Mead Corp. v. Abb Power Generation Inc.
| Decision Date | 18 April 2001 |
| Docket Number | No. 00-351.,00-351. |
| Parties | The MEAD CORPORATION, et al., Plaintiffs, v. ABB POWER GENERATION INC., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Daniel F. Edwards, Thompson, Hine & Flory, Columbus, OH, for Plaintiffs.
Larry H. James, Crabbe, Brown, Jones, Potts & Schmidt, Columbus, OH, for Defendants.
This contract action is brought by The Mead Corporation ("Mead"), Factory Mutual Insurance Company ("Factory Mutual"), and National Union Fire Insurance Company of Pittsburgh ("National Union") against ABB Alstom Power Incorporated ("ABB Alstom"), formerly known as ABB Power Generation Incorporated ("ABB Power"). Plaintiffs originally filed their complaint in state court, but defendant removed the action to this court pursuant to 28 U.S.C. § 1441 on the basis of diversity jurisdiction. Plaintiffs allege that defendant breached a 1992 contract when an upgraded turbine failed for a second time in Mead's Chillicothe, Ohio plant. Plaintiffs assert claims for breach of contract and indemnification. This matter is before the court on defendant's motion for summary judgement, which is ripe for ruling.
Under Fed.R.Civ.P. 56(c), summary judgment is proper "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 and that the moving party is entitled to a judgment as a matter of law." See LaPointe v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir.1993); Osborn v. Ashland County Bd. of Alcohol, Drug Addiction & Mental Health Servs., 979 F.2d 1131, 1133 (6th Cir.1992)(per curiam). The party that moves for summary judgment has the burden of showing that there are no genuine issues of material fact in the case at issue, LaPointe, 8 F.3d at 378, which may be accomplished by pointing out to the court that the nonmoving party lacks evidence to support an essential element of its case. Barnhart v. Pickrel, Schaeffer & Ebeling Co., L.P.A., 12 F.3d 1382, 1389 (6th Cir. 1993). In response, the nonmoving party must present "significant probative evidence" to demonstrate that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 339-40 (6th Cir. 1993). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis added). See generally Booker v Brown & Williamson Tobacco Co., Inc., 879 F.2d 1304, 1310 (6th Cir.1989).
In reviewing a motion for summary judgment, "this Court must determine whether `the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir.1993) (quoting Anderson, 477 U.S. at 251-53, 106 S.Ct. 2505). The evidence, all facts, and any inferences that may permissibly be drawn from the facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). See also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). However, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. See also Gregory v. Hunt, 24 F.3d 781, 784 (6th Cir.1994). Finally, a district court considering a motion for summary judgment may not weigh evidence or make credibility determinations. Adams v. Metiva, 31 F.3d 375, 378 (6th Cir.1994).
The facts are undisputed. Mead and ABB Process Automation Inc. ("ABB Process") entered into a contract in January, 1992, in which ABB Process was to provide equipment, materials, and designs to upgrade the No. 12 turbine at Mead's Chillicothe, Ohio plant. Before any work was commenced, Mead and ABB Process entered into an agreement, drafted by Mead, entitled the "General Terms and Conditions for Contracts and Purchase Orders for Purchase of Equipment" in July, 1993. Complaint at ¶ 5.1
In December, 1994 ABB Alstom assumed the contractual obligations from ABB Process. Defendant continued the work on the No. 12 turbine and finished in December, 1995 by installing fan blades of a greater pitch. After three months of use, the No. 12 turbine suffered a fan blade failure. The cause of this failure was determined to be improper pin fitting. The parties have settled all differences regarding that failure. On March 6, 1996 the parties entered into a written modification of the original contract to cover the repairs that defendant made after the turbine failure. Under the terms of the written modification, the repair work was to be under warranty for an additional twelve months following the startup of the turbine. The No. 12 turbine was put back into service on March 12, 1996.
