Fujifilm N. Am. Corp. v. M & R Printing Equip., Inc.

636 F.Supp.3d 281

2022 DNH 134

FUJIFILM NORTH AMERICA CORPORATION et al. v. M & R PRINTING EQUIPMENT, INC. et al.

Civil No. 20-cv-492-LM

United States District Court, D. New Hampshire

Signed October 24, 2022

Matthew Joseph Delude, Thomas J. Pappas, Primmer Piper Eggleston & Cramer PC, Manchester, NH, for Fujifilm North America Corporation et al.

Jeffrey C. Spear, Orr & Reno PA, Concord, NH, for M & R Printing Equipment, Inc., Novus Printing Equipment, LLC.

William D. Woodbury, Normandin Cheney & O'Neil PLLC, Laconia, NH, for NI Holdings, Inc.

NI Holdings, Inc., Moultonboro, NH, Pro Se.

ORDER

Landya McCafferty, United States District Judge

Plaintiffs Fujifilm North America Corporation, Fujifilm Specialty Ink Systems Ltd., and Fujifilm India Pvt. Ltd. (collectively, "Fujifilm")¹ bring breach of contract and indemnification claims against M & R Printing Equipment, Inc. and Novus Printing Equipment, LLC (collectively "M & R") and NI Holdings, Inc., f/k/a Novus Imaging, Inc., ("Novus Imaging").² Fujifilm's claims stem from an October 2015 contract with Novus Imaging, pursuant to which Novus Imaging agreed to manufacture commercial printers for Fujifilm and authorized Fujifilm to act as a global distributor of the printers (the "Distributor Agreement"). In the Distributor Agreement, Novus Imaging provided a one-year limited warranty for the printers. Fujifilm alleges that, after purchasing and installing these printers, it experienced numerous issues and notified Novus Imaging, but Novus Imaging did not repair or replace them as required under the warranty. In April 2017, M & R purchased Novus Imaging's assets, including Novus Imaging's rights under the Distributor Agreement. Fujifilm alleges M & R is liable for damages related to the printers because M & R assumed Novus Imaging's rights and obligations under the Distributor Agreement.

M & R now moves for partial summary judgment on its liability for certain damages at issue in this case. Doc. no. 58.³ M & R argues that, with limited exceptions, it did not agree to assume liabilities under the Distributor Agreement for any printers Novus Imaging manufactured prior to April 2017. Fujifilm objects, arguing that M & R is liable for all damages related to the printers under the Distributor Agreement.⁴ For the following reasons, the court denies M & R's motion for partial summary judgment.

STANDARD OF REVIEW

Summary judgment is proper only if the moving party can demonstrate that there is no evidence in the record to support a judgment for the nonmoving party. Borges v. Serrano-Isern, 605 F.3d 1, 5, 8 (1st Cir. 2010); see also Fed. R. Civ. P. 56(a). If the moving party succeeds in making that showing, "the burden shifts to the nonmoving party, who must, with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor." Borges, 605 F.3d at 5. In evaluating a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party, must draw all reasonable inferences in that party's favor, and may neither make credibility determinations nor weigh the evidence. Harris v. Scarcelli, 835 F.3d 24, 29 (1st Cir. 2016); Hicks v. Johnson, 755 F.3d 738, 743 (1st Cir. 2014).

BACKGROUND

The facts are drawn from the record and summarized favorably to Fujifilm.

I. October 2015: Novus Imaging, Fujifilm, and the Distributor Agreement

Michael Mills founded Novus Imaging in New Hampshire around 2010. Novus Imaging manufactured, sold, and serviced digital and screen-printing equipment. Sometime before 2015, Novus Imaging introduced a commercial printer known as the "Synergia" printer.⁵ The Synergia printer was not a household printer. Rather, its intended customers were commercial printing companies, and its price tag was approximately $350,000 to $400,000.

In October 2015, Novus Imaging and Fujifilm executed the "Distributor Agreement," in which Novus Imaging agreed to manufacture and sell Synergia printers to Fujifilm and granted it the right to sell those printers to third parties. The Distributor Agreement contemplated an ongoing, long-term business relationship between Novus Imaging and Fujifilm. Fujifilm agreed to purchase a minimum number of printers every year, and Novus Imaging agreed to manufacture and ship the printers to Fujifilm or Fujifilm's customers. Fujifilm agreed to pay for the printers in increments, starting with an initial deposit. It would then make subsequent payments upon completion of the manufacturing process and after shipping and installation.

Beyond those basic terms, several provisions in the Distributor Agreement are relevant to M & R's motion for summary judgment.

