Loeffel Steel Products, Inc. v. Delta Brands, Inc.

• Decision Date: 28 July 2005
• Docket Number: No. 01-C-9389.,01-C-9389.
• Citation: 379 F.Supp.2d 968
• Parties: LOEFFEL STEEL PRODUCTS, INC., Plaintiff, v. DELTA BRANDS, INC., d/b/a dbi; Samuel F. Savariego, individually, Defendants.
• Court: U.S. District Court — Northern District of Illinois

379 F.Supp.2d 968

LOEFFEL STEEL PRODUCTS, INC., Plaintiff, v. DELTA BRANDS, INC., d/b/a dbi; Samuel F. Savariego, individually, Defendants.

No. 01-C-9389.

United States District Court, N.D. Illinois, Eastern Division.

July 28, 2005.

COPYRIGHT MATERIAL OMITTED

Michael P. Connelly, William Edward Snyder, Matthew Patrick Connelly, Connelly, Roberts & McGivney, Chicago, IL, for Loeffel Steel Products, Inc.

H.N. Cunningham, III, James C. Baker, Roberts, Cunningham & Stripling, Dallas, TX, Randall Edmund Server, Tucker, Bower, Robin & Romanek, Chicago, IL, for Delta Brands, Inc., and Samuel F. Savariego, Individually.

Charles J. Risch, John Scott Monical, Paul Michael Weltlich, Lawrence, Kamin, Saunders & Uhlenhop, Chicago, IL, for Industrial Magnetics Inc.

MEMORANDUM OPINION AND ORDER

COLE, United States Magistrate Judge.

Plaintiff Loeffel Steel Products, Inc. ("Loeffel") purchased from defendant Delta Brands Inc. ("DBI") a rotary shear multi-blanking line ("the Line") — a machine that cuts and stacks sheets of steel. According to Loeffel, the machine did not perform up to the specifications DBI had promised in the sales contract. It filed suit alleging breach of contract, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, and fraud.

On February 25, 2004, Magistrate Judge Keys denied DBI's motion for partial summary judgment, concluding that there existed a number of genuine issues of material fact. A year later, Loeffel has now moved for partial summary judgment on the issue of liability against DBI on all but the claim for fraud. As Local Rule 56.1 ("LR") requires, it supported the motion with a statement of undisputed material facts, 134 paragraphs long, supported by a record of over 350 pages, the greater portion of which comprised excerpts from the depositions of ten individuals, including both Loeffel and DBI employees. DBI responded with its LR 56.1 offerings, which included a 15-page, 48-paragraph statement of additional facts. These were supported by a 450-page record, the majority of which was comprised of deposition excerpts from over a dozen witnesses. Loeffel's reply was supported by an additional 150 pages of materials. In response, DBI filed a 54-page motion to strike Loeffel's reply to DBI's additional facts, which was in reality a surreply, which is not contemplated by Local Rule 56.1.¹ Loeffel responded to that. Hardly an auspicious beginning for a case where Loeffel claimed there were no disputed factual issues and it was entitled to judgment as a matter of law.

After a careful review of the complex and voluminous materials submitted by both sides, I find myself in much the same position as did Judge Keys, and like Judge Keys, I have concluded that the current motion for summary judgment should be denied. There are still present sharply divergent recollections of what was said, of what was meant, of what certain parts of the contract mean and do not mean, whether the Line performed satisfactorily, and if not, why not, and other related issues. Although this time the motion is the plaintiff's and although this time Count V is not part of the analytical mix, a host of genuine issues of disputed fact predominate, thereby precluding the granting of summary judgment.

Judge Shadur's recent article, Trials Or Tribulations (Rule 56 Style)?, 29 LITIGATION 5 (Winter 2003) should be must reading for everyone contemplating a motion for summary judgment. He concluded that a meaningful cost benefit analysis would tend to favor not filing the motion in the first place. In his view, "trials not only are more fun but also are more consistent with most lawyers' preferred self image than the sterile Rule 56 path (strewn as it is with paper and nothing but paper)." Id. at 66. (Parenthesis in original). Hence, he concludes, "trials are indeed often better than tribulations (Rule 56 style). Counsel (particularly defense counsel) regularly should be urged by judges to consider — and that counsel should do so — the ultimately conservative alternative of trial before they proceed down the summary judgement path." Id. (Parenthesis in original).

I. BACKGROUND

A

The Parties' Differing And Disputed Versions Of The Facts

The Negotiations And The Ultimate Agreement

Loeffel is in the business of slitting and cutting raw steel into various lengths and widths in accord with its customers' orders. DBI is in the business of designing and manufacturing multi-blanking machines, which are designed to process coils or rolls of sheet steel. The Line's "leveler" flattens the coiled steel as it unrolls and removes surface defects. The line can then cut the steel length-wise into sections; it can also slit the steel into strips — called "blanks" or "mults" — of various widths. As these tasks are accomplished, the "stacker" component sorts and stacks the sheets into a stacker bay.

