THOMAS J. McAVOY, Senior District Judge.
Plaintiff commenced the instant action against Defendants, alleging that they violated warranties and contracts in delivering tractors that failed to perform as promised. Presently before the Court are Defendants' motions for summary judgment pursuant to Federal Rule of Civil Procedure 56(a).
This case concerns Plaintiff's purchase of ten tractors manufactured by Defendant Kenworth Truck Company ("Kenworth") from Defendant Tri-State Diesel, Inc. ("Tri-State"). The tractors' engines were manufactured by Defendant Cummins Northeast, LLC ("Cummins"). Plaintiff contends that the tractors, which were purchased to haul heavy loads as a part of Plaintiff's trucking business, were defective, did not perform properly or as promised, and caused Plaintiff's business considerable disruption and loss of income. Plaintiff alleges that Defendants' conduct breached warranties and contracts between the parties and demands a variety of damages.
Plaintiff Warren W. Fane, Inc., is an excavating and hauling company based in Mechanicville, New York. (Defendant Kenworth's Statement of Material Facts, dkt. # 33-1 ("Kenworth's Statement"), at ¶ 1).
Defendant Cummins Northeast, LLC, ("Cummins"), is the northeast regional distributor for Cummins Inc. (Defendant Cummins Northeast, LLC's State of Material Facts, dkt. 35-1 ("Cummins Statement") at ¶ 2). Cummins provides warranty service and parts for diesel engines that Cummins, Inc., manufactures. (
Plaintiff sought trucks and engines with similar capabilities to those already in its fleet. (Plaintiff's Response to Kenworth at ¶ 6). Greg Fane testified that Plaintiff had a set of specifications that it was seeking in the new trucks. (
Plaintiff solicited prices from several dealers in the area before deciding to purchase ten Kenworth vehicles from Defendant Tri-State. (Kenworth Statement at ¶ 11). Plaintiff alleges that price alone did not guide its decision to purchase the trucks from Defendants; Plaintiff also relied on assurances from Defendant that the trucks would offer performance comparable to Plaintiff's current fleet. (Plaintiff's Response to Kenworth at ¶ 11). Plaintiff purchased eight tandem trucks and two tri-axle trucks. (Kenworth Statement at ¶ 12). Warren and Greg Fane negotiated the truck sale over the telephone with Thomas Jennings. (
Plaintiff placed an order for the ten Kenworth trucks from Tri-State on August 16, 2010. (Kenworth's Statement at ¶ 18). The trucks each had a 500-horsepower Cummins ISXI5 engine. (
When Plaintiff agreed to purchase the trucks, Plaintiff received and executed Retail Purchase Orders for the two tri-axle trucks and eight tandem tractors. (
In or about November 2010, Jennings provided Plaintiff with Kenworth's invoices for the purchase, as well as the Kenworth Truck Company Limited Warranty Agreement-Class 8 Standard Service Warranty, the Cummins Plan 11 Warranty Agreement and a form for component extended coverage election forms. (Kenworth's Statement at ¶ 31). Jennings also traveled to Plaintiff's facility to go over all of the documents with Plaintiff prior to having Plaintiff execute them. (
The Kenworth Warranty expressly disclaims any warranties other than those contained in the agreement, and expressly disclaims any warranties for merchantability or fitness for a particular purpose. (
The warranty provided by Defendant Cummins applied expressly to the new EPA 2010 ISXI1.9 and ISXI5 series engines that had been sold by Cummins. (
Warren Fane admitted at his deposition that the instant action in this case concerns the performance of the Cummins engine. (
In November 2011, Cummins replaced the turbo charges on every truck and recalibrated the engines' Electronic Control Modules to increase their horsepower from 500 to 525. (
Faced with problems that were "continual," William Deegan began keeping a handwritten log of the problems and the amount of time those problems kept trucks out of service. (Kenworth's Statement at ¶ 57). Defendant contends that Plaintiff eventually created a truck-by-truck table of problems, testing, and any resolution of those problems from Deegan's notes. (
Beyond issues with the engines, the charts created by Plaintiff also note numerous problems with air sensors, flex pipes, and fan hubs, which were covered by the Kenworth Warranty. (Kenworth's Statement at ¶ 61;
Plaintiff admits that Fane did not have to pay for any warranty repairs to the trucks or for any replacement parts, but alleges that it was required to "pay for (i) the loss of use of the trucks while the repairs were being performed, (ii) added fuel and fuel additive costs associated with the lower than anticipated and represented fuel economy; and (iii) additional administrative costs associated with truck and engine failures." (Kenworth's Statement at ¶ 69; Plaintiff's Response to Kenworth at ¶ 69). Plaintiff eventually replaced all of the vehicles in question with vehicles manufactured by a competitor. (Kenworth's Statement at ¶ 70). Plaintiff traded in the Kenworth trucks on those new vehicles. (
Plaintiff filed a Complaint in the Supreme Court of New York, Rensselaer County, November 20, 2012.
