The opinion of the court was delivered by: Michael A. Telesca United States District Judge
Plaintiff, Kodak Graphic Communications Canada Company, as successor to Creo Inc. ("Kodak"), filed the instant action for declaratory relief, breach of contract and breach of the implied covenant of good faith and fair dealing against E.I. DuPont de Nemours and Company ("DuPont") on December 8, 2008. The complaint alleges claims relating to an agreement and a related revision ("Revision 9") and Memorandum of Understanding ("MOU") between the parties for the development and production of color filters for liquid crystal displays ("LCD color filters"). (Docket No. 1.) On May 13, 2009, DuPont answered the complaint and asserted counterclaims for a declaratory judgment, breach of contract and unjust enrichment. (Docket No. 9.)
Kodak now moves for partial summary judgment arguing that (1) it did not breach Revision 9 by failing to deliver the product by the dates set forth in the contract, (2) the time requirements were not material terms of the contract, and (3) DuPont waived its right to insist on strict adherence to the time requirements. DuPont opposes the motion contending, inter alia, that there are material issues of fact for trial and that Kodak's interpretation of Revision 9 is incorrect as a matter of law. For the reasons set forth herein, Kodak's motion for summary judgment is denied.
The following facts are taken from the parties' submissions pursuant to Local Rule 56 (a) and the entire record and are viewed in the light most favorable to DuPont, the nonmoving party. Kodak and DuPont entered into an agreement, the Agreement for Exclusive Marketing Rights in and Purchase of Equipment for LCD Color Filters, in June 2002. This agreement was revised several times, including by Revision 9, effective October 22, 2007, which is the subject of this dispute. Revision 9 covers the design and production by Kodak of four Early Production Systems ("EPS units") to be purchased by DuPont and supplied to its customers. Shortly after executing Revision 9, DuPont contracted with a third party customer, Chunghwa Picture Tubes Ltd. ("CPT"), for the purchase of the EPS units, to be delivered to CPT in 2009.
The pertinent part of the disputed provision of Revision 9, Paragraph D, reads:
Delivery requirement: 1st Unit by October 22, 2008, FOB Vancouver.
a. 2nd Unit 2 weeks later (November 5, 2008)
b. 3rd Unit 2 weeks later (November 19, 2008)
DuPont reserves the right to change the date of 2nd and 3rd shipment (beyond two week time frame, based on CPT's requirements)
Time is of the essence. If any change in delivery is discovered, [Kodak] must communicate immediately to DuPont. Both parties will work in good faith and make commercially reasonable efforts which may include without limitation expediting deliveries from subcontractors, overtime, and additional shifts to meet the committed delivery dates.
Both during and after the negotiations of Revision 9, DuPont discussed with Kodak the importance of the timing provisions to ensure the ultimate delivery to CPT on schedule in 2009. DuPont states that it would not have entered into Revision 9 without Kodak's commitment to the dates outlined in Paragraph D.
Kodak and DuPont had previously negotiated contracts for the design and delivery of prototypes (called "LFP machines"), which Kodak claims were less complex than the EPS units. DuPont contends that the EPS units, although different in design, were not significantly more complex, as they were an "extension of known technology." Kodak failed to produce the LFP machines according to the agreed-upon time line for that product, but DuPont nonetheless accepted delivery of those machines. The LFP machines were subject to a separate contract, which did not include the same delivery requirement language as Revision 9, Paragraph D.
Kodak represented to DuPont at the time they negotiated Revision 9 that it was capable of designing and producing the EPS units within the agreed-upon schedule in Revision 9, Paragraph D.
Kodak further represented that the design for the EPS machine was 90% complete, which DuPont now characterizes as a misrepresentation. DuPont recognized early on that the schedule for producing the EPS units was "aggressive", but Kodak nonetheless committed to the dates outlined in Paragraph D.
Kodak experienced delays in production early in 2008, but continued to assure DuPont that it was committed to remaining on schedule. Kodak also assured DuPont in June 2008 that it was "doing [its] best to get back on track" and that it "fully underst[ood] the importance of the delivery schedule." DuPont was assured that despite setbacks, Kodak was working to mitigate delays and to meet the delivery schedule.
When notified of possible delays throughout early 2008, DuPont did not inform Kodak that it would consider any delay a breach of Revision 9, but it continued to stress the importance to it and to CPT of remaining (or getting back) on schedule. DuPont offered to assist Kodak to get back on schedule and ...