Kelsey-Hayes Co. v. Galtaco Redlaw Castings Corp.

749 F.Supp. 794 (1990)

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Nature of the Case

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Facts

P makes brake assemblies that it sells to auto manufacturers, including Chrysler and Ford. D supplied castings to P which incorporated them into the brake assemblies. In 1987, P and D signed a three-year 'requirements' contract. Under the contract, D was to be the sole source to P of certain types of castings through April 1990. In return, D was to charge fixed prices for 1987, and scheduled price reductions for 1988 and 1989, respectively. By the spring of 1989, D had been experiencing continued monetary losses for several years. P was aware of D's financial condition. For the seven months ending in April 1989, D's foundry operations had losses totaling $2,410,000. D's Board of Directors made final a decision to discontinue its foundry operations and cease production of castings. D offered all of its customers, including P, an agreement to keep its foundries operating for 'several months' in exchange for price increase of 30 percent effective with shipments of May 15, 1989. If D had terminated its supply to P, P would not have been able to find an alternate source for 18-24 weeks. This would result in a cascade of shutdowns to P's clients, Ford and Chrysler. P was Ford's sole source of certain brake assemblies, and Ford had no significant bank of those parts. P accepted D's offer to continue supplying castings for a time, at a 30 percent price increase for all castings delivered to all plants. P did not reserve any rights under the 1987 contract when it accepted D's offer. On June 9, 1989, D required an additional 30 percent price increase in order to keep its foundry operations going. D's other customers had found alternative sources of castings. P had not yet found another source for castings. It accepted D's offer to continue providing castings for an additional 30 percent price increase. P did not reserve any rights under the 1987 contract when it entered into the June 1989 agreement. P accepted all of the shipments, and it timely paid for the first 197 deliveries according to the terms of the 1989 agreements. P failed to pay D for 84 of the remaining 85 casting shipments. The price for the 84 shipments approximates the $2 million price increase to which P agreed under the 1989 agreements. P claimed that it agreed to the price increases under duress. D moved for summary judgment.