C-Innovation, LLC v. Norddeutsche Seekabelwerke GmbH

Filing 202

ORDER AND REASONS denying NSW's 127 Motion for Summary Judgment, as stated herein. Signed by Judge Susie Morgan on 3/13/2013. (tsf)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
C-INNOVATION, LLC,
Plaintiff

CIVIL ACTION

VERSUS

No. 10-4441

NORDDEUTSCHE
SEEKABELEWERKE GMBH,
Defendant

SECTION “E”

ORDER AND REASONS
Before the Court is defendant Norddesutsche Seekabelewerke GMBH’s (“NSW”)
motion for summary judgment1 on plaintiff C-Innovation, LLC’s (“C-Innovation”) claims
based on the Louisiana Products Liability Act (“LPLA”), redhibition, and breach of express
warranty. For the reasons set forth below, NSW’s motion is denied in its entirety.
BACKGROUND
The facts of this case, and the grounds for C-Innovation’s causes of action against
NSW, have been fully explored in other orders.2 The Court will not repeat that background
information here, but will address specific factual issues with respect to each of CInnovation’s claims herein.
ANALYSIS
I.

Summary Judgment Standard

Summary judgment is appropriate only “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
1

R. Doc. 127.

2

See, e.g. R. Doc. 42 (Order denying NSW ’s motion to dism iss for lack of personal jurisdiction);
see also R. Doc. 201 (Order granting in part and denying in part NSW ’s motion to dismiss C-Innovation’s
fraud claim).

1

is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” FED . R. CIV. P. 56 ; see also Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986).
If the dispositive issue is one on which the moving party will bear the burden of proof
at trial, the moving party “must come forward with evidence which would ‘entitle it to a
directed verdict if the evidence went uncontroverted at trial.’” Int'l Shortstop, Inc. v.
Rally's, Inc., 939 F.2d 1257, 1263–64 (5th Cir. 1991) (quoting Golden Rule Ins. Co. v. Lease,
755 F. Supp. 948, 951 (D. Colo. 1991)). If the moving party fails to carry this burden, the
motion must be denied. If the moving party successfully carries this burden, the burden
then shifts to the non-moving party to show that a genuine issue of material fact exists.
Celotex, 477 U.S. at 322-23. Once the burden has shifted, the non-moving party must direct
the Court’s attention to something in the pleadings or other evidence in the record that sets
forth specific facts sufficient to establish that a genuine issue of material fact does indeed
exist. Id. at 324. The non-moving party cannot simply rely on allegations or blanket
denials of the moving party’s pleadings as a means of establishing a genuine issue of
material fact, but instead must identify specific facts that establish a genuine issue for trial.
Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001). Likewise, an
affidavit cannot be used to preclude summary judgment unless its contains competent and
otherwise admissible evidence. See FED . R. CIV. P. 56(c)(4) (“An affidavit or declaration
used to support or oppose a motion must be made on personal knowledge, set out facts that
would be admissible in evidence, and show that the affiant or declarant is competent to
testify on the matters stated”). “[A] self-serving affidavit, without more evidence, will not
defeat summary judgment.” Sanchez v. Dallas/Fort Worth Int’l Airport Bd., 438 F. App’x
2

343, 346-47 (5th Cir. 2011) (citing DIRECTV, Inc. v. Budden, 420 F.3d 521, 531 & n.49 (5th
Cir. 2005)); see also United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001); BMG
Music v. Martinez, 74 F.3d 87, 91 (5th Cir. 1996). If the dispositive issue is one on which
the non-moving party will bear the burden of proof at trial, however, the moving party may
satisfy its burden by simply pointing out that the evidence in the record is insufficient with
respect to an essential element of the non-moving party's claim. See Celotex, 477 U.S. at
325.
“An issue is material if its resolution could affect the outcome of the action.”
DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2005). When assessing whether a
material factual dispute exists, the Court considers “all of the evidence in the record but
refrains from making credibility determinations or weighing the evidence.” Delta & Pine
Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008); see also
Reeves v. Sanderson Plumbing, Inc., 530 U.S. 133, 150-51 (2000).

