JOHN A. WOODCOCK, JR., Chief Judge.
In this breach of contract case, Berry Plastics Corporation and Covalence Specialty Coatings, LLC move for summary judgment, asserting that Packgen's claims are barred by the parties' contractual statute of limitations period. Packgen argues that the provision in both of Berry's invoices stating that a one-year statute of limitations applied to the contracts at issue does not render its claims untimely because the invoices never became part of the parties' contract. Packgen also argues that if the invoices are determined to be a confirmation of acceptance, the one-year limitation provisions are not part of the contracts because they are material alterations to the original agreement. The Court denies Berry's motion for summary judgment because under section 2-207(2)(b) of title 11 of the Maine Revised Statutes, there is a genuine dispute of material fact as to whether the one-year statute of limitations terms materially altered the parties' contracts.
Packgen filed a five-count complaint against Berry Corporation and Covalence Specialty Coatings, LLC (Berry) with the Court on March 7, 2012 alleging breach of contract, breach of express warranty, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of merchantability, and negligence.
The parties submitted a joint stipulated statement of facts on November 30, 2012. Stipulated Joint Summ. J.R. (ECF No. 35) (JSMF). The same day, Berry filed its statement of material facts in support of its motion. Statement of Material Facts in Supp. of Defs.' Berry Corporation and Covalence Specialty Coatings' Mot. for Summ. J. (ECF No. 34) (DSMF). Packgen responded to Berry's statement of material facts and submitted a statement of additional material facts on December 21,
Packgen manufactures intermediate bulk containers (IBCs), which are used by petroleum refineries for the transportation and storage of fresh and spent catalyst. DSMF ¶ 1; PRDSMF ¶ 1. Berry supplied Packgen with woven polypropylene fabric that was chemically bonded to a layer of aluminum foil. DSMF ¶ 2; PRDSMF ¶ 2. On September 25, 2007, Packgen sent Covalence Coated Products a purchase order for 61-inch laminated polypropylene foil. DSMF ¶ 3; PRDSMF ¶ 3. On November 26, 2007, Packgen sent a purchase order to Berry requesting 48-inch laminated polypropylene. DSMF ¶ 9; PRDSMF ¶ 9.
In the second half of November 2007, Ron Silen, strategic accounts manager for Berry, told Donald Roberts, purchasing agent for Packgen, that everything was all set with the purchase order for the 61-inch laminated polypropylene and that Berry had ordered the raw materials (woven polypropylene) that it was purchasing from a sister company in Mexico. PSAMF ¶ 1 DRPSAMF ¶ 1. On November 28, 2007, Mr. Silen sent Mr. Roberts an e-mail concerning the purchase orders for the 61-inch laminated polypropylene and the 48-inch laminated polypropylene.
Here is the update on the two PO's:
PSAMF ¶ 2; DRPSAMF ¶ 2. On December 13, 2007, Mr. Silen sent Mr. Roberts an e-mail concerning the purchase orders for the 61" laminated polypropylene and the 48" laminated polypropylene. PSAMF ¶ 3; DRPSAMF ¶ 3. The e-mail states:
PSAMF ¶ 3; DRPSAMF ¶ 3. Berry shipped the 61-inch material on December 22, 2007. DSMF ¶ 4; PRDSMF ¶ 4. The term "vendor's dock" in Packgen's purchase orders for the 61-inch laminated polypropylene and the 48-inch laminated polypropylene specifies that the goods were to be delivered by Berry to a common carrier at the loading dock at Berry's plant in Homer, Louisiana for shipment to Packgen's plant in Auburn, Maine.
The shipment of 61-inch laminated polypropylene was received by Packgen on
On January 17, 2008, Mr. Silen sent an e-mail to Mr. Roberts concerning the purchase order for the 48-inch laminated polypropylene. The e-mail stated as follows:
PSAMF ¶ 4; DRPSAMF ¶ 4. Berry shipped the 48-inch order on January 18, 2008. DSMF ¶ 10; PRDSMF ¶ 10. The shipment of 48-inch laminated polypropylene was received by Packgen on January 21, 2008. PSAMF ¶ 7; DRPSAMF ¶ 7. On January 21, 2008, Berry mailed Packgen an invoice for the 48-inch order by regular, first class Postal Service Mail, which included Berry's Terms and Conditions.
