Standard Alliance Industries, Inc. v. Black Clawson Co.

587 F.2d 813, 12 Ohio Op. 3d 246
CourtCourt of Appeals for the Sixth Circuit
DecidedOctober 20, 1978
DocketNos. 76-2006, 76-2007
StatusPublished
Cited by51 cases

This text of 587 F.2d 813 (Standard Alliance Industries, Inc. v. Black Clawson Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Standard Alliance Industries, Inc. v. Black Clawson Co., 587 F.2d 813, 12 Ohio Op. 3d 246 (6th Cir. 1978).

Opinion

KEITH, Circuit Judge.

This case concerns a machine, a 175 ton “green monster,”1 more formally known as a horizontal automatic radial forging facility. This machine is the cause of this multimillion dollar breach of warranty litigation between its manufacturer, the Black Claw-son Company, (Black Clawson), and its purchaser, Standard Alliance Industries, Inc. (Standard Alliance). After protracted discovery, three separate trials and an unsuccessful mandamus petition to this court, this case comes before us on appeal and cross appeal from the final judgments below.

This litigation principally concerns whether the Black Clawson-built machine was in compliance with certain express warranties. After a four-week trial on the liability issue, a jury found that the machine did not comply with the warranties and, implicitly, that defendant Black Claw-son had adequate notice of the breach. That same jury, at a separare trial, assessed damages at $525,000.00. Finally, at a bench trial, the district court ruled on two peripheral issues arising from the transaction. Black Clawson appeals from the jury’s verdict on liability, raising a host of issues. Standard Alliance, although victorious below, cross appeals, complaining that it did not receive the full damages to which it was entitled. Black Clawson also appeals from the damages award. Finally, Standard Alliance appeals from the judgment of the court below, at the bench trial. We reverse the judgment of liability entered at the jury trial and affirm in part, reverse in part, the judgment at the bench trial.

FACTS

This saga began in the early 1960’s. Plaintiff, Standard Alliance Industries, Inc.,2 manufactured railroad car axles, using the drop hammer method of forging, by which the axles were formed from steel bars by steam hammers. Fearing that its competitors were forging ahead with more sophisticated manufacturing techniques, plaintiff began to actively explore newer technology.

[816]*816By 1965 the plaintiff determined that it should automate the forging process and purchase an automatic forging machine. There were two manufacturers who could provide such a machine: one was a European concern, known as the GFM company,3 the other was the Black Clawson Company. Black Clawson had never manufactured an automatic forging machine before, but it did have general experience as a major machine builder.

The plaintiff was swayed by Black Claw-son’s reputation, its proposed design and its promised fast delivery time.4 Serious negotiations commenced between the two companies in January of 1965. All aspects of the proposed sale were carefully reviewed and negotiated. A major stumbling block was the warranty. The seller, Black Claw-son, did not wish to warrant the quality or quantity of the machine’s production. The buyer, Standard Alliance, insisted on a series of performance guarantees, notably a forging cycle of two minutes and a finished axle within certain tolerances. Finally, a compromise was reached. Black Clawson would guarantee that the machine would perform a series of mechanical functions but would not guarantee the quality or quantity of production. A contract was signed on August 16, 1965, excluding implied warranties,5 but containing certain agreed upon express warranties:

The following express warranties, which relate to mechanical function only become an adjunct to our contract clause # 1 page 11 and supersede all references to warranties that may be contained in the description of the machine pages 2-7, either expressed or implied.
Black Clawson warrants that the subject machinery will perform the following mechanical functions:
1. Press will deliver 1000 ton ram capacity at 150 strokes per minute @ xk" from bottom dead center.
2. Press will have a maximum speed of 250 strokes per minute — with a range of 10 to 250 SPM.
3. Rams at bottom of stroke will have a parallelism of within .005".
4. Peel and press will trace template within plus or minus .015".
5. Feed adjustments will have a range up to 0.375" per second.
6. Peel rotation will have a range of 5 to 100 RPM and will be designed to lock at the 90° positions.
7. Peel traverse speed will have a range of 1 ft/minute to 45 ft/minute, and will be designed to lock in position.
8. The mechanical functions can be programmed to operate in automatic sequence in the specified capacities and accuracies or may be operator interrupted and/or commanded as required.
The quality and quantity of production is not the responsibility of the seller.

We shall refer to these warranties as the “page twelve” warranties, as do the parties. The contract further limited the seller’s obligations under the warranty to repair or replace defective parts for a one-year period. Selling Condition 1 states:

1. Seller warrants the equipment manufactured by it will be free from defects in workmanship and material. Equipment manufactured by others than the Seller is sold exclusively under such warranty as the manufacturer may give to the Seller and to the extent enforcible by the Seller. The Seller does not warrant the amount or quality of production unless expressly stated in the specifications. If any part be found within one [817]*817year from date of delivery to have been defective when delivered (any shortcoming which prevents performance to the specific standards, if any, set forth

Finally, the contract specifically excluded consequential damages for any established breach of warranty.6

The contract also contained six pages of technical specifications for the machine and provided for a delivery time of ten to twelve months. The parties have stipulated that the total amount paid for the machine was $571,790.00.

Immediate problems arose. The manufacturing process took longer than expected and many design changes were made while the machine was being built. Finally, in July, 1967, Black Clawson began to ship the machine to Standard Alliance’s East Chicago, Indiana plant. Installation was completed by October, 1967.

The machine proved troublesome from the start. On December 27, 1967, Standard Alliance sent a letter to Black Clawson outlining the machine’s problems. The parties met to discuss the situation on January 2, 1968. In a follow-up letter, on January 3, 1968, Black Clawson’s president promised that his company would work with Standard Alliance to fix the machine. Accordingly, a team of Black Clawson employees was sent to commence repairs. For over five months, both sides labored to make the machine operable. On June 21, 1968, defendant ceased working on the machine and withdrew its employees.7

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Bluebook (online)
587 F.2d 813, 12 Ohio Op. 3d 246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/standard-alliance-industries-inc-v-black-clawson-co-ca6-1978.