Volume 13, Issue 7 - September 2012

What's News

LEGAL NEWS
Class Action Complaint Filed Against MI Windows and Doors

Ashland Hardware is closing its facility in Lowell, Ind., and transfering work to its existing facilities in the United States and A class action complaint was filed on July 23, 2012, in the U.S. District Court of Kansas against MI Windows and Doors (MIWD) by Jennifer and Scott McGaffin, on behalf of themselves and all others similarly situated. According to court documents, the plaintiffs assert unfair and deceptive trade practices in violation of the Kansas Consumer Protection Act, negligence, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, fraudulent misrepresentation, fraudulent concealment, unjust enrichment and seeking damages and declaratory relief in connection with defective windows designed, manufactured, marketed, advertised and sold by MIWD.

One of the plaintiffs’ contentions is that MIWD designed, manufactured and supplied vinyl windows which relied upon adhesive-coated foam tape to prevent water intrusion through the glazing, and other sealant materials to prevent water intrusion through the sill joints.

According to court documents, “the windows are defective and fail to perform both at the plaintiffs’ residence[s] and at Class members’ residences in that the windows rely upon foam tape between the glass and the vinyl to prevent the intrusion of water. However, MIWD failed to install the foam tape in sufficient compression as required or recommended by the sealant tape manufacturer, which results in premature foam tape performance failure.”

Further, court documents say that “MIWD knew or should have known that the windows were defective in design, were not fit for their ordinary and intended use, and failed to perform in accordance with the advertisements, marketing materials and warranties disseminated by MIWD and further failed to perform to the reasonable expectations of ordinary consumers.”

The plaintiffs allege that MIWD has been put on notice of the widespread defects in its products in Kansas by a number of homeowners. “MIWD knew or should have known that the defects were present at the time the products left its control, not only because of its expertise and testing, but also because of the notices of defect that it was receiving from the field,” reads the complaint.

The plaintiffs also make several allegations related to the window company’s warranty. “MIWD ships a warranty with its windows. However, homeowners generally do not receive the warranty and are not on notice of its limitations, as the window stickers are typically removed by the builder to improve the appearance of the home,” write the plaintiffs. “Defendant MIWD’s shipping of the windows with prior knowledge of the defects or with negligent or reckless disregard of the presence of defects constituted a breach of its express warranty, and makes the limitations of the express warranty unconscionable in all respects, and therefore void.”

According to court documents, the amount in controversy in the suit exceeds $5 million “exclusive of interest and costs” and there are 100 or more members of the proposed plaintiffs’ class which include Jennifer and Scott McGaffin, whose home was built in 2008. The plaintiffs further allege that the windows manufactured by MIWD “suffered premature failure” and thus the homeowners had to replace the windows at their own cost.

Court documents also claim that the “plaintiffs contacted MIWD about the damage from their defective Windows, but were told that the windows were not installed correctly.” Court documents define the damages class as “All persons and entities that own a structure located within the State of Kansas in which MIWD’s 8500/4300/3500 windows are installed, who have not had their windows replaced or been compensated for their loss in full by defendant, and who are not covered by the terms of the defendant’s express warranty.”

A representative of MI Windows and Doors told DWM magazine that it “must now contain its comments to the litigation process.”

Stay tuned to dwmmag.com for further updates.

Dove Vinyl Windows to Close its Doors
Dove Vinyl Windows, based in Wilkes-Barre, Pa., sent a letter to its customers in August announcing that it will close its doors. In a letter to customers, Rick Dove, owner, cited the economic slowdown as the reason for the pending closure.

“At Dove Industries the economic slowdown has created a significant downturn and we have concluded that we must shut down and in an orderly fashion liquidating our assets for the benefit of our creditors,” the letter stated.

He adds that the company will attempt to fill existing orders, but that will be contingent upon availability of necessary supplies.

“Dove Industries thanks you for your business in the past. We regret deeply that we can no longer continue to operate,” the letter stated.

DWM visited the company’s plant in 2009 and at that time Bruce Dove, general manager, reported that the company was poised for growth.

“We’re much better set up than coming out of any other downturn,” said Bruce Dove in the article. “Rick [my uncle] is shrewd and was smart enough to save when things were good.”

Then in December 2010, the company announced that it was investing $2 million dollars to open a new plant in Pulaski County, Va.

