Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Cvd Equipment Corporation v. Taiwan Glass Industrial Corporation

United States District Court, S.D. New York

November 13, 2014

CVD EQUIPMENT CORPORATION, Plaintiff,
v.
TAIWAN GLASS INDUSTRIAL CORPORATION and MIZUHO CORPORATE BANK, LTD., Defendants. TAIWAN GLASS INDUSTRIAL CORPORATION, Counterclaim Plaintiff,
v.
CAPITAL ONE, N.A., Counterclaim Defendant.

OPINION AND ORDER

J. PAUL OETKEN, District Judge.

This is a case, as has been noted before, about "a commercial transaction gone wrong." CVD Equip. Corp. v. Taiwan Glass Indus. Corp., 2011 WL 1210199, at *1 (S.D.N.Y. Mar. 31, 2011). Presently before the Court is the second motion for partial summary judgment by Defendant Taiwan Glass Industrial Corporation ("Taiwan Glass") against Plaintiff CVD Equipment Corporation ("CVD"). On this motion, Taiwan Glass seeks summary judgment on both CVD's breach of contract claim and its counterclaim for breach of contract against CVD.[1]

For the reasons that follow, Taiwan Glass's motion is granted.

I. Background

A. Factual Background

The following facts are drawn, unless otherwise indicated, from the parties' Rule 56.1 Statements and the submissions made in connection with the instant motion. Only the facts relevant to this motion are provided. The facts are undisputed unless otherwise noted.

CVD is a technology company based in Long Island, New York. Its principal facility, at all relevant times, was in Ronkonkoma, New York. CVD's expertise includes the deposition of thin films on various kinds of surfaces, including via a process called "chemical vapor deposition." Taiwan Glass, as its name suggests, has its principal place of business in Taiwan and specializes in the manufacturing of glass.

1. The "APCVD System"

The process for glass production at Taiwan Glass's factory in Lukang, Taiwan - where CVD's equipment was to be ultimately installed - is known as the "float glass" method. In a "float glass" line, raw materials are mixed at very high temperatures and then formed in a "tin bath" to create a sheet of glass. The sheet then passes through a "lehr" - a long kiln - which cools and strengthens (or "anneals") the glass. Finally, the sheet is cut into individual panels and stored.[2]

In mid-to late 2007, Taiwan Glass sought a company to design and build a chemical vapor deposition system for its Lukang factory. The envisioned system would deposit chemical films on sheets of glass during production to create two types of glass: Low-Emission Glass ("Low-E") and Transparent Conductive Oxide Glass ("TCO"). (Def. 56.1 Stmt, ¶ 4.) (TCO glass is generally used for solar panels, while Low-E glass is typically employed for insulation purposes.) The system would be "online, " in the sense that it was to be a component of the factory's manufacturing production line.

In June 2008 - following meetings with, and a presentation by, CVD - Taiwan Glass signed an order confirmation with CVD for a "Continuous TCO Atmospheric Pressure Chemical Vapor System" (the "APCVD System"). Taiwan Glass and CVD then entered into an agreement dated August 29, 2008 (Def. 56.1 Stmt, Ex. 3 ("Agreement")), under which CVD would design and manufacture the APCVD System for a sum of $11, 880, 000.

On or about September 15, 2008, at Taiwan Glass's request, Mizuho Corporate Bank, Ltd. ("Mizuho") issued a letter of credit (the "Commercial LC") in CVD's favor for $11, 880, 000. Reciprocally, on or about October 8, 2008, Capital One, N.A. ("Capital One") issued a standby letter of credit (the "Standby LC") on CVD's behalf to Taiwan Glass for $3, 564, 000 - 30% of the total purchase price.[3] Once Capital One issued the Standby LC, CVD drew down on the Commercial LC for the same amount. (Pl. 56.1 Stmt, at 5.)

The design of the proposed APCVD System was complex. The system was to be online, coating the glass sheets before they reached the annealing lehr. (Def. 56.1 Stmt, ¶ 11.) According to a schematic drawing prepared by CVD (Def. 56.1 Stmt, Ex. 8.) - which CVD contends was "preliminary" and incomplete (Pl. 56.1 Stmt, at 6, 19) - the system contained its own heating unit (the "Deposition Lehr") responsible for maintaining the temperature of the glass. Within the Deposition Lehr would be a "Deposition Module, " depositing gaseous chemicals that would combine to form a thin film over the entire sheet of glass. The Deposition Module was to consist of several "injector modules, " each of which would house its own "deposition head" and "deposition nozzle." (Def. 56.1 Stmt, ¶ 14.)

