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New England Precision Grinding, Inc. v. Simply Surgical, LLC

Appeals Court of Massachusetts, Worcester

March 9, 2016

New England Precision Grinding, Inc.
v.
Simply Surgical, LLC, [1] & another. [2]

         Argued November 2, 2015

          Civil action commenced in the Superior Court Department on August 7, 2006.

Page 177

         The case was tried before Richard T. Tucker, J., and motions for the entry of separate and final judgment and to reach the proceeds of the judgment were heard by him.

          Amended judgment affirmed. Order entered January 18, 2013, affirmed.

          Barry A. Bachrach for the plaintiff.

          Matthew R. Johnson for Simply Surgical, LLC.

          Dale C. Kerester for Iscon Surgicals, Ltd.

         Present: Milkey, Carhart, & Massing, JJ.

          OPINION

          [46 N.E.3d 591] Carhart, J.

          This Superior Court contract action stems from the sale by defendant Simply Surgical, LLC (Simply Surgical), to plaintiff New England Precision Grinding, Inc. (NEPG), of medical device parts manufactured by defendant Iscon Surgicals, Ltd. [46 N.E.3d 592] (Iscon). All three parties appeal from an amended judgment entered on January 8, 2013, in favor of Simply Surgical; Iscon also appeals from an order entered on January 18, 2013, denying its motion for entry of a separate and final judgment and to reach the proceeds of the judgment due to Simply Surgical from NEPG.[3]

         On appeal, NEPG argues that the judge wrongly declined to instruct the jury that, under the Uniform Commercial Code (U.C.C.), codified in Massachusetts at G. L. c. 106, NEPG had the right to revoke its acceptance of parts once they were rejected by its customer Kyphon, Inc. (Kyphon). It also complains that the jury's verdict was against the weight of the evidence and its award excessive. Simply Surgical argues that the judge erroneously prevented it from presenting its claim for common-law indemnification against Iscon. Iscon contends that the judge should have corrected the amount of the damages awarded by the jury to include the total unpaid balance sought by Iscon on its account stated.

         We affirm the amended judgment, and the order entered January 18, 2013, denying Iscon's motion.

Page 178

          Background.

          We summarize the trial evidence. NEPG is a Massachusetts-based manufacturer of precision medical components. In or around 2004, NEPG contracted with Kyphon and agreed to supply Kyphon with medical device parts referred to as stylets and nozzles.[4] In 2005, Kyphon ordered six lots from NEPG, with each lot containing 25,000 pieces of each component. Because NEPG could not manufacture the parts at the price point that Kyphon requested, it contracted with Robert Longo, the owner of Simply Surgical, to obtain the parts from Indian manufacturer Iscon. Iscon shipped the initial order directly to NEPG, but shipped subsequent orders to Longo at Simply Surgical. The parts were shipped by lot, and Iscon would certify that the parts conformed to the plans and specifications provided by NEPG.

         Upon receiving the parts from Iscon or Simply Surgical, NEPG would conduct its own inspection using a process that was approved by Kyphon and which accorded with industry standards for medical devices. If NEPG approved of the parts, it would certify that they conformed to Kyphon's plans and specifications and would ship them to Kyphon. Kyphon would then do its own inspection before accepting or rejecting NEPG's shipment. The purchase orders from NEPG to Simply Surgical neither mentioned Kyphon nor required that the parts ultimately be accepted by Kyphon; [5] rather, the terms were listed as " Net 30 days." The " [d]escription" of the products ordered included " [c]ertifications [r]equired," and the purchase orders contained a directive that the parts are not to be shipped " UNTIL INSPECTION DATA HAS BEEN REVIEW [ sic ] AND APPROVED BY NEPG."

          [46 N.E.3d 593] Early on, NEPG brought to Longo's attention conformity issues that Simply Surgical and Iscon worked to correct. At one point, in order to keep the project moving, Simply Surgical gave NEPG approximately $20,000 in credits. Later, on two occasions after Kyphon rejected lots 4 and 5, ...


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