The invoices for the 61-inch laminated polypropylene and the 48-inch laminated polypropylene were formatted as follows: the first page was titled "INVOICE," a sheet of paper with text on both sides was stapled to the first page, and each side of the second sheet of paper contained the title "BERRY CORPORATION STANDARD TERMS AND CONDITIONS FOR CUSTOMERS' PURCHASE OF GOODS."
PSAMF ¶ 17; DRPSAMF ¶ 17 (emphasis in original). The Terms and Conditions contained a provision stating that "[t]o the extent it may apply," the limitations period in Indiana's statute of limitations is reduced to one year.
DSMF ¶ 14; PRDSMF ¶ 14. Paragraph twelve of the terms and conditions attached to Berry's invoices for the 61-inch and 48-inch laminated polypropylene is on the reverse, i.e., back side, of the page stapled to the invoices. PSAMF ¶ 19; DRPSAMF ¶ 19. The only portions of the terms and conditions attached to Berry's invoices for the 61-inch laminated polypropylene and the 48-inch laminated polypropylene that appear in all capital letters are the third through last sentences of paragraph 8. PSAMF ¶ 20; DRPSAMF ¶ 20. Beyond the notice on the front page of the invoices which stated "[a]ll sales are subject to the standard terms and conditions attached herewith", Berry never advised Packgen that its terms and conditions contained a provision reducing the limitations period for claims to one year.
Upon receipt of the shipments of the 61-inch laminated polypropylene and the 48-inch laminated polypropylene, Packgen immediately moved these materials to its production floor and began using them without delay to manufacture catalyst containers.
The invoices for the 61-inch laminated polypropylene and the 48-inch laminated polypropylene list Packgen's mailing address in the upper left-hand corner of the first page and do not contain Packgen's e-mail address or fax number.
On February 11, 2008, Mr. Roberts submitted two non-conformance reports identifying
Berry states that this motion requires the Court to decide "whether Berry's Standard Terms and Conditions are part of the contract for Packgen's purchase of certain laminated polypropylene from Berry." Defs.' Mot. at 5. To answer that question, Berry asserts that the Court must determine whether Maine or Indiana law applies. Id. Given that Maine has more significant contacts to the parties and the lawsuit, Berry insists that Maine law should apply to the Court's assessment of the enforceability of its standard terms and conditions. Id. at 5-6.
Applying Maine's Commercial Code, Berry contends that (1) under section 2-207(1) the invoice sent by Berry to Packgen operated as a written confirmation of acceptance even though it stated additional terms and (2) that the terms become part of the contract pursuant to section 2-207(2) because both parties are merchants and Berry's terms do not materially alter the contract. Id. at 7-8. Berry emphasizes that Packgen did not expressly limit its acceptance to the terms of its offer and never objected to Berry's terms and conditions. Id. at 8. Further, citing several federal cases, Berry points out that the reduced statute of limitations term is not a material alteration because "the Maine legislature made clear that a one-year time-bar restriction is per se statutorily acceptable and, therefore, reasonable and customary." Id. at 9.
Finally, Berry asserts that if the Court finds the provision limiting the statute of limitations to be part of the parties' contract, Indiana law must be used to interpret the provision, pursuant to the choice of law provision in paragraph 12 of the Terms and Conditions. Id. at 10. Berry points out that Indiana, like Maine, allows parties to contractually limit the statute of limitations to one year. Id. at 10-11. Thus, because Packgen discovered the defects in Berry's products no later than February 11, 2008 and commenced litigation
Packgen points out that "there is no dispute that two distinct contracts exist for the sale of the 61-inch and 48-inch laminated polypropylene" given the parties' conduct. Pl.'s Opp'n at 5. But Packgen asserts that the "contract bell had rung before Berry issued its additional terms" because Packgen only received Berry's additional terms and conditions after Berry shipped the goods and fully performed on its end of the contract. Id. at 6. In support of its argument that the contracts were formed before Berry's proposal of new terms, Packgen contends: (1) Berry unconditionally accepted Packgen's purchase orders by beginning production; (2) section 2-207(2)(b) of the Maine Commercial Code is inapplicable because Berry's additional terms constituted an express rejection rather than an acceptance of Packgen's offer; (3) Berry's terms and conditions represented a counteroffer that Packgen did not accept; and (4) even if section 2-207(2)(b) applied to the contracts, the one-year statute of limitations would not apply because it materially alters the parties' agreements. Id. at 1.