Given that the primary purpose of the APCVD System was the deposition of chemicals onto the glass, it was understood that the components of the system that accomplished this purpose were the most critical. For example, K.S. Chang, a Taiwan Glass engineer at the Lukang factory, described the deposition nozzle - the piece of the system that would actually spray the chemicals onto the glass - as "one of the most important components" of the system. ( Id. ¶ 17.) Karlheinz Strobl - CVD's Vice President for Business Development and the "principal scientist for the APCVD thin coating technology" - referred to the Deposition Module as the "heart" of the APCVD System. ( Id. ¶ 19.)

2. The Inspection and Shipment

Section 6.14 of the Agreement laid out a "Preliminary Manufacturing Schedule, " which divided the project into six stages and stated "goals for each stage." (Agreement, at 18-19.) Among these goals was the design and construction of an "R&D APCVD, " which, Taiwan Glass says, was to include a prototype of the Deposition Module and its constituent parts.[4] (Def. 56.1 Stmt, ¶ 20.) However, in 2009, CVD made changes to the proposed design of the APCVD System and so informed Taiwan Glass. ( Id. ¶¶ 21-22.) CVD concedes that it neither provided a copy of the new design to Taiwan Glass nor physically manufactured the R&D prototype, but says that the R&D system was not a "deliverable item" under the Agreement. (Pl. 56.1 Stmt, at 9-10, 19.)

Under the terms of the Agreement, CVD was entitled to payment of the second 30% of the purchase price following "Shipping and Testing at Seller's Facility and acceptance for shipping by Buyer." (Agreement, at 3.) Section 6.2 of the Agreement, entitled "Pre-Shipment Inspection, " says the following: "Customer visits during construction are encouraged. Prior to shipment we invite customers to our facility to view complete final check out of the system and its ability to meet the specifications mentioned herein." ( Id. at 11.) On October 28, 2009, as required by the Standby LC, Taiwan Glass wrote to CVD instructing the latter to arrange shipment of the APVCD System. (Def. 56.1 Stmt, Ex. 16.) However, Taiwan Glass stressed (in bolded and underlined typeface) that CVD must not ship the system without first obtaining "[t]he acceptance for shipping issued by [Taiwan Glass]."

Approximately a month later, on November 23 and 24, 2009, several Taiwan Glass employees, including Chang, visited CVD's facility for an inspection. (Pl. 56.1 Stmt, at 12.) CVD concedes that, at the time of the inspection, it had not physically manufactured or assembled several components of the APCVD System. ( Id. at 12-13.) In particular, the Taiwan Glass employees were informed that the Deposition Module was not available for inspection, and that components of the module would be "added later in Taiwan." (Def. 56.1 Stmt, ¶ 36.) Neither did CVD produce a completed version of the R&D APCVD or samples of TCO glass from the R&D system ( id. ¶¶ 39-40), though CVD disputes whether it was obligated to provide such samples (Pl. 56.1 Stmt, at 19). Following the inspection, Chang advised Strobl that he and the other employees were "not authorized to sign acceptance of the shipment to [Taiwan Glass] and that CVD should therefore not ship the system." (Def. 56.1 Stmt, ¶ 42.) Nonetheless, on or about November 27, 2009, CVD packed the parts of the APCVD System that had been available for inspection by Taiwan Glass into three shipment containers and had them sent to Taiwan shortly thereafter. Around the same time, CVD arranged for shipment of certain other parts from its suppliers in China directly to Taiwan. The shipments concededly did not include all the components of the system, including the Deposition Module. (Pl. 56.1 Stmt, at 15-16.)

Both parties subsequently - and unsuccessfully - attempted to obtain payment: CVD under the Commercial LC for the second installment of the purchase price, and Taiwan Glass under the Standby LC for the 30% initially paid to CVD. Taiwan Glass sought payment on the stated grounds that CVD had been "unable to meet [the] test requirement" and had shipped the goods in the absence of "acceptance for shipping issued by [Taiwan Glass]." (Def. 56.1 Stmt, ¶ 48.) Taiwan Glass refused to clear the CVD shipment through customs, and it was ultimately shipped back to CVD. ( Id. ¶ 51.) On January 22, 2010, CVD wrote to Taiwan Glass to confirm rejection of the goods. (Def. 56.1 Stmt, Ex. 19.)

B. Procedural History

CVD filed the instant action on January 26, 2010 against Taiwan Glass and Mizuho, alleging breach of contract and wrongful dishonor, respectively. (Dkt. No. 1.) Taiwan Glass filed a counterclaim against CVD for breach of contract on April 15, 2010, and against Capital One for wrongful dishonor on August 31, 2010. (Dkt. Nos. 12 & 32.) Mizuho moved for summary judgment against CVD on July 28, 2010. (Dkt. No. 26.) CVD cross-moved for summary judgment against Mizuho on August 31, 2010. (Dkt. No. 33). On January 28, 2011, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.