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LOEFFEL STEEL PRODUCTS, INC. v. DELTA BRANDS

March 12, 2004.

Loeffel Steel Products, Inc., Plaintiff,
v.
Delta Brands, Inc. d/b/a/ DEI; Samuel F. Savariego, Defendants, Delta Brands, Inc., Counter-Plaintiff, v. Loeffel Steel Products, Inc., Counter-Defendant, Delta Brands, Inc. and Samuel Savariego, Third-Party Plaintiffs, v. Industrial Magnetics, Inc., Third-Party Defendant



The opinion of the court was delivered by: ARLANDER KEYS, Magistrate Judge

MEMORANDUM OPINION AND ORDER

In this diversity action, Third-Party Defendant, Industrial Magnetics, Inc. ("IMI"), moves for partial summary — judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, For the Page 2 reasons set forth below, the motion is GRANTED in part and DENIED in part.

BACKGROUND FACTS

  IMI is a Michigan corporation that produces and sells magnets for use in industrial machinery. IMI sold Third-Party Plaintiff, Delta Brands, Inc. ("DBI"), magnets that DBI incorporated into equipment manufactured for Plaintiff, Loeffel Steel Products, Inc. ("Loeffel"). When the equipment malfunctioned, Loeffel initiated the present action against DBI. In response, DBI brought a third-party complaint against IMI, alleging that IMI misrepresented the magnets' capabilities and must, therefore, share in DBI's liability, if any, IMI now moves for partial summary judgment. The following facts are relevant to the issues raised in IMI's motion.

  Sometime in mid-1999, DBI requested that IMI's regional sales representative, Jim Branch, provide pricing information for certain magnets. On June 22, 1999, Mr. Branch sent DBI a written proposal describing the requested magnets and their possible uses ("June Proposal"). The June Proposal also included a terms and conditions page that included conspicuous warranty disclaimers.

  Months later, Mr. Branch again visited DBI's office. DBI informed Mr. Branch that it needed more magnets for a number of new applications, including the Loeffel project. Mr. Branch drew up a quotation, explaining pricing and payment terms for the requested magnets ("Branch Quotation"). The Branch Quotation described the same magnets referenced in the June Proposal, but was not Page 3 accompanied by any warranty disclaimers.

  On May 10, 2000, DBI issued a purchase order requesting the magnets described in the Branch Quotation ("Purchase Order"). The Purchase Order included certain terms and conditions intended to govern the purchase, including a provision expressly providing for implied warranties. DBI claims that it hand-delivered the Purchase Order to Mr. Branch. IMI disputes this, and claims that it cannot locate the Purchase Order in its archived files.

  IMI shipped the ordered magnets, and DBI incorporated them into Loeffel's equipment. When Loeffel brought the present action, DBI filed a third-party complaint against IMI, raising the following claims: Indemnity (Count I), Contribution (Count II), Breach of Contract (Count III), Breach of Express Warranty (Count IV), Breach of Implied. Warranty of Fitness for a Particular Purpose (Count V), and Breach of Implied Warranty of Merchantability (Count VI). IMI now moves for summary judgment on the implied warranty counts (Counts V and VI). IMI argues that DBI is collaterally estopped from pursuing these claims, and also that the parties' contract conspicuously disclaims implied warranties. IMI also moves to dismiss the contribution claim (Count II), arguing that DBI's contract-based complaint precludes tort-based remedies.

  STANDARD OF REVIEW

  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 Page 4 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 will disregard all facts not properly supported by the record. Brasic v. Heinemann's Inc., 121 F.3d 281, 284 (7th Cir. 1997).

  DISCUSSION

  1. Implied Warranties (Counts V and VI)

  IMI presents two arguments against Counts V and VI. First, IMI claims that DBI is collaterally estopped from litigating the issue of implied warranties because previous litigation conclusively decided the matter. Next, IMI claims that the June Proposal ...


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