of law. Fed.R.Civ.P, 56{c) (2003). A genuine issue of material
fact exists if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether a
genuine issue of material fact exists, the Court views the facts in
the light most favorable to the nonmoving party and draws all
reasonable inferences in the nonmoving party’s favor. Shank v.
William R. Hauge, Inc., 192 F.3d 675, 681 (7th Cir. 1999).

The moving party in a motion for summary judgment bears the
initial burden of demonstrating that no genuine issue of material
fact exists. Celotex Corp, v. Catrett, 477 U.S. 317, 323 (1986).
Tf the moving party’s burden is met, then the nonmoving party must
set forth specific facts showing that there is a genuine issue for
trial in order to survive summary judgment. Schacht v. Wisconsin
Dep’t of Corrs., 175 F.3d 497, 504 (7th Cir. 1999). Jn a summary
judgment proceeding, the Court will disregard all facts not properly
supported by the record, Brasic v. Heinemann’s Inc., 121 F.3d 281,
284 (7th Cir. 1997).

DISCUSSTON

1. Implied Warranties (Counts V and VI)

IMI presents two arguments against Counts V and VI. First, IMI
claims that DBI is collaterally estopped from litigating the issue
of implied warranties because previous litigation conclusively
decided the matter. Next, IMI claims that the June Proposal

expressly and conspicuously waived all implied warranties.


Boats, Inc., 649 N.W.2d 783, 788-89 (Mich. App. 2002).% Here, DBI’s
complaint focuses solely on its disappointed contractual
expectations. DBI does not allege that IMI engaged in any tortious
behavior, or that IMI’s conduct established a separate and distinct
duty beyond its contractual obligations. Because DBI has not
presented any argument as to why the court should impose tort
liabilities on the parties’ contractual relationship, the
contribution claim must fail.
CONCLUSION

IT iS THEREFORE ORDERED that IMI’s Motion for Partial Summary
Judgment be, and the same hereby is, GRANTED in part and DENIED in
part. Count II is dismissed. All other counts remain,

DATED: March 12, 2004 ENTER?

ARLANDER KEYS

United Stats Magistrate Judge

*The court has cited Michigan law based on IMI's
uncontroverted claim that Michigan law controls the issue.

9


that case, the parties agreed that the terms of the controlling
offer included implied warranty disclaimers. See UBI’s Statement of
Material Facts, Ex, F. Here, DBI disputes that the relevant offer
contained any such disclaimers. Because the two cases differ in
this one significant respect, they do not share identical]. issues
and IMI cannot invoke collateral estoppel to bar DBI’s implied
Warranty claims.
B. Implied Warranty Disclaimers

IMI also argues that the terms of the June Proposal expressly
and conspicuously disclaimed all implied warranties. While DBY does
not dispute that the June Proposal contained conspicuous waivers,
DBI advances two positions as to why the disclaimers are without
force. First, DBI claims that waivers were not part of the parties
bargain because DBI based the Purchase Order on the Branch Quotation
and not the June Proposal, Alternatively, DBI claims that, even if
the parties’ contract incorporates the terms of the June Proposal,
the Purchase Order contained conflicting provisions that cancel out
the disclaimers.

Neither party disputes that a contract was formed when DBI
issued the Purchase Order. But the parties disagree as to what
constituted the controlling offer. DBI argues that the Branch
Quotation is the relevant offer, whereas IMI argues for the June
Proposal. IMI characterizes the Branch Quotation as a “mere
confirmation” of the June Proposal and not a separate offer inviting

DBI's acceptance. While IMJ is certainly free to advance this
is ¥


A. Collateral Estoppel

The doctrine of collateral estoppel bars relitigating identical
issues decided by a previous adjudication, Kunzelman v. Thompson,
799 F.2d 1172, 1176 (7° Cir. 1986). IMI claims that the validity of
IMI’s warranty disclaimers was previously litigated and decided in
Caine Steel of Michigan, Inc. v. Delta Brands, Inc. (“Caine Steel”).
In Caine Steel, DBI filed a similar third-party complaint against
IMI after suit was brought against DBI for selling defective
equipment. On September 23, 2003, the court recognized IMI’s
disclaimers, and dismissed DBI’s implied warranty claims, IM!
argues that the Caine Steel decision bars DBI’s present claims. The
court disagrees.

