Fiberglass Component Production v. Reichhold Chem.

CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado
Citation983 F.Supp. 948
Docket NumberCivil Action No. 96-B-813.
PartiesFIBERGLASS COMPONENT PRODUCTION, INC., Plaintiff, v. REICHHOLD CHEMICALS, INC., a North Carolina corporation, Defendant.
Decision Date18 November 1997

David G. Palmer, Brian L. Duffy, Craig V. Richardson, Gibson, Dunn & Crutcher, Denver, CO, for Plaintiff.

Bobbee J. Musgrave, B. Lawrence Theis, Perkins Coie, Denver, CO, for Defendant.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

In this diversity case removed from the District Court of Prowers County, Colorado, defendant, Reichhold Chemicals, Inc. (RCI) moves for summary judgment, pursuant to Fed.R.Civ.P. 56, on the claims of plaintiff, Fiberglass Component Production, Inc. (FCP). FCP brings claims for: 1) breach of express warranty; 2) breach of implied warranty of fitness for particular purpose; 3) breach of implied warranty of merchantability, 4) false representation; 5) negligent misrepresentation; and 6) violation of the Colorado Consumer Protection Act, sections 6-1-105 et seq., C.R.S. Second Amended Complaint. After consideration of the motion, briefs, and counsels' argument, I will deny the motion.

I.

Unless otherwise noted, the following facts are undisputed. This action between RCI, a chemical products manufacturer, and FCP a purchaser of one of RCI's products, concerns a polyurethane resin which FCP purchased from George C. Brandt, Inc. (Brandt), an RCI distributor. FCP, formed in 1981, is located in Lamar, Colorado and fabricates laminated fiberglass products. Although there are automated lamination processes, FCP laminates its products by hand. FCP manufactures housings for air conditioning systems for installation on the top of light rail transit systems and buses.

Laminated fiberglass products are made by adding a resin to raw fiberglass. Resins, however, are inherently flammable. Therefore, chemical additives are added to resins to reduce the smoke and flammability of the finished product. The resin additives create what is called a "filled" system. The additives, or fillers, thicken the resin mixture making it more difficult to handle and more difficult to achieve a uniform amount of resin and fiberglass when laminating by hand.

FCP has used fire retardant resins since the mid 1980's. Because FCP produces housings that are used in public transportation systems, it is critical to use resins that, in the event of a fire, are low in flammability and generate low amounts of smoke. The fiberglass components used in the production of the light rail cars must meet smoke production and flammability specifications measured by various American Society of Testing Materials (ASTM) tests. Specifically, fiberglass component parts containing resins must pass ASTM E-662 smoke test requirements.

FCP used Ashland Chemical's Hetron 325 (Hetron) from the mid 1980's until it switched to the RCI Dion 6657 (RCI 6657) resin in 1995. The Hetron resin met the smoke, flammability, and strength requirements of FCP's customers. (H.Ferdow Depo., Def. Ex. 1, p. 341). However, FCP was unhappy with the ugly yellow color of the Hetron resin. (C.Ferdow depo. Def. Ex. 5, p. 79). Also, FCP was unhappy with the lack of technical support from its prior resin supplier. Resp. Ex. 2.

In the summer of 1994, Wally McClellan (McClellan), a salesman for Brandt, approached Lewis Johnson (Johnson), FCP's plant manager, about switching to the RCI 6657 resin. Pltf. Ex.1. McClellan gave Johnson the RCI 6657 product bulletin. Def. Ex. 2, McClellan Depo. p. 218. Later, McClellan supplied FCP with two 5 gallon samples of the RCI 6657 resin.

FCP attempted to fabricate with the RCI 6657 resin but was unsuccessful with the formula contained in the Product Bulletin which called for 52% aluminum trihydrate (ATH), and 48% RCI 6657 resin. Pltf. Ex.1 and Ex.2., p. 245-46. McClellan then volunteered to contact RCI in an effort to obtain technical assistance for FCP Def. Ex.4, Johnson Depo. pp. 117-118. In September 1994, RCI sent Richard Lewandowski (Lewandowski), a specialist in the highly technical area of low smoke resins, to FCP's plant to develop a workable formula using RCI 6657. During Lewandowski's visit to the FCP plant, a workable formula, different from that contained in RCI's Product Bulletin, was developed. The parties dispute whether Lewandowski developed a workable formula alone or together with Joanne Orozco, an FCP plant foreman. The resulting formula contained 22 lbs. of RCI 6657 resin, 19 lbs. of ATH, 2 lbs. of antimony and a half bucket of cabosil. Pltf. Ex. 3, Lewandowski Depo. pp. 84-85.

