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Indus Concepts & Engineering, LLC v. Superb Industries, Inc.

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

July 30, 2018

INDUS CONCEPTS & ENGINEERING, LLC, Plaintiff/Counter-Defendant,
v.
SUPERB INDUSTRIES, INC., and JOHN MILLER, Defendants/Counter-Plaintiffs.

          R. Steven Whalen, Magistrate Judge.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [53] AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON DEFENDANT'S COUNTERCLAIMS [52]

          LAURIE J. MICHELSON, U.S. DISTRICT JUDGE.

         Indus Concepts and Engineering, LLC and Superb Industries, Inc. worked together for many years on the design and manufacture of metal knee brackets made to protect drivers during car accidents. Indus engineered the bracket technology and Superb manufactured the brackets. The parties successfully partnered with Chrysler to utilize the technology in certain Chrysler trucks. Chrysler ultimately cancelled the program, however, and opted for a different technology (knee air bags). Each side now alleges the other breached the contracts governing their business relationship. And each side moved for summary judgment on the others' claims. The contracts, unfortunately, are not models of clarity. But each side has presented an interpretation that is supported by the record.

         So for the reasons that follow, the Court will grant in part and deny in part Superb's motion for summary judgment, and deny Indus' motion for summary judgment on Superb's counterclaims.

         I.

         A.

         Indus is a Michigan engineering company run by Mani Ayyakannu. (R. 53-6, PageID.970.) Among other things, Indus developed and designed energy-absorbing metal brackets that can be installed in automobiles to protect occupants during a frontal crash. (R. 56-2, PageID.2504.) The brackets came in different thicknesses-2.0, 1.8, and 1.4 mm. (R. 53-6, PageID.971.)

         Superb is an Ohio company in the business of manufacturing precision metal products. (R. 53-2, PageID.826.) Its president is John Miller. (R. 54-3, PageID.1674.)

         The parties entered into a business relationship in which Superb would manufacture and sell products utilizing Indus' technology. In 2008, Mani (on behalf of Indus) and Miller (on behalf of Superb) signed two agreements to govern their relationship-a Business Alliance Agreement (BAA) and a License Agreement. (R. 53-2, PageID.825-855.) A chart attached to the BAA explained how Indus and Superb would share profits. (PageID.826.) According to the chart, Indus would receive a royalty of $0.20 per piece, regardless of the bracket's size or material. (PageID.837.)

         Indus began to work with Chrysler on a program that would incorporate the bracket technology in some of Chrysler's trucks. (R. 56-2.) Indus and Superb worked with Chrysler's direct supplier, Meridian Lightweight Technologies, to provide design and engineering support. (R. 56-2.) While the Chrysler program was getting off the ground, Indus and Superb negotiated pricing on the different sized brackets. (R. 53-6, PageID.984.) According to Indus, under the last quote it finalized with Superb, Superb would charge Meridian $2.158 for each 2.0 mm part, $2.066 for each 1.8 mm part, and $1.889 for each 1.4 mm part (the 2008 Quote). (R. 56-2, PageID.2507- 08; R. 53-6, PageID.997.) Once the program was up and running, Indus passed communication with Meridian off to Superb. (R. 53-6, PageID.990.)

         Meridian submitted its first large purchase order for brackets on September 8, 2009. (R 53-13, PageID.1127.) The purchase order included the part numbers corresponding to the 1.8 mm and 1.4 mm brackets and listed the price per piece as $2.158 and $2.066, respectively. (Id.; R. 53-6, PageID.988.) But these prices corresponded to the 2.0 mm and 1.8 mm parts in the 2008 Quote. (R. 53-13, PageID.1127; R. 53-6, PageID.994; R. 53-35, PageID.1533.)

         Superb emailed Indus the purchase order and also included Indus on an email to Meridian acknowledging the purchase order and informing Meridian that Superb would review the purchase order and let Meridian know if there were any questions or concerns. (R. 53-13, PageID.1125.) Indus did not respond to the email or otherwise object to the purchase order. (R. 53-6, PageID.994, 997.) In other words, Indus did not question why the prices negotiated for the 2.0 mm and 1.8 mm brackets were now being applied to the 1.8 mm and 1.4 mm brackets. According to Superb, it still took a few months to finalize the design with Chrysler, so Superb did not go into production on the order until December 2009. (R. 54-3, PageID.1793-94; R. 53-14.) Beginning in January 2010, Indus received monthly royalty statements. (R. 53-6, PageID.991; R. 53-3.)

         During this time, Indus made some attempts to generate interest in the bracket technology from other automakers. (R. 54-6, PageID.2158-2166.) But Indus was unable to generate any programs with them. (R. 54-3, PageID.1704.)

         In 2014, Indus learned that its program with Chrysler may be in jeopardy and that Chrysler may opt for a different technology-the knee airbag. (R. 53-6, PageID.999-1000.) In an attempt to save its program, Indus emailed Superb asking if there was any way to lower the cost of the bracket. (R. 53-6, PageID.1001-1002.) Superb responded that it could take an eight-cent cut per bracket if Indus did the same. (R. 53-6, PageID.1002.) Superb and Indus never agreed upon a lower price and Chrysler ultimately cancelled the program. (R. 53-6, PageID.1012.)

         In the aftermath, Indus went through the financial paperwork from the program and finally realized that Superb had charged Meridian the 2008 Quote prices for 2.0 and 1.8-sized brackets for the 1.8 and 1.4-sized brackets. (R. 53-6, PageID.1000.) In other words, Superb charged Meridian more for the 1.8 and 1.4 mm brackets than quoted in 2008. Indus maintains that prior to its post-program audit, it believed that the pricing was in accord with the 2008 Quote. (R. 53-6, PageID.996.)

         Superb invested more than $1.9 million to obtain the manufacturing capacity it thought necessary to meet the demands that would result from Indus' marketing of the brackets. (R. 54-4, PageID.1884-1889.) But because Indus was not able to secure a relationship with any automaker other than Chrysler, production fell far short of expectations. (R. 54-4, PageID.1885, 2003.)

         B.

         Indus filed the present lawsuit asserting four breach-of-contract claims against Superb. (R. 32.) First, it asserts that Superb breached the License Agreement by failing to obtain Indus' consent to the bracket price in the September 2009 purchase order. Second, Indus asserts that, in contravention of the BAA, Superb failed to negotiate in good faith to lower the bracket price once the program with Chrysler was in jeopardy. Third, Indus asserts that Superb's bracket “overcharging” should be considered a “cost savings” under the BAA, obligating Superb to split the difference with Indus. Lastly, Indus claims that Superb breached its obligation under the auditing provision of the Licensing Agreement because Superb failed to provide Indus with documentation that would have made it clear that Superb had not followed the letter of the 2008 Quote - i.e., that it was charging $2.158 for the 1.8 mm part and $2.066 for the 1.4 mm part when those were the prices quoted for the 2.0 and 1.8 mm parts. In the alternative, Indus asks for relief under the equitable doctrine of unjust enrichment.

         Superb raises two counter-claims, one of which it is still currently pursuing. (R. 33.) Superb asserts that Indus failed to aggressively market the bracket technology to auto manufacturers as was required in their BAA. Because Indus failed to aggressively market the technology, Superb lost profits and did not recoup its investments in building manufacturing capacity. (R. 33, PageID.533.)

         II.

         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is material only if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). When reviewing a party's motion for summary judgment, the court must view the evidence, and any reasonable inferences drawn from the evidence, in the light most favorable to the nonmoving party. See ...


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