Opinion
CIVIL ACTION NO. 02-7435.
June 20, 2003.
MEMORANDUM
Presently before the Court are Defendant's Motion for Summary Judgment and Plaintiff's Response. For the following reasons, Defendant's motion will be granted.
As Plaintiff is a New York corporation and maintains its principal place of business in New York and Defendant is a Pennsylvania corporation and maintains its principal place of business in Pennsylvania and the amount in controversy exceeds $75,000, the present matter is properly before the Court pursuant to diversity jurisdiction.
Plaintiff engages in the business of pumping concrete. Defendant engages in the business of selling concrete pumps and trucks. On or about July 19, 1999, Plaintiff ordered a new $275,000 truck with a mounted concrete pump from Defendant by filling out a Purchase Order (entitled "New Truck Buyers Order") provided to it by Defendant. On the face of the Purchase Order are the names of each party's representatives, the goods to be sold, the purchase price, the $10,000 cash deposit remitted by Plaintiff, the delivery date and a one (1) year factory warranty guarantee. The Purchase Order, however, is not signed by either party.
See Def. Mot. Summ. J., Ex. A.
On August 6, 1999, the parties executed a Conditional Sales Agreement (the "Agreement") which set forth Plaintiff's payment and performance obligations and the security interest in the goods. Within the Agreement, Defendant also included a disclaimer of all express and implied warranties. Unlike the Purchase Order, the Agreement is signed by each party's representative. Whereas Defendant argues that the Agreement constitutes the only contract entered into by the parties, Plaintiff maintains that the Purchase Order is the document which contractually binds the parties and governs their performance obligations. The parties do agree that Indiana law governs the terms of their bargain as provided by paragraph eighteen of the Agreement.
See Def. Mot. Summ. J., Ex. E.
On or about August 6, 1999, Plaintiff accepted delivery of the pumper and truck from Defendant. Plaintiff alleges that sometime thereafter, it discovered that the truck was defective in that it was not certified for use by the National Highway and Transportation Authority, the Department of Transportation, or the Environmental Protection Agency. Plaintiff also alleges that the concrete pumper failed to operate properly and that the truck lacked proper identification labels as required by Federal Regulations. Plaintiff avers that prior to executing the Agreement, Defendant had specifically represented that the truck was fit for Plaintiff's use as a concrete pumper, was certified for use by all appropriate United States Government agencies, had the proper serial and identification numbers and was mounted with a properly operating concrete pumper. Plaintiff claims that Defendant had knowledge that these representations were false.
On September 11, 2000, Plaintiff first gave notice to Defendant of the truck's alleged defects. Then on December 4, 2000, Plaintiff filed a three count Complaint against Defendant, alleging Breach of Contract and Warranty with regard to the truck, Negligent Misrepresentation, and Breach of Warranty with regard to the concrete pump. Defendant now moves for Summary Judgment against Plaintiff's Complaint, arguing that, as a matter of law, Plaintiff cannot prove that Defendant breached the Agreement or any express or implied warranties. Defendant also argues that Plaintiff's Negligent Misrepresentation claim is barred pursuant to the economic loss doctrine.
Plaintiff concedes that its breach of express warranty claims are time barred due to the fact that it did not give notice of the truck's alleged defects or bring suit against Defendant until after the one year warranty had expired. Plaintiff argues, however, that its breach of implied warranty claims should survive Defendant's motion because the disclaimer contained in the Agreement materially altered the terms of the Purchase Order and, therefore, did not become a part of the parties' bargain. Plaintiff does concede, however, that the Agreement's disclaimer conforms to the requirements of the Uniform Commercial Code of Indiana. Plaintiff also argues that the economic loss doctrine does not bar its Negligent Misrepresentation claim.
II. Summary Judgment Standard
Summary judgment shall be awarded "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "material" if the dispute may affect the outcome of the suit under the governing law and is "genuine" if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Additionally, the evidence presented must be viewed in the light most favorable to the nonmoving party. See American Flint Glass Workers Union, AFL-CIO v. Beaumont Glass Co., 62 F.3d 574, 578 (3d Cir. 1995).
