Rich Product Corp. v. Kemutec, Inc

241 F.3d 915 (7th Cir. 2001)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P seeks to recover damages from D which sold a conveyor to be used to move food components in P's manufacture of food products. P alleged that the conveyor was defective because steel wire strands from the conveyor cable shredded off and contaminated P's food products. P employees discovered a total of twenty-nine (29) pieces of wire, while others were found by customers in P's food products, but no personal injuries are alleged. P recalled all its food products for the prior eleven months beginning from the time the conveyor was first installed. P claims damages of $7.2 million in expenses in connection with the recall, and a loss of $4.2 million in profits for a total of $11.4 million damages. P does not seek to recover losses for any damage to the conveyor itself, for its non-performance, or losses due to insufficient throughput or downtime. P alleges that the conveyor had a history of fractured wire cables of which D was aware, but P was not. D allegedly did not reveal these difficulties to P but instead misrepresented that the conveyor had an excellent record handling baking materials. P accepted a quotation from D in a 1993 purchase order, and the conveyer was soon shipped to P and installed. The court dismissed P's tort claims. That left only P's breach of express and implied warranties claims in the district court. This court accepted the appeal. D only has insurance coverage for the tort claims. D's insurer disclaimed coverage on the warranty claims, and D has insufficient assets to satisfy any residuary judgment.