Hydro Systems, Inc v. Factory Automation Systems, Inc

Filing 48

ORDER: The Court advises the parties to again attempt mediation. It is ORDERED that Defendant and Counterclaim Plaintiff's Motion for Partial Summary Judgment 29 is GRANTED. It is FURTHER ORDERED that Plaintiff and Counterclaim Defendant' ;s Motion for Partial Summary Judgment 30 is GRANTED IN PART as to Count III of the Counterclaim and DENIED IN PART in all other respects. It is FURTHER ORDERED that the Parties are DIRECTED to submit a proposed consolidated pretrial order within 28 days of the date of entry of this Order. If the parties intend to mediate this dispute, they may obtain a stay of this deadline by contacting the Court's courtroom deputy. Signed by Judge Victoria M. Calvert on 3/10/2025. (jbu)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
HYDRO SYSTEMS, INC., a California
company,
Plaintiff/Counterclaim Defendant,

Civil Action No.
1:23-cv-03492-VMC

v.
FACTORY AUTOMATION
SYSTEMS, INC., a Georgia company,
Defendant/Counterclaim Plaintiff.
OPINION AND ORDER
This matter is before the Court on cross-motions for partial summary
judgment. (Docs. 29, 30). For the reasons that follow, the Court will grant
Defendant/Counterclaim Plaintiff Factory Automation Systems, Inc.’s (“FAS”)
motion and grant in part and deny in part Plaintiff/Counterclaim Defendant
Hydro Systems, Inc.’s (“Hydro Systems”) motion.
Background1
I.

The Proposal
On August 31, 2021, Hydro Systems accepted a proposal offered by FAS to

purchase two robotic systems to automate the sanding and polishing of bathtubs

1 The following facts are drawn from the parties’ respective Statements of Material

Facts. Citation to the relevant responsive statement without explanation or
clarification indicates the Court has deemed the underlying statement admitted.
For clarity and ease of reading, the Court omits quotation marks from admitted

at Hydro Systems in McDonough, GA for a purchase price of $1,160,000.
(“Proposal,” Doc. 32-1 ¶ 1, Doc. 33-7 ¶ 16, Doc. 1-1). That same day, On August 31,
2021, Hydro Systems paid FAS $348,000, representing a down payment of 30% of
the total price. (Doc. 33-7 ¶ 17).
The Proposal included a basis section with the following items:
? Each robot cell will be capable of bathtub models with
maximum dimensions up to 36 inches wide by 72 inches
long. For larger tubs, FAS must evaluate robot reach
using the 3D models of each tub.
? As requested, our scope of work and pricing is based
on programming twelve unique tub models. For
reference, each of the three sizes within the Alamo family
will require its own robot program.
? The sanding process will use three sandpaper grits of
220, 400, and 1000.
? Gel coating will be manually applied after the sanding
process and before the polishing process. FAS has no
scope of work related to gel coat application.
? The polishing process will use two buffing
compounds.
? Hydro Systems will provide 3D models for every tub
to be programmed.
(Doc. 1-1 at 1). The scope of work summary excluded the following:

statements that are reproduced in this Order. Citations to the Proposal and the
parties’ respective briefs are to the internal pagination, rather than the ECF header
stamps, unless indicated otherwise.
2

Tub locating fixtures are not currently included in the
scope of work/pricing. FAS will require 3D models of
each tub in order to quote the tub fixtures.
Parts introduced into each system must be consistent
with an “ideal” or nominal part. Parts that are out- ofrange will cause system faults and production stoppage.
These robot systems will process tubs to a more
consistent finish in less time than manual labor, but there
are no provisions for correcting issues from the molding
process or repair/rework process.
(Id.). These exclusions were clarified in Appendix A, Rev. 4:
• Gel coating not included within scope of work (“SOW”).
Is Hydro going to be performing gel coating?
Correct – Gel Coating is outside the scope of this
project.
....
• There are no provisions for correcting issues from the
molding process or repair/rework process. What
happens if there is an issue? Who is responsible for
remedying the issue and who is liable for the cost?
Quality issues from the molding or repair processes
cannot be overcome by the sanding robot. These types
of issues are outside our control and clearly not in our
scope of work. Repairs need to meet Hydro Systems’
quality standards before a tub is loading into the
sanding robot system.
(Id. at 10).
The Proposal stated that “[t]he system will be ready for [testing] in
approximately 24-28 weeks after receipt of order and down payment.” (Id. ¶ 21).
Approximately 24-28 weeks after the order and down payment would fall
3

between February 15 and March 15, 2022. (Id. ¶ 22). More than 36 weeks after the
order and down payment, on May 10, 2022, neither robot was complete or ready
for testing. (Id. ¶ 23). In an email on May 11, 2022, FAS told Hydro Systems that
the Polishing Robot could be in “near production-ready condition” at FAS the
week of June 6, and that the Sanding Robot “can potentially be deployed in your
facility approximately 30-days after the Polishing Cell is installed and operating.”
(Id. ¶ 24).
The Proposal called for two testing phases, with criteria for the tests to be
agreed upon later during the design and engineering phases. (Doc. 1-1 at 4–5). The
first, Factory Acceptance Testing (FAT), was to be employed in FAS’s shop prior
to delivery to Hydro Systems’ facility:
During the design and engineering phases, the FAS
project manager will work with Hydro Systems to
establish the Factory Acceptance Test criteria. FAS will
stage the system and test performance in our shop. Then
during the FAT, the Hydro Systems team will have the
opportunity to inspect the hardware and observe the
system in operation.
(Id. at 4). The second, Site Acceptance Testing, would occur at Hydro System’s
facility: “Site acceptance criteria will be agreed upon by FAS and Hydro Systems
during the engineering phase of the project.” (Id. at 5). Under the Proposal, 10% of
the purchase price was due within thirty days of the “[c]ompletion of FAT at FAS,”
and another 10% within thirty days of the “[c]ompletion of [s]tart-up at Hydro
4

Systems’ facility,” which was “not to exceed 30 days from shipment.” (Doc. 33-7 ¶
83).
II.

