Iron Horse Engineering Co. v. Northwest Rubber Extruders, Inc.

89 P.3d 1249, 193 Or. App. 402, 2004 Ore. App. LEXIS 589
CourtCourt of Appeals of Oregon
DecidedMay 12, 2004
Docket0002-01794; A115936
StatusPublished
Cited by22 cases

This text of 89 P.3d 1249 (Iron Horse Engineering Co. v. Northwest Rubber Extruders, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Iron Horse Engineering Co. v. Northwest Rubber Extruders, Inc., 89 P.3d 1249, 193 Or. App. 402, 2004 Ore. App. LEXIS 589 (Or. Ct. App. 2004).

Opinions

[404]*404WOLLHEIM, J.

This action arises out of a contract involving “rail boot” for the Portland Streetcar Project (the project). “Rail boot” is a rubber cover that is placed around streetcar rail tracks that are embedded in pavement. Appellant Northwest Rubber Extruders, Inc. (Northwest) is a rubber and plastic company that manufactures rail boot through a process called “extrusion.” Respondent Iron Horse Engineering Co., Inc. (Iron Horse) develops designs for rail boot. In this case, Iron Horse and Northwest agreed to work together to provide rail boot for the project but negotiations failed and this contract action ensued, with each party making claims against the other.

Northwest argues that the trial court erred when it (1) denied Northwest’s motions for a directed verdict, judgment notwithstanding the verdict (JNOV), and a new trial regarding Iron Horse’s breach of contract claim; (2) gave a legally incorrect response to a written question that the jury asked during deliberations without first notifying counsel; (3) denied Northwest’s motions for judgment on the pleadings, a directed verdict, JNOV, and a new trial regarding Iron Horse’s claim for breach of the covenant of good faith and fair dealing; and (4) denied Northwest’s request for attorney fees regarding Iron Horse’s claim for misappropriation of trade secrets. We state the evidence in the light most favorable to the prevailing party before the jury. Jensen v. Medley, 336 Or 222, 226, 82 P3d 149 (2003).

In the business of rail boot design and extrusion, a design company, such as Iron Horse, approaches a manufacturing company about a particular project. Iron Horse’s rail boot designs are also referred to as “tooling” or “rail boot technology.” Iron Horse designs the “die” for the rail boot.

Before working with Northwest, Iron Horse worked almost exclusively with Montville Plastic (Montville), a manufacturing company. In its normal course of business, Iron Horse would approach Montville with specifications for particular products. Montville would then give Iron Horse a price quotation for the tooling and the actual production process. Once Iron Horse accepted the price quotation, Iron Horse [405]*405would give Montville a purchase order to manufacture the die and the boot. Montville would then manufacture the die and produce a “first article,” which is the first product that meets all of the designer’s specifications. The first article would then be sent to Iron Horse for approval and, once the article was approved, Iron Horse would sell it to its customer. The die created for Iron Horse would remain in Montville’s physical possession, although Montville did not use Iron Horse’s die for its own use or for the use of Montville’s other customers. Rather, Montville would keep the die for the exclusive use of Iron Horse.

William Moorhead was head of Iron Horse.1 Moorhead first came into contact with Northwest and its owner, Joseph Lucas, when Iron Horse entered into an agreement with a general contractor, Stacy & Witbeck, to supply rail boot materials for a project in Hillsboro. Stacy & Witbeck asked Iron Horse to route the contract through Northwest because Northwest was a “disadvantaged business enterprise” (DBE), and Iron Horse complied with that request.

After the Hillsboro project, Iron Horse asked Northwest for a price quotation for a project in Salt Lake City. Northwest quoted Iron Horse an acceptable price, and Iron Horse placed an initial purchase order with Northwest while Northwest was building the tool for the die that would eventually produce the rail boot. Northwest sent Iron Horse a first article, and Iron Horse paid Northwest for the die and the product. The die remained at Northwest’s plant for Iron Horse’s exclusive use.

After the Salt Lake City project, Iron Horse and Northwest entered into negotiations regarding the project that gave rise to this action. Iron Horse had approached both Montville and Northwest about the project. Stacy & Witbeck, the general contractor on the project, was concerned about meeting its DBE goals, so it wanted Iron Horse to work with Northwest on the project. However, Northwest did not have the “dual durometer capability’ that the project required. Dual durometer capability means that the project required both “big boot” and “little boot” material. Montville, however, [406]*406did have dual durometer capability. Both Northwest and Montville ended up agreeing to work with Iron Horse on the project.2

Eventually, Lucas, on behalf of Northwest, and Moorhead, on behalf of Iron Horse entered into an agreement that Moorhead put into writing and faxed to Lucas on March 9,1999.3 The fax detailed both the items that would be supplied for the job and the pricing. The fax also reflected the fact that, because Northwest did not have dual durometer capability, it would rent the little boot tooling from Iron Horse. Iron Horse’s little boot tooling was in Montville’s physical possession, so Iron Horse and Northwest agreed that Montville would need to ship the die to Northwest.

The .fax also detailed Iron Horse and Northwest’s agreements regarding “accessory items” that Iron Horse would supply. Moorhead explained that accessory items “are those items that we furnish as part of the contract that are necessary for putting in the complete rail boot system.” Iron Horse would also pay any freight and storage charges. The fax concluded with the following:

“AS WE DISCUSSED ON THE PHONE [,] THERE WILL, OF COURSE, HAVE TO BE A CONFIDENTIALITY AGREEMENT/TECHNOLOGY SHARE AGREEMENT AMONG [NORTHWEST], [IRON HORSE], & MONTVILLE.”

After the fax was sent and both parties had agreed to its terms, a draft confidentiality agreement was sent to Lucas, but Lucas did not sign the agreement. Rather, Lucas sent Iron Horse a second, different confidentiality agreement. Moorhead testified that the second agreement did not satisfy Montville’s confidentiality concerns, so the second agreement was never signed by either party.

In April 1999, Lucas visited Montville’s plant to observe the little boot die in operation so that Northwest would be “prepared for whatever we needed for the * * * equipment, any specific things that we didn’t have in place we would have in place.” Once there, Northwest entered into [407]*407an oral agreement with Montville and Iron Horse that Northwest would build its own dual extrusion tool. Lucas testified that the propose of this agreement was

“to demonstrate our technical ability to be able to do so so that [Don Hofstetter, head of Montville,] can feel more comfortable moving his tool to us. I fully understood his concerns, that if we had a tool that was specialized in our shop, I would be very reluctant to send it out to someone that didn’t have the same technology.”

Moorhead suggested that Northwest make the big boot die, and Lucas agreed. Moorhead told Lucas that, when he returned to his office, Moorhead would send Lucas the designs so that Northwest could begin making the die. Moorhead said, “I thought I was ordering a die and going to order a profile the same way we normally had.” While they were still at the Montville plant, Moorhead asked Lucas for a price quote, but he did not receive one that day.

Moorhead and Lucas discussed future projects that they could work on together that would require the use of the big boot die that Northwest had agreed to make.

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Cite This Page — Counsel Stack

Bluebook (online)
89 P.3d 1249, 193 Or. App. 402, 2004 Ore. App. LEXIS 589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/iron-horse-engineering-co-v-northwest-rubber-extruders-inc-orctapp-2004.