United States District Court, E.D. Tennessee, Greeneville
AMERICAN WATER HEATER CO., and A.O. SMITH CORP., Plaintiffs,
THE TAYLOR WINFIELD CORP., d/b/a TAYLOR-WINFIELD TECHNOLOGIES, Defendant.
Corker, Magistrate Judge.
L. COLLIER, UNITED STATES DISTRICT JUDGE.
the Court is a motion for partial summary judgment by
Defendant, The Taylor Winfield Corporation
(“Taylor-Winfield”). (Doc. 91.) Because of a
subsequently filed stipulation of dismissal (Doc. 97), the
parties agree that the motion is no longer for partial
judgment, but addresses all of the remaining claims in this
action. (See Docs. 98 at 1 n.1; 100 at 2 n.2.)
Plaintiffs, A.O. Smith Corporation (“A.O. Smith”)
and American Water Heater Company (“AWH”), have
responded in opposition (Doc. 98), and Defendant has replied
reasons stated below, the Court will GRANT IN
PART and DENY IN PART
Defendant's motion for summary judgment (Doc. 91). The
Court will DENY the motion as to
Plaintiffs' breach of contract claims. The Court will
GRANT the motion as to Plaintiffs'
breach of warranty claims.
diversity action concerns an order for two long-seam welding
machines capable of welding rolled sheets of steel into
cylinders, or “shells, ” which can later be
capped at both ends in order to form water heater tanks.
(Doc. 6 ¶ 7.) Plaintiffs, A.O. Smith and AWH, were the
intended purchasers of the long seam welding machines (the
“machines”). A.O. Smith is the parent corporation
of AWH, which operates a water heater manufacturing facility
in Johnson City, Tennessee. (Doc. 98 at 5.)
January 27, 2014, A.O. Smith issued two written purchase
orders for the machines to Defendant Taylor-Winfield, an Ohio
corporation offering welding products. (Id.; Doc.
92-1.) The purchase orders incorporated a written proposal by
Taylor-Winfield for the design and build of the machines.
(See Doc. 92-1.) Taylor-Winfield's proposal, in
turn, incorporated A.O. Smith's initial written
specifications for its planned use of the machines.
(See Doc. 92-3 at 1.) The documents specified that
Taylor-Winfield would design the machines so that they would
automatically load, roll, size, TWINLAP seam weld, trim, and
unload steel sheets. (See Doc. 92-3 at 1.) The
TWINLAP technology would use two sets of wheels during a
single pass of the equipment to weld the steel. (Doc. 98 at 2
n.4.) Plaintiffs contracted to pay $2, 204, 124.00 for the
first long seam welding machine (the “first
machine”), and $1, 928, 206.00 for the second long seam
welding machine (the “second machine”). (Doc.
92-1.) Taylor-Winfield's proposal estimated a delivery
date of twelve months for the first machine and fourteen
months for the second machine. (Doc. 92-3 at 26.)
documents also required Taylor-Winfield to conduct a trial
run, or “factory run-off, ” of the welding
machines at Taylor-Winfield's factory in Ohio once the
machines were completely operational. (Docs. 98 at 6; 92-3 at
2, 92-4 at 5 ¶ 10.1.) Taylor-Winfield was to notify the
A.O. Smith project manager “of the date of the
scheduled Trial Run at the supplier's site at least two
(2) weeks prior to the scheduled test.” (Doc. 92-4 at 5
¶ 10.1.) The documents required A.O. Smith to issue an
“Acceptance to Ship” after a successful
“factory run-off test before Taylor-Winfield would be
authorized to ship the machines from Ohio to Tennessee. (Doc.
98 at 6.)
issuance of the purchase orders, Taylor-Winfield commenced
work on the machines, and A.O. Smith commenced payment of
installments under the contract. (Id.) There were
numerous discussions between Taylor-Winfield and A.O. Smith
related to the scheduling of runoff testing in 2015. (Docs.
18 at 3-4; 98 at 7; 98-2 at 4, 7-9.) However, the machines
could not consistently meet the requirements in A.O.
Smith's specification. (Docs. 18 at 3-4; 98 at 7.) By
spring of 2015, Taylor-Winfield abandoned the TWINLAP design,
instead moving to a design which utilized a single set of
wheels and induction heating. (Doc. 98 at 7.) A.O. Smith
allowed Taylor-Winfield time to implement and test the
replacement design. (Doc. 98 at 3.) The parties planned that
run-off testing could occur in late 2015, but a significant
failure in a water heater shell occurred in November 2015,
which prevented the run-off from being scheduled. (Docs. 98
February 2, 2016, senior leadership from both sides met at
Taylor-Winfield to discuss the status of the machines and the
plan for performance of the contract going forward.
(Id.) The meeting included A.O. Smith's Plant
Manager, Carol Peters, and Taylor-Winfield President, Alex
Benyo. (Id.) The result of the meeting was a
handwritten note signed by Benyo and other Taylor-Winfield
personnel. (Doc. 6-5.) The note stated,
Agreement to ship Machine 1 to A.O. Smith on 03/14/16
• Runoff based on 14”, 16”, and 18”
Diameter shells listed in runoff sheet provided by A.O. Smith
• 20” & 24” Diameter shells will have
mechanical alignment completed on Machine 1
• A.O. Smith will provide resources to help
• Weekly calls will be setup with Taylor Winfield and
A.O. Smith senior management
• Ship Machine 2 to A.O. Smith on 06/01/16
• Weld schedule development will be done @ Taylor
Winfield on ...