Defendants seek summary judgment. It is well settled that on a motion for summary judgment, the Court must construe the evidence in the light most favorable to the non-moving party,
A party seeking summary judgment bears the burden of informing the court of the basis for the motion and of identifying those portions of the record that the moving party believes demonstrate the absence of a genuine issue of material fact as to a dispositive issue.
Defendant Kenworth seeks summary judgment on several grounds, which the Court will address in turn.
Defendant Kenworth first argues that the Court should grant Kenworth summary judgment on all of Plaintiff's breach of express warranty claims. Kenworth contends that it has met all of the obligations under the warranty agreement by repairing the parts of the vehicle covered by the Kenworth warranty. The Plaintiff's complaint was with the Cummins engine, not the Kenworth vehicle. The Cummins engine was not warrantied by Kenworth, and thus none of the issues involved in this dispute are related to the warranty Kenworth provided. Plaintiff responds by arguing that Defendant offered express warranties on the trucks, and breached those warranties by delivering trucks that failed to meet the standard promised in the warranties. Plaintiff points to the Kenworth Warranty, which promised that the trucks delivered would "`be free from defects in materials and factory workmanship." Plaintiff argues that the trucks, and not just the motors, were defective upon delivery, and the Defendant did nothing to correct the problems. The problems that Plaintiff experienced with fan hubs and flexible exhaust pipes continued even after making repairs. Defendant also argues that Plaintiff cannot sustain any breach of implied warranty claims. Plaintiff does not respond to this argument.
The issue here is Defendant Kenworth's obligations under the alleged express warranty. As a general matter, "a cause of action on an express warranty asks only that a manufacturer make good on the contractual commitment that it voluntarily undertook by placing that warranty on its product."
The parties do not dispute the existence of a warranty agreement, or that the warranty helped induce the bargain between the parties. The question here is whether Defendant breached some portion of the warranty. Plaintiff's brief attempts to address this issue. Plaintiff describes the express warranty connected to the Kenworth vehicle as the Kenworth Truck Company Limited Warranty Agreement, which promised that "the `Kenworth vehicle,' i.e., the trucks, would `be free from defects in materials and factory workmenship [sic].'" In describing the breach, Plaintiff alleges that Fane began to experience problems with both the engines and trucks as soon as the vehicles were delivered. Because these problems existed and Kenworth never corrected them, Plaintiff argues, the Defendant breached the express warranty that the trucks would be free from defects in materials and workmanship and summary judgment must be denied on this issue. Defendant insists that any problems were corrected, meaning that no breach of warranty occurred. Because the warranty specifically disclaims any incidental damages, Plaintiff cannot recover on any breach-of-warranty claim.
The warranty in question provides that "Kenworth warrants directly to you that the Kenworth vehicle ("Vehicle") identified below will be free from defects in materials and factory workmanship ("Warrantable Failures") appearing under normal commercial use and service during the time or mileage limitations set forth in the attached Warranty schedule[.]" (Exh. Y to Plaintiff's Brief in Opposition ("Kenworth Warranty") at 1). The warranty also provides that "YOUR SOLE AND EXCLUSIVE REMEDY AGAINST KENWORTH AND THE SELLING DEALER ARISING FROM YOUR PURCHASE AND USE OF THIS VEHICLE IS LIMITED TO THE REPAIR AND REPLACEMENT OF `WARRANTABLE FAILURES' AT AUTHORIZED UNITED STATES AND CANADIAN KENWORTH DEALERS," subject to the time and mileage limitations stated in the warranty.
