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Disorb Systems, Inc. v. Katz

Court of Common Pleas of Delaware, New Castle

January 29, 2019

DISORB SYSTEMS, INC., Plaintiff,
v.
BERNARD KATZ, Sole Proprietor d/b/a/ TELESONIC PACKAGING CORP. Defendant.

          Submitted: December 18, 2018

          Bruce W. McCullough, Esquire Bodell Bove, LLC Attorney for Plaintiff

          Bernard Katz Telesonic Packaging Corp. Pro Se Defendant

          DECISION AFTER TRIAL

          Hon. Carl C. Danberg, Judge

         The plaintiff, DiSorb Systems, Inc., (hereinafter "Plaintiff), filed a breach of contract action against the defendant, Bernard Katz, a sole proprietor doing business as Telesonic Packaging Corp., (hereinafter "Defendant"), alleging Defendant breached the contract and warranties associated with the purchase of large machinery. Plaintiff is in the business of manufacturing and delivering medical waste management products. Plaintiff contracted with Defendant, a manufacturer of large machinery utilized for packaging, for the purchase of equipment. One particular piece of equipment sought by Plaintiff would be capable of making a specific water soluble pouch desired by one of Plaintiffs customers. The machine, a PM-150P Automatic V/F/F/S Packaging Machine (hereinafter "Packaging Machine"), was ordered in July 2016. Defendant utilized a Chinese company to build the machine which was delivered one-year later in July 2017. Plaintiff found the machine incapable of making the agreed upon pouch. In August 2017, Defendant made attempts to troubleshoot the machine, at which time Defendant said he would refund Plaintiffs money. In September 2017, Plaintiff returned the machine to Defendant, but to date has not received a refund of the amounts paid. Plaintiff seeks recovery of $24, 682.00, plus pre- and post-judgment interest, plus costs. This is the Final Decision and Order of the Court after trial.

         FACTS AND PROCEDURAL HISTORY

         Plaintiffs Chief Executive Officer, Edward McLaughlin (hereinafter "Mr. McLaughlin"), contacted Defendant to inquire about Defendant's ability to construct a machine capable of producing a pouch with a three-sided seal, which would contain a unique film made of poly vinyl alcohol ("PVA film"). PVA film is sensitive to atmospheric states, which requires special storage and conversion conditions. The MonoSol Technical Bulletin[1] for the M7031 PVA film states: 1) the film's "ideal storage conditions" are 41 - 77 degrees Fahrenheit and 20 - 50 percent relative humidity; and 2) the film's "ideal conversion room conditions" are 73 degrees Fahrenheit, plus or minus 5 degrees, and 36 percent relative humidity, plus or minus 5 percent. Mr. McLaughlin testified at trial that at a meeting with Defendant, he brought samples of the exact pouch made by competitors that he wished to reproduce. On June 29, 2016, Defendant compiled a quotation for various pieces of equipment. On July 7, 2016, Defendant produced an invoice for Plaintiffs purchase of the following: a) 1 Packaging Machine for $25, 150.00; b) 1 BSQ-F2 Automatic Intermittent Motion Vacuum Lifter (hereinafter "Vacuum Lifter") for $3, 450.00; c) 1 Discharge & Indexing Counting Conveyer (hereinafter "Conveyer") for $5, 800.00; and d) Extra film former (hereinafter "film former") for $385.00, for a total of $34, 785.00. Plaintiff paid $21, 500.00 towards the purchase price at that time. On July 20, 2016, Defendant produced a second invoice for the purchase of 1 FRM-1010 Rotary Band Sealer (hereinafter "Band Sealer") for $3, 800.00. Attached to the second invoice is a page containing certain terms of sale[2] as well as a one-page warranty.

         The terms attached to said invoice state that Defendant highly recommends for Plaintiff to have a representative present for "machine commissioning" at Defendant's plant, at which time Plaintiff would observe the operation of the machine and receive training free of charge. Defendant's terms also require fifty-percent down payment, with the balance due at acceptable test run before shipment.[3] Defendant's warranty contains the following material terms: 1) seller is "limited either to repairing or replacing defective components," which are shipped to Defendant; 2) the "guarantee shall apply only to components which fail because of defects in material or workmanship provided the equipment has been operated for the purpose and under the conditions for which it was designed;" 3) the guarantee does not apply if equipment or its components have been repaired or altered by someone other than Defendant's authorized personnel;[4] 4) the warranty guarantees against defects in material or workmanship of Defendant's equipment for one year; and 5) the terms of the warranty are "in lieu of all other warranties, whether written, oral or implied."

