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Control Solutions LLC v. Oshkosh Corporation

July 27, 2012

CONTROL SOLUTIONS LLC, PLAINTIFF,
v.
OSHKOSH CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Judge Sharon Johnson Coleman

MEMORANDUM OPINION AND ORDER

Plaintiff Control Solutions ("CS") is the manufacturer of specialty powered door systems and defendant Oshkosh is the manufacturer of armored vehicles. Control Solutions filed a four Count Complaint alleging that it had either an express or implied contract to supply Oshkosh with all its requirements for powered door systems to be used in a line of armored vehicles. Control Solutions claims that Oshkosh breached that contract by purchasing powered door systems from another manufacturer instead of from Control Solutions. Oshkosh asserts that the parties were merely engaged in negotiations that never resulted in a contract. Both parties filed motions for summary judgment. The Court heard oral arguments on the motions on June 19, 2012. As set forth below, this Court denies Control Solutions' Motion for Partial Summary Judgment and grants Oshkosh's Motion for Summary Judgment.

Oshkosh's Motion to Strike

Before addressing the merits of the motions for summary judgment, this Court will consider Oshkosh's Motion to Strike [doc. 110]. Two of the objections raised in Oshkosh's motion to strike Control Solutions' filings in support of its motion for summary judgment have been resolved by CS submitting a corrected brief that conforms to the 30 page limitation imposed by the Court and cites to the paragraphs of the 56.1 statement of facts. The remaining issue relates to two declarations CS submitted in support of its motion for summary judgment: the declaration of Jorge Jimenez and of Michael McKee.

Oshkosh argues that the declarations of Jorge Jimenez and Michael McKee should be stricken as prejudicial. In support of its motion, Oshkosh argues that CS refused to make Jimenez and McKee available for deposition and therefore it would be prejudicial to allow CS to use their declarations in support of its motion for partial summary judgment. CS responds that Oshkosh's motion is untimely because Oshkosh did not depose Jimenez and McKee due to a discovery dispute that arose in late July 2011 as discovery was set to close on July 28, 2011, and Oshkosh did not seek to compel the depositions or any other relief at that time. Oshkosh did move to compel the deposition of Ellen Schramm*fn1 another CS witness, but did not seek the same relief for McKee and Jimenez.

Discovery in this case was set to close on July 28, 2011, however, the parties scheduled five deposition between July 29 and August 5, 2011: Control Solutions was going to produce three witnesses, including Jimenez (former Manager of Mechanical Engineering, Schramm (former Contracts Administrator), and McKee (Chief Technology Officer), and Oshkosh agreed to produce a Fed. R. Civ. P. 30(b)(6) witness and Joseph Gardemal (its expert witness). On July 28, 2011, a dispute arose between the parties over the scope of the 30(b)(6) deposition notice. The parties were unable to reach an agreement over the scope of the deposition. CS decided not to produce its witnesses since Oshkosh would not produce theirs. As a result, none of the five depositions scheduled after July 28, 2011, were taken as scheduled, though Schramm was later deposed after Oshkosh moved to compel her deposition.

Rule 37 provides that upon failure of a party to comply with a discovery request, a party may move the Court to enter an order compelling the non-complying party to disclose the relevant information. Fed. R. Civ. P. 37; see e.g., Nichols v. Chicago, 1992 U.S. Dist. LEXIS 6069, *8-9 (N.D. Ill. Apr. 29, 1992) (denying plaintiff's motion in limine to exclude certain documents on the basis that plaintiff failed to comply with Rule 37 and compel the production of the documents); see also Rossetto v. Pabst Brewing Co., 217 F.3d 539, 542 (7th Cir. 2000) (affirming denial of a party's discovery motion filed two months after the close of discovery where the party offered no reason for the delay).

Oshkosh offers no explanation why it failed to move to compel the depositions of McKee and Jimenez. Certainly, Oshkosh could have done so as it did with Ellen Schramm. Oshkosh should not now be allowed to object to the use of the declarations on the basis that Oshkosh was not able to depose them when it never sought to compel their depositions. Oshkosh filed its motion to strike the declarations on October 7, 2011, more than two months after discovery had closed and it knew that the depositions would not go forward as scheduled. Integral to Oshkosh's argument to strike the declarations is that McKee and Jimenez's failure to appear for their scheduled depositions is sanctionable under Rule 37(d) because they are "managing agents" or "officers" of the company. Yet, Oshkosh never sought to enforce its right to take the depositions. The motion to strike is denied.

