Zurich American Insurance Company v. Mack Industries, Inc.

Filing 35

OPINION AND ORDER GRANTING PLAINTIFFS MOTION FOR RECONSIDERATION 33 . Signed by District Judge Gershwin A. Drain. (TBan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

ZURICH AMERICAN INSURANCE
COMPANY as subrogee of WALTER
TOEBE CONSTRUCTION COMPANY,
Case No. 14-cv-14244
Plaintiff,
UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN

v.
MACK INDUSTRIES, INC.,

UNITED STATES MAGISTRATE JUDGE
MONA K. MAJZOUB

Defendant.
/
OPINION AND ORDER GRANTING PLAINTIFF’S MOTION FOR RECONSIDERATION
[33]
I. INTRODUCTION
Zurich American Insurance Company (“Plaintiff”) commenced this action
against Mack Industries, Inc. (“Defendant”) in the Circuit Court for the County of
Livingston. See Dkt. No. 1 (Exhibit A). On November 4, 2014, the action was
removed to Federal Court. Id. On September 18, 2015, the Defendant moved for
summary judgment. See Dkt. No. 21. This Court granted summary judgment to the
Defendant on December 8, 2015. See Dkt. No. 31.

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Presently before the Court is Plaintiff’s Motion for Reconsideration. See
Dkt. No. 33. For the reasons discussed below, the Motion for Reconsideration is
GRANTED.
II. BACKGROUND
Plaintiff originally filed the instant action against Defendant claiming to
enforce an indemnification clause in a Purchase Order (“PO”). See Dkt. No. 1
(Exhibit A, pp. 2–5). Defendant moved for summary judgment on the basis that the
claim was barred by the statute of frauds and that there was no enforceable contract
between the parties. See Dkt. No. 21. At oral argument, the Defendant admitted to
the Court that the parties had formed an oral contract before the PO was ever sent.
Transcript of Oral Argument at 4–5. The Court granted summary judgment on the
grounds that an enforceable oral contract had been formed, rendering the PO a
mere confirmation of the agreement, and any additional terms, including the
indemnification provision, unenforceable. See Dkt. No. 31.
III. LAW AND ANALYSIS
Motions for Reconsideration are governed by Local Rule 7.1(g)(3) of the
Local Rules of the United States District Court for the Eastern District of
Michigan, which provides:
[M]otions for rehearing or reconsideration which merely present the
same issues ruled upon by the court, either expressly or by reasonable
implication, shall not be granted. The movant shall not only
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demonstrate a palpable defect by which the court and the parties have
been misled but also show that a different disposition of the case must
result from a correction thereof.
E.D. Mich. L.R. 7.1(g)(3). “A ‘palpable defect’ is ‘a defect that is obvious, clear,
unmistakable, manifest, or plain.’” United States v. Lockett, 328 F. Supp. 2d 682,
684 (E.D. Mich. 2004) (quoting United States v. Cican, 156 F. Supp. 2d 661, 668
(E.D. Mich. 2001)).
Upon a careful review of the record, Plaintiff has demonstrated a palpable
defect within the Court’s Order. Plaintiff chiefly argues that the Court was misled
by the Defendant’s concession of an oral contract at oral argument, and because
the issue was not raised by the Defendant’s Motion for Summary Judgment, the
Plaintiff did not have an adequate chance to respond.
Parties are generally expected to set forth all their arguments in support of
summary judgment in a single dispositive motion; piecemeal litigation at the
summary-judgment stage is disfavored. McKay v. Federspiel, No. 14-cv-10252,
2015 WL 163563, at *3 (E.D. Mich. Jan. 13, 2015); see also Fed. R. Civ. P. 56(a).
Defendant did not address the issue of an oral contract in its original motion.
See Dkt. No. 21. Defendant only argued that the claim was barred by the statute of
frauds and that there was no enforceable contract. See id.
Despite this fact, at oral argument Defendant conceded, for the first time,
that an oral contract had been formed. See Transcript of Oral Argument at 4–5

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(“We’re not disputing that there is a contract or an agreement as it relates to the
price and the quantity and that we delivered it. I mean, we can’t argue that . . .
there was discussions only about price and material and some delivery time with a
‘go ahead get started.’ That was what the contract or the agreement was.”). At this
point, the matter had already been fully briefed. Plaintiff had not briefed this
specific issue.
As noted by the Plaintiff, the Court was left wanting for more facts in its
Opinion. See Dkt. No. 31 at 6–7 (Pg. ID No. 279–80) (“The parties have not given
much in the way of facts regarding the depth of these conversations in their
briefs.”); see also id. at 7 (Pg. ID No. 280) (“Here, once again, the parties don’t
provide much in the way of facts with regard to events prior to the [Purchase
Order] being sent in May of 2009.”). The Court concluded there was an oral
contract because the parties agreed to material terms and work began before any
written contract was sent to the Defendant. Id. (“Mack’s commencement of work
was done in reliance on the communication with Toebe, and thus Mack accepted
the oral contract.”).
However, having had an opportunity to brief the issue more fully, Plaintiff
argues that “the discussions held before the Purchase Order occured during the bid
process for the Michigan Department of Transportation construction project,” and
“any prior discussions discussions between the parties were understood to be part

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of the bid process, and not binding on the parties until the Prime Contract was
issued by the MDOT.” Dkt. No. 33 at 25 (Pg. ID No. 308). In other words, Plaintiff
argues that the parties understood, despite reaching agreement on some important
terms, that there was no contract.
The Court originally relied on the deposition testimony of Jeffrey Stover in
its conclusion that a contract had been formed. See Dkt. No. 31 at 6 (Pg. ID No.
279). However, Plaintiff provides testimony from Jeffrey Stover that cuts against
this conclusion:
Q. When you were discussing terms of the quote with representative
of Mack Industries, was a final agreement reached, a final
agreement that would take the place of a purchase order?
A. Absolutely not.
Q. Okay. What was the final agreement that was reached with regard
to the purchase of panels from Mack Industries?
A. The terms of our purchase order that we sent them.
Dkt. No. 33 at 19–20 (Pg. ID No. 302–03) (citing Dep. Stover, P. 68, L. 2–10).
This excerpt was not included in the original pleadings.
Plaintiff further argues that in the construction industry, an oral contract
does not arise “every time a contractor and subcontractor merely come to some
understanding on esential terms.” Dkt. No. 33 at 29 (Pg. ID No. 312). The
testimony of a witness, Bill Deacon, evidences this custom. Id. at 27 (Pg. ID No.
310).
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Whether Plaintiff’s assertions are true is not for this Court to decide.
Regardless, Plaintiff’s arguments do present an issue of material fact regarding the
formation of the contract that, if originally argued, would have resulted in a
different disposition of Defendant’s Motion for Summary Judgment. The only
reason why they were not argued was because Plaintiff was not provided notice of
Defendant’s belief that an oral contract existed. Accordingly, the motion will be
granted.
IV. CONCLUSION
For the reasons state above,
IT IS ORDERED that the Plaintiff’s Motion for Reconsideration [33] is
GRANTED.
IT IS FURTHER ORDERED that the Defendant’s Motion for Summary
Judgment [21] is DENIED.
IT IS FURTHER ORDERED that a status conference will be held on
February 16, 2016 at 3:00 p.m. to put this matter back on track for trial.

Dated: February 8, 2016
Detroit, MI

/s/Gershwin A Drain
HON. GERSHWIN A. DRAIN
United States District Court Judge

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