III. Discussion
A. Plaintiff's Breach of Express and Implied Warranty Claims
As noted above, Plaintiff concedes that its breach of express warranty claims are time barred due to the fact that it did not give notice of the truck's alleged defects or bring suit against Defendant until after the one year warranty had expired. As such, I conclude that there are no genuine issues of material fact as to Plaintiff's inability to proceed on its breach of express warranty claims. Accordingly, Defendant's motion will be granted with regard to Plaintiff's express warranty claims.
With regard to its breach of implied warranty claims, however, Plaintiff argues that they should survive Defendant's motion because the disclaimer contained in paragraph three (3) of the Agreement materially altered the terms of the Purchase Order and, therefore, did not become a part of the parties' bargain. Because the Purchase Order identified on its face the names of the parties, the goods to be sold, the purchase price with a cash deposit of $10,000 and the date of delivery, Plaintiff contends that the Purchase Order stands as the original contract entered into by the parties.
The Agreement disclaimer provides, in relevant part, that:
SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER INCLUDING PATENT INFRINGEMENT, CONDITION, QUALITY OR DESIGN OF THE EQUIPMENT, ITS MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, THE SUITABILITY OF THE EQUIPMENT IN ANY RESPECT OR IN CONNECTION WITH, OR THE PURPOSES AND USES OF, BUYER. BUYER HEREBY WAIVES ANY CLAIM AGAINST SELLER IN CONNECTION WITH OR ARISING OUT OF THE OWNERSHIP, FURNISHING, PERFORMANCE, OR USE OF THE EQUIPMENT AND SELLER SHALL HAVE NO LIABILITY FOR ANY LOSS, DAMAGE OR EXPENSE OF ANY KIND OR NATURE WHATSOEVER RELATING THERETO, INCLUDING WITHOUT LIMITATION, ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
In maintaining this contention, Plaintiff disregards paragraph four (4) of its Complaint, which states "[t]hat on or about August 6, 1999, the Plaintiff entered into a contract with Defendant, O'Connor Truck Sales South, Inc. for the purchase of a new 1998 Samsung truck model . . . with a concrete pumper for the sum of Two Hundred Seventy Five Thousand dollars . . ." Complt. ¶ 4. Again referring to the August 6, 1999 Agreement it entered into with Defendant, Plaintiff goes on to state that "[t]he Defendant O'Connor Truck Sales, Inc. breached its express and implied warranties under the aforementioned Contract of Sale . . ." Complt. ¶ 9 Plaintiff has already made it clear in its Complaint that the Agreement is the contract of August 6, 1999 upon which Plaintiff is suing. Notwithstanding its present argument that the Purchase Order constitutes the parties' governing contract, Plaintiff's argument is contradicted by the terms set forth in the August 6, 1999 Agreement and the admissions it made in its Complaint.
One such term of the August 6, 1999 Agreement which contradicts Plaintiff's argument is the integration clause contained in paragraph sixteen. That clause provides that:
[t]his instrument constitutes the entire contract between the parties hereto, and no representation, oral or written, shall constitute an amendment hereto unless signed in writing by an officer of the Seller. Any amendment, modification, waiver or extension hereunder must be in writing and signed by the parties hereto.
On Motion for Summary Judgment, the Agreement is the only document before the Court signed by representatives from both parties. The Court has not been presented with any written and signed amendments, waivers or modifications to the Agreement. As Plaintiff signed the Agreement, with the included integration clause, and made no amendments to it, Plaintiff cannot now establish that the Purchase Order is the document which contractually binds the parties.
However, even if the Agreement did not contain the above quoted integration clause, it would still be impossible to make a finding that the Purchase Order constitutes a binding contract under Indiana law. Ind. Code § 26-1-2-201(1) provides in relevant part:
Except as otherwise provided in this section, a contract for the sale of goods for the price of five hundred dollars ($500) or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker . . .
