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Faust Printing, Inc. v. Man Capital Corp.

December 14, 2007

FAUST PRINTING, INC. AND FAUST PRINTING, PLAINTIFFS,
v.
MAN CAPITAL CORP. AND MAN ROLAND, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

Magistrate Judge Nan R. Nolan

MEMORANDUM OPINION AND ORDER

Defendants MAN Capital Corp. ("MAN Capital") and MAN Roland, Inc. ("MAN Roland, Inc.") have moved for summary judgment in their favor on Faust Printing, Inc. and Faust Printing's (collectively "Faust") third amended complaint and has also moved to strike Faust's request for a jury trial. Faust, in turn, has cross-moved for summary judgment in its favor. For the reasons set forth below, both defendants' and plaintiffs' motions for summary judgment are denied. MAN Capital's motion to strike Faust's request for a jury trial is granted.

I. BACKGROUND

The disputes in this case center on the purchase of a printing press by Faust. In 1997, Faust commenced negotiations with MAN Roland for the purchase of a MAN Roland Series 700 press to replace its own moribund printing press. Faust explored several financing options, but in the end elected to arrange financing for the machine with MAN Capital's predecessor in interest, MAN Finance Corp. ("MAN Finance"), a subsidiary corporation of MAN Roland. Faust allegedly decided to finance the press with MAN Finance so that Faust would have financial recourse against MAN Roland should it default on any of the terms of the agreement to purchase, including if the press failed to perform to specifications.

On September 24, 1997, Dan Quenzer ("Quenzer") of MAN Roland introduced Faust President and CEO Donald Faust to Richard Pierzchala ("Pierzchala"), General Manager of Leasing and Financing of MAN Finance. Pierzchala was allegedly introduced as "the guy from MAN Roland's in-house finance department" when in fact Pierzchala was employed by MAN Finance and not by MAN Roland. According to Faust, Pierzchala and other representatives of MAN Finance allegedly assured Faust that financing was being arranged through the same company that manufactured the press, and that Faust would have direct financial recourse against the manufacturer. Indeed, alleges Faust, Pierzchala used language in his faxes and letters to Faust that led him to believe that MAN Roland and MAN Finance were one and the same company.

In consummating the deal, Faust signed two principal contracts, along with assorted riders, schedules and amendments. The first contract (the "Machine Contract" or the "Contract") was signed by Faust and by MAN Roland on January 29, 1998, and addressed the acquisition of a new Series 700 printer to be installed by MAN Roland, as well as the training of Faust employees in its use. The second contract (the Master Lease Agreement" or "Lease") was signed by Faust and by a representative of MAN Finance, and expressed the terms of the proposed financing of the printing press.

The terms of the Machine Contract specified that Faust would receive "one (1) new MAN Roland 700 Series Six Color Offset Press with Coater, Model R706LV." The press was to be delivered with all standard equipment and several optional accessories for a price of $2,589,317 (less a $225,000 trade-in allowance), as described in an 11-page attached quotation supplied by MAN Roland. Moreover, the Machine Contract specified that it constituted and contained the entire agreement between the parties and that "all prior or contemporaneous understandings or agreements between the parties, if any, whether written or oral or express or implied, are merged into and with th[e] [Machine Contract]."

The Master Lease Agreement was signed by Faust and by Pierzchala on February 26, 1998. The Master Lease Agreement was printed on stationery featuring the MAN Finance Corporation logo with the word "MAN" in large type and the words "Finance Corporation" in smaller type below; the logo is conspicuously similar to MAN Roland's. The Master Lease Agreement stated in its first paragraph that the agreement was "by and between MAN Finance Corporation, a Delaware corporation with a place of business located at 17 State Street, New York, New York 10004 ("Lessor") and Faust Printing.." The lease continues on to disclaim any warranties by MAN Finance concerning the performance of the press.*fn1 Moreover, the lease also contained a so-called "Hell or high water" clause, specifying that Faust's responsibility for meeting the payment schedule was unconditional and not subject to any abatement, deferment, or interruption for any reason.*fn2 The Lease also stated that the total or partial loss of use or possession would not relieve Faust of its responsibility to make payments, nor would repossession of the press by MAN, in the event Faust should default on its payments relieve, Faust of its payment obligations.

On the signature page of this Faustian contract are the signatures of Donald Faust as President and CEO of Faust as lessee, and Pierzchala as representative of MAN Roland (not MAN Finance) as the lessor. This was, according to MAN Finance, merely a typographical error that was allegedly remedied when a new substitute page, listing MAN Finance as the lessor, was signed by both parties shortly thereafter. MAN Finance alleges that it communicated directly and explicitly to Faust the nature of the correction; Faust maintains only that it was told that certain words had been "misspelled."

MAN Capital asserts that because there was a need for haste in installing the new press, Faust was told that it would not receive a machine especially manufactured for it but would receive instead an "inventory machine", i.e., one that had been previously contracted for by another MAN Roland customer, Litho Industries ("Litho"). Faust disputes MAN Roland's assertion that it was ever informed that it was not receiving a new, custom built machine. According to Faust, Quenzer recognized this particular press as one "custom manufactured for another customer" that failed to meet the specifications of the machine for which Faust had contracted. MAN contends that this press had never been used and was, essentially, "brand new out of the box." Faust further alleges that, during the installation of the press in Faust's facility, an unnamed MAN Roland employee tampered with the press' identification plate, altering the year of manufacture from 1996 to 1998, an alteration that Faust did not discover until the press was repossessed in 2002.

Faust maintains that the installed press lacked the advanced features of the press it had contracted for, but that it was compelled by MAN Roland to sign a "certificate of acceptance" under threat that MAN Roland would lock off the power supply, rendering the press nonoperational. The press was duly installed in Faust's printing facility on September 2, 1998. According to Faust, the completely installed press was unsatisfactory, prone to mechanical difficulties and breakdowns, and produced poor quality prints. As a result, Faust alleges it lost customers and substantial revenue and was ultimately unable to meet the payment schedule prescribed in the Master Lease Agreement. Consequently MAN Capital (MAN Finance's successor in interest) filed suit against Faust to repossess the press, which it did in 2002. Faust subsequently filed the instant suit, claiming fraudulent inducement to enter the Machine Contract against MAN Roland (Count I); fraudulent inducement to enter into the Master Lease Agreement against MAN Roland and MAN Capital (Count II); and alter ego liability against MAN Roland and MAN Capital (Count III).*fn3 MAN Roland and MAN Capital filed a counterclaim alleging breach of contract by Faust. Presently before the court are both parties' motions for summary judgment and defendant's motion to strike Faust's demand for a jury trial.

II. ANALYSIS

Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant for summary judgment bears the burden of establishing that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. FED. R. CIV. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to that party's case on which that party will bear the burden of proof at trial, then Rule 56(c) mandates a grant of summary judgment. Celotex, 477 U.S. at 322-23. When considering a motion for summary judgment, the court will consider the evidentiary ...


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