Eberspaecher N.A., Inc. v. Van-Rob, Inc.

• Decision Date: 28 February 2008
• Docket Number: No. 06-15752.,06-15752.
• Citation: 544 F.Supp.2d 592
• Parties: EBERSPAECHER NORTH AMERICA, INC., Plaintiff, v. VAN-ROB, INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

544 F.Supp.2d 592

EBERSPAECHER NORTH AMERICA, INC., Plaintiff, v. VAN-ROB, INC., Defendant.

No. 06-15752.

United States District Court, E.D. Michigan, Southern Division.

February 28, 2008.

Rodger D. Young, David J. Poirier, Young & Susser, Sara Klettke Macwilliams, Southfield, MI, for Plaintiff.

Moheeb H. Murray, Richard W. Paige, Bush, Seyferth, Troy, MI, Paul R. Bernard, Collins, Einhorn, Southfield, MI, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISSOLVE PRELIMINARY INJUNCTION [15]

NANCY G. EDMUNDS, District Judge.

This matter is before the Court on Defendant's motion to dissolve preliminary injunction. Oral argument was heard on September 28, 2007, before Judge Victoria Roberts. Judge Roberts subsequently recused herself. The matter is now before this Judge. For the reasons stated below, the Court GRANTS Defendant's motion.

I. BACKGROUND

Defendant Van-Rob, Inc. ("Van-Rob") is a seller of automotive mufflers. Plaintiff Eberspaecher North America, Inc. ("ENA") is a manufacturer and seller of automotive exhaust system products. ENA and Van-Rob entered into contracts under which Van-Rob sells three muffler assemblies to ENA's Brampton, Ontario facility. ENA then incorporates the mufflers into complete exhaust systems and supplies them to Chrysler's Brampton Assembly Plant. ENA notes that its Brampton facility has nearly 200 employees and generates yearly sales revenue of approximately $90 million. (Pl.'s Exh. 1, Affidavit of Karin Guillou at ¶ 6.)

ENA contends that Van-Rob's mufflers are specifically engineered and custom-made to meet ENA's and Chrysler's industry-specific engineering specifications. (Id. at ¶ 8.) ENA also contends that Van-Rob supplies the mufflers on a "just in time" basis, which is the automotive inventory control standard. "Just in time" means that ENA requires frequent shipments of mufflers because it only has enough on hand to support less than three days of production. ENA contends that this standard causes it — and Chrysler by extension — to be entirely dependent on Van-Rob to honor its shipment obligations. According to ENA, the slightest shortfall or delay in Van-Rob's supply of the mufflers negatively impacts its manufacturing operations and threatens its supply of the exhaust systems to Chrysler. (Id. at ¶ 19.) ENA states that it would shut down in a matter of days if Van-Rob ceased production of the mufflers, which would subject it to extensive penalties and the immediate loss of its reputation and good standing. ENA states that Van-Rob is the only producer of mufflers meeting Chrysler's conditions and specifications and it cannot obtain an alternative muffler supplier soon enough to avoid supply interruptions. (Id. at ¶ 18.)

The three muffler assemblies are identified by part numbers:

(1) 11.52.205.04.000 ("EB-004");

(2) 11.52.206.02.000 ("EB-1014"); and

(3) 11.52.206.07.000 ("EB-1016").

Van-Rob asserts that it offered to produce the EB-004 assembly at a per-part price of $25.53 plus the cost of certain sub-components. (Def.'s Exh. 1, Affidavit of Blaine S. Gignac at ¶ 9.) Van-Rob's offer stated the quoted price was "subject to applicable Alloy Surcharges." (Id.; Def.'s Exh. A, Updated Quotation.) Van-Rob contends that ENA accepted the offer on November 22, 2002 by issuing a Purchase Order for one pre-production EB-004 assembly. (Def.'s Exh. 1 at ¶ 10; Def.'s Exh. B.) The Purchase Order states, "Purchases are subject to [ENA] terms and conditions. Documentation available upon request." (Def.'s Exh. B.)

Van-Rob contends that after the contract for the pre-production EB-004 assembly was executed, it continued negotiating production assembly prices with ENA. Van-Rob issued a written offer to supply the production EB-004 assemblies at a price of $49.94 per assembly, including the cost of all sub-components. The price was "subject to all Alloy Surcharges." (Def.'s Exh. 1 at ¶ 11; Def.'s Exh. C, Muffler Quotation.) Van-Rob states that ENA accepted its offer on September 15, 2003 by issuing a Scheduling Agreement for 999,999,999 production EB-004 assemblies at the price of $49.94 per assembly. (Def.'s Exh. 1 at ¶ 12; Def.'s Exh. D.) The Scheduling Agreement states, "Purchases are subject to [ENA] terms and conditions. Documentation Available upon request." (Def.'s Exh. D.) There is no disagreement that no terms and conditions were attached to the Scheduling Agreement and that the first ENA terms and conditions are dated January 2004. Van-Rob states that the terms and conditions cannot apply to the EB-004.

Van-Rob states that throughout 2004, two of its suppliers — who ENA directed Van-Rob to use — began charging higher prices for the steel sub-components used in its muffler assemblies. This led to a significant increase in Van-Rob's material costs, and it sought to increase the prices of its muffler assemblies. Notwithstanding the provision that Van-Rob's prices were "subject to all Alloy Surcharges," ENA refused to pay an increased price. (Def.'s Exh. 1 at ¶¶ 15-16.) ENA contends that it consistently reminded Van-Rob that it was contractually obligated to supply the mufflers at fixed prices per its terms and conditions. ENA also demanded adequate assurances from Van-Rob that it would honor the contracts. (Pl.'s Exh. 1 at ¶ 13.)

