Vermont Plastics, Inc. v. Brine, Inc.
| Citation | 79 F.3d 272 |
| Decision Date | 21 March 1996 |
| Docket Number | D,No. 435,435 |
| Parties | 29 UCC Rep.Serv.2d 812 VERMONT PLASTICS, INC., Plaintiff, v. BRINE, INC., Defendant. VERMONT PLASTICS, INC., Third-Party Plaintiff-Appellant, v. NEW ENGLAND PLASTIC SERVICES COMPANY, Third-Party Defendant/Fourth-Party Plaintiff, Plastic Materials Company, Inc., Fourth-Party Defendant-Appellee. ocket 95-7180. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Christopher D. Roy, Downs Rachlin & Martin, Burlington, Vermont, for third-party plaintiff-appellant.
Robert S. DiPalma, Paul, Frank & Collins, Inc., Burlington, Vermont, for fourth-party defendant-appellee.
Before: MESKILL, ALTIMARI, and McLAUGHLIN, Circuit Judges.
In this complex commercial litigation, the only matter before us is the third-party plaintiff-appellant Vermont Plastics, Inc.'s ("VPI's") appeal from a judgment of the United States District Court for the District of Vermont, Fred I. Parker, then-Chief Judge: 1 (1) granting fourth-party defendant-appellee Plastic Materials Company, Inc.'s ("PMC's") motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a) on VPI's claim against PMC for negligent misrepresentation, and (2) denying VPI's motion to amend its third-party complaint to conform the pleadings to the evidence adduced at trial pursuant to Fed.R.Civ.P. 15(b), thereby reinstating its previously dismissed claim against PMC for breach of express warranty. Because the district court's determinations are fully supported by the record and are proper as a matter of law, we affirm the judgment of the district court.
In 1986, VPI entered into a contract with Brine, Inc. ("Brine") whereby VPI agreed to manufacture plastic lacrosse stick heads ("heads") for Brine. The contract specified that VPI was to use only Zytel ST-801 Nylon ("ST-801") in making the heads, and use of any other plastic to make the heads required Brine's prior authorization and testing of the material. ST-801 is a brand of "super tough" nylon manufactured by E.I. Du Pont De NeMours & Co. ("DuPont") from generic 6/6 nylon resin. In the plastic industry, nylon is considered "super tough" if it exhibits certain minimum tensile and impact strengths measured on a standardized test of strength known as the "notched Izod." Besides meeting the minimum tensile and impact strengths for super tough nylon, ST-801 is configured to be flexible by dispersing specialized rubber particles throughout the nylon in small concentrations. The recipe for making ST-801 is Dupont's intellectual property. Dupont manufactures the ST-801 nylon into pellets, and then adds color and other additives to the pellets.
VPI commenced manufacturing heads for Brine, and in the fall of 1987 experienced delays in receiving colored ST-801 directly from DuPont. In response to the delay, it contacted New England Plastic Services ("NEPS"), a plastics distributor that acts as a jobber for various plastic product manufacturers and compounders. Compounders can also add color and additives to ST-801 purchased from Dupont, for distribution to manufacturing companies like VPI who mold the pellets into plastic products for sale to end users. According to NEPS, VPI stated that it had obtained a job requiring super tough nylon, and was having difficulty obtaining colored nylon in a timely fashion. VPI made no mention at the time that only ST-801 could be used to satisfy its super tough nylon needs. Accordingly, NEPS arranged for several sample shipments to VPI of a super tough nylon made by a compounder, PMC, designated as "6608."
By letter dated March 15, 1988, VPI sent NEPS lacrosse stick head samples requesting that they be matched in variously-colored ST-801. NEPS redacted the letter by removing any references to VPI, and forwarded it and the head samples to PMC. Based on PMC's previous representations to NEPS that 6608 was of the same or better quality as ST-801 and that the two nylons could be used interchangeably, NEPS believed that VPI's needs for a super tough nylon in making the heads could be met with PMC's 6608 nylon. Soon afterwards, NEPS gave a price quotation to VPI for the colored nylon, indicating in its letter that the quoted prices were for "ST-801/6608." Despite this ambiguous reference to the product, VPI officials thought "6608" was merely the compounder's code for the color it added to DuPont's ST-801, and believed that the price quotes were for ST-801. NEPS's only explanation for the reference to 6608 as "ST-801/6608" was that it was "a mistake."
