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American Maplan Corp. v. Hebei Quanen High-Tech Piping Co., Ltd

United States District Court, D. Kansas

July 3, 2018

American Maplan Corporation, d/b/a Battenfeld-Cincinnati USA, Plaintiff,
v.
Heibei Quanen High-Tech Piping co., Ltd.; J-M Manufacturing Company, Inc.; and Walter Wang, Defendants. Heibei Quanen High-Tech Piping co., Ltd.; Counterclaim Plaintiff,
v.
American Maplan Corporation, d/b/a Battenfeld-Cincinnati USA, Counterclaim Defendant. Heibei Quanen High-Tech Piping co., Ltd.; Third-Party Plaintiff,
v.
BC Extrusion Holding, GmbH, Battenfeld-Cincinnati Germany GmbH, and Gerold Schley, Third-Party Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE

         American Maplan Corporation, doing Business as Battenfeld-Cincinnati USA, makes equipment used to extrude plastic pipe. Beginning in 2012, Maplan entered into an arrangement to supply pipe extrusion machines to Hebei Quanen High-Tech Piping Company, together with the Quanen subsidiary J-M Eagle, for use at Quanen's plants in China. Maplan began to deliver and install the equipment in 2013.

         Alleging that they refused to pay for the delivered equipment, Maplan brought the present action against Quanen, Eagle, and their leader Walter Wang on March 30, 2017, raising clams for breach of contract, breach of implied covenant of good faith, conversion, unjust enrichment, intentional interference, and fraud. The defendants moved to dismiss the action for lack of personal jurisdiction. The court denied the motion on November 21, 2017. (Dkt. 50).

         Defendants filed their Answer to the Complaint on December 13, 2017 (Dkt. 53), including counterclaims against Maplan, and advancing a third-party complaint against other Battenfeld entities - BC Extrusion Holding GmbH, Battenfeld-Cincinnati Germany GmbH, and Gerold Schley (President and CEO of BC Extrusion). The defendants advance claims for (1) breach of the original contract, (2) breach of a May 27, 2015 agreement intended to resolve issues arising from the installed equipment, (3) strict liability, (4) negligence, (5) breach of express or implied warranty of fitness for a particular purpose, (6) breach of express or implied warranty of merchantability, (7) intentional misrepresentation, (8) negligent misrepresentation, and (9) promissory estoppel.

         The plaintiff has moved to dismiss the seven of the nine counterclaims as time- barred and as otherwise precluded by Kansas law. (Dkt. 69). The third-party defendants join in these arguments, as well as arguing the court lacks jurisdiction. (Dkt. 71). For the reasons provided herein, the court finds that the motions to dismiss should be granted, with the exception of the claim for intentional misrepresentation clam against Maplan.

         Plaintiff Maplan's Motion

         In its motion, Maplan argues that five of the counterclaims (strict liability, negligence, intentional misrepresentation, negligent misrepresentation, and promissory estoppel) are time-barred because they were not brought within two years of the accrual of the relevant cause of action, as required under Kansas law. See K.S.A. 60-513(a)(4) (two year limitation for any “action for injury to the rights of another, not arising on contract”). The face of the defendant Quanen's Answer and Counterclaim presents substantial support for this argument.

         As noted earlier, the defendant's Answer was filed December 13, 2017. Accordingly, Quanen cannot recover under its various tort or warranty for injuries sustained prior to December 13, 2015. Yet the Answer also makes plain that Quanen knew of substantial problems with the pipe extrusion equipment before this time. The Answer alleges:

The commissioning process for all the subject lines was plagued with serious problems. It soon became apparent that there were a host of problems with the design of the PE and the PVC lines and their related equipment, systems and features. These design flaws included problems with the sizing sleeve, saw design errors, puller design issues, cooling system issues and gearbox leakage, among others. Instead of acknowledging these problems and taking steps to correct them, Maplan, BC Extrusion and Battenfeld Germany denied that there was a problem, made excuses and were non-responsive.

(Dkt. 53, ¶ 28) (emphasis added).

         The Answer and Counterclaim alleges that this commissioning process began shortly after the equipment was assembled and installed in China, which commenced after the equipment was shipped “beginning in March 2014.” (Id. at ¶ 27).

         The Answer and Counterclaim thus alleges that the equipment was not only flawed but that these flaws were manifest and obvious more than two years before presenting its counterclaims.

         In its response to the motion to dismiss, Quanen does not argue that its causes of action for strict liability, negligence, or breach of warranty were not ripe until after December 13, 2015. Rather, it argues that Maplan should be equitably estopped from presenting the statute of limitations defense as to those claims. It also argues that its misrepresentation and promissory estoppel claims were triggered only after fully learning that Maplan's various representations were untrue. In both cases, Quanen focuses on a series of representations by Maplan which supposedly lulled Quanen into not suing or in concealing the extent of the injury.

