Reis Robotics Usa, Inc. v. Concept Industries
| Decision Date | 06 November 2006 |
| Docket Number | No. 06 CV 1430.,06 CV 1430. |
| Citation | 462 F.Supp.2d 897 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | REIS ROBOTICS USA, INC., an Illinois corporation, Plaintiff, v. CONCEPT INDUSTRIES, INC., a Michigan corporation, Defendant. |
CASTILLO, District Court.
This is a diversity action governed by Illinois law in which Plaintiff Reis Robotics USA, Inc. ("Reis") filed a complaint against Defendant Concept Industries, Inc. ("Concept"), seeking redress for breach of contract. Concept has answered the complaint, asserted six affirmative defenses, and brought seven counterclaims against Reis. Reis now moves to strike and dismiss Concept's affirmative defenses (H. 13); strike portions of Concept's answer (R. 17); and dismiss Concept's counterclaims (R. 21). For the reasons set forth below, Reis's motions are granted in part and denied in part.
The following facts are taken from Reis's complaint. Reis, an Illinois corporation, manufactures and supplies industrial robotics equipment. (R 1, Compl. ¶ 1.) Concept, a Michigan corporation, manufactures and supplies automotive parts. (Id. ¶ 2.) On or about February 24, 2005, the parties entered into a contractual arrangement for Concept to purchase from Reis a robotic laser cutting machine (the "Laser") and associated fixtures for trimming three separate automotive parts: the Hush Panel, JS Dash Silencer, and JS Dash Close Out Panel. (Id. ¶¶ 5, 9.) The pertinent contract documents are an "Order Acknowledgment" executed by Reis and an "Amended Purchase Order" executed by Concept (R. 1, Ex. 2 (Purchase Order)).1 For ease of reference, we refer to these documents collectively as "the Agreement."
While Reis was in the process of manufacturing the Laser and fixtures pursuant to the Agreement, Concept informed Reis that Concept had terminated the Hush Panel program and that the associated fixtures were no longer needed. (Id. ¶ 10.) The parties agreed to amend the purchase price of the Agreement to reflect the cancellation of the Hush Panel fixtures but to include payment for work performed. (Id. ¶ 11.) Following the cancellation of the Hush Panel fixtures, the amended purchase price of the Agreement was $911,000. (Id. ¶ 8.)
In July 2005, Reis presented and demonstrated the Laser to Concept. (Id. ¶ 14.) In August 2005, Concept informed Reis of changes to the JS Dash Silencer part. (Id. ¶ 16.) Concept's changes to the JS Dash Silencer part required Reis to redesign the associated fixtures. (Id. ¶ 16.) Reis alleges that Concept ordered these modifications under the Agreement, but Concept denies this allegation. (Id. ¶ 17.) Reis asserts that it is entitled to the original purchase price of the JS Dash Silencer fixtures and for work performed on their redesign and remanufacture. (Id. ¶¶ 18-19.)
In October 2005, Reis again presented and demonstrated the Laser to Concept. (Id. ¶ 14.) On October 3, 2005, Concept acknowledged receipt of the Laser at its Michigan facility by executing an Acceptance Test Certificate. (Id. ¶ 15.)
In November 2005, Concept informed Reis that Concept had terminated the JS Dash Close Out Panel program and that the associated fixtures, which Reis was still working on, were no longer needed. (Id. ¶ 12.) Reis alleges that it was entitled to payment for work already performed on the JS Dash Close Out Panel fixtures prior to cancellation, a total of $6,900. (Id. ¶ 13.) Concept denies that Reis is entitled to payment of this amount. (R. 11, Answer ¶ 13.)
The parties agree that Concept has paid' Reis $588,600 to date. Reis asserts that Concept has breached the Agreement by failing to pay a remaining balance of $264,300 plus interest. Concept denies that it owes Reis any additional money under the Agreement. (R. 11, Answer ¶¶ 22-24.)
The following additional facts are gleaned from Concept's "Answer, Affirmative Defenses and Counterclaim." (R. 11.) Concept alleges that prior to entering the Agreement, the parties engaged in extensive negotiations regarding the specifications of the Laser, particularly the Laser's cutting speed, also called "cycle time," meaning the time required to complete one part. Throughout the negotiations, Reis, through its sales manager Dino Chece, allegedly made various oral and written promises to Concept indicating that the Laser would trim the JS Dash Silencer parts at a cycle time of 60-70 seconds per part or faster. (Id. ¶ 1, 5-10.) Relying on these promises by Reis, Concept entered into the Agreement. (Id. ¶ 11.)
