Opinion
Civil Action No. 3:97-CV-1480-L
October 17, 2001
MEMORANDUM OPINION AND ORDER
Before the court is Alcan Aluminum Corporation's Motion to Reconsider Memorandum Opinion and Order ("Alcan's Motion to Reconsider"), filed August 30, 2001; Defendant BASF Corporation's Second Motion for Summary Judgment ("BASF's Second Motion for Summary Judgment"), filed August 24, 2001; Alcan Aluminum Corporation's Motion for Leave to File Supplemental Jury Instructions, filed August 30, 2001; Alcan Aluminum Corporation's Motion for Leave to Supplement Joint Pretrial Order, filed August 31, 2001; Defendant's Motion to Strike Plaintiff's Supplemental Expert Materials and Brief in Support, filed June 29, 2001; Plaintiff Alcan Aluminum Corporation's Motion to Exclude Expert Testimony of Kenneth Baker, filed June 28, 2001; Plaintiff Alcan Aluminum Corporation's Motion to Exclude Expert Testimony of Daniel Klempner, filed June 29, 2001; and BASF Corporation's Motion to Exclude Expert Witness and Brief in Support, filed June 29, 2001. After careful consideration of the motions, responses, replies, briefs, evidence submitted by the parties and applicable law, the court denies Alcan's Motion to Reconsider and grants BASF's Second Motion for Summary Judgment. The court denies as moot the remaining motions.
On August 24, 2001, Defendant BASF Corporation's Trial Brief Regarding Alcan's Contract Claims ("BASF's Trial Brief) was filed. At the pretrial conference, the court informed the parties that it would redesignate BASF's Trial Brief as a second motion for summary judgment, and directed the clerk to so reclassify BASF's Trial Brief. The court allowed Alcan until September 20, 2001 to file a response, and permitted a reply to be filed within seven days of the response.
I. Factual and Procedural Background
Plaintiff Alcan Aluminum Corporation ("Alcan") manufactured aluminum based panels for gasoline station fascia and sun rooms. The aluminum panels contained an insulating layer of foam that was sprayed into the aluminum as a liquid. The foam then hardened to create a rigid insulating core. Defendant BASF Corporation ("BASF") sold the mixing system that Alcan used to make the foam. The mixing system was the Autofroth 9206 system and Alcan used the system from July 1993 until September 1994.
The Autofroth 9206 system had narrow processing parameters. As a result, Alcan had to closely maintenance the system to ensure that the Autofroth 9206 foam was properly fabricated. In the spring of 1994, Alcan nevertheless began receiving complaints and warranty claims from customers who alleged that the Autofroth 9206 foam was causing Alcan's aluminum panels to bubble and lose form. Alcan initially sought assistance from BASF to resolve these problems. The parties could not find a solution. Alcan therefore sent a letter to BASF, dated December 16, 1994, wherein Alcan claimed that the bubbles and malformation were a direct result of problems with the Autofroth 9206 system. Alcan also requested that BASF reimburse it for any warranty claims that Alcan's customers brought against it. The parties could not reach an agreement.
Alcan therefore filed suit against BASF in state court on May 16, 1997. BASF removed to this court on June 18, 1997. Alcan asserted causes of action for: 1) breach of contract; 2) breach of warranty; 3) fraud and/or fraudulent concealment; 4) negligent misrepresentation; 5) violation of the Texas Deceptive Trade Practices — Consumer Protection Act ("DTPA"), Tex. Bus. Comm. Code Ann. § 17.41 et seq. (West 1987); 6) professional negligence; and 7) for declaration that a contract existed between Alcan and BASF.
By Memorandum Opinion and Order, filed January 30, 2001, this court granted summary judgment against Alcan's claims for breach of warranty, fraud, fraudulent concealment, negligent misrepresentation, DTPA violations, and professional negligence. The court also dismissed Alcan's request for declaratory relief. Alcan's only remaining claim is the breach of contract claim.
BASF's Second Motion for Summary Judgment and Alcan's Motion to Reconsider involve the relationship between the previously dismissed breach of warranty claims and the remaining breach of contract claim. The following facts clarify the motions' procedural significance.
