Tralon Corp. v. Cedarapids, Inc., No. C 95-195-MWB.

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
Writing for the CourtBennett
Citation966 F.Supp. 812
Decision Date20 May 1997
Docket NumberNo. C 95-195-MWB.
PartiesTRALON CORPORATION, Soil Remediation Service, Inc., and Bernard Glieberman, Plaintiffs, v. CEDARAPIDS, INC., Defendant.
966 F.Supp. 812
TRALON CORPORATION, Soil Remediation Service, Inc., and Bernard Glieberman, Plaintiffs,
v.
CEDARAPIDS, INC., Defendant.
No. C 95-195-MWB.
United States District Court, N.D. Iowa, Cedar Rapids Division.
May 20, 1997.

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Donald G. Thompson, Vernon P. Squires, Bradley & Riley, P.C., Cedar Rapids, IA, for Plaintiffs.

Stephen J. Holtman, Leonard T. Strand, Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, IA, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING MOTION TO STRIKE COUNTERCLAIM AND MOTION FOR SUMMARY JUDGMENT

BENNETT, District Judge.


 TABLE OF CONTENTS
                 I. INTRODUCTION AND BACKGROUND .............................................816
                 II. STANDARDS FOR SUMMARY JUDGMENT ..........................................817
                III. FINDINGS OF FACT ........................................................818
                 A. Uncontested Facts ....................................................818
                 B. Contested Facts ......................................................822
                IV. LEGAL ANALYSIS ...........................................................822
                 A. Cedarapids' Motion For Summary Judgment ...............................822
                 1. The Terms Of The Parties' Agreement ................................822
                 2. Plaintiffs' Warranty Claims ........................................824
                 a. Sufficiency of representations ..................................824
                 b. SRS' right to consequential damages .............................826
                 3. Plaintiffs' Fraudulent Misrepresentation Claims ....................826
                 a. Fraudulent misrepresentation under Iowa law .....................827
                 b. Sufficiency of representations ..................................827
                 c. Evidence of knowledge of falsity ................................828
                 4. The Availability Of Equitable Recision As A Remedy..................829
                 5. The Viability of Tralon's Indemnity Claim ..........................830
                 B. Plaintiffs' Motion To Strike Counterclaim .............................831
                V. CONCLUSION ...............................................................833
                

The lawsuit presently before the court is, depending upon which party's perspective is employed, either a classic case of buyer's remorse or an archetypal episode of misrepresentation taken by a manufacturer in order to consummate a sale. Defendant seeks summary judgment on all of plaintiffs' claims. Resolution of defendant's motion for summary judgment requires the court to examine and explore the contours of several areas of the law, including Iowa contract, commercial and tort law. Additionally, plaintiffs seek to strike defendant's counterclaim. This endeavor requires the court to examine the procedural question of whether the filing

Page 816

of an amended complaint accords the responding party the right to assert a counterclaim without securing prior leave of the court.

