Hadar v. Concordia Yacht Builders, Inc., 92 Civ. 3768 (RLC).

• Decision Date: 13 April 1995
• Docket Number: No. 92 Civ. 3768 (RLC).,92 Civ. 3768 (RLC).
• Citation: 886 F. Supp. 1082
• Parties: Richard HADAR, Plaintiff, v. CONCORDIA YACHT BUILDERS, INC., Concordia Custom Yachts, Inc., System Three Resins, Burlington Industries, Inc., Northern Fiberglass Sales, Inc., and RP Associates, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

886 F. Supp. 1082

Richard HADAR, Plaintiff, v. CONCORDIA YACHT BUILDERS, INC., Concordia Custom Yachts, Inc., System Three Resins, Burlington Industries, Inc., Northern Fiberglass Sales, Inc., and RP Associates, Inc., Defendants.

No. 92 Civ. 3768 (RLC).

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

April 13, 1995.

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Miller Cooke & Rohrberg (Bradford Cooke and Scott Miller, of counsel), New York City, for plaintiffs.

Wilson, Elser, Moskowitz, Edelman & Dicker (Debra A. Tama, of counsel), New York City, for defendant Concordia Yacht Builders, Inc.

Kirkpatrick & Lockhart (John R. Dingess and George B. Foster, of counsel), Pittsburgh, PA, Eaton & Van Winkle (Thomas A. Hickey, of counsel), New York City, for defendant Concordia Custom Yachts, Inc.

Quirk & Bakalor, P.C. (Robert E. Quirk, of counsel), New York City, for defendant System Three Resins.

Kreindler & Relkin, P.C. (S. Robert Schrager and Michael G. Goldberg, of counsel), New York City, for defendants Burlington Industries, Inc. and Northern Fiberglass Sales, Inc.

Hawkins, White, Feretic, Daly, O'Neill & Maroney (Thomas Maroney and Raymond Power, Jr., of counsel), New York City, for defendant RP Associates, Inc.

ROBERT L. CARTER, District Judge.

Defendants Concordia Custom Yachts, Inc. ("Concordia Custom") and Burlington Industries, Inc. ("Burlington") assert that they are improper parties and move for summary judgment on the causes of action asserted against them by the plaintiff and on the cross-claims asserted against them by co-defendants. All defendants move for summary judgment on plaintiff's strict liability and negligence causes of action on the grounds that solely economic damages are alleged. Defendants System Three Resins ("System Three"), Burlington, Northern Fiberglass Sales, Inc. ("Northern") and RP Associates, Inc. ("RP Associates") move for summary judgment on plaintiff's breach of warranty causes of action against them on the grounds that they are not in privity with plaintiff. Defendants Concordia Yacht Builders, Inc. ("Concordia Yacht") and Concordia Custom move for summary judgment on plaintiff's breach of warranty causes of action against them and on the issue of plaintiff's entitlement to consequential damages for breach of warranty. Concordia Yacht requests that in the event that the court dismisses the action against Burlington for a reason other than a finding that Burlington is not a proper party, then the court should convert Concordia Yacht's counter-claims against Burlington into cross-claims. Northern moves for summary judgment on the cross-claims brought against it by Concordia Custom, RP Associates and System Three. Finally, plaintiff moves to amend the complaint and seeks partial summary judgment as regards liability.

The court has diversity jurisdiction over this case pursuant to 28 U.S.C. § 1332 (1988).

I. Background

Defendant Concordia Yacht built the "Josher III," a fifty-two foot custom yacht, for plaintiff Richard Hadar. The hull and deck of the yacht were covered by a fiberglass and epoxy laminate consisting of layers of fiberglass combined with epoxy resin. Concordia Yacht constructed the laminate according to the vacuum-bagging method, in which a layer of fabric known as peel ply is used to release the vacuum bag from the laminate. The Phase Two epoxy resin used in the Josher III was manufactured by defendant System Three and distributed by defendant RP Associates, and the Super Release Blue Peel Ply ("SRB Peel Ply") used in the manufacture of the Josher III was manufactured by Precision Fabrics and distributed by defendant Northern.

During the course of the yacht's construction, portions of the deck were removed. Donald Watson, an employee of Concordia Yacht, noticed that the layers of laminate on the removed portions had not bonded properly, causing a condition called "delamination." Watson sent the samples to RP Associates, which in turn sent the samples to System Three. System Three analyzed the samples and concluded in January, 1989, that the improper bonding was caused by an incompatibility between the SRB Peel Ply and the Phase Two epoxy resin.

