The opinion of the court was delivered by: Judge Blanche M. Manning
Plaintiff Economy Folding Box Corporation ("Economy") brought suit against Anchor Frozen Foods, Corporation ("Anchor") for breach of contract after Anchor failed to pay for special order shipping boxes it ordered from Economy. Economy now seeks full payment under the sales agreement as well as interest and storage costs. Anchor has filed an affirmative defense asserting a breach of the implied warranties of merchantability and fitness for a particular purpose.
A bench trial was conducted on July 10 and 11, 2006, and the parties have submitted their proposals for findings of fact and conclusions of law. In accordance with Fed. R. Civ. P. 52(a), the court makes the following Findings of Fact ("Findings") and Conclusions of Law ("Conclusions"). To the extent any of the Findings reflect legal conclusions, they shall be deemed Conclusions and vice versa.
The court also notes that the parties' briefs and proposed Findings and Conclusions are lacking in completeness and clarity. On at least one occasion, Economy's proposed Conclusions mention an argument (specifically, the alleged failure to allow cure) that is not discussed in its post-trial brief. Moreover, both parties throw out propositions of law with little to no analysis tying those propositions to the facts of this case. Finally, after both parties present what could at best be charitably described as very convoluted summaries of expert testimony, Anchor effectively abandons any effort to present a meaningful argument based on this testimony stating in its post-trial brief that "[n]o attempt will be made here to simplify the very technical procedures and calculations that each [of the experts] included in their reports and live testimony, or to distinguish the subtleties of their methodologies." Resp. at 10. Instead, apparently, that job will be left to the court, at least in Anchor's view.
The court, as factfinder, assesses the credibility of the two primary fact witnesses, Roy Tucillo, Anchor's president, and Ken Green, Economy's salesperson for the transaction at issue.
It finds that Roy Tucillo was a credible witness while Ken Green was not. The court bases its finding on personally hearing the testimony of each of these witnesses and perceiving the demeanor of each while testifying, including, respectively, their body language, the inflection in their voices and the specificity of the details provided by each witness. United States v. Ray, 238 F.3d 828, 834 (7th Cir. 2001) ("we reverse [credibility] determinations on appeal only under exceptional circumstances, such as 'where it was physically impossible for the witness to observe that which he claims occurred, or impossible under the laws of nature for the occurrence to have taken place at all.' ")(quoting United States v. Williams, 216 F.3d 611, 614 (7th Cir. 2000)).
A. Parties and their Relationship
1. Economy was and is at all relevant times an Illinois corporation organized and licensed to do business in Illinois. Its principal place of business is Chicago, Illinois. Anchor was and is at all relevant times a New York corporation with its principal place of business in Westbury New York.
2. Economy has been engaged in the business of selling packaging materials and manufacturing boxes for at least 52 years. It makes custom boxes to the specifications of the customer.
3. Anchor has been engaged in business in the wholesale frozen seafood industry for 26 years. Anchor sold seafood under the name Prince of the Sea.
4. At all relevant times, Roy Tucillo was the sole principal and president of Anchor and was routinely and substantially involved in the ordering of boxes from Anchor.
5. At all relevant times, Ken Green was employed by Economy as a sales representative. He has been in the box business uninterrupted for 36 years.*fn1
6. Green and Tucillo met about ten or eleven years prior to the dispute at issue and during that time enjoyed a very good business relationship.
7. Anchor regularly ordered cartons from Economy for the purpose of packaging Anchor's frozen seafood. Prior to the transaction at issue, the cartons that Anchor bought from Economy were interior product cartons as opposed to exterior shipping cartons.
8. Prior to the transaction at issue, Economy had provided to Anchor boxes in which it packaged its seafood. These boxes were then displayed by the supermarket in their freezer sections.
9. These boxes were not the ones in which Anchor would ship the product to its brokers. The shipping boxes ("shippers") Anchor had used prior to the transaction at issue were basic white corrugated boxes which were not supplied by Economy.
10. Because the end consumer did not see the shippers, a basic white box was the most cost efficient manner in which to ship the seafood packages.
11. However, in late 2003, Anchor embarked an a new venture whereby it would package and sell "six-packs" of frozen seafood to distributors for resale to end- user customers. These six-packs would include six different inner packages of Prince of the Sea (i.e., Anchor brand) frozen seafood within a single outer box.
12. Because the consumers would see the outer box, Anchor envisioned using graphics on the outer box under this new venture. Pursuant to the new venture, Anchor had been using rudimentary graphics on a corrugated brown shipper. However, this shipper was not "eye-appealing."
