Cambridge Engineering v. Robertshaw Controls Co.

• Decision Date: 15 April 1997
• Docket Number: No. 4:90 CV 1407 DDN.,4:90 CV 1407 DDN.
• Citation: 966 F.Supp. 1509
• Parties: CAMBRIDGE ENGINEERING, INC., Plaintiff, v. ROBERTSHAW CONTROLS COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

966 F.Supp. 1509

CAMBRIDGE ENGINEERING, INC., Plaintiff, v. ROBERTSHAW CONTROLS COMPANY, Defendant.

No. 4:90 CV 1407 DDN.

United States District Court, E.D. Missouri, Eastern Division.

April 15, 1997.

COPYRIGHT MATERIAL OMITTED

Peter C. Woods, Kohn and Shands, St. Louis, MO, Timothy Belz, Principal, Ottsen

and Mauze, St. Louis, MO, for Cambridge Engineering Inc.

Linda Carroll Reisner, W. Stanley Walch, Bryan L. Sutter, Thompson Coburn, St. Louis, MO, for Robertshaw Controls Co.

OPINION

NOCE, United States Magistrate Judge.

This action is before the court following a non-jury trial. Plaintiff Cambridge Engineering, Inc., (Cambridge) has brought this judicial action against defendant Robertshaw Controls Company (Robertshaw) for monetary damages. The parties consented to the exercise of authority by the undersigned United States Magistrate Judge under 28 U.S.C. § 636(c)(3). This court has subject matter jurisdiction over the action under 28 U.S.C. § 1332.

Earlier in this action the Court sustained defendant's motions for summary judgment on plaintiff's third amended complaint claims for negligence (Count I), breach of implied warranty (Count II), breach of implied warranty of merchantability (Count III), and strict liability (Count IV). Now before the Court for determination are plaintiff's claims of fraudulent misrepresentation and concealment (Count V) and breach of express warranty (Count VI). Plaintiff seeks substantial actual and punitive damages.

Plaintiff's claims arose out of its purchase from defendant of ignition control modules used by plaintiff in the manufacture of direct-fired gas heaters.

From the evidence adduced during the trial, the Court makes the following findings of fact and conclusions of law:

FACTS

1. Plaintiff Cambridge Engineering, Inc. (Cambridge) is a Missouri corporation with its principal place of business located in St. Louis County, Missouri.

2. Defendant Robertshaw Controls Company (Robertshaw) is a Delaware corporation with its principal place of business located in Richmond, Virginia.

3. Cambridge designs, manufactures, and sells direct-fired gas heaters for use in warehouses, factories, and other commercial and industrial buildings. Cambridge has approximately twenty-six competitors in the direct-fired gas furnace industry.

4. The heaters and furnaces manufactured by Cambridge operate as follows: when the operating thermostat inside the building, or other electrical interlock, signals the heater to start its heating cycle, the heater's blower comes on and draws air in from outside the building. It then blows the air over a gas burner and out into the area to be heated. After the blower starts, a hot surface igniter is energized for seventeen seconds, allowing it to reach a temperature hot enough to ignite the natural gas fuel. Then a gas valve opens, letting gas into the burner, where it is lit by the hot surface igniter. Once the presence of flame is detected, the electrical current to the hot surface igniter is turned off, the gas burner continues burning, and the blower continues to operate, until the thermostat or other interlock cycles off the heater. This sequence is dictated by an electronic device known as an ignition control module which Cambridge purchases from manufacturers such as Robertshaw.

5. During the relevant time period, Cambridge manufactured and sold three differently sized models of its heaters. The series CH110, which has a burner approximately ten inches wide, is the smallest model. The series CH115, which has a burner approximately fifteen inches wide, is the mid-sized model. The series CH120, which has a burner approximately twenty inches wide, is the largest model. Only the Cambridge heaters use a "blow-through" design. With a blowthrough design, the fan is between the air intake and the burner. The more common draw-through design, employed by Cambridge's competitors, places the fan after the burner. The blow-through design allows Cambridge's heaters to be physically smaller and lighter.

6. The fuel ignition system in Cambridge's heater is comprised of (a) a hot surface igniter which ignites the natural gas fuel (much like a car lighter ignites a cigarette), (b) a flame sensing rod, (c) an ignition control module, and (d) other wiring and circuitry. The ignition control module (control) is an electric switch which, among other things, routes electrical power to the igniter when the thermostat calls for heat and then turns off the power after a period of time which is normally sufficient for the gas to ignite. If the remote sensor fails to detect flame in the gas burner, the control switches off the electricity to the gas valve causing the gas fuel source to shut off. If flame is detected, the control keeps the electricity flowing to the gas valve, which continues the flow of gas, until the thermostat signals the completion of the heating cycle.

