on July 8, 2016. [Id. at p. 10]

Changes to the decal packaging machine's function pushed the project into 2017. [Record Nos. 21-16 and 21-17] Due to the delay, the parties arranged a December 2016 factory test on one size of decals for tax purposes. [Record Nos. 21-3, pp. 27-28, 21-18, and 21-19] They began to prepare for a formal FAT in January 2017, and RT reached out to Durham to obtain all the "sizes and style parts" for the packaging and decal materials prior to completion of the project. [Record No. 21-20] LaBonne followed up in a February 27, 2017 email that noted:

The parts that were originally brought the last time you were here [in December 2016] and some of the parts sent after have issues the machine cannot process. If the chip boards are severely bowed they will not feed through the friction feeders. Also we noticed that the board materials vary and the print quality suffers. Some of the boards are more porous and absorb the ink. This causes a blurred print. The header cards must have the tabs intact in order for the friction feeders to be able to singulate them properly also.

[Record No. 21-21] LaBonne testified that the material samples Brass Reminders provided to RT during the summer and early fall of 2016 varied from these later samples. [Record No. 21-4, p. 30]

LaBonne then noted in a March 20, 2017 email to Durham that "[w]e have been dealing with material issues right along and it is really slowing down progress." [Record No. 21-22] Further, the March 20 email stated that some of the problems with the materials supplied by Brass Reminders to RT likely stemmed from the fact that it had been affected by humidity of their prior storage in Brass Reminders' non-climate-controlled facility. [Record No. 21-23]

Durham acknowledged in a March 23, 2017 email to LaBonne that Brass Reminders had previously used "all gauges of material," which did not matter for hand packaging but affected the function of the automated machine. [Record No. 21-23] LaBonne also testified that Durham had indicated that Brass Reminders had used poor-quality materials in the past because their quality or inconsistent dimensions did not affect the hand-packaging process. [Record No. 21-4, p. 20] This inconsistency was, at least in part, due to the fact that Brass...