United States District Court, W.D. Wisconsin
SANCHELIMA INTERNATIONAL, INC., and SANCHELIMA INTERNATIONAL S. DE R.L. DE C.V., Plaintiffs,
WALKER STAINLESS EQUIPMENT COMPANY, LLC, BULK SOLUTIONS, LLC, and BULK TANK INTERNATIONAL, S. DE R.L. DE C.V., Defendants.
OPINION & ORDER
D. PETERSON DISTRICT JUDGE
move the court to reconsider its decision to deny their
motion for summary judgment that the distribution
agreement's remedy limitations provisions bar plaintiffs
from recovering consequential damages. Dkt. 67. To prevail on
their motion, defendants “must present either newly
discovered evidence or establish a manifest error of law or
fact.” Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606
(7th Cir. 2000). Defendants have not identified a manifest
error of law or fact in the court's summary judgment
order, so the court will deny their motion.
contend that the court's order was based on two manifest
errors of law: (1) a conflation of Wis.Stat. §
402.719's two tests for unenforceability and (2) a
conclusion that either test renders the limitations
provisions unenforcecable. “A ‘manifest
error' is not demonstrated by the disappointment of the
losing party. It is the ‘wholesale disregard,
misapplication, or failure to recognize controlling
precedent.'” Id. (quoting Sedrak v.
Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)).
diversity suit, the controlling precedent is Wis.Stat. §
402.719 and state court interpretations of that statute. At
summary judgment, the court applied the Wisconsin Supreme
Court's interpretation of § 402.719 in Murray v.
Holiday Rambler, Inc., 83 Wis.2d 406, 265 N.W.2d 513 (1978).
Murray explains that § 402.719 contains two subsections
that render certain limitations provisions unenforceable-one
for unconscionability and the other for failing the
limitation's essential purpose.
Any clause purporting to limit remedies in an unconscionable
manner will be deleted, making the ordinary UCC remedies
available as though the stricken clause had never existed.
In addition, sec. 402.719(2), Stats., provides: “(2)
Where circumstances cause an exclusive or limited remedy to
fail of its essential purpose, remedy may be had as provided
in this code.”
Id. at 520 (citation omitted). But Murray and a
Wisconsin Court of Appeals decision that followed it, Trinkle
v. Schumacher Co., 100 Wis.2d 13, 301 N.W.2d 255 (Ct. App.
1980), do not distinguish between these two subsections.
Rather, they focus on “the sensible policy underlying
sec. 402.719 . . . . ‘that there be at least a fair
quantum of remedy for beach of the obligations or duties
outlined in the contract. Thus any clause purporting to
modify or limit the remedial provisions . . . in an
unconscionable manner is subject to deletion.'”
Trinkle, 301 N.W.2d at 259 (quoting U.C.C. § 2-719 cmt.
1 (Am. Law. Inst. & Unif. Law Comm'n 1977)); see also
Murray, 265 N.W.2d at 520 (citing U.C.C. § 2-719 cmt.
1). In fact, Trinkle's analysis appears to conflate the
two subsections, explaining that despite the lack of
traditional signs of unconscionability, the limitations
provision was “unconscionable” because under the
circumstances of the case, it failed of its essential
In this case, the essential purpose of the sales invoice
provision was to bar claims once the goods were substantially
changed by cutting. . . . Trinkle and Schumacher were
experienced in the fabric industry business.
Unconscionability rarely exists in a commercial setting
involving parties of equal bargaining power. However, the
vice of that limitation applied to this case is that it
denies any remedy whatsoever to Trinkle, although the
specific warranty for the fitness for the purpose intended
was breached. . . .
We find that the provision is unconscionable because it
provides neither a minimum nor adequate remedy to Trinkle.
301 N.W.2d at 259 (citations omitted). So contrary to
defendants' argument, conflating § 402.719's two
subsections would not be a misapplication of controlling
remaining arguments also fail. They argue that the essential
purpose subsection only applies to “a disclaimer of the
warranty of merchantability, ” Dkt. 67, at 3, but they
offer no authority to support that proposition. They argue
that the limitations provisions are not unconscionable, but
they cite only state court cases concerning contract
provisions other than limitations provisions. The court
explained in its summary judgment opinion that such cases are
inapplicable, see Dkt. 66, at 6, and defendants offer no
argument as to why the court should now apply them. As
Trinkle illustrates, a limitations provision may be
unconscionable under § 402.719 even if it would not
otherwise qualify as unconscionable.
contend that the limitations provisions are enforceable
because plaintiffs “may have suffered compensatory
damages” that would be recoverable under the
limitations provisions. Dkt. 67, at 6. Defendants adduce the
deposition testimony of Estelle Sanchelima in support. They
should have adduced this evidence and advanced this argument
in their summary judgment motion; they do not argue that they
could not have done so. “Reconsideration is not an
appropriate forum for rehashing previously rejected arguments
or arguing matters that could have been heard during the
pendency of the previous motion.” Caisse Nationale de
Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th
Cir. 1996). And even if the court were to consider this new
evidence and argument, it would not render the limitations
provisions enforceable. Defendants argue that plaintiffs
“incurred costs in marketing [defendants'] products
in the Territory, including costs of attending trade shows,
purchasing advertisements, and paying a sales staff, ”
and that such damages would be recoverable. Dkt. 67, at 6.
But at summary judgment, defendants interpreted the
distribution agreement as limiting damages to “the
amount [plaintiffs] paid to [defendants] under the purchase
order(s) at issue.” Dkt. 45, at 2. The compensatory
damages that defendants list in their motion for
reconsideration were not paid under a purchase order, so
under defendants' interpretation of the limitations
provisions, they would not be recoverable. Reconsideration is
not an appropriate forum for strategically shifting
defendants contend that the court's summary judgment
order disposes of three of plaintiffs' breach of contract
claims and ask the court to “clarify” this point.
Although defendants style their request as a motion for
clarification, they are essentially asking the court to
reconsider its determination that enforcement of the
limitations provisions would provide neither a minimum nor an
adequate remedy for the alleged breaches. They argue that
unlike the alleged sales to customers in the territory
designated in the distribution agreement, the following
alleged breaches could be adequately remedied by recovery of
amounts paid under a purchase order: (1) defendants'
failure “to have adequate facilities in Mexico for the
manufacture of silos at the time the Distribution Agreement
was executed, ” (2) defendants' failure “to
timely complete manufacturing of products ordered by
[plaintiffs] in Mexico, ” and (3) defendants'
intentional attempt “to sabotage [plaintiffs']
relationship with customers, mainly FEMSA.” Dkt. 39,
¶ 21. Once again, defendants could and should have made
this argument at summary judgment. But even if the court were
to consider it now, the factual record concerning these three
alleged breaches has not been developed. Based on the
allegations contained in plaintiffs' amended complaint,
it appears that these three breaches may have been tied to
the breaches of the exclusivity provision and would not have
resulted in a purchase order. See, e.g., Dkt. 39, ¶ 18
(“[Defendants] damaged [plaintiffs'] reputation
with FEMSA . . . so that [defendants] could usurp FEMSA as a