United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Z. Lee United States District Judge.
September 2012, Plaintiff Highway Equipment Company
(“Plaintiff”) sent Defendant Ermak USA, Inc.
(“Ermak USA”) a purchase order for a Fibermak
Laser Cutting Machine, an expensive piece of equipment that
is used to cut sheet metal. It was to be manufactured and
shipped by Defendant Ermaksan Turkey
(“Ermaksan”). Dissatisfied with the final
product, Plaintiff brought suit against Ermak USA and
Ermaksan (together, “Defendants”), alleging
various contractual claims under Illinois statutory and
common law. In response, Ermak USA brought contract-based
counterclaims of its own against Plaintiff. Defendants have
now moved for summary judgment with regard to all of
Plaintiff's claims and Ermak USA's counterclaims. For
the reasons provided herein, their motion for summary
judgment  is denied.
is an Iowa corporation that manufactures large-scale farm and
municipal equipment. Pl.'s LR 56.1(b)(3)(C) Stmt. ¶
1, ECF No. 52-2. Its principal place of business is in Linn
County, Iowa. Defs.' LR 56.1(a)(3) Stmt. ¶ 1, ECF
No. 48-1. Ermak USA is an Illinois corporation with its
principal place of business in Elk Grove Village, Illinois.
Id. ¶ 2. Ermaksan is a Turkish corporation with
its principal place of business in Turkey. Id.
July 2012, Plaintiff and Ermak USA began negotiations
regarding Plaintiff's purchase of a fiber laser cutter.
Id. ¶ 7. In connection with these negotiations,
Ermak USA provided Plaintiff with a quote for a Fibermak
Laser Cutting Machine (“the Fibermak”).
Id. ¶ 13. Shortly thereafter, Plaintiff sent
Ermak USA a purchase order for the Fibermak. Id.
¶ 14. On September 6, 2012, Ermak USA acknowledged the
purchase order by sending an order acknowledgment, which
included the final “Special Terms and Conditions”
governing the Fibermak's sale. Id. ¶ 15.
the Special Terms and Conditions, Plaintiff agreed to pay
Ermak USA a total of $777, 500 on an installment basis in
exchange for the manufacture and shipment of the Fibermak.
Id., Ex. 12, at 1, 6-7. For its part, Ermak USA
agreed that the Fibermak would be shipped to Norfolk,
Virginia, at which point it would be loaded onto
Plaintiff's truck and shipped to Plaintiff's facility
in Cedar Rapids, Iowa. See id., Ex. 12, at
Ermak USA further agreed that the Fibermak would be covered
by Ermak USA's two-year “Manufacturer's Limited
Warranty” and that “English speaking service
technicians based in the Chicago area” would be
available to provide free service support. Id., Ex.
12, at 2, 9.
Special Terms and Conditions also set forth criteria for
Plaintiff's acceptance of the Fibermak. See
Defs.' LR 56.1 Stmt. ¶ 18; Pl.'s LR
56.1(b)(3)(B) Stmt. ¶ 13, ECF No. 52-1. In pertinent
part, these criteria read as follows:
Acceptance of the [Fibermak] is a three step process based on
the satisfactory completion of test cutting at Ermaksan in
Bursa, Turkey on the specific machine purchased by
[Plaintiff] and then the satisfactory replication of the same
test cutting following installation and startup of the
machine at [Plaintiff's facility] in Cedar Rapids, IA.
Final acceptance occurs when the operator and maintenance
training is complete in Cedar Rapids, IA.
LR 56.1 Stmt., Ex. 12, at 7-8.
