Scott v. Stran Bldgs.

• Decision Date: 16 January 1991
• Docket Number: No. 90-5039,90-5039
• Citation: 923 F.2d 855,1991 WL 3377
• Parties: Unpublished Disposition NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Drura SCOTT, Plaintiff-Appellant, v. STRAN BUILDINGS, National Steel Products Company, AMCA International Corporation, and Empire Steel, Inc., Defendants-Appellees and Third-Party Plaintiffs, Empire Steel, Inc., Third-Party Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 855

923 F.2d 855

Unpublished Disposition

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.

Drura SCOTT, Plaintiff-Appellant, v. STRAN BUILDINGS, National Steel Products Company, AMCA International Corporation, and Empire Steel, Inc. Defendants-Appellees and Third-Party Plaintiffs Empire Steel, Inc., Third-Party Defendant.

No. 90-5039.

United States Court of Appeals, Sixth Circuit.

Jan. 16, 1991.

Before MILBURN, BOGGS and SUHRHEINRICH, Circuit Judges.

PER CURIAM.

Plaintiff-appellant Drura Scott, d/b/a Scott Farms, appeals the district court's grant of summary judgment for defendants-appellees Stran Buildings, National Steel Products Company, and AMCA International Corporation ¹ in this diversity action to recover damages sustained from the premature deterioration of two large steel buildings manufactured by Stran. For the reasons that follow, we affirm.

I.

A.

Scott originally filed this action on September 25, 1985, in the Circuit Court of Henderson County, Kentucky, alleging that the premature deterioration of two large steel buildings "purchased from Empire Steel, Inc., a distributor and agent of defendants ... caused breach of contract, breach of express warranty, breach of implied warranty, breach of warranty [of] fitness for a particular purpose and through [the] doctrine of res ipsa loquitur and nigligence [sic] or strict liability has caused the plaintiff to suffer" loss of use of the buildings and replacement costs. J.A. 16-17. Scott did not name Empire Steel as a defendant.

On October 16, 1985, Stran removed the action to the federal district court, and Stran later filed a third-party complaint against Empire. On September 6, 1988, Stran filed a motion for summary judgment which was granted in an order entered October 24, 1989, explained by a memorandum of that same date. The district court dismissed Scott's claims against all defendants and dismissed the third-party complaint as moot. Scott filed a timely motion for reconsideration which the district court denied on December 5, 1989. This timely appeal followed.

B.

Drura Scott, doing business as Scott Farms, bought two 50 feet by 1,000 feet metal buildings directly from Empire Steel, Inc., for the purpose of housing large numbers of cattle. The buildings were manufactured by Stran. Scott Farms took delivery of the buildings and erected the buildings with its own crew. During a light snowfall approximately four to five years after the buildings were erected, large portions of both buildings collapsed. The parties agree that the collapse was the result of corrosion to the buildings which was accelerated in the corrosive environment of confined cattle feeding.

When Drura Scott decided to institute a system of confined cattle feeding, he informed his brother and farm manager, Emerson Scott, of his decision and left the details to Emerson Scott. Since Empire Steel was a large and reputable builder and distributor of metal buildings, and had given Drura Scott satisfactory service in the past, Emerson Scott contacted Empire's representative, Earl Roehm.

In a deposition, Emerson Scott testified that he essentially gave Roehm the dimensions of the buildings and left the design of the buildings to Empire. Neither Emerson Scott nor Drura Scott had any direct contacts with Stran. In his deposition, Emerson Scott further testified that he was given no oral or written warranties, but later, in an affidavit, Emerson stated that while reviewing some documents he remembered that Roehm had indicated that the buildings were "20-20-20 buildings" meaning that they had a twenty-year life span, a twenty-pound wind load, and a twenty-pound snow load capacity. Emerson's affidavit is corroborated by an affidavit of Roehm.

The possibility that Empire was acting as an agent of Stran was explored during depositions of Ed Abel, a regional manager for Stran, and Earl Roehm, the representative of Empire who dealt directly with Scott Farms. Abel classified Empire as a builder and/or dealer of Stran products. Abel acknowledged that Stran's relationship with Empire went back as far as 1965, and Abel characterized Empire as "a large and very good dealer." Abel also acknowledged that Stran periodically offered incentive trips to dealers such as Empire and to their representatives. Stran also periodically paid part of its dealers' advertising costs.

