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Dual-Temp of Illinois, Inc. v. Hench Control, Inc.

United States Court of Appeals, Seventh Circuit

May 6, 2016

Dual-Temp of Illinois, Inc., Plaintiff-Appellee,
Hench Control, Inc. and Caesar-Verona, Inc., Defendants-Appellants.

Argued March 29, 2016

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:09-CV-595 - Sharon Johnson Coleman, Judge.

Before Flaum, Easterbrook, and Sykes, Circuit Judges.

Flaum, Circuit Judge.

Hench Control Corporation ("Hench I"), the predecessor to defendants Hench Control, Inc. ("Hench II") and Caesar-Verona, Inc., contracted with plaintiff Dual-Temp of Illinois, Inc. to supply a refrigeration control system. However, the Hench refrigeration control system delivered to Dual-Temp did not work properly, and Dual-Temp brought suit against defendants for breach of contract. After a bench trial, the district court held that defendants had breached the contract and awarded damages and attorneys' fees to Dual-Temp . Defendants appeal. We affirm the district court's conclusion that defendants breached the contract and its award of damages.

I. Background

A. Factual Background

Dual-Tem p is a refrigeration contractor that installs refrigeration systems. A crucial component of a refrigeration system is the refrigeration control system ("RCS"), which regulates the temperature, humidity, and ammonia levels in the refrigeration system and controls related equipment such as compressors and condensers. The RCS must maintain communication with the rest of the refrigeration system to function properly.

In 2006, Home Run Inn Pizza began the expansion of its pizza manufacturing facility and hired Milord Company as a general contractor. Milord subcontracted with Dual-Temp to update Home Run Inn's refrigeration system. Dual-Temp solicited bids from several companies to design an RCS for integration into Home Run Inn's refrigeration system.

Hench I submitted a bid to supply an RCS to Dual-Temp. Dual-Temp accepted this bid and issued a purchase order on October 20, 2006. The purchase order states, in relevant part, that the Hench RSC was to "meet design specifications and function (1) as called for in the plans, specifications or addenda, (2) as herein set forth, and (3) as published or warranted by the manufacturer for the equipment involved." The purchase order also states that "[i]n the event that [the Hench RCS] does not meet the foregoing requirements, [defendants] shall immediately, upon notice, replace or repair same or remedy any deficiency without expense to [Dual-Temp]." The parties do not dispute that Dual-Temp and Hench I entered into a valid contract and were bound by the terms of the purchase order.

On February 28, 2007, Caesar-Verona acquired Hench I and proceeded to do business as Hench Control, Inc. ("Hench II"). The district court found that Caesar-Veron a and Hench II implicitly assumed Hench I's liability on the Dual-Temp contract. The parties do not appeal this finding.

The Hench RCS components were shipped to Dual-Temp beginning in January 2007. At the end of March 2007, DualTem p received additional RCS parts. Dual-Temp's affiliate, Spur Electric, Inc., installed the RCS at the Home Run Inn facility. Dual-Temp asserts that problems arose with the RCS immediately upon installation. For instance, Dual-Temp discovered that the wiring diagrams for the RCS were mislabeled. Defendants sent replacement diagrams, but these were also incorrect. Defendants eventually sent the correct diagrams. Defendants also sent Dual-Temp a computer with incorrect software but corrected this error as well.

After installing the RCS, Dual-Temp had to connect it to the refrigeration system in the Home Run Inn facility, a process referred to as "startup." In May 2007, defendants sent their technician, Steve Halvorsen, to assist with startup. Shortly after startup, the RCS began having frequent communication failures. This problem persisted for months and was never resolved. A functional RCS would have been able to communicate with the refrigeration system to control all parts of the refrigeration system. Dual-Temp and defendants sent technicians to troubleshoot the problem, but their efforts were unsuccessful.

On April 29, 2008, Milord demanded that Dual-Temp replace the Hench RCS. In May 2008, Dual-Temp paid Select Technologies, Inc. $113, 500 to remove the Hench RCS and to design, build, and install a replacement RCS. Dual-Temp asserts that the new Select Technologies ...

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