This document, which Plaintiff claims is the source of its express warranty claims against Defendant Kenworth, makes clear that Kenworth is obligated to pay for repairing and replacing the parts of the vehicle covered by the warranty if those parts prove defective. The warranty provides coverage for "warrantable failures," which are defined as "defects in materials and factory workmanship." Plaintiff argues that the failure of the truck to operate properly gives rise to a claim under this express warranty. Plaintiff's position, however, ignores the terms of the warranty and Plaintiff's own evidence presented in opposition to the motion for summary judgment.
The warranty upon which Plaintiff relies requires the Defendant to pay any warranty claims for "defects in materials and factory workmanship." Plaintiff's evidence points to several claims made for such failings. The evidence supplied by the Plaintiff, however, also indicates that Plaintiff was not charged for parts or repairs made for these defects. By the plain terms of the warranty, Defendant acted as the warranty required. Defendant paid warranty claims. As such, Plaintiff cannot make out a claim for breach of warranty on the basis of such defects, since a breach of express warranty claim in New York requires a showing that Defendant actually breached its obligations under the warranty.
Plaintiff's claim that the vehicles were unfit for the jobs for which they were purchased could be construed as a claim for breach of an implied warranty of fitness for a particular purpose. That claim is no more availing, since the warranty plainly disclaims any implied warranties. Plaintiff's brief does address Defendant's argument in this respect. In any case, the New York Uniform Commercial Code provides that "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 in writing and conspicuous." NY CLS UCC §2-316(b). "Warranties of merchantability and fitness for use are implied by" the UCC, therefore, "but may be excluded using the proper language."
Warranty disclaimers "in all capital letters and [specifying] the warranties that are being disclaimed" have been found valid.
The disclaimer cited above meets the requirements for enforcement described by the New York Courts. The disclaimer sets out clearly, in capital letters and set apart in a section entitled "warranty disclaimer and limitations of liability," that Kenworth offers no warranty of merchantability or fitness for a particular purpose. Kenworth Warranty, at 1. The disclaimer is conspicuous and obvious, and sets out in all capital letters the specific warranties that are being disclaimed. A reasonable person reading the warranty could not help but notice the disclaimer. Thus, to the extent that Plaintiff's claim is that the trucks were not suitable for the purpose for which they were sold, Defendant has expressly disclaimed any warranty for those trucks. Summary judgment is appropriate on that portion of the claim as well.
Moreover, the warranty also expressly disclaims most of the damages that Plaintiff seeks to recover from the Defendant. The affidavit of Warren Fane, in explaining the continued problems with the trucks, provides that "[w]hile the attempts by Tri-State, Kenworth and Cummins came at no additional cost to Fane, Fane did incur costs associated with the loss of use of the trucks while those repair attempts were being made, incurred costs as a result of having [to] pay its own in-house mechanics to repair the trucks' fan hubs and exhaust pipes, incurred costs as a result of having direct shipments and/or change trucks when engine failures occurred, and, ultimately, incurred a loss when Fane sold the ten (10) trucks due to repeated failure of Tri-State, Kenworth and Cummins to correct the issues and problems identified above." (Warren Fane Affidavit, un-lettered exhibit to Plaintiff's Response in Opposition, dkt. #43-29, at ¶ 28).
Defendant argues that the limitation in liability clause contained in the warranty must be enforced. Plaintiff does not address this issue, but instead cites to the general law of damages under the UCC to argue that Plaintiff can recover the difference between the cost paid for the trucks and the cost for Plaintiff of purchasing replacement vehicles. Plaintiff admits that it can claim no damages for repairs not completed on the trucks or materials not replaced, but instead seeks damages for the consequences of the malfunctioning engines, such as lost time for employees, replacement vehicles, and the loss that Fane took when reselling the trucks. To the extent that such damages are consequential damages, they are prohibited by the terms of the warranty and Plaintiff cannot recover them. "A limitation on liability provision in a contract represents the parties' agreement on the allocation of the risk of economic loss in the event that the contemplated transaction is not fully executed, which the courts should honor."