COMPANY NEWS
New Era Employees File Legal Arbitration
Serious Energy has been in the news again recently. In July employees of New Era Windows LLC, the window manufacturer formed earlier this year when Serious Energy announced it was closing its Chicago-based facility, filed legal arbitration in hopes of buying some of the company’s machinery—as well as saving jobs. The employees claimed that as part of an agreement reached with Serious earlier this year, the workers, members of the United Electrical and Machine Workers of America Local 1110, were to be able to purchase the machinery from their former employer and raise the investments necessary to start up their cooperative and begin producing windows. However, they were notified on a Sunday that Serious planned to instead liquidate the assets by the following Friday.

The statement continues, “Serious advised the union that it planned to auction off the remaining equipment at the plant (the building is rented) and agreed to defer the closing of the plant by several more months than required by law. The union has been trying to put together a bid for the equipment, and it may still be able to do so. The proceeds of the auction are expected to return only a small fraction of the money invested in this operation by Serious over the past 3 ½ years, and the Mesirow Funds have written off, and expect to continue to have to write off most of their investment in Serious.”

In other news, Kevin Surace, Serious co-founder of the Sunnyvale, Calif.-based company, no longer serves as its chairman of board. He now serves as CEO of Santa Rosa, Calif.-based Gridlock Solar.

Surace previously also served as CEO of the company but stepped down from that role earlier this year and co-founder Marc Porat took over. According to information from the Serious website, Tassilo Bauerle now has taken over as president and CEO of the company. He previously served as executive director of General Biofuels, a developer of biomass pellet facilities with projects throughout North America. Porat remains on the company’s board of directors, according to information from Serious.

MGM Industries to Expand Tennessee Facility
Expansion plans are underway for MGM Industries in Hendersonville, Tenn. The expansion represents an investment of $3 million and the creation of 75 jobs, including production, engineering and maintenance positions during a three-year period.

“We have positioned our company for the future by making a $1 million capital investment to painted vinyl windows and doors,” says Joe Gaskins, vice president of sales. “We are also introducing a new brand of paint, which will be branded Uncle Omer’s Premium Vinyl Paint. To support this new brand, MGM is investing in technologies that offer custom colors which will be created within the manufacturing umbrella of MGM Industries.”

According to MGM president Abe Gaskins, the investment has been made over the past few years and will also include future investments in the fenestration markets.

“MGM is looking to develop fiberglass pultrusions and further expand into the cellular PVC markets,” says Abe Gaskins, adding this expansion was necessary “because we now have our painting process in place as well as upper-end vinyl windows that can compete in the clad segment of the market with the addition of our color capabilities.”

The company also will receive a $30,000 state grant.

“I am committee co-chairman for a group we call the Industry and Education Coalition,” says Abe Gaskins. “On this group we have various government representatives, one of which is the Northern Middle Tennessee Economic and Community Development. They encouraged us to apply for training funds. The purpose of this group is to improve the vocational and industrial training in Sumner County and the State of Tennessee.”

He adds that the funds will be paid out per job created in the next five years and the company is now hiring qualified applicants.

Fen-Tech Expands Due to Growth
Pat Heytens, owner of Fen-Tech Windows, based in Superior, Wis., says the company has experienced such significant growth that it broke ground recently to construct a new building. The new 10,000-square-foot structure will be in addition to its existing facility and the two locations will share the same loading dock. The expansion was expected to be complete in August, according to Heytens, but due to flooding in late June and other weather conditions, has been delayed three to four weeks. The company is also in the final design stage of a new garden window.

“We don’t have the room to make the garden window in house,” he says. “We were already busting at the seams.”

Sixty percent of the space will be devoted to production of the garden window and the rest can be used for storage and could eventually be used for additional manufacturing capacity.

Heytens says the company has experienced some strong growth this year which resulted in the need for more space.

“This has been a good year, although we were concerned with the forecast,” he says. “We have seen a nice broad increase especially with some smaller companies we deal with, particularly in the Midwest and West.”

Heytens attributes a few items to the company’s healthy growth in a challenging market.

“Number one we operate in a niche market,” he says. “Over the last three years we have taken a close look at what we can do to serve existing customers.”

Some of the increases may also be attributed, however, to a shrinking market.

“To be honest a lot of companies have gone out of business and that has helped us as well,” says Heytens.

“We forecasted to be up 5 percent at this point this year and we are seeing upwards of 20-25 percent increases,” he says.

He adds, however, that the company has also made some changes in its services offered that has also made a difference. For example, the company has adopted a new software system by AMS that will encompass geometric shapes which is a large part of its business. He says the remote order entry system will also offer customers the ability to obtain instant quotes.

Alside Celebrates 65th Anniversary
Alside is celebrating 65 years in the home improvement and new construction industries. To commemorate its anniversary, the company held a weeklong celebration in August at its headquarters in Cuyahoga Falls, Ohio. Key events included a United Way Day of Action and a celebration with corporate employees and retirees. Guest speakers included Don L. Robart, mayor of Cuyahoga Falls.

