Messer Griesheim v. Cryotech of Kingsport

• Decision Date: 10 July 2003
• Docket Number: No. E2002-01728-COA-R3-CV.,E2002-01728-COA-R3-CV.
• Citation: 131 S.W.3d 457
• Parties: MESSER GRIESHEIM INDUSTRIES, INC. d/b/a MG Industries v. CRYOTECH OF KINGSPORT, INC., et al.
• Court: Tennessee Court of Appeals

131 S.W.3d 457

MESSER GRIESHEIM INDUSTRIES, INC. d/b/a MG Industries v. CRYOTECH OF KINGSPORT, INC., et al.

No. E2002-01728-COA-R3-CV.

Court of Appeals of Tennessee, at Knoxville.

February 13, 2003 Session.

July 10, 2003. Published Pursuant to Rule 11.

Gregory M. Leitner, Chattanooga, Tennessee; Mark G. Arnold, St. Louis, Missouri, and Arthur G. Seymour, Jr., Knoxville, Tennessee, for the Appellants, Messer Griesheim Industries, Inc. d/b/a MG Industries.

Pamela Blass Bracher, Chattanooga, Tennessee; William Randall Wilson, Chattanooga, Tennessee, and Robert C. Divine, Chattanooga, Tennessee, for the Appellee, Eastman Chemical Company.

HOUSTON M. GODDARD, P.J., delivered the opinion of the court, in which CHARLES D. SUSANO, JR., and D. MICHAEL SWINEY, JJ., joined.

OPINION

This appeal from the Knox County Circuit Court questions whether the Trial Court erred in granting a summary judgment in favor of the Appellee/Defendant, Eastman Chemical Company, with respect to various claims connected with the purchase and sale of contaminated carbon dioxide by the Appellant/Plaintiff, Messer Griesheim Industries, Inc., d/b/a MG Industries. We affirm in part, vacate in part and remand.

Cryotech of Kingsport, Inc., (hereinafter "Cryotech") operates gas purification facilities and produces food grade liquid carbon dioxide. The Appellee, Eastman Chemical Corporation (hereinafter "Eastman"), owns and operates a coal gasification plant in Kingsport. The Appellant, Messer Griesheim, Inc., d/b/a MG Industries (hereinafter "Messer"), is a distributor of liquid carbon dioxide, which it purchases in bulk and sells to customers for various food and medical uses.

In 1988 Cryotech and Eastman entered into an agreement pursuant to which Cryotech would purchase a carbon dioxide rich waste stream (hereinafter "feedgas") from Eastman which Eastman had, prior to that time, vented into the atmosphere. The price paid to Eastman by Cryotech under the agreement was determined by the concentration of carbon dioxide in the feedgas and the volume of feedgas to be purchased was measured by the amount of carbon dioxide Cryotech shipped to its customers.

At the same time it entered the feedgas agreement Cryotech also entered into a lease of land belonging to Eastman adjacent to Eastman's Kingsport plant and constructed thereon a carbon dioxide purification facility.

Cryotech's purification facility became operational in 1992 and Cryotech began selling carbon dioxide to Messer and other customers. Shortly after operations began Cryotech began experiencing problems due to chemical contaminants in the feedgas it was purchasing from Eastman. In spring of 1993, Eastman discovered the presence of hydrogen cyanide (hereinafter "HCN"), a toxic and potentially lethal substance, on Cryotech's catalyst and informed Cryotech of this finding. The feedgas agreement had not included HCN in a description designated "Typical Composition of Carbon Dioxide Gas" and deposition testimony indicates that Eastman had previously represented that it had never detected any cyanide in the feedgas. Because of resulting increased purification costs, Cryotech withheld payment for the feedgas and eventually owed Eastman an arrearage of over one million dollars.

Cryotech began monitoring the HCN content of the feedgas more than once a day and frequently discussed the results of such monitoring with Eastman representatives. In late 1993 Cryotech detected increasing levels of HCN and complained to Eastman about the increased cost of its removal. Eastman sought to determine the cause of the increased HCN levels and endeavored to assist Cryotech in identifying better and less expensive ways Cryotech could remove the HCN. Eastman also took some actions in its own facility to try to reduce the HCN content of the feedgas. In 1996 Eastman installed its own HCN analyzer to prepare for compliance with new EPA regulations; however, this analyzer exhibited various problems and was ultimately determined to be an unreliable measure of HCN levels.

