Hart Engineering Co. v. FMC Corp., Civ. A. No. 83-0219 S.

• Decision Date: 12 September 1984
• Docket Number: Civ. A. No. 83-0219 S.
• Citation: 593 F. Supp. 1471
• Parties: HART ENGINEERING COMPANY, Plaintiff, v. FMC CORPORATION, Defendant.
• Court: U.S. District Court — District of Rhode Island

593 F. Supp. 1471

HART ENGINEERING COMPANY, Plaintiff, v. FMC CORPORATION, Defendant.

Civ. A. No. 83-0219 S.

United States District Court, D. Rhode Island.

September 12, 1984.

COPYRIGHT MATERIAL OMITTED

Edwards & Angell, Jeffrey C. Schreck, Providence, R.I., for plaintiff.

Hinckley & Allen, Robert Lovegreen, Michael G. Sarli, Providence, R.I., for defendant.

OPINION and ORDER

SELYA, District Judge.

In this diversity action, 28 U.S.C. § 1332, plaintiff Hart Engineering Company (Hart) seeks to recover damages for costs incurred in the removal, shipment and reinstallation of six drive bases taken from clarifiers supplied by the defendant FMC Corporation (FMC) for use at the municipal waste water treatment facility in Holyoke, Massachusetts. Count one of plaintiff's complaint alleges a breach of express and implied warranties made in connection with the sale of the clarifiers. Count two alleges that FMC ignored its contractual obligations to Hart in the premises. The remaining two statements of claim seek damages under principles of tort law, count three being grounded in negligence and count four in strict product liability.¹

The case was docketed in this court on March 25, 1983. In January of 1984, the parties crossmoved for summary judgment. Those motions were each denied without prejudice on April 20, 1984. The plaintiff and defendant then agreed to submit the case to the court for decision on the merits essentially on their respective summary judgment initiatives, as fleshed out by an agreed statement of facts and certain other supplemental materials. Pursuant to the court's order of May 24, 1984, the parties submitted a joint bench book containing and/or referencing the desiderata to be considered by the court.² In addition, the matter has been amplificatively briefed. Oral argument has been waived. This opinion, therefore, constitutes the court's findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a).

I.

Hart is a Rhode Island corporation with its principal place of business in East Providence, Rhode Island. FMC is incorporated under the laws of the Commonwealth of Pennsylvania and has its principal place of business in that state. Jurisdiction is premised on diversity of citizenship and the existence of a controversy in an appropriate amount. 28 U.S.C. § 1332.

The present dispute arose out of a purchase agreement entered into by Hart and FMC in early February of 1979. At that time, FMC agreed to supply a half dozen clarifiers and various other kinds of machinery for Hart's use at the municipal sewage treatment plant then under construction in Holyoke, Massachusetts (Hart having theretofore been awarded the general contract by the city). The agreement as finally executed by the parties was the product of a hard-driven (albeit not impolitic) battle of proposals and counterproposals between individuals savvy in the trade. Under the terms of that agreement, the plaintiff committed to purchase two main clarifiers, four secondary clarifiers, two gravity thickeners, and additional overload devices to be used in conjunction with already existing clarifiers. The total cost of the items to be bought aggregated $320,000.

The contract contained some twelve general terms and conditions governing the relationship between the buyer and the seller. One of those conditions provided in material part:

4. WARRANTY. New equipment manufactured by Seller is warranted to be free from defects in material and workmanship under normal use and service for a period of one year from date of shipment; Seller's obligation under this warranty being limited to repairing or replacing at its option any part found to its satisfaction to be so defective provided that such part is, upon request, returned to Seller's factory from which it was shipped, transportation prepaid.... THIS WARRANTY IS EXPRESSLY IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED AND SELLER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

The last of those conditions provided:

12. DISCLAIMER OF CONSEQUENTIAL DAMAGES, LIQUIDATED DAMAGES OR PENALTIES. SELLER SHALL NOT BE LIABLE FOR CONSEQUENTIAL DAMAGES. CONSEQUENTIAL DAMAGES FOR THE PURPOSES OF THIS AGREEMENT SHALL INCLUDE BUT NOT BE LIMITED TO LOSS OF USE, INCOME, OR PROFIT,

OR LOSS OF OR DAMAGE TO PROPERTY INCLUDING, BUT WITHOUT LIMITATION, PRODUCTS MANUFACTURED, PROCESSED OR TRANSPORTED BY THE USE OF THE EQUIPMENT, OCCASIONED BY OR ARISING OUT OF THE OPERATION, USE, INSTALLATION, REPAIR OR REPLACEMENT OF THE EQUIPMENT OR OTHERWISE....

