Scapa Tapes North America, Inc. v. Avery Dennison Corp.

384 F. Supp. 2d 544, 2005 U.S. Dist. LEXIS 16581, 2005 WL 1925773
CourtDistrict Court, D. Connecticut
DecidedAugust 10, 2005
DocketCiv. 3:03cv1689(JBA)
StatusPublished
Cited by1 cases

This text of 384 F. Supp. 2d 544 (Scapa Tapes North America, Inc. v. Avery Dennison Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scapa Tapes North America, Inc. v. Avery Dennison Corp., 384 F. Supp. 2d 544, 2005 U.S. Dist. LEXIS 16581, 2005 WL 1925773 (D. Conn. 2005).

Opinion

RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT [DOCS. ##28, 31]

ARTERTON, District Judge.

This commercial dispute arises from a written contract between the parties that was intended to result in joint development of a component of an automotive finishing product that defendant Avery Dennison Corp. (“Avery”) markets under the brand name Avloy. Plaintiff Scapa Tapes North America, Inc. (“Scapa”) seeks a declaratory judgment that material it supplied to Avery conformed to the contractual specifications, and related injunc-tive relief (Count One), and damages for common law breach of contract for nonpayment of goods (Count Two), improper rejection of goods under the U.C.C. (Count Three), breach of the covenant of good faith and fan- dealing under Connecticut tort law (Count Four), promissory estoppel (Count Five), and negligent misrepresentation (Count Six). See Complaint [Doc. # 1]. Avery has moved for summary judgment on all six of Seapa’s claims. Def. Mot. for Summary Judgment [Doc. #28]. Avery also asserts counterclaims against Scapa for a declaratory judgment that Sca-pa’s product did not conform to specifications (Counterclaim One), damages for common law breach of contract (Counterclaim Two), and disgorgement of unjust enrichment (Counterclaim Three). Scapa has cross-moved for summary judgment on Counterclaims One and Two only. See PI. Mot. for Summary Judgment. [Doc. # 31]. For the reasons that follow, Avery’s motion will be granted as to Sca-pa’s claims of breach of good faith, negligent misrepresentation, and promissory estoppel, as well as the issue of liability under the contract for 1-mil baseweb, and denied as to Scapa’s remaining claims; Scapa’s motion will be denied in its entirety-

I. FACTUAL BACKGROUND

Defendant Avery sells Avloy to automotive parts manufacturers. Avloy is a type of film used to cover the outside of automobile parts as an alternative to wet spray paint. Def. L.R. 56(a)l Stmt. [Doc. #35] at ¶ 2. It comes in thicknesses of “1-mil” and “2-mil,” and is shipped to customers in rolls. Id. ¶¶ 2-3. Avloy consists of four layers: a baseweb, a color coat, a tie coat, and a backing sheet to protect the product in transport. Id. ¶ 3. Avery has in the past, and continues today, to purchase ba-seweb, the first layer, from outside vendors who manufacture it by “ ‘solvent coating’ the resin onto the substrate, which is a liquid process that uses a solvent, as the name implies.” Id. ¶ 5.

In 1998, Avery began searching for a way to make baseweb through an extru *547 sion technique, meaning squeezing melted resin onto the substrate. Id. ¶ 6. Bill Goldsmith, Vice President and General Manager of the Performance Films Division of Avery, stated that “[e]xtrusion technology had never been used before in the manufacture of Avloy®, but Avery believed that extruded baseweb would be cheaper and of better quality than solvent-coated baseweb. Extrusion also has significant environmental benefits, since no solvents are used. Avery employees secured several patents relating to the new process.” Goldsmith Aff. at ¶ 6.

In 1999, Avery began working with Great Lakes Technologies, which was bought by Scapa the next year, on developing extruded baseweb. Id. ¶¶ 7-8. Between late 1999 and 2001, the companies jointly conducted a series of test runs, and then proceeded to codify their future business arrangement in a written contract.

The Purchase and Supply Agreement, signed in April 2002, recites that Scapa has specialized manufacturing experience desirable to Avery; that Avery would provide Scapa with certain intellectual property relating to Avloy as set forth on separate riders; that Scapa would “need to make significant capital expenditures and allocate significant resources which would not be done absent the commitments of [Avery] set forth in this Agreement; and ... as a material inducement to [Scapa’s] obligations ... [Avery] is willing to undertake” the exclusive supply agreement set forth in the requirements contract provisions. Def. L.R. 56(a)2 Stmt., Ex. J at 1. The contract refers to the baseweb to be manufactured as “Avloy Product,” and requires Scapa to “manufacture such Avloy Product for [Avery] in a good and workmanlike manner in accordance with specifications, quality standards and formulas” attached to the contract as a rider. Id. at 1-2. Exhibit A to the contract, entitled “Avery Dennison Proprietary and Confidential Specifications — Avloy,” contains, among others, the following terms:

Characteristic UOM [unit of measurement] MIN MAX
Particles 0.4 mm 2 17
(■within two linear feet x width of web)
Thickness Mil 1.7 2.1

Id. at 12.

The contract also reflects that the production of Avloy Product was still experimental at that point:

Initial Production Delays. Customer [Avery] acknowledges and agrees that only samples of the Avloy product have heretofore been produced and that the manufacture of the Avloy product in the quantities contemplated will be subject to the installation and development of new equipment and process, the exact timetable for which cannot be determined at this time.
Customer further acknowledges and agrees that there will be a period of time necessary for testing the new machinery and processes utilized in manufacturing the Avloy Product, that Supplier [Scapa] reserves the right to establish and extend testing procedures as Supplier deems reasonable under the circumstances prior to commencing full production, and that delays may result from this process. Accordingly, as a material inducement to Supplier’s proceeding with this Agreement and making investment [sic] contemplated hereunder, Customer agrees that it waives the right to assert and will not assert any claim ... for delays in delivery of Avloy Product ... unless and until Supplier acknowl *548 edges in writing that all tests [sic] production runs have been successfully completed (“Seller’s Capacity Notice”). Customer agrees to cooperate with Supplier to test Avloy Product and to timely respond to Supplier inquiries respecting samples....

Id. at 7-8 (emphasis added).

The requirements contract was to last for a period of three years from the date that Scapa delivered the “Seller’s Capacity Notice,” renewable annually thereafter. Id. at 2. Avery was to provide Scapa with yearly forecasts of its requirements for baseweb, updated each month, id. at 5, and the contract permitted Avery to terminate the agreement for cause if, among other reasons, Scapa “fails to manufacture and deliver to [Avery] the Avloy Product as required by this Agreement, in sufficient quantities (subject to and based upon Customer’s annual forecast).... ” Id. at 8. The initial price of the baseweb was set at 35 cents per square foot, subject to annual adjustment by mutual consent. Id. at 4. Finally, the contract contains an integration clause, id.

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384 F. Supp. 2d 544, 2005 U.S. Dist. LEXIS 16581, 2005 WL 1925773, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scapa-tapes-north-america-inc-v-avery-dennison-corp-ctd-2005.