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Ltd. v. Angstrom Automotive Group, LLC

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

December 3, 2019




         Plaintiff Stackpole International Engineered Products, LTD, (“Stackpole”) is an automotive supplier. It was engaged in several commercial agreements with Defendants Angstrom Automotive Group, LLC, (“AAG”) and Angstrom Precision Metals, LLC, (“APM”). In these agreements, Stackpole ordered parts necessary to build engine oil pumps. The relationship broke down and both sides now seek to hold the other liable for alleged breaches of contract. Stackpole also seeks to hold Defendants liable for a breach of implied warranty.

         Now before the court are cross motions for summary judgment. The parties thoroughly briefed the motions. (ECF Nos. 51, 56, 57, 58, 59, 60.) The court found a hearing unnecessary. E.D. Mich. L.R. 7.1(f)(2). For the following reasons, the court will deny Stackpole's motion for summary judgment as to Stackpole's breach of contract claim but will grant Stackpole's motion as to AAG's participation in the agreements. The court will grant in part and deny in part Stackpole's motion as to APM's counterclaim. For Defendants, the court will deny their motion for summary judgment as to Stackpole's breach of contract claim and as to AAG's participation in the agreements. However, the court will grant Defendants' motion on Stackpole's implied warranty claims.


         Stackpole filed its complaint in November 2017. (ECF No. 1.) In it, Stackpole alleged breach of contract (Count I), breach of express warranty (Count II), and claim and delivery (Count III). (Id.) Within three months, Defendants moved to dismiss the complaint and Stackpole filed a motion for partial summary judgment. (ECF Nos. 11, 14.)

         In September 2018, the court issued an opinion that denied without prejudice Stackpole's motion for summary judgment and granted in part and denied in part Defendants' motion to dismiss. (ECF No. 24.) The court found that Stackpole had plausibly alleged AAG was a valid party to this suit. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (ECF No. 24, PageID.475.) It also found that Stackpole had pled a viable claim for breach of contract. (Id., PageID.478.) However, the court found that Stackpole lacked a valid basis for breach of express warranty (Count II) and claim and delivery (Count III). (Id., PageID.486.) The court did leave open the possibility of an amended complaint. (Id., PageID.489.) The court further found insufficient evidence to grant Stackpole's motion for summary judgment. (Id., PageID.484.) It denied Stackpole's motion without prejudice and allowed the parties to proceed with discovery. (Id., PageID.486.)

         Soon after the court's September 2018 opinion, APM filed a counterclaim, alleging breach of contract on the part of Stackpole. (ECF No. 36.) Stackpole amended its complaint to add two claims of implied warranty of merchantability. Stackpole narrowed its claim and delivery suit in accordance with the court's opinion as well.

         After almost ten months of discovery, Stackpole now moves for summary judgment again. (ECF Nos. 56.) It alleges that it is entitled to a judgment as a matter of law as to its breach of contract claim. Stackpole also seeks to dismiss APM's counterclaim. At issue is whether AAG is a valid party to this suit and whether Defendants' actions amounted to a breach.

         Defendants filed their own motion for summary judgment at the same time as Stackpole. (ECF No. 51.) They assert that Stackpole's claims for breach of contract and breach of implied warranty fail for lacking genuine disputes of material fact. Fed.R.Civ.P. 56(a). Defendants ask the court to dismiss the claims against AAG given that AAG was allegedly not a party to the contracts at issue.


         Both Stackpole and Defendants are participants in the automotive sector's supply chain. Stackpole is a tier-1 automotive supplier that, among other things, manufactures transmission and engine oil pumps. (ECF No. 35, PageID.644-6.) These pumps are then sold to original equipment manufacturers (“OEM”) on their way toward being incorporated into vehicles for use on the streets. (Id.) In order to build these pumps, Stackpole sought suppliers for three parts. These parts were labeled 806670 or “T70 Parts, ” 140665 or “10R/10L Parts, ” and 116122 or “Nano Parts.” (Id., PageID.645.)

