Kron-CIS GmbH v. LS Industries, Inc.

Filing 161

MEMORANDUM AND ORDER: Defendant's 147 Motion for Partial Summary Judgment is moot in part, granted in part and denied in part. Plaintiff's 149 Motion for Partial Summary Judgment is granted in part and denied in part. See order for details. Signed by U.S. District Senior Judge Sam A. Crow on 12/9/14. (msb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
KRON-CIS GmbH,
Plaintiff
vs.

Case No. 12-1473-SAC

LS INDUSTRIES, INC.,
Defendants.
MEMORANDUM AND ORDER
The plaintiff aptly summarizes this case as a buyer’s “breach of
contract case [that] arises from the sale of an internal shot blaster system”
(“System”) manufactured by the defendant LS Industries, Inc. (“LS”) and
sold to Kron-CIS, GMBH, a German corporation, (“Kron”). (Dk. 150, p. 1).
Among the asserted contractual breaches, Kron alleges LS failed “to deliver
the internal shot blaster system in accordance with the schedule set forth in
the contract and in accordance with the contract’s specifications.” (Dk. 150,
pp. 1-2; Dk. 156, p. 1). Kron moves for partial summary judgment on its
claims for breach of contract in failure to deliver the System by the date
appearing in the written contract and for the remedy of revocation of
acceptance based on allegations of the System’s nonconformity having
substantially impaired the System’s value to Kron. (Dks. 149 and 150). LS
also has filed a motion for partial summary judgment against Kron’s claims

for punitive damages, for fraud and misrepresentation, and for any
damages. (Dks. 147 and 148).
Rule 56 authorizes a court to “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.” Fed. R. Civ. P. 56(a).
A fact is material if it would affect the outcome of a claim or defense under
the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). “[T]he dispute about a material fact is “genuine, . . ., if the
evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id. The essential inquiry is “whether the evidence
presents a sufficient disagreement to require submission to the jury or
whether the evidence is so one sided that one party must prevail as a matter
of law.” Anderson v. Liberty Lobby, 477 U.S. at 251-52. The summary
judgment movant bears the initial burden of pointing out those portions of
the record that show it entitled to judgment as a matter of law. Thomas v.
Wichita Coca–Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.1992), cert.
denied, 506 U.S. 1013 (1992). If the movant meets that burden, the nonmovant must come forward with specific facts based on admissible evidence
from which a rational fact finder could find in the non-movant's favor. Adler
v. Wal-Mart Stores, Inc., 144 F.3d 664, 671 (10th Cir. 1998).
The court regards the following facts to be uncontroverted for
purposes of these pending motions. In late July of 2010, LS and Kron
2

executed Contract 07-084 for Kron’s purchase of LS’s I.D. Pipe Blaster
System (“System”) for delivery to Russia. Kron is a German corporation
while Kronstadt Ltd. is a Russian corporation. They are sister companies
without a parent company. Kron was set up because foreign company
dealings with a European company are “easier and more convenient.” (Dk.
148-2, p. 42).
While LSI’s contract was with Kron, Kronstadt had an agreement
to sale a LSI-built blaster system to Lukoil. This latter agreement is dated
January 19, 2010, and it contains no purchase price, no description of the
specific equipment and no specifications. Lukoil later paid Kronstadt for the
System. Kronstadt as principal entered an agency agreement with Kron as
its agent dated January 4, 2010, which included the following provision:
Under this Agreement, the Agent accepts obligation to execute legal or
other actions under its own name but at expense of the Principal in
order to purchase goods for the Principal (further “Actions”) when the
Principal makes such requests. Under this Agreement the Agent is
responsible for each business deal that it makes with the third party,
in spite of the presence of Principal’s name in the deal, or if the
Principal gets into business relationship with the third party in order to
execute the deal.
(Dk. 156-12, p. 1). The defendant states it has received no translated
documents showing that Kronstadt paid for and was assigned the system
purchased by Kron. The plaintiff does not effectively controvert this
statement.
The Kron/LSI Contract 07-084 required the System to be
“available for delivery” F.O.B. in Wichita “no later than 14 weeks from date
3