In late 1999, Loeffel was shopping for just such a machine, and its founder, Maurice Loeffel, came across an article about DBI and its multi-blanking line in a trade publication. Coincidentally, at about the same time, DBI's vice president of sales and marketing, Gautum Mahtani, contacted Loeffel to gauge its interest in a multi-blanking line. The parties embarked upon negotiations that included a visit to a facility to observe one of DBI's similar machines, although it was a heavier gauge line — running .250-inch thick steel as opposed to .125-inch — and only cut steel to length as opposed to "multi-blanking" or "slitting."

Mr. Mahtani provided Loeffel with a quotation describing the features and components of DBI's multi-blanking line. DBI claims that Mr. Mahtani made it clear to Loeffel that the machine was the first of its kind (Defendants' Statement of Additional Facts ("Def.St."), ¶ 12), but his deposition testimony indicates he is not so sure that was actually discussed. (Plaintiff's Response to Def.St. (Pl.Resp., Ex. 2, at 81-82)). Mr. Mahtani did say, however, that he discussed bringing other customers to Loeffel's facility for demonstrations once the Line was installed. (Id.). Over the course of their negotiations, the parties exchanged five revisions of the purchase agreement before finally executing a contract on March 1, 2000, whereby DBI would deliver a rotary shear multi-blanking line to Loeffel by May 31, 2000, at a cost of $1.5 million. (Pl.St., Ex. B).

The contract between the parties can be broken down into sections. The first is captioned, "Introduction," and is 1½ pages in length. In setting forth the technical advantages of the Line "versus Roll Feed Technology," DBI promises that there will be minimum down time, lower equipment costs and longer equipment life with dependable performance. After lauding the Line, there is this rhetorical question: "Is this not a lot better than having to purchase a new line with twice the cost and equipment and installation and double personnel requirement and cost." Id. at 2. (Emphasis supplied).² The pages of the Introduction are numbered 2 and 3, page 1 being the cover page.

Next comes that part of the contract captioned, "Equipment Summary and Price and Delivery Schedule." It runs from pages 4-6. At the bottom of page 6 are the signatures of Delta and Loeffel's Presidents. Immediately above their signatures is this instruction: "* See Annex A — which is an integral part of this agreement."

Pages 7-8 contain various specifications under the headings, "Optional Equipment," "Incoming Materials," "Finished Products," "Production Analysis (Blanking)," "Slitting Specifications," and "Production Analysis (Multiple-Blanking)." The specifications include production speeds broken down by length of steel sheets, ranges of steel thicknesses that can be leveled down to nine one-thousandths of an inch, and length accuracies down to the thousandth of an inch. Pages 8 through 29 are a detailed description of every conceivable aspect of the Line. They appear under the heading, "Equipment Descriptions," which is ¶ 3.01 of the contract and contain subparagraphs ¶ 1-17, which are mostly single spaced. There are on these pages as there are on earlier pages, handwritten changes. Detailed are the size and thickness of the coils of steel to be cut, leveled, and stacked; the accuracy of length and width cutting; the speed at which the machine can run in feet-per-minute ("fpm"), and other specifications and capacities. (Pl.St., Ex. B, at 7-29).³

Under the heading, "Technical Data and Assistance," which itself appears as a subsection under "Equipment Descriptions," there appears the following clause: "DBI guarantees this equipment to operate mechanically within the specifications and capacities as mentioned in this quotation on a production basis." (Def.Resp., Ex. E, D00072; Contract at ¶ 3.01, subsection 17 at p. 27) (Emphasis supplied).

The last section consists of 6 unnumbered pages, under the heading, "Annex A, (Documentation of Correspondence)." The Annex, as noted above, is expressly made "an integral part of this agreement," by virtue of the statement on page 6 of the contract. The Annex contains a letter dated February 9, 2000, asking Mr. Savariego 20 specific questions including, "[w]hat guarantees do you give on length and width tolerance?" Mr. Savariego responded by letter dated February 17, 2000 in which all 20 questions were answered. Paragraph 9 of his letter states, "Guarantees on Length/Width Tolerances — as per specification." The next three pages of the Annex are captioned "Points Agreed on our Telephone Conversation" and notes that DBI is not responsible for "consequential damages." The pages of the Annex, like all the pages of the contract, are initialed by Loeffel and DBI.

Paragraph 13 of DBI's answer admits that it entered into a written contract on about March 2, 2000 and that the copy attached to the complaint as Exhibit 1 is the contract.

Ignoring ¶ 3.01, subsection 17's "guarantee" that the...