The Agreement stated that the "Application" of the Laser was for the cutting of parts "described as Hush Panel/Panels Close/Silencer." (Id. ¶ 11; Ex. B (Order Acknowledgment) at 3.) The Agreement did not mention the 60-70 seconds cycle time, but did provide as follows:
Necessary cycle time per component is indicated from Concept Industries with 23.7 sec per part including loading/ unloading and inspection. During our test in Chicago we were able to cut the parts in 17-20 sec. The table rotating time is 3 sec. The loading/unloading as well as inspection is done during [sic] the robot is cutting the part, therefore this time does not need to be added to the overall cycle. Reis Robotics is NOT responsible for the Operator related cycle times.
(Id. ¶ 1; Ex. B at 6.) The Agreement also contained an express warranty that the Laser would be free from defects in material and workmanship. (Id. ¶ 12; Ex. B at 31.)
According to Concept, at a demonstration of the Laser conducted by Reis on May 26, 2005, Concept personnel questioned Mr. Chece and Dr. Wenzel, Reis's general manager, about the Laser's apparent slow cutting speed of JS Dash Silencer parts during the demonstration. (Id. ¶ 13.) In response to Concept's concerns, Mr. Chece and Dr. Wenzel responded that the Laser was not yet optimized and that Concept had "nothing to worry about." (Id. ¶ 13.) When Concept accepted possession of the Laser at its facility, the certificate of acceptance indicated that cycle times "[c]annot be checked without the production fixture." (Id. ¶ 16.) Following the installation of the Laser at Concept's facility, Concept repeatedly expressed to Reis concerns regarding the cutting speed of the Laser. (Id. ¶ 15-26.) Concept repeatedly requested assurances from Reis that the cycle time for the JS Dash Silencer would be 60-70 seconds per part, as promised earlier by Mr. Chece. (Id. ¶¶ 15-26.) After it became clear to Concept that the Laser would be unable to achieve the promised cycle time, on December 21, 2005, a representative of. Concept sent Reis an email informing Reis that "Concept is pursuing the implementation of an alternate production process" and requesting that Reis "place all production fixtures design work that is currently in-process on the LHD and RHD JS Dash Silencers on hold." (Id. ¶ 25.)
On January 6, 2006, Reis informed Concept in writing that the Laser's cycle time for the JS Dash Silencer would be between 150-195 seconds per part, far longer than what was originally promised. (Id. ¶ 26.) According to Concept, to date the Laser has failed to come close to achieving the initially promised cycle time of 60-70 seconds per part, a defect that was. "fatal" to Concept's ability to manufacture parts in the volumes required by its customers. (Id. ¶¶ 1, 26-27.)
As for the JS Dash Silencer fixtures, Concept alleges that it only authorized Reis to design the JS Dash Silencer fixtures and never authorized Reis to begin manufacturing the fixtures. (Id. ¶¶ 28-45.) According to Concept, between April and October 2005, the parties exchanged numerous communications through which both parties indicated that Reis would wait for Concept's final design approval prior to initiating any production of the JS Dash Silencer fixtures. (Id. ¶¶ 29-33.) Concept alleges that it never gave Reis final design approval and therefore is not responsible for any charges related to the production of the JS Dash Silencer fixtures. (Id. ¶ 28, 45.)
Concept also raises counterclaims against Reis for: (1) fraudulent inducement; (2) misrepresentation; (3) unjust enrichment; (4) promissory estoppel; (5) breach of contract; (6) breach of express warranty; and (7) overpayment. (Id. ¶¶ 46-81.) All of the claims are premised on the Laser's inability to achieve the cycle time allegedly discussed by the parties. (See id.)
We turn first to Reis's motion to strike and dismiss various portions of Concept's affirmative defenses.
Federal Rule of Civil Procedure 12(f) permits the Court to strike "any insufficient defense or any redundant, immaterial, impertinent or scandalous matter." Fed.R.Civ.P. 12(f). Motions to strike are generally disfavored because of their potential to delay proceedings. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir.1989). Nonetheless, a motion to strike can be a useful means of removing "unnecessary clutter" from a case, which will in effect expedite the proceedings. Id.
Affirmative defenses are pleadings and, as such, are subject to all the same pleading requirements applicable to complaints. Id. Thus, affirmative defenses must set forth a "short and plain statement" of the basis for the defense. Fed. R.Civ.P. 8(a); Heller, 883 F.2d at 1294. Even under the liberal notice pleading standards of the Federal Rules, an affirmative defense must include either direct or inferential allegations as to all elements of the...
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