Gonzalez v. Rutherford Corp.

• Decision Date: 31 March 1995
• Docket Number: No. CV 91-4534(RR).,CV 91-4534(RR).
• Citation: 881 F. Supp. 829
• Parties: Jorge GONZALEZ, Plaintiff, v. RUTHERFORD CORP., Defendant. RUTHERFORD CORP., Third-Party Plaintiff, v. CLEVELAND CRANE AND ENGINEERING CO., Daley-Hodkin Corp., Pyramid Equipment Leasing Corp., and Capital Steel Fabrication, Inc., Third-Party Defendants.
• Court: U.S. District Court — Eastern District of New York

881 F. Supp. 829

Jorge GONZALEZ, Plaintiff, v. RUTHERFORD CORP., Defendant.

RUTHERFORD CORP., Third-Party Plaintiff, v. CLEVELAND CRANE AND ENGINEERING CO., Daley-Hodkin Corp., Pyramid Equipment Leasing Corp., and Capital Steel Fabrication, Inc., Third-Party Defendants.

No. CV 91-4534(RR).

United States District Court, E.D. New York.

March 31, 1995.

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Trolman & Glaser, P.C. by Gary P. Deutschmeister, New York City, for plaintiff.

Quirk and Bakalor, P.C. by Timothy Keane, New York City, for Rutherford Corp.

Myles R. Elber by Mark Baribault, Brooklyn, NY, for Daley-Hodkin Corp.

Conway, Farrell, O'Connor, Curtain & Kelly, P.C. Kristin G. Shea, New York City, for Pyramid Equipment Leasing Corp.

MEMORANDUM and ORDER

RAGGI, District Judge:

Plaintiff Jorge Gonzalez, a New York resident, invokes this court's diversity jurisdiction to sue Rutherford Corporation, a used machinery dealer located in New Jersey, for injuries sustained while working with a press brake sold by Rutherford to Gonzalez's employer, Capital Steel Fabrication, Inc. Plaintiff's complaint alleges causes of action in strict liability, breach of express and implied warranties, and negligence. Rutherford, in turn, has filed a third-party complaint seeking contribution and/or indemnification from (1) Capital Steel Fabrication, (2) Cleveland Crane and Engineering Co., the manufacturer of the press¹, (3) Daley-Hodkin Corporation, the auctioneer from which Rutherford purchased the press brake, and (4) Pyramid Equipment Leasing Corporation, a finance lessor involved in the transfer of the press brake from Rutherford to Capital Steel Fabrication.

Now pending before the court are Rutherford's motion for summary judgment against Gonzalez and the motions of third-party defendants Daley-Hodkin and Pyramid Equipment Leasing for summary judgment against Rutherford. Having carefully considered the submissions of the parties, and having heard oral argument, the court hereby grants Rutherford's motion for summary judgment as to plaintiff's claim of express warranty, but denies the motion in all other respects. It grants the motions of Daley-Hodkin and Pyramid Equipment Leasing and enters summary judgment in their favor on Rutherford's third-party claim.

Factual Background

Most facts relevant to the motions before this court are not in dispute. To the extent they are, the court views the evidence in the light most favorable to the non-movant on each motion.

At the times relevant to this dispute, Jorge Gonzalez was an employee of Capital Steel Fabrication in Brooklyn, New York. On August 6, 1991, Gonzalez was working a Steel-weld mechanical press brake, model number I-4-8, serial number M 3235, a machine used for stamping and puncturing metal. The press brake contained a long vertically movable cutting instrument, called a ram, which would descend onto a point of operation, or bed. The ram could be activated either manually by twin buttons on either side of the machine front plate or by use of a foot pedal. Gonzalez asserts that, while sitting in front of the machine, he at one point leaned forward to better see a metal sheet he was positioning with his right hand on the cutting plane. In the process, he inadvertently stepped on the foot pedal, activating the ram. The ram crushed and partially amputated parts of four fingers on Gonzalez's right hand.

On November 20, 1991, plaintiff commenced this lawsuit. He contends that the press brake was defectively designed in that it had no foot pedal guards, point of operation safety system, or hand tools for use at the point of operation. He submits that Rutherford is strictly liable for these defects and the failure to warn of them. He further asserts that Rutherford's conduct was negligent and a breach of express and implied warranties.