Proposal Terms and Conditions
The Proposal ends with a list of Terms and Conditions. Provisions relevant

to this case include the following:
10) LIMITATION OF LIABILITY: Factory Automation
Systems will at Purchaser’s request submit Certificates of
Insurance from companies chosen by Factory
Automation Systems showing our limits of coverage.
Factory Automation Systems agrees to indemnify and
save harmless Purchaser only against liability imposed
on Purchaser by law with respect to bodily injury or
property damage to the extent such liability results from
the performance of Factory Automation Systems under
this contract. Factory Automation Systems does not
agree to indemnify and save Purchaser harmless except
as set forth herein. Purchaser agrees to indemnify and
save harmless Factory Automation Systems for all loss,
cost or damage incurred by Factory Automation Systems
as a result of Purchaser’s or third parties’ misuse or
misapplication of Factory Automation Systems supplied
products. In no event, regardless of cause, shall Factory
Automation Systems be liable for incidental or
consequential damage either real or alleged.
11) WARRANTY: Factory Automation Systems passes
manufacturer warranties to Purchaser for hardware and
packaged software used in our systems. Our integration
services, including engineering, software, wiring work
and documentation are warranted to be free from defects
for a period of one year from delivery. FACTORY
AUTOMATION SYSTEMS’ WARRANTY IS LIMITED
TO REPAIR OR REPLACEMENT OF THE DEFECTIVE
WORK AT OUR OPTION AND IN NO WAY
INCLUDES INCIDENTAL OR CONSEQUESTIAL
5

DAMAGES. FACTORY AUTOMATION SYSTEMS
MAKES NO OTHER REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESSED OR
IMPLIED, AS TO THE MERCHANTABILITY, FITNESS
FOR PURPOSE OR OTHER MATTER WITH RESPECT
TO ANY OF THE GOODS OR SERVICES.
(Doc. 1-1 at 8–9). The Proposal also has an Appendix which includes revisions to
the terms, including the following:
• Limitation of Liability – Propose making the limitation of
liability re incidental or consequential damages mutual.
Proposed language “In no event, regardless of cause,
shall either party be liable to the other, for incidental or
consequential damage, either real or alleged.”
Agreed
(Id. at 11).
The Integration Services warranty will be extended to 24
months on this initial purchase order from Hydro
Systems. Future projects will revert to the standard 12month warranty, or Hydro Systems can purchase an
extended warranty. Other than the adjustment to
Integration Services, the remainder of Article 11 in the
FAS Terms and Conditions is unchanged.
(Id. at 12).
III.

Development and Deployment of the Robots
In June 2022, before delivering the Polishing Robot, FAS invited Hydro

Systems to observe testing at FAS (Doc. 33-7 ¶ 27). Hydro Systems’ Vice President
Kevin Steinhardt attended this testing in person on June 9, 2022. (Doc. 33-7 ¶¶ 2,
28). FAS contends that this test constituted the FAT for the Polishing Robot, which
6

Hydro Systems disputes. (Doc. 45 ¶ 35). Brian Hiltz, the Director of Management
and Resource Planning at FAS, oversaw the presentation. (Affidavit of Brian Hiltz
dated April 8, 2024, “Hiltz Aff.,” Doc. 33-4 ¶¶ 2, 8). During this visit to FAS, Kevin
Steinhardt asked FAS about the possibility of alarms to notify Hydro Systems of
faults when the systems run unattended overnight, or “lights out.” (Doc. 33-7 ¶
29).
During the presentation, the polishing spindle fell off the Polishing Robot
while it was operating, and a polishing tool rubbed against the tub. (Id. ¶ 30).
However, according to Mr. Hiltz’s account of the presentation, Mr. Steinhardt
indicated that he was pleased with the results and raised no issue regarding the
finished tub quality. (Hiltz Aff. ¶¶ 9–10).2 Hydro Systems did not sign any
approval or acceptance during this June 9, 2022 testing attempt. (Doc. 33-7 ¶ 31).
But Hydro Systems did instruct FAS to ship and install the Polishing Robot, even

Hydro Systems’ personal knowledge objection (Doc. 45 ¶ 36) is overruled
because Mr. Hiltz averred that he oversaw the demonstration. (Hiltz Aff. ¶ 8).
Hydro Systems’ hearsay objection is overruled because Mr. Hiltz testified about a
statement Mr. Steinhardt made in the scope of his employment relationship with
Hydro Systems. Fed. R. Evid. 801(d)(2)(D). Mr. Steinhardt offered his own
declaration in connection with the motions (Doc. 30-4) and could have
supplemented his testimony by disputing that Mr. Hiltz was present, by denying
that he indicated that he was pleased, or by denying that he raised no issue
regarding the finished tub quality. Instead, Mr. Steinhardt only testified that he
“did not consider the Polishing Robot complete at this time,” which does not create
a fact dispute as to what he said at the demonstration. (Doc. 30-4 ¶ 40).
2

7

though Hydro Systems had only provided FAS with three of the twelve tub
models for testing. (Id. ¶ 37).3 As a result, despite the fact that the Proposal stated
that “FAS will program twelve designated tub models for both sanding and
polishing” and that the “scope of work and pricing is based on programming
twelve unique tub models,” when the Polishing Robot arrived at Hydro Systems,
it was only programmed to process three models. (Doc. 33-7 ¶¶ 34–35). As to those
three models, the Parties dispute whether the Polishing Robot functioned poorly
and if so whether the fault was on Hydro Systems for utilizing a process that
differed from what was described and sampled. (Doc. 33-7 ¶ 36). Nonetheless, all
of the models had to be reprogrammed several times. (Doc. 33-7 ¶ 37). In any case,
FAS delivered the Polishing Robot to Hydro Systems on approximately June 20,
2022, 42 weeks after the order and down payment. (Doc. 33-7 ¶ 25).
Shortly after that, FAS’s Project Manager Scott Seitz called Mr. Steinhardt to
schedule a FAT for the sanding robot on June 21, 2022. (Affidavit of Scott Seitz

3 Hydro Systems’ hearsay objection is overruled for the reasons the Court gave in

note 2. Additionally, to the extent that Hydro Systems contends that Mr. Hiltz’s
testimony itself constitutes hearsay, the Court “may consider a hearsay statement
in passing on a motion for summary judgment if the statement could be reduced
to admissible evidence at trial or reduced to admissible form.” Macuba v. Deboer,
193 F.3d 1316, 1323 (11th Cir. 1999). Hydro Systems does not contend that Mr. Hiltz
would be unable to testify at trial.
8

dated April 8, 2024, “Seitz Aff.” Doc. 33-3 ¶ 39).4 Mr. Steinhardt declined to attend
and opted to have FAS ship the robot to Hydro Systems instead. (Id.).
Hydro Systems sent FAS an email dated July 5, 2022 stating that
“the tubs are all coming out with scratches on them. The
scratches are in a specific pattern and clearly coming
from the robot . . . . It is clear to me that that these tubs
were not closely inspected when you tested them at your
place . . . when inspected closely all the scratches can be
seen. We are now stuck doing R&D instead of producing
product.
(Doc. 33-7 ¶ 38).
FAS delivered the Sanding Robot to Hydro Systems5 on approximately July
11, 2022, 45 weeks after the order and down payment. (Doc. 33-7 ¶ 26). The Parties
likewise dispute whether the Sanding Robot was incomplete and whether it
performed poorly, and whether any functionality problems with the Standing
Robot were the fault of Hydro Systems. (Id. ¶ 39). The Proposal stated that “[t]he
system will include an automatic sandpaper exchange system to accommodate
three grits of sandpaper,” but when it was delivered, the Sanding Robot had no