of advance payment,” and it did not permit partial shipment. (Dk. 150-4, p.
1). The contract specified a penalty for delay in making the System available
for delivery. Id. at p. 2, § 4.7. In October of 2010, the parties added
Addendum 1 to Contract 07-084 which extended the System’s shipping date
to December 15, 2010. This addendum was worked out through emails
exchanged between the LS’s sales manager, Tim Ens, and the import
manager of Kronstadt Ltd., Miss Olga Chikova (“Chikova”), but the
addendum was signed by others for LS and Kron. (Dks. 148-7; 150-4, pp. 910).1 On December 13, 2010, the parties added a signed Addendum 2 which
extended the shipping date to December 30, 2010.
On December 23, 2010, Tim Ens for LS emailed Chikova that the
shipping date would need to be pushed back to January 21, 2011, due to
vendor problems in providing a hydraulic unit. Chikova emailed back on
December 28, 2010:
We understand that this is not your personal or your company’s fault,
but the situation is getting worse day by day.
We were astonished by the dates you wrote to us last week, as that
very morning we had assured LUKOIL that the blaster should be
delivered two months later than agreed. As far as Russian Supply
Contracts are very strict, and this week we have already delayed the
delivery of your machine to the customer’s facility, we have been
consequently notified that we will be charged a penalty starting from
this morning and till the date of delivery.
....
As far as the Contract is signed by our representative office in
Germany, further correspondence related to Contract details and
Penalties will be probably held by Kron-CIS GmbH, i.e. Leola Kilt (or
Irina Sondermann) with me (or our Financial Manager) in copy.
1

Chikova is employed by Kronstadt but not Kron.
4

Anyway we need to receive from you some kind of ‘Progress report’
twice a week (eg. Mon & Wed) until the blaster is shipped on a vessel
and once a week until the blaster reaches Saint-Petersburg for us to
have precise information in time and to be able to inform the customer
and avoid serious conflicts in case any problems arise.
....
Please confirm new dates according to your new delay . . . .
(Dk. 155-14, p. 2). Ens’s email reply addressed these questions and
demands and established dates for testing, sending the testing video, date
of packing, date of dispatch, and date of shipment from New York. (Dk. 14817). Ens also emailed progress reports with photographs on January 3 and
6, but he received no responses to them. Ens telephoned and learned that a
Russian holiday extended through January 11.
On January 13, 2011, Mr. Gluzman with Lukoil called LSI about
the delay and asked for an email explaining the situation. Ens sent an email
addressing the delay and the current timeline. (Dk. 155-17). In response to
Chikova’s email that requested sending a suggested written letter from LSI
to Lukoil addressing the delay, LSI’s President and General Manager, Linda
Weir-Energen, sent a letter to Mr. Gluzman, Director of Material,
Procurement, and Supply for Lukoil. (Dk. 155-18).
Assembly of the System was completed on January 13, 2011,
and the testing was completed over the next three days. There is a question
of material fact over whether the testing established that the System was
capable of cleaning pipes at the rate specified in the contract. LSI made a
video of the final run-off in testing and emailed a link to this video on
5

January 16, 2011, with a request for immediate approval. (Dk. 148-12). On
January 17, 2011, Chikova replied by email saying the customer had
approved and requesting LSI to “continue with painting and packing.” (Dk.
148-13). After the testing was completed, the System’s lance was cut in two
for shipment. On January 19 and 20, 2011, the System was loaded into
three containers and shipped from LSI. Addendum 2 changed “delivery
terms into CIF Saint-Petersburg, Russia (Incoterms 2000).” (Dk. 150-4, p.
10).
On January 14, 2011, Ens for LSI sent an email to confirm that a
Spanish translator would be available for the technician being sent to
Langepas, Russia, for the System’s installation. LSI chose Rafael Villa Pezzat
to be the technician, and Pezzat spoke only Spanish and could not speak or
read English or Russian. Ens emailed Chikova on January 17, 2011, the
following representation:
Rafael Villa Pezzat understands limited English but for him that is not a
problem. He worked for LS installing machines in Israel, UAE,
Kazakhstan and a similar machine in Poland in the past ten years. He
has 45 years of experience in the field installing machines. He knows
machine operation very well.
(Dk. 148-20, p. 2). Pezzat traveled to the manufacturing site of the System
and spent a couple days reviewing its operation. He was provided the
Systems’ operation and maintenance manuals in English and Russian when
he left Wichita. Pezzat translated the English manuals into Spanish using
Google. On March 28, 2011, Chikova emailed Ens requesting Pezzat’s
6

