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REPUBLIC CORP. v. PROCEDYNE CORP.

June 18, 1975

REPUBLIC CORPORATION, Plaintiff,
v.
PROCEDYNE CORPORATION, Defendant


Levet, District Judge.


The opinion of the court was delivered by: LEVET

LEVET, District Judge.

OPINION, FINDINGS OF FACT and CONCLUSIONS OF LAW.

 The above-named plaintiff, Republic Corporation ("Republic"), filed a complaint against defendant, Procedyne Corporation ("Procedyne"), alleging that defendant breached a contract entered into between the parties on or about March 13, 1969, and further that defendant breached certain express and implied warranties made in conjunction with said contract. Plaintiff contends that pursuant to their contract defendant was to provide Polytherm Plastics ("Polytherm"), an unincorporated division of plaintiff, with two separate electrical control systems, or consoles, which were represented to have the capacity to automatically and accurately control the heating units in two of Polytherm's thermoforming machines to a temperature variance of plus or minus 10 degrees F. of the desired temperature. These thermoforming machines were an integral part of Polytherm's manufacturing process and required accurate temperature control to function properly.

 Plaintiff alleges that the consoles provided by defendant did not function properly in that they failed to automatically and accurately control the heating units in the thermoformers to within plus or minus 10 degrees F. of the desired temperature; that, therefore, defendant has breached its contract and its express and implied warranties. As a result of said breach plaintiff asserts that it has sustained damages in the amount of $61,217.29.

 Defendant by its answer admits an agreement to sell the consoles in question to Republic for use in the Polytherm plant but denies that it breached the contract pursuant to which these consoles were sold and delivered; and further denied that it breached any express or implied warranties made to plaintiff in conjunction with said contract.

 Defendant also alleges, as an affirmative defense, that the consoles were tested and accepted by plaintiff as delivered and that plaintiff has thereby waived any claim it may have had against defendant and is estopped from asserting the same.

 Defendant has also asserted a counterclaim in the amount of $2,377.10 with interest which it claims represents the value on a time-and-materials basis of work done on the consoles and thermoformers at Polytherm's request after delivery and acceptance of the consoles.

 After hearing the testimony of the parties, reviewing the transcript of the trial (which was available December 5, 1974) and examining the exhibits and the Proposed Findings of Fact and Conclusions of Law submitted by plaintiff and defendant on March 21, 1975 and April 21, 1975, respectively, along with each party's objections to the Proposed Findings of Fact and Conclusions of Law of the other, this court makes the following Findings of Fact and Conclusions of Law:

 FINDINGS OF FACT

 1. This court has jurisdiction over the subject matter and parties of this action pursuant to 28 U.S.C. § 1332(a).

 2. During the period between January 1969 to at least the beginning of 1970 Polytherm, an unincorporated division of Republic, a corporation incorporated under the laws of Delaware and with its principal place of business in the State of California, was engaged in the manufacture and sale of plastic disposable bowls, dishes, trays and food containers. (Tr. 9, 10, 12.) *fn1"

 3. During that period, and thereafter, Procedyne, a corporation incorporated under the laws of New York and with its principal place of business in the State of New Jersey, was engaged in the manufacture and sale of equipment primarily involving the precision temperature control of resistance heaters. (Tr. 585-86.)

 4. Plaintiff's manufacturing process required the use of machines known as "thermoformers" which converted sheets of flat plastic into three-dimensional shapes which constituted its finished product. Thermoformers accomplish this conversion by transporting flat sheet material through a heating oven section, which consists of upper and lower tiers of heaters, so as to soften the plastic material, then by further transporting the heated sheet into a molding area where pressure, from the closing of matched molds, shapes the material, and finally, by transporting the newly molded sheet to a die cutting area where the finished pieces are cut from the sheet. (Tr. 11, 12, 45.)

 5. In order for the thermoformers to operate properly and efficiently it was essential that the sheet of plastic be uniformly and precisely heated to a predetermined temperature. Overheating the plastic would cause it to melt and drip while underheating would prohibit proper molding of the plastic. (Tr. 82, 85.)

