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NATION ENTERPRISES v. ENERSYST

February 28, 1990

NATION ENTERPRISES, INC., d/b/a NATION PIZZA, Plaintiff,
v.
ENERSYST, INC., Defendant


Milton I. Shadur, United States District Judge.


The opinion of the court was delivered by: SHADUR

MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE

 Nation Enterprises, Inc. ("Nation") has sued Enersyst, Inc. ("Enersyst") for selling Nation two allegedly defective pizza ovens, designated in the five-count Amended Complaint (the "Complaint") as "Oven 1" and "Oven 2":

 
1-2. Both Count I (breach of contract) and Count II (breach of warranty) are governed by the Texas Uniform Commercial Code, Tex. Bus. & Com. Code Ann. ch. 2 (Vernon 1987) ("Commercial Code"). *fn1"
 
3. Count III is brought under the Texas Deceptive Trade Practices and Consumer Protection Act, Tex. Bus. & Com. Code Ann. ch. 17 (Vernon 1987) ("Consumer Act").
 
4. Count IV asserts common law promissory estoppel.
 
5. Nation has voluntarily dismissed Count V (negligent design) in its entirety.

 Enersyst now moves for summary judgment on the first four Counts as they relate to Oven 1. *fn2" For the reasons stated in this memorandum opinion and order, Enersyst's motion is granted as to Count III but is denied as to all other Counts.

 Facts *fn3"

 Nation is a maker of pizza crusts, while Enersyst is a manufacturer of commercial ovens for the food processing industry. In 1981 Nation's chief executive officer and sole shareholder Marshall Bauer ("Bauer") entered into discussions with Enersyst's President Don Paul Smith ("Smith") looking to Nation's purchase of an Enersyst Jet Sweep Oven Model C-7-39. Enersyst provided Nation with a quotation and offer to sell Oven 1. Bauer penciled in modifications to a few of the quotation's terms and returned the quotation with his signature. On October 26, 1981 Smith added his signature to approve the sale, initialing his acceptance of Bauer's modifications. Both sides agree that the quotation document as modified thus became a binding contract for the sale of Oven 1.

 Oven 1 is a 36-foot-long and 3-foot-wide gas fired convection oven with an aluminum exterior and aluminized steel interior. To bake pizza crusts as the Enersyst design envisioned, heated air was to bake both the tops and bottoms of the crusts as they traveled the oven's length on a stainless steel wire conveyor belt. By controlling the oven temperature and the belt speed, the operator was supposed to be able to bake the crusts as desired. *fn4"

 Under the contract Enersyst was obligated (1) to deliver Oven 1 to Nation's plant in Chicago "twelve weeks from acceptance of purchase order unless delays beyond the control of the Supplier [Enersyst] are encountered" and (2) to assist in the necessary installation, although Nation was to provide labor for the installation process. That division of responsibilities was spelled out in the following provisions: *fn5"

 
PRICE: Enersyst Jet Sweep Oven with 6" infeed plus 36'8" of oven and 6" outfeed . . $ 75,000. Price includes [O> two-man days of
 
* * * *
 
PROVISIONS BY PURCHASER: Unload all material into installation site. Labor to uncrate and install equipment. . . .

 In addition, the contract provided a period after delivery in which Nation could test the equipment:

 
EXAMINATION AND TESTING:
 
Within sixty (60) days after delivery, purchaser shall accept the equipment. If any change is believed required to make the equipment acceptable, the supplier shall be notified as soon as possible in writing and within thirty (30) days after delivery and shall make agreed upon changes before payment. If delay in correcting such changes is for causes beyond the control of the Supplier, [but in fact due through delays caused by the buyer, only,] the balance [of] payment will be made sixty (60) days after delivery or notification of availability for delivery.

 Finally, the contract provided the following warranty:

 
Seller warrants the equipment manufactured by Seller, and not by others, to be free from defects in workmanship and material under normal use and service for a period of one (1) year from date of delivery or the period of twenty-one hundred (2100) accumulated hours of use, whichever period is shorter. . . .

