Mark Andy, Inc. v. Heat Technologies, Inc.

Filing 88

MEMORANDUM AND ORDER, IT IS HEREBY ORDERED that the motions for partial summary judgment [# 71 , # 78 ] are denied. Signed by District Judge Catherine D. Perry on 4/3/15. (EAB)

UNITED STATES DISTRICT COURT
THE EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MARK ANDY, INC.,
Plaintiff,
v.
HEAT TECHNOLOGIES, INC.,
Defendant.

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Case No. 4: 13 CV 2150 CDP

MEMORANDUM AND ORDER
Mark Andy makes printing press equipment. Heat Technologies builds
dryers for printing presses. In 2013, Mark Andy hired Heat Technologies to make a
custom dryer system for a printing press it was building for third-party customer
CL&D. The dryer system was delivered and installed, but Mark Andy alleges it
never worked properly. This lawsuit followed. In the second amended complaint,
Mark Andy brings claims for breaches of contract and warranties (express and
implied) against Heat Technologies relating to the functionality of the dryer
system. Heat Technologies brings counterclaims for breach of contract.
Before me now are cross-motions for partial summary judgment. The
parties want me to decide as a matter of law which contract terms control the
present dispute. Because genuine disputes of material fact remain as to when a
contract was formed and what terms were included in the contract, I must deny all

