Deprag Inc. v. Mine Shield, LLC

Filing 53

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT re 27 Opposed MOTION for Summary Judgment filed by Deprag Inc.. Summary judgment is granted with respect to the Defendants statuteof frauds affirmative defense. Additio nally, summary judgment is granted with respect to theDefendants counterclaims and affirmative defenses of fraud, breach of express warranty, breach ofimplied warranty of merchantability, and breach of implied warranty of fitness for particular purpose. Signed by Judge Richard A. Schell on 1/3/14. (cm, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
DEPRAG, INC.,
Plaintiff,
v.
MINE SHIELD, LLC.,
Defendant.

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CIVIL ACTION NO. 4:12-cv-320

MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
The following are pending before the court:
1.

Plaintiff’s motion for summary judgment and brief in support (docket entry #27);

2.

Defendant’s response in opposition to Plaintiff’s motion for summary judgment on
Defendant’s counterclaims and brief in support (docket entry #32); and

3.

Plaintiff’s reply to Defendant’s response in opposition to Plaintiff’s motion for
summary judgment (docket entry #34).

Having considered the Plaintiff’s motion and the briefing in response thereto, the court finds that the
motion should be granted.
FACTUAL AND PROCEDURAL BACKGROUND
The facts of this case are largely undisputed and they are as follows:
1.

The Defendant contacted the Plaintiff regarding the production of air motors to be
used in the Plaintiff’s products;

2.

Based on specifications contained in various emails that were exchanged between the
parties, the Plaintiff produced a prototype air motor for the Defendant to test;

3.

After testing, the Defendant ordered 200 motors to be manufactured to the
Defendant’s specifications, i.e. the air motors should be of the same design and
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quality as the prototype. The parties agreed that the Plaintiff would deliver 50 air
motors per month over a period of four months;
4.

The words “Mine Shield” were engraved by laser on the motor housing of each
manufactured air motor;

5.

The air motors manufactured by the Plaintiff for the Defendant varied from the
Plaintiff’s standard air motor specifications in that the air motors in question
provided a 2-hole mounting flange;

6.

The Plaintiff specially manufactured the air motors and delivered them to the
Defendant; and

7.

The Defendant contended that the production motors failed to conform to the quality
and design of the prototype. The Defendant refused to pay for the production motors.
The Defendant returned 196 of the production motors. The Plaintiff contends that
the production motors conform to the Defendant’s specifications.

On April 26, 2012, the Plaintiff filed its original petition for suit on sworn account in the
431st Judicial District Court of Denton County, Texas. On May 25, 2012, the Defendant removed
this case to this court. The Defendant subsequently filed an answer and counterclaim. On June 22,
2012, the Plaintiff filed an amended complaint seeking damages for suit on sworn account, breach
of contract, quantum meruit, and promissory estoppel. The Defendant filed an amended answer and
amended counterclaims on July 6, 2012 asserting the affirmative defenses of fraud, statute of frauds,
breach of express warranty, breach of implied warranty of merchantability, breach of implied
warranty of fitness for particular purpose, the right to reject the goods, and unclean hands.
Additionally, the Defendant asserted counterclaims for fraud, breach of express warranty, breach of
implied warranty of merchantability, and breach of implied warranty of fitness for particular purpose.
The Plaintiff is now moving for summary judgment on the Defendant’s counterclaims and
affirmative defenses.

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LEGAL STANDARD
The purpose of summary judgment is to isolate and dispose of factually unsupported claims
or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper
“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 dispute about a material fact is
genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all
reasonable doubts in favor of the party opposing the motion for summary judgment. Casey
Enterprises, Inc. v. American Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations
omitted). The substantive law identifies which facts are material. See id. at 248.
Both parties have a responsibility in the summary judgment process. Celotex, 477 U.S. at
323–24. First, the party seeking summary judgment must show that the admissible evidentiary
material of record and any affidavits submitted by the nonmoving party are insufficient to permit the
nonmoving party to carry its burden of proof. The nonmoving party must then set forth “specific
facts showing that there is a genuine issue for trial” and “may not rest upon the mere allegations or
denials of his pleadings.” Anderson, 477 U.S. at 248. “Conclusional allegations and denials,
speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not
adequately substitute for specific facts showing a genuine issue for trial.” Roach v. Allstate
Indemnity Co., 2012 WL 1478745 (5th Cir. 2012), citing SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir.
1993).

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DISCUSSION AND ANALYSIS
A.

