Braswell Egg Co. v. Poultry Mgmt. Sys., Inc.

• Decision Date: 24 August 2020
• Docket Number: No. 5:19-CV-502-D,5:19-CV-502-D
• Citation: 481 F.Supp.3d 528
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: BRASWELL EGG COMPANY, INC., Plaintiff, v. POULTRY MANAGEMENT SYSTEMS, INC., Defendant.

481 F.Supp.3d 528

BRASWELL EGG COMPANY, INC., Plaintiff,

v.POULTRY MANAGEMENT SYSTEMS, INC., Defendant.

No. 5:19-CV-502-D

United States District Court, E.D. North Carolina, Western Division.

Signed August 24, 2020

Christopher S. Edwards, Ward and Smith, P.A., Wilmington, NC, E. Bradley Evans, Joseph A. Schouten, Ward & Smith, P.A., Raleigh, NC, for Plaintiff.

Carmelle F. Alipio, J. Matthew Little, Teague Campbell Dennis & Gorham LLP, Raleigh, NC, for Defendant.

ORDER

JAMES C. DEVER III, United States District Judge

On October 28, 2019, Braswell Egg Company, Inc. d/b/a Braswell Family Farms ("Braswell" or "plaintiff") filed a complaint against Poultry Management Systems, Inc. ("PMSI" or "defendant"), alleging two breach of contract claims and a negligence claim [D.E. 1-2]. On December 3, 2019, PMSI moved for judgment on the pleadings [D.E. 13] and filed a memorandum in support [D.E. 14]. See Fed. R. Civ. P. 12(c). On December 20, 2019, Braswell responded in opposition [D.E. 16]. On January 14, 2020, PMSI replied [D.E. 19]. As explained below, the court grants in part and denies in part PMSI's motion for judgment on the pleadings.

I.

Braswell is a family-owned company in Nash County, North Carolina that produces eggs. See Compl. [D.E. 1-2] ¶¶ 5–6. On June 8, 2016, Braswell purchased the Command III System ("the Command III") and a Natural On-line Animal Housing Computer Watchdog Timer ("the Watchdog Timer") from PMSI. See id. at ¶¶ 7–13. The Command III is a hardware system that allows its user to "monitor remotely all aspects of egg production, like the poultry's feed and water intake, the light intensity inside each poultry house, and weather conditions." Id. at ¶ 9. The Command III, when coupled with the Watchdog Timer, also allows its user to monitor the temperature of its installation location. See id. at ¶ 10.

Braswell and PMSI executed a signed Quotation for Command III Egg Flow/Environmental Control Features ("the price quote"). See [D.E. 1-2] 10–13. The price quote listed the estimated cost of the Command III as $90,399.50. See id. at 12; Compl. ¶ 16. The price quote also included "Installation Supervisor at Actual Cost" in one column and "Estimate ... OPEN" in the corresponding across column, while noting that "(Installation and Fiber Optics are estimates only and can effect [sic] total)." [D.E. 1-2] 12. According to Braswell, when it signed the price quote, "PMSI represented to Braswell that it only was ‘lock[ing] in’ the price of the Command III hardware." Compl. ¶ 20 (alteration in original). Moreover, "[r]elying on industry practice, when Braswell signed the Price Quote, it believed that an additional contract—one that outlined more fully the parties’ rights, duties, and obligations—would be coming." Id. at ¶ 21. A paragraph underneath the signature line of the price quote stated:

Terms: ALL PURCHASES FROM POULTRY MANAGEMENT SYSTEMS, INC. SHALL BE GOVERNED BY ITS STANDARD TERMS OF SALE, A COPY OF WHICH MAY BE OBTAINED BY CALLING (616) 642-9050, WRITING US AT 6245 Grand River Ave., Saranac, MI. OR BY VISITING OUR WEBSITE AT www.PMSI.cc WE OBJECT TO ANY DIFFERENT OR ADDITIONAL TERMS, EXCEPT TO THE EXTENT, IF ANY, THAT WE HAVE ACCEPTED THEM IN A SIGNED WRITING.

[D.E. 1-2] 12. This paragraph had the same font style as the rest of the price quote but a different font size and color. See id. According to Braswell, PMSI never mentioned or provided a copy of the standard terms of sale referred to in this paragraph. See Compl. ¶¶ 46–49.

PMSI's standard terms of sale, referred to in the paragraph underneath the signature line, contains a time bar for bringing legal action: "Any action that Buyer brings against Seller for breach of this Agreement or for any other claim that arises out of or relates to the goods or their design, manufacture, sale or delivery or the services must be brought within one year after the cause of action accrues." [D.E. 11-2] ¶ 18 (emphasis added). PMSI's standard terms of sale also contains a waiver for tort liability and a limitation on consequential damages:

SELLER SHALL NOT HAVE ANY TORT LIABILITY TO BUYER OR ANY OTHER PERSON WITH RESPECT TO ANY OF THE GOODS OR SERVICES AND SHALL NOT BE

LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, INDIRECT OR PUNITIVE DAMAGES ARISING FROM ANY PRODUCT DEFECT, DELAY, NONDELIVERY, RECALL OR OTHER BREACH. BUYER SHALL NOT HAVE ANY RIGHT OF REJECTION OR OF REVOCATION OF ACCEPTANCE OF THE GOODS.

