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United Contractors Midwest, Inc. v. Boart Longyear Co.

March 19, 2010

UNITED CONTRACTORS MIDWEST, INC., A DELAWARE CORPORATION, PLAINTIFF,
v.
BOART LONGYEAR COMPANY, A UTAH CORPORATION, AND DIAMOND PRODUCTS LIMITED, AN OHIO LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter is before the Court on Defendant Boart Longyear Company's Motion for Summary Judgment against Diamond Products Limited (d/e 66) (Motion for Summary Judgment) and Defendant Diamond Products Limited's Motion for Leave to Supplement to Its Response to Boart Longyear Company's Motion for Summary Judgment (d/e 97) (Diamond's Motion to Supplement). The instant case arises out of Freesen, Inc.'s purchase of a highway grinder. On December 31, 2009, Freesen, Inc. was merged into Plaintiff United Contractors Midwest Inc. By Text Order, dated January 20, 2010, United Contractors Midwest, Inc. was substituted for Freesen, Inc. as the Plaintiff in this matter. At that time, the pending motions were fully briefed. For clarity and consistency with the briefing, the Court will refer to Plaintiff as Freesen throughout this Order.

Freesen initially contracted with Defendant Boart for the purchase of the highway grinder; however, prior to delivery of the grinder, Defendant Boart sold its grinding division to Defendant Diamond, pursuant to an Asset Purchase Agreement. Freesen's three-count Amended Complaint (d/e 22) alleges breach of contract, breach of express warranty, and breach of the implied warranty of merchantability claims against both Defendants arising out of the grinder purchase. Defendants Boart and Diamond have filed cross-claims, which are at issue in the pending Motion. Defendant Diamond Products Answer and Affirmative Defenses to Amended Complaint and Second Amended Cross-claim Against Defendant Boart Longyear Company (d/e 24) (Diamond's Second Amended Cross-claim); Boart Longyear Company's Answer and Affirmative Defenses to Diamond Products Limited's Second Amended Cross-claim and Cross-claim Against Diamond Products Limited (d/e 39) (Boart's Cross-claim).

Boart's Cross-claim against Diamond seeks indemnification under the Diamond-Boart Asset Purchase Agreement. Defendant Diamond's Second Amended Cross-claim against Boart, alleges claims for breach of contract for sale of grinder (Count 1), breach of the Diamond-Boart Asset Purchase Agreement (Count 2), contractual indemnity (Count 3), and breach of implied warranty of merchantability (Count 4). In the instant Motion, Boart seeks summary judgment in its favor on its Cross-claim and on all counts of Diamond's Second Amended Cross-claim. For the reasons set forth below, Diamond's Motion to Supplement is allowed, and Boart's Motion for Summary Judgment is allowed, in part, and denied, in part.

I. DIAMOND'S MOTION TO SUPPLEMENT

Boart's Motion for Summary Judgment lists ninety-three statements of fact, deemed by Boart to be undisputed and material pursuant to Local Rule 7.1(D)(1)(b). Motion for Summary Judgment, p. 4-17. In its response to the Motion for Summary Judgment, Diamond concedes that twenty-two of Boart's proffered undisputed, material facts are indeed undisputed and material. Defendant Diamond Products Limited's Response to Boart Longyear Company's Motion for Summary Judgment (d/e 74) (Diamond's Response), p. 4. Diamond designates Boart's Statement of Material Fact Nos. 38 and 43 as disputed. Id. Diamond designates Boart's remaining proffered undisputed, material facts as immaterial. Id., p. 5.

Local Rule 7.1(D)(2)(b)(2) directs a party responding to a motion for summary judgment to list by number each fact that is claimed to be disputed and states that "[e]ach such claim of disputed fact must be supported by evidentiary documentation referenced by specific page." Local Rule 7.1(D)(2)(b)(3) directs a party responding to a motion for summary judgment to list by number each fact that is claimed to be immaterial and the reason for such claim. In its reply, Boart correctly notes that Diamond failed to provide evidentiary documentation relating to the two claimed disputed facts and failed to provide a reason for any of the claimed immaterial facts. Boart Longyear Company's Reply in Support of Its Motion for Summary Judgment Against Diamond Products Limited (d/e 96) (Boart's Reply), p. 2. Boart asks the Court to deem all of Boart's proffered facts to be undisputed and material based on Diamond's failure to comply with Local Rule.

