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Faust Printing, Inc. v. Man Capital Corp.

December 23, 2009

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



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

MEMORANDUM OPINION & ORDER

Plaintiffs Faust Printing Inc. and Faust Printing (collectively, "Faust") brought this fraud action against defendants MAN Capital Corp. and MAN Roland, Inc. related to Faust's purchase of a MAN Roland series 700 printing press. This matter is presently before the court on defendants' motion for summary judgment. For the reasons stated herein, the court grants defendants' motion in part.

I. BACKGROUND

In approximately September 1997, Faust entered into negotiations to purchase a MAN Roland series 700 printing press. (Compl. ¶ 15.) Those negotiations culminated in the January 29, 1998 execution of a Machinery Contract by Faust and MAN Roland. (Pls.' Resp. to Defs.' Stmt. of Facts ¶ 3 & Ex. K.)*fn1 The Machinery Contract incorporates performance criteria set forth in a document captioned Addendum A. (Id. ¶ 4 & Ex. K.) Faust also executed a Master Lease Agreement on February 24, 1998 through which it financed the purchase of the press. (Id. Ex. F.) A representative of MAN Roland executed the Master Lease Agreement on February 26, 1998 (id.); subsequently, Faust and a representative for MAN Capital's predecessor-in-interest, MAN Finance Corporation, executed an additional signature page to the Master Lease Agreement which was identical save for the signature blocks. (See id. Ex. G.)

The press Faust received (the "Press") did not function as Faust expected, and Faust now seeks redress by means of this fraud action. In Count I, Faust claims that MAN Roland fraudulently induced it to enter into the Machinery Contract, and in Count II, Faust alleges that MAN Capital and MAN Roland fraudulently induced it to enter into the Master Lease Agreement. In Count III, Faust seeks to hold both MAN Roland and MAN Capital liable under an alter ego theory.

Defendants' motion for summary judgment focuses on whether genuine issues of material fact exist regarding: whether, at the time of execution of the Machinery Contract, the Press could not meet the performance criteria set forth in Addendum A (and whether MAN Roland knew as much); whether Faust suffered any damage from MAN Roland's alleged misrepresentation regarding the date of manufacture of the Press; and whether Faust's agreement to the "hell or high water" clause in the Master Lease Agreement precludes its fraudulent inducement claim.

II. MATERIAL FACTS

The facts stated within are undisputed (or, where baselessly disputed, without genuine issue) unless otherwise noted.

A. Performance

In the Machinery Contract, the parties specified that the Press was to be a "New MAN Roland Series 700 Six Color Offset Press with Coater, Model R706 LV complete with standard equipment and optional accessories . . . . See Addendum A . . . forming part of this contract." (See id. Ex. K.)*fn2 Addendum A sets forth various performance criteria for the Press regarding: the testing of the Press, the "make-ready" time for a normal Press commercial job; MAN Roland service technician response to emergencies; the computer system accompanying the Press; and various other technical requirements. (See Pls.' Resp. to Defs.' Stmt. of Facts Ex. K, at 3.) Faust eventually received a Series 722 Press which was manufactured in 1996. (See id. Ex. M ¶¶ 3-4.)

Don Faust, President and CEO of Faust,*fn3 testified regarding the operation of the Press, particularly in comparison to the specifications in Addendum A. (See generally Defs.' Stmt. of Facts Ex. 11.) Going through the specifications in Addendum A, Don Faust testified that the Press: was properly tested; "very, very rare[ly]" performed jobs in the specified amount of time; "was not consistent" in density control; did not "have major problems" with marking; and would "sometimes" print commercially acceptable solids. (See id. 86-94.) He also testified that MAN Roland "rarely . . . had the correct technician on the site within four hours." (See id. 96.) In sum, Don Faust attested that the Press and MAN Roland satisfied six of the eight requirements set forth in Addendum A at some point during Faust's use of the Press, although not necessarily simultaneously.*fn4 Don Faust also testified that he did not know whether MAN Roland, at the time it executed the Machinery Contract, intended to provide Faust with a press that would not satisfy the criteria set forth in Addendum A. (See id. ¶ 12, at 155.)

Faust offered Donald E. Lewis, a former service technician at MAN Roland, as an expert regarding differences in the types of presses manufactured by MAN Roland. (Id. ¶ 5.) Before asking Lewis questions regarding the performance of MAN Roland presses, counsel made clear he was asking about presses generally, and not the Press specifically:

Q: . . . And again, I am going to ask you this about the press series in general, not about Faust's press in particular.

If we are going to get into an area where I am going to ask you a specific question about Faust's press in particular, I'll let you know. (See id., Ex. 10, at 116.) Thereafter, Lewis conceded that the series 722 press generally would meet each of the technical specifications described in the Addendum A, without attesting to the ability of the Press to meet those specifications. (See Defs.' Stmt. of Facts Ex. 10, at 116-39.)

Faust produced testimonial and documentary evidence that it lost customers because of the faulty operation of the Press, although that evidence is undermined by Faust's tax returns, which indicate that Faust enjoyed increasing revenues throughout the relevant ...


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