Matec SLR v. Gramercy Holdings I, LLC

In 2017 Matec S.r.L. (plaintiff) sold two industrial water-filtration machines to Gramercy Holdings I, LLC, doing business as Noranda (Noranda) (defendant). [Ed.’s note: The suffix S.r.L. is misspelled in the official name of the case.] In 2019 Matec and Noranda signed two contracts. The first was an agreement by Matec to complete a punch list of repairs to the 2017 water-filtration machines. The second contract was a purchase agreement in which Noranda purchased three more water-filtration machines from Matec. The purchase agreement provided that payment would not become due until Matec completed the repairs in the punch-list contract. The punch-list contract contained a general provision giving Noranda the right to inspect and approve Matec’s work. It also contained a provision outlining a procedure for handling delays, which did not contain any express conditional language. Matec did not complete the repairs or comply with the general provision for handling delays, and Noranda did not pay for the new water-filtration machines. Matec sued Noranda, alleging that Noranda breached the purchase agreement by failing to pay for the new water-filtration machines and breached the implied covenant of good faith and fair dealing by frustrating Matec’s performance of the punch-list contract. Matec alleged that it attempted to complete the punch-list repairs but that Noranda refused access to the machines, refused delivery of replacement parts without justification, and improperly maintained the machines. Noranda moved to dismiss Matec’s complaint. Because Noranda’s obligation to pay Matec for the new machines was conditioned on Matec’s completion of the punch-list contract, and Matec did not complete the punch list, Noranda argued that it was not required to pay Matec for the new machines. Noranda also argued that its actions were permitted by the inspect-and-approve provision of the punch-list contract and that Matec failed to comply with the provisions governing performance delays.