The opinion of the court was delivered by: ARLANDER KEYS, Magistrate Judge
MEMORANDUM OPINION AND ORDER
In this diversity action arising out of the sale of industrial
machinery, Defendants, Delta Brands, Inc. and Samuel Savariego
(collectively "DBI"), move this Court for partial Summary Judgment,
pursuant to Rule 56 of the Federal Rules of Civil Procedure.*fn1 For the
reasons set forth below, DBI's motion is denied.
Plaintiff, Loeffel Steel Products ("Loeffel"), processes steel and
delivers finished product to various equipment manufacturers. In late
1999, Loeffel began looking for a new piece of equipment. Acting on
Loeffel's interest, a DBI salesperson, Gautam Mahtani, contacted Loeffel
in January of 2000 touting their new product, a multi-blanking line.
Purchase negotiations subsequently began and various representations
were made. The parties' recollections of these representations sharply
diverge. For instance, DBI claims that Loeffel represented that its
primary business was processing prime steel and that Loeffel only
intended to run quality product on the new line. Loeffel denies this, and
says that DBI was aware that Loeffel also processed secondary steel.
Loeffel also contends that DBI represented that the new line would not
require separator-disks in the stacker area and would have automatic
blade gap adjustment.
Further, Loeffel claims that DBI made additional
representations during an escorted trip to an Indiana warehouse to
view, an. existing DBI line. According to Loeffel, DBI promised that
Loeffel's line would be designed so that it could be installed at
floor-level. Additionally, Loeffel claims that DBI repeated the assurance
that the line would not require separators.
After Loeffel confirmed its interest in DBI's product, the parties
exchanged draft sales contracts. On or about March 1, 2000, the parties
executed the final revision (the "Contract"). The Contract contains an
Annex A (the "Annex"), which attaches a series of correspondence which
were incorporated into the Contract by reference. DBI contends that the
Annex contains a provision disclaiming DBI's responsibly for
consequential damages. Loeffel disagrees with DBI's interpretation, and
claims that the parties intended to limit the consequential damages
waiver only to issues arising out of the installation of the equipment.
Beyond the Contract's terms, the parties made certain contemporaneous
oral agreements. One such agreement regarded the line's installation,
which Loeffel claims DBI estimated would cost $70,000.
After contracting, the parties discovered that Loeffel's plant lacked
the electrical capacity to maintain DBI's equipment, and Loeffel was,
therefore, forced to incur additional, uncontemplated costs to increase
the plant's on-site energy intake. The parties disagree over who is to
blame for this oversight. DBI maintains that Loeffel's plant manager made
decision that the plant could handle the new line, whereas Loeffel
places blame on DBI's inaccurate representations that Loeffel's plant had
sufficient electrical capacity for the incoming DBI equipment.
The next problem involved the new line's installation. DBI complains
that Loeffel delayed shipment, and then hired a third-party installer
whose work caused significant problems. Again, Loeffel deflects blame and
faults DBI's failure to test the machine and improper installation
instructions. Also, Loeffel claims that, during his escorted trip to
Indiana, DBI assured Loeffel that his line would be designed so that it
could be installed at floor-level, but delivered prints calling for a
Once installed, operational problems arose, and the parties blame each
other for the ensuing difficulties. Among its complaints, Loeffel cites
continuous problems with the line's stacker, even when processing
"pristine" coils.*fn2 Additionally, Loeffel complains that the line's
leveler did not perform to its represented range and created
unsatisfactory products. Further, Loeffel cites problems with the line's
slitting unit, in that it lacks the represented tooling and/or software
Loeffel claims that the new line required separators in the
multi-blanking mode, which is directly contrary to DBI's explicit
representations. While DBI does not specifically refute each of Loeffel's
complaints, it claims that the line will meet production expectations, so
long as Loeffel runs commercial quality steel through the machine.
Faced with continuing operational difficulties, Loeffel initiated the
present action. Loeffel's complaint fashions five counts against DBI,
including breach of contract (Count I), breach of express warranty (Count
II), breach of implied warranty of merchantability (Count III), breach of
implied warranty of fitness for a particular purpose (Count IV), and
fraud(Count V).*fn3 Following written discovery, DBI now moves for
summary judgment on Count V. DBI claims that Loeffel has not produced
evidence to sustain its fraud claim and that summary judgment is,
therefore, appropriate. DBI further moves the Court to reject Loeffel's
prayer for consequential damages because, it claims, the Contract
specifically relieves DBI from liability for such damages.
The Court will grant summary judgment only if the pleadings and
supporting documents show that there is no genuine issue of material
fact, and that the moving party is entitled to a judgment
as a matter of law. Fed.R.Civ.P. 56(c) (2003). A genuine issue of
material fact exists if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party, Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). In determining whether a genuine
issue of material fact exists, the Court views the facts in the light
most favorable to the nonmoving party and draws all reasonable inferences
in the nonmoving party's favor. Shank v. William R. Hauge, Inc.,
192 F.3d 675, 681 (7th Cir. 1999).
The moving party in a motion for summary judgment bears the initial
burden of demonstrating that no genuine issue of material fact exists.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party's
burden is met, then the nonmoving party must set forth specific facts
showing that there is a genuine issue for trial in order to survive
summary judgment. Schacht v. Wisconsin Dep't of Corrs., 175 F.3d 497, 504
(7th Cir. 1999), In a summary judgment proceeding, the Court ...