Polycon Industries Inc v. R & B Plastics Machinery, LLC

CourtDistrict Court, N.D. Indiana
DecidedSeptember 5, 2024
Docket2:19-cv-00485
StatusUnknown

This text of Polycon Industries Inc v. R & B Plastics Machinery, LLC (Polycon Industries Inc v. R & B Plastics Machinery, LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Polycon Industries Inc v. R & B Plastics Machinery, LLC, (N.D. Ind. 2024).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA HAMMOND DIVISION

POLYCON INDUSTRIES, INC., ) ) Plaintiff & Counter-Defendant, ) ) v. ) Case No. 2:19-CV-485-PPS ) R&B PLASTICS MACHINERY, LLC, ) and MONROE MOLD, LLC, ) ) Defendants & Counterclaimants. )

OPINION AND ORDER

When a warranty commences upon the “successful operation” of a machine, what exactly does that mean? That question is at the center of this dispute involving three players in the plastic bottle manufacturing process. Polycon Industries manufactures “blow molded” plastic bottles and containers. R&B Plastics Machinery designs, manufactures, and installs the machines that make blow molded containers. And Monroe Mold designs, manufactures, and installs the molds required in the process. The present litigation arises from Polycon’s purchase of two blow molding machines from R&B and molds for those machines from Monroe Mold. Polycon’s basic contention is that they were sold underperforming machines by R&B. Polycon’s First Amended Complaint contains claims against R&B for breach of contract, breach of express warranties, first party indemnity, and fraud in the inducement, as well as claims against Monroe for breach of contract, breach of an implied warranty of merchantability, and breach of an implied warranty of fitness for a 1 particular purpose.1 Polycon and R&B agreed to an express warranty for one year that commenced, as noted at the outset, upon the “successful operation” of the machines

Polycon purchased from R&B. There are also counterclaims at issue in the case: R&B claims that Polycon failed to pay all of its bill—they’re short $471,000.00 (excluding interest) on the purchase agreement, says R&B. Before me now is R&B’s third attempt at partial summary judgment, this time concerning Polycon’s warranty claims against R&B and R&B’s counterclaim against Polycon. I previously denied R&B’s second motion for partial summary judgment on

the basis that the contractual language at issue was ambiguous and numerous questions of fact remained. [DE 152.] Because this latest motion deals with the same ambiguous contractual language (“successful operation”), albeit in a different section of the contract, and relies upon extrinsic evidence, R&B’s Motion for Partial Summary Judgment will be DENIED. [DE 174.]

Also, as I will discuss at the end of this Opinion, because of its relevance to damages and the ongoing discussions concerning the possibility of a bifurcated trial, I will also at this time DENY WITHOUT PREJUDICE R&B’s Motion in Limine concerning Polycon’s damages expert. [DE 168.] Factual Background

As usual, I’ll start with the facts, many of which remain the same as in my April 2023 Opinion that denied R&B’s second motion for partial summary judgment. But in

1 I previously granted R&B summary judgment on the claim for fraud in the inducement. [DE 107.] 2 this latest attempt at partial summary judgment, R&B has put forth additional undisputed facts that I did not have before me during the first go around. While

somewhat repetitive, given the complicated nature of the contractual and warranty issues, I will briefly recite the core facts of this dispute, including the new undisputed facts. For more than 50 years, Polycon has been in the business of manufacturing blow- molded plastic bottles. Polycon sold plastic bottles to an outfit named Ecolab beginning in 1980 but lost this business to a competitor in 2010. [DE 195 at ¶11.] In 2016, Polycon

decided to make a bid to recapture the Ecolab business it had previously lost. [Id. at ¶12.] By this time, Ecolab had changed the process by which its bottles got “qualified”—meaning the testing process bottles must undergo before Ecolab would accept them. [Id. at ¶¶12–13.] Polycon disputes R&B’s characterization of witness testimony as indicating that Ecolab’s qualification tests were more “demanding”, but

Polycon does not dispute that Ecolab changed its qualification standards. [Id. at ¶¶12– 14.] Polycon attempted in early 2016 to produce qualified 93 oz containers on its existing Uniloy machines. [Id. at ¶23.] But after nine months of attempts, by November 2016, Polycon still had not been able to produce a 93 oz container acceptable to Ecolab. [Id. at ¶24.]