telephone number, because she wanted to speak with Pezzat to determine
his English language capacity and/or consider using one of their technicians
who spoke Spanish.
A certificate of insurance was purchased for the shipment from
New York to Saint Petersburg. It provided that losses were payable to LSI.
(Dk. 148-22, p. 4). A copy of this certificate was sent to Chikova on March 2,
2011, in response to her email that said, “The blaster was sent on CIF SaintPetersburg, i.e. with insurance. Please send us the copy of insurance policy,
we are obliged to show it to customs at the arrival of the vessel (March, 9).”
(Dk. 148-22, p. 3).
Chikova sent an email on April 12, 2011, stating that the shipped
System had arrived in Saint Petersburg port on April 9 and that they were
waiting for customs to provide clearance. (Dk. 155-19, p. 2). On or about
April 18 or 19, 2011, the containers cleared customs, and notification was
given Artur Nekrasov, a Logistics Manager for Kronstadt, Ltd. In performance
of his duties to receive containers on behalf of Kron, Nekrasov opened the
containers and took photographs of the damage he saw.2 The photographs
were sent to Chikova sometime later. The System was then loaded onto
several trucks and transported to its final destination at Langepas, Russia. It
arrived on April 25, 2011, and the System was unloaded by Lukoil
employees.
What the defendant cites from Chikova’s deposition testimony does not
controvert that Nekrasov observed damage and he took photographs of it.

2

7

On April 29, 2011, Chikova arrived in Langepas and took more
photographs of the System to document the damage occurring during
transportation. When she returned to Saint-Petersburg on May 4, 2011,
Chikova sent the photographs she had taken and those taken by Nekrasov
to LSI’s sales representative, Tim Ens. There is a question of material fact
over whether the damage shown in Nekrasov’s earlier photographs is the
same as the damage seen later in Langepas, Russia. Chikova’s email was
the first indication to LSI that the System had been damaged in transit. LSI’s
email response to Chikova stated that the apparent damage should not
prevent the System from operating and that parts would be sent for
repairing the lance. Chikova testified that Kron could not file a claim against
the insurance and did not file a claim after LSI said the damages would not
affect the System. (Dk. 148-2, pp. 243-44). During the relevant time period,
LSI did not notify the insurer’s agent of the transportation damage done to
the System.
On May 11, 2011, Pezzat arrived in Langepas to complete
installation and set up the System. He observed that the System had not
been installed and that there was more damage done to it than he had been
told. After Pezzat informed LSI of this additional damage, LSI chose not to
file an insurance claim. Though he did not see anyone actually damage the
System, Pezzat opines that the Lukoil employees damaged the lance table in
moving it. Of the seven days he spent in Langepas, Pezzat estimates four
8