A second turbine failure occurred on January 4, 1998. The cause was once again determined to be improper pin fitting. Defendant alleges that the parties attempted to reach a settlement for this failure, but these efforts failed. As a result, Factory Mutual and National Union, Mead's insurance carriers, each paid Mead $550,212 for partial assignment of Mead's rights against defendant for "damages including lost profits, production losses, and business interruptions." Complaint at ¶ 14.
The parties acknowledge that Ohio law governs this action. "If a contract is clear and unambiguous, then its interpretation is a matter of law and there is no issue of fact to be determined." Island Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, 15 Ohio St.3d 321, 474 N.E.2d 271, 272 (1984). The court finds that this contract is clear and unambiguous.
Plaintiffs claim that the January 4, 1998 fan blade failure was a result of defendant's breach of contract. Defendant argues that it is entitled to summary judgement on plaintiffs' breach of contract claim because the claim is actually a disguised breach of warranty claim. For the reasons set forth below, the court agrees.
Plaintiffs labeled their first cause of action "breach of contract," and in their memorandum contra defendant's motion for summary judgment state, "[n]owhere in the Amended Complaint do the Plaintiffs assert a cause of action for breach of warranty." Memorandum Contra at p. 2. However, courts do "not rely solely on labels in a complaint, but [must] probe deeper and examine the substance of the complaint." Minger v. Green, 239 F.3d 793, 799 (6th Cir.2001). Indeed, the "label which a plaintiff applies to a pleading does not determine the nature of the cause of action which he states." Id. (quoting United States v. Louisville & Nashville R. Co., 221 F.2d 698, 701 (6th Cir.1955)). Examining the substance of plaintiffs' complaint in the instant case, it is clear that plaintiffs' breach of contract claim is, in reality, a thinly disguised breach of warranty claim. Why disguised? Because the warranty had expired at the time of the January 4, 1998 fan blade failure.
The first contract entered into by the parties, entitled "Design, Construction, and Installation Agreement," was executed in January, 1992. See Motion for Summary Judgment, Exh. A. In August, 1993 the parties entered into a subsequent contract, entitled, "General Terms and Conditions for Contracts and Purchase Orders For Purchase of Equipment." See id., Exh. B. On January 3, 1995 the parties entered into a supplemental agreement, the purpose of which was to alter several portions of the August, 1993 contract. See id., Exh. C. Section 5 of the supplemental agreement replaced the warranty provision of the August, 1993 contract in its entirety. See Exh C. at p. 2. A second supplemental agreement was entered into on January 16, 1995. See Motion for Summary Judgment, Exh. H. After the March, 1996 fan blade failure, the parties entered into the written modification of their earlier contracts. See id., Exh. D. This modification was entered into "to modify [t]he original commercial terms between ABB Power Generation and the Mead Corporation because of turbine equipment failure resulting in warranty repairs[.]" Id.
The March, 1996 written modification states, in pertinent part:
The following changes will be incorporated in and modify the original contract.
1. ABB will install replacement fan blades and make other necessary repairs to bring the turbine generator to the prefailure condition at their cost. ABB will assure total integrity of installation and warrant the rebuilt turbine generator for a period of one (1) year after completeion [sic] of warranty repairs and start-up. The warranty will be per terms set forth in the "Original Terms and Conditions for Contracts and Purchase Orders for Purchase of Equipment" between ABB Process Generation, Incorporated and The Mead Corporation signed and dated July 29, 1993 Section 4.0 Warranty.
Id. (emphasis added). Thus, the March, 1996 installation and repairs were under warranty for a period of one year. As stated in the written modification, it was governed by the warranty provision set forth in the August, 1993 contract(Exh. B)3, which was modified on two occasions, the last of which was January 16, 1995 (Exh. H). The warranty provision states, in pertinent part:
4.1 Equipment supplied by seller is warranted against defects in material and workmanship for twelve (12) months after installation or eighteen (18) months following delivery to TMC [The Mead...
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