Hydro Systems’ hearsay objection to Mr. Seitz’s affidavit (Doc. 45 ¶ 38) is
overruled for substantially the same reasons the Court gave in notes 2 and 3,
above. The remainder of Hydro Systems’ objection that Mr. Seitz’s statement “is a
conclusory allegation without specific supporting facts, documentation, or record
evidence” goes to weight, not admissibility.
4

5 The Court assumes the reference to FAS delivering the robot to FAS was a

typographical error.
9

automatic sandpaper exchange. (Id. ¶ 40–41). FAS contends that the parties
mutually departed from this portion of the Proposal at an October 18, 2021
meeting by agreeing to replace the sandpaper exchange system in the Proposal
with a tool that exchanges the entire spindle rather than just the paper. (Seitz Aff.
¶ 12). The Proposal’s list of “Deliverables” from FAS also included a “Robot Endof-Arm Tool” described as a vacuum hose to connect sander to Hydro Systemssupplied vacuum collection system.” (Doc. 33-7 ¶ 43). Hydro Systems purchased
a vacuum system for this purpose, but the Sanding Robot did not have (and has
never had) a vacuum hose. (Id. ¶ 44). FAS contends that the Parties agreed to
remove the vacuum hose connection from the scope as part of the changes at the
same October 2021 meeting. (Seitz Aff. ¶ 13).
By July 2022, almost a full year after Hydro Systems paid the down payment
to FAS, FAS had programmed only five models into the robots. (Id. ¶ 45). Mr.
Steinhardt contends that even these five models did not work correctly, but FAS’s
President Jim Pursley blames Hydro Systems for providing samples that differed
from their manufacturing process, among other reasons. (Affidavit of Jim Pursley
dated April 8, 2024 “Pursley Aff.,” Doc. 33-5 ¶¶ 2, 5).
By email dated July 26, 2022, Hydro Systems informed FAS of the following:
a. “The [Proposal] calls for the programming of twelve
unique tub models. To date, 5 models have been
programmed.”
10

b. “Robot was to use less time than manual labor. At
25mm/sec, this doesn’t represent less time than we
currently use.”
c. “[W]e are a long way from operating in an efficient
manner, and in a way that was represented in [the
Proposal]. Please do not consider the robots to have
passed Site Acceptance at this time until FAS can correct
the [outstanding] issues.”
(Doc. 33-7 ¶ 47).6 By letter dated August 9, 2022, Hydro Systems notified FAS as
follows:
a. “[T]o date, [FAS] has failed to provide an acceptable
robotic system for sanding and polishing our bathtubs as
proposed[.]”
b. “The robot systems were to provide more consistent
finish in less time than our manual process. To date, the
finish is less consistent, and forcing us to do much
rework[.]”
c. “The PolishingBot, as programmed, will not even
remove 1500 grit scratches. These scratches are being
removed manually in our Detailing department. By
comparison, an employee using a manual polishing
buffer can remove 1000 grit scratches with minimal
effort. This deems the investment in the PolishBot
completely worthless.”
d. “Hydro Systems has spent over $40,000 in rework
costs, not to mention lost profits during the so-called
start-up phase of the robots.”

6 FAS’s objection to Hydro Systems offering the email through Kevin Steinhardt is

overruled; Mr. Steinhardt laid the foundation for his personal knowledge. (Doc.
30-4 ¶ 49). The remaining objections are also overruled.
11

(Id. ¶ 48).7
Mr. Pursley responded in a letter to Mr. Steinhardt dated August 22, 2022.
(Doc. 30-4 at ECF pp. 92–100).8 The letter begins as follows:
I am disheartened that our relationship has turned
contentious. We have continually worked with Hydro on
this project in the spirit of partnership. We have
accommodated process changes and delays on items
outside of our scope. We have made concessions on
overages and scope changes and offered further
concessions, all with the aim of building a partnership for
the future. Despite the current situation, I am still
hopeful that we can work together to solve the problems
in front of us.
(Id. at 1). In the letter, Mr. Pursley breaks down Mr. Steinhardt’s points one by one
and responds at length. For example, he writes that “[a]ny delays are the result of
(1) Hydro’s failure to make all twelve tubs and associated fixtures available to FAS
for testing, (2) Hydro’s decision to apply the gel coating before sanding, and (3)
Hydro’s failure to perform dust collection, as specified in the Project Proposal.”
(Id. at 4). “Programming tubs at your facility,” he explained, “takes significantly
more time than if we would have received the tubs and fixtures to program the
tubs at our shop. We save the travel time, but more importantly, we have our tools
and resources, and we are not working around production schedules.” (Id.). The

7 Hydro Systems’ objection to Kevin Steinhardt laying the foundation for this

document is overruled for substantially the same reasons given in note 6, above.
8 The Court uses the letter’s internal pagination for subsequent citations.

12

letter enumerates the following problems that Mr. Pursley asserted Hydro
Systems caused:
In addition to Hydro’s failure to provide us with the
necessary tubs and fixtures, there are two other problems
that must be addressed. The first is Hydro’s decision to
apply the gel coat prior to sanding. The second is the
Hydro’s failure to collect the dust created by this process
change. These issues lie at the root of many smaller issues
raised throughout your letter. The process was discussed
in depth with Hydro in the pre-sales cycle. As clearly
stated in the proposal, ‘Gel coating will be manually
applied after the sanding process and before the
polishing process. FAS has no scope of work related to
gel coat application’. . . . The tubs provided by Hydro for
sanding have gel coating already applied. Sanding after
gel coat is applied drastically changes the process. The
result of these problems is:
• Product quality implications. Sanding a tub to prepare
for gel coat application is completely different than
sanding after the gel coat is applied. The difference is
similar sanding something before painting versus after a
high shine paint is applied.
• [Redacted] has also indicated that not removing dust
between sanding grit passes may cause debris from one
sanding pass to cause scratches on subsequent passes.
Hydro is responsible for dust collection which to our
knowledge has not been installed.
• Reduced sanding pad life. The FAS application you
reference from “YouTube” is sanding before gel coat is
applied. These pads will last for multiple tubs. Sanding
gel coat clogs the sanding pad and reduces the pad life.
The lack of dust collection also affects the sanding pad
life. Dust from previous sanding passed will fill the pad
with dust (a.k.a. clogging) which reduces the pad life.

