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Metaldyne, LLC v. JD Norman Industries, Inc.

United States District Court, E.D. Michigan, Southern Division

April 19, 2017

METALDYNE, LLC, Plaintiff,
v.
JD NORMAN INDUSTRIES, INC., Defendant.

          OPINION AND ORDER DENYING PLAINTIFF'S “EMERGENCY” MOTION FOR DECLARATORY JUDGMENT OR, IN THE ALTERNATIVE, FOR PRELIMINARY INJUNCTION (DKT. 10)

          MARK A. GOLDSMITH, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Metaldyne, LLC's “emergency” motion for a declaratory judgment or, in the alternative, a preliminary injunction (Dkt. 10), to which Defendant JD Norman Industries, Inc. filed a response (Dkt. 19). A hearing on the motion was conducted on April 4, 2017. For the reasons stated below, the Court denies the motion.

         I. BACKGROUND

         Metaldyne manufactures and supplies certain automotive parts to JD Norman pursuant to the parties' contracts. 2d Am. Compl. ¶¶ 8, 10; Pl. Br. at 2, 7-9; Def. Resp. at 4. JD Norman performs certain machining services on these parts and then delivers them to General Motors Corporation for use in the 6.6L Duramax, Gen V 5.3L and 6.2L and L850 programs (“GM programs”), as well as to Fiat Chrysler Automobiles for use in the Tigershark 2.0L and 2.4L programs (“FCA programs”). Id. The payment terms for goods supplied for the Gen V 5.3L GM program are Net-45, while the payment terms under the other GM programs are Net-47. 2d Am. Compl. ¶ 9.[1] The payment terms for goods supplied for the FCA programs are Net-70. Id. ¶ 11.

         Metaldyne alleges that, within the last several months, JD Norman “has repeatedly failed to make timely payments for the shipment of parts delivered under the GM programs and the FCA programs.” Id. ¶ 13; Pl. Br. at 9 (“[S]ince November 2016, JD Norman has paid 141 of 152 invoices late, with days delinquent ranging from 1 to 27 (18 invoices were paid more than 16 days late).”). Metaldyne claims that JD Norman's failure to make timely payments amounts to a breach of the parties' contracts and, as of March 8, 2017, JD Norman owed Metaldyne approximately $2, 785, 385. 2d Am. Compl. ¶¶ 13, 15.[2]

         Metaldyne further states that it sent a letter to JD Norman on March 6, 2017 demanding that JD Norman would: “(1) pay its past due arrearage to Metaldyne of $475, 251.00; (2) provide adequate assurances that it would make full payment for all future amounts owed as such payments became due; (3) agree to Net-20 payment terms going forward; and (4) provide sufficient financial information to demonstrate it was not suffering financial difficulties.” Id. ¶ 17; see also 3/6/2017 Demand Letter, Ex. A to Am. Compl., at 2 (Dkt. 9-1). Metaldyne claims that JD Norman rejected the Net-20 proposal, as well as the demand to provide financial information. 2d Am. Compl. ¶ 19; Pl. Br. at 17 (“Late in the day on March 8th, and again via letter received from its counsel on March 9th, JD Norman rejected Metaldyne's demand for Net- 20 payment terms and rejected its demand that JD Norman provide Metaldyne with any financial information.” (emphasis omitted)). Metaldyne alleges that, by failing to respond to the demand letter, JD Norman “repudiated the contract pursuant to [Mich. Comp. Laws §] 440.2609(4).” 2d Am. Compl. ¶ 20; Pl. Br. at 17-21.

         In its breach-of-contract claim, Metaldyne alleges that JD Norman breached the parties' contracts by: (i) repeatedly failing to timely pay in accordance with the contracts' terms; (ii) failing to provide adequate assurance, which amounts to repudiation of the contracts; and (iii) breaching its obligation of good faith and fair dealing. 2d Am. Compl. ¶¶ 27-29. Because of this purported breach and repudiation, Metaldyne asserts in its declaratory-judgment claim that it is entitled to exercise its rights as an aggrieved seller pursuant to Mich. Comp. Laws § 440.2703 and the common law. Id. ¶ 38.

         II. ANALYSIS

         Metaldyne filed the present “emergency” motion on March 17, 2017, claiming that “there is a reasonable risk that JD Norman is financially distressed and therefore will fail to pay Metaldyne millions of dollars that are owed for goods already delivered and to be delivered to JD Norman.” Pl. Br. at 1-2. Metaldyne seeks a declaratory judgment or, in the alternative, a preliminary injunction. The Court addresses each request in turn.

         A. Declaratory Judgment

         Metaldyne requests a declaratory judgment that it may exercise its rights as an aggrieved seller under both Mich. Comp. Laws § 440.2703 and the common law. Pl. Br. at 1; Am. Compl. ¶ 42. This request is premised entirely on JD Norman's purported breach and repudiation of the parties' contracts. See Am. Compl. ¶ 38 (“As a result of [JD Norman's] breach and its repudiation of the contracts, Metaldyne is entitled to exercise its rights as an aggrieved seller pursuant to [Mich. Comp. Laws §] 440.2703 and the common law.”).

         The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a); Fed.R.Civ.P. 57 (“These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. § 2201.”). The exercise of jurisdiction in a declaratory judgment action is consigned to the court's discretion. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). In exercising that discretion, courts consider five factors:

(1) Whether the declaratory action would settle the controversy;
(2) Whether the declaratory action would serve a useful purpose in clarifying the ...

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