Global Petromarine v. G.T. Sales & Mfg., Inc.

• Decision Date: 17 August 2009
• Docket Number: No. 08-1849.,08-1849.
• Citation: 577 F.3d 839
• Parties: GLOBAL PETROMARINE, Plaintiff, v. G.T. SALES & MANUFACTURING, INC., doing business as Hewitt, U.S.A., Defendant/Third Party Plaintiff-Appellant, HBD Industries, Inc., Third Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

577 F.3d 839

GLOBAL PETROMARINE, Plaintiff, v. G.T. SALES & MANUFACTURING, INC., doing business as Hewitt, U.S.A., Defendant/Third Party Plaintiff-Appellant HBD Industries, Inc., Third Party Defendant-Appellee.

No. 08-1849.

United States Court of Appeals, Eighth Circuit.

Submitted: October 16, 2008.

Filed: August 17, 2009.

Charles Henry Stitt, I, argued, Leland M. Shurin, on the brief, Kansas City, Mo, for appellant.

William Francis Logan, argued, Scott David Hofer, on the brief, Kansas City, Mo, for appellee.

Before GRUENDER, BEAM, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

Appellant, G.T. Sales & Manufacturing, Inc. doing business as Hewitt, U.S.A. (hereinafter "Hewitt"), challenges the district court's dismissal of its indemnification action through a grant of summary judgment. For the reasons explained below, we reverse and remand this matter to the district court.

I.

The factual underpinnings of this case involve the sale of 17 submarine hoses designed to transport crude oil. Three contracts were entered into to transfer the hoses from HBD Industries, Inc ("HBD"), the manufacturer, to the Syrian Crude Oil Transportation Company ("Scotraco"), the ultimate buyer. This case concerns the first two of those contracts. The first contract is between HBD and Hewitt for the manufacture and purchase of the hoses. The second contract is between Hewitt and Global Petromarine ("Global"), a Lebanese company, for the purchase of the hoses. Global eventually sold the hoses to Scotraco. This third contract between Global and Scotraco is not at issue in this matter.

In the fall of 2001, Global began negotiating with Hewitt for the purchase of the hoses from Hewitt. Hewitt, in turn, commenced simultaneous negotiations with HBD for the manufacturing and purchase of the hoses. HBD normally warranted its hoses for one year from the date the product is shipped from HBD's manufacturing plant. However, as negotiations progressed, Hewitt requested and HBD initially presented a warranty covering "a period of one year from date of Shipment with a prorated warranty for the Second year of service."¹ Hewitt placed the warranty terms on Hewitt letterhead and submitted it to Global along with Hewitt's price quote for the hoses. Global replied that its client, Scotraco, would prefer a one-year warranty dated from the time of receipt of the hoses in its warehouses. In response to this request and after discussing the matter with Hewitt, HBD presented to Hewitt a "[w]arranty for a period of fourteen (14) months from date of ocean bill of lading." The remainder of the warranty terms remained the same. At that time, both HBD and Hewitt understood that either the two-year prorated warranty or the 14-month warranty were available and enforceable against HBD. Eventually, Hewitt and Global settled on the two-year prorated warranty. As part of the contracts, HBD agreed with Hewitt that the hoses' design, manufacture, and testing would comply with international industry standards known as the "OCIMF Guidelines," and Hewitt made the same promise to Global.

Within 90 days after installation of the first hoses, Scotraco notified Global and Global relayed to Hewitt that the hoses were leaking and no longer suitable for their use. At Hewitt's request, sections of the hoses were shipped back to Hewitt for testing. After testing, Hewitt refused to refund the purchase price of the hoses or to replace the leaking hoses. Global eventually purchased replacement hoses from another source.

Global then filed a complaint against Hewitt, alleging breach of contract, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, and negligent misrepresentation. Hewitt answered the complaint and filed a third-party complaint against HBD, asserting "HBD is obligated to indemnify and hold harmless [Hewitt] from any such claims, and all such costs, fees, expenses and damages related thereto, because HBD designed, manufactured, tested, packaged and shipped the subject hoses ... [and] because HBD warranted the subject hoses."

HBD moved for partial summary judgment. In its motion, HBD sought an order concluding that, inter alia: (1) as a matter of law, HBD had effectively disclaimed the implied warranties of merchantability and fitness for a particular purpose, (2) Hewitt's damages to Global for breach of warranty were limited, by either the two-year prorated warranty or the 14-month warranty, to repair of the defective products and materials or repayment of the purchase price, and (3) HBD's liability, if any, to indemnify Hewitt was limited to $10,732 under the two-year prorated warranty or $5,600 under the 14-month warranty.

