Kelsey-Hayes Co. v. Galtaco Redlaw Castings Corp.

In 1987, Galtaco Redlaw Castings Corp. (defendant) entered into an agreement to sell castings to Kelsey-Hayes Co. (plaintiff) for use in brake assemblies. The agreement provided prices for the castings. In 1989, Galtaco offered all of its customers castings at a 30 percent price increase. Galtaco made it clear that if the price increases were not accepted then it would have to halt production of castings. Kelsey-Hayes contacted six other castings manufacturers, but was unable to find an alternative supplier. Kelsey-Hayes sold the brake assemblies to auto manufacturers, such as Ford, and was Ford’s sole supplier of the brake assemblies. Kelsey-Hayes believed that a halt in castings supply would cause Ford and other manufacturers to have to halt their production. Kelsey-Hayes also believed that such a halt in production would lead to an injured business reputation and subject it to large monetary damages. Kelsey-Hayes entered into a new agreement with Galtaco, which provided for the demanded price increase. Kelsey-Hayes did not expressly reserve a claim for breach of the 1987 agreements. Galtaco sought an additional 30 percent price increase. When Galtaco made shipments of castings to Kelsey-Hayes, Kelsey-Hayes refused to pay for a specific number of shipments. The total price for that specific number of shipments reflected the price increase that Galtaco demanded under the 1989 agreements. Kelsey-Hayes filed suit in the United States District Court for the Eastern District of Michigan for breach of the 1987 agreements. Galtaco filed a motion for summary judgment.