Control Solutions' Motion for Partial Summary Judgment

On January 8, 2010, Control Solutions filed a four Count Complaint alternatively alleging breach of an express supply contract, breach of an implied-in-fact supply contract, unjust enrichment, and promissory estoppel. Control Solutions argues that it is entitled to summary judgment in its favor on liability because either an express contract was formed whereby Oshkosh agreed to purchase power door systems designed and manufactured by CS, if Oshkosh received a federal government contract to produce a military vehicle known as the "M-ATV," or the parties course of dealing in Spring 2009 created an implied-in-fact contract. CS further argues that Oshkosh breached the contract when it failed to purchase CS' power door system after the government ordered the M-ATV with door armor kits from Oshkosh. CS requests a trial on damages.

Oshkosh's Motion for Summary Judgment on all Counts

Oshkosh argues that it is entitled to judgment as a matter of law because no valid and enforceable contract was ever formed between the parties. Oshkosh contends that CS did not make an objective offer, Oshkosh did not accept an offer, and the purported contract does not contain all the required material terms. Oshkosh further argues that any purported contract is unenforceable under the Statute of Frauds. Additionally, Oshkosh moves for summary judgment arguing that there is no valid underlying action to support CS' unjust enrichment claim and, even if there were, the record lacks any evidence that Oshkosh unjustly retained any benefits provided by CS. Oshkosh also asserts that since the elements of a valid contract are lacking, CS cannot prevail on a claim for promissory estoppel.

Alternatively, Oshkosh argues that if the Court denies its motion for summary judgment on the contract claims, the Court should grant partial summary judgment denying at least $179,251, 940 of CS' claimed damages. Oshkosh argues that most of CS' claimed damages are too speculative. More specifically, Oshkosh contends that the "unabsorbed overhead costs" were not caused by the alleged breach, and are not recoverable. The lost profits and "unabsorbed overhead costs" are not recoverable under Count III for unjust enrichment because it is measured by a defendant's gains, not the plaintiff's losses. Those damages are not recoverable under Count IV for promissory estoppel either because the proper measure of damages would be those necessary to restore CS to the position it was in prior to its reliance on Oshkosh's promise.

Background

Plaintiff Control Solutions designs and manufactures control and user interface devices used in a variety of commercial, military, and medical applications. For military uses, such as the one at issue here, Control Solutions' products include power door systems ("PDS"), which are used to open and close doors on armored military vehicles. Oshkosh Defense is a division of Oshkosh Corporation that manufactures armored and tactical vehicles for military applications.

In December 2008, the Department of Defense issued a solicitation for the competitive procurement of mine-resistant all terrain vehicles ("M-ATV"). The M-ATV is a type of armored fighting vehicle designed to withstand improvised explosive devices ("IED") with improved off-road mobility over earlier generations of the vehicle. M-ATVs are designed to be equipped with armor upgrade kits ("EFP kits" for explosively formed penetrators) for a higher degree of protection against armor-piercing munitions. The EFP kits require power door assistance because of the extra weight they add to a standard M-ATV door. The Department of Defense contract was to be "indefinite delivery, indefinite quantity" ("IDIQ") and gave the government the option to purchase up to 10,000 M-ATVs over three years. It also gave the government the option to buy one EFP kit for up to every M-ATV delivered.

In January 2009, Oshkosh asked CS to develop a prototype door assist or powered door system for vehicles that would be equipped with the EFP kits. CS delivered the first prototype, a modification of its standard PDS, in February 2009. Oshkosh used the prototype PDS to equip its marketing vehicle, which was displayed in an Association of the Unites States Army trade show in February and nearly twenty other marketing events. On March 2, 2009, Kent Schulte a project engineer at Oshkosh requested a "formal production quote" from CS "based on volumes of one EFP kit per vehicle produced." On March 6, Control Solutions quoted $5,800 per PDS unit.*fn2 Control Solutions agreed to absorb the cost of the original prototype as well as the research and development costs.

In March 2009, the Department of Defense selected Oshkosh as one of the manufacturers to proceed to the next phase of contract bidding. The Department of Defense then gave each of the selected manufacturers a contract to provide three vehicles for testing and evaluation by the Army with one "production representative" EFP kit to be delivered for testing with the vehicles. Throughout March and April 2009 Control Solutions continued to work with Oshkosh to develop and refine the design of the PDS. On April 21, 2009, Oshkosh sent CS a purchase order for four PDS units to make up the EFP kit for testing by the Army. The purchase order incorporated Oshkosh's Terms and Conditions, including a merger clause stating that the purchase ...


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