Packgen claims that Berry accepted its purchase order offers either (a) when it purchased raw materials and began production or (b) when it shipped the finished goods to Packgen. Id. at 8. Thus, "because Berry unconditionally accepted the purchase orders by its conduct before presenting its forms, there was no [] battle [of the forms] here", which would trigger section 2-207. Id. at 6. As Berry's "terms arrived after the contracts were formed, Packgen's purchase orders govern the terms of the transactions between the parties... [and] the four-year limitations period of 11 M.R.S.[] § 2-725(1) controls Packgen's claims." Id. at 9.
Even if the contract bell did not ring before Berry's additional terms were received by Packgen, Packgen asserts that Berry cannot show it satisfied section 2-207(1)'s contract formation requirements because its terms and conditions expressly stated that the invoice and its contents could not be considered an acceptance "of any prior or subsequent Reply." Id. at 10. Accordingly, Packgen argues that Berry's additional terms represented a rejection and counteroffer to Packgen's purchase order. Id. Further, Packgen claims that Berry did not present its additional terms and conditions to Packgen within a reasonable time as required by section 2-207(1). Id. at 11. In the event the Court finds that Berry accepted Packgen's offer within a reasonable time, Packgen still argues that the contract falls out of section 2-207(1) because Berry's terms and conditions "explicitly and unambiguously declare[] that it is a counteroffer," and under section 2-207(1) the conditions are therefore "part of the contracts ... only if Packgen affirmatively assented to the offer." Id. at 12-13. In sum, Packgen contends, the parties did not form valid contracts under section 2-207(1); rather, they formed their contracts under section 2-207(3). Id. at 11.
Finally, Packgen argues that even if the Court determines the parties' contract was formed under section 2-207(1), Berry's statute of limitations term does not apply because it materially alters the contracts. Id. at 14. Packgen claims it was surprised by Berry's reduced statute of limitations term because it was inconspicuous — stapled to the back of the invoice — and Berry never alerted Packgen to the term. Id. at
Berry asserts that Packgen's opposition boils down to "whether M.R.S. § 2-207(2) applies to the agreement between the parties." Defs.'s Reply at 1. First, Berry argues that even if the contracts were formed when it shipped the laminated polypropylene foil to Packgen, its terms and conditions still become part of the contract under section 2-207(2) as a confirmation sent after the goods are shipped. Id. Berry analogizes the facts of this case to those of Glyptal, Inc. v. Engelhard Corp., 801 F.Supp. 887 (D.Mass.1992). Id. at 2. Because Packgen did not seasonably object to Berry's terms and conditions, it argues that "[t]he additional terms included in the invoices, even if sent after shipment of goods, must be analyzed under UCC § 2-207 rather than some other provision of the UCC." Id. at 3.
Next, Berry insists that the reference to a "counteroffer" in the terms and conditions does not determine the substance of its invoices because the Court must "look to the totality of the circumstances to determine the function of a document." Id. Berry also notes that the timing of the invoices establishes they were not intended to be counteroffers. Id. Thus, Berry's invoices should be analyzed as confirmations sent after goods are shipped under section 2-207(2) and Berry's one-year statute of limitations should be considered part of the parties' contracts. Id. at 4.
Finally, Berry dismisses Packgen's claim that its contractual limitation provision was inconspicuous because "the clause is no less conspicuous than the rest of the document." Id. at 5. Ultimately, Berry asserts that "Packgen cannot be absolved because it did not read the Terms and Conditions, did not object to them, and now claims to be ignorant to the law." Id. at 6.
At oral argument, Berry urged the Court to adopt the reasoning of the Eighth Circuit Court of Appeals in Shur-Value Stamps, Inc. v. Phillips Petroleum Co., 50 F.3d 592 (8th Cir.1995), because, like Texas, the Maine Legislature has adopted the UCC's statute of limitations term in contracts for sale. Given the Maine Legislature's decision to adopt the same language as the UCC in Maine Revised Statutes, title 11, section 2-725, Berry argued that a one-year statute of limitations term is per se customary and reasonable and therefore not a material alteration. Accordingly, Berry insisted that the Court does not need to consider other facts such as industry custom and the parties' prior course of dealing to determine the materiality of the limitations term.