13

• Increased number of grits required. The “YouTube”
referenced Sander uses 2 grits. Per Hydro’s request, as
defined in the proposal, “The sanding process will use
three sandpaper grits of 220, 400, and 1000”. Hydro has
reported that the revised process requires a 6-grit
progression to meet the desired quality. These additional
grits that are allegedly required are related to the process
change.
• Explosive dust hazard. The significant danger
presented by this dust is addressed as a standalone topic
below.
(Id. at 6–7).
After threats of legal action and some back and forth, in September 2022,
FAS resumed work on programming. (Doc. 33-7 at 52). In November 2022, the
Polishing Robot went idle for a month, after the Sanding Robot smashed into the
tub it was sanding, breaking the tub. (Id. ¶ 53). FAS took components from the
Polishing Robot and installed them into the Sanding Robot, leaving the Polishing
Robot unusable while awaiting parts to replace those FAS had removed. (Id. ¶ 54).
Throughout the first seven months of 2023, FAS continued adjusting, testing, and
reprogramming the robots on Hydro Systems’ production floor. (Id. ¶ 55). In July
2023, FAS ceased working on the robots. (Id. ¶ 57). The Sanding Robot currently
does not function at all, as it has a bathtub stuck inside of it, making it nonoperational. (Id. ¶ 58).

14

Meanwhile, on March 21, 2022, Hydro Systems paid FAS $348,000, and on
June 15, 2022, Hydro Systems paid FAS an additional $232,000. (Id. ¶ 18). To date,
Hydro Systems has paid FAS a total of $928,000. (Id. ¶ 19).
Legal Standard
Federal Rule of Civil Procedure 56(a) provides “[t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” A factual
dispute is genuine if the evidence would allow a reasonable jury to find for the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is
“material” if it is “a legal element of the claim under the applicable substantive
law which might affect the outcome of the case.” Allen v. Tyson Foods, Inc., 121 F.3d
642, 646 (11th Cir. 1997).
The moving party bears the initial burden of showing the court, by reference
to materials in the record, that there is no genuine dispute as to any material fact
that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260
(11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving
party’s burden is discharged merely by “‘showing’—that is, pointing out to the
district court—that there is an absence of evidence to support [an essential element
of] the nonmoving party’s case.” Celotex, 477 U.S. at 325. In determining whether
the moving party has met this burden, the district court must view the evidence
15

and all factual inferences in the light most favorable to the party opposing the
motion. Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996). Once the moving
party has adequately supported its motion, the non-movant then has the burden
of showing that summary judgment is improper by coming forward with specific
facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). All reasonable doubts should be resolved in the favor of
the non-movant. Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). In
addition, the court must “avoid weighing conflicting evidence or making
credibility determinations.” Stewart v. Booker T. Washington Ins., 232 F.3d 844, 848
(11th Cir. 2000). When the record as a whole could not lead a rational trier of fact
to find for the nonmoving party, there is no genuine dispute for trial. Fitzpatrick, 2
F.3d at 1115 (citations omitted).
On cross-motions for summary judgment, “[t]he standard of review. . . does
not differ from the standard applied when one party files a motion, but simply
requires a determination of whether either of the parties deserves judgment as a
matter of law on the facts that are not disputed.” Loiseau v. Thompson, O’Brien, Kemp
& Nasuti, P.C., 499 F. Supp. 3d 1212, 1219 (N.D. Ga. 2020) (quoting GEBAM, Inc. v.
Inv. Realty Series I, LLC, 15 F. Supp. 3d 1311, 1315–16 (N.D. Ga. 2013)). “The Court
must consider each motion on its own merits, resolving all reasonable inferences
against the party whose motion is under consideration. Cross-motions may . . . be
16

probative of the absence of a factual dispute where they reflect general agreement
by the parties as to the controlling legal theories and material facts.” Id. (citing U.S.
ex rel. Saldivar v. Fresenius Med. Care Holdings, Inc., 972 F. Supp. 2d 1339, 1341 (N.D.
Ga. 2013)).
Discussion
The Court first addresses FAS’s partial motion for summary judgment on
the issue of consequential damages and then turns to Hydro Systems’ motion on
liability and on FAS’s counterclaims.
I.

FAS’s Motion for Partial Summary Judgment
FAS seeks partial summary judgment on the issue of Hydro System’s claim

for damages for “lost production, lost sales, wasted materials, increased labor
costs, lost time and productivity of Hydro Systems personnel . . . .” (Doc. 1 at 46)
on the grounds that such damages are incidental and consequential damages, and
therefore barred by the terms of the Proposal expressly exculpating both parties
from those damages. See Background § II, above. The Court agrees.
A.

Consequential Damages in Sales Contracts

Many a first-year law student has trudged through Hadley v. Baxendale
[1854] 156 Eng. Rep. 145, 145-46; 9 EX. 341, 341. That case involved a delay in
shipping a broken crankshaft to a factory which in turn led the affected miller to
seek “damages for their inability to supply their customers with flour during the

17

period of delay.” Paul S. Turner, Consequential Damages: Hadley v. Baxendale
Under the Uniform Commercial Code, 54 SMU L. Rev. 655, 657 (2001). That case, in
barring such damages for lost profits, is often (rightly or wrongly) credited with
expounding the principle of consequential damages in contract. But see id. (“The
term ‘consequential damages’ does not appear anywhere in the court’s opinion.”).
In any case, the distinction between proximate or direct and consequential
or indirect damages in contract has survived today. Under Georgia’s version of
the UCC,9 incidental and consequential damages are distinguished from the

9 The Proposal, which is governed by Georgia law (Doc. 1-1 at 9, 11), called for a

hybrid sales and services transaction which raises a question of whether and to
what extent Georgia’s UCC applies. O.C.G.A. § 11-2-106(5) (“‘Hybrid transaction’
means a single transaction involving a sale of goods and . . . [t]he provision of
services . . . .”). Under Georgia law, in a hybrid transaction “[i]f the sale-of-goods
aspects predominate, [the UCC] applies to the transaction but does not preclude
application in appropriate circumstances of other law to aspects of the transaction
which do not relate to the sale of goods.”). O.C.G.A. § 11-2-102(2)(b). Upon review
of the Proposal, it appears that only $33,200 of the $1,160,000 purchase price is
specifically earmarked for installation, which implies that the sale of goods aspect
predominates. See J. Lee Gregory, Inc. v. Scandinavian House, L.P., 433 S.E.2d 687,
689–90 (Ga. Ct. App. 1993) (“What was the dominant purpose of the transaction in
the case sub judice? Was it the sale of goods or the rendition of services? It can
hardly be said that the sale of the windows was ‘incidental’ to the transaction.
Rather it would appear that the rendition of services was the incidental factor.
After all, approximately two-thirds of the cost of the transaction was allocated to
the windows. . . . Thus, we think the predominant character of the transaction was
the sale of goods, even though a substantial amount of service was involved in
installing the goods. The mere fact that Scandinavian House would not have
purchased the windows unless plaintiff installed them is of no consequence”).
Moreover, the services aspect of the Proposal seems limited to setup and
deployment and the Proposal does not appear to contemplate an ongoing services
relationship. (Doc. 1-1 at 5). Lastly, both Parties cited the UCC in their briefing.
18