All reasonable

inferences are drawn in favor of the non-moving party. Little v. Liquid Air Corp., 37 F.3d
1069, 1075 (5th Cir. 1994). There is no genuine issue of material fact if, even viewing the
evidence in the light most favorable to the non-moving party, no reasonable trier of fact
could find for the non-moving party, thus entitling the moving party to judgment as a
matter of law. Smith v. Amedisys, Inc., 298 F.3d 434, 440 (5th Cir. 2002).
II.

C-Innovation's Redhibitory Action

C-Innovation alleges the cables at issue were defective and thus in violation of the
implied warranty against redhibitory defects. See LA . CIV. CODE ANN . art. 2520, et seq. As
the party asserting a claim for redhibition, the burden of demonstrating that the cables were
defective lies with C-Innovation. See, e.g., Cazaubon v. Cycle Sport, LLC, 11-289 (La. App.
3

1 Cir. 11/9/11); 79 So.3d 1063, 1065.
NSW’s original motion for summary judgment and memorandum in support do not
address whether the cables were or were not defective.3 In NSW’s supplemental Local Rule
56.1 statement of uncontested material facts,4 NSW argues for the first time that CInnovation cannot meet its burden of proving the cables were unreasonably dangerous and
thus defective for LPLA purposes. The issue of whether the cables were unreasonably
dangerous is an issue of fact. See Hines v. Remington Arms Co., 94-455 (La. 12/8/94); 648
So.2d 331, 335 (“Whether a product is unreasonably dangerous, and thereby is defective,
is a question of fact to be made by the factfinder.”) (internal citations omitted); see also
Taylor v. American Laundry Mach., Inc., 27121-CA, (La. App. 2 Cir. 6/23/95); 658 So.2d
288, 291, writ denied, 95-1877 (La. 11/3/95); 661 So.2d 1385. It is clear from the record
this issue is very much in dispute. Nevertheless, NSW argues in its summary judgment
motion that there are no issues of material fact with respect to certain of its defenses
because, even if the cables were defective, NSW’s defenses would prevail. Accordingly, for
purposes of assessing NSW’s right to summary judgment on its defenses, the Court assumes
the cables were defective.
NSW’s defenses are that, even if the cables were defective, C-Innovation’s redhibitory
action is prescribed; the cables met C-Innovation’s specifications; C-Innovation waived its
right to bring an action for a breach of the implied warranty against redhibitory defects; and
C-Innovation’s continued use of the cables precludes a redhibitory action. NSW argues

3

See R. Doc. 127 (NSW ’s motion for summary judgment); R. Doc. 127-1 (NSW ’s memorandum in

support).
4

R. Doc. 166.

4

there are no facts in dispute with respect to these defenses and it is entitled to prevail on
these defenses as a matter of law. Because NSW will bear the burden of proving these
affirmative defenses at trial, its burden at the summary judgment stage is to demonstrate,
with specific citations to competent record evidence, that there are no genuine issues of fact
and that NSW is entitled to the protection of each defense as a matter of law. The Court
finds material facts are in dispute with respect to each defense and that, in some instances,
even if there were no factual disputes NSW would not be entitled to judgment as a matter
of law.
A.

NSW’s Defense that C-Innovation’s Redhibitory Action is
Prescribed

NSW argues that, even assuming the cables were defective, C-Innovation’s
redhibitory action is prescribed, and thus that claim fails as a matter of law. Under
Louisiana law, a manufacturer is presumed to know of defects in its products. See LA . CIV.
CODE ANN . art. 2545;5 see also Encalade v. Coast Quality Const. Corp., 00-925 (La. App.
5 Cir. 10/31/00); 772 So.2d 244, 247, writ denied, 00-3229 (La. 1/26/01); 782 So.2d 634.
Because NSW was the manufacturer of the cables at issue and is presumed to know of the
defect in its product, the one year prescriptive period on C-Innovation’s redhibitory action
began to run the day C-Innovation discovered the defect in the cables. See LA . CIV. CODE
ANN . art. 2534(B).6 Prescription does not begin to run on a redhibitory action simply
5

Article 2545 provides, in pertinent part, that “[a] seller is deemed to know that the thing he sells
has a redhibitory defect when he is a m anufacturer of that thing.” L A . C IV . C ODE A N N . art. 2545.
6

Article 2534 provides as follows:
The action for redhibition against a seller who did not know of the existence
of a defect in the thing sold prescribes in four years from the day delivery
of such thing was made to the buyer or one year from the day the defect was
discovered by the buyer, whichever occurs first. . . . The action for