The Steelweld press brake involved in the Gonzalez accident was originally manufactured sometime during the 1950's by Cleveland Crane and Engineering Co. It eventually became the property of a Massachusetts business, ATF-Davidson Company, Inc. When ATF-Davidson declared bankruptcy, its property was sold for the benefit of creditors, including the Bank of New York. To effect the sale of assets, the Bank of New York hired Daley-Hodkin to conduct a bankruptcy auction. Among the assets thus offered for sale in April 1990 were over three-thousand separate lots of personal property — including the Steelweld press brake — and over one hundred forty acres of real property. All bidders were advised that the property was being sold "as is/where is," without any warranties as to quality or merchantability. It is undisputed that Daley-Hodkin made no modifications or repairs to any of the property offered for sale. Rutherford was the successful bidder for the press brake, paying $11,000.

For close to twenty years, Rutherford has bought and sold used metal working machine tools. It stores and shows its inventory — which has included over one hundred different types of machines manufactured by over twenty-five businesses — at a 10,000 square foot warehouse in Linden, New Jersey. It advertises in various trade magazines, including "Used Equipment Directory," specifically aimed at the used machinery market. It does not dispute that it is a regular dealer in used goods.

Sometime in late 1990, Rutherford's salesman, Frank Sangiorgi, discussed with representatives of Capital Steel Fabrication that company's interest in purchasing a press brake. Alain Blaier, the Vice President of Capital Steel Fabrication, and his father went to Rutherford's warehouse to see the Steelweld press brake here at issue. To meet the $30,000 purchase price, Capital Steel Fabrication explored financing with Pyramid Equipment Leasing. As a result, Pyramid Equipment Leasing formally purchased the press brake from Rutherford on November 26, 1990, arranging for shipment directly to Capital Steel Fabrication.²

The invoice relating to this sale states that the machinery is sold by Rutherford with "no warranties express or implied." A similar disclaimer is noted on the bill of sale. The invoice further purports to obligate the "buyer ... to inspect All Machinery On A Continuing Basis, and to Provide Proper Safety Devices and Equipment or Means Necessary to Safeguard the Operator from Harm For Any Particular Use, Operation or Set-up of Machines." Finally, the invoice contains an indemnification clause whereby,

Buyer agrees to indemnify and hold seller harmless from ... (4) any liability, loss or damages, claims, demands, costs or judgments based upon or resulting from any legal theory of strict liability or liability without fault applied to buyer or to seller or to the original manufacturer of the subject machinery or equipment to seller or (5) any liability, loss or damages, claims, demands, costs or judgments based upon or resulting from any theory of breach of warranty of any kind.

Apparently, this document was never signed by any representative of Pyramid Equipment Leasing or Rutherford.

Although Pyramid Equipment Leasing is listed as the "buyer" on the relevant sales documents, it is undisputed that it never had possession of the Steelweld press brake. An equipment lease dated November 27, 1990 provided for Capital Steel Fabrication to pay Pyramid Equipment Leasing a "monthly rental" of $845.25 for the press brake over sixty months, with an option to purchase the machine for $1.00 at the expiration of the lease. This lease was assigned to Apple Acceptance Corporation on the same day, and it was that business that both paid Rutherford and received lease payments from Capital Steel Fabrication.

Discussion

I. Summary Judgment

It is well-established that summary judgment is appropriate only when there are no genuine issues of material fact requiring resolution at trial, and when the law supports the moving party. Fed.R.Civ.P. 56(c); e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Turtur v. Rothschild Registry Intern., 26 F.3d 304, 309 (2d Cir.1994). The movant bears the initial burden of demonstrating the absence of any genuine issue of fact. Turtur v. Rothschild Registry Intern., 26 F.3d at 309. A party opposing summary judgment cannot rely on hypothetical speculation or metaphysical musings to create an issue of fact. Rather, it must point to specific evidence that, if credited, would support a jury verdict in its favor. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). If such evidence is adduced, the weight to accord it, and the resolution of any factual differences between the parties must be left for the jury to determine. This is because a court's sole task is to decide whether genuine factual issues are present, not to weigh the evidence or resolve the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-50, 106 S.Ct. at 2510-11; Turtur v. Rothschild Registry Intern., 26 F.3d at 309.

II. Choice of Law

A federal court sitting in diversity applies the same choice of law rules as the state in which it sits. Klaxon v. Stentor, 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Banker v. Nighswander, Martin & Mitchell, 37 F.3d 866, 871 (2d Cir.1994). In personal injury actions, New York generally applies its own law to injuries occurring in this state. E.g., Cooney v. Osgood Machinery, Inc., 81 N.Y.2d 66, 595 N.Y.S.2d 919, 612 N.E.2d 277 (1993). All parties agree that New York law applies to this case.

III. Rutherford's Motions Against Gonzalez

A. Strict Liability

Rutherford moves for summary judgment in its favor on Gonzalez's strict liability claim, arguing that, under New York law, strict products liability does not apply to used machinery dealers. The legal issue is by no means easily resolved. Generally, this court would look first to New York's ultimate authority, its Court of Appeals, to...