default “measure of damages for nondelivery or repudiation by the seller,” which
“is the difference between the market price at the time when the buyer learned of
the breach and the contract price,” unless the buyer “‘cover[s]’ . . . by making in
good faith and without unreasonable delay any reasonable purchase of or contract
to purchase goods in substitution for those due from the seller,” in which case
damages are “the difference between the cost of cover and the contract price.”
O.C.G.A. §§ 11-2-712, -713. For goods that have been accepted, “[t]he measure of
damages for breach of warranty is the difference at the time and place of
acceptance between the value of the goods accepted and the value they would
have had if they had been as warranted, unless special circumstances show
proximate damages of a different amount.” O.C.G.A. § 11-2-714(2).
All of these remedies provide that in addition to these direct or proximate
damages, the seller may also recover “incidental or consequential damages,”
which are defined by the U.C.C. as follows:
(1) Incidental damages resulting from the seller’s breach
include expenses reasonably incurred in inspection,
receipt, transportation, and care and custody of goods
rightfully rejected, any commercially reasonable charges,
expenses, or commissions in connection with effecting
cover, and any other reasonable expense incident to the
delay or other breach.

(Doc. 29-1 at 5–6; Doc. 30-1 at 17). For these reasons, the Court concludes that the
Proposal is predominately a sale of goods and therefore the UCC applies.
19

(2) Consequential damages resulting from the seller's
breach include:
(a) Any loss resulting from general or particular
requirements and needs of which the seller at the
time of contracting had reason to know and which
could not reasonably be prevented by cover or
otherwise; and
(b) Injury to person or property proximately
resulting from any breach of warranty.
O.C.G.A. § 11-2-715. In keeping with Hadley, Georgia considers lost profits and
production delays stemming from the sale of goods to be consequential damages.
Sunstate Indus., Inc. v. VP Grp., Inc., 679 S.E.2d 824, 828 n.9 (Ga. Ct. App. 2009); see
also B & D Carpet Finishing Co. v. Gunny Corp., 281 S.E.2d 354, 355 (Ga. Ct. App.
1981) (“Even prior to the enactment of the UCC provision, Georgia permitted the
recovery of the cost of paying idle labor and other items of special damage as
consequential damages flowing from a breach of contract.”).
Hydro Systems’ reliance on Holiday Hospitality Franchising, LLC v. J&W
Lodging, LLC, No. 1:17-CV-01663-ELR, 2019 WL 3334614, at *7 (N.D. Ga. Mar. 7,
2019), which held that lost profits in a licensing agreement were actual damages
and not consequential damages, is misplaced. First, that case was not a sales
contract governed by the UCC, which strictly defines direct damages and
delineates them from indirect and consequential damages. Second, in a licensing
agreement, the object of the transaction is that the licensee will utilize the licensed

20

property to profit in business subject to paying a portion of that profit in the form
of royalties. Cf. Bennett v. Associated Food Stores, Inc., 118 Ga. App. 711, 715, 165
S.E.2d 581, 585 (1968) (“Profits, as used in this context, is to mean ‘the gain which
the plaintiff would have made if he had been permitted to complete his contract.’”)
(quoting Wallace v. Tumlin & Stegall, 42 Ga. 462, 471 (1871)); see also Wallace, 42 Ga.
at 470–71 (“[O.C.G.A. § 13-6-8], speaking of the damages which are allowed for
breach of contract, includes the profits which are the immediate fruit of the
contract.”). In contrast, in a contract for goods, the object of the transaction is to
purchase goods for a given price. O.C.G.A. § 11-2-301 (“The obligation of the seller
is to transfer and deliver and that of the buyer is to accept and pay in accordance
with the contract.”). As such, Holiday Hospitality Franchising does not alter the basic
premise that in a contract for the sale of goods, lost profits and labor costs are
incidental or consequential damages.10 And as the Court discusses next, a contract
for the sale of goods may limit incidental or consequential damages.
B.

Application and Enforceability of Exculpation of Consequential
Damages

Georgia’s UCC Article 2 permits parties to a sales contract to exculpate one
another from incidental or consequential damages. Specifically, O.C.G.A. § 11-2-

10 Similarly, Hydro Systems’ insistence that “FAS has waived any argument that

the contract’s damages limitation precludes any of Hydro Systems’[] damages
claims” is baseless. (Doc. 32 at 5).
21

719(1)(a) provides for a general rule that a sales contract may limit the measure of
damages:
(a) The agreement may provide for remedies in
addition to or in substitution for those provided in
this article and may limit or alter the measure of
damages recoverable under this article, as by
limiting the buyer’s remedies to return of the
goods and repayment of the price or to repair and
replacement of nonconforming goods or parts
....
(emphasis added). This general rule has two exceptions. First, “[w]here
circumstances cause an exclusive or limited remedy to fail of its essential purpose,
remedy may be had as provided” under Article 2 without regard to the limited
remedy provision. O.C.G.A. § 11-2-719(2). Second, and relevant here,
“[c]onsequential damages may be limited or excluded unless the limitation or
exclusion is unconscionable.” O.C.G.A. § 11-2-719(3). Georgia law provides a
presumption that “[l]imitation of consequential damages for injury to the person
in the case of consumer goods is prima facie unconscionable but limitation of
damages where the loss is commercial is not.” Id.
The Proposal does not meet either exception to contractual exculpation.
Hydro Systems’ sole cursory argument that an exclusive “agreement to repair or
replace” fails of its essential purpose when there is a “refusal to remedy within a
reasonable time, or a lack of success in the attempts to remedy” relies on irrelevant

22

case law governing when a breach of warranty arises.11 (Doc. 32 at 9 n.4) (quoting
Space Leasing Assocs. v. Atlantic. Bldg. Sys., Inc., 241 S.E.2d 438, 441 (Ga. Ct. App.
1977)). As the Court will explain below, there is a fact dispute as to whether FAS’s
further performance under the Proposal’s warranty was excused. The possibility
of an excuse defense does not negate the essential purpose of the Proposal.
Moreover, Hydro Systems does not even attempt to argue that the
Proposal’s exculpatory clause is unconscionable. 12 It cannot seriously argue the
clause is procedurally unconscionable where it specifically negotiated that the
clause be reciprocal. (Doc. 1-1 at 11). And as the Supreme Court of Georgia has
explained with regard to substantive unconscionability, because the UCC
specifically provides for prima facie unconscionability in one circumstance, courts
should not presume a limitation of consequential damages in other circumstances
is substantively unconscionable. NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 (Ga.

