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Sunday, April 5, 2020

Federal judge won't throw out Chicago's lawsuit vs maker of $1.3M defective electric garbage truck

Federal Court

By Scott Holland | Jul 10, 2019

Chicago city hall

CHICAGO — A federal judge has refused to throw out a lawsuit the city of Chicago filed against the makers of an allegedly defective electric garbage truck.

In February, Chicago City Hall lawyers filed suit in Cook County Circuit Court against Motiv Power Systems, asking the court to force Motiv to reimburse more than $1.3 million that the city spent on an electric refuse truck, alleging it has been out of service for a cumulative three years since the city took possession in 2014.

Motiv, which is based near San Francisco, removed the case to U.S. District Court Northern District of Illinois in March, and also filed a counterclaim, alleging breach of contract and breach of the duty of good faith. Motiv also asked the court to dismiss the city's lawsuit. 

U.S. District Judge Ronald Guzmán issued an opinion on that motion July 9. Motiv had argued an indemnification provision in its October 2012 contract with the city should apply only to third party actions, such as injury or damage lawsuits and patent or trademark infringement actions, and can't be used by the city to sue Motiv.

Guzmán rejected that position, citing a 2017 federal court opinion in Walgreen Co. v. Panasonic Healthcare Corp. of North America, which held: “In Illinois, a contractual indemnification clause may be ‘broad enough to encompass claims for both first party and third party claims for indemnity.’”

He further said any party wishing to limit liability expressly to a third party must do so in the contract, and ruled that Motiv’s contract with the city had no such express language.

Motiv also argued the city’s breach of warranty claim failed because it should’ve been filed by Jan. 6, 2018, exactly four years after it delivered the truck. The city countered by arguing the truck was never fully “delivered” according to the contract, because the vehicle’s defects mean Motiv did not, per contract language, “deliver the specified vehicles or equipment, complete with all attachments and ready for use.”

The city also noted the contract obligated Motiv to “be responsible for the contracted quality and standards of all materials, components or completed work furnished under this contract up to the time of final acceptance by the city,” and since the truck was never “ready for use,” the city never agreed to “final acceptance” of the vehicle.

“Whether delivery of the ERT was tendered pursuant to the terms of the contract is an issue of fact that is not properly resolved at the motion to dismiss stage,” Guzmán wrote.

Guzmán’s opinion is the latest action in an issue that goes back to 2012, four years after the city launched its Chicago Climate Action Plan, described in the initial complaint against Motiv as “a comprehensive and detailed strategy to help lower greenhouse gas emissions and address climate change. This included a provision for Chicago to “introduce both all-electric and hybrid garbage trucks into the city’s fleet” and reduce “reliance on diesel-driven trucks and petroleum use.”

The city said it secured a U.S. Department of Energy “to partially fund its acquisition of hybrid and electric fleet vehicles, including electric refuse trucks” and paid more than $1.3 million for one truck in 2014.

According to Motiv’s website, the company produces buses, step vans, work trucks, box trucks and other “medium-duty body” commercial vehicles powered by an all-electric powered chassis. The website does not advertise electric garbage trucks.

The city is represented by attorneys from its Department of Law.

Motiv is represented by attorneys Michael J. Summerhill and John T. Shapiro, of the firm of Freeborn & Peters LLC in Chicago.

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Organizations in this Story

U.S. District Court for the Northern District of IllinoisFreeborn & PetersMotiv Power SystemsCity of Chicago