days were spent repairing the System. When he left Langepas, Pezzat knew
there were three things that still needed to be addressed: (1) additional
software so the System could operate in the automatic mode; (2) some hose
connections; and (3) a chain tensioner. Kronstadt did not assist Pezzat in
efforts to obtain renewal of his work visa, and there is a factual dispute over
its reasons for doing so.
In late May or early June of 2011, on LSI’s recommendation,
Kron hired Tommy Austin (“Austin”) of Austin & Mazzei Service, Inc. to fix
the tensioner, hose connections and program on the System. When Austin
arrived, he started the machine and nothing worked, as the program was
gone from the System. He downloaded the program from his computer and
tested the System. Austin identified problems with flexing of a sheet metal
chute and the alignment and design of the lance assembly. He also
discussed the addition of protective guards in case a hose failed. After
testing the System first in the manual mode, Austin changed to the
automatic mode and observed problems with hoses getting caught and
pulling loose, lance problems, and timing issues. Austin also observed later
capacity problems with the elevator assembly and dust collector as the
production rate increased. When Austin left on June 23, 2011, the System
still had issues with the lance assembly, hoses, air pressure, and the
elevator assembly. Austin spent some time in St. Petersburg identifying

9

what additional parts were needed to address these issues and to meet the
specifications requested by Lukoil.
Three weeks later, Austin returned to Langepas to complete his
work as Chikova informed him that all of his parts had arrived. When he got
there, he discovered that not all of the needed parts had arrived and that
the dust collector had been removed making it inoperable. Austin estimated
that upon receipt of all the requested parts, he would need three weeks to
get the System fully operational, tested, and adjusted. Without all the parts,
Austin indicated the System would not operate automatically at the rates
requested by Lukoil. He installed the parts that did arrive, reinstalled the old
dust collector, and tested the System in the manual mode. While Austin was
testing it an air hose disconnected, Chikova then informed Austin to stop his
work and indicated the System would not be part of this facility. Chikova
avers that “Lukoil informed Kron that it was cancelling its contract with Kron
due to the damage, delay and anticipated cost that it would take to get the
shot blaster operational.” (Dk. 150-7, ¶ 54).3 Austin returned to the United
States without completing his work and sent Kron a final typewritten report.
In the report, Austin concludes that his modifications “had some success”
but that there were still “issues with the lance feed hose getting caught” and
then the hose “pulled loose from hose fitting causing shot to fly all over
production area.” (Dk. 150-15, p. 2). Chikova avers that the System never
The defendant has not effectively controverted this statement. (Dk. 155, p.
7).
3

10

operated at the contract-specified rate of 9 pipes cleaned per hour. The
defendant cites the testimony of Pezzat and Austin that the System was
operational in the automatic mode, but their cited testimony does not
address whether the System performed at the rate stated in the contract.
In a letter dated July 9, 2012, attorneys for Kron formally
notified LSI of its failure to provide a System “in accordance with the
contractual agreement. (Dk. 160-4, p. 1). Kron, however, did not assert a
claim or demand for rescission until its amended complaint filed on
November 19, 2013, almost eleven months after filing suit.
LS’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Punitive Damages for Breach of Contract
The defendant’s motion opens with a challenge that the plaintiff
may not recover punitive damages on a claim alleging no more than a
breach of contract without an independent tort. The plaintiff concedes this
legal proposition and maintains its claim for punitive damages is limited to
tortious allegations of fraud and misrepresentations of fact. The court
accepts the plaintiff’s representations that it is not pursuing a punitive
damage claim “in connection with its breach of contract claims” and that
such a claim rests on the “independent tort of fraud and misrepresentation.”
(Dk. 156, p. 14). The court considers this issue moot in light of the plaintiff’s
representation.
Kansas Law Governing Fraudulent Misrepresentations
11

Whether fraud exists is generally a question of fact, and the
elements making up an “action for fraud include an untrue statement of fact,
known to be untrue by the party making it, made with the intent to deceive
or with reckless disregard for the truth, upon which another party justifiably
relies and acts to his or her detriment.” Bank of America, N.A. v. Narula, 46
Kan. App. 2d 142, 158-59, 261 P.3d 898 (2011) (internal quotation marks
and citation omitted).
Fraudulent Misrepresentation as to System’s Functioning and Testing
The defendant next seeks summary judgment arguing the
plaintiff lacks the evidence that the defendant committed fraud in
representing that the System was “well functioning, well fabricated and well
tested” (Pretrial Order, Dk. 135, p. 7). The defendant maintains this
representation was true in that the System, when shipped, met all three
qualities because it was built to specification and had been tested properly.
Since the plaintiff chose not to send a representative to observe the
System’s testing, the defendant concludes the plaintiff has no evidence to
show otherwise.
The plaintiff counters that LS’s limited testing of the System did
not confirm the System would perform at the contract-specified rate and
that LS’s video of the testing falsely represented the System as meeting the
contract’s specifications on the pipe-cleaning rate. The plaintiff also points to
the defendant’s design of a 40’ lance which after testing had to be cut into
12

