Rich Product Corp. v. Kemutec, Inc.

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

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Nature of the Case

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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.