VPI agreed to order the 6608 from NEPS, and started receiving shipments in 55 pound bags labelled "Nylon 6/6" and "Super Tough." Although the majority of shipments came from NEPS, some bags were shipped directly from PMC. According to VPI, because ST-801 was called "super tough" at VPI, VPI officials assumed that the shipments of bags labelled "Super Tough" contained ST-801.
Quality control problems soon arose with the 6608 nylon. According to VPI's production manager, heads that were made with the 6608 nylon failed impact strength tests more often than heads made with ST-801. In February 1989, VPI asked NEPS to conduct testing on the 6608 material it was getting. One month later, NEPS forwarded PMC's notched Izod testing results of the 6608 nylon to VPI. The stated subject of the memorandum accompanying the results was: "Physical Properties of 6/6/ Nylon," and the text read "[e]nclosed are the physical test dates on the re-made lots of Super Tough nylon." The testing data indicated that the material had the physical properties of super tough nylon. Despite the 6608 testing results, VPI continued to experience quality problems with the 6608. In September of 1989, at NEPS's request, PMC shipped an additive to VPI to be mixed into the 6608 that allegedly would increase the nylon's flexibility. The last shipment of 6608 that PMC made to VPI was in January, 1990. Some of this shipment was returned as unsatisfactory.
Eventually, Brine also experienced a high breakage rate on the lacrosse stick heads it sold that had been manufactured by VPI. It forwarded a sample of the heads to Dupont for testing, and was informed that the nylon used by VPI was not ST-801. When Brine confronted VPI with this information in May, 1991, VPI explained it did not know that 6608 was anything other than ST-801 until that time. Thereafter, Brine ceased doing business with VPI, including making further payments to VPI for back invoices of heads sent to Brine.
VPI commenced an action in Vermont state court against Brine to recover the money it was owed in unpaid invoices. Brine removed the action to the federal district court on the basis of the parties' diversity of citizenship, and counterclaimed against VPI on a variety of legal theories, including breach of contract, breach of express warranty, and breach of implied warranty. It also asserted third-party claims against NEPS and PMC based on negligence, negligent misrepresentation, and breach of express and implied warranty. VPI, in its capacity as a counter-defendant, asserted identical third- party claims against NEPS and PMC. Finally, NEPS also asserted cross-claims against PMC, alleging negligence and negligent misrepresentation.
Prior to trial, NEPS and PMC moved for summary judgment to dismiss the third-party claims against them. The district court, in a thorough opinion familiarity with which is presumed, granted PMC's and NEPS's motions and dismissed Brine's third-party negligence, negligent misrepresentation and implied warranty claims. See Vermont Plastics, Inc. v. Brine, Inc., 824 F.Supp. 444, 447-454 (D.Vt.1993). The district court allowed Brine's breach of express warranty claim to go forward subject to renewal of NEPS's and PMC's motion upon the completion of discovery. See id. at 454-55. In a subsequent, unpublished opinion, the district court also granted PMC's and NEPS's motion to dismiss VPI's negligence claims against them, PMC's motion to dismiss VPI's breach of implied warranty claim, and PMC's motion to dismiss NEPS's cross-claim based on negligence. The district court also granted PMC's motion to dismiss VPI's breach of express warranty claim, on the ground that, despite having clear notice of the requirements of Rule 56(f) of the Federal Rules of Civil Procedure, VPI failed to comply with the requirements of that Rule in opposing the motion by not submitting an affidavit explaining the nature of any uncompleted discovery and how any undiscovered facts were reasonably expected to create a genuine issue of material fact. The district court did not, however, grant the motions to dismiss VPI's negligent misrepresentation claims.
The trial commenced in early October, 1994. On the eve of trial, a partial settlement was reached among VPI, Brine, and NEPS. As part of the settlement agreement, Brine agreed not to execute judgment against VPI, and VPI agreed not to execute judgment against NEPS, unless sums were actually recovered from PMC in satisfaction of a judgment.
At the conclusion of VPI's case, PMC moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a) on VPI's negligent misrepresentation claim against it. PMC principally argued that VPI could not have justifiably relied on PMC's representation that 6608 was "super tough" nylon and interchangeable with ST-801, because VPI's contract with Brine explicitly required that it could only use ST-801 to make the lacrosse stick heads. VPI, on the other hand, argued that its contractual duties under the Brine contract were immaterial; according to VPI, it justifiably relied on the representations because, had the 6608 been "super tough" as PMC represented, VPI would have substantially performed its contractual duties and would not be liable to Brine for breach of the contract. The district court denied PMC's motion.
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