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Crown Parts and Machines, Inc. v. Euro Machine Tool Company Inc.

United States District Court, D. Montana, Billings Division

September 9, 2019

CROWN PARTS AND MACHINES, INC., doing business as H-E Parts International, Plaintiff,
v.
EURO MACHINE TOOL COMPANY INC.; FRANK TURI, Defendants. EURO MACHINE TOOL COMPANY INC., Counterclaim Plaintiff.
v.
CROWN PARTS AND MACHINES, INC., doing business as H-E Parts International, Counterclaim Defendant.

          ORDER

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE

         Plaintiff Crown Parts and Machines, Inc., doing business as H-E Parts International, (“H-E Parts”) brings this action against Euro Machine Tool Company (“Euro Machine”) and Frank Turi (“Turi”) relating to H-E Parts' purchase of a lathe from Defendants. H-E Parts alleges claims for breach of contract, revocation, breach of covenant of good faith and fair dealing, breach of implied warranties, fraud, and negligent misrepresentation.

         Presently before the Court is H-E Parts' Motion for Partial Summary Judgment. (Doc. 38.) The motion is fully briefed and ripe for the Court's review.

         Having considered the parties' submissions, the Court finds H-E Parts' motion should be DENIED.

         I. FACTUAL BACKGROUND [1]

         H-E Parts is a Montana corporation in the business of supplying parts, remanufactured components and equipment to global mining, heavy construction, material processing and energy sectors. Euro Machine is an Illinois corporation that sells machinery. Turi is the President of Euro Machine.

         Prior to 2005, there was a company in Poland called Fabryka Urzadzen Mechanicznych Poreba which manufactured lathes. H-E Parts previously owned a Polish-manufactured Poreba lathe. In 2003, Euro Machine obtained a distribution contract with Poreba. At that time, a company called Toolmex Corporation owned the “Poreba” trademark. In 2004, however, Euro Machine purchased the Poreba trademark from Toolmex for approximately $50, 000.00. Euro Machine registered the “Poreba” mark with the United States Patent and Trademark Office. Euro Machine contends it purchased the trademark so that it could legally sell lathes using the Poreba name. Euro Machine has sold approximately 100 lathes and other machinery under the Poreba mark since 2004.

         In approximately 2005, the Poreba Polish factory ceased manufacturing the types of lathes that H-E Parts utlized. The Polish factory has since gone out of business. Turi indicated in his deposition that another company has started building the large capacity machines that the Polish factory used to build.

         In 2005, Euro Machine started private labeling the machines it sold with the Poreba trademark.[2] Euro Machine does not manufacture lathes. Rather, according to Turi, “we would buy machines from various companies, and since we owned the trademark, we put our brand on it and we sold them as a Poreba machine because that was the brand that we were selling.” Euro Machine purchased machines for this purpose from three or four factories. The lathe Euro Machine sold to H-E Parts was manufactured by ZMM, a Bulgarian manufacturer.

         In late November 2015, H-E Parts agreed to purchase a lathe from Euro Machine. Euro Machine and H-E Parts memorialized their agreement in an invoice dated November 30, 2015. The invoice described the lathe as “One New Poreba 36” x 118” Hollow Spindle Lathe, Model: TR22-93/14/3M.” The cost of the new Poreba was $129, 500.00. As part of the purchase, H-E Parts traded-in its 1978 “Used Poreba” lathe for $30, 000, thereby bringing the total purchase price to $99, 500.00. The invoice also provided that Euro Machine would “supply a technician to level and power the Poreba 36” x 118” Hollow Spindle Lathe (1-day).”

         Approximately one week before the purchase, Eric Simmons, the Safety Co-Coordinator for H-E Parts forwarded to Bill Brown, the President of H-E Parts, the proposal from Euro Machine, with the following discussion:

We have bought the CNC Poreba from this company as a used piece of equipment, I am not sure how many years ago. The Poreba Brand was originally built in Poland, it has since been bought out by private investors and been moved to Taiwan, where the brakes underwent a complete redesign and the electronics were modernized to remove some earlier failings of the Polish design. Practical Machinist had high ratings of the machine when built in Poland and higher praise since moving to Taiwan. Frank had problems getting some parts for the machines we have, both of Polish manufacture, leading to some frustration on Ed's part. But with this being a new machine Ed is comfortable with dealing with Euro Machine Tool.

         Nevertheless, H-E Parts states it desired to purchase a Polish-made Poreba lathe, due to the quality of the Poreba machine. H-E Parts contends it “believed and understood it was purchasing a Poreba-made lathe when it entered into the contract with Euro Machine, ” and that it “relied on the representations of Frank Turi that the lathe H-E Parts was purchasing was in fact a Poreba-made lathe.” HE Parts further contends that if it had known “the lathe sold by Euro Machine and Turi was not in fact made by Poreba, H-E Parts would not have purchased the lathe.” H-E Parts states it did not care about the name on the machine, rather “it cared about what company manufactured the lathe.”

         Turi contends, however, that he did “not know whether [H-E Parts] desired to buy a Polish-made lathe. It did not tell [him] it wanted to buy a Polish-made lathe.” Turi further contends that he “did not represent to any person within [H-E Parts] that [he] was selling them a lathe manufactured by Fabryka Urzadzen Mechanicznych Poreba in Poland, nor did [he] tell them that the lathe they were buying was manufactured in Poland.” Turi states he represented to H-E Parts that he was selling it a “New Poreba 36” x 118” Hollow Spindle Lathe, ” and contends that is exactly what he delivered. Turi explains that the lathe was new when it was sold to H-E Parts, and that Euro Machine's ownership of the Poreba trademark ...


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