Packgen disagreed and pointed to the language in section 2-725 which states, "[b]y original agreement the parties may reduce the period of limitations" to one year as evidence that the legislature only finds one-year limitation terms immaterial and reasonable when they are expressly agreed upon by the parties. 11 M.R.S. § 2-725. As it is unclear whether the one-year limitations term was part of the parties' "agreement", Packgen argued that the Court must look to industry custom and the parties' prior course of dealing to determine whether the term materially alters the parties' agreement. In response,
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(a). A fact is "material" if it "has the potential to change the outcome of the suit." Tropigas de Puerto Rico, Inc. v. Certain Underwriters at Lloyd's of London, 637 F.3d 53, 56 (1st Cir.2011) (quoting McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995)). An issue is "genuine" if "a reasonable jury could resolve the point in favor of the nonmoving party." Id. (quoting McCarthy, 56 F.3d at 315).
"The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case." Phair v. New Page Corp., 708 F.Supp.2d 57, 61 (D.Me.2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). "In determining whether this burden is met, the Court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor." Id. at 61 (citing Santoni v. Potter, 369 F.3d 594, 598 (1st Cir.2004)). However, the Court "afford[s] no evidentiary weight to `conclusory allegations, empty rhetoric, unsupported speculation, or evidence which, in the aggregate, is less than significantly probative.'" Tropigas, 637 F.3d at 56 (quoting Rogan v. City of Boston, 267 F.3d 24, 27 (1st Cir.2001)).
The parties agree that Maine law governs the validity and enforceability of Berry's terms and conditions in its invoices.
Berry argues that its additional terms constitute a written confirmation of its acceptance
In Glyptal, Inc. v. Engelhard Corp., a district court entertained similar legal arguments when Glyptal, Inc. (Glyptal) sued Engelhard Corp. (Engelhard) for breach of warranty claims on three contracts. 801 F.Supp. at 887. Engelhard supplied Glyptal with paint three times after receiving purchase orders from Glyptal. Id. at 890-91. For each transaction, Engelhard shipped the paint before mailing Glyptal an acknowledgment form, which contained various terms and conditions of the sale printed on the back of the form. Id. Ultimately, the paint Engelhard sent Glyptal did not meet Glyptal's specifications and Glyptal sued. Id. at 891-92. In its motion for summary judgment, Engelhard argued that the remedy-limiting provisions in its terms and conditions attached to its acknowledgment form prevented Glyptal from obtaining consequential or incidental damages. Id. at 892. Glyptal argued that the parties' contract was fully formed when Engelhard shipped the goods to Glyptal, and therefore the terms in its acknowledgment were mere proposals for additional terms that should not be incorporated into the parties' contracts under U.C.C. § 2-207. Id.
The Glyptal Court agreed that Engelhard had accepted Glyptal's offers when it shipped the goods to Glyptal, pursuant to U.C.C. § 2-206(1)(b). Id. at 893-94. The Court then — adopting the approach recommended by Professors James White and Robert Summers in their treatise on the UCC — treated the acknowledgment forms as proposals for additional terms to the contracts, "which either would be excluded from or incorporated into the parties' agreement depending upon the outcome of an analysis performed in accordance with section 2-207(2) of the Uniform Commercial Code." Id. After analyzing whether the remedy-limiting provisions constituted a material alteration to the parties' agreement under section 2-207(2), the Glyptal Court concluded that the additional terms fell outside of the contract. Id. at 894-95.
Applying the Court's analysis in Glyptal, this Court concludes that the parties here formed their contract when Berry accepted Packgen's offer by shipping the laminated polypropylene. See id. at 891-95. Section 2-206(1) of the Maine Commercial Code states that a contract is formed through offer and acceptance when:
11 M.R.S. § 2-206. The commentary to section 2-206 notes that "[a]ny reasonable manner of acceptance is intended to be regarded as available unless the offeror has made quite clear that it will not be acceptable." 11 M.R.S.A. § 2-206, cmt. 1.
CORBIN ON CONTRACTS § 3.8 (2013).
According to Packgen, Berry accepted its purchase order offers either when it began performance or when it shipped the goods to Packgen. Pl.'s Opp'n at 7-8. Berry does not directly contest that point but argues that its invoices confirmed its acceptance of both purchase orders and therefore the invoices' terms may still form part of the contracts pursuant to sections 2-207(1, 2). Def.'s Reply at 1. Packgen stated that "[f]ollowing its receipt of each purchase order, Berry informed Packgen that Berry was purchasing raw materials, beginning production, completing production, and shipping the goods to Packgen." Pl.'s Opp'n at 6. The record establishes that the parties were in contact and were negotiating the details of their deals from around the time Packgen sent Berry its purchase orders until Berry shipped the polypropylene. PSAMF ¶¶ 2-4; DRPSAMF ¶¶ 2-4. Thus, given that Packgen did not expressly limit the manner in which Berry could accept its offers and section 2-206 confirms that Berry could accept Packgen's offer either through commencement of performance or shipment of the laminated polypropylene, the Court agrees with Packgen that Berry accepted Packgen's offers before it sent Packgen the relevant invoices. See Glyptal, 801 F.Supp. at 893 ("a seller's acknowledgment that arrives after the seller ships the goods would not constitute a counter-offer or even an acceptance because, pursuant to section 2-206(1)(b) of the Uniform Commercial Code, the shipment would constitute the seller's acceptance").