5

because a plaintiff suspects something might be wrong. See Chevron USA, Inc. v. Aker
Maritime, Inc., 604 F.3d 888, 894 (5th Cir. 2010). Instead, the prescriptive period begins
to run when the plaintiff has a “reasonable basis to pursue a claim against a specific
defendant.”7 Id. (internal citation omitted).
NSW has the burden of proving C-Innovation’s redhibitory action is prescribed. It
is undisputed that C-Innovation experienced a “ground fault” in one of its umbilical cables
in October 2007.8

It is also undisputed that, in a September 2012 deposition, C-

Innovation’s corporate representative Steven Thrasher (“Thrasher”) testified that in March
2009, C-Innovation identified the cause of the “z-kinking” issues C-Innovation was
experiencing as being on the “umbilical side” of its operation, meaning the issues were
somehow related to the umbilical cables C-Innovation was using to tether its ROVs to
ships.9 Thrasher made this determination when C-Innovation experienced z-kinking issues
even after it attached the cables to a fixed platform instead of a vessel bobbing in the sea.10
redhibition against a seller who knew, or is presumed to have known, of the
existence of a defect in the thing sold prescribes in one year from the day the
defect was discovered by the buyer.
L A . C IV . C ODE A N N . art. 2534.
7

Louisiana jurisprudence requires that all prescription statutes be strictly construed against
prescription. See W imberly v. Gatch, 93-2361 (La. 4/11/94); 635 So.2d 206, 211.
8

See R. Doc. 169 at p. 12 (C-Innovation admits it experienced a ground fault in October 2007); see
also R. Doc. 127, Ex. 20 (October 18, 2007 email from Norm Robertson to Steven Thrasher related to
October 2007 ground fault).
9

See R. Doc. 128, Ex. 2 (Steven Thrasher Dep., 86:21 - 87:2, Sept. 6, 2012) ("Q: So when was that
that you determined it was an umbilical issue? A: I determined it whenever we installed the systems on
onto the Rowan Gorilla on UHDs. Q: W hen was that? A: It was March-ish - - it was March of 2009, I
believe."); see also id. at 84:10 -85:22.
10

See R. Doc. 128, Ex. 2 (Thrasher Dep., 84:10 - 85:22, Sept. 6, 2012) (“Q: W hat investigations did
C-Innovation do to try to determine the cause of the cable failures? A: we put [the NSW cables] on board
[a Rowan Gorilla jack up vessel, a fixed platform] and then they continued to fail and that’s when we
automatically knew that it was definitely a problem on the umbilical side. So as far as investigating a

6

This lawsuit was filed in December 2010.11 NSW points to Thrasher’s testimony
regarding C-Innovation’s identification in March 2009 of the cause of the z-kinking being
on the umbilical side of its operation12 to prove C-Innovation’s redhibitory action is
prescribed. In response, while C-Innovation admits that a ground fault was experienced
in a cable in October 200713 and that the umbilical side of C-Innovation’s operation was
identified as a problem in March 2009,14 C-Innovation argues it did not have a reasonable
basis to pursue a claim against NSW based on the defect in NSW’s design of its cables until
July 2010, when a Schilling employee emailed Thrasher stating the cause of the z-kinking
to be a defect in NSW’s design of the cables.15 Thus, C-Innovation argues its claim has not
prescribed.
The Court finds C-Innovation has satisfied its burden of pointing to specific evidence
in the record demonstrating an issue of fact exists with respect to when C-Innovation
“discovered” the defect in NSW’s design of its cables, defined under the jurisprudence as

cause, whether it was something wrong with the umbilical or whether it was something with the way it was
being operated or this and that . . . we knew it was in fact the umbilical); Id. at 86:9-15 (“So as far as an
actual investigation, besides whether it was operator issue or the way they were maintaining the cables or
the cable itself, that’s as far we got . . . there became a point where we knew for a fact there was an
umbilical issue, then we replaced - - we stopped buying umbilicals altogether.”).
11

See R. Doc. 1 (Complaint).

12

See supra notes 9 & 10.

13

See R. Doc. 169 at p. 12; see also R. Doc. 127, Ex. 20.

14

See supra notes 9 & 10.

