425 Notre Dame, LLC v. Kolbe & Kolbe Millwork Co., Inc. et al
Filing
124
ORDER & REASONS: denying 102 Notre Dame's Motion for Partial Summary Judgment; granting 104 Kolbe's Motion for Partial Summary Judgment; FURTHER ORDERED that the oral argument set for June 1, 2016 is CANCELED. FURTHER ORDERED that the pending Motions for Leave to File Reply (Rec. Doc. 118; Rec. Doc. 119; Rec. Doc. 123) are DENIED as moot. Signed by Judge Carl Barbier on 5/27/16. (sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
425 NOTRE DAME, LLC
CIVIL ACTION
VERSUS
NO: 15-454
KOLBE & KOLBE MILL WORK CO.,
INC., ET AL.
SECTION: “J” (4)
ORDER AND REASONS
Before the Court are a Motion for Partial Summary Judgment
(Rec. Doc. 102) filed by Plaintiff, 425 Notre Dame, L.L.C. (“Notre
Dame”) and oppositions thereto filed by Defendants, Kolbe & Kolbe
Millwork Co., Inc. (“Kolbe”) (Rec. Doc. 117) and Grand Openings,
Inc. (“Grand Openings”) (Rec. Doc. 115). Also before the Court are
a Motion for Partial Summary Judgment (Rec. Doc. 104) filed by
Kolbe and an opposition thereto (Rec. Doc. 113) filed by Notre
Dame. Notre Dame and Kolbe asked the Court to hear oral argument
on
their
motions.
Having
considered
the
motions
and
legal
memoranda, the record, and the applicable law, the Court finds
that Notre Dame’s motion should be DENIED and Kolbe’s motion should
be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
The Court is well aware of the facts underlying this case. In
summary, this litigation arises from a construction and renovation
project in New Orleans, Louisiana. The owner, Notre Dame, hired
1
Landis
Construction
Co.
L.L.C.
(“Landis”)
as
the
general
contractor on the project. (Rec. Doc. 36-1, at 1.) The contract
between Notre Dame and Landis provided that the buildings were to
contain an aluminum window system. Id. at 2. According to Landis,
the architect on the project, Rozas Ward Architects, insisted on
using windows manufactured by Kolbe. Id. Landis then entered into
a purchase agreement with Grand Openings, Inc. (“Grand Openings”),
a distributor for Kolbe, which provided that Grand Openings would
furnish the windows for the project. (Rec. Doc. 1, at 2.) In turn,
Grand Openings and Kolbe signed a purchase order, in which Kolbe
agreed to manufacture the windows. (See Rec. Doc. 36-1, at 2.)
Landis
also
Fabricators,
entered
Inc.
into
and
a
contract
Southern
Steel
with
Southern
Fabricators,
Steel
L.L.C.
(collectively “Southern Steel”), in which Southern Steel agreed to
manufacture the window mullions and steel stiffners. (Rec. Doc.
48-1.) McInerney & Associates, Inc. (“McInerney”) installed the
mullions and stiffeners manufactured by Southern Steel, as well as
the windows manufactured by Kolbe. (Rec. Doc. 49-1, at 2.) The
windows began leaking after installation. Id. at 3.
On February 12, 2015, Notre Dame filed suit against Kolbe and
Grand Openings, alleging that Defendants are liable for damages
for
negligence,
breach
of
the
warranty
against
redhibitory
defects, for the breach of warranty of fitness for ordinary use,
and under the Louisiana Products Liability Act (“LPLA”). Id. at 5.
2
On August 17, 2015, Kolbe filed a cross-claim against Grand
Openings and a third-party complaint against Landis. (Rec. Doc.
22.) On that same day, Grand Openings filed third-party complaints
against Landis, Southern Steel, and McInerney. (Rec. Doc. 24.) In
an Order and Reasons dated December 16, 2015, the Court dismissed
Defendants’ claims against Third-Party Defendants. (Rec. Doc. 69.)
Kolbe filed a Motion for Partial Summary Judgment on February 4,
which this Court denied on March 22, 2016. (Rec. Doc. 81; Rec.
Doc. 93.)
Notre Dame filed the instant motion on May 17, 2016, seeking
summary judgment against Grand Openings on its contractual claims.
Kolbe filed the instant motion on May 17, seeking summary judgment
on Notre Dame’s redhibition and warranty of fitness claims. The
parties filed oppositions on May 24, 2016. Both motions are set
for oral argument on June 1, 2016.
