Minnesota Forest Products v. Ligna Machinery
| Citation | 17 F.Supp.2d 892 |
| Decision Date | 22 April 1998 |
| Docket Number | No. CIV.A. 96-296/RHK/RLE.,CIV.A. 96-296/RHK/RLE. |
| Parties | MINNESOTA FOREST PRODUCTS, INC., a Minnesota corporation, Plaintiff, v. LIGNA MACHINERY, INC., a North Carolina company; H.E. "Butch" Wilson, individually; and Jocar, a/k/a Jose De Oliveira Carlos & Irmao, a Portuguese company, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Susan Barnes & John Strothman, Lindquist & Vennum, Minneapolis, MN, for Plaintiff.
Eric Jorstad, Robert Collins & Karen Wilson, Faegre & Benson, Minneapolis, MN, for Defendants Ligna Machinery and H.E. "Butch" Wilson.
Alan Silver & Richard Pins, Doherty, Rumble & Butler, Minneapolis, MN, for Defendant Jocar.
Plaintiff Minnesota Forest Products, Inc. ("Forest") contracted with Defendant Ligna Machinery, Inc. ("Ligna") for sawmill equipment and design services. Defendant Jocar ("Jocar"), a Portugese manufacturer of sawmill equipment, produced some of the equipment which Ligna sold to Forest. Ligna installed the equipment, but Forest was not satisfied with the equipment's performance. Forest filed the instant action, alleging claims for breach of contract against Ligna, breach of implied and express warranties against all Defendants, fraud against all Defendants, negligence against all Defendants, and negligent design against Ligna and its president, Defendant H.E. Butch Wilson Jr. ("Wilson"). Presently before the Court are Defendants Ligna and Wilson's Motion for Partial Summary Judgment and Defendant Jocar's Motion for Summary Judgment. For the reasons set forth below, the Court will grant Ligna and Wilson's Motion in part and grant Jocar's Motion in its entirety.
Forest is a Minnesota corporation located in Onamia, Minnesota. It operates a sawmill and sells lumber products. Larry Doose, the president of Forest, and his wife, Yvonne Doose, are the sole owners of Forest.
In 1983, the Dooses began working in the sawmill industry for Ratzlaff Logging & Lumber ("Ratzlaff"), a company that Yvonne's father owned. (L. Doose Dep. 19; 2nd L. Doose Aff. ¶ 4.) Ratzlaff had operated a circle saw type sawmill1 in Onamia, but it shut down in the early 1980's, (L. Doose Dep. 19-20.) Larry Doose made this mill operational again (hereinafter "Mill C") and then managed it. (Id. at 19-21.) During the period that he managed Mill C, Larry Doose oversaw the purchasing, installation and repair of equipment in the mill, including the installation of a new debarker, carriage drive system, and chip screening system. (Id. at 21-23, 25.) He understood how the machines worked and had a "real strong understanding of electrical and hydraulics." (Id. at 25-26.)
In June 1986, the Dooses bought Mill C from Ratzlaff, and in late 1986 they formed Forest. (L. Doose Dep. 26-27.) Mill C produced NHLA grade lumber, wood chips, and some low grade lumber. (Id. at 28.) Between 1986 and 1997, Forest made several substantive changes to the machine centers at Mill C. (Id. at 29-36.) It replaced the debarker, carriage, log turner, sawyer's cab, edger, and gang saw; it added a computerized setworks to the carriage, redid the waste system, installed a vibrating conveyor system and a jumpskid transfer, and moved the chipper. (Id.)
Ligna is a North Carolina corporation with its principal place of business in Burlington, North Carolina. (Compl.¶ 3.) It designs sawmills and manufactures equipment used in the timber industry. (Id.) Wilson is the president of Ligna. (Id. ¶ 4.)
Jocar is a Portuguese company that manufactures sawmill equipment. Since 1987, Ligna has been the sole United States distributor and representative of Jocar's sawmill equipment. (Themudo Dep. 17-18; June 2, 1997 Y. Doose Aff. ¶ 2.) Jocar sells sawmill equipment to Ligna, which in turn sells it to third parties. (Themudo Dep. 19-20.) Jocar does not know for how much Ligna resells its equipment. (Id.) Jocar and Ligna have never entered into joint projects together. (Wilson Dep. 195.) Jocar, however, referred to Ligna as its "agent" in a letter that it sent to Forest. (See id. Ex. D (Jocar's Nov. 9, 1995 fax to Yvonne Doose).)
When Ligna buys equipment from Jocar, Jocar usually is paid in three phases. (Themudo Dep. 23.) Typically, Jocar receives either 20% or 30% as a pre-payment with the order from Ligna, 60% or 70% when it delivers the equipment to the United States, and the remaining 10% or 20% when Ligna is paid. (Id.)
Jocar gave Ligna permission to use its name in advertising that Ligna distributes in the United States. (Wilson Dep. 195-96.) Jocar does not ask to see such advertising before it is distributed. (Id.) Jocar also gave Ligna advertising prepared by Jocar for distribution in the United States. (Themudo Dep. 30-36.)