 If things had proceeded as initially intended, delivery would have been made in January 1982. At the time, however, Nation was enlarging its plant and remodeling a new building to house its pizza crust ovens. Accordingly, although Oven 1 was ready for delivery on January 15, 1982, Nation made numerous requests that delivery be delayed to enable it to complete alterations to the new building. According to a letter from Enersyst to Bauer, Bauer asked for one such delay (until April 15, 1982) both to enable Enersyst to incorporate into Oven 1 design changes that had been requested by Nation and because Nation's new building was still not ready. *fn6" Enersyst finally made shipment on or about September 13, 1982.

 EDITOR'S NOTE: Text within these symbols (O>

 But even after that shipment Nation's new building was still not sufficiently complete for Oven 1 to be installed. Although neither party explains fully the reasons for that additional delay, *fn7" it appears that the installation by Enersyst employees was not complete for nearly two years. According to the deposition of Enersyst engineer Jerald High ("High"), Oven 1 was finally assembled and ready for its first test run on July 18, 1984. *fn8" That first test was aborted before product could be run through the oven because the oven overheated and the conveyor belt snagged. High modified the conveyor system to prevent snagging in the area where the conveyor belt left the oven, and another test was run the next day (July 19). During the course of that testing further design changes were required and made to deal with the problems that the novel use of aluminum as the oven material had caused to the planned conveyor operation. High's testimony does not reveal the extent of testing done on that day, nor precisely who was in attendance, but a handwritten note he made on July 20 said:

 
Cooking tests were run Thursday evening [July 19] and the oven performed satisfactorily except that the conveyor setting needs adjustment to improve tracking and Walter (maintenance man) was to do that Friday morning.

 Nation began pizza crust production with Oven 1 on November 6, 1984.

 None of the modifications made or suggested by High during the July 18 and 19 tests eliminated all the oven's problems. *fn9" On November 9, 1984 Nation reported numerous problems -- all of which Enersyst considered typical for a new design -- to Enersyst. Nation first recorded down-time on Oven 1 on December 26, 1984, and on January 4, 1985 it sent another letter to Enersyst relating more problems. Meanwhile Enersyst was advising Nation on getting the oven up to speed: Smith went to Nation's plant on March 1, 1985 to help, and High did the same on August 23, 1985. In spite of the problems, Oven 1 had logged 2100 hours of use by April 24, 1985.

 In August 1985 Bauer asked Enersyst about purchasing a second oven to work in conjunction with Oven 1. *fn10" According to Nation, Smith made an oral promise that Enersyst would repair Oven 1 as a precondition to Nation's purchase of Oven 2, and on August 20, 1986 he sent Nation a signed letter offering for sale several ovens of varying capabilities and quoting prices. On October 31, 1986 Smith signed and sent to Nation a revised quotation offering to sell an oven with Oven 2's specifications. Neither quotation -- nor any other document -- reflected Smith's claimed oral promise to repair Oven 1. Rather than simply returning the quotation letter with Bauer's signature on the line marked "accepted" (as it had done when ordering Oven 1), Nation returned a purchase order signed "B. Kraut" and dated November 24, 1986 describing Nation's requirements in terms identical to the description in Enersyst's October 31 revised quotation. About April 6, 1987 Enersyst shipped Oven 2 to Nation's plant. As with Oven 1, Nation complains of numerous defects in Oven 2, but none of those is implicated by the present summary judgment motion.

 BREACH OF CONTRACT AND WARRANTY CLAIMS

 Complaint Count I claims damages sustained as a result of Enersyst's breaches of its agreements to sell Ovens 1 and 2. Count II also requests damages for breach of warranty. Enersyst moves on two grounds for summary judgment on both counts as they relate to Oven 1:

 
1. Nation's claims as to Oven 1 are assertedly barred by Commercial Code ยง 2.725, its statute of limitations. *fn11"
 
2. By its express terms the contract is said to negate any express or implied ...

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