15

See R. Doc. 153, Ex. 10 (Thrasher Dep., 165:6-19, Sept. 6, 2012) (“Q: Okay. W hen was the first
time that you became aware that a defect in the cable was the cause for the ongoing Z-kinking that the
cables were experiencing? A: W hen [Schilling employee] Jeff Small had sent me an e-mail confirming
such. Q: When was that? A: It’s in an e-mail. July, maybe. Q: July 2010? A: Honestly, I don’t recall, but
it’s in here. It’s in his pile of papers. Q: But it was after the testing? A: It was definitely after the testing.”)

7

having a reasonable basis to pursue a claim against NSW.16 In his affidavit, Steven Thrasher
states that C-Innovation’s knowledge in March 2009 did not mean C-Innovation knew the
z-kinking issues were NSW’s fault at that time.17 Instead, Thrasher and C-Innovation had
eliminated the vessel moving around in the sea as a potential cause of the z-kinking but had
not yet determined what the cause was.18 A genuine issue of material fact exists with
respect to when C-Innovation had knowledge sufficient to start the running of prescription
under Louisiana Civil Code article 2534(B). NSW is not entitled to summary judgment on
its defense that C-Innovation’s redhibitory action is prescribed.
B.

NSW’s Defense that the Cables Met C-Innovation’s
Specifications

NSW also argues the cables at issue met the Schilling design specifications CInnovation relied upon when purchasing NSW-manufactured cables from Schilling and
Phoenix,19 and also when purchasing NSW-manufactured cables directly from NSW.20
Because the cables met these specifications, NSW argues, C-Innovation’s redhibitory action
fails as a matter of law. Under Louisiana law, a seller may avoid liability in redhibition if
it can prove that its product conformed to a buyer’s specifications. See New Orleans Assets,
LLC v. Carl E. Woodward, LLC, No. 01-2171, 2003 WL 21434888, at *2 (E.D. La. Jan. 23,

16

See Chevron, 604 F.3d at 894.

17

See R. Doc. 169; see also R. Doc. 153, Ex. 11 (Thrasher Aff. at ¶¶ 4-6 Dec. 20, 2012).

18

R. Doc. 153, Ex. 11 (Thrasher Aff. at ¶¶ 4-6 Dec. 20, 2012).

19

See R. Doc. 127, Ex. 4 (Jan Mikalsen Dep., 51:16 - 52:17, Apr. 17, 2012) (explaining that CInnovation relied on Schilling’s specifications when ordering ROVs with cables already attached from
Schilling).
20

See R. Doc. 127, Ex. 1 (Norm Robertson Dep., 166:3 - 167:8, Mar. 23, 2012) (explaining that CInnovation relied on Schilling’s specifications when ordering cables directly from NSW ).

8

2003) (Feldman, J.) (citing La. Indus. v. Bogator, Inc., 605 So.2d 213, 217 (La. App. 2 Cir.
1992) and Conmaco, Inc. v. S. Ocean Corp., 581 So.2d 365, 371 (La. App. 4 Cir. 1991), writ
denied, 586 So.2d 533 (La. 1991)).
NSW argues all of the cables purchased by C-Innovation, either directly or indirectly,
conformed to Schilling’s specifications which did not include a requirement that the cables
be able to withstand twisting motions. NSW directs the Court’s attention to the deposition
testimony of Phil Gibson (“Gibson”), the president of the company that tested the cables,
in which Gibson stated Schilling never included a requirement that the cables be able to
withstand twist in its specification to NSW.21 NSW also directs the Court’s attention to a
January 2010 email from one Schilling employee to another stating that “twist” was not a
part of Schilling’s specification to NSW.22 Additionally, NSW directs the Court’s attention
to a September 2005 specification provided by Schilling to NSW that has no twist
specification23 and a December 2009 revised specification provided by Schilling to NSW
that included a twist specification.24 The December 2009 specification was sent by Schilling
to NSW after the last cable at issue in this case had been delivered.25 NSW argues the fact
that Schilling added an explicit twist specification to its December 2009 revised
specification is proof that previous specifications did not include such a requirement.
To prove the Schilling specifications included a requirement that the cables be
21

See R. Doc. 127, Ex. 3 (Philip Gibson Dep., 149:14-18, 188:5-11, Aug. 8, 2012).

