Tralon Corp. v. Cedarapids, Inc.

Tralon Corp. v. Cedarapids, Inc.

Opinion

 [*815] MEMORANDUM OPINION AND ORDER REGARDING MOTION TO STRIKE COUNTERCLAIM AND MOTION FOR SUMMARY JUDGMENT

TABLE OF CONTENTS

I. INTRODUCTION AND BACKGROUND

II. STANDARDS FOR SUMMARY JUDGMENT

III. FINDINGS OF FACT

A. Uncontested Facts

B. Contested Facts

IV. LEGAL ANALYSIS

A. Cedarapids' Motion For Summary Judgment

1. The Terms Of The Parties' Agreement

2. Plaintiffs' Warranty Claims

a. Sufficiency of representations

b. SRS' right to consequential damages

3. Plaintiffs' Fraudulent Misrepresentation Claims

a. Fraudulent misrepresentation under Iowa law

b. Sufficiency of representations

c. Evidence of knowledge of falsity

4. The Availability Of Equitable Recision As A Remedy

5. The Viability of Tralon's Indemnity Claim

B. Plaintiffs' Motion To Strike Counterclaim

V. CONCLUSION

The lawsuit presently before the court is, depending upon which party's perspective is employed, either a classic case of buyer's [**2]  remorse or an archetypal episode of misrepresentation taken by a manufacturer in order to consummate a sale. Defendant seeks summary judgment on all of plaintiffs' claims. Resolution of defendant's motion for summary judgment requires the court to examine and explore the contours of several areas of the law, including Iowa contract, commercial and tort law. Additionally, plaintiffs seek to strike defendant's counterclaim. This endeavor requires the court to examine the procedural question of whether the filing  [*816]  of an amended complaint accords the responding party the right to assert a counterclaim without securing prior leave of the court.

I. INTRODUCTION AND BACKGROUND

On June 16, 1995, plaintiffs Tralon Corporation ("Tralon"), and Soil Remediation Service, Inc. ("SRS") filed their original complaint in this lawsuit against defendants Cedarapids, Inc. ("Cedarapids") and General Electric Capital Corporation ("G.E. Capital"). Plaintiffs asserted claims against Cedarapids for breach of contract, misrepresentation, and recision flowing from Tralon's purchase of a portable soil reconditioning machine from Cedarapids in 1993. ¹ On June 27, 1995, prior to any answer being filed,  [**3]  plaintiffs filed an amended complaint in this case. The amended complaint added a third plaintiff, Bernard Glieberman ("Glieberman"), who is alleged to have executed a personal guaranty to secure the purchase of the portable soil reconditioning machine. No new theories or claims were advanced in the amended complaint. Cedarapids filed its answer in this matter on August 16, 1995. On August 18, 1995, G.E. Capital filed its answer in this case and a counterclaim against Tralon and Glieberman for the amount due and owing on the contract for the purchase of the Cedarapids portable soil reconditioning machine sold to Tralon. On January 29, 1996, G.E. sold Tralon's note back to Cedarapids and assigned its rights under the note to Cedarapids. On March 18, 1996, plaintiffs voluntarily dismissed G.E. Capital as a defendant. G.E. Capital's counterclaim, however, was not dismissed at that time. On August 1, 1996, plaintiffs moved for leave to file a second amended complaint. On August 23, 1996, plaintiffs' motion to amend was granted and plaintiffs' Second Amended and Substituted Complaint was filed in this case. Plaintiffs' second amended complaint asserts claims against Cedarapids for breach [**4]  of express warranty, breach of implied warranty, misrepresentation, recision/restitution and indemnity. On October 1, 1996, Cedarapids filed its answer to plaintiffs' Second Amended and Substituted Complaint, and also a counterclaim against Tralon and Glieberman for the amount due and owing on the contract for the purchase of the Cedarapids' portable soil reconditioning machine sold to Tralon. Cedarapids states in its counterclaim that in January 1996, G.E. Capital assigned to Cedarapids all its rights and interests in a note and a guaranty executed by Tralon and Glieberman respectively securing Tralon's purchase of the portable soil reconditioning machine. On October 18, 1996, counterclaim plaintiff G.E. Capital voluntarily dismissed its counterclaim against counterclaim defendants Tralon and Glieberman. On October 21, 1996, plaintiffs moved to strike Cedarapids' counterclaim. Cedarapids filed a timely resistance to plaintiffs' motion to strike. On October 30, 1996, Cedarapids moved for leave to file the counterclaim that was included with its answer. Cedarapids also moved to modify the court's January 3, 1996, scheduling order to allow the filing of Cedarapids' counterclaim on October [**5]  1, 1996. Plaintiffs filed a resistance to Cedarapids' motion to file the counterclaim and amend the scheduling order.

On March 17, 1997, Cedarapids moved for summary judgment on all claims asserted against it by plaintiffs. Plaintiffs filed a timely resistance to Cedarapids' motion for summary judgment on April 14, 1997. The pending motion for summary judgment and motion to strike Cedarapids' counterclaim were then set for telephonic oral argument before the court on May 16, 1997. At the hearing, plaintiffs were represented by Donald G. Thompson and Vernon P. Squires of Bradley & Riley, P.C., Cedar Rapids, Iowa. Cedarapids was represented by Stephen J. Holtman and Leonard T. Strand of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, Iowa. The parties have filed thorough and extensive briefs in support of their [**6]  respective positions. Counsel were exceptionally well prepared for oral argument.  [*817]  The oral arguments were well presented and reflected the hotly contested nature of this litigation. This matter is now deemed fully submitted.

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