pending motions for the reasons stated below.
Standards Governing Summary Judgment
The standards for summary judgment are well settled. In ruling on summary
judgment, the Court views the facts and inferences therefrom in the light most
favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U .S. 574, 587 (1986). The moving party has the burden to
establish both the absence of a genuine issue of material fact and that it is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Once the moving party has met this burden, the nonmoving party may not rest on
the allegations in its pleadings but must set forth by affidavit or other evidence
specific facts showing that a genuine issue of material fact exists. Fed. R. Civ. P.
56(e). At the summary judgment stage, I will not weigh the evidence and decide
the truth of the matter, but rather I need only determine if there is a genuine issue
for trial. Anderson, 477 U.S. at 249; ASi Industries GmbH v. MEMC Electronic
Materials, Inc., 2008 WL 413819, *1 (E.D. Mo. Feb. 13, 2008).
Background Facts1
On January 2, 2013, Bruce Murphy of Mark Andy sent an email to Gene
Plavnik of Heat Technologies requesting a bid for the CL&D dryer system. To
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I set out these facts only for the purpose of deciding the summary judgment motions. Neither
party may rely on this Memorandum and Order to establish any fact or defense at trial.
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accurately prepare a bid, Heat Technologies first asks potential customers to
provide it with specific information about the project. Murphy did this by
completing Heat Technologies’ Design Criteria Form and including it as an
attachment to his email.
On January 26, 2013, Heat Technologies sent a proposal for the dryer
system to Mark Andy (“the Proposal”). The Proposal is attached as Exhibit 1 to
the second amended complaint. The Proposal states that it is an “offer” that will
remain open for 30 days and contains specifications for the dryer system, purchase
price ($292,700.00), payment terms (three payments per specified events), and
shipping (FOB Atlanta). The Proposal also contains written warranties titled
“Performance Warranty,” “Limited Equipment Warranty,” and “Limited
Component Warranty.” The Proposal states that these warranty obligations “expire
immediately and completely if there are any alterations to the equipment during the
warranty period.” The Proposal also disclaims any other express and implied
warranties not set out in the Proposal and excludes consequential and other
damages and remedies to the extent allowed by Georgia law. Plavnik sent the
Proposal to Murphy as an attachment to an email which notes that “[the Proposal]
has a clause of performance warranty.”
On January 30, 2013, Mark Andy issued a purchase order to Heat
Technologies for the purchase of the CL&D dryer system (“Purchase Order”). The
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Purchase Order is attached as Exhibit 2 to the second amended complaint. The
Purchase Order incorporates by reference Mark Andy’s “Standard Terms and
Conditions,” which are available online. It further states that “SELLER AGREES
THAT THIS PURCHASE ORDER WILL BE GOVERNED BY SUCH
STANDARD TERMS AND CONDITIONS . . . BY SELLING
GOODS/SERVICES TO MARK ANDY, YOU AGREE TO, AND INTEND TO
BE BOUND BY SUCH STANDARD TERMS AND CONDITIONS . . . .” Mark
Andy’s Standard Terms and Conditions include the following provision:
Acceptance of this Order is expressly made conditional on assent to
the terms, provisions and conditions of this Order which cannot be
altered by the shipment or receipt of any Goods contemplated by this
Order . . . Seller’s shipment of the Goods or its execution of the
acknowledgment copy of this instrument shall constitute acceptance
of all of the terms, provisions and conditions herein set forth, and said
terms, provisions and conditions shall constitute the entire contract
between the parties, no additional or different terms, provisions or
conditions contained in a written expression or confirmation of
acceptance by Seller shall become a part of the contract even though
such expression or confirmation of acceptance states that it is
expressly made conditional on assent to such additional or different
terms, provisions or conditions.
The Standard Terms and Conditions state as follows with respect to warranties:
In addition to any warranty implied by fact or law, Seller expressly
warrants that the Goods covered by this Order are free from defects in
design, materials and workmanship, conform strictly to specifications,
drawings and samples, if any, are fit and sufficient for the purpose
intended, are merchantable, do not infringe on any patent, trademark,
copyright or other intellectual property right of any third party, and
are conveyed to Buyer free and clear of all liens, claims and
encumbrances . . . Acceptance of this Order shall constitute an
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agreement upon Seller’s part to indemnify and hold Buyer harmless
from liability, loss, damage and expenses, including special, incidental
and consequential damages, and including reasonable counsel fees,
incurred or sustained by Buyer by reason of the failure of the Goods
to conform to such warranties or by reason of the negligence or willful
misconduct by Seller . . . Such indemnity shall be in addition to any
other remedies provided by law . . . All warranties shall survive
inspection, tests, acceptance of and payment by Buyer. In the event of
breach of warranty, Buyer may at its option either return for full
refund or credit or require prompt correction or replacement of the
defective non-conforming Goods . . . In the event Seller refuses to
promptly correct the defective or non-conforming Goods . . . Buyer
may upon reasonable notice to Seller make the repairs necessary to
correct said Goods and charge Seller with the costs of repair.
Page two of the Purchase Order, under “Item/Part Number/Description,”
states that “this order is defined by the proposal from Heat Technologies, Inc.,
titled (CL&D Project) dated January 26, 2014. 1 x Spectra HETM Ultra Drying
System for 17 web width in line flexographic press, 10 colors per specifications
described in proposal noted above.” The Purchase Order contains a delivery date
and delivery instructions, payment terms (three payments per specified events),
shipping terms (FOB Origin) and instructions, billing instructions, and purchase
price ($292,700.00). The final payment is “due upon acceptance as per terms of
Performance Warranty.” “Performance Warranty” is not defined in the Purchase
Order or the Standard Terms and Conditions. The only “Performance Warranty”
in the record appears in Heat Technologies’ Proposal.
Murphy then emailed Plavnik the same day to ask, “Have you receive[d]
[the Purchase Order]?” Plavnik responded by email, “Thank you and yes, we have
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received the new order and will schedule a conference call with the engineering
team within this week. We look forward to continuing to work together.” Plavnik
testified that after receiving the Purchase Order, he called Murphy “to discuss the
purchase order, including the reference to Mark Andy’s Terms and Conditions.
During my call with Mr. Murphy, I told that him that my understanding of the
purchase order was based on [Heat Technologies’] proposal and warranties, not
Mark Andy’s Terms and Conditions, and asked whether my understanding was
correct. Mr. Murphy told me that my understanding was correct.” [Doc. #72-1].
Murphy denies this conversation took place. [Doc. #85-1].
On May 11, 2013, Plavnik emailed Murphy and others at Mark Andy to
inform them that the dryer system was ready for shipment. He then requested
payment of 35% of the purchase price “[a]ccording to the PO and accepted