22

See R. Doc. 127, Ex. 32.

23

R. Doc. 127, Ex. 39.

24

R. Doc. 127, Ex. 40.

25

See R. Doc. 169 at p. 14 (C-Innovation admits cables were delivered between January and
Decem ber 2008); see also R. Doc. 127, Ex. 33; R. Doc. 127, Ex. 34.

9

operable with Schilling ROVs, including being able to withstand twist, C-Innovation directs
the Court’s attention to an August 2005 specification requiring that the cable be able to
"safely and efficiently operate" Schilling’s ROV.26 C-Innovation argues this specification
includes the ability to withstand twist because this capability is necessary to operate the
ROV safely and efficiently. C-Innovation also directs the Court’s attention to the deposition
testimony of NSW design engineer Guido Lunneman (“Lunneman”), in which Lunneman
explained that twist is a force inherent in the operation of an ROV, as well as the deposition
testimony of Gibson, in which Gibson made statements similar to those of Lunneman.27 In
addition, C-Innovation argues that the instructions received by NSW from Schilling were
not technical specifications at all. C-Innovation directs the Court’s attention to the Schilling
president’s deposition testimony, in which he explained Schilling provided only general
operating requirements to NSW and asked NSW to propose a cable design to conform to
those general requirements.28 Schilling would then evaluate and determine whether the
proposed design met those general requirements before placing an order.29
The Court finds there are genuine issues of material fact with respect to whether
Schilling issued specifications or only general operating requirements, who drafted the
26

See, e.g. R. Doc. 169, Ex. 19 (August 31, 2005 Schilling equipment specification).

27

See R. Doc. 153, Ex. 3 (Lunneman Dep., 64:2 - 67:10, June 4, 2012); R. Doc. 153, Ex. 2 (Gibson
Dep., 95:17 - 97:22).
28

See R. Doc. 153, Ex. 1 (Schilling Dep., 42:3 - 45:23, Oct. 23, 2012).

29

Id. C-Innovation contends the cables were designed by NSW to meet Schilling’s general
operating requirements, and not that Schilling provided exacting specifications which NSW then carried
out, as NSW argues. C-Innovation contends the first three ROVs it purchased from Schilling included
cables Schilling ordered from NSW , which were designed by NSW , not Schilling, and which were already
attached to the ROVs. C-Innovation then ordered the rest of the ROVs from Schilling without cables
attached, and ordered the cables for these ROVs directly from NSW , telling NSW to manufacture these
direct-purchased cables to meet the same general operating requirements as the cables NSW
manufactured and sold to Schilling.

10

specifications, what the specifications were, and whether the cables met those
specifications. As a result, NSW is not entitled to summary judgment on its defense that
the cables were designed and created in accordance with specifications.
C.

NSW’s Defense that C-Innovation Waived its Redhibitory
Action

NSW also argues that C-Innovation waived its redhibitory action by accepting an
NSW price quote that included an express warranty provision and language excluding all
other claims, including the claim for redhibition. Under Louisiana law, a party may agree
to exclude or limit the implied warranty against redhibitory defects, thus eliminating the
possibility of a buyer bringing a redhibitory action for a breach of that implied warranty.
LA . CIV. CODE ANN . art. 2548. The terms of the buyer’s waiver, exclusion, or limitation of
the warranty must be clear and unambiguous and must be brought to the attention of the
buyer. Id. The seller bears the burden of establishing the existence of such a waiver.
Tucker v. Petroleum Helicopters, Inc., 08-1019 (La. App. 4 Cir. 3/23/09); 9 So.3d 966, 970
(citing Berney v. Rountree Olds-Cadillac Co., Inc., 33,388 (La. App. 2 Cir. 6/21/00), 763
So.2d 799; Moses v. Walker, 98–58 (La. App. 3 Cir. 6/17/98); 715 So.2d 596, 598.). “In
order to bear its burden that the alleged waiver of warranty was effective, [the seller] must
prove that the waiver was: (1) written in clear and unambiguous language; (2) contained
in the contract; and (3) either brought to the attention of the buyer or explained to him.”
Id. (citing Boos v. Benson Jeep–Eagle Co., Inc., 98–1424 (La.App. 4 Cir. 6/24/98); 717
So.2d 661).
Under Louisiana contract law, terms contained in other documents may be
incorporated into a contract, either by attaching those documents to the contract or by

11

referencing those documents in the contract.

