Puckett, Taul & Underwood, Inc. v. Schreiber Corp., Inc.
| Decision Date | 14 July 1989 |
| Citation | 551 So.2d 979 |
| Parties | PUCKETT, TAUL & UNDERWOOD, INC., et al. v. SCHREIBER CORPORATION, INC. 87-1552. |
| Court | Alabama Supreme Court |
James C. Huckaby, Jr., and Charles A. McCallum III of Haskell, Slaughter & Young, Birmingham, for appellants.
W. Lee Thuston, Stephanie R. White, and Robert H. Sprain, Jr., of Sadler, Sullivan, Herring & Sharp, Birmingham, for appellee.
This is an appeal from a summary judgment in favor of Schreiber Corporation, which was made final pursuant to Rule 54(b), A.R.Civ.P. Puckett, Taul & Underwood, Inc. ("PTU"), is an engineering/construction firm specializing in the design and construction of water and wastewater treatment facilities. Schreiber Corporation, Inc. ("Schreiber"), sold two components of a wastewater treatment system known as a counter current aeration system ("CCAS") to PTU for use in a sewage treatment plant on Ft. Morgan peninsula in Baldwin County, Alabama. The sewage treatment plant failed to treat the sewage adequately.
Schreiber is one of a number of defendants named by PTU in a complaint filed on November 6, 1986, in the Circuit Court of Jefferson County, Alabama, seeking a declaratory judgment and an award of monetary damages. Also named in this suit as defendants were Fort Morgan Authority Sewer Service ("FMASS"), South Alabama Sewer Service Corporation ("SASS"), and Phillip W. Bass and Nell Bass (owners of substantially all of the outstanding capital stock of FMASS and SASS). The complaint prayed in pertinent part for "[A] declaratory judgment against Schreiber to the effect that the failure of aeration equipment furnished by Schreiber to achieve the oxygen transfer specified in PTU's process design for the STP (sewage treatment plant) constitutes a breach of warranty for which Schreiber is and will be liable to PTU for and damages sustained by PTU as a proximate result thereof."
In June 1984, PTU learned that a Baldwin County developer, Phillip Bass, was planning to construct a 0.6 million gallon per day ("MGD") capacity sewage treatment plant on the Ft. Morgan peninsula. Bass requested that PTU submit a "turn-key" bid for both the design and the construction of the proposed sewage treatment plant. PTU contacted Wynn C. Echols, the president of Jim House and Associates (a manufacturer's representative for Schreiber), concerning a CCAS. A CCAS treats wastewater by moving air diffusers through the waste as opposed to the conventional process by which the wastewater passes through an aeration device. Several components constitute a CCAS, including aeration equipment, an aerated grit and removal system, a screen, clarification equipment, and a screw pump for return sludge.
On July 14, 1984, Schreiber submitted a proposal to PTU, via Echols, which was based upon information provided by PTU, and which specified a 0.6 MGD facility. The literature included six different models of equipment configurations for a CCAS and set out standard design criteria applicable to each option. Blank spaces were provided in which PTU could designate its preferred design criteria. PTU's president, James Puckett, made several changes in the proposal. He deleted five of the seven component parts listed in the Schreiber proposal for a CCAS. The mechanically cleaned screen and the grit removal system were ordered from a supplier other than Schreiber, the grease removal system was eliminated by PTU, and PTU changed the screen pump and return sludge system to centrifugal pumps ordered from another manufacturer. Thus, PTU did not buy a CCAS from Schreiber. PTU purchased aeration tank equipment, final clarifier equipment, and air blowers from Schreiber.
The developer, Phillip Bass, who had first specified a 0.6 MGD system, requested that PTU explore the feasibility of modifying the sewage treatment plant to achieve a capacity of 1.2 MGD. PTU retained the design services of AWARE corporation, which specializes in environmental engineering, to ascertain the feasibility of this modification. The goal was to determine whether sewage flows of 1.2 MGD could be treated with an extended aeration process to meet the effluent levels required by the Alabama Department of Environmental Management ("ADEM").
On August 8, 1984, PTU received the AWARE generic process design, establishing design flows for the volume of wastewater and design concentrations for the strength of specific pollutants, which was forwarded to Schreiber via Echols. On August 9, 1984, Schreiber prepared a proposal for PTU that incorporated PTU's and AWARE's design specifications. On August 10, 1984, FMASS contracted with PTU to design, engineer, and construct a sewage treatment plant on the Fort Morgan peninsula, with the capacity for 1.2 MGD. On August 14, 1984, PTU and Schreiber executed the sales agreement, in which Schreiber agreed to sell to PTU the aeration and clarification components of a CCAS for $170,000. The sales agreement specified that shipment "is estimated 12 weeks after receipt in Seller's office of complete approved submittal data." On August 17, 1984, Schreiber supplied PTU with a revised proposal, which was approved by PTU.
The Schreiber equipment was delivered on February 1, 1985, and was subsequently installed by Schreiber personnel in March 1985. Construction on the plant was substantially completed by April 1, 1985. From April 1, 1985, until April 20, 1986, the plant had little or no sewage influent to treat. On April 20, 1986, the plant went into operation and operated successfully. In June 1986 the volume increased substantially when the waste of the entire city of Gulf Shores was diverted into the plant, and the plant failed.
PTU then contacted AWARE corporation, which sent a representative, Kevin Torrens, to investigate the problem. He determined that part of the problem was inadequate oxygen transfer, and he determined that the facility was "underdesigned." PTU filed suit, contending that Schreiber is at fault for this underdesign, while Schreiber points out that PTU and AWARE were the project designers, and argues that it simply provided components based on their specifications.
At issue here are PTU's allegations that the aeration equipment that Schreiber supplied to PTU failed to achieve the oxygen transfer specified in PTU's process design, that the alleged malfunctioning of Schreiber's equipment constituted a breach of design warranties, and that PTU suffered damages as a result thereof. Schreiber responded to the complaint by denying that any design warranties had been made, by averring that PTU had failed to give it notice of breach of warranty as is required by Code 1975, § 7-2-607(3), and by averring that the only agreement between the parties was the sales agreement signed August 14, 1984, which clearly and conspicuously excluded express or implied warranties other than a one-year warranty that Schreiber's equipment would be free from defects in material and workmanship.
In November 1987 defendants FMASS, SASS, and Phillip and Nell Bass, filed a counterclaim against PTU, claiming damages in the amount of $1.2 million for the failed sewage treatment plant. PTU denied the allegations of that counterclaim raised affirmative defenses, and filed a third-party complaint in January 1988 against Schreiber. PTU filed a "fifth amendment to the original complaint/first amendment to the third-party complaint" on May 13, 1988, alleging fraudulent misrepresentation and fraudulent concealment by Schreiber. Schreiber countered that amendment with a motion to strike, or, in the alternative, for summary judgment.
The parties then submitted briefs and affidavits in support of their positions, and counsel presented oral argument. On August 12, 1988, the trial court granted Schreiber's motion to strike and its amended motion for summary judgment, and entered a final judgment for Schreiber pursuant to Rule 54(b) A.R.Civ.P., on all of PTU's claims against Schreiber alleging negligence, breach of warranty, fraud, and misrepresentation. PTU appeals from this judgment.
We must determine whether the trial court erred in entering Schreiber's summary judgment. Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56, A.R.Civ.P. Although several issues are raised in this appeal, the dispositive question is whether the trial court erred in interpreting the sales agreement signed by the parties on August 14, 1984, as entitling Schreiber to a judgment as a matter of law. We hold that the trial court was correct, and we affirm the judgment.
The sales agreement states (in pertinent part) as follows:
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