KRISTI K. DUBOSE, District Judge.
This matter came before the Court for a non-jury trial on January 5, 2012. Upon consideration of the documentary and testimonial evidence presented at trial and all other pertinent portions of the record, the Court makes the following findings of fact and conclusions of law:
On September 15, 2010, Plaintiff Cahaba Disaster Recovery, LLC ("Cahaba") filed a complaint against Defendants Lenard E. Rodgers ("Lenny Rodgers" or "Rodgers") and International Lining, LLC ("International Lining") in the Circuit Court of Mobile County, Alabama, alleging breach of contract and fraud. (Doc. 2). At the time of the filing and thereafter, Cahaba was an Alabama limited liability company with its principal place of business in Mobile, Alabama, Rodgers was a citizen of Florida, and International Lining was a Florida limited liability company with its principal place of business in Longwood, Florida. (Doc. 2 at 1; Doc. 1 at 1).
On October 15, 2010, Defendants timely removed the case to this Court on the basis of diversity pursuant to 28 U.S.C. § 1332(a). (Doc. 1). On March 9, 2011, with leave of the Court, Cahaba filed an amended complaint that added a breach of warranty claim to the two claims stated in the original complaint. (Doc. 20). Defendants answered the amended complaint on March 21, 2011. (Doc. 21). Though Defendants sought and obtained an extension of the deadline for dispositive motions (Docs. 31 & 32), neither party filed any such motion, and this matter proceeded to trial on all claims.
On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico. The resultant oil spill threatened coastal communities from Louisiana to Florida. In an effort to protect their beaches and marshlands, certain of those communities hired emergency response companies to deploy and service offshore "boom" — floating barriers designed to arrest the movement of oil-contaminated water. Among those companies was DRC Emergency Services, LLC ("DRC"), a Mobile, Alabama-based limited liability company that engaged Plaintiff Cahaba to locate and procure oil boom to be used for DRC's projects. Cahaba entrusted much of that responsibility to David Eblen ("Eblen"), Cahaba's equipment and purchasing manager.
In late April 2010, Eblen made his first-ever purchases of small quantities of oil containment and oil absorbent boom. As their names suggest, oil containment boom ("containment boom") is designed to keep oil-contaminated water in place, whereas oil absorbent boom ("absorbent boom") is meant to extract and retain oil while repelling water. Eblen's purchases had to conform to certain specifications expressed in DRC's contracts. With respect to containment boom, those specifications were quite detailed. Conversely, the absorbent boom that Eblen was instructed to order simply had to be either five or eight inches in diameter.
On or about May 1, 2010, someone at DRC suggested to Eblen that he could procure some absorbent boom from Defendant International Lining and provided Eblen with International Lining's phone number. Eblen spoke with Lenny Rodgers, International Lining's managing partner, and inquired about the availability of eight-inch absorbent boom. After Rodgers reported that International Lining could sell 150,000 feet of eight-inch absorbent boom for $1.33/foot, Eblen sought and obtained authorization from his boss, Buddy Fuzzell, to purchase the same. After Eblen and Rodgers finalized Cahaba's order by phone, Rodgers sent Eblen a confirmation email, which stated in pertinent part:
(Pl.'s Trial Ex. 1). Eblen assumed, but did not confirm with Rodgers, that the "FOC Boom product" referenced in Rodgers' email was the eight-inch absorbent boom that he had agreed to purchase from International Lining.
Two days later, on May 3, 2010, Eblen requested a formal invoice from Rodgers. (
(Pl.'s Trial Ex. 7; Defs.' Trial Ex. 3). Though the May 3 invoice (like Rodgers' May 1 confirmation email) mentioned only FOC boom product and made no reference to either absorbent boom or eight-inch boom, Eblen continued to assume that the product described in International Lining's invoice and the product that he ordered on May 1 were one and the same.
Shortly after receiving International Lining's invoice, Eblen asked Rodgers to "advise what the price is now for an additional 150,000 feet of 8" absorbent boom." (Pl.'s Trial Ex. 8; Defs.' Trial Ex. 5 at 11).
(Pl.'s Trial Ex. 9; Defs.' Trial Ex. 4). Eblen did not respond to Rodgers' email or otherwise purchase any additional products from International Lining on behalf of Cahaba.