In accordance with its obligations under the contract, the defendant manufactured the six clarifiers and shipped them to Holyoke in May of 1980. They were subsequently installed. For nearly two years after the goods were forwarded, there was no communication of any significance between Hart and FMC. That state of equipoise began to dissolve, however, in February of 1982. The wellspring of the instant dispute was unearthed at that time, when Tighe & Bond (T & B), the consulting engineers who had supervised erection of the plant for the city of Holyoke, discovered a malfunction in one of the new clarifiers supplied by FMC. This trickle of dissatisfaction dampened few spirits. Hart routinely notified the defendant of the problem, and at least one FMC employee sojourned to Holyoke to investigate the matter. With representatives of FMC and Hart in attendance, T & B thereafter diagnosed the malady to be the absence of major portions of weld from the clarifier's drive base. That discovery, however, revealed only the tip of what was soon found to be a ubiquitous iceberg; subsequent perscrutation by the consulting engineers dredged up the unhappy finding that substantial segments of weld were missing from the drive base components of all six of the clarifiers manufactured by the defendant.

The effluent stream of contentiousness thereafter began to run downhill. A flurry of communications between the plaintiff, the defendant, and T & B ensued. In an apparent effort to ameliorate an increasingly tense situation, the defendant offered to perform field repairs on the defective drive base components. In a letter to the plaintiff dated March 24, 1982, T & B, with obvious reluctance, agreed to allow the field repairs to go forward on a "trial basis." This acquiescence was to be conditioned, however, on FMC's and/or Hart's acceptance of financial responsibility (i) for costs to be expended in cleaning out each tank as the work progressed, and (ii) for expenses to be incurred in monitoring and evaluating the "failure and repair" of the units. As a further stipulation, T & B also insisted that the defendant furnish "an extended five year warranty from date of acceptance of the equipment repairs." A copy of that letter was sent to FMC by Hart. Not surprisingly, the proposition failed to evoke a chorus of assents.

In a letter from the defendant to the plaintiff dated March 26, 1982, A. Joseph Antunes, FMC's manager of water treatment, stated in pertinent part,

We have been surprised at the entire reaction to the situation since we consider the problem to be a warranty problem. Our company warrantees all material to be free from defects in material and workmanship and this problem falls into the category of defective workmanship.

In keeping with our policy of furnishing fully functional and reliable equipment, we plan to start work on Monday, April 5, 1982 to correct the defective workmanship....

We will extend the warranty on each machine for one year from the date it is restored to operating condition and put back into service.

We thank you for bringing this problem to our attention so that we can bring these machines up to the quality standards that FMC wants on all of its products.

As opposed to calming troubled waters, Antunes' message served only further to roil them. In its wake, T & B shot off a rather heated letter to the defendant on April 1, 1982. That billet-doux made it plain that T & B had no intention of accepting the counterproposal; that it wished to revoke acceptance of the defective clarifiers; and that it would not allow FMC to make on-site repairs.

The next entry in this turbulent sweep-stakes was a cryptic communication from R.B. Parry, a Hart official, to Antunes under date of April 2, 1982. Parry purported therein to confirm a conversation with Antunes anent T & B's April 1 missive, and expressed the view that FMC should be held responsible for certain kinds of damages flowing from the clarifier problem.

Gotwols, rather than Antunes, responded to Parry on April 16, 1982. His reply was lengthy and in writing. In that dissertation, Gotwols stated in relevant part,

We were most dissappointed to receive your letter of April 2, 1982 and a copy of Tighe & Bond's letter dated April 1, 1982. We frankly feel that FMC has been dealing fairly and openly with both Hart Engineering and Tighe & Bond on the issue of repairs ... We have readily acknowledged that the missing welds constitute a defect in workmanship, which was covered by the FMC warranty and we have offered to make what we feel as the designers and manufacturers of the equipment are appropriate repairs ...

We made this offer even though our warranty expired one (1) year after shipment and under the terms of our warranty we could have requested that the equipment be returned to our factory, freight prepaid, so that the repairs could be accomplished in our own shop.

We have been prevented from making the necessary corrections and have no legal or moral obligation to pay interest on any monies owed to Hart by Tighe & Bond currently being retained. In addition to this, Hart Engineering has been retaining over $12,000.00 of FMC's money even though the equipment was put into operation four (4) months ago. It would certainly appear that interest at this prime rate would be applicable to these funds; however, again FMC did not make any such claim in

...