In March of 1996 Messer began selling carbon dioxide obtained from Cryotech to a large manufacturer of carbonated beverages. Shortly thereafter, this manufacturer notified Messer that it was receiving customer complaints regarding the odor and/or taste of its beverages. Testing revealed the presence of HCN in Cryotech's carbon dioxide and thereafter Eastman discontinued supplying feedgas to Cyotech. Subsequently, several of Messer's other customers claimed that their product had been adulterated by the contaminated carbon dioxide and that beverage canisters containing the contaminated carbon dioxide were rendered unusable and had to be destroyed. Messer settled these claims in anticipation of litigation. Messer also incurred expenses in cleaning its own storage tanks and tanker cars which had contained the contaminated carbon dioxide. Messer incurred additional expenses as a result of the adulteration of uncontaminated carbon dioxide when it was mixed with carbon dioxide purchased from Cryotech. Altogether, Messer asserts that it has sustained damages totaling nearly eight million dollars as a result of injury to its own property and the property of its customers and that it has suffered additional damages "including but not limited to, business losses, substantial attorney's fees, expenses incurred in determining the origin of the hydrogen cyanide contamination, and the costs of cover." There are no allegations of personal injury in this case.

In June of 1996 Messer filed a complaint in the United States District Court for the Eastern District of Tennessee at Chattanooga against Cryotech seeking reimbursement of funds paid to satisfy claims of those customers of Messer who had purchased contaminated carbon dioxide. The complaint was amended in September of 1996 to include as defendants Eastman and Mellon Financial Services which provided financing for Cryotech's gas purification facility.¹

On February 4, 1997, Messer filed a complaint in the Circuit Court for Knox County which essentially duplicated the complaint filed in the District Court. The complaint alleged that the defendants were liable under theories of breach of contract, fraud, breach of warranty, misrepresentation, products liability, ultra-hazardous activity, negligence, gross negligence, recklessness, outrageous conduct, intentional concealment, violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and violations of the Consumer Product Safety Act. This complaint was removed to the United States District Court for the Eastern District of Tennessee at Knoxville where it was consolidated with the federal suit pending in Chattanooga. The District Court in Knoxville dismissed Messer's claims for violation of the Consumer Product Safety Act and the RICO Act and remanded the case to the Knox County Circuit Court.

In July of 1997 Eastman filed a motion to dismiss and for summary judgment or partial summary judgment in the Circuit Court. Hearing on that motion was held on October 6, 1997, at which time the Court granted the motion in part. In so doing, the Court dismissed Messer's product liability claim upon a finding that Messer had not sustained property damage. The Court also dismissed Messer's claim for breach of contract upon a finding that there was lack of privity between Eastman and Messer and Messer's claim for breach of warranty for lack of privity and/or property damage. Finally, the Court dismissed Messer's claim for violation of the TCPA.² Remaining matters under the motion were held in abeyance pending further discovery.

In October of 2001, Messer filed a motion requesting the Court to reconsider its October 1997 ruling granting Eastman's motion for summary judgment and, on January 15, 2002, Eastman filed a renewed motion for summary judgment requesting that the Court dismiss all remaining claims against it.

On April 18, 2002, the Court granted Eastman's renewed motion for summary judgment. The Court also granted Messer's motion to reconsider with respect to its claim against Eastman under the Tennessee Consumer Protection Act; however, on May 13, 2002, the Court granted Eastman's motion for summary judgment as to this claim also. Thereafter, Messer filed this appeal.

The issues presented for our review in this case are restated as follows:

1. Did the Circuit Court err in granting Eastman's motion for summary judgment as to Messer's tort claims upon grounds that such claims are barred by the economic loss doctrine?

2. Did the Circuit Court err in granting Eastman's motion for summary judgment as to Messer's fraud and concealment claims upon grounds that such claims are barred by the economic loss doctrine?

3. Did the Circuit Court err in granting Eastman's motion for summary judgment as to Messer's claim under the Tennessee Consumer Protection Act upon grounds that there was lack of privity between Eastman and Messer, that there was lack of evidence that Eastman engaged in unfair or deceptive conduct and that there was lack of evidence of causation?

4. Did the Circuit Court err in granting Eastman's motion for summary judgment as to Messer's tort and contract claims upon grounds that Eastman and Messer were not engaged in a joint venture?

5. Should the Circuit Court have applied Pennsylvania law in ruling upon Eastman's motion for summary judgment as to Messer's claims against Eastman for breach of warranty?

The standard of review with respect to a trial court's ruling on a motion for summary judgment is well settled. Summary judgment is only proper when the moving party has demonstrated that there are no genuine issues with respect to the material facts relevant to the claim or defense contained in the motion and the moving party is entitled to judgment as a matter of law. Byrd v. Hall, 847 S.W.2d 208, (Tenn.1993). Because our inquiry in determining the propriety of a summary judgment involves purely a question of law no...