Injunction upheld in auto assembly parts supply dispute

The Indiana Court of Appeals upheld a decision denying the dissolution of a preliminary injunction involving two manufacturing companies, finding that if dissvoled, one company would be at risk of suffering irreparable harm.

Autoform Tool & Manufacturing, LLC uses injector cups supplied by Whitesell Precision Components, Inc. to produce fuel rail assemblies used in car manufacturing.

In July 2016, Whitesell issued an invoice to Autoform reflecting a higher price for the injector cups than previously determined. Whitesell also sought an alleged “payment shortfall” of $343,154.15. Autoform did not pay the amount demanded, and before the parties could come to an agreement, Whitesell ceased its shipments of injector cups to Autoform.

Autoform filed a motion for a temporary restraining order against Whitesell. After some continuances and discovery disputes, the trial court set the matter for a preliminary injunction hearing. However, the parties reached an agreement and the trial court entered an agreed order vacating the court date and converting the temporary restraining order to a preliminary injunction.

Immediately afterward, a dispute arose concerning the quality of the injector cups supplied to Autoform. In October 2017, the trial court issued a pre-trial order providing that Autoform could debit Whitesell’s account for each defective injector cup delivered. When Whitesell filed a motion to dissolve the preliminary injunction, the trial court denied it. The appellate court upheld that decision on Friday in Whitesell Precision Components, Inc. v. Autoform Tool & Manufacturing, LLC, 18A-PL-848. 

On appeal, Whitesell argued that the trial court abused its discretion in refusing to dissolve the preliminary injunction issued pursuant to the parties’ agreement.

Whitesell contended that it was incumbent upon the trial court to require Autoform to provide evidence of its current ability to re-source the injector cups, but that the trial court declined to do so and simply relied upon facts that existed in the past.

But the appellate court found that in its argument, Whitesell largely ignored the fact that it had agreed to the continuation of the injunction until the resolution of the underlying litigation.

“Whitesell’s claim that it is entitled to dissolution of the preliminary injunction based upon the passage of sufficient time for re-sourcing is such a collateral attack,” Judge L. Mark Bailey wrote for the court. “When Whitesell stipulated with Autoform that the temporary restraining order should be converted to a preliminary injunction, the parties agreed to its duration, that is, until the litigation was resolved by trial.”

“The agreed order did not impose a time limit for Autoform to find a new supplier; indeed, Autoform was not obligated to re-source its needs. Whitesell cannot now be heard to complain that the trial court abused its discretion with respect to the proper length of the injunction.”

The appellate court also noted that Whitesell did not know that Autoform would obtain an order specifically permitting debits to Whitesell’s account for parts Autoform considered defective while Whitesell was restrained from ceasing shipments. Under the changed circumstances, Whitesell contended there was “an imbalance of power” and the “emergency was long over” regarding the injunction’s necessity.

But the appellate court affirmed the trial court’s decision that found Whitesell could be adequately compensated by money damages if Autoform had acted wrongfully but, in the event Whitesell had acted wrongfully, Autoform was at risk of suffering irreparable harm that could not be adequately addressed by money damages.

 Therefore, the appellate court concluded, the trial court did not abuse its discretion in denying Whitesell’s motion to dissolve the preliminary injunction.