Russellville Steel Co., Inc. v. A& R

Excavating, Inc., 624 So.2d 11 (La. App. 5 Cir. 1993) (citing Action Fin. Corp. v. Nichols,
180 So.2d 81, 83 (La. App. 2 Cir. 1965). Extrinsic terms are considered part of the contract
only if the parties intended for them to be so. Nichols, 180 So.2d at 83; see also One Beacon
Ins. Co. v. Crowley Marine Servs., Inc., 648 F.3d 258, 267 (5th Cir. 2011) (“Under general
contract principles, where a contract expressly refers to and incorporates another
instrument in specific terms which show a clear intent to incorporate that instrument into
the contract, both instruments are to be construed together.”) (emphasis added).
NSW and C-Innovation offer different versions of the facts surrounding CInnovation’s initial purchase of cables from NSW. It is undisputed that on July 3, 2007,
NSW sent a letter to C-Innovation (the “First Letter”).30 The First Letter included waiver
language and, while the date of C-Innovation’s receipt of the First Letter is unclear, CInnovation admits it did receive it.31 By its express language, the First Letter was valid for
30 days.32 It is also undisputed that, after the terms of the First Letter expired, CInnovation sent NSW a purchase order on August 7, 2007 (the “Purchase Order”).33 The
Purchase Order includes a reference to "Quotation No.: A13303 C-Innovation - ROV
Umbilical 126394.doc,”34 which quotation number appears on the first page of the First

30

See R. Doc. 153, Ex. 7 (July 3, 2007 letter from NSW addressed to Norm Robertson).

31

See R. Doc. 169.

32

See R. Doc. 153, Ex. 7.

33

See R. Doc. 153, Ex. 5 (C-Innovation purchase order dated August 7, 2007).

34

Id.

12

Letter, the term of which had by then expired by its own terms.35 The Purchase Order does
not include any language waiving or excluding warranties, nor does it expressly incorporate
the terms of the First Letter.36 What happened between the date of the First Letter and the
date of the Purchase Order is the subject of a genuine factual dispute. Also in dispute is
whether the parties intended to incorporate extrinsic terms and conditions into the
Purchase Order.
Under NSW’s version of the facts, NSW sent C-Innovation a letter on July 27, 2007
(the “Second Letter”),37 including waiver language and a price quote, in response to CInnovation’s and NSW’s negotiations following the First Letter.38 NSW argues that CInnovation’s sending the Purchase Order in response to the Second Letter was an
agreement to be bound by the language in the Second Letter, including the waiver of any
redhibitory action. Under C-Innovation’s version of the facts, C-Innovation never received
the Second Letter,39 and by the time C-Innovation sent the Purchase Order to NSW, the
terms of the First Letter had expired. C-Innovation argues the waiver language in the First
Letter and the Second Letter was not clear and unambiguous, nor was the language from
35

R. Doc. 153, Ex. 7.

36

See R. Doc. 153, Ex. 5.

37

See R. Doc. 127, Ex. 11 (July 27, 2007 letter from NSW addressed to Norm Robertson).

38

See R. Doc. 127, Ex. 1 (Robertson Dep., 160:16-21, Mar. 23, 2012).

39

The First Letter included the following identifier: “Quotation No.: A13303 C-Innovation - ROV
Umbilical 126394.doc.” R. Doc. 153, Ex. 7. The Second Letter included the following identifier: “Quotation
No.: A13303-2 C-Innovation - ROV Umbilical 126394.doc.” R. Doc. 127, Ex. 11. The Purchase Order
references the identifier contained in the First Letter. See R. Doc. 153, Ex. 5. C-Innovation argues it
issued the Purchase Order and referred to the First Letter’s identification number, and not the Second
Letter’s identification number, because C-Innovation never received that Second Letter. NSW argues CInnovation’s position is untenable because of similarities between the numbers quoted in the Second
Letter and the numbers in the Purchase Order, but NSW does not direct the Court’s attention to anything
in the record showing C-Innovation received the Second Letter.