Ind. Code § 26-1-2-201(1). In the present case, it is undisputed that Defendant's representative did not sign the Purchase Order. The portion of the Order reserved for a representative's signature was conspicuously left blank. Given that Defendant, the party against whom Plaintiff is attempting to enforce the Purchase Order, did not sign and accept it, there is no evidence to support Plaintiff's contention that the Order stands as a binding and enforceable contract between the parties under Indiana law. Accordingly, I must conclude that the Agreement, which was signed by both Buscaglio and Kearney, stands as the only contract which governs the parties' obligations with regard to the pumper and truck.
As noted above, Plaintiff concedes that the disclaimer located at paragraph three of the Agreement conforms with the requirements of the Uniform Commercial Code of Indiana. Upon review of the disclaimer, I too find it to be unambiguous, conspicuous and sufficient under Indiana law. As such, I conclude that there is no genuine issue of material fact as to whether Defendant validly and conspicuously disclaimed any express or implied warranty, including implied warranties of merchantability and fitness for a particular purpose. Accordingly, Defendants' motion will be granted with regard to Plaintiff's breach of implied warranty claims.
Ind. Code § 26-1-2-316(2) provides in relevant part:
Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it, the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous . . .
B. Plaintiff's Negligent Misrepresentation Claim
Defendant argues that Plaintiff's negligent misrepresentation claim should not survive the present motion because it is barred by the economic loss doctrine. The Supreme Court of Indiana affirmed the economic loss doctrine in Martin Rispens Son v. Hall Farms, Inc., 621 N.E.2d 1078, 1090-1091 (Ind. 1993) when it held that a plaintiff may not recover on a negligence claim where the claim is solely based on a product's failure to perform as expected and the plaintiff only suffers economic damages or loss. The court defined economic loss as the loss of profits caused by a product which "does not work for the general purposes for which it was manufactured and sold, and includes such incidental and consequential losses as lost profits, rental expense and lost time." Id at 1089.
In response to Defendant's position, Plaintiff cites Estate of Reasor v. Putnam County, 635 N.E.2d 153, 161 (Ind. 1994) and Essex v. Ryan, 446 N.E.2d 368, 371 (Ind.App. 1983) as standing for the principle that a party may be held liable in tort for negligently performing their contractual duties. Although Plaintiff correctly states the principal affirmed in Estate of Reasor and Essex, in neither case was the plaintiff's negligence claim based on a product's failure to perform as expected. Rather, the plaintiff's in Estate of Reasor and Essex based their claims on the negligent performance of services which the defendants were contractually obligated to perform. In the instant matter, Plaintiff has based its negligent misrepresentation claim on the alleged defects attached to the truck and pumper it purchased, not on any services Defendant failed to perform with reasonable care.
Martin Rispens Son is more on point with the facts of the present matter. There, the plaintiff, a farm corporation, brought a negligence claim against the defendant for having sold it disease infected seeds which destroyed its crop. In applying the economic loss doctrine to affirm the lower court's grant of summary judgment against plaintiff's negligence claim, the court summed up the plaintiff's claim as follows:
Hall Farms [plaintiff] alleged that Petoseed [defendant] negligently marketed seeds that Petoseed knew or should have known were infected . . . and that as a result, Hall Farms was left with a damaged crop that resulted in lost profits. In other words, the basis of the negligence claim is that the product failed to perform as expected.Id at 1089. In the present case, Plaintiff alleges that Defendant falsely or negligently represented to Plaintiff that the truck it purchased was fully certified and would function properly as a concrete pumper. As a result of the truck's alleged defects, Plaintiff claims that it lost the benefit of the contract price and financing as well as profits. In accordance with the Indiana Supreme Court's reasoning in Martin Rispens Son, Plaintiff's negligent misrepresentation claim is based on the allegation that a product did not perform as expected, resulting in purely economic losses. As Indiana's economic loss doctrine dictates that a plaintiff cannot recover in negligence on this type of claim, I conclude that there are no genuine issues of material fact as to Plaintiff's inability to proceed on its Negligent Misrepresentation claim. Accordingly, Defendant's motion will be granted with regard to said claim.
An appropriate Order follows.
ORDER
AND NOW, this 20th day of June, 2003, upon consideration of Defendant's Motion for Summary Judgment and Plaintiff's Response, IT IS HEREBY ORDERED that Defendant's motion is GRANTED.