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Excelsior Metals, Inc., A California Corporation v. Han-Kwang Usa

April 20, 2011

EXCELSIOR METALS, INC., A CALIFORNIA CORPORATION,
PLAINTIFF,
v.
HAN-KWANG USA, INC., AN ILLINOIS CORPORATION; AND DOES 1 THROUGH INCLUSIVE,
DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

SCHEDULING CONFERENCE ORDER Discovery Cut-Off: 8/15/11 Non-Dispositive Motion Filing Deadline: 8/30/11 100, Non-Dispositive Motion Hearing Date: 9/30/11 9:00 Ctrm. 7 Deadline: 9/15/11 Dispositive Motion Filing Dispositive Motion Hearing Date: 10/17/11 10:00 Ctrm. 3 Settlement Conference Date: 8/23/11 10:30 Ctrm. 7 Pre-Trial Conference Date: 11/21/11 11:00 Ctrm. 3 Trial Date: 1/10/12 9:00 Ctrm. 3 (JT-10 days)

I. Date of Scheduling Conference. April 20, 2011.

III. Summary of Pleadings.

1. On or about December 20, 2006 Excelsior and Han-Kwang entered into a sales agreement (hereinafter "Original Agreement") for the purchase and sale of two laser cutting machines and an automated loading/unloading system described as Hankwang Model FL3015 (hereinafter "the System"). Pursuant to the terms of the Original Agreement, Excelsior issued a $150,000.00 installment payment to Han-Kwang - which was to be applied against the $1,132,687.50 purchase price - on or about January 24, 2007 and the System was shipped to Excelsior shortly thereafter.

2. Subsequent to delivery and testing, Excelsior determined that the System did not perform to its satisfaction. After negotiation, the parties entered into a new agreement dated July 21, 2008 (hereinafter "Amended Agreement"). Under the Amended Agreement, Han-Kwang agreed to replace the existing loading/unloading system (hereafter "New System") and to substitute a new purchase price of $1,002,500.00 taking into account and crediting the previously issued $150,000.00 installment. Excelsior was to make an immediate payment of $625,000.00 upon execution of the Amended Agreement. Thereafter, two separate payments which would satisfy the remaining purchase price were contemplated. The first payment of $100,000.00 was to be issued if the New System met the "Successful System" installation and testing provisions articulated in the Amended Agreement.*fn1 The second payment of $127,500 was to be issued if the New System again met the "Successful System" requirements 90 days after the first successful test.

3. Excelsior claims that the New System failed to meet the requirements of a "Successful System" and therefore, it is absolved of any obligation to remit the final two payments under the Amended Agreement. Additionally, Excelsior claims that it is entitled to receive warranty services from Han-Kwang and in accord with the Amended Agreement, that it is entitled to keep the system at no additional cost. Excelsior also seeks compensation for damages incurred as a result of the alleged system failure, and for declaratory relief regarding its entitlement to warranty services. Contrarily, Han-Kwang contends that the New System performed satisfactorily, that Excelsior indicated to Han-Kwang that the New System met the standards of a "Successful System" as defined in the Amended Agreement, and that Excelsior's failure to remit payment is wrongful. Furthermore, Han-Kwang alleges that Excelsior has failed to reasonably and properly maintain the New System, dispensing with the requirement to render warranty services. Han-Kwang seeks to recover the final two payments totaling $227,500.00 plus interest, and for declaratory relief regarding its requirement to provide warranty services.

IV. Orders Re Amendments To Pleadings.

1. The parties do not anticipate amending the pleadings at this time.

V. Factual Summary.

A. Admitted Facts Which Are Deemed Proven Without Further Proceedings.

1. Plaintiff Excelsior Metals, Inc., is a California corporation qualified to do and doing business in the State of California.

2. Han-Kwang USA, Inc., is an Illinois corporation doing business for the purposes of this lawsuit as alleged in the State of California.

3. It is uncontested that Excelsior and Han-Kwang entered into an agreement on or about December 20, 2006, for the purchase and sale of two laser cutting machines and an automated loading/unloading system (the "Original Agreement").

4. It is uncontested that the purchase price under the Original Agreement was $1,132,687.50. Further, it is uncontested that the loading/unloading system was installed and Excelsior made a $150,000.00 installment payment pursuant to the Original Agreement.

5. It is uncontested that Paragraph 8 of the Amended Agreement defines "Successful System" as one that would function for "24 hours of unmanned operation for two consecutive days subject to system operator's strict compliance with the operation guidelines as set out by Han-Kwang and attached herewith at Exhibit B." It is further uncontested that all testing of the new system would take place six months from the execution of the Amended Agreement.

6. It is uncontested that Excelsior and Han-Kwang entered into an amended agreement dated July 21, 2008 (the "Amended Agreement"). The Amended Agreement called for a new loading/unloading system to be installed with a new purchase price of $1,002,500.00 to be paid in specified installments.

7. It is uncontested that the new loading/unloading system was installed and Excelsior paid the first installment of $625,000.00 pursuant to the Amended Agreement. It is further uncontested that Excelsior was to pay the sum of $100,000.00 upon the installation and successful testing of a "Successful System." It is further uncontested that Excelsior was to pay the remaining balance of $127,500.00 if the New System again met the "Successful System" provisions 90 days after the first successful test.

8. It is uncontested that Excelsior has not paid, nor has Han-Kwang received, the remaining $227,500.00 balance of the purchase price under the Amended Agreement.

9. It is uncontested that Paragraph 3 of the Amended Agreement states, "Seller shall include four (4) resonator rebuilt kits, operator training, documentation of machine, automation, and all alarms and system error codes with the new system."

B. Contested Facts.

1. All other facts are contested.

VI. Legal Issues.

A. Uncontested.

1. Jurisdiction exists under 28 U.S.C. § 1332.

2. Venue is proper under 28 U.S.C. § 1391.

3. The parties agree, in this diversity action, the substantive law of the State of California provides the rule of decision.

4. It is undisputed that the prevailing party shall be entitled to attorneys fees as articulated ...


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