two pieces for shipping. Finally, the plaintiff cites Austin’s report as
identifying design deficiencies with the System that were not exposed in the
limited testing and that kept it from operating at the desired rates.
The deposition testimony and affidavit cited by the defendant do
not establish as a matter of uncontroverted fact that the System as tested
and shipped was capable of performing at the pipe-cleaning rate and for the
operational hours specified in the contract. Thus, the defendant is not
entitled to summary judgment based on the argument that its
representations were truthful. In its reply brief, the defendant argues for the
first time the lack of evidence regarding fraudulent intent. Arguments raised
for the first time in a reply brief are waived and will not be considered.
Water-Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1159 n.8 (10th Cir.
2013).
Fraudulent Misrepresentation on Shipping
The defendant argues that it made no misrepresentations
regarding shipping and that its representations are not fraudulent in nature.
Two of the shipping delays were the subject of contractual addendums, and
the third delay was due to a vendor issue. The defendant contends “there
was no representation at the time of the contract was entered into which
was false or intended to mislead Kron-CIS in any way, and there has been
no showing of any fraudulent intent on the part of Defendant.” (Dk. 148, p.
13). The plaintiff does not respond to these arguments and does not point to
13

any genuine issues of material fact that would preclude summary judgment
on this argument. The court grants defendant’s motion as uncontested on
this claim.
Fraudulent Misrepresentation on Competent and Qualified Tech
The defendant argues that it identified and discussed at length
Mr. Pezzat, his language limitations, and his experience in installing LS
equipment, including a similar machine, in other foreign countries. Because
of these disclosures and because the plaintiff said it had a local technician
who spoke Spanish, the defendant denies that it failed to disclose or
misrepresented any material fact and also denies that the plaintiff relied on
any purported misrepresentation. The plaintiff’s response does not generate
any controverted issues of material fact as to prevent summary judgment on
this issue.
That Mr. Pezzat was not an in-house technician, that he had not
witnessed the manufacturing of the System, that he did not have a Spanish
version of the System manual, and that LS chose him for this project
because, in part, of a relationship with one of its engineers are not facts
which show a fraudulent representation here. Even Kron’s negative opinion
about Mr. Pezzat’s general knowledge and performance does not evidence a
specific fraudulent representation about Mr. Pezzat’s experience and
qualifications. The plaintiff’s evidence fails to show that Mr. Pezzat’s
performance was so lacking as to demonstrate that the defendant
14

fraudulently represented his basic qualifications or competence in installing
machinery of this kind. The defendant is entitled to summary judgment on
this fraud claim.
Fraudulent Misrepresentation on Shipping Insurance Contract
The pretrial order lays out the plaintiff’s theory on this claim to
be the fraudulent misrepresentation “that LS would take the necessary steps
to maintain a contract of insurance from Wichita to St. Petersburg.” (Dk.
135, pp. 7-8). The defendant argues it is entitled to summary judgment
because a contract of insurance was acquired consistent with the contractual
shipping terms of “CIF-St. Petersburg” and a copy of this insurance was
provided to the plaintiff while the System was being shipped. The defendant
asserts any failure to collect on this insurance was due to the plaintiff not
following through in pursuing a claim.
In response, the plaintiff does not dispute that there was an
insurance contract issued consistent with the contract but now alleges that it
was relying on the defendant to file a claim with the insurance carrier and
points to the defendant as the named certificate holder on the insurance.
The defendant replies that a fraud claim based on failure to file an insurance
claim is new to the case and not included as a theory in the pretrial order.
The court agrees that the plaintiff has not alleged and preserved such a
claim in the pretrial order. The defendant is entitled to summary judgment
on this claim.
15

