Jury awards local banner company $2.5 million
Chicago manufacturer sold faulty equipment, Houston firm argued
By Monica Perin
A Houston jury last week awarded $2.5 million to a defunct local printing company that accused a Chicago printing machine manufacturer of ruining its business. The founders of Presentation Resource Inc. won the jury verdict in a lawsuit alleging fraud, breach of contract and Texas Deceptive Trade Practices Act violations against Illinois-based M&R Printing Equipment Inc., the world's largest supplier of screen printing equipment. But M&R's attorney Scott Cunningham, formerly with Brill and Byrom, says the case will be appealed.

According to their attorney, PRI owners Buddy Lavin an Mike Mallay had developed a unique and profitable niche producing large, multi-color fabric banners for major cosmetic manufacturers. Those brands routinely use banners for sales promotions in department stores like Foley's and Dillards.

Lavin was a cosmetics buyer for Foley's when he began hand-screening the banners for suppliers, says John Tavormina, PRI's lawyer. And in 1990 Lavin and Mallay formed a full time business to manufacture them.

PRI had 28 employees and 40 independent contractors at the height of its business, Tavormina says, and in 1993 the two began looking for a printing machine that would enable the company to produce its product in much greater quantities. According to the lawsuit petition, M&R assured Lavin and Mallay it could provide them with the machine they needed, built to their specifications.

"The belt had to stop precisely so that the colors wouldn't overlap or be separated by a space," says Tavormina. "Customers were paying a lot for these banners and didn't want sloppy work." But, PRI contended the belt did not stop precisely, ruining the banners. In addition, PRI's competitor, AdArt of California, owned an M&R printing machine that was doing good work, Tavormina says. "We thought we were getting the same kind of printer, but they actually gave us a smaller motor and a belt only 66 inches wide, while AdArt's belt was 88 inches wide. And that width is critical in doing this kind of printing." PRI's remaining assets were subsequently sold to AdArt.

M&R claimed the machine they sold to PRI had the capacity to stop and start with a tolerance of plus-or-minus two-thousandths of an inch but that PRI's employees did not operate it properly. The jury awarded PRI $1 million for past damages, $500,000 for future damages from lost business opportunities, and $1 million in punitive damages for "willful and wanton" misconduct by M&R.

"Everyone was blown away by the award," Cunningham says. "This company had never shown a profit according to their tax returns. It was a very technical case, and they just said, this is a big Chicago company, let's hurt them. "