On August 24, 2001, BASF filed a Trial Brief wherein it argues that Alcan's breach of contract claim is substantively indistinguishable from the previously dismissed breach of warranty claims. BASF therefore contends that the breach of contract claim should likewise be dismissed. The court's September 6, 2001, directed the clerk of court to redesignate BASF's Trial Brief as BASF's Second Motion for Summary Judgment because the Trial Brief in effect requests summary dismissal of Alcan's breach of contract claim.
On August 30, 2001, Alcan filed its Motion to Reconsider. Alcan moves the court to reverse summary dismissal of Alcan's breach of warranty claims. The court originally dismissed the claims because it concluded that BASF had given Alcan a document that disclaimed all express and implied warranties. The document was a Terms and Conditions of Sale. The court's January 30, 2001 Memorandum Opinion and Order indicates that BASF presented competent summary judgment evidence that Alcan received the Terms and Conditions of Sale, and that Alcan failed to present competent summary judgment evidence that it did not receive the document. Memorandum Opinion and Order at 19. Accordingly, Alcan failed to demonstrate that there was a genuine issue of material fact with respect to BASF's disclaimer. See Id.
Alcan's Motion to Reconsider contends that the Terms and Conditions of Sale is not competent summary judgment evidence. Alcan's logic is that the document is dated "1994", but the transaction between Alcan and BASF occurred in 1993. According to Alcan, the Terms and Conditions of Sale post dates the transaction and is therefore irrelevant. The court herein resolves these issues.
II. Alcan's Motion to Reconsider
From a procedural standpoint, Alcan waited seven months after the court dismissed the breach of warranty claims before it moved the court to reconsider the dismissal. Alcan offers no explanation for this delay. The court notes that Alcan filed the motion only after BASF filed its Second Motion for Summary Judgment. Alcan's Motion to Reconsider apparently anticipates that if BASF's Second Motion for Summary Judgment is well founded, the breach of contract claim will be dismissed and Alcan will lose its last remaining claim against BASF. Accordingly, Alcan attempts to salvage the breach of warranty claims.
From a substantive standpoint, Alcan also fails to explain why it only now asserts that the Terms and Conditions of Sale document was not competent summary judgment evidence. BASF's original Motion for Summary Judgment was filed on April 23, 1998, and in that motion BASF used the Terms and Conditions of Sale as summary judgment evidence. Even then, Alcan was aware that the document was dated "1994", because Alcan expressly questioned a BASF representative about the 1994 date. See BASF's Response and Brief in Opposition to Alcan's Motion to Reconsider at 3 (stating, "Alcan has known since it deposed [the BASF representative] in 1997 [that] BASF has used the same warranty disclaimer since . . . April 1992. . . . Indeed, Alcan's counsel specifically asked [the representative] in his deposition about the significance of the . . . 1994 date.") (emphasis added).
Alcan does not dispute that it has always been aware that the Terms and Conditions of Sale bears a 1994 date. Thus, despite knowing that the document was dated "1994", Alcan did not challenge the sufficiency of the document when, in 1998, BASF used the document as summary judgment evidence. Instead, it has waited more than three years to contend that the document is not competent summary judgment evidence.
The court can otherwise highlight Alcan's delay by noting that the court's January 30, 2001 Memorandum Opinion and Order made clear that the court relied on the document to dismiss the breach of warranty claims. The Memorandum Opinion and Order was issued approximately three years after BASF initially moved for summary judgment. During the three years before the court issued the Memorandum Opinion and Order, Alcan conceivably could have overlooked the potential value of challenging the competency of the Terms and Conditions of Sale. This oversight, alone, may be — but is not necessarily — excusable. After the court's Memorandum Opinion and Order, however, Alcan should have been aware that the document was pivotal to dismissal of the breach of warranty claims. Accordingly, Alcan should have immediately contended that the document is arguably objectionable. Instead, after having already waited three years, Alcan waited another seven months to finally argue that the document was not competent summary judgment evidence. Alcan offers no explanation for this delay.
Alcan now encourages the court to disregard the 1994 document and reconsider dismissal of the breach of warranty claims because — according to Alcan — to not do so "would be clearly erroneous and an abuse of discretion." Alcan's Motion to Reconsider at 2. The court disagrees. The court rejects Alcan's contention that the 1994 document is not competent summary judgment evidence for the reasons articulated in its Memorandum Opinion and Order, filed January 30, 2001. More importantly, even if the contention has merit, no valid basis exists to reconsider the Memorandum Opinion and Order. Alcan has wholly failed to explain the reason for its failure to present evidence to challenge the sufficiency of the Terms and Conditions of Sale document, even though such evidence was available during the pendency of the first motion for summary judgment. Accordingly, Alcan has not set forth good cause or a valid basis for the court to reconsider its earlier ruling. See Russ v. International Paper Co., 943 F.2d 589, 593 (5th Cir. 1991). The court therefore will not reconsider the ruling. Consequently, Alcan's breach of contract claim is viable only if it is distinguishable from the breach of warranty claims.