Real Party in Interest and Damages
The defendant contends that Kron, as purchaser of the System
from LS, has failed to show its sale or transfer of the System to Kronstadt.
The defendant says it has not received in discovery from the plaintiff any
translated documents showing such a sale, transfer or reimbursement
between Kron and Kronstadt. The plaintiff acknowledges having received a
copy of a contract between Kronstadt and Lukoil dated January 19, 2010,
which lacks specifics on the price and product. As far as proof of damages,
LS has received evidence of Kronstadt making a repayment to Lukoil that is
tied to “certain invoices including a collateral agreement which is not
included in the translated documents, a specification that is not included in
the translated documents, or copies of the invoices.” (Dk. 148, p. 18). LS
says it has not received, however, proof that the repayment was charged
back to the plaintiff Kron. Because Kron and Kronstadt are separate legal
entities and because tort claims cannot be assigned, any tort claims
belonging to Kronstadt cannot be assigned to the plaintiff Kron.
Furthermore, the defendant says it has no evidence that Kronstadt assigned
its breach of contract claims to Kron. The plaintiff contends these gaps in the
translated documentary evidence produced during discovery keep the
plaintiff Kron from proving it has been damaged. The defendant concludes:
Plaintiff has now produced a body of 35 documents translated
from Russian or German to English. (See, Exhibit B). Although the
body of exhibits to be relied upon by Plaintiff could have included a
variety of administrative proceedings in which Lukoil presented their
16

various complaints to Kronstadt, Kronstadt and Plaintiff have chosen
not to produce any of these documents in certified translation.
Instead, Plaintiff has produced a translated version of PL0001435
which is the demand for payment of 2,600,000 rubles in delay
damages; the contract between Lukoil and Kronstadt which purports to
be the controlling contract between these companies in Exhibit B at
pp. PL001441-PL001449, and various shipping documents. None of
these documents establish any basis for Kronstadt paying damages to
Lukoil or charging any part of its controversy with Lukoil back to KronCIS.
(Dk. 148, p. 19). In response, Kron counters that it is the real party in
interest as the party to the contract who paid LS and as the entity to whom
LS made the false representations. In reply, the LS acknowledges Kron’s
legal position as the real party in interest, but renews an argument that Kron
cannot prove it suffered any damages.
The court will not grant LS’s motion on this issue. The record
does not show that Kron is bringing any assigned tort claims or that it is
bringing any breach of contract claims other than as the purchaser of the
System and as party to the contract. As for its other challenge to the
plaintiff’s proof of damages, LS’s motion fails to carry the initial burden of
pointing out those portions of the record that show it is entitled to judgment
as a matter of law on this point. LS’s motion does not articulate a statement
of facts to support this burden and does not cite portions of the record that
would sustain this burden. At best, LS’s motion does no more than show that
translated documents evidencing a sale, transfer or reimbursement between
Kron and Kronstadt have not been produced in discovery. LS’s motion fails

17

to demonstrate that this proposition necessarily means the plaintiff cannot
prove it suffered damages for any of its claims.
KRON’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Breach of Contract for Failure to Ship on or Before December 30, 2010
As set forth in the pretrial order, Kron claims that LS breached
their “contract when it failed to manufacture and ship the shot blaster to
Kron on the date specified in the contract.” (Dk. 135, p. 7). LS’s stated
position in the pretrial order is to deny it breached the contract. Id. at 9. The
choice of law provision in the parties’ written contract looks to Kansas law,
(Dk. 148-4, p. 5), and both sides cite Kansas law respectively. The elements
of a breach of contract claim in Kansas are: “(1) the existence of a contract
between the parties; (2) sufficient consideration to support the contract; (3)
the plaintiff’s performance or willingness to perform in compliance with the
contract; (4) the defendant’s breach of the contract; and (5) damages to the
plaintiff caused by the breach.” Stechschulte v. Jennings, 297 Kan. 2, 23,
298 P.3d 1083 (2013) (citations omitted).
Addendum 2 to the parties’ written contract extended the
shipping date to December 30, 2010, and there were no other written
addendums that extended this date. It is also uncontroverted that the
System did not ship until January 19 and 20, 2011. Kron highlights this
provision in their contract, “If Products have not been made available for
delivery to the Buyers and/or failure to supply part of Products, the Sellers
18

