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CUSTOM AUTOMATED MACHINERY v. PENDA CORP.

January 20, 1982

CUSTOM AUTOMATED MACHINERY, A DIVISION OF CUSTOM ALUMINUM PRODUCTS, INC., PLAINTIFF-COUNTER DEFENDANT,
v.
PENDA CORPORATION, DEFENDANT-COUNTER PLAINTIFF. PENDA CORPORATION, PLAINTIFF, V. CUSTOM AUTOMATED MACHINERY, DEFENDANT.



The opinion of the court was delivered by: Aspen, District Judge:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This cause having come on trial and the Court, having considered the evidence, oral arguments, and the briefs of the parties, does hereby make and enter, pursuant to Rule 52 of the Federal Rules of Civil Procedure, its Findings of Fact and Conclusions of Law. Any finding of fact which is properly a conclusion of law and any conclusion of law which is properly a finding of fact is to be so considered.

FINDINGS OF FACT

1. Custom Automated Machinery ("Custom") is an operating division of Custom Aluminum Products, Inc., an Illinois corporation with its principal place of business at 414 West Division Street, South Elgin, Illinois. Custom was established as a division of Custom Aluminum Products, Inc. on or about March, 1978. Custom designs, manufactures and sells thermoforming machinery. (Agreed Statement of Fact, hereinafter "ASOF", # 1).

2. Penda Corporation ("Penda") is a Wisconsin corporation with its principal place of business at 1214 North Fort Road, Portage, Wisconsin. Penda is in the business of thermoforming plastic products. (ASOF # 2).

Case No. 79 C 3078: CAM No. 1

3. In early 1978, the president of Penda met with a sales representative of Custom in Chicago, Illinois. They agreed to meet again in Wisconsin to discuss the possible purchase by Penda of thermoforming machinery manufactured by Custom. (ASOF 3).

4. Subsequently, two meetings were held between Penda and Custom representatives at Penda plants in Wisconsin. During these meetings, Penda and Custom discussed the capacities of Custom's thermoforming machinery. Custom estimated that its machine would operate at a cycle time of 120 cycles per hour and stated that it could be delivered to Penda within eight to twelve weeks. (Tr. 90-94, 127).

5. Following these meetings, Custom sent Penda a written quotation for Penda's purchase of one 6' x 10' four-station rotary thermoforming machine (hereinafter "CAM No. 1") (ASOF # 4, Tr. 111-114). Custom stated therein that CAM No. 1 would have twin-sheet forming capability (Tr. 232) and would be accompanied by instruction manuals (Tr. 35; Penda Ex. 2).

6. Upon review of Custom's quotation for CAM No. 1, Penda representatives discovered that several operating requirements to which Custom had orally agreed were not included. Consequently, Penda retyped the aforementioned quotation, adding the operating requirements agreed to earlier as well as a few minor additional ones, and sent it to Custom on or about May 18, 1978. (Tr. 119-122).

7. In deciding to purchase CAM No. 1, Penda relied upon Custom's representations that the machine would be delivered within twelve weeks of the agreement and that the machine would be designed so that it could operate at 120 cycles per hour with an Envirodisc mold. (Tr. 90-94, 122-124).

8. Custom agreed to all of Penda's additions on the quotation for CAM No. 1.

9. In or about November, 1978, CAM No. 1 was delivered to Penda's plant in Portage, Wisconsin. (ASOF # 8).

10. CAM No. 1 was installed at Penda's plant by employees and agents of Custom in or about mid-November, 1978. (ASOF 9).

11. Penda paid to Custom the full purchase price of $109,464.00 for CAM No. 1. (ASOFs # 7 and # 10).

12. Despite repeated requests by Penda, Custom failed to deliver to Penda manuals for the operation, start-up, and maintenance of CAM No. 1. (Tr. 190-91, 248).

13. During the installation of CAM No. 1, numerous problems with the machine were discovered. The problems with the installation of CAM No. 1 testified to at trial included misalignment of the platens, a defective sheet load table, and improper fan location. (Tr. 242-43). After CAM No. 1 was installed, Penda personnel attempted to operate it but encountered a series of mechanical failures and breakdowns. The plaintiff presented specific evidence of malfunctions, including shorts in the wiring, sagging frames, and burned-out motors. (Tr. 250-253). Additionally, the evidence established that CAM No. 1, as manufactured by Custom, is incapable of twin-sheet forming. (Tr. 615-616).

14. Penda personnel discussed the problems of CAM No. 1 with Custom personnel on numerous occasions and, on November 20, 1978, Penda formally notified Custom in writing of the malfunctioning of CAM No. 1. (Tr. 143-145, ASOF # 18).

15. Despite Custom's numerous service calls to work on CAM No. 1 between November, 1978 and March, 1979, Custom failed to repair the machine so that it could operate in accordance with Penda's needs. (Tr. 145-154, 263, 370-389, 860-875). After March of 1979, Custom did not perform any further repairs on, CAM No. 1, nor did it provide any further replacement parts. (ASOF # 19).

16. The testimony presented at trial indicated that CAM No. 1, as designed and manufactured by Custom, under the contract description for the machine, was not fit for the ordinary purposes of thermoforming machinery.

17. In an effort to correct the defects that Custom had failed to correct and to repair CAM No. 1 so that it could operate in accordance with Penda's needs, Penda sought assistance and parts from private contractors, at a cost of approximately $67,566, (Tr. 298)*fn1 and used parts from its inventory at a cost of approximately $500 (Tr. 309).

18. It would cost Penda at least $50,000 to modify CAM No. 1 so that the machine will be able to function in the twin-sheet forming mode (Tr. 616).

19. Due to the abnormal defects, CAM No. 1 was inoperative for 529 hours between May 30, 1979, and May 31, 1981.*fn2 Penda showed to a reasonable certainty that it suffered damages for loss of use or the machine in the amount of $43 per hour: $20 for lost operator time and $23 for profit. (Tr. 303-304). Penda also attempted to show an additional loss of $45 per hour for overhead costs. Penda's proof of this loss, however, was wholly inadequate. (See Conclusion of Law # 15, infra).

20. The evidence at trial indicated that Penda lost 1,534 hours of CAM No. 1's productive capacity due to the machine's failure to consistently operate at 120 cycles per hour, 1,343 hours between January 25, 1979 to April 7, 1980 (Tr. 290-293) and 191 additional hours between April 27, 1980 and May 31, 1981 (Tr. 295).

21. The evidence at trial indicated to a reasonable certainty that Penda's maintenance employees spent 529 hours, at a cost of $18 per hour in repairing CAM No. 1 between May 30, 1979 and May 31, 1981. (Tr. 304-305).

Case No. 79 C 1755: CAM No. 2

22. After an agreement had been reached for Penda's purchase of CAM No. 1, the president of Penda spoke with a sales representative of Custom concerning the purchase of a second thermoforming machine. (Tr. 131-132).

23. Subsequent to this conversation, Penda submitted a purchase order, dated August 4, 1978, for the purchase of a second 6' x 10' four-station rotary thermoforming machine (hereinafter, "CAM No. 2"). (ASOF # 7). Attached to the purchase order for CAM No. 2 was a list of specifications, prepared by Penda which, except for the deletion of all references to twin-sheet forming ...


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