III. BASF's Second Motion for Summary Judgment A. Summary Judgment Standard
Summary judgment shall be rendered when 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); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
B. Breach of Contract versus Breach of Warranty
The court's September 6, 2001 order, which reclassified BASF's Trial Brief as BASF's Second Motion for Summary Judgment, invited Alcan to submit summary judgment evidence regarding the viability of its breach of contract claim. The court did not invite Alcan to further advocate for resurrection of the breach of warranty claims. Alcan nevertheless filed a twelve page submission that commits eleven pages to resurrecting the breach of warranty claims. The court disregards this discussion. The remaining page cites Reynolds Metals Co, v. Westinghouse Electric Corp., 758 F.2d 1073 (5th Cir. 1985) as the only authority that Alcan's breach of contract claim is viable.
In Reynolds, Reynolds purchased electrical equipment from Westinghouse. 758 F.2d at 1074. Reynolds purchased the equipment on the condition that Westinghouse provide a competent engineer to supervise the installation of the electrical equipment. Id. The engineer was further obligated to supervise the installation for two days. Id.
David Reindl was designated as the engineer to supervise the installation. Id. at 1075. Reindl had an electrical engineering degree but lacked extensive training related to the electrical equipment purchased by Reynolds. Id. Additionally, when Reindl arrived to fulfill his obligations to Reynolds, he explained that he "considered it his responsibility to `technically assist' rather than to `supervise' Reynolds in the installation of the purchased equipment." 758 F.2d at 1075.
The electrical equipment ultimately malfunctioned, and Reynolds blamed Westinghouse and Reindl. Id. at 1075-76. Reynolds filed breach of contract and breach of warranty claims against Westinghouse. Id. at 1076. The case was tried to a jury. Id. at 1077. At the close of the evidence, Westinghouse obtained an instructed verdict on the breach of warranty claim because Westinghouse proved the parties agreed to disclaim all warranties. Id.
Westinghouse also contended that the breach of contract claim was subject to instructed verdict because it was indistinguishable from the breach of warranty claim. 758 F.2d at 1077. Westinghouse's argument was that Reynolds was complaining about the quality of services provided under the contract. Id. According to Westinghouse, this complaint sounded in warranty, not contract. Id. The trial court disagreed and refused to issue an instructed verdict. Id. The jury thereafter found for Reynolds. Id.
Westinghouse appealed and contended that the trial court should have instructed a verdict on the breach of contract claim because it was indistinguishable from the breach of warranty claim. 758 F.2d at 1077-78. Reynolds's position was that because Reindl was so severely unqualified to act as the supervising engineer and that because Reindl did not agree to supervise as promised, Westinghouse had in effect failed to deliver the engineer contemplated by the contract. Id. According to Reynolds, that failure sounded in contract, not warranty. Id. The Fifth Circuit agreed and held that the jury was entitled to conclude that Reindl's lack of competence and his unwillingness to supervise amounted to a total failure of performance that sounded in contract. Id. at 1078.
Alcan contends that Reynolds supports the proposition that a breach of contract claim is appropriate when a seller delivers goods that are so defective that in effect there has been no delivery. Alcan further contends that the Autofroth 9206 system was grossly defective because allegedly 90 to 95% of the Autofroth 9206 foam did not function properly. Alcan therefore relies on Reynolds to substantiate its contention that the Autofroth 9206 system was so defective that BASF, in essence, completely failed to deliver the system. This, according to Alcan, amounts to breach of contract.