shall pay to the Buyers a penalty at the rate of .2% of TCP for every day of
delay but in no event shall the total of all such penalties exceed 10% of
TCP.” (Dk. 148-4, p. 3). The plaintiff seeks summary judgment on this claim.
In response, LS argues the plaintiff’s motion “ignores
communications between the parties” over a shipping date change due to a
vendor problem. (Dk. 155, p. 18). As discussed above, LS exchanged emails
explaining why the shipping date needed to be pushed back to January 21,
2011, and LS confirmed the new shipping date for the plaintiff’s
representatives. LS highlights Chikova’s email of January 17, 2011, that
replied to LS’s email which had sent a link to the video testing of the System
and had asked for “approval ASAP.” (Dk. 148-12). Chikova’s reply said the
customer had approved and requested LSI to “continue with painting and
packing.” (Dk. 148-13). LS insists this means that the “delay was approved.”
(Dk. 155, p. 18). LS also argues that the plaintiff failed to reject the system
for improper delivery and concludes that the plaintiff “is not entitled to
summary judgment for breach of contract based on improper delivery.” (Dk.
155, p. 19).
In reply, the plaintiff looks to their written contract which
provides at section 11.2:
With regard to the rights and obligations of the parties the present
written Contract with Appendix 1 shall prevail. Possible contradictory
statements, undertakings and the like of former correspondence,
offers etc. are irrelevant. Any amendment of and supplement to the
present CONTRACT 07-084 and/or Appendix 1, or specifications
19

thereof must again be made in writing by authorized representatives
of each party in order to be valid.
(Dk. 148-4, p. 6). The plaintiff denies that the emails exchanged between
Ens and Chikova evidences any written amendment to extend the shipping
date or to modify other terms of their written agreement. Besides not being
authorized representatives, Ens and Chikova did not send emails that
indicated an amendment of any term to Addendum 2. Instead, Chikova’s
email expressly reserved:
As far as the Contract is signed by our representative office in
Germany, further correspondence related to Contract details and
Penalties will be probably held by Kron-CIS GmbH, i.e. Leola Kilt (or
Irina Sondermann) with me (or our Financial Manager) in copy.
Anyway we need to receive from you some kind of ‘Progress report’
twice a week (eg. Mon & Wed) until the blaster is shipped on a vessel
and once a week until the blaster reaches Saint-Petersburg for us to
have precise information in time and to be able to inform the customer
and avoid serious conflicts in case any problems arise.
(Dk. 155-14, p. 2). The plaintiff notes that the defendant has not offered
any documentary evidence of a written amendment extending the shipping
date or modifying the agreement’s terms.
The plaintiff has carried its summary judgment burden on its
breach of contract claim that the defendant failed to ship the System by
December 30, 2011, as required by Addendum 2, and that the defendant is
liable under § 4.7 of their agreement. The defendant’s response does not
create any genuine issues of material fact for a written amendment
extending the shipping date and does not advance any legal arguments to
preclude its liability for failure to make the System available for delivery
20

