Omni United States, Inc. v. Parker-Hannifin Corp.

• Decision Date: 08 August 2013
• Docket Number: Civil Action No. H–10–4728.
• Citation: 964 F.Supp.2d 805
• Parties: OMNI USA, INC., Plaintiff, v. PARKER–HANNIFIN CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Texas

964 F.Supp.2d 805

OMNI USA, INC., Plaintiff,

v.PARKER–HANNIFIN CORPORATION, Defendant.

Civil Action No. H–10–4728.

United States District Court,

S.D. Texas,

Houston Division.

Aug. 8, 2013.

Daniel Amando Ruiz, Law Office of Daniel A. Ruiz, Katy, TX, for Plaintiff.

Jeremy Richard Stone, Mehaffy Weber PC, Houston, TX, for Defendant.

OPINION AND ORDER

MELINDA HARMON, District Judge.

The above referenced action alleges that Defendant Parker–Hannifin Corporation (“Parker”) improperly designed, manufactured, marketed, and serviced defective industrial oil seals sold to Plaintiff Omni USA, Inc. (“Omni”) specifically for use in its gearboxes, sold as part of agricultural irrigation systems to a third party. The Court's Opinion and Order of March 27, 2012, 2012 WL 1038642 (instrument # 26) dismissed with prejudice claims brought by Omni against Parker for fraud, fraudulent inducement, negligent misrepresentation, and violations of the Deceptive Trade Practices Act. Omni's remaining claims against Parker are for breach of express warranties under § 2.313 of the Texas Business and Commerce Code, breach of implied warranties of merchantability and fitness for a particular purpose under §§ 2.314 and 2.315 of the Texas Business and Commerce Code, and breach of performance contract as defined under §§ 2.201(c), 2.204, and 2.206 of the Texas Business and Commerce Code.

Pending before the Court are the following motions: (1) Parker's motion for partial summary judgment (# 33) on Omni's remaining claims on the grounds that there is no defect or no evidence of any defect in Parker's seals; (2) Parker's second motion for summary judgment (# 36) on all of Omni's claims; (3) Parker's motion for partial summary judgment against Omni on Parker's counterclaims ¹ for unpaid invoices (# 37); and (4) Parker's motion for spoliation instruction (# 42).

After reviewing the briefs, the record and the applicable law, for the reasons stated below the Court concludes that Parker's three motions for partial summary judgment should be granted as indicated in this document.

Because Omni's response to # 37 refers the Court to its responses to Parker's motions for partial summary judgment as evidence(# 47, p. 3) to support its affirmative defenses to Parker's counterclaims, the Court will first address Parker's two motions for partial summary judgment (# 33 and 36).

I. Standard of Review

Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when, viewing the evidence in the light most favorable to the nonmovant, the court determines that “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” A dispute of material fact is “genuine” if the evidence would allow a reasonable jury to find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Initially the movant bears the burden of identifying those portions of the pleadings and discovery in the record that it finds demonstrate the absence of a genuine issue of material fact and that the movant is entitled to summary judgment as a matter of law; the movant may, but is not required to, negate elements of the nonmovant's case to prevail on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.1998).

If the movant meets its burden and points out an absence of evidence to prove an essential element of the nonmovant's case on which the nonmovant bears the burden of proof at trial, the nonmovant must then present competent summary judgment evidence to support the essential elements of its claim and to demonstrate that there is a genuine issue of material fact for trial. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d 698, 712 (5th Cir.1994). “[A] complete failure of proof concerning an essential element of the nonmoving party's case renders all other facts immaterial.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The nonmovant may not rely merely on allegations, denials in a pleading or unsubstantiated assertions that a fact issue exists, but must set forth specific facts showing the existence of a genuine issue of material fact concerning every element of its cause(s) of action. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). Conclusory allegations unsupported by evidence will not preclude summary judgment. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 713;Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996). “ ‘[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment ....’ ” State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir.1990), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Nor is the ‘mere scintilla of evidence’ sufficient; ‘there must be evidence on which the jury could reasonably find for the plaintiff.’ ” Id., quoting Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505. The Fifth Circuit requires the nonmovant to submit “ ‘significant probative evidence.’ ” Id., quoting In re Municipal Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir.1982), and citing Fischbach & Moore, Inc. v. Cajun Electric Power Co–Op., 799 F.2d 194, 197 (5th Cir.1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir.1999), citingCelotex, 477 U.S. at 322, 106 S.Ct. 2548, and Liberty Lobby, 477 U.S. at 249–50, 106 S.Ct. 2505.²

The court must consider all evidence and draw all inferences from the factual record in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 712–13.

II. Relevant Substantive Law

Parker's motions for partial summary are grounded in several provisions of the Texas Business and Commerce Code.³

Breach of Contract

Under the UCC, a breach of warranty, which is created when a seller makes an affirmation of fact or a promise to the purchaser that relates to the sale of a product and warrants a conformity to the affirmation or promise, is distinguishable from a breach of contract based on whether the buyer has finally accepted the goods ⁴: “[w]hen a party fails to deliver the goods as promised, a breach of contract occurs[,] but when a seller delivers nonconforming goods, it is a breach of warranty.” Structural Metals, Inc. v. S & C Elec. Co., No. SA–09–CV–984–XR, 2012 WL 930816, *3 (W.D.Tex. Mar. 19, 2012) (and cases cited therein), citing Chilton Ins. Co. v. Pate & Pate Enters., 930 S.W.2d 877, 890 (Tex.App.-San Antonio 1996, writ denied); in accord, Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d 894, 897 (Tex.App.-Houston [1st Dist.] 2002, no pet.); Head v. U.S. Inspect DFW, Inc., 159 S.W.3d 731, 746 (Tex.App.-Fort Worth 2005). See generally Southwestern Bell Telephone Co. v. FDP Corp., 811 S.W.2d 572, 576 (Tex.1991) (“The UCC recognizes that breach of contract and breach of warranty are not the same cause of action. The remedies for breach of contract are set forth in [Texas Business and Commerce Code] section 2.711, and are available to a buyer ‘[w]here the seller fails to make delivery....’ The remedies for breach of warranty are set forth in section 2.714,⁵ and are available to a buyer who has finally accepted goods, but discovers the goods are defective in some manner. Tex. Bus. & Com.Code Ann. § 2.714, § 2.711 (Comment 1).”)

Breach of Contract

Section 2.204, “Formation in General,” provides,

(a) A contract or sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(b) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(c) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Section 2.206, “Offer and Acceptance in Formation of Contract,” recites,

(a) Unless otherwise unambiguously indicated by the language or circumstances

(1) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;

(2) an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods, but such a shipment of non-conforming goods does not constitute an acceptance if the seller seasonably notifies the buyer that the shipment is offered only as an accommodation to the buyer.

(b) Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

To recover for breach of contract, a plaintiff must prove (1) the existence of a valid contract, (2) performance or tendered performance by the plaintiff; (3) breach by the defendant, and (4) harm to the plaintiff as a result of the breach. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 771 (Tex.App.-Corpus Christi 2001, no pet.).

Section 2.201 addresses “Formal Requirements; Statute of Frauds,” and recites,

(a) Except as otherwise provided in this section a contract for the sale of goods for the price of...