PARTIES’ ARGUMENTS
A. Notre Dame’s Motion for Partial Summary Judgment
In its motion, Notre Dame seeks summary judgment against Grand
Openings
on
its
contractual
claims.
Specifically,
Notre
Dame
contends Grand Openings is liable (1) for the alleged redhibitory
defects in the Kolbe windows, (2) for breach of the warranty of
fitness for ordinary use under Louisiana Civil Code article 2524,
and (3) for providing windows that were “not of the kind or quality
specified in the contract or represented by the seller” under
3
article 2529. Grand Openings and Kolbe both opposed Notre Dame’s
motion. Both Defendants pointed to disputed factual issues that
they contend preclude summary judgment.
B. Kolbe’s Motion for Partial Summary Judgment
In its motion, Kolbe argues it is entitled to summary judgment
on Notre Dame’s redhibition and warranty of fitness claims. Kolbe
argues
that
agreeing
to
Notre
Dame
Kolbe’s
waived
Express
its
Limited
contractual
Warranty.
warranties
This
by
warranty
appeared in the purchase order signed by Grand Openings and Landis.
(Rec. Doc. 104-16, at 60.) The warranty stated, “This express
limited warranty is in lieu of all other warranties, express or
implied. There are no implied warranties of merchantability or
fitness for a particular purpose, or any other warranties that
extend beyond this express limited warranty. . . . The remedies
provided under this express limited warranty are exclusive and in
lieu of all other remedies at law or equity.” Id. at 61. The
warranty also excluded “[p]roducts which have non-Kolbe products
mulled/attached to them and/or field-mulled units if not mulled to
Kolbe’s specifications.” Id. Kolbe argues that Notre Dame was aware
of the exclusionary language because Landis’ project executive,
Sarah Busch, was aware of the language. (Rec. Doc. 104-26, at 11.)
Kolbe asserts that Notre Dame is bound by Landis’ knowledge because
Landis acted as Notre Dame’s agent in the transaction. Because the
express limited warranty excluded redhibition and the warranty of
4
fitness, Kolbe argues that Landis did not transfer those warranties
to Notre Dame.
In its opposition, Notre Dame argues that Kolbe failed to prove
a valid waiver of redhibition. First, Notre Dame asserts that Kolbe
failed to show that the warranty exclusion applied to an end user
of the product. The exclusion appeared in the purchase order signed
by Grand Openings and Landis. Notre Dame argues that the waiver
did not appear in its contract with Landis. Further, Notre Dame
claims that Kolbe’s warranty exclusions were never brought to its
attention. Second, Notre Dame points out that a manufacturer of a
product is presumed to have knowledge of the redhibitory defects
in its products. Thus, Notre Dame asserts that it is not bound by
an otherwise valid waiver. Third, Notre Dame argues that it and
Landis are subrogated to Grand Openings’ rights in redhibition as
against Kolbe. Even if the Kolbe waiver is valid as to it and
Landis, Notre Dame argues that it may maintain its claims against
Kolbe through subrogation to Grand Openings’ potential claims.
LEGAL STANDARD
Summary
judgment
is
appropriate
when
“the
pleadings,
the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing former
Fed. R. Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069,
5
1075 (5th Cir. 1994). When assessing whether a dispute as to any
material fact 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). All
reasonable inferences are drawn in favor of the nonmoving party,
but
a
party
cannot
defeat
summary
judgment
with
conclusory
allegations or unsubstantiated assertions. Little, 37 F.3d at
1075. A court ultimately must be satisfied that “a reasonable jury
could not return a verdict for the nonmoving party.” Delta, 530
F.3d at 399.
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)
(citation omitted). The nonmoving party can then defeat the motion
by either countering with sufficient evidence of its own, or
“showing that the moving party’s evidence is so sheer that it may
not persuade the reasonable fact-finder to return a verdict in
favor of the moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
6
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324.
The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial.
See, e.g., id. at 325; Little, 37 F.3d
at 1075.
DISCUSSION
A. Notre Dame’s Motion for Partial Summary Judgment
Notre Dame seeks partial summary judgment on its contractual
claims, including redhibition, the warranty of fitness, and the
requirement that goods supplied be of the type contemplated by the
contract.
