Breach of Contract – Fraudulent Inducement Claims

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WI Court of Appeals – District I

Case Name: Tankstar USA, Inc., et al. v. Navistar, Inc., et al.

Case No.: 2017AP1907

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Breach of Contract – Fraudulent Inducement Claims

Tankstar USA, Inc. (“Tankstar USA”), Bulk Logistics, Inc. (“Bulk”), Schwerman Trucking Company (“Schwerman”), North American Bulk Transport, Inc. (“North American”), and Rogers Cartage Company (“Rogers”) (collectively, “Tankstar”) appeal a summary judgment granted in favor of Navistar, Inc. (“Navistar”) and Lakeside International Trucks, Inc. (“Lakeside”). The judgment was granted on Tankstar’s breach of contract and fraudulent inducement claims relating to its purchase of seventy-nine ProStar semi-trailer trucks manufactured by Navistar and purchased from Lakeside.

Tankstar argues the circuit court erred in granting summary judgment on its fraudulent inducement claim against Lakeside on the basis that Tankstar lacks an available remedy for any alleged fraud. We agree with the circuit court that Tankstar’s subsequent conduct in selling the trucks and instituting the present action for contract-based damages had the effect of affirming the contract, thereby precluding Tankstar from seeking restitutionary damages associated with a rescission of its contracts with Lakeside. Because Tankstar has no breach of contract claim against Lakeside, the circuit court properly dismissed Tankstar’s fraudulent inducement claim.

Tankstar also argues the contractual “repair and replace” remedy Navistar offered in its various warranties failed of its essential purpose because several trucks required repeated engine repairs. As a result, Tankstar asserts it is entitled to the full panoply of remedies available under the Uniform Commercial Code (“U.C.C.”), including consequential damages. We agree with the circuit court that Tankstar has failed to present evidence that would permit a reasonable factfinder to conclude that, as to the entire batch of trucks, the “repair and replace” remedy has categorically failed due to the alleged design defects. We also observe that aside from its categorical claim, Tankstar makes no effort to argue or demonstrate that any individual truck or trucks suffered from such frequent and repeated repairs that Tankstar was deprived of an effective contract remedy. We therefore conclude that Tankstar was limited to its contractual remedies against Navistar. We affirm the circuit court in all respects.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.