I. INTRODUCTION AND BACKGROUND

On June 16, 1995, plaintiffs Tralon Corporation ("Tralon"), and Soil Remediation Service, Inc. ("SRS") filed their original complaint in this lawsuit against defendants Cedarapids, Inc. ("Cedarapids") and General Electric Capital Corporation ("G.E. Capital"). Plaintiffs asserted claims against Cedarapids for breach of contract, misrepresentation, and recision flowing from Tralon's purchase of a portable soil reconditioning machine from Cedarapids in 1993.1 On June 27, 1995, prior to any answer being filed, plaintiffs filed an amended complaint in this case. The amended complaint added a third plaintiff, Bernard Glieberman ("Glieberman"), who is alleged to have executed a personal guaranty to secure the purchase of the portable soil reconditioning machine. No new theories or claims were advanced in the amended complaint. Cedarapids filed its answer in this matter on August 16, 1995. On August 18, 1995, G.E. Capital filed its answer in this case and a counterclaim against Tralon and Glieberman for the amount due and owing on the contract for the purchase of the Cedarapids portable soil reconditioning machine sold to Tralon. On January 29, 1996, G.E. sold Tralon's note back to Cedarapids and assigned its rights under the note to Cedarapids. On March 18, 1996, plaintiffs voluntarily dismissed G.E. Capital as a defendant. G.E. Capital's counterclaim, however, was not dismissed at that time. On August 1, 1996, plaintiffs moved for leave to file a second amended complaint. On August 23, 1996, plaintiffs' motion to amend was granted and plaintiffs' Second Amended and Substituted Complaint was filed in this case. Plaintiffs' second amended complaint asserts claims against Cedarapids for breach of express warranty, breach of implied warranty, misrepresentation, recision/restitution and indemnity. On October 1, 1996, Cedarapids filed its answer to plaintiffs' Second Amended and Substituted Complaint, and also a counterclaim against Tralon and Glieberman for the amount due and owing on the contract for the purchase of the Cedarapids' portable soil reconditioning machine sold to Tralon. Cedarapids states in its counterclaim that in January 1996, G.E. Capital assigned to Cedarapids all its rights and interests in a note and a guaranty executed by Tralon and Glieberman respectively securing Tralon's purchase of the portable soil reconditioning machine. On October 18, 1996, counterclaim plaintiff G.E. Capital voluntarily dismissed its counterclaim against counterclaim defendants Tralon and Glieberman. On October 21, 1996, plaintiffs moved to strike Cedarapids' counterclaim. Cedarapids filed a timely resistance to plaintiffs' motion to strike. On October 30, 1996, Cedarapids moved for leave to file the counterclaim that was included with its answer. Cedarapids also moved to modify the court's January 3, 1996, scheduling order to allow the filing of Cedarapids' counterclaim on October 1, 1996. Plaintiffs filed a resistance to Cedarapids' motion to file the counterclaim and amend the scheduling order.

On March 17, 1997, Cedarapids moved for summary judgment on all claims asserted against it by plaintiffs. Plaintiffs filed a timely resistance to Cedarapids' motion for summary judgment on April 14, 1997. The pending motion for summary judgment and motion to strike Cedarapids' counterclaim were then set for telephonic oral argument before the court on May 16, 1997. At the hearing, plaintiffs were represented by Donald G. Thompson and Vernon P. Squires of Bradley & Riley, P.C., Cedar Rapids, Iowa. Cedarapids was represented by Stephen J. Holtman and Leonard T. Strand of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, Iowa. The parties have filed thorough and extensive briefs in support of their respective positions. Counsel were exceptionally well prepared for oral argument.

Page 817

The oral arguments were well presented and reflected the hotly contested nature of this litigation. This matter is now deemed fully submitted.

The court turns first to the standards applicable to motions for summary judgment, then to a discussion of the undisputed facts as shown by the record and the parties' submissions, and finally to the legal analysis of whether Cedarapids is entitled to summary judgment on any of plaintiffs' claims. Finally, the court will turn to the issue of plaintiffs' motion to strike Cedarapids' counterclaim.

II. STANDARDS FOR SUMMARY JUDGMENT

The Eighth Circuit Court of Appeals recognizes "that summary judgment is a drastic remedy and must be exercised with extreme care to prevent taking genuine issues of fact away from juries." Wabun-Inini v. Sessions, 900 F.2d 1234, 1238 (8th Cir.1990). On the other hand, the Federal Rules of Civil Procedure have authorized for nearly 60 years "motions for summary judgment upon proper showings of the lack of a genuine, triable issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). Thus, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Wabun-Inini, 900 F.2d at 1238 (quoting Celotex, 477 U.S. at 327, 106 S.Ct. at 2555); Hartnagel v. Norman, 953 F.2d 394, 396 (8th Cir.1992).

The standard for granting summary judgment is well established. Rule 56 of the Federal Rules of Civil Procedure states in pertinent part:

Rule 56. Summary Judgment

(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof.

(b) For Defending Party. A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory judgment is sought may, at any time, move with or without supporting affidavits for a summary judgment in the party's favor as to all or any part thereof.

(c) Motions and Proceedings Thereon. ... The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(a)-(c) (emphasis added); see also Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53; Reliance Ins. Co. v. Shenandoah S., Inc., 81 F.3d 789, 791 (8th Cir.1996); Beyerbach v. Sears, 49 F.3d 1324, 1325 (8th Cir.1995); Munz v. Michael, 28 F.3d 795, 798 (8th Cir.1994); Roth v. U.S.S. Great Lakes Fleet, Inc., 25 F.3d 707, 708 (8th Cir.1994); Cole v. Bone, 993 F.2d 1328, 1331 (8th Cir. 1993); Woodsmith Publishing Co. v. Meredith Corp., 904 F.2d 1244, 1247 (8th Cir. 1...

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