The following morning, Eblen and Rodgers exchanged a number of emails regarding some difficulty that Cahaba encountered in wiring International Lining its $208,100 payment. (Pl.'s Trial Exs. 10-13; Defs.' Trial Ex. 5 at 34). After making a second attempt to wire the funds, Eblen asked Rodgers for "the ETA of the 150,000 feet of absorbent boom." (Pl.'s Trial Ex. 14). Rodgers responded:
(Pl.'s Trial Ex. 15; Defs.' Trial Ex. 5 at 34).
Rodgers asserted at trial that "the 150,000 feet of absorbent boom" mentioned in Eblen's email referred to something other than the boom that Cahaba ordered on May 1. It is clear that Rodgers' assertion is not credible. For example, on May 5, 2010, Eblen emailed Rodgers:
What is the ETA on the 150,000 feet? I need to let my field guys know. (Pl.'s Trial Ex. 20). The following day, Eblen wrote to Rodgers:
(Pl.'s Trial Ex. 25). Eblen's need to inform Cahaba's employees in the field about when the 150,000 feet would be delivered and his instruction to Rodgers as to where delivery should be made clearly indicate that "the 150,000 feet" referred to product that Eblen (on behalf of Cahaba) had actually ordered.
On May 4, 2010, a face-to-face meeting occurred between Eblen and two of International Lining's salesmen, Chris Rodgers and Travis Rodgers (both of whom are sons of Defendant Lenny Rodgers). The Rodgers brothers testified that, during their 20-minute meeting with Eblen — which occurred after Cahaba successfully wired $208,100 to International Lining as full payment for its order — they reviewed in detail with Eblen a seven-page "brochure" they had created earlier in the day about a product called "Oil Containment Barrier" (Defs.' Trial Ex. 6) and explained to Eblen that the product described therein is what Cahaba ordered from International Lining. However, Eblen testified credibly that the brothers never offered such an explanation.
On May 7, 2010, International Lining delivered 150,000 feet of boom to Cahaba. Part of the delivery was accompanied by a shipping statement that referred to 13,000 lineal feet of "FOC 8" boom product." (Defs.' Trial Ex. 8 at 3). Upon receipt of the boom, Cahaba project manager Bryce Fletcher ("Fletcher") called Eblen and said that he did not recognize and could not identify the type of product that Cahaba had received. Fletcher's colleague, Jake Branum ("Branum") emailed Eblen a photograph of the delivered product, and, within five minutes, Eblen forwarded Branum's email and photograph to Rodgers. (Pl.'s Trial Ex. 30). Eblen then called Rodgers, who explained to Eblen that the delivered product, labeled as "Rapid Oil Containment Barrier" but occasionally referred to by International Lining as "Fast Oil Containment" or "FOC,"
Later that same day, Rodgers, Eblen, and Fletcher participated in a three-way conference call, during which the manufacturer and Rodgers both represented to Eblen and Fletcher that FOC boom absorbs oil. Given that assurance, Eblen advised Fletcher and Branum that the FOC boom was, in fact, absorbent boom. Cahaba then attempted, without success, to employ the FOC boom to satisfy its contracts with DRC and also to sell the boom to others responding to the Deepwater Horizon spill.
Nearly six weeks later, on June 15, 2010, Eblen informed Rodgers in an email bearing the subject line "Absorbent Boom" that the FOC boom did not meet Cahaba's needs:
(Pl.'s Trial Ex. 34). After Rodgers responded that International Lining was also selling and "talk[ing] about" FOC boom, Eblen sought to return the product:
(Pl.'s Trial Ex. 36). Within ten minutes, Rodgers responded that International Lining would not accept any return. (Pl.'s Trial Ex. 37; Defs.' Trial Ex. 5 at 128). After another ten minutes, Eblen again asked Rodgers to help identify potential buyers of the FOC boom that Cahaba had received but could not use:
(Pl.'s Trial Ex. 43). Rodgers responded that, while he "can't give out sources," he would let Eblen know if he had use for Cahaba's stockpile of FOC boom in the future. (Pl.'s Trial Ex. 38).
