The opinion of the court was delivered by: Samuel Der-Yeghiayan United States District Court Judge
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant AGC Flat Glass North America Inc. f/k/a AFG Insulating's (AGC) motion to dismiss. For the reasons stated below, we deny the motion to dismiss.
Plaintiff Custom Aluminum Products, Inc. d/b/a/ Casco Industries Division of Custom (Casco) manufactures windows, doors, and other building product materials. Prior to 2004, Casco allegedly manufactured windows using double-paned insulated glass that was obtained from Cardinal Glass Industries (Cardinal). Casco contends that during that time, its customers were generally satisfied with the quality of windows manufactured by Casco. In 2003, AGC allegedly solicited Casco's business for providing insulated glass to Casco. AGC allegedly represented to Casco that its sealant was significantly more reliable than competitors' sealant. In February 2004, Casco allegedly entered into a sales agreement with AGC (First Sales Agreement) that was effective February 2004 through February 2006. In February 2006, Casco allegedly entered into a second sales agreement with AGC (Second Sales Agreement). Between 2004 and 2008, Casco allegedly purchased all its insulated glass from AGC and installed it in windows and doors manufactured by Casco. Casco allegedly gave warranties to its customers that it would replace insulated glass for defective pieces and, in some instances, even pay costs for reinstallation of insulated glass.
In 2007, Casco allegedly started receiving complaints from customers that the insulated glass in its windows and doors was defective. Casco claims that it turned to AGC and asked AGC to honor the warranties it made to Casco in the First Sales Agreement and Second Sales Agreement (collectively referred to as "Sales Agreements"). According to Casco, by April 2008, the rate of defects in the insulated glass that had been provided by AGC greatly increased, exceeding the standard defect rate for a standard sealant. Casco contends that it incurred significant costs in rectifying the defects complained about by customers.
When the defects came to light, AGC allegedly began initially to supply Casco with replacement glass to give to complaining customers, but when that glass was found defective as well, Casco stopped accepting glass from AGC and started buying replacement glass from Cardinal. AGC allegedly refused to provide any refund for replacement glass unless Casco produced the defective glass for inspection. Casco contends that it was sometimes unable to return the defective glass to AGC because either a third-party replaced the defective glass and did not give the defective glass to Casco or because the defective glass was destroyed during the replacement process. In May 2009, AGC allegedly stopped reimbursing Casco for any glass that needed to be replaced. AGC also allegedly informed Casco that AGC had shut down the manufacturing plant that made the insulated glass and that AGC would no longer supply any replacement glass. Casco claims that, thus far, over 1,500 units of AGC's insulated glass have been found to be defective. Casco contends that AGC breached implied warranties and the terms of the Sales Agreements.
Casco includes in its complaint a breach of implied warranty of merchantability claim (Count I), a breach of implied warranty of fitness for a particular purpose claim (Count II), and, in the alternative, a breach of contract/breach of express warranty claim (Count III).
In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), a court must "accept as true all of the allegations contained in a complaint" and make reasonable inferences in favor of the plaintiff. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(stating that the tenet is "inapplicable to legal conclusions"); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). To defeat a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted)(quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that contains factual allegations that are "merely consistent with a defendant's liability . . . stops short of the line between possibility and plausibility of entitlement to relief." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted).
AGC argues that the breach of implied warranty claims in Counts I and II should be dismissed, contending that there were clear and conspicuous disclaimers of such implied warranties in the Sales Agreements. AGC also contends that the breach of contract and breach of express warranty claims in Count III should be dismissed, arguing that the parties agreed in the Sales Agreements to limit the remedies and damages for breaches of the agreements. AGC further argues that if the court finds that there is no contractual limitation on damages, Casco cannot establish any damages for a breach of an express warranty. The parties agree that, based on the terms of the Sales Agreements, Michigan state law applies to the dispute in the instant action. (Mot. Dis. 5); (Ans. Dis. 6).
I. Breach of Implied Warranty Claims (Counts I and II)
AGC moves to dismiss the breach of implied warranty of merchantability claim (Count I) and the breach of implied warranty of fitness for a particular purpose claim (Count II), arguing that the Sales Agreements contained ...