The
Louisiana
Civil
Code
describes
redhibition
follows:
The seller warrants the buyer against
defects, or vices, in the thing sold.
redhibitory
A defect is redhibitory when it renders the thing
useless, or its use so inconvenient that it must be
presumed that a buyer would not have bought the thing
had he known of the defect. The existence of such a
defect gives a buyer the right to obtain rescission of
the sale.
A defect is redhibitory also when, without rendering the
thing totally useless, it diminishes its usefulness or
its value so that it must be presumed that a buyer would
still have bought it but for a lesser price. The
existence of such a defect limits the right of a buyer
to a reduction of the price.
7
as
La. Civ. Code art. 2520. The warranty of fitness is closely related
to the warranty against redhibitory defects. See 24 Dian TooleyKnoblett & David Gruning, La. Civ. L. Treatise, Sales § 11:44. The
Civil Code simply provides, “The thing sold must be reasonably fit
for its ordinary use.” La. Civ. Code art. 2524. The general rules
of obligations govern a breach of this warranty. Id. The Civil
Code also requires a seller to supply goods “of the kind or quality
specified in the contract or represented by the seller.” La. Civ.
Code art. 2529. If the seller fails to comply with this article,
the buyer’s remedies are governed by the general rules of sales
and conventional obligations. Id.
Notre Dame contends that no genuine issues of material fact
exist. First, Notre Dame argues that the Kolbe windows leaked,
causing water to pool on the concrete floor of the building.
Because the windows allowed water to enter the building, Notre
Dame argues that they were rendered useless. As evidence of this
alleged defect, Notre Dame cites the deposition of George Digman,
Kolbe’s director of research and development. (Rec. Doc. 102-2.)
Digman stated that the windows were not manufactured in accordance
with Kolbe’s standards and that the deviations from the standards
allowed water to penetrate the windows in two places. Id. at 1820.
Further,
Digman
testified
that
Kolbe’s
testing
revealed
penetration of water in the two locations and that video evidence
showed continued water intrusion after Kolbe attempted to repair
8
the defects. Id. at 29. Thus, Notre Dame argues that it is entitled
to summary judgment on its redhibition claim.
Second, Notre Dame argues that the windows were unfit for their
ordinary use because they allowed water to intrude into the
building. Digman stated that the windows were intended to prevent
water from entering the building. Id. at 30. Third, Notre Dame
argues that the windows were not of the quality specified in the
Purchase Order. The Purchase Order specified that the windows would
be “fit and sufficient for the purposes intended, merchantable, of
good materials and workmanship, and free from defect.” (Rec. Doc.
102-6, at 5.) Notre Dame asserts that the windows were neither fit
and sufficient for their intended purpose, nor free from defect.
Specifically,
Notre
Dame
claims
that
the
windows
contained
insufficient sealant in the mitered joints. Further, Notre Dame
argues that the windows were not of good materials and workmanship
because
Digman
admitted
that
they
were
not
manufactured
in
accordance with Kolbe’s standards.
However,
both
Kolbe
and
Grand
Openings
point
to
potential
disputed fact issues. First, Kolbe cites evidence that disputes
the value of the water intrusion testing ordered by Notre Dame.
Kolbe asserts that the tests suggest deficiencies in Landis’
workmanship, not in the Kolbe windows themselves. (Rec. Doc. 11719, at 1.) Second, Kolbe points to the results of an audit of the
window installation. According to Kolbe, the auditor’s written
9
report, dated August 6, 2014, reveals problems with the work of
Landis and its subcontractors. (Rec. Doc. 117-12.) Third, Kolbe
argues that Notre Dame again conducted testing of the windows,
supposedly isolating the windows themselves. For this test, the
company
hired
by
Notre
Dame
used
a
different
standard
and
definition of “water penetration,” thus skewing the results. (Rec.
Doc. 117, at 12.)1
Fourth, Kolbe’s expert engineer opined that the windows passed
the water penetration standards and that any water observed on the
floor of the building was attributable to deficiencies in the
perimeter sealant joints and Landis’ field vertical mullion. (Rec.
Doc. 117-14, at 39-41.) Fifth, Kolbe cites evidence of improper
handling
of
McInerney,
Kolbe’s
Landis’
windows.
Specifically,
subcontractor
Kolbe
responsible
claims
for
that
window
installation, improperly removed gusset plates that were intended
to hold the window units in place until they were ready for field
mulling. (Rec. Doc. 117-5.) Finally, Kolbe asserts that Notre
Dame’s motion relies on the deposition testimony of George Digman.