February 2013, Plaintiff's employees traveled to Bursa,
Turkey, to observe test cutting on the Fibermak at
Ermaksan's facilities. Defs.' LR 56.1 Stmt. ¶
parties agree that this test cutting failed to meet several
requirements. In particular, Ermaksan “never met the
speed requirement of 4kw during the test cutting, did not
meet the burr requirements for the 1/4" 304 steel, and
did not have a completed [Fibermak] as the lift table and
table stops were not complete.” Pl.'s LR
56.1(b)(3)(C) Stmt. ¶ 10. Nevertheless, on May 8, 2013,
installation of the Fibermak began at Plaintiff's
facility in Cedar Rapids, Iowa. Defs.' LR 56.1 Stmt.
¶ 23. Defendants acknowledge that the installation
process began later than the agreed-upon date on which
installation was supposed to begin. Id.
details of what happened after installation began remain the
subject of much dispute. According to Defendants,
installation of the Fibermak was completed soon thereafter on
May 22, 2013, and test cutting on the Fibermak at
Plaintiff's facility was completed on June 7, 2013.
Id. ¶¶ 25-26. Defendants assert that the
Fibermak was fully operational at the time of this test
cutting. Id. ¶ 26. By contrast, Plaintiff
denies these assertions, claiming that installation remained
incomplete as of May 22, 2013, because the Fibermak's
“cut loss sensor” had not yet been installed.
Pl.'s LR 56.1(b)(3)(B) Stmt. ¶ 25. Plaintiff further
claims that the Fibermak was not fully operational as of June
7, 2013, because key components of the Fibermak-namely,
“loss of cut and opposite hand construction and the
related reference point”-also had not been installed by
that date. Id. ¶¶ 27-28.
May 2013 to March 2014, the Fibermak had difficulty
maintaining cut quality and running in production mode.
Pl.'s LR 56.1(b)(3)(C) Stmt. ¶ 13. These issues
required seven or eight on-site service visits by Ermak
USA's technicians. See Defs.' LR 56.1 Stmt.
¶ 33. Defendants claim-while Plaintiff denies-that
“[a]ll material issues were resolved during these site
visits.” Id. ¶ 34; Pl.'s LR
56.1(b)(3)(B) Stmt. ¶ 34.
final service visit to Plaintiff's facility took place
from February 10 to March 7, 2014. Defs.' LR 56.1 Stmt.
¶ 36. During this visit, one of Defendants'
technicians provided technical support, installed a new
cutting head, installed loss-of-cut monitoring, and conducted
further test cutting on the Fibermak. Id. Defendants
claim that the Fibermak was functioning properly as of March
7, 2014, as a result of its technician's work.
Id. ¶ 37. Plaintiff, however, maintains that
the Fibermak continued to malfunction and still was not
operating in full production mode. Pl.'s LR 56.1(b)(3)(B)
Stmt. ¶ 37; Pl.'s LR. 56.1(b)(3)(C) Stmt.
problems with the Fibermak arose after this final service
visit. According to Defendants, on March 10, 2014, one of
Plaintiff's employees damaged two components of the
Fibermak's cutting head-namely, the “ceramic”
and the “pin”-while operating the Fibermak.
Defs.' LR 56.1 Stmt. ¶¶ 39-40. But according to
Plaintiff, the pin fell out of the cutting head on its own on
March 10, and its employee did not damage the ceramic until
March 13. Pl.'s LR 56.1(b)(3)(B) Stmt. ¶¶
April 2, 2014, Plaintiff sent Defendants a letter asking them
to remove the Fibermak and refund all of Plaintiff's
payments. Defs.' LR 56.1 Stmt., Ex. 39. The letter also
stated: “We are rejecting your machine since we have
never accepted it due to Ermak's failure to perform. To
the extent you claim we have accepted it, we hereby revoke
our acceptance.” Defs.' LR 56.1 Stmt. ¶ 56.
Defendants never responded to this letter. Pl.'s LR
56.1(b)(3)(C) Stmt. ¶ 37.
April to November 2014, Plaintiff attempted to resell the
Fibermak to other companies. Defs.' LR 56.1 Stmt. ¶
58. These attempts were unsuccessful, and Plaintiff
subsequently filed this lawsuit. See Id. ¶ 60.