 6. Plaintiff's Polytherm plant was equipped with at least two thermoforming machines, one Brown 821 machine and one NRM machine. The ovens of both machines were equipped with ceramic type heaters known as Elstein heaters, installed by plaintiff's personnel, which generated heat by means of electric current. Because these heaters were smaller and more compact than their commercially available counterparts, normally provided in the Brown and NRM thermoformers, they produced tighter temperature control in the ovens, which is one reason plaintiff chose them for its manufacturing process. The Brown and NRM machines, as sold commercially, are equipped with controllers; however, plaintiff sought to achieve an exactitude of temperature control in the Elstein heaters which could not be achieved by the controllers with which the thermoformers were ordinarily equipped. (Tr. 149-53, 449.)

 7. Plaintiff's personnel had no expert knowledge in the design or manufacture of devices to control the temperature of the heaters in the thermoformers. (Tr. 5, 173, 241-42.)

 8. In 1969 defendant was engaged in the business of designing and manufacturing temperature control devices. It employed persons skilled in electrical engineering such as Dr. Staffin who has bachelor's, master's and doctorate degrees in electrical engineering and has had extensive experience and expertise in the electronics field and, particularly, in the field of temperature control of electric resistance heaters. (Tr. 585-601.)

 9. On or about January 15, 1969 defendant submitted a report to plaintiff (Pl.Ex. 3), *fn2" which represented the results of a controller test conducted by Dr. Staffin for Polytherm. The test had been conducted to determine the general performance criteria for control of Elstein heating elements, such as those used in plaintiff's thermoformers. The report of Dr. Staffin concluded that a thermocouple controller should perform satisfactorily in meeting the requirement that said heaters maintain a temperature not varying more than plus or minus 10 degrees F. of the specified temperature setting while in operation. (Pl.Ex. 3; Tr. 23.)

 10. Pursuant to said test results, on or about January 15, 1969 defendant also submitted a proposal and quotation to plaintiff (Pl.Ex. 4) offering to sell the plaintiff specified Heater Control Consoles. This quotation contained the various specifications of said consoles and the price for each console ordered. Defendant represented that the consoles would be capable of maintaining the temperature variations within the heaters to plus or minus 10 degrees F. (Pl.Ex. 4; Tr. 20.)

 11. Defendant's offer (Pl.Ex. 4) was accepted by plaintiff's Purchase Orders dated February 24, 1969 (Pl.Ex. 5) and March 13, 1969 (Pl.Ex. 6), which pertained to the purchase of consoles for the Brown 821 thermoformer and the NRM thermoformer respectively. The specifications contained in both Purchase Orders were identical, with the exception that each order referred to a separate thermoformer and heater control console. (Pl.Exs. 5, 6; Tr. 26-30.)

 12. The written contract entered into between plaintiff and defendant consisting of the proposal and quotation from defendant (Pl.Ex. 4) and plaintiff's Purchase Orders (Pl.Exs. 5, 6) was modified on or about May 2, 1969 by a signed agreement of both parties. (Pl.Ex. 7.)

 13. The written contract, as modified, essentially provided for the following pertinent conditions and obligations of the respective parties:

 
(1) Defendant is to provide the completed consoles with terminal boards to facilitate all external field connections, and is responsible for the proper functioning of all internal components of the consoles.
 
(2) Plaintiff shall be responsible for the installation and wiring of all externals to the consoles, including the connection of the heaters, thermocouples and power source.
 
(3) Defendant has responsibility for insuring the proper field operation of the heaters. The consoles are to be capable of holding the surface temperature of the heaters to plus or minus 10 degrees F.
 
(4) Defendant is responsible for the side by side operation of the consoles but is not responsible for interference effects due to external equipment from other manufacturers.
 
(5) Defendant will install interference suppression equipment if required on a straight time-and-materials charge basis.

 (Pl.Exs. 4-7.)

 14. The purpose of these consoles was to insure that the temperature within the thermoformer ovens is maintained within the restricted acceptable variation specified, and defendant was fully aware of this purpose at the time it entered into this contract. (Pl.Ex. 3; Tr. 601.)

 15. Defendant selected and designed the means by which the consoles were to maintain the desired temperature of the heaters in the thermoformers; and defendant assumed total responsibility for the proper function of all internal components of the consoles. (Pl.Ex. 7; Tr. 784, 851.)

 16. Defendant delivered two electrical control consoles, one for the NRM thermoformer and one for the Brown thermoformer, to plaintiff on or about June 18, 1969 and July 2, 1969 respectively. The console provided for the Brown thermoformer consisted of 32 temperature control units and that provided for the NRM ...


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