Dynamic Machine Works, Inc. v. Machine & Electrical Consultants, Inc.

831 N.E.2d 875 (2005)

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Nature of the Case

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Facts

Dynamic Machine Works, Inc. (P), agreed to purchase a lathe from Machine & Electrical Consultants, Inc. (D). D would receive a down payment of $29,500, a second payment of $148,000 on delivery, which was scheduled for May 15, 2003, and a final payment of $177,500 on acceptance. In the interim, P rented a Johnford ST-60B lathe from D. In February 2003, P informed D that it was experiencing problems with the rental lathe and that if these problems were not addressed and remedied in the new lathe, P would reject it. Production of the new lathe in Taiwan was delayed due to the 'SARS' epidemic and other events beyond the control of D. The parties extend the deadline for the installation and commissioning of the lathe to September 19, 2003. They also agreed that any further delay would result in a $500 a day penalty assessed against D. The lathe was delivered on October 9th. Throughout the month of November, the lathe was tested and readjusted in connection with its final commissioning. P by letter on December 9^th granted a final unconditional commission date by the close of business day, Friday, December 19, 2003. On the following day, P received additional information regarding the lathe that led him to conclude that it would not be able to meet the required specifications. P promptly notified D that it intended to retract the deadline extension. In a letter dated December 11, counsel for P advised D that P was revoking acceptance of the lathe, demanding return of P's down payment and the payment of the penalty fees, and requested instructions concerning disposition of the lathe. D had not relied on the deadline extension granted on December 9 in any material way prior to P's written revocation of it on December 11. P filed this action in the Superior Court, seeking a declaratory judgment concerning its rights and remedies under the Uniform Commercial Code, and alleging breach of warranty, breach of contract, and unfair business practices. D removed the action to the United States District Court and asserted a counterclaim of breach of contract. The District Court judge heard P's motion for summary judgment and D's cross-motion for partial summary judgment. The judge concluded that 'P properly and timely revoked its December 9, 2003, letter extending the commissioning deadline, thus rendering D liable for breach of contract.' P was not entitled to recover punitive damages based on the penalty provision in the July 8, 2003, agreement. The judge certified the above question.