         The Packaging Machine was manufactured in China and subsequently shipped to Defendant. Plaintiff received the equipment in July 2017, one year after the order was placed. Upon receipt, the Packaging Machine did not function. Diego Arisi (hereinafter "Mr. Arisi"), a machinist employed by Plaintiff as a senior facilities engineer, testified at trial that he could not get the machine to work. Sometime between the delivery date and August 2, 2017, Mr. Arisi contacted Defendant seeking assistance. Xiao Feng (hereinafter "Mrs. Feng"), Defendant's wife and employee, emailed Mr. Arisi on August 2, 2017, with information on how to operate the Packaging Machine. On August 3, 2017, Mr. Arisi replied asking for someone from Defendant's company to come out to Plaintiffs premises to perform what Mrs. Feng believed would get the machine operable. On August 11, 2017 and August 14, 2017, Defendant and Mrs. Feng visited Plaintiffs premises to inspect the Packaging Machine. Mrs. Feng was the only one to perform work on the Packaging Machine. Defendant admitted at trial that on August 14, 2017, after failing to get the Packaging Machine running, Defendant told Mr. McLaughlin to return the Packaging Machine for a refund. On September 6, 2017, Mr. McLaughlin emailed Mrs. Feng advising her that all equipment, [5] excluding the Indexing Conveyor, would be shipped back to Defendant. Mr. McLaughlin also included directions regarding who to make the refund check to. On September 11, 2017, Plaintiff returned the equipment to Defendant's place of business. Mr. McLaughlin testified during trial that the delay prior to returning the equipment was because Defendant was out of the country and Plaintiff did not want to leave the equipment unattended and outside of Defendant's place of business. On September 14, 2017, Mr. McLaughlin followed up with another email inquiring about the status of the refund check and confirming that all equipment had been returned and crated. On September 19, 2017, Mrs. Feng replied stating Defendant wanted to "make good" and supply Plaintiff with a new machine. The same day, Mr. McLaughlin responded, informing Mrs. Feng that Plaintiff was not interested in a new machine because Plaintiff had already waited a year to receive equipment that did not work and again requested a refund. Mr. McLaughlin testified at trial that the Packaging Machine was only supposed to take ten to twelve weeks to manufacture, but instead took a year, and Plaintiff could not wait any longer. On September 20, 2017, Mrs. Feng emailed Mr. McLaughlin with a balance sheet indicating a balance of $24, 682.00, which is the amount Plaintiff is requesting.[6] The same day, Mr. McLaughlin again responded asking when to expect the refund. On December 14, 2017, Mrs. Feng emailed Mr. McLaughlin stating that the Packaging Machine and Vacuum Lifter were functioning properly[7]and needed to be picked up by Plaintiff. Mrs. Feng also advised that Plaintiffs account was considered "PAID IN FULL" and the warranty would be extended for ninety days for latent defects. Defendant admitted they were only able to get the equipment operating on film other than the required PVA film.

         PARTIES' CONTENTIONS

         Plaintiff alleges that it bargained with Defendant for a machine capable of making a specific pouch with a three-sided seal containing PVA film. Plaintiffs Chief Executive Officer explained Plaintiff had done business with Defendant previously for equipment and was satisfied. Plaintiff contends that their site was equipped to accommodate the climate-controlled environment necessary for the PVA film and equipment. Plaintiff alleges that Defendant was incapable of testing the Packaging Machine with PVA film at Defendant's site upon delivery from China because Defendant did not have the necessary climate-controlled environment.[8] Plaintiff claims that the machine would not operate, even having the necessary environment at Plaintiffs site, despite repeated attempts by Defendant to cure the issue. Plaintiff wants the refund promised by Defendant and alleges Defendant breached the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, the express warranty and the contract.

         Defendant claims Plaintiffs failure to obtain training invalidates the express warranty.[9]Additionally, Defendant claims that the express warranty protects only latent defects and not defects caused by Plaintiff. Defendant asserts that Plaintiffs environmental conditions were not sufficient for the PVA film and Packaging Machine, causing the Packaging Machine not to function properly. Defendant contends that he revoked the statement made pertaining to the return of the equipment and refund of money upon discovering that Plaintiffs environmental conditions were improper. Lastly, Defendant argues that Plaintiff failed to have an expert test the environmental conditions of Plaintiff s premises despite Defendant's request for such test during discovery.[10]

         DISCUSSION

         The issue after trial is whether the express warranty protected Plaintiffs loss. An express warranty becomes a basis of the bargain[11] and provides a buyer with security in their investment. "[T]he buyer must prove: (1) the existence of an express ... warranty, (2) a breach of the defendant's express ... warranty, (3) a causal connection between the defendant's breach and the plaintiffs injury or damage; and 4) the extent of loss proximately caused by the defendant's breach."[12] "Also, 'the buyer must first prove compliance with any conditions precedent that the seller has imposed with respect to the warranty.'"[13] If the express warranty ...


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