Three days after Boart's Reply was filed, Diamond filed the pending Motion to Supplement seeking to rectify the identified shortcomings. Boart opposes the Motion to Supplement. Boart Longyear Company's Response in Opposition to Diamond Products Limited's Motion for Leave to Supplement (d/e 101). However, under the circumstances, the Court finds that Diamond should be allowed to supplement its Response. Diamond made its request soon after the shortcomings were identified by Boart's Reply, and Boart will not be prejudiced by the proffered supplement. The majority of the facts at issue were deemed immaterial, but were not disputed, by Diamond. Thus, the Court will deem these facts undisputed in ruling on the Motion for Summary Judgment, and the argument section of Diamond's Response adequately explained the reasons Diamond believed these facts were immaterial.

With respect to the two facts that Diamond designated disputed, the Court will look to the record as a whole to determine whether these facts are actually established. The evidentiary support that Diamond seeks to identify in its supplement is already a part of the record. In disputing Boart's Statement of Material Fact No. 38, Diamond relies on Freesen's Amended Complaint (d/e 22) and Diamond's Answer (d/e 24). Diamond disputes Boart's Statement of Material Fact No. 43 to the extent it asserts that the serial number of the Freesen grinder was 113805. According to Diamond, the serial number of the Freesen grinder was 113705. Diamond seeks to support its assertion with invoices noting a serial number of 113705. An invoice noting a serial number of 113705 is already a part of the record. Diamond's Second Amended Cross-claim, Ex. C. Therefore, Diamond's Motion to Supplement is allowed, and the Court will consider Diamond's supplemental response in ruling on Boart's Motion for Summary Judgment. Motion to Supplement, Ex. A.

II. BOART'S MOTION FOR SUMMARY JUDGMENT

Unless otherwise noted, the following facts are deemed undisputed. Boart and Freesen entered into a Purchase Agreement, dated January 24, 2005, for the purchase of a PC 6000EC highway grinder, for a net price of $553,000.00, with a 10% deposit due at the time of the order. See Diamond's Response, Ex. 5. Under the terms of the grinder Purchase Agreement, delivery of the grinder was to be August 15, 2005, or sooner, and the balance of $497,700.00 plus tax and freight was due prior to shipping of the grinder. Id.

On April 29, 2005, Boart and Diamond executed an Asset Purchase Agreement (APA), under which Diamond purchased assets that Boart used in manufacturing and selling grooving and grinding equipment (designated "the Product Line Business" by the APA), including Boart's rights under expressly identified Assumed Contracts. A copy of the APA is before the Court. Motion for Summary Judgment, Ex. 1. One of the Assumed Contracts was the grinder Purchase Agreement, dated January 24, 2005, between Boart and Freesen. Id., p. 52. Diamond also acquired all customer deposits that Boart had received for orders in the Product Line Business that were unfilled as of the closing date of the APA. Id., p. 5.

Under § 3.1(a) of the APA, Diamond expressly assumed certain liabilities of Boart, including "[l]iabilities and obligations of [Boart] under the executory portion of any Assumed Contract or Purchase Order accruing from and after the Closing, but not including any liability or obligation for any breach thereof occurring prior to the Closing Date." Motion for Summary Judgment, Ex. 1, p. 5. As a part of the APA, Boart and Diamond executed a Bill of Sale, Assignment and Assumption Agreement (Bill of Sale), dated April 29, 2005. Id., Ex. 1, p. 31-34. Under the Bill of Sale, Boart transferred all of the rights, title, and interest in the Assumed Liabilities, as defined in § 3.1 of the APA, to Diamond. Id., p. 31. The Bill of Sale also stated that Diamond assumed the Assumed Liabilities and agreed to pay, perform, and discharge them when due. Id.

The APA contained provisions regarding employee matters. Under § 9.2, Diamond agreed to offer employment to all Boart employees active in the Product Line Business, except Louis Silay and Pat Muncy. Under § 9.2(b), Boart agreed to continue to employ Silay through December 31, 2005 and to make Silay available as a consultant to Diamond for up to 75% of Silay's working time. Under § 9.2(d), Boart agreed to make Muncy available to Diamond as a consultant for service work and field start up from the closing date of the APA through December 31, 2005.

The APA also contained indemnification covenants. Under ยง 10.2 of the APA, Diamond agreed to: indemnify [Boart] from and against all liability, demands, claims, actions or causes of action, assessments, losses, fines, penalties, costs, damages and expenses, including reasonable attorneys' fees sustained or incurred by [Boart] as a result of or arising out of or by virtue of: . . . (v) any claim arising out of ...


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