         The Answer and Counterclaim itself provides little in the way of support for these contentions, other than the most conclusory of statements. It does allege that Maplan represented that it “had the capacity, ability, and know-how to repair or replace the extrusion lines and bring them up to the requirements and specifications of Quanen that it had promised.” (Dkt. 53, ¶ 104). The defendant allegedly “induced Quanen not to take legal action but to give [them] and their technical staffs additional time to make repairs.” (Id. at ¶ 32). After discovering the alleged problems with the equipment, Quanen consulted with Maplan and the parties entered into a schedule in May 2015 “for the remediation and repair of the extrusion lines.” (Id. at ¶ 30).

         In particular, Quanen relies upon the following passage from the Answer and Counterclaim:

By their conduct from 2013 through and including May 2015 (and thereafter) in assuring Quanen that they had the capacity, ability and know-how to repair or replace the extrusion lines and bring them up to meet the requirements and specifications they had promised to meet, and that they could and would do so, each of Maplan, BC Extrusion, and Battenfeld Germany affirmatively induced Quanen not to take legal action but to give these companies and their technical staffs additional time to make repairs-repairs that were never successfully completed.

(Id. at ¶ 32. See also ¶¶ 95, 104).

         But in context, this “thereafter” language does not fairly allege conduct with the limitations period, that is, after December 13, 2015. The cited allegation is made immediately after asserting that “[t]he problems persisted well into 2015.” (Id. at ¶ 30). As the result of their meetings, Quanen and Maplan entered into a May 27, 2015 agreement for Maplan to make repairs so that the equipment could be commissioned “by certain set dates in the future” (id.), but there is no allegation that these set dates were after December, 2015. Indeed, the Answer and Counterclaim itself makes no specific allegation of lulling conduct at any time in 2016.

         The Answer and Counterclaim alleges that during testing which occurred as part of the commissioning process, the Maplan equipment caused two explosions, on May 18, 2015, and July 23, 2015. These events produced no personal injuries. and apparently occurred not during ordinary use but while pipe was being subjected to preliminary high pressure tests. (Dkt. 53, ¶¶ 36, 52).

         In relevant passage, the defendants also do not assert damages based on any injury, but instead allege that as a result of these two events, its “customer rejected all of the pipe, causing considerable additional cost to Quanen in excess of $1.5 million, ” and that the event “damaged Quanen's business relationship with this important customer.” (Id. ¶ 36.) The defendants continue, raising other assertions of economic injury. Thus, as a result of the alleged design flaws,

Quanen has been unable to fulfill customer orders, has incurred substantial additional costs, has experienced numerous shut-downs in the production process and has faced other serious delays in production and difficulties in producing pipe according to customer specifications. Its reputation in the marketplace has also been seriously affected.

         (Dkt. 53, ¶ 37).

         If the court was presented only with the Answer and Counterclaim itself, it would have little difficulty in concluding that the non-contract claims advanced by Quanen were time-barred. Given the extent of the alleged defects, and their manifest and “apparent[]” nature, those non-contract claims - even couched as promissory estoppel or misrepresentation - had all accrued by mid-2015, six months before the limitations deadline.

         But Quanen expressly requests leave to amend the Answer and Counterclaim to add allegations relating to later events, and Maplan's reply does not address the request.[1]Specifically, defendants assert that they would further allege that in October of 2015, BC Extrusion was continuing to propose future resolutions to the problems, that these efforts continued in February, 2016, and that Quanen's testing of modified equipment continued into March of 2016. (Resp. at 13-14).

         Maplan does argue Quanen was not lulled into inaction because it did sue other Battenfeld entities (but not Battenfeld itself) in California. Maplan suggests that Quanen sued these other entities in California in order to avoid the various defenses Maplan may advance here pursuant to its purchase agreements.

         The court finds that a question of fact is presented as to defendant's claims of estoppel. While the California suit might be strong evidence against any lulling, it is not conclusive. The California action was filed on May 24, 2016. A fact-finder could infer some degree of estoppel, or lulling, existed until the spring of 2016, and the December 2017 counterclaims could therefore be timely.

         However, the court finds that amendment of the Answer and Counterclaim is not warranted to add estoppel allegations, because the non-contract claims are in any event properly dismissed for other reasons.

         First, the court finds that language from the Maplan Purchase Agreements specifically excludes claims for strict liability, negligence, negligent misrepresentation, or promissory estoppel.

         The Purchase Agreements first specifically limit the extent of recovery, providing that the purchaser is restricted to elimination of the fault alone. Under the heading “Conditions of delivery and payment, ” the Maplan Purchase Agreement provides:

         General:

         American Maplan shall not be responsible for any special, indirect, incidental or consequential damages in connection ...


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