Id. at ¶ 7(g). As for remedies, PMSI's standard terms of sale provides that "[i]n the event of a defect in any Products constituting a breach of the warranty provided herein, Seller will at its option either (i) repair or replace such Product free of charge (F.O.B. Seller's plant), or (ii) in lieu of repair or replacement, refund to Buyer the original purchase price less the reasonable value of Buyer's use of the Products." Id. at ¶ 7(c). As for the governing law, "[t]his agreement between Seller and Buyer shall be considered to have been made in the State of Michigan, and it shall be governed by and interpreted according to Michigan law ...." Id. at ¶ 19.

On October 8, 2016, a PMSI technician installed the Command III and Watchdog Timer on Braswell's poultry house number 3 ("House 3"), which contained numerous hens. See Compl. at ¶¶ 8, 22, 36. PSMI provided Braswell with a copy of its field service policy at that time. See id. at ¶ 23; [D.E. 1-2] 14–21. According to Braswell, "[b]oth Braswell and PMSI intended the Field Service Policy to address the installation of the Command III and Watchdog Timer." Compl. ¶ 24. In the field service policy, PMSI stated that one of its technicians will perform the following at the time of installation:

1. Supervise or connect all wires and adjust Central Computer equipment.

2. Test computer

3. Instruct the customer's personnel in the operation and maintenance of the equipment.

4. Assist in the operation of the equipment on a production basis.

[D.E. 1-2] 15. As for Braswell, its duties included "[u]npack[ing] and inspect[ing] the equipment for obvious shipping damage," "[p]osition[ing] the equipment in the desired location," and "[i]nstall[ing] required services" such as "all sensing controlling equipment." Id. In addition, the field service policy required Braswell to "[h]ave present at the equipment all operating and maintenance personnel who operate and maintain the equipment, to receive instructions from the PMSI technician" and "[r]ender all reasonable assistance as requested by the PMSI technician." Id. The field service policy also stated: "Upon completion of the service period, the customer [i.e., Braswell] will be presented with the PMSI Standard Release Form for acceptance by a responsible representative of the customer [i.e., Braswell]. This certifies to PMSI that the technician has performed those services contracted for as mentioned above and the equipment is performing in accordance with specifications." Id. The field service policy did not mention PMSI's standard terms of service. Cf. id. at 14–21; see Compl. ¶¶ 53–54.

When installing the Watchdog Timer, PMSI agreed to program the Watchdog Timer to report temperature irregularities lasting for more than 8 minutes. See Compl. ¶ 31. Instead, PMSI's technician programmed the Watchdog Timer to report temperature irregularities lasting for more than 88 minutes. See id. at ¶ 33. On January 13, 2017, a power anomaly tripped House 3's circuit breaker. See id. at ¶ 34. This anomaly caused the temperature of House 3 to significantly increase. See id. at ¶ 35. Braswell did not receive notification until 88 minutes passed. As a result, roughly 221,590 hens perished. See id. at ¶ 37.

In early 2019, Braswell contacted PMSI concerning the failure of the Watchdog Timer and the dead hens. See id. at ¶ 40. PMSI initially negotiated with Braswell and asked to see documentation concerning Braswell's damages. See id. at ¶ 41. In September 2019, PMSI stopped negotiating and disclaimed liability via its standard terms from the price quote. See id. at ¶ 42. On October 8, 2019, Braswell filed suit.

Braswell makes three claims against PMSI. First, Braswell alleges that PMSI's faulty installation of the Watchdog Timer breached the field service policy contract. See Compl. ¶¶ 56–65. Second, in the alternative, Braswell alleges that PMSI breached the price quote contract. See id. at ¶¶ 66–75. Third, in the alternative to both the first and second breach claims, Braswell alleges that PMSI negligently installed the Watchdog Timer. See id. at ¶¶ 76–81. Braswell seeks damages and reasonable attorneys’ fees.

In seeking judgment on the pleadings, PMSI makes four arguments. First, Michigan law governs the price quote contract and permits both incorporation by reference of PMSI's terms of service and a 1-year claim limitation period. See [D.E. 14] 6–11. Second, the 1-year claim limitation period in PMSI's terms of service, as incorporated into the price quote, bars Braswell's claims. See id. at 5–6. Third, PMSI's terms of service disclaims tort liability arising from the contract and prevents Braswell from recovering consequential damages. See id. at 11–12, 14–15. Fourth, the economic loss rule bars Braswell's negligence claim. See id. at 12–14. Implicitly, PMSI argues that the price quote, not the field service policy, constitutes the governing contract between the parties. Cf. id. at 5–14.

Braswell responds with three main arguments. First, Braswell argues that the field service policy really governs the contractual relations between the parties. See [D.E. 16] 7–13. Second, Braswell argues that even if the price quote contract governs, PMSI's terms of service do not bar Braswell's breach claim or negligence claim. See id. at 13–18. Alternatively, Braswell contends that PMSI's terms of service are unenforceable as unconscionable. See id. at 16–18. Third, Braswell argues that the economic loss rule does not bar Braswell's negligence claim. See [D.E. 16] 19.

In reply, PMSI asserts that PMSI and Braswell...