The above-referenced decision is not accompanied by reasoning
or citations to authority. Rather, the half-page order states that
the decision was based on reasons stated “more fully on the record
at a hearing held on September 23, 2003.” As IMI has not supplied
the transcript from this hearing, the court is unable to determine
if the disputed issues were identical to those surrounding the
present dispute. While it may be true that the complaints in ¢ach
case are similar, this alone cannot decide the matter. Without
further insight into what prompted the judge's actual decision, the
court cannot accept IMI’s assertion that the Caine Steel decision
turned on identical issues.

Moreover, DBI provides evidence demonstrating that the present

case involves a key issue that was not disputed in Caine Steel. In


and neither become part of the contract. Challenge Mach. Co. v.
Mattison Mach. Works, 359 N.W.2d 232, 236-37 (Mich. App. 1984) .¢
Applying this principle here, the conflicting implied warranty
provisions would knock each other out, and the parties’ contract
would be silent with respect to implied warranties. In such a case,
the court would look to the Uniform Commercial Code to determine
whether the sales transaction gave rise to implied warranties, Id,
at 237. The parties do not address this latter issue, and resolution
of this factual question is better left for trial.

In sum, the court finds that DBI has presented sufficient
evidence to raise a dispute of material fact as to whether the June
Proposal’s warranty disclaimers were made part of the contract,
Even assuming that they were, a dispute of material fact exists as
to whether the Purchase Order’s conflicting terms knocked out the
disclaimers, and whether implied warranties arose by operation of
law. Accordingly, Counts V and VI may stand.

2. Contribution (Count IT)

IMI argues that DBI cannot bring a tort-based contribution
claim because the third-party complaint sounds entirely in contract.
IMI is correct that a tort claim cannot be maintained when a
contractual agreement exists and no separate and distinct duty from

the contractual obligation is established. See Sherman v. Sea Ray

“The June Proposal states that Michigan law governs the
transaction, and DBI does not dispute that it would apply.

8


hae

Minute Qater Form (06/97)
United States District Court, Northern District of Hinois
sence | AvlnderKeys | Sunt
CASE NUMBER 01 C 9389 DATE 3/12/2004
CASE Loeffel Steel Products, Inc. vs. Delta Brands, Inc.
TITLE
Un the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintifY, and (b) state briefly the nature
MOTION: of the motion being prescnted.]
DOCKET ENTRY:
(1) a Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) a Answer brief to motion due____._ Reply to answer brief due.
(4) a Ruling/Hearing on setfor at,
(5) a Status hearing(held/continued to] [set for/re-set for}on set for at
(6) a Pretrial conference[held/continued to] (set for/re-set for]on__—_setfor at.
(7) im) Trial[set for/re-set for]on at.
(8) a [Bench/Jury trial] [Hearing] hefd/continued to at.
(9) Qa This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
QFRCP4¢n) O Local Rule 41.) OFRCP4ifay(1) OO FRCP41(a)(2).
qo [Other docket entry} Memorandum Opinion and Order entered. Motion of Third-Party Defendant

Industrial Magnetics, Inc. for Partial Summary Judgment [#47] is hereby granted in part and denied in
part, Count II of the Complaint is dismissed. Ail other counts remain. te

(il) @

No notices required, advised in open court.

[For further detail see order attached to the original minute order,]

No notices required,

wv | Notices mailed by judge's staff.

Notified counsel by telephone,

Docketing to mail notices,
Mail AO 450 form.

Copy to judge/magisteate judge. we TET teeny

courtroom

Fil deputy's a! : _
initials + -

Date/time received in

central Clerk's Office

railing deputy Initints



position at trial, the court tinds that the Branch Quotation
exhibits enough characteristics of a definite proposal to create a
genuine dispute of material fact regarding whether it constituted
the controlling offer.

The Branch Quotation contains definite terms, including
specifically described subject matter, quantity, and pricing
information. Additionally, the Branch Quotation invites DBI's
acceptance, as it sets forth the required payment schedule. Lastly,
the Branch Quotation fails to reference the June Proposal. If the
Branch Quotation was merely a confirmation of a prior offer, it
would be reasonable to expect at least some reference to the June
Proposal. Based on these observations, the court finds that the
Branch Quotation could serve as the controlling offer. If it does,
then IMI’s warranty disclaimers would not apply to the subject
transaction.