13

either letter explicitly incorporated into the Purchase Order or brought to the attention of
C-Innovation at the time of the execution of the Purchase Order. As a result, C-Innovation
argues it did not intend to be or agree to be bound by the terms of the First Letter or the
Second Letter and did not waive its redhibitory action.
NSW has the burden of proving there are no genuine issues of material fact with
respect to its waiver defense. The Court finds the waiver language in the First Letter and
the Second Letter is not sufficiently clear and unambiguous to be a valid waiver of CInnovation’s right to bring a redhibitory action, nor has it been established that the parties
intended to incorporate that waiver language into the Purchase Order. The Court also finds
a factual dispute exists regarding C-Innovation’s receipt of the Second Letter. As a result,
the Court cannot find C-Innovation has waived its right to bring a redhibitory action as a
matter of law. NSW is not entitled to summary judgment on this defense.
D.

NSW’s Defense that C-Innovation’s Continued Use of the
Cables Precludes a Redhibitory Action

Finally, NSW argues that, because C-Innovation continued to use the cables even
after alleging they were defective, C-Innovation’s continued use of the cables provides NSW
with a defense to C-Innovation’s redhibitory action. It is undisputed that at least one of the
cables was still being used by C-Innovation as late as September 2012.40 It is unclear when
C-Innovation ceased using the other cables.

NSW is correct that, under certain

circumstances, a buyer’s continued use of a product after it complains of defects with that
product may result in the buyer being precluded from seeking rescission of the sale. See,
40

W hile C-Innovation failed to respond to NSW ’s supplemental Local Rule 56.1 statement of facts
regarding this issue, an earlier Local Rule 56.2 statement filed by C-Innovation explained that “CInnovation has replaced all but one NSW cable” and that the last cable was “slated to be removed prior to
the end of [2012].” See R. Doc. 162.

14

e.g., Coffey v. Cournoyer Oldsmobile-Cadillac-GMC, Inc., 484 So.2d 798, 800-801 (La.
App. 1 Cir. 1986); Cournelious v. Bailey Lincoln-Mercury, Inc., 566 So.2d 85, 88 (La. App.
4 Cir. 1990).
However, as recognized by C-Innovation, this defense is not always successful in
cases involving a buyer’s continued use of a product after complaining that product is
defective. See, e.g. Hebert v. Claude Y. Woolfolk Corp., 176 So.2d 814, 818 (La. App. 3 Cir.
1965). This determination is fact-intensive, and rescission should be denied on this basis
only in extreme cases. The cases cited by NSW deal with products significantly easier to
exchange or return than the cables at issue in this case. Because the Court construes the
facts in favor of C-Innovation at this stage, summary judgment on this issue is
inappropriate. This is true even if C-Innovation did continue to use some of the NSW cables
after complaining about their defects. NSW is not entitled to summary judgment on its
defense that C-Innovation’s continued use of the cables precludes it from asserting a
redhibitory action.
E.

NSW is Not Entitled to Summary Judgment on CInnovation’s Redhibitory Action

For all of these reasons, with respect to C-Innovation's redhibitory action and NSW’s
asserted defenses to that claim, the Court finds there are genuine issues of material fact in
dispute which preclude the entry of summary judgment in favor of NSW.
III.

C-Innovation’s Breach of Express Warranty Claim

NSW also filed a motion for summary judgment with respect to C-Innovation’s
breach of express warranty claim because the time period to bring that claim had expired
before suit was filed. NSW bases its defense on the Second Letter, which contained a

15

provision that any breach of warranty claim was to be brought within twelve months from
the date the cables were taken into use or no later than eighteen months from the date of
delivery.41 It is undisputed the cables at issue were delivered to C-Innovation between
January and December 2008.42 Because more than eighteen months passed after the date
the last cable was delivered before C-Innovation filed suit, NSW argues C-Innovation’s
breach of express warranty claim is untimely.
NSW argues C-Innovation agreed to be bound by Second Letter’s time limit on
breach of express warranty claims when C-Innovation issued the Purchase Order because
the Purchase Order contains a reference to "Quotation No.: A13303 C-Innovation - ROV
Umbilical 126394.doc."43 C-Innovation argues it never agreed to be bound by the terms of
the Second Letter because it never received the Second Letter.44 C-Innovation also argues
that, because it never agreed to the terms of the Second Letter, those terms were not a part
of any contract between C-Innovation and NSW, or between C-Innovation and Schilling or
Phoenix. In support of its argument that C-Innovation agreed to the terms of the Second
Letter, NSW directs the Court’s attention to similarities between the terms of the Second
Letter45 and the terms of the Purchase Order,46 but does not point to any direct testimony
establishing that C-Innovation received the Second Letter or agreed to be bound by the

