Alltrista Plastics, LLC d/b/a Jarden Plastic Solutions v. Rockline Industries, Inc.

Superior Court of Delaware·Decided March 11, 2016·No. N12C-09-094 JRJ CCLD·Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

ALLTRISTA PLASTICS, LLC d/b/a ) JARDEN PLASTIC SOLUTIONS )

)

Plaintiff, )

)

v. ) C.A. No. N12C-09-094 JRJ CCLD )

ROCKLINE INDUSTRIES, INC., )

)

Defendant. )

OPINION

Date Submitted: February 5, 2016 Date Decided: March 11, 2016

Upon Plaintiff’s Motion for Summary Judgment: DENIED.

Joseph A. Bellew, Esquire, Cozen O’Connor, Wilmington, DE, James H. Heller, Esquire (pro hac vice) (argued), Abby L. Sacunas, Esquire (pro hac vice), Cozen O’Connor, Philadelphia, PA, Attorneys for Plaintiff Alltrista Plastics, LLC d/b/a Jarden Plastic Solutions.

Daniel J. Brown, Esquire, James J. Freebery, Esquire, McCarter & English, LLP, Wilmington, DE, Jessica H. Polakowski, Esquire (pro hac vice), Reinhart Boerner Van Deuren, s.c., Madison, WI, Guy R. Temple, Esquire (pro hac vice) (argued), Reinhart Boerner Van Deuren, s.c., Milwaukee, WI, Attorneys for Defendant Rockline Industries, Inc.

Jurden, P.J.

I. INTRODUCTION

Before the Court is Plaintiff Alltrista Plastics, LLC d/b/a Jarden Plastic Solutions’ (“Jarden”) Motion for Summary Judgment on its breach of contract claim against Rockline Industries, Inc. (“Rockline”), and for dismissal of Rockline’s counterclaims for intentional misrepresentation, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and unjust enrichment.1 II. BACKGROUND

A. The Parties Jarden supplies plastic packaging solutions, including thin-wall plastic injection molded products, to a variety of industries. 2 Rockline produces, among other things, disinfecting wet wipes. 3 In 2009, Jarden approached Rockline about manufacturing wet wipe canisters for Rockline using Jarden’s “LitePak” canister design.4 LitePak canisters are thin-walled, injection molded canisters that are

1 Motion for Summary Judgment (“Jarden Mot. Summ. J.”) (Trans. ID. 58195759); Defendant Rockline Industries’ Memorandum of Law in Opposition to Jarden’s Motion for Summary Judgment (“Rockline Resp.”) (Trans. ID. 58328694); Plaintiff’s Reply Memorandum in Support of its Motion for Summary Judgment (Trans. ID. 58435227). 2 Joint Pre-Trial Stipulation at 13 (Trans. ID. 58679062). 3 Id. 4 Jarden Mot. Summ. J. at 3; Rockline’s Resp. at 3, Ex. C Deposition of Mike Zaagman at 69:15– 21.

“lighter in weight and more bio-degradable” than traditional blow molded canisters. 5 In November 2009, Jarden and Rockline executed a Letter of Understanding (“LOU”) outlining the anticipated terms and conditions of a future supply agreement.6 Canisters from Jarden’s single cavity prototype tool were provided to Rockline in late 2009 “to allow Rockline to verify whether the [p]rototype [c]anisters would work in Rockline’s manufacturing process.”7 On October 19, 2010, Kishore Gonpati (“Gonpati”), a Rockline packaging engineer, signed a canister design drawing (“October 2010 Design Drawing”) for Jarden to use in cutting an eight cavity production tool.8 That same day, Gonpati circulated the October 2010 Design Drawing and a component specification document numbered “24021 Revision A” (“Component Specification 24021”) to Jarden employees, Timothy Benz (“Benz”) and Susan Braun.9

5 Jarden Mot. Summ. J. at 3. 6 Jarden Mot. Summ. J., Ex. E. 7 Rockline Resp. at 3. 8 Jarden Mot. Summ. J., Ex. G Deposition of Kishore Gonpati at 137:10–15 (Q. - - on [Jarden Mot. Summ. J., Ex. H] was that your way of telling Jarden, among other people, that the prototype tool was approved and that you could then start cutting the production tool? A. Correct.). 9 Jarden Mot. Summ. J., Ex. B Deposition of Timothy Benz at 37:19–38:1; Jarden Mot. Summ. J., Ex. I.