Before FCP began using RCI 6657 in its production process, it needed proof that the resin would pass the industry tests based on the specifications required by its customers. Lewandowski, aware of the testing requirements, prepared fiberglass test panels and offered to test them at RCI's cost. RCI ran a smoke density test on the FCP test panels on January 23, 1995. The test results showed that the fiberglass panels tested at "68" for flaming exposure at 4 minutes. This result was well under the "less than 300" test result referenced in Lewandowski's letter to FCP written after his trip to the FCP plant. Def. Ex. 15, p. 5. Based on the "68" result, FCP purchased the RCI 6657 resin and began using it in production. Eventually, the air conditioning housings produced with RCI 6657 were installed in rail cars in San Francisco, San Diego and Denver. The parties dispute whether the housings were installed in rail cars in Portland. However, apparently FCP produced three prototypes of the Portland units made with the RCI resin. Resp. Brief. Corr. Ex. 32, ¶ 3. Id.

In late summer 1995, FCP received field reports that its air conditioner housings were developing cracks. As a result of these reports, FCP initiated additional testing. Hauser Laboratories performed tests on panels made with the RCI 6657 resin. The Hauser smoke test results showed an average of over 300 for flaming exposure at 4 minutes. Def. Ex. 17, p. 2; Pltf. Ex. 39. FCP states that Lewandowski was never able to duplicate the January 1995, 68 smoke test result. Resp. Brief, p. 3. Based on the additional test results, FCP initiated a product recall and is rebuilding the air conditioning units with complying resin. Id. at 3-4.

II. SUMMARY JUDGMENT STANDARD

The very purpose of a summary judgment motion is to assess whether trial is necessary. White v. York Int'l Corp., 45 F.3d 357, 360 (10th Cir.1995). Fed.R.Civ.P. 56 provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The non-moving party has the burden of showing that there are issues of material fact to be determined. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). A party seeking summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, interrogatories, and admissions on file together with affidavits, if any, which it believes demonstrate the absence of genuine issues for trial. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552-53; Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). Once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in his complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried. Otteson v. U.S., 622 F.2d 516, 519 (10th Cir.1980); Fed.R.Civ.P. 56(e). These specific facts may be shown "by any of the kinds of evidentiary materials listed in Rule 56(c), except the pleadings themselves." Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.

If a reasonable juror could not return a verdict for the non-moving party, summary judgment is proper and there is no need for a trial. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. The operative inquiry is whether, based on all documents submitted, reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). However, summary judgment should not enter if, viewing the evidence in a light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor, a reasonable jury could return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. at 252, 106 S.Ct. at 2512; Mares, 971 F.2d at 494.

III.
A. Claim 1-Breach of Express Warranty

To recover for breach of express warranty, a plaintiff must prove that: 1) a warranty existed; 2) the defendant breached the warranty; 3) the breach proximately caused the losses claimed as damages; and 4) timely notice of the breach was given to defendant. See CJI-Civ.3d 14:6 (1990); Palmer v. A.H. Robins Co., Inc., 684 P.2d 187 (Colo. 1984).

In its second amended complaint, FCP alleges that:

"Reichhold ... expressly warranted the Resin to meet ASTM-662 smoke specifications when used in a filled system. In particular, Reichhold ... expressly warranted the Resin to meet these smoke requirements when used in FCP's manufacturing process with the Reichhold Mixture."

Second Amended Complaint ¶ 36.

RCI moves for summary judgment arguing, inter alia, that RCI was never made aware of the specifications required by FCP and, thus, RCI could not have expressly warranted their resin. RCI presents evidence that McClellan, the distributor's representative, specifically asked FCP plant manager Lewis Johnson what technical specifications FCP was required to meet and Johnson did not know. Def. Ex. 2, McClellan Depo. pp. 51-52. However, FCP points to Lewandowski's testimony that in a...

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