Earl Roehm described Empire as a general contractor and metal building dealer for Stran. This meant simply that Empire had a right to sell Stran buildings. Empire had a similar relationship with another comparable manufacturer. According to Roehm, his procedure upon learning of any given job prospect is to first estimate the job, then secure a contract from the customer, and then purchase a building from Stran or the other manufacturer.

Although Emerson Scott testified that design of the buildings was left primarily to Empire, Roehm testified that the materials and design were left primarily to Stran. According to Roehm, Empire had no involvement in deciding the materials and design of Scott Farms' buildings other than providing an anchor bolt layout. Roehm did not remember any discussion with Scott Farms about the possibility of premature corrosion other than alerting someone of the need to coat the lower portion of some support columns with a protective coating.

Purchase orders and order acknowledgments list Empire Steel as the builder, Emerson Scott, d/b/a Scott Farms, as the "builder's customer" and reflect that the orders were "sold to" Empire Steel to be shipped "(to consignee) Empire Steel, c/o Scott Farms." J.A. 141-142. A purchase order from Scott Lumber, Inc., (a company closely linked to Scott Farms) to Empire Steel specifically requested a "Stran steel type LR building" with dimensions of 50 feet by 1,000 feet. J.A. 97. The record reflects that Scott Lumber, Inc., was billed directly by Empire Steel for the cost of the buildings.

The principal issues presented in this appeal are (1) whether the district court correctly held that Kentucky courts would not impose tort liability on the manufacturer of a defective product where the defect results in injury only to the product itself and causes only economic losses without creating an unreasonable danger, and (2) whether the district court correctly held that plaintiff's action in theories of breach of contract and breach of warranty was barred by lack of privity between the plaintiff and Stran.

II.

A.

We review a district court's grant of summary judgment de novo, by the same standard as the district court employs initially. Hines v. Joy Mfg. Co., 850 F.2d 1146, 1149 (6th Cir.1988); Pinney Dock and Transp. v. Penn Cent. Corp., 838 F.2d 1445, 1472 (6th Cir.), cert. denied, 488 U.S. 880 (1988). Summary judgment is appropriate if, upon viewing all facts and inferences to be drawn therefrom in the light most favorable to the nonmoving party, 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987), the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Although our review of a summary judgment is de novo, "[w]hen summary judgment is granted in a diversity case by a federal district court sitting in the state whose law governs, and the judgment is based upon [the] district court's interpretation of state law, this court 'will defer to the district court's interpretation of state law if it is permissible.' " White v. Turfway Park Racing Ass'n, 909 F.2d 941, ---- (6th Cir.1990) (quoting Hines, 850 F.2d at 1151).

B.

Before deciding the principal issues which we have set forth, we address two preliminary matters. Scott contends that the district court failed to address all the legal theories of recovery presented below. After reading the district court's memorandum carefully in its entirety, we find it clear that the district court held (1) that a cause of action does not lie in tort for mere loss of bargain as opposed to injury from exposure to an unreasonable danger, and (2) that a cause of action does not lie for breach of contract or breach of warranty absent privity. These holdings encompass all the plaintiff's legal theories; therefore, we find no merit in the plaintiff's contention that the district court ignored some of his theories of liability.

We also note preliminarily that Scott's reliance upon the theory of res ipsa loquitur is misplaced. Scott had full control of the buildings for several years after they left the manufacturer. It cannot be said that buildings do not corrode absent negligence, and the failure of the buildings was more of a gradual deterioration than an accident. See Sadr v. Hager Beauty School, Inc., 723 S.W.2d 886, 887 (Ky.Ct.App.1987) (explaining elements of res ipsa loquitur ).

C.

We now turn to the more substantial issue of whether Kentucky would allow an action in tort for pure economic loss. For the proposition that Kentucky would allow recovery on the facts presented here, Scott relies primarily upon three cases. See Dealers Transp. Co. v. Battery Distributing Co., 402 S.W.2d 441 (Ky.1966); C.D. Herme, Inc. v. R.C. Tway Co., 294 S.W.2d 534 (Ky.1956); C & S Fuel, Inc. v. Clark Equip. Co., 524 F.Supp. 949 (E.D.Ky.1981). Dealers Transport does not help the plaintiff because in that case the consumer sought recovery for extensive damage to other property caused by a dangerously defective product. 402 S.W.2d at 443-44.

Herme helps the plaintiff only a little. In that case the ultimate purchaser of a semi-trailer, who purchased through an independent dealer, was allowed to recover against the manufacturer of the trailer for damages to the trailer and its cargo caused by a defective "king-pin" which caused...