13. In or around January 2004, Tuccillo told Green about the new frozen seafood six-pack concept and that he wanted an outer box that was very "eye-appealing" to the consumer. Tuccillo thought Economy did a very good job with graphics.
14. This meeting took place in Anchor's conference room in New York. Tuccillo provided Economy with the specifications and rough graphics for the cartons ordered.
15. Tucillo told Green that the outer "master" carton would be the shipping box and that they would be palletized and would "lay as a seven" and "go nine high" for a total of 63 on a 48-inch pallet so as to fit in the 110-inch opening of a trailer. Tucillo also told Green that the pallets would then be shipped out on freezer trucks to distributors for eventual sale to consumers. Tr. 161-164.
16. Green acknowledged that Tucillo told him that the boxes would be palletized "and that he [Tucillo] would be sending them out through his distributors." Green also testified that he knew the items to be shipped would be frozen. He also represented to Tucillo that the board used in the box was "freezer-worthy."*fn2
17. This project was the first time that Economy had provided an "outer" or "shipper" box to Anchor.
18. Economy prepared some designs for the size and shape of the inner and outer six-pack boxes. Tuccillo supplied his own graphic design.
19. Anchor specified that it needed one large outer carton which would contain six smaller cartons filled with frozen seafood product.
20. Tuccillo told Green he wanted the master carton to open on top so that the six inner cartons could be pulled out.
21. The discussion between Economy and Anchor dealt with the configuration of the boxes. Green specified a paper board material for the outer cartons and stated that these cartons would be strong enough to hold the six inner boxes.
22. Green was aware that Tucillo had considered a laminated corrugated outer carton but told him that it would be very expensive. Tucillo testified that he did not question Green's advice because Green was in the box business. Tucillo relied on Green's advice that the outer paper board carton was "going to be good." Tr. 227.
23. Anchor received, pursuant to the policies and procedures of Economy, sample boxes for its approval.
24. A sample has a place for the customer to sign and denote its approval of the sample.
25. After further discussion and design, Economy eventually sent a sample of a plan for inner and outer carton configuration and Anchor approved the sample.
26. Tuccillo tested the sample boxes prior to approving them by filling the inner cartons with Anchor's product, placing the inner carton in the outer carton and freezing the fully loaded cartons for a week.
27. Anchor approved for manufacture and delivery by signing the actual sample cartons used in testing and returned its approval to Economy for manufacturing of the cartons.
28. Anchor specifically asked Economy if the board was freezer-worthy. Economy stated that it was and informed Anchor that it could provide correspondence from the board manufacturer declaring the board's freezer-worthiness.
29. Anchor expressed a concern with regard to the freezer-worthiness of the cartons.
30. On or about March 8, 2004, Anchor ordered from Economy approximately 180,000 inner cartons and 30,000 outer cartons to be increased or increased up to 20% based upon actual overrun or underrun of cartons by Economy. The order was based on a quotation provided by Economy to Anchor. Plaintiff's Trial Exhibit 4 is a true and correct copy of the executed quotation and contains the terms and conditions applicable to the transaction at issue.
31. The Quotation agreed to by Anchor contained the terms of the agreement between the parties and specified that Illinois was to be the forum for all disputes and that Illinois law was to apply to any disputes.
32. The first shipment of cartons pursuant to the quotation was comprised of 6,300 outer cartons and 36,800 inner cartons. These were accepted without qualification by Anchor.
33. On or about April 14, 2004, Economy issued invoice no. 431640 for $78,458.40. This first invoice was for 204,000 inner cartons at the agreed price of $.2461 per inner carton for a total inner carton cost of $50,612,40, and for 34,000 outer cartons invoiced at an agreed price of $.819 per outer carton for a total outer carton cost of $27,846.00 for the first invoice.
34. On or about April 27, 2004, Economy issued a second invoice no. 431690 for $4,615.20. This invoice covered an additional 12,000 inner cartons that had been produced at a price of $.2481 per inner carton for a total inner carton cost of $2,977.20, and an additional 2,000 outer cartons that had been produced and invoiced at a price of $.819 per outer carton for a total outer carton price for that invoice of $1,638.00.
35. The total amount claimed to be due and owing to Economy from Anchor as of April 27, 2004, pursuant to the quotation was $83,073.60.
C. Anchor Experiences Problems with the Boxes and Notifies Economy
36. Anchor placed the boxes in its warehouse and subsequently sent out orders to two of its customers, Colorado Choice Distributors and ...