Sometime in either 1992 or 1993, Forest began considering an expansion of its sawmill business. (2nd L. Doose Aff. ¶ 3; Y. Doose Dep. 98.) Forest wanted a new mill ("Mill B") that could process smaller diameter logs for use as high-end, pallet lumber. (2nd L. Doose Aff. ¶ 5.) Forest had no experience in milling pallet lumber, and it had no experience with twin bandsaws, thin kerf sawing, and sharp chain systems that could be used to mill such lumber. (2nd L. Doose Aff. ¶ 15; L. Doose Dep. 91.)
In early 1993, Forest contacted two companies, Fastline and Tipton, about equipment for its new mill. (L. Doose Dep. 65-67.) Larry Doose visited two of Tipton's mills in Missouri and a "Tipton installation in Wisconsin" to see how Tipton's equipment operated (Id. at 81.) In the summer of 1993, Tipton sent Forest a written quotation and a blueprint design for Ligna's proposed new mill. (Id. at 81-82.)
In 1993, Forest bought an edger for Mill C from Ligna. (L. Doose Dep. 46-47.) After this purchase, Jim Besonen ("Besonen"), a sawmill equipment sales representative from whom Forest had bought machinery in the past, recommended that Forest consider buying equipment for its new mill from Ligna.2 (Id. at 67-68; 2nd L. Doose Aff. ¶ 6.) Besonen arranged for the Dooses and a Ligna representative, Joe Caron, to visit mills in Michigan and Wisconsin that used Ligna equipment. (L. Doose Dep. 68-69.) In late 1993, Besonen and the Dooses traveled to North Carolina to see other mills that were using equipment representative of the type of equipment that would be used in Forest's new mill, and they also toured Ligna's plant. (2nd L. Doose Aff. ¶ 7; L. Doose Dep. 79.) The owners of these mills told Larry Doose that they were happy with the equipment that Ligna had sold them. (L. Doose Dep. 71-78.) In 1994, the Dooses again visited North Carolina again, and toured several facilities that used Ligna equipment with Wilson. (Id. at 86-96.)
Larry Doose told Wilson that his primary purpose for considering a new sawmill was to be able to process pallet lumber out of material that Forest was chipping for its customers. (Wilson Dep. 400; 2nd L. Doose Aff. ¶ 8.) Wilson told him that Ligna could supply Forest with a mill design and appropriate and reliable equipment to manufacture such pallet lumber. (2nd L. Doose Aff. ¶ 8.)
Forest claims that Wilson made the following representations to it during the course of their discussions about Forest's desired sawmill design and equipment, and that these representations induced Forest into entering into design and equipment contracts with Ligna: (1) "that the mill design and that the Ligna and Jocar equipment quoted will consistently produce at least 40,000 board feet per shift in pallet lumber and considerably more in grade lumber" (2nd L. Doose Aff. ¶ 17(A));3 (2) "that the Jocar and Ligna equipment being purchased by [Forest] was tested, reliable, and ideal for Forest's proposed use" (2nd L. Doose Aff. ¶ 17(B)); (3) "that Ligna's customers have been totally satisfied with Ligna's sawmill design and products and [Forest] will be also" (Id. ¶ 17(C)); (4) "that Ligna has a well trained and talented staff of engineers designing sawmills and sawmill equipment" (Id. ¶ 17(D)); (5) "that Rich Landers (`Landers') was Ligna's chief engineer and that he would design [Forest's] project and see it through complete engineering, manufacture, installation and start up" (Id. ¶ 17(E)); (6) "that Landers is one of the best sawmill designers in the country with extensive experience in designing complete sawmills of the nature [Forest] is considering" (Id. ¶ 17(F)); (7) "that the equipment which Ligna manufactures and which Ligna sells as agent for Jocar is unconditionally guaranteed" (Id. ¶ 17(G)); (8) "that [Wilson] guarantee[d] that Ligna will stand 100% behind its design and equipment we sell you" (Id. ¶ 17(H)); (9) "that Ligna will deliver on time and in a sequence that will permit the orderly installation of equipment" (Id. ¶ 17(I)); (10) "that the mill will perform to [Forests's] specifications within 30 to 60 days of start-up and the only delay in reaching full production will be from Forest's operators to become used to the equipment which should take a couple of weeks." (Id. ¶ 17(J)).
Forest also claims that Ligna and Jocar made many statements in its advertising about the experience and abilities of their equipment, including the following representations: (1) "Jocar band headsaw and resaws ... quality manufacturing ... extremely tough ... economically priced;" (2) "Jocar— very strong, fast and efficient;" (3) "Jocar— easy to work due to its simplicity;" (4) "Jocar —very robust and efficient machine and well-constructed;"(5) "Jocar — if you don't like it, you don't keep it;" (6) "Jocar — innovative and technologically advanced to reduce maintenance and repair costs;" (7) "band mills produce approximately 10% more lumber from any...
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