KSR International Company v. Delphi Automotive Systems, LLC
523 F. App'x 357
6th Cir.2013Background
- KSR appeals district court dismissal of breach of contract and related Equitable claims against Delphi regarding ED&T costs under a 2010 throttle position sensor contract.
- Contract documents were attached to Delphi’s motion and referenced by the complaint; the contract stated a five-year price for TPS parts at $4.0222 per unit.
- KSR claimed Delphi promised to pay its pre-production ED&T costs, supported by a cited Cost Breakdown Worksheet used to amend the price.
- Delphi terminated the contract for convenience effective March 31, 2012; KSR sought unpaid ED&T costs not yet recovered.
- District court assumed the worksheet and quote were part of the contract but held they did not obligate Delphi to pay all ED&T costs and rejected equity claims; KSR appealed, arguing its interpretation was facially plausible.
- Court reviewed de novo, applying Twombly/Iqbal plausibility standards and considering integrated contract terms under Michigan law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Delphi must pay KSR’s pre-production ED&T costs under the contract. | KSR relies on the Cost Breakdown Worksheet and Article 11 to show ED&T costs are recoverable. | The contract is a goods sale for TPS parts; no promise to pay ED&T costs separately. | No; contract language shows goods, not services, and ED&T costs are not recoverable beyond the per-unit price. |
| Whether ED&T costs fall within Article 11's services remedy. | ED&T costs were services completed under the contract and should be paid. | The contract expressly covers goods; ED&T costs are not services under the agreement. | No; the contract is integrated and provides a remedy only for finished goods at the contract price. |
| Whether equitable claims (promissory estoppel, unjust enrichment, quantum meruit) survive. | Equity should enforce full ED&T cost recovery. | Equity cannot override an integrated contract that governs the dispute. | Dismissed; equitable claims premised on non-existent extra-contractual promise fail. |
| Whether the district court erred in treating documents as non-ambiguous and in applying a plain-language contract interpretation. | Contract terms could be read to include ED&T costs as a price component. | Documents show a goods contract; no implied expansion to cover ED&T. | No error; unambiguous contract language governs; dismissal affirmed. |
Key Cases Cited
- Mediacom Southeast LLC v. BellSouth Telecomm., Inc., 672 F.3d 396 (6th Cir. 2012) (reversing where court relied on improper fact-finding about services under contract)
- Rory v. Continental Ins. Co., 703 N.W.2d 23 (Mich. 2005) (unambiguous contract enforced by plain language)
- New Freedom Mortg. Corp. v. Globe Mortg. Corp., 761 N.W.2d 832 (Mich. App. 2008) (contract interpretation aims to ascertain parties’ intent from plain language)
- Novak v. Nationwide Mut. Ins. Co., 599 N.W.2d 546 (Mich. App. 1999) (promissory estoppel dependent on reasonable reliance within integrated contract)
- Morris Pumps v. Centerline Piping, Inc., 729 N.W.2d 898 (Mich. App. 2006) (no implied contract where an express contract covers the subject)
- Metropolitan Alloys Corp. v. Considar Metal Mktg., Inc., 615 F. Supp. 2d 589 (E.D. Mich. 2009) (elements of promissory estoppel and reliance-focused relief)
- Twombly v. Bella, 550 U.S. 544 (2007) (pleading must show plausible entitlement to relief)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (plausibility standard for pleadings)