pursuant to the written agreement. Because the plaintiff did not present a
statement of uncontroverted fact on the amount owed under this provision,
the court’s ruling on this remedy is not final in that respect.
Revocation of Acceptance Remedy
In seeking this remedy, Kron argues that the System’s
nonconformity to Kron’s needs and circumstances at the time of the
purchase substantially impaired its value to Kron and that Kron accepted the
System either believing the System would be remedied promptly or not
discovering the extent of the System’s nonconformity. Specifically, when the
first technician, Mr. Pezzat, left Russia in May, Kron alleges it believed the
System needed to have software installed to operate in automatic mode and
to have problems with hose connections and chain tensioner resolved. The
arrival of the second technician, Mr. Austin, however, revealed additional
problems with a flexing metal chute, the lance assembly, piping, hose
connections coming loose. Kron contends these circumstances and the
uncontroverted opinions of the technicians establish that System was
nonconforming, that the nonconformity “substantially impaired its value to
Kron, and that Kron was unaware of the nonconformities until after the
repairs to the machine had been made, and after Austin’s arrival with the
necessary software program to test the machine in automatic mode.” (Dk.
150, p. 19). The plaintiff also contends it gave timely notice of the System’s

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nonconformity and “ultimately revoked its purchase, at the latest upon the
filing of this lawsuit.” Id.
The defendant denies that the System had any functioning value
to Kron but only to the final end-user, Lukoil, who is not a party to the
action. The defendant maintains that the plaintiff first attempted to revoke
its acceptance of the System with the filing of its first amended complaint on
November 19, 2013, over two years after delivery of the System. The
defendant denies that it received notice of the Kron’s revocation of
acceptance “within a reasonable time after” Kron’s alleged discovery of the
grounds for revoking. See K.S.A. 84-2-608(2). The defendant argues the
questions whether Kron ever revoked acceptance and whether the alleged
revocation was timely remain material questions of fact to be decided by the
trier of fact. Finally, the defendant contends that the System did conform to
the contract’s specifications but that the additional problems noted by Austin
came from Lukoil requesting modifications so the System would operate
faster than contract specifications.
On its face, the plaintiff’s summary judgment request on this
remedy is riddled with genuine issues of material fact. Most notably are if
and when the plaintiff revoked its acceptance and whether the revocation
occurred within a reasonable time. The court is unable to find in the
plaintiff’s motion an uncontroverted fact establishing that the plaintiff
notified the defendant of its revocation prior to filing the first amended
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complaint. A revocation of acceptance is “not effective until the buyer
notifies the seller of it.” K.S.A. § 84-2-608(2). A buyer’s notification of a
breach is one thing, but the buyer also must notify the seller “that it was
revoking acceptance and canceling the contract, and the comments to
section 84-2-608 indicate that mere notice of a breach under the preceding
section is generally not sufficient to effect revocation of acceptance.”
Genesis Health Clubs, Inc. v. LED Solar & Light Co., 2014 WL 2095170 at *2
(D. Kan. May 20, 2014) (citations omitted). For that matter, the plaintiff is in
no position to demonstrate as a matter of law that its revocation occurred
within a reasonable time after discovering the ground for revocation. This
question of timeliness or reasonableness is a question of fact to be decided
by the jury in consideration of the facts and circumstances here. Scotwood
Industries, Inc. v. Frank Miller & Sons, Inc., 435 F. Supp. 2d 1160, 1168-69
(D. Kan. 2006) (and cases cited therein). The plaintiff’s motion is denied on
this claim.
IT IS THEREFORE ORDERED that the defendant LS’s motion for
partial summary judgment (Dk. 147) is moot concerning any possible claim
by Kron for punitive damages for breach of contract; is granted on Kron’s
fraud and misrepresentation claims regarding shipping by the deadlines
provided in the contract, supplying a competently trained and qualified
technician, and maintaining a contract of insurance during shipment from
Wichita to St. Petersburg; is denied on the plaintiff’s claim for fraud and
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misrepresentation that the System would be well functioning, well fabricated
and well tested; and is denied as to the LS’s arguments related arguments
on real party in interest and damages;
IT IS FURTHER ORDERED that the plaintiff Kron’s motion for
partial summary judgment (Dk. 149) is granted on its breach of contract
claim for the defendant LS’s failure to deliver the System by the date
appearing in the written contract and the defendant’s liability under § 4.7 of
the written contract, but it is denied as to plaintiff’s claim for revocation of
acceptance.
Dated this 9th day of December, 2014, Topeka, Kansas.

s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge

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