Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Okna Windows v. Diversified Structural Composites

United States District Court, E.D. Pennsylvania

August 12, 2019

OKNA WINDOWS
v.
DIVERSIFIED STRUCTURAL COMPOSITES

          MEMORANDUM

          JOHN R. PADOVA, J.

         Plaintiff Okna Windows Corporation (“Okna”) commenced this breach of contract action against Defendant Diversified Structural Composites (“Diversified”) after Diversified stopped collaborating with Okna on a new line of fiberglass double-hung windows. Both parties have moved for summary judgment. For the following reasons, we deny Plaintiff's Motion, grant Defendant's Motion, and enter summary judgment in Defendant's favor.

         I. BACKGROUND

         The undisputed facts in the summary judgment record are as follows. Since 1994, Plaintiff Okna has manufactured windows and doors for commercial and residential clients. (Def.'s Ex. C (“September 27, 2014 Email”).) Until 2014, Okna produced these windows and doors primarily using vinyl and composite components. (Id.) In the spring of 2014, Okna decided to enter into the fiberglass window market. (Id.; Pl.'s Mot., Ex. B (“Ostaniewicz Dep.”) at 18:22-19:4.) After Okna decided to enter the market, it was introduced to Diversified. (Ostaniewicz Dep. at 23:9-17.) Until that time, Diversified predominantly sold pultruded components, [1] such as window components like lineals and profiles, but it had decided to branch out into selling fenestration products, such as windows and doors. (Pl.'s Ex. A (“Klawonn Dep.”) at 16:24-17:20.)

         After being introduced, the parties discussed designing a new model of double-hung window that would use fiberglass components, and Okna visited Diversified's offices in July 2014. (Ex. 6 to Pl.'s Ex. A.) Around the same time, a representative from OmniGlass, another pultrusion supplier, notified Okna of a September 2014 auction in Chicago where industrial equipment used to manufacture windows would be for sale. (Def.'s Ex. H.) In advance of the auction, Okna signed a demolition contract to destroy part of its existing factory space. (Ex. 4 to Pl.'s Ex. B.) Troy Osborne, one of Diversified's engineers, travelled to the auction, “blessed” the equipment that Okna was considering, and said it “would be a good purchase.” (Ostaniewicz Dep. at 70:11-14; Def.'s Ex. G at 3.) Okna then purchased the equipment. (Ostaniewicz Dep. at 70:15-71:4.)

         After purchasing the equipment at the auction and demolishing 50, 000 square feet for the fiberglass line, Okna sent an email to Diversified stating that it was committed to moving forward with a fiberglass program and that it would prefer to do business with Diversified Lineal Systems (“DLS”).[2] (Ostaniewicz Dep. at 71:5-11; September 27, 2014 Email.) Okna explained that it had budgeted $500, 000 towards equipment and tooling for the project and that it had already committed over $400, 000 for the purchase and installation of the equipment bought at auction. (September 27, 2014 Email.) Okna therefore sought for Diversified to finance the pultrusion tooling necessary to manufacture components needed for double-hung and casement window systems that were “under consideration.” (Id.) Diversified responded that it considered Okna a key customer and asked for Okna to put its proposal on company letterhead. (Id.)

         The parties eventually negotiated a two-page Memorandum of Agreement (“MoA”), which expressed the parties' desire to enter into a business relationship for the supply of DLS fenestration materials. (Ex. 10 to Pl.'s Ex. A.) The MoA, which the parties signed on January 14, 2015, provided that the parties would finalize the design of the Series 3500 double-hung, double slider, and picture windows by January 16, 2015. (Id. at 1.) Okna agreed to contribute $80, 000 to Diversified for the costs of customized tooling to produce the Series 3500 double-hung window and to issue a purchase order for at least one million dollars of unspecified DLS products.

         (Id.) In return, Diversified agreed to “accelerate the purchase of all tooling, corner keys, supplementals, testing and certification for the 3500 Series.” (Id.) The parties also agreed to execute non-disclosure agreements. (Id. at 2.) Crucially, the MoA contains in bold type a non-binding obligation (“NBO”) clause, which provides that:

This Memorandum of Agreement does not constitute or create, and shall not be deemed to constitute or create, any legally binding or enforceable obligation on the part of either party. No. such obligation shall be created, except by the execution of separate written agreements and purchase orders with associated terms and conditions.

(Id.)

         Okna contributed the $80, 000 tooling costs through Polstar, a company related to Okna, and attached to the MoA a $1, 000, 000 signed purchase order (the “Purchase Order”) for unspecified DLS materials. (Klawonn Dep. at 91:1-5; Ostaniewicz Dep. at 63:20-64:1.) The Purchase Order states that specific materials would be given in subsequent purchase orders. (Ex. 10 to Pl.'s Ex. A at 3.) There is no record evidence of the parties' executing non-disclosure agreements. (Ostaniewicz Dep. at 54:15-56:7; 60:13-61:15.) Diversified used the MoA and the attached Purchase Order to procure $400, 000 in funding from its Japanese parent for the re-tooling. (Klawonn Dep. at 45:17-22.)

         The parties completed a prototype of the double-hung window on November 11, 2015. (Ostaniewicz Dep. 97:16-19.) Samples based on this model were submitted to the American Architectural Manufacturers Association (“AAMA”), and while the window received some AAMA certification, Okna was not happy with the results. (Id. at 62:15-18; 96:13-16.) Mike Clay, one of Diversified's employees, went to Okna's facilities and helped design and build other window specimens for testing. (Id. at 62:1-3; Klawonn Dep. at 101:8-12.) After developing the double-hung window, the parties discussed developing a casement window together and produced a draft agreement. (Exs. 12-13 to Pl.'s Ex. A; Ostaniewicz Dep. at 65:11-21.) This agreement, however, was not signed by either party, and Okna did not tender the $150, 000 for tooling that the new casement window agreement would have required.[3] (Klawonn Dep. at 63:3-5; Ostaniewicz Dep. at 67:18-20; 68:3-11.)

         Sometime in late 2015, Diversified's parent company gave Robert Klawonn, then-President of Diversified, a short period of time to prove definitively that Diversified's fenestration business was viable. (Klawonn Dep. at 76:22-77:7.) In early 2016, Diversified's parent company decided to withdraw from the Series 3500 project. (Id. at 77:7-9; 82:2-4.) Robert Klawonn informed Okna on March 11, 2016 that Diversified would be withdrawing from the project. (Id. at 85:25-86:6.) Diversified refunded Okna the $80, 000 contribution that Okna had made toward retooling, and the parties unsuccessfully attempted to resolve their differences without resorting to litigation. (Klawonn Dep. at 90:23-25; Exs. 21-22 to Pl.'s Ex. A.)

         Okna filed this action on June 11, 2018. The Complaint asserts four claims for relief: breach of contract, breach of implied contract, breach of requirements contract, and promissory estoppel. Okna demands compensatory damages of $1, 782, 300, the costs of suit, incidental and consequential damages including attorney's fees for the breach of the requirements contract, and such other relief as the Court may deem appropriate. Okna moves for summary judgment as to the breach of contract and the breach of requirements contract claims; Diversified moves for summary judgment on all counts.

         II. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.