41

R. Doc. 127, Ex. 11.

42

See R. Doc. 169 at p. 14 (C-Innovation admits cables were delivered between January and
Decem ber 2008); see also R. Doc. 127, Ex. 33; R. Doc. 127, Ex. 34.
43

R. Doc. 153, Ex. 5.

44

See supra note 39.

45

R. Doc. 127, Ex. 11.

46

R. Doc. 153, Ex. 5.

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Second Letter’s terms. At the summary judgment stage, the burden of proof is on NSW to
bring forward competent evidence that C-Innovation not only received the Second Letter
but also agreed to its terms. NSW has not met this burden.
As explained above, C-Innovation’s receipt of the Second Letter is a disputed issue
of fact. Even if C-Innovation did receive the Second Letter, NSW has not established that
C-Innovation intended to be bound by the terms in the Second Letter. The Purchase Order
does not specifically incorporate the terms of the Second Letter or include any language
setting a time limit for bringing breach of express warranty claims.47

Louisiana law

requires a showing that parties to a contract intended to incorporate terms from an
extrinsic document into that contract before it can be said those extrinsic terms are a part
of the contract. See Nichols, 180 So.2d at 83. NSW has not made such a showing. NSW’s
motion for summary judgment on the untimeliness of C-Innovation’s breach of express
warranty claim is denied.
IV.

C-Innovation’s LPLA Claim

Finally, NSW argues C-Innovation’s LPLA claim is prescribed. Under Louisiana law,
a claim for damages under the LPLA is a declictual action for which “prescription
commences to run from the day injury or damage is sustained.” See LA . CIV. CODE ANN . art.
3492; see also Am. Zurich Ins. Co. v. Caterpillar, Inc., 12-270 (La. App. 3 Cir. 10/3/12); 99
So.3d 739, 741 (internal citation omitted) (article 3492 prescriptive period applies to claims
under the LPLA). For article 3492 purposes, “damage is considered to have been sustained
only when it has manifested itself with sufficient certainty to support accrual of a cause of

47

R. Doc. 153, Ex. 5.

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action.” Cameron Parish Sch. Bd. v. Acands, Inc., 96-895 (La. 1/14/97); 687 So.2d 84, 88.
The burden at trial will be on NSW to prove that C-Innovation’s LPLA claim is
prescribed, and thus NSW's burden at the summary judgment stage is to demonstrate an
absence of disputed issues of material fact with respect to when the defect in the cables
manifested itself with sufficient certainty to support accrual of a cause of action. NSW has
not met this burden. NSW’s motion for summary judgment contains virtually no argument
on this issue,48 and NSW has not directed the Court’s attention to any facts in the record
establishing when the alleged defect manifested itself with sufficient certainty to support
accrual of a cause of action.
The Court has found the issue of when C-Innovation had a reasonable basis to
pursue a claim against NSW to be a disputed issue of fact in the context of prescription of
C-Innovation’s redhibitory action. For the same reasons, the Court finds the issue of when
the defect manifested itself with sufficient certainty to support accrual of a cause of action
to be a disputed issue of fact.49 Because the material facts are in dispute, NSW is not
entitled to summary judgment on this issue. NSW’s motion for summary judgment that CInnovation’s LPLA claim is prescribed is denied.
CONCLUSION
IT IS ORDERED that NSW’s motion for summary judgment is DENIED.

48

NSW argues in its memorandum in support, without elaboration, that C-Innovation’s LPLA
claim prescribed “long ago.” R. Doc. 127-1. C-Innovation’s response does not address NSW ’s prescription
argument. See R. Doc. 153.
49

The rule for when prescription begins to run on an LPLA claim and the rule for when
prescription begins to run on a redhibitory action are about the same. Compare Cameron Parish Sch. Bd.,
687 So.2d at 88 with Chevron, 604 F.3d at 894.

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13th
New Orleans, Louisiana, this ____ day of March, 2013.

_____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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