BASF responds to Alcan's contention by arguing that Reynolds is no longer valid in light of holdings in Southwestern Bell Telephone Co. v. FDP Corp., 811 S.W.2d 572 (Tex. 1991) and Brooks, Tarlton, Gilbert, Douglas Kressler v. United States Fire Ins. Co., 832 F.2d 1358 (5th Cir. 1987). In Southwestern Bell the Texas Supreme Court held:
The [Uniform Commercial Code ("UCC")] recognizes that breach of contract and breach of warranty are not the same cause of action. The remedies for breach of contract are set forth in [UCC] section 2.711, and are available to a buyer " [w]here the seller fails to make delivery" Tex. Bus. Co, Code § 2.711(a). The remedies for breach of warranty, however, are set forth in section 2.714, and are available to a buyer who has finally accepted goods, but discovers that the goods are defective in some manner. Tex. Bus. Comm. Code § 2.714, § 2.711 (Comment 1). . . .811 S.W.2d at 576 (emphasis added). In Brooks, the Fifth Circuit echoed the Texas Supreme Court's distinction between a breach of warranty and breach of contract claim by stating, "we conclude that with respect to goods, a buyer is limited to bringing [breach of warranty actions in] situations where the buyer's compliant is focused on the qualities of goods received rather than on the fact that no goods were ever delivered" 832 F.2d at 1375 (emphasis added).
Alcan assumes — as does BASF — that Reynolds should be read to suggest that a breach of contract action can be appropriate when goods are delivered, but defects in quality are so extensive that the goods should be considered not delivered. This principle is arguably inconsistent with Southwestern Bell and Brooks, which mandate that if delivery has occurred, disputes regarding quality give rise to breach of warranty, not breach of contract. The court has given close reading to Reynolds, Southwestern Bell, and Brooks and concludes that it is not necessary to determine whether these cases are incongruous. Pivotal language in Reynolds suggests that the cases are in harmony.
In Reynolds, the Fifth Circuit clarifies its holding by stating:
If Westinghouse had provided a competent engineer to supervise installation of the [electrical equipment], and that engineer had not performed as expected, there would be a breach of warranty but not a total failure of performance. In contrast, if Reindl did not even qualify as a "component" engineer and did not believe that it was his duty "to supervise" Reynolds in the installation, then by supplying him Westinghouse failed to perform at all as promised under the contract. Such a failure would constitute a total failure of performance, a breach of contract. . . .758 F.2d at 1078. (emphasis added). This language is consistent with the principle advanced by Southwestern Bell and Brooks, because it reflects that delivery of inferior goods or services equate to a warranty claim while delivery of nothing equates to a contract claim.
Neither Alcan nor BASF disputes that BASF contracted to deliver the Autofroth 9206 system. BASF delivered that system. Alcan was not satisfied with the quality of foam created by the system. Alcan brought this suit. This is a classic claim for breach of warranty.
Alcan has therefore failed to establish that a genuine issue of material fact exists with respect to whether its breach of contract claim is distinct from its breach of warranty claims. Reynolds, Southwestern Bell, and Brooks establish as a matter of law that Alcan's breach of contract and warranty claims are indistinguishable. Alcan's breach of warranty claims were dismissed by summary judgment in the January 30, 2001 Memorandum Opinion and Order. Alcan's breach of contract claim must likewise be dismissed.
V. Conclusion
For the forgoing reasons, Alcan Aluminum Corporation's Motion to Reconsider Memorandum Opinion and Order is hereby denied. Defendant BASF Corporation's Second Motion for Summary Judgment is hereby granted, and Alcan's breach of contract claim is dismissed with prejudice. In light of the court's ruling on these two motions, the remaining motions are no longer viable because all depend on the continued maintenance of this suit. Alcan Aluminum Corporation's Motion for Leave to File Supplemental Jury Instructions, Alcan Aluminum Corporation's Motion for Leave to Supplement Joint Pretrial Order, Defendant's Motion to Strike Plaintiff's Supplemental Expert Materials and Brief in Support, Plaintiff Alcan Aluminum Corporation's Motion to Exclude Expert Testimony of Kenneth Baker, Plaintiff Alcan Aluminum Corporation's Motion to Exclude Expert Testimony of Daniel Klempner, and BASF Corporation's Motion to Exclude Expert Witness and Brief in Support are therefore denied as moot. Additionally, on September 5, 2001, BASF filed its Motion for Attorneys' Fees and Costs with respect to Alcan's DTPA claims. The court will consider this motion postjudgment pursuant to Fed.R.Civ.P. 54(d)(2). Final judgment on the merits will issue by separate document as required by Fed.R.Civ.P. 58. Once the court has determined the issue of attorney fees, it will issue a separate judgment related to the fees.