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Breach of warranty case brings $754k verdict

Brian Laudadio

Attorneys from Bond, Schoeneck & King have received a $754,000 verdict on behalf of their client, Magnus Precision Manufacturing Inc. of Phelps.

The Ontario County company was represented by Brian Laudadio of BS&K’s Rochester office and Stephen Sharkey of the firm’s Buffalo office. The dispute involved a machine tool the company purchased in 2005 from TPS International Inc. of Sussex, Wis. for $837,000.

According to court papers, there was an agreement that the machine, manufactured by Universal-Automatic Corp. of Des Plaines, Ill., had to meet certain performance criteria for a specific component relating to a project Magnus was doing for another company.

After a formal test, Magnus was not satisfied the machine met the required criteria and the parties reached a reconciliation agreement which, in part, would allow Magnus to return the machine for a refund after giving the manufacturer and seller every opportunity to bring the machine to an acceptable level.

Stephen Sharkey

In September 2005, Magnus claimed the machine still didn’t meet the agreement and alleged a breach of the agreement and warranty. Magnus claimed it was unable to produce good parts because of flaws in the machine design.

A demand for a jury trial was filed in July 2008 in U.S. District Court, Western District of New York, but in February 2009 Judge Charles J. Siragusa granted a motion by the defendants to dismiss the suit and move to a new venue.

The suit was re-filed in Circuit Court for Waukesha County in Wisconsin — TPS International’s location. A bench trial was conducted in January with a verdict reached Jan. 25 in Magnus’s favor.

“We believe that the court’s ruling was erroneous,” said Anthony J. Monaco of the Chicago firm Swanson, Martin and Bell LLP, who represents the two defendant companies. “I maintain both TPS and Universal-Automatic are innocent.”

Monaco said there will be an appeal. He said no judgment has been filed yet and he didn’t believe $754,000 was the correct amount. Laudadio said it is the verdict figure reached from the bench, and will be included in the order when it becomes available in the next week or so.

Monaco declined to comment further. Laudadio said the manufacturer and seller claimed there was nothing wrong with the machine and that the failure was the result of modifications made to it by Magnus.

“Under the purchase agreement, both [companies] were responsible for ensuring the machine was able to make parts for which it was intended,” Laudadio said. “We were able to prove to the court that the problem with the machine was not modifications made by Magnus, but were inherent design flaws and assembly errors that created geometry problems with the machine.”

He said the award, which is rounded off, is 90 percent of the purchase price and that the remaining 10 percent was not reimbursable because of specific language in the purchase contract.

“We’re very pleased that the court determined that Magnus was entitled to the refund because the inherent problems with the machine were the results of the defendants’ failure to make a quality product.”

Monaco has 45 days from the order issuance to file the appeal.