Kolbe argues that the Court cannot favor Digman’s testimony without
1
Kolbe bases this argument on the deposition of James Blakey, whom Notre Dame
hired to conduct the window testing. Because the deposition was taken on May
20, the transcript is not yet available.
10
making
credibility
determinations,
which
is
forbidden
at
the
summary judgment stage.
Similarly, Grand Openings points out factual issues in its
opposition.
First,
Grand
Openings
cites
testimony
from
Notre
Dame’s water-proofing consultant, John Tatum. According to Grand
Openings, Tatum testified about the potential sources of water
intrusion but could not determine the actual point of water
intrusion. (Rec. Doc. 102-9, at 31-32.) Further, Grand Openings
points out that the first set of water testing showed intrusion of
water from the sealant around the perimeter of the window. Grand
Openings cites a statement of Landis’ project manager to confirm
this. (Rec. Doc. 115-2, at 2.) Second, Grand Openings repeats the
conclusions of Kolbe’s expert engineer, who testified that Landis’
mishandling of the windows resulted in the water penetration.
Third,
Grand
Openings
highlights
the
statement
of
the
water
intrusion auditor, who did not observe any water intrusion in his
inspection of the testing at the construction site. (Rec. Doc.
117-9, at 15.) Grand Openings asserts that the opening of the mitre
corners – a result of Landis’ mishandling of the windows – allowed
the intrusion of water. Thus, Grand Openings argues that the
windows did not contain a manufacturing defect.
Defendants’ oppositions reveal the existence of numerous factual
issues that preclude summary judgment. The key issue is whether
the defect in the windows existed at the time they were delivered
11
to Landis. Defendants’ opposition evidence suggests that Landis or
its subcontractors may be responsible for the leaking windows.
Thus, Notre Dame is not entitled to summary judgment at this time.
B. Kolbe’s Motion for Partial Summary Judgment
Kolbe argues that it is entitled to summary judgment because
Notre Dame effectively waived all warranties not specifically
provided for in Kolbe’s Express Limited Warranty. The Civil Code
provides
that
the
parties
to
a
contract
may
waive
certain
warranties. “The parties may agree to an exclusion or limitation
of the warranty against redhibitory defects. The terms of the
exclusion or limitation must be clear and unambiguous and must be
brought to the attention of the buyer.” La. Civ. Code art. 2548.
Waivers of the warranties are strictly construed against the
seller. Boos v. Benson Jeep–Eagle, Inc., 717 So. 2d 661, 664 (La.
Ct. App. 1998). Additionally, the seller carries the burden of
proving an effective waiver. Id. Further, “[w]arranty limitations
are generally construed against manufacturers. For that reason,
limitation attempts have often been ineffective.” Datamatic, Inc.
v. Int'l Bus. Machines Corp., 795 F.2d 458, 465 (5th Cir. 1986)
(internal citations omitted). However, commercially sophisticated
parties
are
held
to
a
higher
standard
than
unknowledgeable
consumers. Id. “In such cases, Louisiana courts are more willing
to find that the waiver was clear and unambiguous, and that the
12
buyer's signature is evidence that its terms and conditions were
brought to his attention.” Id. (internal citations omitted).
In a previous Order and Reasons, the Court found that Kolbe did
not introduce any evidence to show that Landis was made aware of
any waiver provisions. (Rec. Doc. 93.) As an exhibit to the instant
motion, Kolbe attached the deposition of Sarah Busch, the Landis
project executive responsible for the Notre Dame project. Busch
signed the Purchase Order with Grand Openings on Landis’ behalf.
She testified that she read, observed, and was aware of Kolbe’s
Express Limited Warranty, which was included in the contract. (Rec.
Doc. 104-26, at 11.) Thus, the Court finds that the waivers were
brought to Landis’ attention.
Notre Dame argues that Kolbe must prove that the waiver was
brought to its attention, not merely to Landis’ attention. However,
the Fifth Circuit suggests otherwise. First, as the Fifth Circuit
points out, “a warranty limitation legally operative against the
original
consumer-buyer
is
effective
against
all
successive
buyers.” Datamatic, Inc., 795 F.2d at 460. Because a subsequent
buyer’s rights in redhibition are based on subrogation, “[w]hen an
informed buyer purchases [a product] from a seller who is not a
dealer of the manufacturer, his claim against the manufacturer .