         AAG is a parent company with several subsidiary affiliates, including APM. (ECF No. 35, PageID.652; ECF No. 56-3, PageID.1282-83.) APM served as the actual component supplier while AAG oversaw and managed corporate level decisions. (ECF No. 35, PageID.645, 652; ECF No. 56-3, PageID.1282-83; ECF No. 56-6, PageID.1308.)

         The contracts at issue had their origin in June 2014 when Stackpole sent a quote to Defendants, asking for pricing estimates on the production of the parts. (ECF No. 51-3, PageID.1055.) In response, APM submitted pricing quotes for the 10R Parts and the Nano Parts. (ECF No. 51-7, PageID.1079; ECF No. 51-8, PageID.1081.) APM and Stackpole had a preexisting contract to produce T70 Parts. (ECF No. 51, PageID.1010; ECF No. 56, PageID.1242; ECF No. 51-2, PageID.1050.) AAG maintained ultimate responsibility for deciding quotes submitted by APM. (ECF No. 56-2, PageID.1273.; ECF No. 57-4, PageID.1514.) Stackpole and AAG negotiated the specifics of the potential deal and eventually signed an agreement in the form of a Letter of Intent (“LOI”). (ECF No. 56-6, PageID.1308; ECF No. 57-13, PageID.1590-93; ECF No. 58-6, PageID.1717-1719; ECF No. 58, PageID.1638.) The LOI was signed between Stackpole and AAG, but was made with the understanding that APM would manufacture the parts. (ECF No. 51-10, PageID.1088-89; ECF No. 51-4, PageID.1058; ECF No. 51- 5, PageID.1071.) AAG was merely the management umbrella for APM and did not negotiate to manufacture the products itself. (ECF No. 56-3, PageID.1282.)

         The LOI detailed prices and quantities for the three parts. Stackpole agreed to order 1.1 million 10R Parts for $1.66 per part and 306, 000 Nano Parts for $3.08 per part. (ECF No. 51-10, PageID.1088-89.) Defendants agreed to a three-year price reduction for the preexisting T70 Part business. (Id.) The LOI further identified 10R Parts and Nano Parts discounts for Stackpole that would take place over the course of the next three years as APM improved its productivity. (Id.; ECF No. 58, PageID.1660-61.) The contract contemplated later agreements between Stackpole and Defendants. It mentioned “Purchase Orders and Stackpole Production blanket purchase orders will be issued for each part at a later date.” (ECF No. 51-10, PageID.1089.) Notably, the LOI did not detail the manufacturing process that would be used by APM to make the parts. (ECF No. 51-10, PageID.1088-89.) It also did not include a provision for Stackpole to share the cost of production with Defendants. (Id.) A termination date was not included either. (Id.)

         After the LOI was signed, Stackpole followed through and placed an order to APM to produce the relevant parts. Stackpole sent APM three purchase orders (“POs”) by June 2015. (ECF Nos. 56-8, 56-9, 56-10.) These POs were not signed and returned by either Defendant. (See ECF No. 56-8, PageID.1323; ECF No. 56-9, PageID.1337; ECF No. 56-10, PageID.1348.) Nonetheless, as this court pointed out in its earlier opinion, APM's subsequent performance of the POs and Stackpole's acceptance of APM's shipments established a valid contractual relationship. (ECF No. 24, PageID.487-88; ECF No. 51, PageID.1018.) Thus, Stackpole and APM (at a minimum) were bound by the provisions of the POs, minus the terms included in the “Supplemental Terms and Conditions.” (ECF No. 24, PageID.487-88.) Importantly, all three POs referenced the original LOI between Stackpole and AAG. (ECF No. 56-8, PageID.1314; ECF No. 56-9, PageID.1327; ECF No. 56-10, PageID.1340.)