The warranty expressly disclaims a right to consequential damages. Plaintiff has not pointed to any evidence or made any argument to demonstrate either special conditions preventing the enforcement of the limitation on liability or conduct in reckless disregard for others' rights on the part of the Defendant. To the extent that the damages Plaintiff seeks are consequential damages, Plaintiff could not recover even if there were evidence to support the breach-of-warranty claims.
Plaintiff argues, however, that Fane could recover for the cost of purchasing replacement vehicles.
Defendant next argues that Plaintiff's breach-of-contract claims must be dismissed. Defendant contends that almost all of Plaintiff's claims relate to engine issues. The engine was not produced by Kenworth, and thus no claims can exist for those claims. Any problems with the vehicles that may have been subject to Kenworth's warranty or any promises made by Kenworth were resolved pursuant to the warranties. Moreover, Kenworth built the vehicles to Plaintiff's specifications. Plaintiff therefore has no claim for breach of contract against Kenworth. Again, Plaintiff offers no response to this portion of the motion. Plaintiff apparently agrees with the Defendant that no claim for breach of contract can be maintained based on the facts in the record. The Court agrees, as the evidence indicates that the Defendant delivered the trucks as specified in the purchase order, the contract here at issue. The Court will grant the motion for summary judgment in this respect as well.
Finally, Defendant argues that the warranty in question contained an express provision disclaiming any potential liability for incidental or coincidental or coincidental damages. The Court has already explained that Plaintiff cannot prove Defendant liable on any claims. As such, the question of damages is moot.
Defendant Tri-State Diesel, Inc. ("Tri-State"), also seeks summary judgment on several grounds, which the Court will address in turn, as appropriate.
Tri-State first argues that Plaintiff cannot prevail on any warranty claims, whether express or implied. Tri-State contends that the only warranty that can apply in this case is the express warranty provided by Kenworth and discussed above. Defendant points out that the Kenworth Warranty represents that the warranty applies to both Kenworth and the "Selling Dealer," Tri-State. Tri-State offered no distinct warranty separate from the Kenworth warranty. Since Plaintiff has not pointed to any provision of the warranty agreement between the parties which Defendant Tri-State breached, Tri-State argues, no warranty claim can be made. Any breach of warranty on the engine is an argument between Cummins and Plaintiff, and does not involve Tri-State. Tri-State also contends that no breach of the Kenworth warranty occurred. Plaintiff responds by claiming that Defendant breached the Kenworth warranty by providing trucks that were not free from defects, and never fully corrected those defects.
Plaintiff's arguments here are essentially the same arguments Plaintiff makes in connection with Kenworth's motion for summary judgment on the express warranty claim. Plaintiff's arguments here fail for the same reasons: the Defendant did not breach the warranty but instead acted as obligated under the warranty's terms. Summary judgment will be granted to Defendant Tri-State on the same basis as for Kenworth, supra.
Defendant Tri-State also contends that the negotiations surrounding the purchase of the trucks did not create any sort of express warranty. Any statements made by Tri-State representatives were merely generalized ones and did not create any sort of express warranty. No promises were made about the suitability of the vehicles for Plaintiff's purposes, the performance of the engines, or the fuel economy those engines delivered. Instead, Tri-State's representative offered a simple commendation of the Cummins engine. Any other statements were merely puffery and cannot be seen as warranties. Tri-State likewise argues that none of the comments made in negotiations for the purchase of the truck could be considered warranties concerning gas mileage. Plaintiff disagrees, contending that Tri-State's representative, Tom Jennings, made express representations concerning the performance and fuel milage that could be obtained using the Kenworth machines. Plaintiff relied on these representations and purchased the trucks. Only after purchase did Plaintiff discover that the vehicles did not provide the promised performance.