But even assuming that the July Proposal’s terms were
incorporated into the contract, the court would still find that a
dispute of fact exists as to whether the warranty disclaimers
survived DBI’s acceptance. This is because the Purchase Order
provides its own warranty provisions that directly conflict with
[IMI's terms and conditions excluding such warranties. Under

relevant law, conflicting warranty provisions cancel each other out,

Valthough IMI claims that it has no record of receiving the
Purchase Order's terms and conditions page, the court must accept
DBI's version of the events at this stage of the proceedings. IMI
will, of course, have an opportunity to disprove DBI's version at
trial.


accompanied by any warranty disclaimers.

On May 10, 2000, DBI issued a purchase order requesting the
magnets described in the Branch Quotation (“Purchase Order”). The
Purchase Order included certain terms and conditions intended to
govern the purchase, including a provision expressly providing for
implied warranties. DBI claims that it hand-delivered the Purchase
Order to Mr. Branch. IMI disputes this, and claims that it cannot
locate the Purchase Order in its archived files.

IMI shipped the ordered magnets, and DBI incorporated them into
Loeffel’s equipment. When Loeffel brought the present action, DBL
filed a third-party complaint against IMI, raising the following
claims: Indemnity (Count I), Contribution (Count II), Breach of
Contract (Count III), Breach of Express Warranty (Count IV), Breach
of Implied Warranty of Fitness for a Particular Purpose (Count Vj,
and Breach of Implied Warranty of Merchantability (Count VI). IM1
now moves for summary judgment on the implied warranty counts
(Counts VY and VI}. IMI argues that DBI is collaterally estopped
from pursuing these claims, and also that the parties’ contract
conspicuously disclaims implied warranties. IMI also moves to
dismiss the contribution claim (Count II), arguing that DS8I’s
contract-based complaint precludes tort-based remediés.

STANDARD OF REVIEW

The court will grant summary judgment only if the pleadings and

supporting documents show that there is no genuine issue of material

fact and that the moving party is entitled to a judgment as a matter

3


reasons set forth below, the motion i8 GRANTED in part and DENIED
in part,
BACKGROUND FACTS

IMI is a Michigan corporation that produces and sells magnets
for use in industrial machinery. IMI sold Third-Party Plaintift,
Delta Brands, Inc. (“DBI”), magnets that DBI incorporated into
equipment manufactured for Plaintiff, Loeffel Steel Products, Inc.
(“Loeffel”}. When the equipment malfunctioned, Loeffel initiated
the present action against DBI. In response, DBI brought a third-
party complaint against IMI, alleging that IMI misrepresented the
magnets’ capabilities and must, therefore, share in DBI’s liability,
if any. IMI now moves for partial summary judgment. The following
facts are relevant to the issues raised in IMI’s motion.

Sometime in mid-1999, DBI requested that IMI’s regional sales
representative, Jim Branch, provide pricing information for certain
magnets, On June 22, 1999, Mr, Branch sent DBI a written proposal
describing the requested magnets and their possible uses (‘June
Proposal”). The June Proposal also included a terms and conditions
page that included conspicuous warranty disclaimers.

Months later, Mr. Branch again visited DBI‘s office. PBI
informed Mr, Branch that it needed more magnets for a number of new
applications, including the Loeffel project. Mr. Branch drew up a
quotation, explaining pricing and payment terms for the requested
magnets (“Branch Quotation”). The Branch Quotation described the

same magnets referenced in the June Proposal, but was not


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

28

CKETED
MAR 1 5 2004

D

o

Loeffel Steel Products, Inc.,
Plaintiff,
Vv.

Delta Brands, Inc. d/b/a/ DBI;
Samuel F. Savariego,

Defendants.

Delta Brands, Inc.,

Counter=-Plaintiff, No. O01 C 9389

v. Magistrate Judge

Arlander Keys
Loeffel Steel Products, Inc.,

Counter-Defendant.

Delta Brands, Inc.
and Samuel Savariego,

Third-Party
Plaintiffs,

ve
Industrial Magnetics, Inc.,

Third-Party
Defendant.

MEMORANDUM OPINION AND ORDER
In this diversity action, Third-Party Defendant, Industrial
Magnetics, Inc. (“IMI”), moves for partial summary judgment,

pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the

“9
y/