Laidlaw Environmental Servs.

• Decision Date: 18 September 1996
• Docket Number: C/A No. 7:95-473-21.
• Citation: 966 F.Supp. 1401
• Parties: LAIDLAW ENVIRONMENTAL SERVS., (TOC), INC., Plaintiff, v. HONEYWELL, INC., Defendant.
• Court: U.S. District Court — District of South Carolina

966 F.Supp. 1401

LAIDLAW ENVIRONMENTAL SERVS., (TOC), INC., Plaintiff, v. HONEYWELL, INC., Defendant.

C/A No. 7:95-473-21.

United States District Court, D. South Carolina, Spartanburg Division.

September 18, 1996.

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Kellum Wright Allen, Kenneth W. Ebener, West Columbia, SC, for plaintiff.

John A. Hagins, Jr., Greenville, SC, Brad P. Engdahl, Matthew L. Woods, Randall Tietjen, Minneapolis, MN, for defendant.

ORDER

TRAXLER, District Judge.

This case presents a study in the battle of the forms between two sophisticated corporate entities that, after thorough negotiations, arrived at a contract for the purchase of a computer control system. After two months of labored negotiation, the parties entered into a contract that provided Plaintiff Laidlaw Environmental Services (TOC), Incorporated, ("Laidlaw"), would purchase a computer control system from Defendant Honeywell, Incorporated ("Honeywell"). Despite this negotiated contract, in which Honeywell's disclaimer of warranties and limitation of remedies prevailed, Laidlaw now asserts that a pro forma purchase order, with pre-printed terms appearing on the reverse side, that it sent to Honeywell prior to the negotiations that culminated in the contract constitutes the agreement between the parties. According to Laidlaw, Honeywell's acceptance of this purchase order nullified the negotiated contract because of the pre-printed terms appearing on the reverse side of the purchase order, which purport to declare the parties' rights and remedies. In essence, therefore, Laidlaw urges the court to hold that two months of intense negotiations between counsel for sophisticated corporate entities were abrogated by Honeywell's pro forma reference to the purchase order in a two-sentence letter confirming the contract.

Honeywell posits that its reference to the purchase order did not form a new contract, but argues that the parties' written contract memorializing their bargained-for terms prevails. Based on the language in the contract that disclaimed warranties and limited Laidlaw's remedy to repair or replacement of the computer control system, Honeywell posits further, there are no genuine issues of material fact and it is entitled to judgment as a matter of law. Accordingly, Honeywell has moved the court for summary judgment pursuant to Federal Rule of Civil Procedure 56(c). Concluding, as a matter of law, that the purchase order and letter of reference did not create a contract between the parties and concluding further that the plain language of the written contract disclaims warranties and limits Laidlaw to the exclusive remedy or repair or replacement, the court grants Honeywell's motion for summary judgment respecting all of Laidlaw's claims.

I.

A.

Laidlaw operates a hazardous waste incineration facility in Roebuck, South Carolina. In 1991, Laidlaw desired to replace the aging computer control system that operated its facility, and in this regard, hired Lockwood Greene Engineers, Incorporated, ("Lockwood Greene"), an engineering firm, to prepare and issue a request for proposal ("RFP") to provide prospective bidders with "performance requirements and specifications" for a computer control system. Among the separate specifications for the system, the RFP provided that "[t]he Seller shall be responsible for becoming familiar" with certain codes and standards, including the requirements of the EPA and "insure full compliance" with those codes and standards. In addition, the RFP provided for certain "Instructions, Conditions and Terms" ("Instructions") for prospective bidders. These Instructions included terms and conditions that were to govern an eventual agreement with any prospective seller. Any exceptions to the Instructions were to be clearly noted on a bidder's proposal, in which case such exceptions were to be construed as a counteroffer.

On July 2, 1991, Lockwood Greene issued the RFP to Honeywell, which manufactures control systems that monitor and control various industrial processes. On July 18, 1991, Honeywell responded to the RFP with a written proposal to provide Honeywell's "TDC 3000 Distributed Control System" ("TDC 3000 System"). In responding to the RFP, Honeywell expressly stated that its TDC 3000 System was "not offered in conformance with particular standards or codes, U.L., NFPA, EPA, etc., except as required by the United States Federal Law at the time of manufacture," and "consequently, strict compliance with the standards referred to [by the RFP was] not offered or implied." Material for purposes of this suit, Honeywell's response provided that it was offering its TDC 3000 System with certain express exceptions to Lockwood Greene's Instructions and subject to applicable sections of Honeywell's own "General Terms and Conditions," which were essentially disclaimers and limitations of remedy. In addition, Honeywell's response provided that acceptance of its terms would not be altered by subsequent purchase orders.