Van-Rob continued to ship the production EB-004 assemblies at the contract price of $49.94 until November 2004, when it agreed to reduce the price to $49.50 per assembly because of lower freight costs. (Def.'s Exh. 1 at ¶ 17.) On January 25, 2005, ENA issued a Scheduling Agreement for EB-004 assemblies, which purported to decrease the price from $49.50 to $46.13. (Def.'s Exh. 1 at ¶ 18; Def.'s Exh. E.) Van-Rob rejected ENA's request and continued to ship the EB-004 assemblies with invoices reflecting the contract price. (Def.'s Exh. 1 at ¶¶ 19-21; Def.'s Exh. F, E-mail from Blaine Gignac to Bill Petrusha.) ENA disregarded the invoices and paid $46.13 per assembly. Van-Rob claims that ENA accumulated a debt of more than $460,000 in connection with the EB-004 assembly. (Def.'s Exh. 1 at ¶¶ 21-22.)

Van-Rob and ENA also negotiated the production assembly prices for the EB-1014 and the EB-1016. During these discussions, Van-Rob sent ENA written offers and ENA sent corresponding Scheduling Agreements to Van-Rob. All of Van-Rob's offers were subject to "applicable Alloy Surcharges" and changes to the United States and Canadian exchange rates. (Def.'s Exh. 1 at ¶ 24.) In its original proposed acceptances of these offers, ENA inserted language stating that "[n]o alloy surcharges will be paid on the LX [muffler assembly] program." Van-Rob states it did not agree to this language. (Id. at ¶ 25.)

On January 5, 2005, Van-Rob issued a written offer to enter into a contract for the EB-1014 and EB-1016 assemblies at $52.57 per assembly. The offer stated that "[a]ll prices are subject to applicable Alloy Surcharges" and that the "[e]xchange rate [was] to be adjusted in either direction after 2% change." (Id. at ¶ 27; Def.'s Exh. G.) Van-Rob asserts that in June 2005, ENA accepted the offer by issuing Scheduling Agreements for the EB-1014 and EB-1016 assemblies. (Def.'s Exh. 1 at ¶ 28.) The Scheduling Agreements specified that the $52.57 price was only valid through August 15, 2005 and that the "[f]inal piece price [was] to be negotiated." (Def.'s Exhs. H and I.)

On October 19, 2005, ENA issued a different Scheduling Agreement for the EB1014, purportedly reducing the price from $52.57 to $45.00. (Def.'s Exh. 1 at ¶ 30; Def.'s Exh. J.) This Scheduling Agreement states, "Purchases are subject to [ENA] terms and replace any/all issues and terms noted on the quotation(s)." (Def.'s Exh. J.) ENA attached a copy of its terms and conditions to this Scheduling Agreement. (Def.'s Exh. 1 at ¶ 31.)

Van-Rob states that ENA's terms and conditions were not incorporated into the contract because it did not assent to them. (Id. at ¶ 32.) Van-Rob also states that it objected to ENA's purported reduction. (Id. at ¶¶ 32-33; Def.'s Exh. J, E-mail from Blaine Gignac to Bill Petrusha.) However, Van-Rob continued to ship the assemblies to ENA. Van-Rob asserts that as of December 2006, ENA owes over $537,000 for failing to pay the contract price for the EB-1014 and EB-1016 assemblies. (Def.'s Exh. 1 at ¶¶ 34-35.)

On May 8, 2006, Van-Rob informed ENA of significant market changes that required a price increase for the EB-004, EB-1014, and EB-1016 muffler assemblies. Van-Rob also informed ENA that it could find another supplier for the assemblies who could meet its price demands. (Id. at ¶¶ 38-39; Def.'s Exh. K, Letter from Blaine S. Gignac to Rick Arms.) Van-Rob stated the new prices were as follows: (1) $58.88 for the EB-004; (2) $64.06 for the EB-1014; and (3) $62.32 for the EB-1016. (Def.'s Exh. K.)

On August 23, 2006, Van-Rob informed ENA that it could no longer manufacture the assemblies at the current prices and that it would stop shipment beginning September 8, 2006. (Def.'s Exh. 1 at ¶ 41; Def.'s Exh. L, E-mail from Blaine Gignac to Karin Guillou.) Van-Rob states that it extended the "stop-shipment" deadline several times at ENA's request until November 29, 2006 became the final "stop-shipment" date. (Def.'s Exh. 1 at ¶ 43; Def.'s Exh. M, E-mail from Bruce Johnson to Karin Guillou.)

On November 20, 2006, ENA filed suit in the Oakland County Circuit Court against Van-Rob alleging anticipatory repudiation and/or breach of contract. ENA sought declaratory and injunctive relief, as well as money damages. The Oakland County Circuit Court issued a temporary restraining order against Van-Rob on November 29, 2006. On December 13, 2006, that court heard oral argument and granted ENA's motion for a preliminary injunction.

Van-Rob removed the case to this Court on December 27, 2006. On August 15, 2007, the Court issued an Order stating that it will retain jurisdiction because Eberspaecher Exhaust Systems Canada, Inc. was fraudulently joined. Van-Rob then filed this "...