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Marvin Lumber and Cedar Co. v. Marvin Architectural Limited

United States District Court, D. Minnesota

November 7, 2016

Marvin Lumber and Cedar Company, Plaintiff,
v.
Marvin Architectural Limited, Defendant.

          Robert R. Weinstine, Joseph M. Windler, Michael E. Obermueller, Winthrop & Weinstine, P.A., Minneapolis, Minnesota, for Plaintiff.

          Clarence J. Kuhn, The Kuhn Law Firm, P.L.L.C., Edina, Minnesota, Jeffrey M. Goldstein, Goldstein Law Firm, P.L.L.C., Washington, D.C., for Defendant.

          MEMORANDUM OPINION AND ORDER

          RICHARD H. KYLE United States District Judge

         INTRODUCTION

         From 2000 to 2015, Plaintiff Marvin Lumber and Cedar Company (“Marvin”) sold windows and doors to Ireland-based Defendant Marvin Architectural Limited (“MAL”) pursuant to a written agreement. After terminating that agreement, Marvin filed this action, seeking a declaration that it is not liable to MAL for claimed defects in the subject windows and doors. MAL has counterclaimed, alleging inter alia that Marvin breached the parties' agreement by failing to defend and indemnify it in product-defect lawsuits in Ireland. Presently before the Court are Marvin's Motion to Dismiss MAL's counterclaims and Motion for Summary Judgment on its declaratory-judgment claim. For the reasons that follow, the Court will grant both Motions.

         BACKGROUND

         Marvin is a Minnesota-based manufacturer of windows, doors, and related products. On February 11, 2000, it entered into an International Distribution Agreement (“Distribution Agreement”) with MAL, under which it sold products to MAL for resale to consumers in Ireland. (Obermueller Decl. Ex. A.) At that time, Marvin warrantied its products against certain “defects in manufacturing, materials, and worksmanship” to all end-users for ten years. (Mooney Decl. Ex. 1) The Distribution Agreement provided that “all [p]roducts sold hereunder shall conform to the applicable warranty for such [p]roducts in effect on the date of delivery to [MAL].” (Id. at 2.) Marvin “made no other representations or warranties of any kind whatsoever.” (Id.) In addition, the Distribution Agreement set forth a procedure for resolving warranty claims reported to MAL:

[MAL] shall promptly notify [Marvin] so that [Marvin] may investigate the claimed defect. [Marvin] and its representatives shall have the right to inspect the [p]roducts claimed to be defective and [MAL] shall have no right to return any [p]roducts to [Marvin] without [Marvin]'s prior written consent. [MAL] may return to [Marvin] any [p]roducts which [Marvin] concedes are defective, and [Marvin] shall, at its option, either replace such [p]roducts without additional charge to [MAL] or credit [MAL]'s account for the purchase price of such [p]roducts.

(Id.)

         The parties operated under the Distribution Agreement for over a decade, [1] cooperating to resolve consumer complaints; Marvin addressed defects covered by its warranty, and MAL addressed installation-related issues. According to MAL, however, Marvin's products struggled to withstand Ireland's weather conditions. (Mooney Decl. ¶ 10.) Complaints of defects covered by Marvin's warranty became frequent and costly. As a result, Marvin decided to terminate the Distribution Agreement and halt sales to consumers in Ireland. Marvin notified MAL of this decision in 2013, and the parties agreed that the Distribution Agreement would terminate on November 30, 2015. (Obermueller Decl. Ex. B at 1.)

         On June 1, 2013, the parties entered into a “Windup Agreement, ” in which they “memorialize[d] . . . the termination of the Distribution Agreement, the details of [their] amicable windup, and[] settle[d] any obligation, claim, commitment, or loss, foreseen or unforeseen.” (Id.) To that end, MAL agreed to release Marvin “to the fullest extent permitted by law, from any and all claims . . . of any kind or nature whatsoever . . . including, without limitation . . . Losses[2] that have or may in the future arise out of or relate in any way to the products that were the subject of the Distribution Agreement.” (Id. at 2.) The parties further agreed to “resolve existing service obligations of MAL and/or warranty obligations of Marvin, pursuant to one or more separate and mutually agreed-upon protocols.” (Id. at 1.) In an attached “Service Protocol, ” the parties acknowledged that “MAL has a number of existing service commitments and Marvin a number of product warranty obligations to fulfill” in Ireland. (Id. at 4.) They agreed that, “any and all new requests for service and/or warranty claims will be referred to Marvin directly.” (Id.) Marvin would then rely on MAL for labor and other services as required to resolve those claims, compensating MAL at rates set forth in the Service Protocol. (Id.) In consideration for the release and other provisions of the Windup Agreement, Marvin paid MAL $650, 000. (Id. at 2.) Neither the Windup Agreement nor the Service Protocol extended the termination date of the Distribution Agreement.

         MAL has continued to receive warranty claims from consumers in Ireland after termination of the Distribution Agreement. (Mooney Decl. ¶ 15.) MAL has, in turn, asked Marvin to compensate it for these claims, but Marvin has refused. (Id.) Marvin contends that, although it may have warranty obligations to consumers in Ireland, it has no obligation to MAL pursuant to the Windup Agreement. On April 6, 2016, Marvin filed this action, seeking a declaration that the Windup Agreement released it from liability to MAL. MAL counterclaimed, alleging (1) breach of contract and the covenant of good faith and fair dealing, (2) unlawful termination, and (3) unjust enrichment. On July 18, 2016, Marvin moved to dismiss MAL's counterclaims and, three days later, it moved for summary judgment on its declaratory-judgment claim. The Motions have been fully briefed and the Court heard argument on September 20, 2016; the Motions are ripe for disposition.

         ANALYSIS

         I. ...


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