The question in this instance is whether the parties created an express warranty during the negotiations that led to the purchase of the vehicles. As explained above, "a cause of action on an express warranty asks only that a manufacturer make good on the contractual commitment that it voluntarily undertook by placing that warranty on its product."
An express warranty is interpreted as a contract, and a Plaintiff can provide evidence of the warranty through various means.
Although there is evidence from which it could be concluded that an express warranty by Tri-State existed
Because the parties agreed that no warranty except those in the written warranty could apply to this case, the Court must grant summary judgment to Plaintiff on the express warranty claims arising from the sales negotiations in this matter.
Defendant next argues that the disclaimer in the Kenworth warranty preventing any implied warranty claims applies to Tri-State as well. Plaintiff does not respond to this argument, which is based on the same legal grounds as Kenworth's argument on implied warranties. The motion will be granted for the same reason as Kenworth's motion was granted: the Kenworth warranty clearly and unequivocally disclaims any implied warranties and such a disclaimer is enforceable in this context.
Finally, Tri-State contends that the limitation on damages contained in the Kenworth warranty apply to this case and establish that Plaintiff cannot obtain any consequential damages on its warranty claims. Plaintiff responds that Tri-State can be liable for the damages associated with the cost of replacing the deficient trucks and engines sold by Tri-State. As the Court has found that Plaintiff cannot prevail on any of its claims against Tri-State, this portion of the motion is moot, and the Court will not address it.
Defendant Cummins Northeast, LLC, has also filed a motion for summary judgment, alleging that Cummins cannot be liable because Defendant played no role in the manufacture or sale of the engines about which Plaintiff complains.
Defendant Cummins argues that Plaintiff cannot establish an express warranty claim because Plaintiff cannot establish the existence of any such warranty provided by the Defendant. Cummins argues its business was not the sale or manufacture of the engines, and that Cummins did not make any warranty to Plaintiff upon the purchase of the engines. Instead, Cummins Northeast simply provided warranty repairs as an agent of Cummins, Inc., which had actually manufactured the engines and provided the warranty. Plaintiff responds that Cummins breached an express warranty by "failing to adequately and appropriate [sic] diagnosis [sic], remediate and/or repair the litany of engine-related problems that Plaintiff experienced with the" Cummins engine. Plaintiff argues that the engines were purchased with a warranty from Cummins that covered parts and labor, that Cummins undertook to repair the engines under the warranty, and that these repairs did not solve the problems with the engines. Since Cummins had represented that its repairs would solve the engine failures and deficiencies and Plaintiff relied upon those representations, Cummins breached an express warranty.
Plaintiff apparently does not dispute that the warranty supplied with the Cummins engines was not a warranty that Defendant Cummins Northeast issued. Instead, Plaintiff simply contends that the repairs made by Defendant Cummins Northeast were inadequate and failed to cure the defects in the engine as promised. In other words, Plaintiff alleges that Defendant breached an express warranty created when Plaintiff brought the trucks in for repair to Defendant Cummins Northeast. Without citing to any evidence of statements by agents or representatives of Defendant Cummins, or any written guarantees at the time the repairs to the engines were performed, Plaintiff now argues that the express warranty claim is based on the failure of the repairs to make the trucks work as Plaintiff desired. Defendant responds that this claim amounts to a change in the theory of liability after discovery has closed, and one not supported by any evidence in the record.
Plaintiff does not point to any place in the record where evidence exists to support its claim that "Cummins expressly represented that it was capable of fixing the many engine failures and deficiencies suffered by Plaintiff." Dkt. #42 at 9. Plaintiff simply asserts that such a promise existed without citing to who made that promise, where, or when. Indeed, in responding to Defendant Cummins' statement of material facts, Plaintiff admitted that all repairs were performed pursuant to the Cummins, Inc., warranty, and were performed by Defendant Cummins Northeast at no cost to the Plaintiff. (
Plaintiff therefore points to no record evidence to support its claim that Defendant Cummins, which was performing repairs pursuant to a warranty issued by Cummins, Inc., not a defendant, had somehow warrantied that those repairs would completely solve any problems caused by the trucks. In the context of the instant motion, the burden is on the Plaintiff to point to evidence which, if believed, would cause a jury to find for the non-moving party. Defendant has produced evidence to establish that it made no express warranty related to the engines, and, as explained previously, Plaintiff must produce evidence establishing the existence of a factual dispute that a reasonable jury could resolve in his favor.