On June 24, 2010, a Cahaba project manager reported to Eblen that a field test off the coast of Escambia County, Florida revealed that FOC boom effectively contains, but does not absorb, oil. (Pl.'s Trial Ex. 41; Defs.' Trial Ex. 5 at 137; Eblen trial testimony). Eblen relayed this finding to Rodgers in a short email:
(
(Pl.'s Trial Ex. 42). Eblen did not respond to Rodgers' email, and International Lining did not offer or attempt to replace Cahaba's stock of FOC boom with absorbent boom. Cahaba filed its breach of contract and fraud suit against International Lining and Rodgers approximately three months later.
All of Cahaba's claims are alleged against both International Lining and Rodgers. However, Alabama's limited liability company law "does not envision that either a member or a manager of a limited liability company would be liable in an individual capacity for the actions of the limited liability company."
It is both clear and undisputed that, in all of his dealings with Cahaba, Rodgers acted not in his individual capacity but as International Lining's agent.
At the close of Cahaba's case, Defendants orally moved for judgment as a matter of law on each of Cahaba's claims. The Court construed Defendants' application as a motion for judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c), which applies in the bench trial context, rather than as a motion for judgment as a matter of law pursuant to Rule 50(a), which applies only in the jury trial context.
Rule 52(c) provides:
Fed. R. Civ. P. 52(c). Rule 52(a)(1) explains that "[t]he findings and conclusions may be stated on the record after the close of the evidence or may appear in an opinion or a memorandum of decision filed by the court." Fed. R. Civ. P. 52(a)(1).
As stated on the record, the Court found that Cahaba had failed to offer during its case-in-chief any evidence in support of Count 2 of the complaint, which charged Defendants with fraud. Accordingly, the Court granted Defendants' motion as to that count but declined to enter judgment as to Cahaba's breach of contract and breach of warranty claims.
Under Alabama law, the essential elements of a cause of action for breach of contract are the existence of a valid contract binding the parties; plaintiff's performance under the contract; defendant's nonperformance; and damages.
The Court's factual finding that the parties contracted for 150,000 feet of absorbent boom and Defendants' admission that the boom delivered to Cahaba was not absorbent (
International Lining's delivery of non-absorbent boom also constitutes a breach of International Lining's express warranty that that the boom would absorb. Alabama law provides that any description of goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. Ala. Code § 7-2-313(1)(b) (2006). Contrary to the suggestion made at trial by Defendants' counsel, an express warranty need not be made in writing.
In support of their affirmative defenses, Defendants rely on a provision of the Alabama Uniform Commercial Code that sets forth that a buyer's acceptance of nonconforming goods precludes its right to return the goods to the seller.
To preserve its right to recover damages, a buyer who has accepted nonconforming goods must timely notify the seller of the breach. Ala. Code § 7-2-607(3)(a) ("The buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy . . . ."). Eblen's June 24, 2010 email, which was sent immediately after Cahaba discovered that the FOC boom was not absorbent, satisfies the notice requirement. The email clearly informed International Lining that testing by Cahaba revealed that the FOC boom "is not an absorbent but a containment boom" (Pl.'s Trial Ex. 41; Defs.' Trial Ex. 5 at 137), and thereby presented International Lining with an unrealized opportunity to cure the nonconformity or otherwise settle with Cahaba.
The measure of damages for breach of warranty in regard to accepted goods is governed by Ala. Code § 7-2-714, which provides in pertinent part:
Ala. Code §§ 7-2-714(2)-(3) (2006). Section 7-2-715 provides examples of recoverable incidental and consequential damages:
Ala. Code §§ 7-2-715(1)-(2) (2006).
Though Cahaba's amended complaint prays for compensatory and consequential damages plus interest, costs, and reasonable attorneys' fees (Doc. 20 at 5), the parties' Joint Pretrial Document — which was incorporated by reference into the Pretrial Order (Doc. 41) — indicates that Cahaba seeks only damages in the amount of $208,100 plus interest (Doc. 40 at 11). Therefore, and in light of the fact that Cahaba has offered no evidence of its consequential damages, costs, or attorneys' fees, the Court will consider only the demand for compensatory damages and statutory interest.
International Lining is liable for the $208,100 purchase price, less the value of the FOC boom as accepted by Cahaba.
Additionally, Cahaba is entitled to prejudgment interest. "In diversity cases, the availability and amount of prejudgment interest is ordinarily governed by state law."
Finally, Cahaba is entitled to postjudgment interest of 0.11%.
Based upon the foregoing, it is
Pursuant to Rule 58 of the Federal Rules of Civil Procedure, Judgment shall be entered by separate document.