Lockheed Martin Corp. v. Galaxis Usa, Ltd.

• Decision Date: 17 April 2002
• Docket Number: No. 6:99-CV-14520RL28JGG.,6:99-CV-14520RL28JGG.
• Parties: LOCKHEED MARTIN CORPORATION, Plaintiff, v. GALAXIS USA, LTD., a Delaware corporation and Bavaria-Hanseatic Holding GMBH f/k/a Galaxis Holding GMBH, a/k/a "The Galaxis Group"; Galaxis Vertriebsgesellschaft MBH, a German corporation; and Winfried Klimek, individually, Defendants.
• Court: U.S. District Court — Middle District of Florida

222 F.Supp.2d 1315

LOCKHEED MARTIN CORPORATION, Plaintiff, v. GALAXIS USA, LTD., a Delaware corporation and Bavaria-Hanseatic Holding GMBH f/k/a Galaxis Holding GMBH, a/k/a "The Galaxis Group"; Galaxis Vertriebsgesellschaft MBH, a German corporation; and Winfried Klimek, individually, Defendants.

No. 6:99-CV-14520RL28JGG.

United States District Court, M.D. Florida, Orlando Division.

April 17, 2002.

COPYRIGHT MATERIAL OMITTED

Joseph E. Foster, Akerman, Senterfitt & Eidson, P.A., Orlando, FL, for plaintiff.

Thomas A. Hickey, Member, Eaton & Van Winkle, New York City, Winslow Davis Hawkins, III, Law Offices of Winslow D. Hawkes, III, P.A., West Palm Beach, FL, for defendants.

ORDER

ANTOON, District Judge.

This cause is before the Court on the following motions:

(1) Motion for Summary Judgment in Favor of Defendants Bavaria-Hanseatic Holding GMBH, Galaxis Vertriebsgesellschaft MBH, and Winfried Klimek (Doc. 93, filed November 30, 2001);

(2) Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Summary Judgment on Amended Counterclaim III Brought By Defendant/Counter-Claimant Galaxis USA (Doc. 95, filed November 30, 2001);

(3) Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Partial Summary Judgment on Contract Liability (Doc. 96, filed November 30, 2001); and

(4) Plaintiff Lockheed Martin Corporation's Motion for Partial Summary Judgment Against Defendant Winfried Klimek (Doc. 99, filed November 30, 2001).

These motions were referred by the undersigned District Judge to the assigned United States Magistrate Judge for the issuance of a Report and Recommendation. On January 24, 2002, the Magistrate Judge heard oral argument on the motions and issued oral rulings thereon. (Docs.138, 145).

The Magistrate Judge filed his Report and Recommendation on March 8, 2002 (Doc. 147). In that Report, the Magistrate Judge makes the following recommendations:

(1) that the Motion for Summary Judgment in Favor of Defendants Bavaria-Hanseatic Holding GMBH, Galaxis Vertriebsgesellschaft MBH, and Winfried Klimek (Doc. 93) be granted in part (as to Defendant Winfried Klimek) and denied in part (as to Defendants Bavaria-Hanseatic Holding GMBH and Galaxis Vertriebsgesellschaft);

(2) that Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Summary Judgment on Amended Counterclaim III Brought By Defendant/Counter-Claimant Galaxis USA (Doc. 95) be granted and that Amended Counterclaim III be dismissed with prejudice;

(3) that Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Partial Summary Judgment on Contract Liability (Doc. 96) be denied; and

(4) that Plaintiff Lockheed Martin Corporation's Motion for Partial Summary Judgment Against Defendant Winfried Klimek (Doc. 99) be denied.

Plaintiff Lockheed Martin Corporation ("Lockheed") has filed Lockheed Martin Corporation's Objections to Magistrate's Report and Recommendation (Doc. 151, filed March 18, 2002), and the Defendants have filed Defendants' Response to Lockheed Martin Corporation's Objections to Magistrate's Report and Recommendation (Doc. 154, filed April 1, 2002). The defendants have not filed any objections to the Report.

After an independent de novo review of the record pertaining to those portions of the Report to which objections have been filed, the Court agrees with all but one of the conclusions and recommendations in the Report. The Court's conclusions and rulings with respect to each of the subject motions will be discussed in turn.

A. Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Summary Judgment on Amended Counterclaim III Brought By Defendant/Counter-Claimant Galaxis USA (Doc. 95)

In the Report, the Magistrate Judge recommends that Lockheed's Motion for Summary Judgment on Amended Counterclaim III Brought By Defendant/Counter-Claimant Galaxis USA (Doc. 95) be granted because that claim—for negligence—is barred by the economic loss rule. galaxis USA has not filed an objection to this recommendation, and the Court agrees with the conclusion in the Report that the negligence claim in Amended Counterclaim III is barred by the economic loss rule. Accordingly, this motion (Doc. 95) shall be granted and this counterclaim shall be dismissed with prejudice.