proposal” and later stated that the transaction would be completed “according to
accepted proposal and issued purchase order.” (emphasis added). The attached
invoice states, “We ship the dryer within two week (or faster) after receiving
second payment on the project – see the proposal.” (emphasis added). Mark Andy
paid two invoices and Heat Technologies delivered the dryer system. A dispute
then arose about its functionality and this lawsuit was eventually filed.
Discussion
For summary judgment purposes, the parties agree that Missouri law applies.
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Section 2–207 of the Uniform Commercial Code2governs transactions for the sale
of goods such as the dryer system at issue here. It provides:
(1) A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition
to the contract. Between merchants such terms become part of the
contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given
within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a
contract is sufficient to establish a contract for sale although the
writings of the parties do not otherwise establish a contract. In such
case the terms of the particular contract consist of those terms on
which the writings of the parties agree, together with any
supplementary terms incorporated under any other provisions of this
chapter.
U.C.C. § 2–207.
Both parties concede that Heat Technologies’ Proposal constituted an offer. There
is also no dispute that terms offered by Heat Technologies in its Proposal are
“different from” those contained in Mark Andy’s Purchase Order. The issue
before me is whether Mark Andy’s Purchase Order accepted Heat Technologies’
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As adopted in Missouri, Mo. Rev. Stat. § 400.2-612.
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offer or constituted a counteroffer. Here, Mark Andy’s Purchase Order was not an
acceptance of Heat Technologies’ offer as set out in the Proposal because of the
expressly conditional language contained in the Purchase Order. PCS Nitrogen
Fertilizer, L.P. v. Christy Refractories, L.L.C., 225 F.3d 974, 979 (8th Cir. 2000)
(“[C]reation of a contract [under 2-207(1)] is prevented where acceptance is
expressly made conditional on assent to the additional or different terms.”)
(internal quotation marks and citation omitted). “While an acceptance need not
match the exact language of § 2-207(1) to be considered expressly conditional, an
acceptance which precisely follows § 2-207(1) clearly forestalls contract
formation.” Id. (internal quotation marks and citations omitted). Here, Mark
Andy’s Purchase Order tracks the statutory language and states that “acceptance of
this Order is expressly made conditional on assent to the terms, provisions and
conditions of this Order . . . .” Accordingly, it was not a valid acceptance of Heat
Technologies’ offer. See id.
Mark Andy’s Purchase Order, while not a valid acceptance of the Proposal,
stands as a non-binding counter-offer. See Christy Refractories, 225 F.3d at 979.
Because Mark Andy expressly conditioned its acceptance on Heat Technologies’
assent to the proposed terms in the Purchase Order, a contract on Mark Andy’s
terms resulted only if Heat Technologies assented. See White Consolidated
Industries, Inc. v. McGill Manufacturing Co., Inc., 165 F.3d 1185, 1191 (8th Cir.
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1999).3 Mere performance does not constitute acceptance of all the terms in the
counter-offer. See Christy Refractories, 225 F.3d at 980. “Instead, specific and
affirmative assent to the [] counter-offer is necessary to create a contract.” Id.
Here, evidence of the parties’ conduct following Mark Andy’s transmittal of the
Purchase Order raises genuine issues of material fact as to when a contract was
formed and what terms were included in the contract. Mark Andy argues that
Plavnik’s January 30, 2013, affirmative response to the question of whether Heat
Technologies had received the Purchase Order is undisputed evidence of assent to
the counter-offer and its terms. Heat Technologies disputes that it assented to the
counter-offer and offers the testimony of Plavnik, who avers that after he received
the Purchase Order, he called Murphy “to discuss the purchase order, including the
reference to Mark Andy’s Terms and Conditions. During my call with Mr.
Murphy, I told that him that my understanding of the purchase order was based on
[Heat Technologies’] proposal and warranties, not Mark Andy’s Terms and
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I reject Heat Technologies’ circular argument that Mark Andy’s Purchase Order was an
acceptance, not a counteroffer, because it incorporated the terms of the Proposal into the
Purchase Order by describing the system to be purchased as “defined by the proposal from Heat
Technologies, Inc., titled (CL&D Project) dated January 26, 2014. 1 x Spectra HETM Ultra
Drying System for 17 web width in line flexographic press, 10 colors per specifications
described in proposal noted above.” A plain and ordinary reading of the Purchase Order is that
this provision is meant to identify the item to be built and purchased, not to incorporate all the
terms and conditions of the Proposal in its entirety. Heat Technologies’ urged interpretation
would result in an internally inconsistent document which, for example, bars the recovery of
consequential damages in one section while simultaneously permitting them in another. Such a
strained reading runs afoul of Missouri law, which requires contracts to be construed so as to
give reasonable meaning to each term and to harmonize all provisions. Chochorowski v. Home
Depot U.S.A., 404 S.W.3d 220, 229 (Mo. banc 2013).
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Conditions, and asked whether my understanding was correct. Mr. Murphy told
me that my understanding was correct.” Murphy denies the conversation took
place. Plavnik’s later emails to Mark Andy refer both to the “accepted proposal”
and the “issued purchase order.” In addition, Mark Andy’s Purchase Order states
that final payment is “due upon acceptance as per terms of Performance
Warranty.” “Performance Warranty” is not defined in the Purchase Order or the
Standard Terms and Conditions. The only “Performance Warranty” in the record
appears in Heat Technologies’ Proposal.4 In light of this disputed evidence, the
Court cannot decide as a matter of law which contract terms control the present
dispute. See ASi Industries GmbH v. MEMC Electronic Materials, Inc.,
4:06CV951 CDP, 2008 WL 413819, *4-*5 (E.D. Mo. Feb. 13, 2008); Venmar
Ventilation, Inc. v. Von Weise USA, Inc., 2009 WL 799610, *11-*12 (D. Minn.
Mar. 24, 2009); Verasun Fort Dodge, L.L.C. v. Industrial Air Technology Corp.,
2008 WL 5069121, *19-*20 (N.D. Iowa Nov. 25, 2008). Although the parties
discuss the gap-filler provisions of § 2-207(3), the Court cannot determine as a
matter of law whether, and to what extent, the gap-filler provisions apply here
because there is a material dispute as to whether a contract was formed under § 2207(1). Summary judgment will therefore be denied.
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Contrary to Mark Andy’s argument, the parol evidence rule does not bar consideration of this
evidence because it goes to the issue of whether a contract was even formed and, as admitted by
the parties, “there is no single signed contract executed by both Parties for the sale and purchase
of the drying system at issue.” [Doc. #65 at 2].
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Accordingly,
IT IS HEREBY ORDERED that the motions for partial summary
judgment [#71, #78] are denied.

_______________________________
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 3rd day of April, 2015.

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