Moreover, under the UCC, direct damages from a breach of warranty are
specifically delineated from incidental or consequential damages. O.C.G.A. § 112-714 (providing that “[i]n a proper case any incidental and consequential
damages under Code Section 11-2-715 may also be recovered [in addition to the
measure of damages for breach of warranty].”).
11

“[C]ourts have generally divided the relevant factors into procedural and
substantive elements. . . . Procedural unconscionability addresses the process of
making the contract, while substantive unconscionability looks to the contractual
terms themselves.” NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 (Ga. 1996) (citing
UCC–Unconscionability Warranty Disclaimer, 38 A.L.R.4th 25, §§ 2, 3(a)(b)).
12

23

1996) (“The Legislature could have provided that a limitation on consequential
property damages in the case of consumer goods is prima facie unconscionable, as
it did with consequential damages for personal injuries, but it chose not to do so.”).
Absent other evidence of substantive unconscionability, the Court must find that
the Proposal’s exculpatory clause is enforceable and applies to bar Hydro Systems’
claims for lost production, lost sales, wasted materials, increased labor costs, lost
time and productivity of Hydro Systems personnel; partial summary judgment as
requested by FAS is appropriate.13
II.

Hydro Systems’ Motion for Partial Summary Judgment
Hydro Systems’ motion for partial summary judgment seeks a

determination that FAS breached the Proposal as a matter of law, and non-liability
for FAS’s counterclaim (Doc. 30-1 at 1–2, 13). However, for the reasons that follow,
the Court finds material fact disputes preclude summary judgment as to each of
these issues.

13 The Court notes that FAS’s partial motion for summary judgment does not

appear to argue that the limitation of liability under the Proposal should bar direct
damages under other sections of Article 2. O.C.G.A. §§ 11-2-714(2), -608(3), 711(1);
712. The Court assumes these are issues for trial.
24

A.

Hydro Systems’ Claims of Breach for Failure to Deliver
Conforming Goods

Hydro Systems first claims breach of contract for failure to deliver
conforming goods. The Proposal included a basis section listing the following
items:
? Each robot cell will be capable of bathtub models with
maximum dimensions up to 36 inches wide by 72 inches
long. For larger tubs, FAS must evaluate robot reach
using the 3D models of each tub.
? As requested, our scope of work and pricing is based
on programming twelve unique tub models. For
reference, each of the three sizes within the Alamo family
will require its own robot program.
? The sanding process will use three sandpaper grits of
220, 400, and 1000.
? Gel coating will be manually applied after the sanding
process and before the polishing process. FAS has no
scope of work related to gel coat application.
? The polishing process will use two buffing
compounds.
? Hydro Systems will provide 3D models for every tub
to be programmed.
(Doc. 1-1 at 1). The scope of work summary excluded the following:
Tub locating fixtures are not currently included in the
scope of work/pricing. FAS will require 3D models of
each tub in order to quote the tub fixtures.
Parts introduced into each system must be consistent
with an “ideal” or nominal part. Parts that are out- ofrange will cause system faults and production stoppage.
25

These robot systems will process tubs to a more
consistent finish in less time than manual labor, but there
are no provisions for correcting issues from the molding
process or repair/rework process.
(Id.). These exclusions were clarified in Appendix A, Rev. 4:
• Gel coating not included within scope of work (“SOW”).
Is Hydro going to be performing gel coating?
Correct – Gel Coating is outside the scope of this
project.
....
• There are no provisions for correcting issues from the
molding process or repair/rework process. What
happens if there is an issue? Who is responsible for
remedying the issue and who is liable for the cost?
Quality issues from the molding or repair processes
cannot be overcome by the sanding robot. These types
of issues are outside our control and clearly not in our
scope of work. Repairs need to meet Hydro Systems’
quality standards before a tub is loading into the
sanding robot system.
(Id. at 10).
Hydro Systems contends that, setting aside any issue of delay, 14 FAS
materially breached the Proposal by failing to deliver conforming goods under the

14 Hydro Systems does not seek summary judgment on a delay theory. (Doc. 30-1

at 5 n.1) (“Although the parties disagree about the causes for FAS’s lengthy
production delay, this delay and its causes are not material to Hydro Systems’[]
claim here, as it is Hydro Systems’[] position that the robots still do not function
as promised, more than a year after the delayed delivery, and Hydro Systems is
not currently seeking a ruling that the delay itself breached the contract.”). Hydro
26

Proposal, i.e. robots that “process tubs to a more consistent finish in less time than
manual labor.” (Doc. 30-1 at 12). The problem with this argument is that it is
riddled with underlying fact questions.
First, “[n]onconformity is generally a question of fact for a jury.” Tuni Gap
Enters., LLC v. MarineMax E., Inc., No. 2:21-CV-20-RWS, 2022 WL 18459849, at *8
(N.D. Ga. Aug. 15, 2022) (citing Esquire Mobile Homes, Inc. v. Arrendale, 356 S.E.2d
250, 252 (Ga. Ct. App. 1987)). Mr. Pursley offered his testimony that Hydro
Systems’ Marketing Director Kenneth Steinhardt told him that “the sanding bot is
doing its job but the polishing bot is not,” but that in Mr. Pursley’s opinion “the
polishing robot delivered a consistent finish” such that FAS “fulfilled the
requirement of the Proposal.” (Pursley Aff. ¶¶ 53–54). Hydro Systems argues that
this affidavit is contradicted by the record, but that just creates a fact dispute.
Hydro Systems also argues that Mr. Pursley’s affidavit should not be accepted
because it is self-serving, but “an affidavit which satisfies Rule 56 of the Federal
Rules of Civil Procedure may create an issue of material fact and preclude
summary judgment even if it is self-serving and uncorroborated.” United States v.
Stein, 881 F.3d 853, 854 (11th Cir. 2018) (overruling cases to the contrary).

Systems also does not seek a ruling regarding the delay in programming. (Id. at 6
n.3).
27

Moreover, “where one party’s cooperation is necessary to the agreed
performance of the other but is not seasonably forthcoming, the other party in
addition to all other remedies . . . [i]s excused for any resulting delay in his own
performance.” O.C.G.A. § 11-2-311(3)(a); see also O.C.G.A. § 13-4-23 (“If the
nonperformance of a party to a contract is caused by the conduct of the opposite
party, such conduct shall excuse the other party from performance.”). FAS set
forth a number of arguments why Hydro Systems’ own actions led to any nonconformity, (Doc. 33 at 15–16), including applying gel coating before sanding
instead of “after the sanding process and before the polishing process,”15 and these
create a fact dispute as to whether FAS’s obligation to deliver conforming goods
or seasonably cure a defect was excused. Cf. Madden v. Nat’l Life Ins. Co., No.
219CV168FTM38MRM, 2019 WL 4140954, at *3 (M.D. Fla. Aug. 30, 2019) (“The
issue of Madden’s cooperation with National Life’s claims investigation is a factual
issue that is premature at the motion to dismiss stage and if Madden failed to
timely notify National Life of her disability, it could be that such a failure was
excused under the circumstances.”). Hydro Systems’ claims that FAS waived its