7. The Simicon Division of Robertshaw designs, manufactures, and sells controls and has its headquarters in Holland, Michigan. Robertshaw controls are most frequently used in residential furnace units.

8. White-Rodgers is a division of Emerson Electric Company (White-Rodgers) which also designs, manufactures, and sells similar controls.

9. As early as 1986, Cambridge decided to seek Factory Mutual (FM) underwriters certification for each of the component parts of its direct-fired gas heaters, including the heater controls. FM is an insurance underwriter with its own certification laboratories. Cambridge believed that obtaining FM certification of its heaters would create a marketing advantage in selling its heaters, because it would help Cambridge's potential customers reduce their own insurance costs.

10. In 1987, Gary Potter, Cambridge's vice-president of engineering who has a degree in electrical engineering, asked White-Rodgers to obtain FM certification for its controls in exchange for Cambridge's agreement to purchase its controls from White-Rodgers. White-Rogers originally agreed to obtain FM certification for its control on behalf of Cambridge. Although Cambridge had manufactured direct-fired heaters since the 1960s, Cambridge began producing heaters with hot surface ignition systems in 1987. More specifically, Cambridge started using hot surface igniters in its CH110 heater in September of 1987, and in its CH115 heater in December of 1987. Cambridge had previously used a spark ignition system.

11. In 1987, Donald Naab, a Robertshaw official, learned from igniter suppliers that hot surface igniters which remain powered in the presence of gas or flame will fail more quickly than if they are not kept on in the presence of gas or flame.

12. In early 1988, Potter learned that White-Rodgers had failed to submit its control to FM for certification and would not do so. Potter then contacted Richard Little, Robertshaw's St. Louis area salesman, and asked him whether Robertshaw would obtain FM certification for its control on behalf of Cambridge, if Cambridge would purchase Robertshaw's HS780 control modules. During this conversation, no one at Robertshaw told Potter that the Robertshaw control was the "functional equivalent" of or a "direct replacement" for the White-Rodgers control.

13. By May 1988 Potter had become familiar with a document which Robertshaw's Grayson Controls Division published in May 1986 regarding its Unilogic V Hot Surface Direct Ignition System, which included the HS780 control. This document is composed of a general description of the products, a specific description of the products' features, component descriptions, drawings, operation, installation and servicing instructions, and start-up and check-out procedures. The first section on the first page of the document states in pertinent part:

The Robertshaw Unilogic V Electronic Hot Surface Direct Ignition System is applicable to gas fired heating systems of many types .... the system acts on a demand for heat by a switch or thermostat to supply power to the ignition control. On the non-prepurge model the ignitor will be energized immediately. There is a 34 second delay provided on the prepurge model. After a few seconds the ignitor will begin to glow, and in approximately 34 seconds the gas valve is opened supplying gas to the main burner. After several seconds the ignitor is turned off and the sensor is energized. As long as the main burner flame is sensed, the system continues to operate. When the thermostat is satisfied both valves in the gas control will be closed to shut off the main burner.

See Pl.Exh. 25 at 1.

14. The White-Rodgers control and the Robertshaw control are both hot surface ignition controls designed to work with a hot surface igniter. The White-Rodgers and Robertshaw controls are competitive products. Cambridge had previously sent a Robertshaw model HS790 control to the American Gas Association (AGA) for alternative component testing on its heaters in 1987. At that time, AGA approved the use of the Robertshaw control in Cambridge's furnaces as an alternative to the White-Rodgers control.

15. In May 1988, after speaking with Little, Potter spoke with Ron Weerstra, Robertshaw's Simicon Division Product Manager, and Fred Geary, Robertshaw's Senior Design Engineer, prior to purchasing the Robertshaw controls. Fred Geary had designed both the HS790 and the HS780 controls. Potter told Weerstra he was interested in purchasing the HS780 control if Robertshaw would pay for FM certification. During that conversation, Weerstra asked Fred Geary, Robertshaw's engineer who designed the HS780, to join the telephone conversation. Potter then told Geary and Weerstra that he was using the Robertshaw control with a 24-volt igniter. Geary stated to Potter that the Robertshaw HS780 control might not be suitable for use in a 24-volt system. Weerstra informed Potter that Robertshaw was concerned about the reliability of its control in Cambridge's application and that Robertshaw had never tested its control...