Thus, Honeywell excepted to many of Lockwood Greene's terms, consistently seeking to disclaim warranties and to limit Laidlaw's remedy to repair or replacement of the TDC 3000 System. Specifically, Honeywell expressly excepted to Article 12 of Lockwood Greene's Instructions with Article 6 of Honeywell's "General Terms and Conditions." Under the bold-lettered heading "WARRANTY," Article 6 provided that Honeywell would take all reasonable steps to remedy, free of charge, any hardware design faults or software errors. Other than this warranty to repair or replace the hardware and software on the TDC 3000 System, Article 6 expressly disclaimed all other warranties:

The foregoing warranty shall constitute the exclusive remedy of Customer and the exclusive liability of Honeywell for any breach of any warranty related to the Equipment or Software supplied hereunder.

Additionally, Article 6 concluded with a disclaimer in capital letters, distinct in size from the other print on the document:

THE WARRANTY SET FORTH HEREIN IS EXCLUSIVE, AND HONEYWELL EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

Not only did Honeywell desire to disclaim warranties, but it also sought to limit Laidlaw to the exclusive remedy of repair or replacement of the TDC 3000 System. In this respect, Honeywell specifically excluded any incidental or consequential damages that might flow from any defects in the TDC 3000 System. Honeywell's express exceptions to Lockwood Greene's Instructions also included a requirement that any contract for the sale and purchase of the TDC 3000 System would include the limitation of remedy as set forth in Article 8, which provided in the same print as Article 6:

LIMITATION OF LIABILITY

IN NO EVENT SHALL HONEYWELL BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM HONEYWELL'S PERFORMANCE, OR FAILURE TO PERFORM, PURSUANT TO THE CONTRACT, OR THE FURNISHING, PERFORMANCE, OR USE OF ANY EQUIPMENT OR SOFTWARE SOLD PURSUANT HERETO, WHETHER DUE TO A BREACH OF CONTRACT, BREACH OF WARRANTY, THE NEGLIGENCE OF HONEYWELL, OR OTHERWISE.

Lest these disclaimers and limitations on remedy be sacrificed in a battle of the forms, Honeywell explicitly demanded any pro forma acceptance of Laidlaw's purchase orders not operate to exclude the disclaimers and limitation of remedies:

PROPOSAL ACCEPTANCE

All Honeywell proposals, all acceptance of Purchasers' orders, and all sales by Honeywell are expressly limited to, and expressly made conditional upon the Purchaser's acceptance of and assent to the General Terms and Conditions of Sales as set forth herein, not withstanding receipt of, or acknowledgment of, the Purchaser's order form or specifications containing additional or different provisions, or conflicting oral representations by any agent or employee of Honeywell.

The parties could not rotely accept the form contract of the other, so they commenced negotiations to achieve a mutually acceptable compromise. On August 13, 1991, Laidlaw sent Honeywell a Letter of Intent indicating that Laidlaw intended to purchase the computer system from Honeywell provided that the parties could agree upon all terms and conditions. The letter of intent also stated that the specific components for the system would be listed on a final purchase order in approximately two weeks.

Also, on August 29, 1991, during negotiation of the contract and prior to the contract's being memorialized, Laidlaw mailed a purchase order to Honeywell that provided in conspicuous lettering:

PLEASE FURNISH THE MATERIAL AND/OR SERVICE LISTED HEREON, SUBJECT TO THE TERMS AND CONDITIONS ON THE FACE AND BACK HEREOF AND MADE A PART OF THIS ORDER, ALL OF WHICH SHALL CONSTITUTE A CONTRACT BETWEEN U.S. UPON ACCEPTANCE OF THIS ORDER.

The reverse side of this purchase order provided in pertinent part:

ACCEPTANCE. Any of the following acts by the supplier shall constitute acceptance of this order and all of its terms and conditions.... Any terms of condition stated by the Supplier in any prior proposal or in acknowledging or otherwise accepting this order shall not be binding on the Buyer unless specifically accepted in writing.

INSPECTION. No inspection ..., tests, approval, or acceptance of items or services ordered shall relieve the Supplier from responsibility for defects or other failures to meet the requirements of this order. Rights granted to Buyer in this Article 6 are in addition to any other rights or remedies provided elsewhere in this order or in law.

WARRANTIES. In addition to any other express or implied warranties, the Supplier warrants the items or services furnished pursuant to this order will be (i) free from defects in workmanship and material, (ii) free from defects in design, except to the extent that such items comply with detailed designs provided by...