Defendant next argues that Plaintiff cannot prevail on its breach-of-implied warranty claims against Cummins. Such claims require privity of contract between Cummins and Plaintiff at the time the engine was purchased, and no such privity existed. While Plaintiff urges the Court to deny the Defendant's motion in its entirety, the Plaintiff offers no actual argument in response to Defendant's position that no implied warranty was ever offered, and does not deny that Cummins never had any contact with the Plaintiff's representatives before the engines were purchased.
New York law is clear that where there is "no privity between the purchaser and the defendant there can be no implied warranty."
Courts in New York have noted that "privity of contract" has been "traditionally defined by Black's Law Dictionary as `that connection or relationship which exists between two or more contracting parties[.]"
Plaintiff admits facts that undermine any claim to privity of contract, and thus any implied warranty. Defendant states, for instance, that "Cummins Northeast did not manufacture or warrant the engines in the trucks purchased by Fane, or sell them to anyone in the chain of distribution of those engines and trucks, including Kenworth or Tri-State." (Cummins Statement at ¶ 10). Plaintiff admits this statement, and only adds that Cummins Northeast worked to repair the engines. (Plaintiff's Response to Cummins Statement at ¶ 10). Plaintiff also admits, with the same caveat, that "the Cummins engines were manufactured and warranted by Cummins Inc. and sold to Kenworth, who built the trucks that Tri-State sold to Fane." (Cummins Statement at ¶ 11; Plaintiff's Response to Cummins Statement at ¶ 11). Moreover, "Cummins Northwest was not involved in the selection of the Cummins engines for Fane's trucks." (Cummins Statement at ¶ 12). Indeed, Plaintiff admits that "Cummins Northwest was not aware of Fane's purchase of the 10 Kenworth trucks containing Cummins engines until sometime after Fane took delivery of the trucks in the fall of 2010." (
Thus, Plaintiff admits that no contractual relationship was formed by the parties and no privity of contract existed at the time that an implied warranty would have been created. Plaintiff admits that no relationship existed between Defendant Cummins and Fane outside of Defendant's express warranty-related repairs on the Cummins Engines. Plaintiff does not even attempt to argue that these repairs created an implied warranty that Defendant has breached, and could not. Defendant Cummins did not provide an implied warranty, and summary judgment will be granted Defendant on this claim.
Even if the Court could conclude that an implied warranty existed, the Cummins Warranty issued when the trucks were purchased disclaims any implied warranties. The disclaimer is prominently displayed in a section of the warranty entitled "limitations," and is stated in all capital letters and bold type. (
(
For the reasons stated above, the Court will grant each of the moving Defendants' motions for summary judgment, dkts. 33-35.
(1) Express warranties by the seller are created as follows:
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as `warrant' or `guarantee' or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty."
NY CLS UCC § 2-313.
Eventually, Greg Fane, with assistance from Warren Fane, negotiated the purchase of the ten trucks from Defendant Tri-State. (Tri-State Statement at ¶ 16; Plaintiff's Response to Tri-State at ¶ 16). Edward Thomas ("Tom") Jennings negotiated this sale with the Plaintiff. (
Greg Fane testified that after informing Jennings of Plaintiff's needs for the trucks, he had a second conversation with Jennings by telephone. (
Defendant argues that no evidence exists to support Plaintiff's claim that Tri-State offered an express warranty as to the performance and fuel mileage that the trucks would provide. The Court finds, however, that there is evidence in the record which, if believed by a jury, could lead to a finding that there was an "`affirmation of fact or promise by the seller, the natural tendency of which [was] to induce the buyer to purchase' and that the warranty was relied upon[.]"