Because the Court has determined that the parties formed a contract before Packgen's receipt of Berry's invoices, the Court must decide whether section 2-207(1) and (2) apply to Berry's proposed additional terms and conditions. Section 2-207 provides:
Additional Terms in Acceptance or Confirmation.
11 M.R.S. § 2-207. Packgen asserts that where the parties' contracts are not formed under section 2-207(1), section 2-207(2) does not apply because there is no "battle of the forms." Pl.'s Mot. at 6. Yet, there does not have to be a classic "battle of the forms" for section 2-207(1) and (2) to apply to a contractual dispute, as:
CORBIN ON CONTRACTS § 3.37A (2013); MURRAY ON CONTRACTS § 50[D] (2011) ("While the paradigm situation involves two forms, a purchase order and a seller's acknowledgment containing additional or different terms, a not uncommon situation involves only one form"); see Continental Can Co. v. Poultry Processing, Inc., 649 F.Supp. 570, 574 (D.Me.1986) (applying section 2-207(2) to an orally assigned contract where the parties' confirmation letters each included additional terms). Accordingly, "Section 2-207 applies to `written confirmations of agreements already reached.'" ICC Chem. Corp. v. Vitol, 425 Fed.Appx. 57, 59 (2d Cir.2011) (quoting Aceros Prefabricados, S.A. v. TradeArbed, Inc., 282 F.3d 92, 98 (2d Cir.2002)).
The same reasoning applied to oral contracts and confirmations applies to the contracts here and persuades the Court to conclude that Berry's invoices were confirmations of the parties' agreements.
Moreover, a comment to section 2-207 that the Glyptal Court found persuasive when forming its decision states:
U.C.C. § 2-207, cmt. 2; 11 M.R.S.A. § 2-207, cmt. 2; see Aceros Prefabricados, 282 F.3d at 98-99 (noting that whether writings
Packgen asserts that it did not receive Berry's terms and conditions within a reasonable time as required by section 2-207(1). Pl.'s Opp'n at 11; see M.R.S. § 2-207(1). Section 1-205 of the UCC states that "whether a time for taking an action required by [the Uniform Commercial Code] is reasonable depends on the nature, purpose, and circumstances of the action." U.C.C. § 1-205. Accordingly, "the transactional context of the particular action" must be analyzed when assessing the reasonableness of the timing when Packgen received Berry's invoices. Id. at cmt. 1.
Given the timeline in the record, the Court concludes that Berry sent Packgen the invoices within a reasonable amount of time pursuant to section 2-207(1). The record establishes that Packgen sent Berry a purchase order for the 61-inch laminated polypropylene foil on September 25, 2007. DSMF ¶ 3; PRDSMF ¶ 3. The parties continued to exchange e-mails while Berry secured final dates for delivery of materials, production, and shipment. PSAMF ¶¶ 2-3; DRPSAMF ¶¶ 2-3. Berry shipped the polypropylene to Packgen on December 22, 2007, Packgen received the 61-inch polypropylene on December 27, 2007, and Berry sent the relevant invoice to Packgen on December 28, 2007. DSMF ¶¶ 4, 5; PRDSMF ¶¶ 4, 5; PSAMF ¶ 6; DRPSAMF ¶ 6. The 48-inch polypropylene shipment followed a similar time trajectory as Packgen sent a purchase order on November 26, 2007, Berry shipped the polypropylene on January 18, 2008, Packgen received the 48-inch polypropylene on January 21, 2008, and Packgen received the relevant invoice on or after January 24, 2008. DSMF ¶¶ 9-10; PRDSMF ¶¶ 9-10; PSAMF ¶¶ 7, 16; DRPSAMF ¶¶ 7, 16.