B. Motion for Summary Judgment in Favor of Defendants Bavaria-Hanseatic Holding GMBH, Galaxis Vertriebsgesellschaft MBH, and Winfried Klimek (Doc. 93) and Plaintiff Lockheed Martin Corporation's Motion for Partial Summary Judgment Against Defendant Winfried Klimek (Doc. 99)

Both of these motions pertain to the alleged guaranty of galaxis USA's payment obligations under the production contract. In the Report, the Magistrate Judge recommends that Lockheed's motion (Doc. 99) be denied and that the Defendants' motion (Doc. 93) be granted as to Defendant Klimek and otherwise denied. Lockheed has objected to the recommendation that its motion (which pertains only to Klimek) be denied and that the Defendants' motion be granted as to Klimek; the Defendants have not objected to the recommendation that their motion be denied as to Defendants Bavaria-Hanseatic Holding GMBH and Galaxis Vertriebsgesellschaft MBH.

The Report concludes, in discussing these two motions, that Defendant Klimek "did not sign the guaranty in a personal capacity." (Doc. 147 at 44). The Report acknowledges Florida case law holding that "an individual may be personally liable under a contract when he signs the contract on behalf of an entity which does not exist." (Doc. 147 at 41 (citing Van D. Costas, Inc. v. Rosenberg, 432 So.2d 656, 658-60 (Fla. 2d DCA 1983))). However, the Report concludes that Klimek did not sign the alleged guaranty on behalf of a nonexistent entity because even though "there is no separate legal entity known as `galaxis Group' ... everyone knew what `galaxis Group' meant." (Doc. 147 at 41).

In its Objections to the Report, Lockheed argues that its motion for summary judgment against Klimek should be granted because there is no issue of fact remaining as to whether Klimek individually signed the guaranty. Alternatively, Lockheed asserts that the Defendants' motion as to Klimek should be denied because there is no record evidence that Lockheed knew what "galaxis Group" meant in July and August of 1999 as concluded in the Report.

Upon consideration, the Court concludes that a genuine issue of material fact remains regarding whether Lockheed knew the meaning of "galaxis Group" in July and August 1999 when the alleged guaranty documents were signed. The Court does not find that the record conclusively shows that Lockheed indeed had such knowledge. See Van D. Costas, Inc., 432 So.2d at 659 ("Of course, if the contracting party knows the identity of the principal for whom the agent purports to act, the principal is deemed to be disclosed. A dispute concerning such knowledge presents an issue of fact.") (citation omitted). Accordingly, Lockheed's motion (Doc. 99) shall be denied, and Defendants' motion (Doc. 93) shall be denied in its entirety.

C. Plaintiff/Counter-Defendant, Lockheed Martin Corporation's Motion for Partial Summary Judgment on Contract Liability (Doc. 96)

In the Report, the Magistrate Judge concluded—after assuming for summary judgment purposes that the scanners contained manufacturing defects—that Lockheed's Motion for Partial Summary Judgment on Contract Liability (Doc. 96) should be denied because of the existence of numerous remaining issues of material fact. In its Objections (Doc. 151), Lockheed argues that it is clear from the record that galaxis USA accepted over 1200 scanners and sold approximately 265 of those scanners to third parties in May 1999. Lockheed then notes that not until August 17, 1999 did galaxis USA order Lockheed to stop production and claim that ten scanners were defective. Lockheed claims that galaxis USA was obligated to pay for scanners once it accepted them and that any claimed defects were subject not to the withholding of payment but to the opportunity of Lockheed to repair or replace the defective unit(s) at its option. Lockheed thus argues that it is entitled to summary judgment on the issue of contract liability and that the only issue remaining for trial is damages.

In their Response to Lockheed's Objections (Doc. 154), Defendants contend that the scanners were not accepted as alleged by Lockheed and that even if some scanners had been accepted, such acceptance was revoked. Defendants contend that "galaxis USA never had a reasonable opportunity to inspect the units for conformity" and that as long as "the scanners remained in Lockheed Martin's possession, they could still be inspected and rejected." (Doc. 154 at 7, 8). Defendants contend that the scanners were ultimately rejected in the August 17, 1999 stop work order and notice of defects. Finally, Defendants argue that Lockheed failed to comply with the provision in the Memorandum of Agreement requiring ninety (90) days' notice of intent to terminate.

Upon consideration of Lockheed's objections and Defendants' response thereto, the Court agrees with the Magistrate Judge's conclusion that genuine issues of material fact remain regarding the issue of contract liability, including as to whether certain of the scanners were accepted. Of course, at trial Lockheed will be given an opportunity to prove its position that galaxis USA breached the production contract by failing to pay for scanners it accepted. Moreover, at trial Lockheed will have an opportunity to address the contention by Defendants in their response that Lockheed failed to comply with the ninety-day notice-of-termination provision in the Memorandum of Agreement and the effect of that provision on the claimed breaches of the production contract. At trial, the Court will take up these issues and others relating to the meaning of the production contract in the light of the parties' conduct and course of performance. Thus, Lockheed's Motion for Partial...