Installation and Training. Novus Imaging agreed to provide reasonable assistance and technical support for the installation and setup of the first few printers that Fujifilm sold to its customers. Other than those initial printers, Fujifilm would be responsible for installing the printers on behalf of end users.

Warranty/Repairs/Service. Novus Imaging also provided Fujifilm and its customers certain equipment and service warranties for the printers. Specifically, Novus Imaging warranted the printers for a period of one year from the date of their installation, alongside an additional six-month warranty for parts repaired or replaced under the warranty. The warranty required Novus Imaging to repair or replace any nonconforming printers at no cost to the printers' end users, and it established a protocol for bringing warranty claims to Novus Imaging's attention.

The contract also divided responsibilities for servicing the printers between Novus Imaging and Fujifilm. Fujifilm was required to provide "first level service" to its customers and only escalate issues to Novus Imaging (which provided "second level service") if Fujifilm could not resolve the problem. If an issue fell outside of the limited warranty, the contract stated that Novus Imaging would charge Fujifilm its standard rates to service the printers and replace any necessary parts.

Indemnity. Section 8 states that Novus Imaging agreed to indemnify Fujifilm for "all actions, suits, claims, demands, losses, damages or other liabilities . . . arising out of or related to: (i) [Novus Imaging's] manufacture, storage, packaging and shipment of the [printers] including, without limitations, Defect Claims, provided that: (1) such [printer] was installed according to [Novus Imaging's] instructions; and (2) such claim for indemnity is not caused by an unauthorized modification to the [printer] or due to the use of" ink or parts not authorized by Novus Imaging. Doc. no. 58-2 at 11.

Fujifilm's Right-of-First-Refusal. Section 12 of the Distributor Agreement granted Fujifilm a right of first refusal to purchase Novus Imaging's assets and business concerns in the event a third party offered to buy them. Novus Imaging agreed to provide Fujifilm notice of any offers, at which point Fujifilm could exercise or waive its right of first refusal. In any event, if Novus Imaging and Fujifilm were unable to reach an agreement on the price and other terms and conditions of the sale within 30 days of the date Novus Imaging provided Fujifilm notice, Novus Imaging was "thereafter free to enter into a transaction to sell all or substantially all of [its] assets . . . to a third party . . . ." Id. at 14.

Assignment of Rights. Section 13(c) provided that neither party could "assign any part of [the Distributor] Agreement without the other [p]arty's written consent . . . ." Id. at 15.

II. October 2015-April 2017: Novus Imaging and Fujifilm's Interactions Under the Distributor Agreement

Pursuant to the Distributor Agreement, Fujifilm purchased 14 Synergia printers between 2015 and 2016.⁶ Novus Imaging manufactured the 14 printers in 2015 and 2016. Fujifilm installed one of the 14 printers in its "Demo Center" in Illinois in November 2015. Fujifilm sold 8 of the 14 printers to customers around the world, and it installed them at its customers' facilities throughout 2016. Although Novus Imaging manufactured the remaining five printers by the end of 2016, Fujifilm does not appear to have sold them. Three of these printers are currently stored by Fujifilm, while two are stored by M & R. Fujifilm also paid Novus Imaging deposits for five additional printers that were never manufactured.

According to a Fujifilm service log, Fujifilm first reported issues with its Synergia printers to Novus Imaging in late December 2015. Over the next few years, Fujifilm reported additional problems with the Synergia printers. By early 2017, Fujifilm had recorded about 152 issues with the 9 printers it had installed. It ascribed the problems to a variety of causes, including hardware and software issues, inadequate training, improper use, and lack of proper instruction on how to use the Synergia printers. Fujifilm contends that some, but not all, of these issues were attributable to Novus Imaging. Some of the issues, however, stemmed from Fujifilm's customers' use of the Synergia printers and Fujifilm's own failure to provide training to its customers.

Between 2015 and early 2017, Fujifilm exchanged numerous emails, telephone calls and service calls with Novus Imaging about the printers' issues. Novus Imaging attempted to fix the issues by, for example, sending technicians to service the printers in person, replacing parts, providing service support over email and phone, issuing technical bulletins, holding weekly conference calls with technical staff at Fujifilm, and releasing updated versions of the printers' software. Novus Imaging did not, however, accept responsibility for all the issues Fujifilm identified with the printers.

Despite these issues, Fujifilm remained committed to purchasing and distributing the Synergia printer. Fujifilm's executives believed many of the problems were typical for the roll out of a new product. And, at least outwardly, Fujifilm's...