Although approximately three months passed between the time Packgen sent its purchase orders and Berry sent its invoices, each invoice followed Packgen's receipt of the polypropylene by only a few days and the parties appeared to be negotiating and finalizing the details of their deals until the time Berry shipped each order. See DSMF ¶¶ 3-5; PRDSMF ¶¶ 3-5; PSAMF ¶¶ 2-3, 6; DRPSAMF ¶¶ 2-3, 6. Because the parties continued to negotiate the terms of the deals and the invoices constituted confirmations of the parties' final agreements, the Court concludes that a reasonable juror could find that the circumstances and transactional context of the parties' dealings show that Berry sent Packgen the invoices within "a reasonable time." See M.R.S. § 2-207(1); Pl.'s Opp'n at 11 (noting that after Packgen sent the purchase orders "the parties had engaged in a number of communications concerning the purchase orders"); Defs.' Reply at 2 ("Indeed, Packgen's purchase order does not provide all of the terms of the agreement because negotiations between the parties continued through telephone calls and e-mails after Packgen sent the purchase orders to Berry").
Next, Packgen asserts that the terms and conditions contained in Berry's invoices fall within section 2-207(1)'s proviso because "they comprise a definite expression that Berry does not accept Packgen's purchase orders and rejects them." Pl.'s Opp'n at 10. Thus, Packgen argues that Berry's "terms and conditions are a counteroffer and as such are expressly conditional on Packgen's assent." Id. at 11. Section 2-207(1) states, "[a] definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms." 11 M.R.S. § 2-207(1). Packgen directs the Court to a portion of Berry's terms and conditions, which states, in part:
61-inch Invoice at 2; 48-inch Invoice at 2 (emphasis in original).
At first glance, the language in Berry's "Notice" may appear to expressly condition the parties' agreement on Packgen's assent to its additional terms; however, Berry had already accepted Packgen's offer before Packgen's receipt of the invoices containing the conditional language. See Part III.C.1; see also CORBIN ON CONTRACTS § 3.37A (discussing the proviso and how it applies to "definite expression[s] of acceptance"). Accordingly, contrary to Packgen's position, the Court concludes that Berry's invoices were not "traditional counteroffer[s]" but rather constituted confirmations of the parties' prior agreements. See Pl.'s Opp'n at 11-13. Whether the additional terms and conditional language in the invoices become part of the parties' contracts depends on whether the proposed terms survive the Court's section 2-207(2) analysis.
Applying section 2-207(2) to Berry's invoices, the central issue is whether the reduction of the default statute of limitations for breach of contract for a sale of goods from four years to one year would materially alter the parties' contract. See 11 M.R.S. § 2-725. Typically, "[a]n action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued." 11 M.R.S. § 2-725. The statute also allows parties to reduce the "period of limitation to not less than one year." Id. If the one-year statute of limitations in Berry's invoices applies, Packgen's lawsuit will be untimely and barred by the statute of limitations. See Def.'s Mot. at 11; Def.'s Reply at 6.
Section 2-207(2) provides that in an acceptance or confirmation:
11 M.R.S. § 2-207(2). Here, both parties are merchants within the meaning of the statute, so the "additional terms" in Berry's acceptances are to "become part of the contract unless" one of the three subsection-exceptions in Section 2-207(2) applies. Id.; see 11 M.R.S. § 2-104(1) (defining "merchant"); Def.'s Mot. at 8 n. 5.
Neither subsection (a) nor subsection (c) of Section 2-207(2) applies to Berry's one-year statute of limitations terms. Section 2-207(2)(a) does not apply because Packgen's purchase orders — the offers — did not "expressly limit" Berry's acceptances to the terms contained within Packgen's orders. See 61-inch Purchase Order; 48-inch Purchase Order. Also, Berry was not placed on "notice" that Packgen objected to its reduced statute of limitations terms under section 2-207(2)(c). See 61-inch Purchase Order, 48-inch Purchase Order. Packgen's purchase orders did not contain an express provision on the applicable statute of limitations, id., and here, unlike in Ionics, Inc. v. Elmwood Sensors, there is no indication that the forms contained conflicting clauses. 110 F.3d at 189 (holding that "where the terms in two forms are contradictory," such terms do not "become part of the contract under [2-207(2) ] because notification of objection has been given by the conflicting forms" under 2-207(2)(c)). Thus, subsections (a) and (c) of section 2-207(2) do not excise Berry's additional one-year statute of limitations term from the parties' contracts.