15 Hydro Systems argues that the contract’s reference to gel coat being applied after

sanding does not preclude the possibility that gel coat would also be applied
before sanding (Doc. 44 at 7, 12 n.3), but accepting this argument requires the
Court to view the evidence in the light most favorable to Hydro Systems which
the Court cannot do on summary judgment. See O.C.G.A. § 13-2-1 (“The
construction of a contract is a question of law for the court. Where any matter of
fact is involved, the jury should find the fact.”).
28

excuse defense or that the parties modified the Proposal to conform to the gel coat
by continuing to attempt to work with the gel coat, (Doc. 44 at 10–11), also raise
jury questions. Integrated Micro Sys., Inc. v. NEC Home Elecs. (USA), Inc., 329 S.E.2d
554, 559 (Ga. Ct. App. 1985).
Finally, even assuming that the robots do not conform to the Proposal, to
determine whether Hydro Systems may mount a claim for breach of contract for
failure to deliver conforming goods (as opposed to a breach of warranty, discussed
in the next section), the Court must answer a series of questions: First, whether
Hydro Systems accepted the robots;16 and if so, second, whether non-conformity
substantially impaired value and either (a) acceptance was made on the reasonable
assumption that any non-conformity would be seasonably cured or (b) if Hydro

16 It is unclear from the briefing, but it appears that Hydro Systems is arguing that

because FAS allegedly never delivered “conforming” goods, it never had to accept
or reject the robots and therefore may mount a claim for non-delivery without
regard to whether it either (a) rejected within a reasonable time after delivery, (b)
accepted on assumption of cure, or (c) may revoke acceptance for latent nonconformity. (Doc. 30-1 at 12) (“FAS has failed to perform its most basic obligation
under the contract. In the Proposal, FAS specified that it would provide robots that
could polish and sand tubs ‘to a more consistent finish in less time than manual
labor.’”). The Court does not interpret the UCC to provide this remedy. While
“[t]ender of delivery requires that the seller put and hold conforming goods at the
buyer’s disposition,” O.C.G.A. § 11-2-503(1), and “[t]ender of delivery is a
condition to the buyer’s duty to accept the goods,” O.C.G.A. § 11-2-507(1), the UCC
recognizes that an improper tender may be cured, O.C.G.A. § 11-2-507, or even
accepted, O.C.G.A. § 11-2-601. Because it is undisputed that FAS made some
delivery of goods under the Proposal, the proper analysis is to determine whether
rejection, acceptance, or revocation properly occurred.
29

Systems later discovered non-conformity, it notified the FAS of any breach within
a reasonable time after it was discovered or should have been discovered; and if
either or both are true, third, whether the non-conformity was not seasonably
cured and if applicable whether revocation of acceptance thereafter occurred
within a reasonable time. O.C.G.A. §§ 11-2-606 to -608, -714; see also O.C.G.A. §§
11-2-608(3) (timely revocation equivalent to rejection), -508(2) (seller may cure
rightly rejected tender after reasonable time in certain circumstances). All of these
questions are generally considered jury issues. Griffith v. Stovall Tire & Marine, Inc.,
329 S.E.2d 234, 236 (Ga. Ct. App. 1985) (“It is true that issues such as whether an
effective revocation of acceptance was made, whether reasonable notice of
revocation was given to the seller, and whether the value of the goods was
substantially impaired are ordinarily matters for determination by the trior of fact,
even where the buyer has continued to use nonconforming goods after an alleged
revocation of acceptance.”) (citing Trailmobile Div. of Pullman v. Jones, 164 S.E.2d
346 (Ga. Ct. App. 1968); Jacobs v. Metro Chrysler-Plymouth, 188 S.E.2d 250 (Ga. Ct.
App. 1972); Hub Motor Co. v. Zurawski, 278 S.E.2d 689 (Ga. Ct. App. 1981)); Tuni
Gap Enters., 2022 WL 18459849, at *10 (“To have rightfully revoked its acceptance,
[buyer] must have accepted the Boat either knowing of the nonconformity and
reasonably assuming that it would be cured or without knowing of the
nonconformity and accepting it because of the difficulty of discovering it . . . . [and]
30

what the buyer knew is ordinarily a question of fact for the jury.”) (citing Griffith,
329 S.E.2d at 236–37); Car Transp. Brokerage Co. v. Blue Bird Body Co., 322 F. App’x
891, 897 (11th Cir. 2009) (“Although the statutory opportunity to ‘seasonably cure’
does not entitle a seller to unlimited attempts to cure a defect, it does require a
buyer to provide a seller with a reasonable time in which to attempt to make
repairs. . . . What constitutes a reasonable time in which to cure depends on the
nature, purpose, and circumstances of a particular case.”) (citing O.C.G.A. § 11-1205(2), (3)). Accordingly, fact disputes preclude a determination that FAS breached
the Proposal by failing to deliver conforming goods.
B.

Hydro Systems’ Claims of Breach for Breach of Warranty

Hydro Systems makes similar arguments as to its claim for breach of
warranty. Georgia law provides the following with respect to express warranties:
(1) Express warranties by the seller are created as
follows:
(a) Any affirmation of fact or promise made by the
seller to the buyer which relates to the goods and
becomes part of the basis of the bargain creates an
express warranty that the goods shall conform to
the affirmation or promise.
(b) Any description of the goods which is made
part of the basis of the bargain creates an express
warranty that the goods shall conform to the
description.
....

31

O.C.G.A. § 11-2-313. “Warranties whether express or implied shall be construed
as consistent with each other and as cumulative, but if such construction is
unreasonable the intention of the parties shall determine which warranty is
dominant.” O.C.G.A. § 11-2-317.
A buyer who has accepted goods may nonetheless bring suit for breach of
warranty. O.C.G.A. § 11-2-714(2). “The measure of damages for breach of warranty
is the difference at the time and place of acceptance between the value of the goods
accepted and the value they would have had if they had been as warranted, unless
special circumstances show proximate damages of a different amount.” Id.
For the same reasons that the Court could not reach summary judgment as
to whether the robots were non-conforming goods, the Court cannot determine
whether the robots conformed to the description warranted in the Proposal. See
Horne v. Claude Ray Ford Sales, Inc., 290 S.E.2d 497, 499 (Ga. Ct. App. 1982)
(questions of breach of warranty are for jury). Similarly, the Court cannot
determine whether any duty to repair or replace set forth in the contract was
excused by Hydro Systems’ own conduct with respect to its manufacturing
processes and if that excuse was somehow waived or modified by continued
performance.

32

C.

