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Servotec Usa, LLC v. Ruag Ammontec Usa

October 6, 2011


The opinion of the court was delivered by: Mae A. D'Agostino, U.S. District Judge:



Presently before the Court is a motion by defendant Ruag Ammotec USA, Inc. f/k/a Precision Ammunition, LLC ("defendant" or "Ruag") pursuant to Fed. R. Civ. P. 12 (c) for judgment on the pleadings and dismissal of plaintiff's claims of fraud, misappropriation of trade secrets and proprietary information and injunctive relief. (Dkt. No. 11). In response to the motion, plaintiff Servotec USA, LLC ("plaintiff" or "Servotec") filed a cross motion seeking judgment on the pleadings and dismissal of defendant's Counterclaim. (Dkt No. 13).


Plaintiff is in the business of mechanical press manufacturing and tooling with its principle place of business in Hudson, New York. Defendant is in the business of small-caliber ammunition manufacturing with its principle place of business in Tampa, Florida. Thomas Tanguay is the owner, President and Chief Operations Officer for plaintiff. Daniel L. Powers, Jr. is the Chief Executive Officer for defendant.

On January 22, 2009, defendant inquired about plaintiff's services to remanufacture five of defendant's munition loading V&O Presses built in 1940.*fn2 The presses are industrial-sized punch presses used to manufacture small-caliber ammunitions, such as 9-millimeter, 40 S&W and 45 ACP bullets. Over the next five months, defendant and plaintiff communicated concerning the remanufacturing process for the subject presses. In June 2009, defendant shipped the five presses to plaintiff. On June 23, 2009, plaintiff issued five invoices for $10,000.00 each to disassemble the presses and evaluate the parts. Defendant paid these invoices.

Plaintiff claims that defendant subcontracted with other companies to provide equipment for the remanufacture. Plaintiff alleges that the remanufacturing process was delayed due to defendant's subcontractors and Powers "indecisiveness about the tooling of the presses".

In October 2009, Powers visited plaintiff's manufacturing site in Hudson, New York. On October 26, 2009, Tanguay provided Powers with a status report memorializing the parties' agreement for the work to be performed with a quote of $139,998.00 for the cost to remanufacture each press for a total cost of $699,990.00. With regard to installation and commission, the letter provided:

SERVOTEC USA will also provide 3 days of onsite set up and commissioning to the customer, should any additional time be required by the customer, it will at the customer's expense and at SERVOTEC USA rate of $1200 dollars per day per technician. Other arrangements for commissioning can be discussed between RUAGAmmotec USA and SERVOTEC USA at a later date. The cost does not include crating or special air ride transportation to the customer's location; however SERVOTEC USA is willing to provide the crating necessary to insure the safe travel of the press and hopper at the customer's expense; this cost can also be discussed at a later date.

At the time plaintiff forwarded this letter, defendant had made three deposits totaling $150,000.00. On October 27, 2009, Powers wrote a letter directing plaintiff to cease working on the presses until he obtained approval from defendant's parent company.*fn3 On October 28, 2009, Tanguay sent a letter and expenditure report to Powers informing him that he inadvertently omitted labor costs so the outstanding balance was increased to $51,264.00.

Plaintiff claims that Powers advised that the parent company would only authorize $500,000.00 for the remanufacture of the presses. On November 11, 2009, Powers visited plaintiff's site to meet with subcontractors to discuss the project. Powers authorized plaintiff to resume work. On February 18, 2010, Powers sent an email to Tanguay informing plaintiff that defendant needed the presses on March 31, 2010. On April 21, 2010, Powers visited plaintiff's site. Plaintiff claims that defendant needed the presses, "as soon as possible; however, the defendant and the defendant's subcontractors caused repeated delays". During this visit, Powers videotaped the first working press with his camera phone.

Plaintiff claims that Powers told Tanguay that defendant would pay for plaintiff's staff to travel to defendant's site in Florida on or about May 23, 2010 to install and commission the presses. Plaintiff claims that defendant hired subcontractors to install and commission the presses and that the subcontractors were at defendant's site as early as May 2010 working on the presses. On May 7, 2010, Powers and defendant's shop foreman visited plaintiff's site. At that time, one press had tooled and tested successfully. On May 11, 2010, Powers elected to take all presses early and hire other subcontractors to complete the tooling. The presses were shipped to Florida.

On June 8, 2010, Powers informed Tanguay by email that defendant was reviewing the outstanding invoices and the status and condition of the presses. On June 24, 2010, Tanguay sent an email to Powers asking if he could visit defendant's site the following week. On June 25, 2010, Powers emailed Tanguay informing him that he could not visit as, "[e]verything is being reviewed with our corporate offices and some individuals in the U.S." After June 25, 2010, plaintiff received no communication from defendant. On June 28, 2010, plaintiff forwarded an invoice for the overdue balance of $118,742.41. On August 1, 2010, plaintiff made a final demand for payment of the outstanding balance. Plaintiff subsequently learned that defendant paid one of its subcontractors directly and therefore, the overdue balance was reduced to $95,469.61.

Plaintiff's complaint sets forth eight causes of action including, inter alia, claims for breach of contract, breach of the implied covenant of good faith and fair dealing and unjust enrichment.*fn4 In the Fifth Cause of action (misnumbered as the Fourth Cause of Action), plaintiff alleges:

Defendant promised that the parties would finish the project together and encouraged the plaintiff to continue working on the presses, notwithstanding the fact that the defendant had already contracted with the plaintiff's subcontractors to commission and install the presses.

Plaintiff detrimentally relied on the defendant's promises when it expended considerable resources over the course of twelve (12) months to remanufacture and update the defendant's presses, including, but not limited to, manpower and finances for parts and subcontractors' labor.

Had the defendant not promised to pay for the plaintiff's services, the plaintiff would not have allocated its manpower and finances to remanufacture and update the defendant's presses.

Defendant defrauded the plaintiff out of the sum ...

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