The Court turns to the key issue: Whether Berry's one-year statute of limitations terms "materially alter" the contracts between Packgen and Berry. Comment three to section 2-207 states:
11 M.R.S.A. § 2-207, cmt. 3. The Maine Law Court has held that under section 2-207(2), "[a]n additional term materially alters the ... agreement if it would result in unreasonable surprise or hardship to the buyer." A.E. Robinson Oil Co. v. County Forest Prods., 2012 ME 29, ¶ 9, 40 A.3d 20 (citing 11 M.R.S.A. § 2-207, cmts. 4-5). "The test for materiality is objective." Id. ¶¶ 9, 10 n. 3. "Considerations relevant to the issue of surprise include `the parties' prior course of dealing and the number of written confirmations that they exchanged, industry custom and the conspicuousness of the term.'" Dermalogix Partners, 2000 WL 760732, at *4 (quoting LTV Energy Products v. Northern States Contracting, 162 B.R. 949, 957 (S.D.N.Y.1994)). According to comment four of section 2-207:
Although there is no First Circuit case on point, other federal courts have concluded that if a state adopts the UCC's statute of limitations provision authorizing parties to reduce their limitations term to one year, a one-year limitations period that is an "additional term" under section 2-207 is per se reasonable. In Shur-Value, the plaintiff claimed that the district court erred when it concluded that the limitations term became part of the parties' agreement under Texas Business and Commercial Code, section 2-207(2)(b), arguing that there were disputed factual issues for the jury regarding whether the term resulted in hardship or surprise to the plaintiff. Id. at 597-99. In response, the Eighth Circuit upheld the district court's decision and concluded that "[i]f a contractual provision stipulates a limitations period that falls within statutorily defined parameters ... then presumably the provision is not only legal, but also reasonable, customary, acceptable and accepted." 50 F.3d at 598. Citing comments four and five to section 2-207, the Eighth Circuit recognized that "[c]onsiderations of surprise and hardship must remain part of the analysis," but determined that those considerations were already taken into account by the Texas Legislature when it adopted UCC section 2-725, thereby expressly allowing parties to include a one-year statute of limitations in contracts. Id. at 599. Accordingly, the Court declined to conduct a separate factual analysis of whether the reduced limitations term resulted in unreasonable surprise or hardship to the plaintiff because "the per se reasonableness of the POA's one-year time-bar" entitled the defendant to summary judgment. Id.
Other courts have arrived at the same conclusion under section 2-207(2) when determining the "reasonableness" of reduced statute of limitations terms. In Aceros Industriales, S.A. de C.V. v. Florida Steel Corp., the district court held that the contract's one-year statute of limitations term was not a material alteration because "the fixing of a reasonable time period for complaints to be brought does not constitute a material alteration of a prior agreement for the sale of goods." 528 F.Supp. 1156, 1158 (S.D.N.Y.1982) (citing New York Uniform Commercial Code, § 2-207, cmt. 5); see Therma-Coustics Manufacturing v. Borden, 167 Cal.App.3d 282, 295-96, 213 Cal.Rptr. 611 (Ct.App.1985) (holding one-year limitations term to be per se reasonable in light of UCC 2-207, comment 5, and because California statutory law allowed for one-year limitation term). In dictum, the Tenth Circuit observed that a one-year statute of limitations term "likely" would be excluded as a material alteration under Colorado law because Colorado had not adopted UCC section 2-725, while it was "possible" that an identical term would not be considered a material alteration under New York law, because New York had adopted that section. See Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1285-86 (10th Cir.1997).
Like Texas, New York, and California, the Maine Legislature has adopted UCC § 2-725. See 11 M.R.S. § 2-725. Accordingly, the reasoning for upholding the limitations terms in Shur-Value, Aceros Industriales, and Therma-Coustics appears to apply to the one-year limitations term at issue here. Yet, at oral argument, Packgen highlighted the "[b]y the original agreement" language in section 2-725(1) and argued that Shur-Value's reasoning should not apply because the parties never
This Court concludes that there is a genuine dispute of material fact as to whether the one-year statute of limitations terms in this case "materially altered" the contract between Packgen and Berry. See 11 M.R.S. § 2-207(2); A.E. Robinson Oil, 2012 ME 29, ¶ 9, 40 A.3d 20. Under A.E. Robinson Oil, "material alteration" under Maine law is an added term that would "result in unreasonable surprise or hardship to the buyer."