FAS’s Counterclaims

FAS’s Counterclaim contains three counts: Count I for Breach of Contract
for “failing to pay FAS for the services rendered pursuant to the contract and
failing to perform material terms of the contract, including but not limited to, the
obligation to create reasonable final acceptance criteria for the project”; Count II
Breach of Covenant of Good Faith and Fair Dealing; and Count III for Quantum
Meruit as well as two counts for attorney’s fees. (Doc. 9 ¶¶ 39–54).
Hydro Systems seeks summary judgment on Count I and II on the grounds
of non-breach. (Doc. 30-1 at 19). It also points out that “there is no independent
cause of action for violation of the covenant [of good faith] apart from breach of
an express term of the contract.” (Id.) (quoting Morrell v. Wellstar Health Sys., Inc.,
633 S.E.2d 68, 72 (Ga. Ct. App. 2006)); see also Stuart Enters. Int’l, Inc. v. Peykan, Inc.,
555 S.E.2d 881, 884 (Ga. Ct. App. 2001) (“In contracts governed by the UCC, the
failure to act in good faith in performing a contract does not create an independent
cause of action.”).
On the question of non-payment, Hydro Systems raises two arguments.
First, that under the Proposal, the contractual milestones requiring payments were
never reached. (Doc. 30-1 at 21) (“The remaining balance on the contract price is
not outstanding because it never became due under the plain terms of contract,
which call for 10% of the purchase price within thirty days of the “[c]ompletion of
33

FAT at FAS,” and another 10% within thirty days of the “[c]ompletion of [s]tartup at Hydro Systems’ facility,” which was “not to exceed 30 days from
shipment.”). But whether and when FAT was completed or waived is a fact
dispute and whether Hydro Systems’ own failure to cooperate in providing
samples and conforming the gel coat to the Proposal excused completion of
performance at Hydro Systems’ facility are both fact disputes.
Also, as explained below FAS argues that Hydro Systems’ own breach in
failing to create final acceptance criteria excused the condition precedent of
completion of start-up at the facility. (Doc. 33 at 23) (citing Ga. 20 Props. LLC v.
Tanner, 564 S.E.2d 459, 462 (Ga. Ct. App. 2002) (“A party cannot avoid the
obligations of a contract by frustrating the performance of a condition
precedent.”); cf. also O.C.G.A. §§ 11-2-311(3) (providing for excuse for lack of
cooperation), -615 (“Delay in delivery or nondelivery in whole or in part by a seller
. . . is not a breach of his duty under a contract for sale if performance as agreed
has been made impracticable by the occurrence of a contingency the
nonoccurrence of which was a basic assumption on which the contract was made
. . . .”). Moreover, even if FAS could not maintain an action for the purchase price
on the grounds that the price has not “become[] due,” the seller can “nevertheless
be awarded damages for nonacceptance” after “the buyer has wrongfully rejected
or revoked acceptance.” O.C.G.A. § 11-2-709(1), (2) (citing O.C.G.A. § 11-2-708).
34

Here, whether Hydro Systems accepted the robots subject to seasonable cure
and/or properly revoked acceptance is an issue of fact as set forth above.
Similarly, Hydro Systems’ second argument, that payment of the purchase
price is excused when a seller fails to deliver conforming goods pursuant to
O.C.G.A. §§ 11-2-507(1), -508, is bound up in the question of whether it accepted
the robots subject to seasonable cure and/or properly revoked acceptance, as
“[t]he buyer must pay at the contract rate for any goods accepted.” O.C.G.A. § 112-607(1). Lastly, to the extent that Hydro Systems contends it is entitled to “deduct
all or any part of the damages resulting from any breach of the contract from any
part of the price still due under the same contract,” O.C.G.A. § 11-2-717, this too is
bound up in the fact disputes precluding its own breach claim. And Hydro
Systems is not entitled to summary judgment on damages, because at a minimum
there is a fact dispute as to whether FAS is entitled to the balance of the contract
as set forth above.
Lastly, Hydro Systems is entitled to summary judgment on Count III for
Quantum Meruit. In its Response Brief, FAS argues that it provided services not
contemplated by the Proposal. (Doc. 33 at 24). In a hybrid transaction
predominated by the sale of goods, the UCC “does not preclude application in
appropriate circumstances of other law to aspects of the transaction which do not
relate to the sale of goods.” O.C.G.A. § 11-2-102(2)(b). Moreover, “[u]nless
35

displaced by the particular provisions of this title, the principles of law and
equity. . . shall supplement its provisions.” O.C.G.A. § 11-1-103(b). Under Georgia
general contract law, the general rule is “no recovery may be had in quantum
meruit when a contract governs all claimed rights and responsibilities of the
parties,” but “a party to a contract who accepts valuable services in excess of those
contemplated in the contract may be liable to pay for such services if they are
necessary to complete the contract.” Bollers v. Noir Enters., Inc., 677 S.E.2d 338, 341–
42 (Ga. Ct. App. 2009) (citing Choate Constr. Co. v. Ideal Elec. Contractors, 541 S.E.2d
435 (Ga. Ct. App. 2000)).
However, Hydro Systems is correct that the Proposal already governs extra
work:
Onsite Startup
For both robot cells, FAS has included a total of 300 manhours of installation supervision and startup assistance
at Hydro Systems. All startup assistance is based on
work being performed on a continuous basis and during
normal Factory Automation Systems working hours
with one mobilization to the job site. Additional time or
mobilizations to the job site are available on an as
needed basis at Factory Automation Systems’ standard
hourly rates.
...
4) EXTRA WORK AND CHANGES IN SCOPE: All
changes to the basis of the proposal which affect
quantities, types or configuration of hardware or which
affect the engineering and design responsibilities or
other labor requirements are to be submitted in writing
36

to Factory Automation Systems for prior pricing and are
to be approved by the Purchaser in wiring before such
changes are incorporated into the order. Pricing of
changes shall be based on pricing in effect at the time of
the change.
(Doc. 1-1 at 5, 8). Thus, partial summary judgment on this claim is appropriate.
Conclusion
As the above opinion explains, this case involves a lot of moving parts (no
pun is intended). Trying this case to a jury will pose a number of complexities,
both in terms of demonstrating conformity to the Proposal and in navigating the
various UCC provisions at issue. The Court advises the parties to again attempt
mediation.
For the above reasons, it is
ORDERED that Defendant and Counterclaim Plaintiff’s Motion for Partial
Summary Judgment (Doc. 29) is GRANTED. It is
FURTHER ORDERED that Plaintiff and Counterclaim Defendant’s Motion
for Partial Summary Judgment (Doc. 30) is GRANTED IN PART as to Count III
of the Counterclaim and DENIED IN PART in all other respects. It is

37

FURTHER ORDERED that the Parties are DIRECTED to submit a
proposed consolidated pretrial order within 28 days of the date of entry of this
Order. If the parties intend to mediate this dispute, they may obtain a stay of this
deadline by contacting the Court’s courtroom deputy.
SO ORDERED this 10th day of March, 2025.

_
Victoria Marie Calvert
United States District Judge

38

_