Around the same time, Polycon and R&B negotiated a contract under which R&B would design and build two blow-molding machines for Polycon, referred to as the “8/16 machine” and the “4/11 machine.” [Id. at ¶25.] Polycon’s Vice President of 3 Operations and CEO Bill Hansen negotiated on behalf of Polycon, and R&B’s President Fred Piercy negotiated on behalf of R&B. [Id. at ¶26.] Polycon intended to use the 4/11

machine to manufacture a 93 oz Ecolab capsule on “Line 2” of its manufacturing facility. [Id. at ¶1.] And Polycon intended to use the 8/16 machine to manufacture a 2.5- gallon Ecolab container and a 2.5-gallon Polycon “stock” container on “Line 0” of its manufacturing facility. [Id.] Based on these negotiations, on March 4, 2016, R&B sent Polycon proposal number PM 16-4066, in which R&B agreed to supply Polycon with the 8/16 machine in

exchange for a total purchase price of $2,985,000. [DE 137 at ¶5.] On April 11, 2016, R&B sent Polycon proposal number PM 16-3978B, in which R&B agreed to supply Polycon with the 4/11 machine for a total purchase price of $1,725,000. [Id. at ¶6.] The Parties finalized the deal a few days later when they executed a Terms and Conditions of Sale agreement, which both parties had the opportunity to review, revise, and separately

sign. [Id. at ¶7.] After execution of the Terms and Conditions, Polycon sent R&B two purchase orders—one for the 8/16 machine and the other for the 4/11 machine. [Id. at ¶8.] Turning back to the Terms and Conditions, R&B disclaimed the warranties of merchantability and fitness for a particular purpose opting instead for the following

warranty provided in Paragraph 3(a): Seller warrants that all Equipment and Work furnished pursuant hereto shall: (i) conform to all specifications drawings, samples, and descriptions given (the “Specifications”), (ii) be new and, for a period of one (1) years from the successful operation of the Equipment at Purchaser’s facility (the 4 “Equipment Warranty Period”), be free from defects in design, material, workmanship, warning and instruction . . . . [DE 195 at ¶4, quoting DE 185-3 at ¶3(a) (emphasis added).] This is the warranty provision that is at issue in this case. During the one-year Equipment Warranty Period, to begin upon the “successful operation of the Equipment” at Polycon’s facility, R&B agreed to the following:

Seller will (i) at Seller’s option and at Seller’s sole cost and expense, repair or replace the Equipment or part that does not conform to the warranty or description herein contained, or refund the purchase price of such Equipment or part, and (ii) at Seller’s sole cost and expense, provide qualified technical consultation by phone, written correspondence or with field service as reasonably necessary to resolve any warranty issue. [Id. at ¶5, quoting DE 185-3 at ¶3(f).] Polycon does not appear to dispute that the Terms and Conditions did not include a provision mandating that R&B produce qualified bottles for Ecolab, an understanding that appears to be supported by deposition testimony of Bill Hansen. [Id. at ¶27.] Likewise, the Parties agree that R&B’s obligations for “In-Field Installation” in the proposal and purchase order for the 4/11 machine did not include producing qualified containers. [Id. at ¶30; DE 186-3 at 7.] In fact, the “In-Field Installation” language in the 4/11 machine proposal states the contrary: “Line Items does not include producing ‘qualified containers’[.]” [DE 186-3 at 7 (emphasis in original).] The proposal and purchase order obligations for the 8/16 machine, however, differ from those for the 4/11 machine.

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Bluebook (online)
Polycon Industries Inc v. R & B Plastics Machinery, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/polycon-industries-inc-v-r-b-plastics-machinery-llc-innd-2024.