Comment four provides "[e]xamples of typical clauses which would normally `materially alter' the contract," including "a clause requiring that complaints be made in a time materially shorter than customary or reasonable." Id. (emphasis added). Comment five provides "examples of clauses which involve no element of unreasonable surprise and are therefore to be incorporated in the contract unless notice of objection is seasonably given," including "a clause fixing a reasonable time for complaints within customary limits." 11 M.R.S.A. § 2-207, cmt. 5 (emphasis added). Although "customary" and "reasonable" may overlap in these examples, they remain separate parts of the material alteration inquiry; elsewise, the word "customary" would be surplusage. Compare id., cmt. 4 ("customary or reasonable"), with id., cmt. 5 ("reasonable time for complaints within customary limits").
Accordingly, a determination as to reasonableness alone is not sufficient to conclude whether there was no material alteration as a matter of law. A statute of limitations provision could be a "reasonable" modification, but still materially alter the contract, if the term is "materially shorter than customary" or otherwise results in "unreasonable surprise or hardship to the buyer." See A.E. Robinson Oil, 2012 ME 29, ¶ 9, 40 A.3d 20. This conclusion further supported by the First Circuit's observation that the examples in comments four and five are not comprehensive: "Comments 4 and 5 are illustrative
Viewing the record in the light most favorable to Packgen, a disputed issue of material fact remains as to whether Berry's one-year statute of limitations provisions resulted in "unreasonable surprise or hardship to the buyer." See 11 M.R.S.A. § 2-207, cmt. 4; A.E. Robinson Oil, 2012 ME 29, ¶ 9, 40 A.3d 20; Phair, 708 F.Supp.2d at 61. Packgen has asserted that the limitations period was inconspicuous, vague, and that Packgen was neither informed of the proposed change nor aware of it. Pl.'s Opp'n at 16. Packgen supports these assertions by describing how the limitations period was found within a one-page double-sided document that was stapled to Berry's invoice, "buried in the eighth sentence of a paragraph on the back side of the page" in small print. Id. at 15-16. These facts make out an allegation of unreasonable surprise, consistent with the "[c]onsiderations relevant to the issue of surprise" set out in Dermalogix Partners. See 2000 WL 760732, at *4 (listing factors to be considered as including "the parties' prior course of dealing and the number of written confirmations that they exchanged, industry custom and the conspicuousness of the term") (internal citations omitted). See 11 M.R.S.A. § 2-207, cmt. 4. Giving Packgen the benefit of all reasonable inferences in its favor, Phair, 708 F.Supp.2d at 61, a reasonable person could conclude that the one-year statute of limitations provisions resulted in "unreasonable surprise" to Packgen, and thus materially altered the contracts at issue. See id.; A.E. Robinson Oil, 2012 ME 29, ¶ 9, 40 A.3d 20; Dermalogix Partners. See 2000 WL 760732, at *4.
The Court concludes that there remains a genuine dispute of material fact as to whether Berry's one-year statute of limitations terms materially altered the two contracts between Packgen and Berry.
The Court DENIES Berry's Motion for Summary Judgment (ECF No. 33).
SO ORDERED.
The term "vendor's dock" in both purchasing orders is undefined within the orders. See JSMF Attach 1, 61-inch Laminated Polypro Foil Purchase Order (ECF No. 35-1) (61-inch Purchase Order); JSMF Attach 2, 48-inch Laminated Polypro Foil Purchase Order (ECF No. 35-2) (48-inch Purchase Order). The Court views the term as self-defining, namely, the dock of the seller, and to the extent it is not self-explanatory, it is a term within a trade that a lay witness, such as Mr. Roberts, is competent to explain. The best evidence objection is frivolous. The purpose of the statements of fact is to focus the Court's attention on the significant portions of documents instead of placing the entire document before the Court.
The Court does not strike Packgen's response to paragraph 7 because Mr. Lapoint's testimony related to his personal knowledge of Packgen's receipt of Berry's invoices. See Lapoint Decl. ¶¶ 1-3, 24. Both parties' factual assertions are supported by sworn declarations. Compare Lapoint Decl. ¶ 24, with Decl. of Diana Canterbury ¶¶ 3-4 (ECF No. 34-3) (Canterbury Decl.). Viewing the facts in the light most favorable to Packgen, the Court includes Packgen's qualification regarding the location of Berry's terms and conditions because the record supports the assertion. See Lapoint Decl. ¶ 16.