Before delivery of the yacht, Watson noticed flaws in the laminate, which he characterized as print-through, a cosmetic problem that occurs when resin shrinks as a result of exposure to heat. Concordia Yacht attempted to address the problem by sanding and repainting the hull. The yacht was delivered to plaintiff on May 26, 1989. Late in the summer of 1989 Watson again noticed what he characterized as print-through on the hull, and during the summer of 1990 Concordia Yacht repainted the boat at Hadar's expense. During the fall of 1990, Watson noticed another flaw in the hull, which he characterized as delamination. In an attempt to remedy the problem, Hadar had the flawed areas of the laminate repaired at the Derecktor Shipyard, and he later had the entire laminate removed and replaced. Hadar alleges that during the repair process the yacht was suspended upside-down for an extended period of time, causing damage to various parts of the yacht.

II. Burlington Motion for Summary Judgment

Burlington asserts that it did not manufacture the peel ply at issue in this case and moves for summary judgment on the negligence and strict liability causes of action asserted against it by plaintiff and on the cross-claims asserted against it by Concordia Yacht, Concordia Custom, RP Associates, and System Three. A party is entitled to summary judgment as a matter of law if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Rule 56(c), F.R.Civ.P. The moving party can carry this burden "merely by pointing out that there is an absence of evidence to support the non-moving party's claims." Pressman v. Estate of Steinvorth, 860 F.Supp. 171, 176 (S.D.N.Y.1994) (Carter, J.) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986)). When the moving party has met its burden, the adverse party can defeat the motion only if it can "set forth specific facts showing that there is a genuine issue for trial." Rule 56(e), F.R.Civ.P. "Mere allegations in the non-moving party's pleadings are insufficient to show that there is a triable issue of fact," Project Release v. Prevost, 722 F.2d 960, 969 (2d Cir.1983),—to meet his burden, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). For the purpose of this motion, facts must be viewed in the light most favorable to the non-moving party, id. at 587, 106 S.Ct. at 1356, and "when the factual allegations in the pleadings of the party opposing summary judgment are supported by affidavits or other evidentiary material, they must be taken as true." First Nat'l Bank of Cincinnati v. Pepper, 454 F.2d 626, 629 (2d Cir.1972).

Hadar contends that Burlington was either the manufacturer or the seller of the SRB Peel Ply used in the laminate of the Josher III. It is uncontroverted that the peel ply at issue was manufactured and sold by Precision Fabrics and that prior to February, 1988, Precision Fabrics was a division of Burlington. The issue is whether Burlington has shown that there is an absence of evidence to support Hadar's claim that Precision was still a division of Burlington on the date of the sale of the peel ply. Plaintiff contends that the sale occurred in September 1988, while Burlington contends that it occurred in May 1988. Both parties support these allegations with invoices for the sale of peel ply addressed to Concordia Yacht, creating an issue of fact regarding the exact date of sale. It is undisputed, however, that the sale occurred no earlier than May 1989.

Burlington alleges that it sold its Precision Fabrics division ("Precision division") to Precision Fabrics Group, Inc. ("Precision, Inc.") on February 17, 1988, and thus was neither the manufacturer nor the seller of the peel ply purchased by Concordia in May 1988. As evidence of this sale, Burlington points to a purchase agreement between Burlington and Precision, Inc. dated February 8, 1988, and signed by Burlington's vice chairman and the president of Precision, Inc. In this agreement, Burlington promises to sell and Precision, Inc. promises to buy the Precision division on the closing date, but each party's promises are conditional on the performance of certain obligations by the other party at or prior to the closing. There is a "Bill of Sale and Assignment" dated February 17, 1988, attached as an exhibit to the purchase agreement, but this document is unsigned and therefore does not provide admissible evidence that the conditions were ever waived or met and that the sale was completed.

Despite the absence of a signed closing document, however, there is ample evidence before the court that Burlington sold its Precision division prior to May, 1988. Burlington submits a sworn affidavit of Charles Stricken, manager of the Accounts Payable Department of Burlington, stating that on February 17, 1988, Burlington sold its division which produced the SRB Peel Ply to Precision, Inc. and that after that date Burlington did not sell SRB Peel Ply. Affidavits submitted in support of summary judgment motions "shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Rule 56(e), F.R.Civ.P. Here, the affidavit is admissible because it is based on the personal knowledge of Mr. Stricklen, sets forth only those facts to which he is competent to testify, and shows that he is competent to testify to the matters stated...