B. The Supply Agreement Jarden and Rockline signed a contract (“Supply Agreement”) on November 2, 2010. 10 Pursuant to the Supply Agreement, the “one (1) cavity prototype tool” would be modified by Jarden at Rockline’s expense to become “a set of workable plastic injection tools for the production of 105[]mm cylindrical [wet] wipe canisters . . . (‘Canisters’).” 11 Rockline agreed to purchase “at least 13,000,000 Canisters . . . (the ‘Annual Minimum’)” each year, for three years, and, if Rockline did not “purchase the Annual Minimum for any reason other than Jarden’s failure to supply . . . Rockline [would pay] . . . for the purchase shortfall.” 12 The Supply Agreement also provides that the total cost “for the Tool shall be $500,000.00,” consisting of $200,000.00 Rockline previously paid to Jarden under the LOU and $300,000.00 Rockline agreed to pay to Jarden “within ten (10) days of Tool validation.” 13 Section 4(a) of the Supply Agreement provides that “Jarden and Rockline shall work together to reach agreed upon Specifications,” and “[o]nce the parties

10 Joint Pre-Trial Stipulation at 13; Jarden Mot. Summ. J., Ex. A Supply Agreement (“Supply Agreement”). 11 Supply Agreement p.1. 12 Id. ¶ 1(i). 13 Id. p. 1, ¶ 3(c). The Supply Agreement “supersedes and replaces the terms of any and all prior discussion, agreements or understanding between the Parties,” including the November 12, 2009 Letter of Understanding. Id. ¶ 23; Jarden Mot. Summ. J., Ex. E.

reach agreed upon Specifications, Jarden shall materially conform to the respective specifications as set forth in Exhibit A” (“Canister Specifications”). 14 C. Development of the Production Tool According to Rockline, Rockline ordered a shipment of “TR 12” canisters, and, upon receipt, shrink wrapped pallets of the TR 12 canisters for a stack test, “with intent to then complete a final ship test.”15 When Rockline employees inspected the pallets, they reported denting, buckling, and cracking in the TR 12 canisters. 16 On March 21, 2012, Rockline informed Jarden that the canisters had failed Rockline’s stack test.17 Jarden immediately sent a representative, Todd Zillmer (“Zillmer”), to Rockline’s warehouse to view the TR 12 canisters.18 Zillmer believed that the observed damage to the TR 12 canisters was caused by Rockline shrink wrapping the canisters too tightly. 19 Rockline, however, did not believe that the shrink wrapping caused the damage, and sent Jarden a checklist of “variables to be investigated and documented.” 20 According to Rockline, the purpose of the

14 Supply Agreement ¶ 4(a). 15 Jarden Mot. Summ. J., Ex. T. 16 Id. 17 Id. 18 Joint Pre-Trial Stipulation at 13. 19 Jarden Mot. Summ. J., Ex. C June 17, 2015 Deposition of Ronald Kerscher at 168:23–169:14. 20 Rockline Resp. at 8, Exs. S, T.

checklist was to help determine why the TR 12 canisters were not performing as well as the prototype canisters. 21 Jarden never responded to Rockline’s checklist and request for an investigation. Instead, Jarden filed the instant action alleging breach of contract against Rockline because, according to Jarden, Jarden had fulfilled its contractual obligations and it was clear that “Rockline was going to breach the Supply Agreement by refusing to order the canisters or pay the outstanding balance for the tool.” 22 Rockline then counterclaimed, alleging breach of contract, intentional misrepresentation, breach of the covenant of good faith and fair dealing, promissory estoppel, and unjust enrichment. 23 III. STANDARD OF REVIEW

Superior Court Civil Rule 56 permits summary judgment when “there is no genuine issue as to any material fact” such that “the moving party is entitled to a judgment as a matter of law.”

When interpreting a contract, Delaware courts give priority to the intentions of the parties as “‘reflected in the four corners of the agreement,’ construing the

21 Id. 22 Jarden Mot. Summ. J. at 12–13. 23 Alltrista Plastics, LLC v. Rockline Indus., Inc., 2013 WL 5210255 (Del. Super. Sept. 4, 2013).

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