         APM followed through with its supply to Stackpole for roughly the next two years. However, the production of the parts began to put strains on Defendants' businesses. By April 2017, Defendants were unable to profitably produce the parts necessary to meet their obligations to Stackpole. (ECF No. 57-14, PageID.1597; ECF No. 56-21, PageID.1409.; ECF No. 56-23, PageID.1420.) AAG informed Stackpole that APM would not continue production of the parts unless Stackpole agreed to a price increase. (ECF No. 24, PageID.472; ECF No. 25, PageID.499; ECF No. 56-21, PageID.1409.) Over the course of May 2017, AAG clarified its demands, ultimately asking for a price increase of $1.63 per part. (ECF No. 56-25, PageID.1425; ECF Nos. 56-22, PageID.1413; 56-24, PageID.1423.) Through April and May 2017, AAG made it explicitly known to Stackpole that Defendants required a price increase or APM would shut down manufacturing operations. (ECF No. 56-21, PageID.1409 (“The second option is that we will wind down the whole operation.”); ECF No. 56-22, PageID.1413 (Defendants' production labeled as a “Going Concern” if Defendants do not receive a price increase); ECF No. 25, PageID.499 (“In April and May 2017, Angstrom verbally informed Stackpole that it would no longer supply the Parts to Stackpole unless Stackpole agreed to Angstrom's . . . price increase.”).)

         In response, Stackpole made it known to Defendants that it would only agree to a price increase under protest. (ECF No. 56-26, PageID.1427 (Letter from Stackpole on May 31, 2017 indicating that if Stackpole must pay a higher price for the parts, “then it will have to do so under protest.”).) Stackpole, operating in the middle of the automotive sector's manufacturing process, needed to ship its parts “just in time” for the next stage of production. (ECF No. 27, PageID.552-53.; ECF No. 56-26, PageID.1427 (“[Defendants'] commitment to supply is critical to protect our consumer.”).) Any delay in Stackpole's shipments would endanger the entire supply chain's tightly regimented time schedule. (ECF No. 27, PageID.552-53.; ECF No. 56-26, PageID.1427; ECF No. 56-6, PageID.1309 (threatening to cut off supply effectively meant “a gun was put to [Stackpole's] head.”); ECF No. 57-5, PageID.1530 (Defendants “forced [Stackpole's] hand.”).) Missing deadlines would risk permanent loss of business for Stackpole. Id.

         Stackpole and AAG then negotiated a new agreement, called the “Wind-Down Agreement.” (ECF No. 56-3, PageID.1286-87 (AAG's Chief Commercial Officer describing negotiations between AAG and Stackpole regarding the Wind Down Agreement); ECF No. 56-27.) Signed by APM and Stackpole on June 6th and 7th, 2017, respectively (with AAG's address on the agreement's letterhead), the new agreement set higher prices for the parts and set an end date for September 30, 2017. (ECF No. 56-27, PageID.1429; ECF No. 56, PageID.1251; ECF No. 58, PageID.1656.) Stackpole agreed to Defendants' demand of an increase of $1.63 per part. (ECF No. 56-27, PageID.1429.) This constituted a price increase over 100% for the supply of T70 Parts and 10R Parts, as well as over 50% for Nano Parts. (Id.) The parties agreed to end their commercial relationship by the end of September 2017. (Id.) The end of the agreement explicitly stated that Stackpole “enter[ed] [the] agreement under duress and protest.” (ECF No. 56-27, PageID.1430.)

         Stackpole and Defendants fulfilled the obligations in the agreement, with APM providing the remaining parts ordered and Stackpole paying the increased pricing. (ECF No. 51, PageID.1022; ECF No. 57, PageID.1473.) Stackpole did refuse to pay some amounts owed under the Wind Down Agreement for APM's equipment expenses. (ECF No. 40, PageID.723-24.) At the completion of the Wind Down Agreement, Stackpole filed this instant action against both Defendants. (ECF No. 1.)

         II. ...

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