FRAUD

Under Texas law, a claimant alleging fraud must prove the following: (1) that a material
representation was made; (2) the representation was false; (3) when the representation was made,
the speaker knew it was false or made it recklessly without any knowledge of the truth and as a
positive assertion; (4) the speaker made the representation with the intent that the other party should
act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered
injury. Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam).
The Plaintiff argues that the Defendant failed to offer summary judgment evidence in support of its
counterclaim and affirmative defense of fraud. The court agrees.
The Plaintiff argues that the Defendant has failed to offer summary judgment evidence that
the Plaintiff made a representation knowing that it was false or made recklessly without knowledge
of its truth. In response, the Defendant argues that the prototype was a representation to the
Defendant that the production models would be of the same quality as the prototype. The Defendant
argues that the production models were not the same quality as the prototype and, thus, the implied
representation was false. Apparently, the production models would not operate at “3BAR air
pressure.” In their briefs, the parties do not provide an explanation of “3BAR air pressure.” The
Plaintiff responds, however, that the Defendant does not dispute that the Defendant never requested
that the air motors be operational at 3BAR air pressure. Further, the Plaintiff notes that the
Defendant did not offer summary judgment evidence that the Plaintiff represented that the prototype
would operate at 3BAR air pressure. The Plaintiff offered summary judgment evidence that the
operations manual that it sent to the Defendant with the prototype expressly discusses operational
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capacity at 6BAR air pressure and air pressure below 6BAR reduces the power output of the motor.
Since the Defendant offered no summary judgment evidence that the Plaintiff represented that the
prototype would operate at 3BAR air pressure, the Defendant’s affirmative defense and counterclaim
for fraud fails.1
B.

WARRANTY CLAIMS

The Plaintiff argues that the Defendant failed to offer summary judgment evidence in support
of its breach of warranty claims. The Plaintiff further contends that the Defendant failed to offer any
evidence indicating that the Defendant incurred damages in relation to its breach of warranty claims.
Since the court finds that the Defendant failed to offer adequate summary judgment evidence relative
to damages with respect to its breach of warranty claims and defenses, the court need not address the
remainder of the Plaintiff’s arguments.
The Defendant’s breach of warranty claims only concern the production motors, not the
prototype motor. The Defendant argues that it is seeking the following damages with respect to the
production motors: (1) “damages for loss of the savings it would have gleaned had the air motors
worked as advertised by the prototype air motor”; and (2) estimated damages of $16,000 to $20,000
associated with the cost of sending agents into underground mines to replace three of the production
air motors. The summary judgment evidence offered by the Defendant to the court with respect to
damages is an affidavit from Terry Huffman approximating the Defendant’s damages. Mr.
Huffman’s affidavit references a March 6, 2012 letter from Justin Conner (Defendant’s quality
manager) to the Plaintiff wherein Mr. Conner estimates the Defendant’s damages between $16,000

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The Plaintiff additionally contends that the Defendant’s counterclaim and affirmative defense of
fraud are barred by the economic loss doctrine. In light of the court’s ruling, supra., the court need not
address this issue.

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and $20,000. Additionally, the Defendant contends that on April 18, 2013, the Plaintiff deposed the
Defendant’s witnesses about damages and the witnesses apparently testified about the damages being
sought. The Defendant states that the deposition transcripts were not available at the time it filed
its response to the Plaintiff’s motion for summary judgment; however, the Defendant never sought
leave of court to supplement its summary judgment evidence. Further, the Plaintiff argues that the
Defendant never provided a computation of each category of damages with respect to the production
motors in its FED . R. CIV . P. 26(a)(1)(A)(iii) disclosures.
At this juncture, the Defendant’s damages should be readily calculable and not a mere
estimate. The Defendant, however, provided the court with a speculative estimate of its damages,
but not evidence of its breach of warranty damages. Without more, the court finds that the
Defendant’s breach of warranty affirmative defenses and counterclaims must fail.
C.

STATUTE OF FRAUDS

Finally, the Plaintiff moves for summary judgment on the Defendant’s statute of frauds
affirmative defense.

The Defendant wholly failed to respond to the Plaintiff’s argument.

Accordingly, the court finds that the Defendant waived any arguments regarding its statute of frauds
affirmative defense and abandoned the same. See United States v. Charles, 469 F.3d 402, 408 (5th
Cir. 2006) (“Inadequately briefed issues are deemed abandoned.”).
CONCLUSION
Based on the foregoing, the court hereby GRANTS the Plaintiff’s motion for summary
judgment (docket entry #27). Summary judgment is granted with respect to the Defendant’s statute
of frauds affirmative defense. Additionally, summary judgment is granted with respect to the
Defendant’s counterclaims and affirmative defenses of fraud, breach of express warranty, breach of
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implied warranty of merchantability, and breach of implied warranty of fitness for particular purpose.
IT IS SO ORDERED.

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SIGNED this the 3rd day of January, 2014.

_______________________________
RICHARD A. SCHELL
UNITED STATES DISTRICT JUDGE

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