Hewitt opposed HBD's motion for partial summary judgment, arguing that implied indemnity is available to Hewitt against HBD for the entire amount of any recovery obtained against Hewitt by Global. Hewitt also claimed that the warranty obligated HBD to pay the entire purchase price for all of the hoses because some of the hoses manifested the defect prior to the end of the first year of the warranty. Finally, Hewitt maintained that the "exclusive remedy" clause should not be applied to the relationship between Hewitt and HBD because it would lead to an unconscionable result.

Hewitt also sought summary judgment as to Global's claims against Hewitt and as to Hewitt's indemnity claim against HBD. In its motion, Hewitt argued that it presented a 90-day warranty to Global via a "brochure" and that this 90-day warranty "disclaim[ed] all warranty liability on the part of Hewitt, whether express or implied ... except for the limited express warranty stated therein; however, such express warranty liability [was] also disclaimed, with respect to products sold by Hewitt but manufactured by others." According to Hewitt, under this 90-day warranty "it is clear that Global expressly agreed not to hold Hewitt liable on any warranties regarding the hoses, but would rely solely on those warranties (if any) provided to it by the actual manufacturer of the hoses." Accordingly, Hewitt argued that Global was limited to pursuing claims against HBD under the warranties Hewitt issued.

Alternatively, Hewitt argued, in its summary judgment motion, that HBD was required to indemnify Hewitt if Hewitt was held liable to Global on the basis of the warranty terms submitted by HBD and transmitted to Global by Hewitt. That indemnification would also include attorneys' fees expended in defending Global's action because Hewitt demanded HBD defend Hewitt and HBD refused. Further, under implied indemnity, Hewitt argued that HBD would be obligated to indemnify Hewitt for any liability imposed against Hewitt on the basis that the hoses did not comply with OCIMF Guidelines for manufacturing, that production testing on the hoses was inaccurate or incomplete, or that the hoses were not "of new materials and manufacture." According to Hewitt, HBD assured Hewitt that the hoses would meet those OCIMF Guidelines for production and testing, and Hewitt in turn made the same assurances to Global.

The district court denied Hewitt's motion for summary judgment against Global and HBD. As to Global's claims against Hewitt, the district court held that genuine issues of material fact remained concerning whether the hoses were manufactured in compliance with OCIMF guidelines, whether Global was entitled to recover against Hewitt for either express or implied warranties contingent upon the applicability of the 90-day warranty and the two-year prorated warranty, and whether the economic loss doctrine serves as a bar to Global's claim for negligent misrepresentation.

As to Hewitt's third-party claim against HBD, the district court held that, because there is no express indemnification provision in the contract between Hewitt and HBD, the only form of indemnification that Hewitt may seek is through the equitable remedy of implied indemnity. Applying Missouri law, the district court held that implied indemnity was applicable only where an identical duty owed by one is discharged by the other. The court found that Hewitt was not entitled to implied indemnity because (1) HBD had no legal obligation to Global, (2) Hewitt made separate representations and warranties to Global via Hewitt's brochure which contained a 90-day warranty, and (3) the negotiations between HBD and Hewitt evince a lack of intention that any type of indemnity apply to the contract. In view of its determination that Hewitt was not entitled to indemnification from HBD, the district court concluded that HBD's motion for summary judgment against Hewitt was moot.

After the entry of the district court's denial of its motion for summary judgment against HBD, Hewitt sought a new scheduling order in its third-party action against HBD. The day after Hewitt sought the new scheduling order, Hewitt and Global reached a settlement and filed a joint Stipulation of Dismissal, requesting that the district court order the dismissal of Global's claims against Hewitt. Through a Clerk's Order of Dismissal entered at the direction of the district court, Global's claims against Hewitt were dismissed with prejudice. On the same day, the clerk also entered a Judgment in a Civil Case, referencing the district court's order denying Hewitt's motion for summary judgment. HBD then filed an objection to Hewitt's request for a new scheduling order, arguing that all of Hewitt's indemnification claims had been disposed of when the district court denied Hewitt's motion for summary judgment as that denial had effectively dismissed Hewitt's indemnification claim against HBD.

The district court agreed with HBD. In an order denying as moot Hewitt's motion for a new scheduling order, the court "clarifie[d] [that] its ruling on Hewitt's motion for summary judgment dated March 12, 2008 ... disposed all of Hewitt's claims against HBD ... and granted judgment in HBD's...