In Metal Seal Precision, Ltd. v. Sensata Technologies, Inc., Metal Seal sued Sensata for allegedly breaching the parties’ Memorandum of Understanding (MOU), which required Sensata to purchase minimum quantities of metal components from Metal Seal. Responding to the complaint, Sensata denied that it agreed to a minimum-quantities requirement. Sensata also alleged that the minimum-quantities requirement was unenforceable because it was based on Metal Seal’s fraud. According to Sensata, while negotiating the MOU, Metal Seal falsely represented that its insurer required that any contract with Sensata include minimum volumes of components.
Metal Seal moved for summary judgment on Sensata’s G.L. c. 93A and fraud claims. Metal Seal also moved for summary judgment on Sensata’s affirmative defense based on Metal Seal’s alleged “material misrepresentations.”
Judge Davis granted the motion, concluding that Metal Seal’s misrepresentations did not constitute “material facts,” an essential element of fraud under Massachusetts law. Recognizing that the “case law on the issue is somewhat sparse,” Judge Davis cited a decision from the Supreme Court of Vermont—Goldman v. Town of Plainfield, 171 Vt. 575, 762 A.2d 854 (2000)—and concluded that “a party’s statement of the reasons or motives underlying its bargaining position generally are not considered to be ‘material.’”
Judge Davis explained:
Metal Seal may have misrepresented to Sensata why it insisted on the inclusion of minimum purchase requirements in the parties’ agreement, but that misrepresentation did not alter the substance of what Metal Seal demanded, or what Sensata agreed to . . . . Moreover, the minimum purchase requirements that Metal Seal insisted upon were not hidden from Sensata or misrepresented by Metal Seal in any way. Sensata understood the purchase requirements that Metal Seal was demanding, and it had a full and fair opportunity to assess those requirements on their merits and decide whether to accept or reject them. Thus, Sensata got what it bargained for irrespective of whether Metal Seal’s misrepresentation regarding its motive was true or false and, therefore, that representation cannot be deemed material for any purpose.
Judge Davis also noted Sensata’s admission that Sensata had no alternative source for components when it negotiated the MOU. That fact, according to Judge Davis, further demonstrated that Metal Seal’s motives for demanding the minimum-quantities requirement were immaterial to Sensata’s decision to sign the MOU.
The Business Litigation Session of the Massachusetts Superior Court: BLS 1
Docket Number: 1784CV00518-BLS1
Date of Decision: October 30, 2019
Judge: Brian A. Davis
- Senior Editor, Co-Chair, Business Litigation Practice Group