According to the announcement, Jerome J. Kaufman, founder of Alside, introduced a residential baked enamel aluminum siding in 1947. Since then, the company has expanded to produce and distribute vinyl windows, vinyl siding, vinyl fencing and other exterior building products through 100 company-owned supply centers and a network of independent distributors nationwide.

“Alside is dedicated to advancing innovative exterior building products for the residential marketplace,” says Jerry Burris, president and CEO for Associated Materials Inc., parent company of Alside. “This dedication is illustrated in the growth and success we’ve experienced throughout our 65 years. It is a proud legacy, and we are fortunate and honored to carry it forward.”

“Alside is a company that not only survived but prospered over the last 65 years because of [its] determination and resiliency,” says founding family member Donald L. Kaufman. “I feel honored to have spent 46 years there as an executive and CEO.”

LaCantina Announces New Corporate Facility
LaCantina Doors has moved its corporate headquarters and manufacturing operations into a new 67,000-square-foot facility in the North County of San Diego.

According to the company, the new facility is fully operational, manufacturing at full capacity and on schedule to ship orders.

LEGISLATIVE NEWS
Congress Postpones Vote on Bill to Reform Lacey Act
A bill that would reform the Lacey Act was expected to come up for a vote in the House of Representatives in July, but last-minute concerns raised by opponents of the bill prevented the vote from moving forward, according to Ben Gann, director of legislative affairs and grassroots activities for the Window and Door Manufacturers Association (WDMA). The Lacey Act requires companies involved in importing wood to know the definition of “illegally sourced” as defined by each foreign country.

“This places an extraordinary burden on companies to try to determine if they are in compliance with all laws of every nation in the wood supply chain,” says Gann. He adds that one of the major challenges with the Lacey Act involves acting with “due care” in importing wood. Although third-party certification has been identified as an appropriate step in the due care process, it alone does not meet the standard for due care under the Lacey Act.

“If enacted, the Relief Act would help door and window manufacturers that import wood by clarifying the concept of due care,” he says.

The Lacey Act is overly broad and the Relief Act is as a way of clarifying the exercise of due care in the acquisition of imported wood, says Gann. Determining a clear standard of due care for importers would allow for prosecution in cases where the Lacey Act was knowingly violated but protect end users who did not knowingly violate the law.

“The setback for the Relief Act is disappointing but WDMA remains committed to finding a solution for manufacturers making it easier for them to comply with the Lacey Act,” he says.

$75,000 Suit by PPG Industries Against Jeld-Wen Dismissed
PPG Industries’ suit against Jeld-Wen Inc., which alleged breach of license, has been dismissed. According to the order of dismissal, which was granted by the U.S. District Court for the Western District of Pennsylvania, both companies agreed the suit should be dismissed with prejudice and therefore Jeld-Wen of Klamath Falls, Ore., cannot be retried for the original allegations made by Pittsburgh-based PPG.

PPG filed the suit against Jeld-Wen in May, claiming that the company violated its rights to PPG’s patent applications “covering an insulating unit with a low thermal conducting edge.” The complaint alleged that per its license agreement, PPG had granted Jeld-Wen certain rights and licenses with respect to the patents. In exchange for the rights and licenses granted to Jeld-Wen by PPG, the window manufacturer was required to make periodic royalty payments to PPG, according to the complaint.

“Despite several demands that it do so, Jeld-Wen has failed to make its required royalty payments,” alleged PPG in the complaint.

The suit also claimed that “as a direct and proximate result of defendant Jeld-Wen’s breach of contract, PPG suffered damages resulting from Jeld-Wen’s failure and refusal to pay the royalty payments required by the license agreement.” PPG alleged that its damages had exceeded $75,000, exclusive of interest and costs.

The original agreement regarding the patents was made on September 24, 1992, according to the complaint.

MIWD to Close Tennessee Fabrication Plant
MI Windows and Doors (MIWD) announced it will close its manufacturing plant located in Smyrna, Tenn., where there currently are 103 employees. The company anticipates that the operation will be closed by this fall.

“This move is by no means a reflection upon the performance of our team in Smyrna, but rather is part of our long-term strategy to consolidate our operations into three manufacturing centers located in Arizona, Texas and Pennsylvania,” says Matt DeSoto, chief operating officer of MIWD. “We will continue to service our Smyrna customers from our remaining facilities and are still fully committed to growing our market presence in the southeastern United States.”

In other news, the company’s Southern Division is now manufacturing the Designer Series vinyl replacement windows in Carrollton, Texas.


DWM

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