. .
is no greater than the rights of the original buyer.” Id. at
464; c.f. DeSoto v. Ellis, 393 So. 2d 847, 849 (La. Ct. App. 1981)
13
(subvendee is subrogated to the rights of his vendor as to the
warranty against eviction).
Second, because commercially sophisticated entities are held to
a higher standard, the Fifth Circuit found that a subsequent
purchaser was bound by its seller’s waiver of redhibition. The
exclusions applied to the purchaser because “[t]he language of the
warranty-limitation provisions was conspicuous and should have
been clear and unambiguous. [The subsequent purchaser] was on
notice of the existence of the original contracts and their terms
through the language in the warranty provisions of its contracts
with [its seller].” Datamatic, Inc., 795 F.2d at 465.
In this case, Notre Dame is subrogated to Landis’ rights as
against Grand Openings and Kolbe. Because Landis acted as Notre
Dame’s contractor in the transaction with Grand Openings, it would
be patently absurd for Notre Dame to claim that it had no notice
of the terms of the Purchase Order. As a commercially sophisticated
entity, Notre Dame is held to a higher standard than the average
consumer. Thus, Notre Dame was sufficiently aware of the Express
Limited Warranty contained in the Purchase Order.
The Datamatic opinion similarly disposes of Notre Dame’s other
contentions. First, Notre Dame argues that the manufacturer’s
constructive knowledge of the defect defeats any attempted waiver.
The Civil Code provides, “A buyer is not bound by an otherwise
effective exclusion or limitation of the warranty when the seller
14
has declared that the thing has a quality that he knew it did not
have.” La. Civ. Code art. 2548. Knowledge of defects in a product
are imputed to the manufacturer, who is considered a bad faith
seller. La. Civ. Code art. 2545. Thus, Notre Dame claims that
Kolbe, as manufacturer of the windows, had constructive knowledge
of the alleged defects, defeating its attempt to exclude the
warranty against redhibitory defects. However, the Fifth Circuit
rejected this argument, stating, “This equivalence, however, is
suggested only in one commentary, has been rejected in another,
and
has
never
been
adopted
by
a
Louisiana
court.
We
are
unpersuaded. Although ingenious, this scheme seems to us to equate
different concepts created for different purposes.
Datamatic,
Inc., 795 F.2d at 465 (internal citations omitted). This Court is
bound by the Fifth Circuit’s decision on this issue.
Second, Notre Dame argues that it is subrogated to the rights
of Grand Openings as against Kolbe, entitling Notre Dame to sue
Kolbe directly. The Civil Code provides, “A seller who is held
liable
for
a
redhibitory
defect
has
an
action
against
the
manufacturer of the defective thing, if the defect existed at the
time the thing was delivered by the manufacturer to the seller,
for any loss the seller sustained because of the redhibition. Any
contractual provision that attempts to limit, diminish or prevent
such recovery by a seller against the manufacturer shall have no
effect.” La. Civ. Code art. 2531. Notre Dame claims that it may
15
proceed directly against Kolbe because it is subrogated to the
rights of Grand Openings against Kolbe. The Fifth Circuit has
rejected this argument, pointing out that “article 2531 by its own
terms is not applicable if the buyer's immediate seller was not
held liable.” Datamatic, Inc., 795 F.2d at 466. Neither Landis nor
Grand Openings has been held liable to Notre Dame in redhibition.
Based on this binding precedent, the Court must reject Notre Dame’s
argument.
The only remaining issue is whether Kolbe’s waiver was clear
and unambiguous. The Fifth Circuit has approved of language similar
to the language in Kolbe’s Express Limited Warranty. Kolbe’s
warranty stated, “This express limited warranty is in lieu of all
other
warranties,
express
or
implied.
There
are
no
implied
warranties of merchantability or fitness for a particular purpose,
or any other warranties that extend beyond this express limited
warranty. . . . The remedies provided under this express limited
warranty are exclusive and in lieu of all other remedies at law or
equity.” (Rec. Doc. 104-16, at 60.) In Datamatic, the Fifth Circuit
found
that
similar
language
was
sufficiently
clear
and
unambiguous. The Circuit approved of the following language: “The
foregoing Warranties and Limitations are exclusive remedies and
are in lieu of all other warranties express or implied, including
but not limited to the implied warranty of merchantability.”
Datamatic, Inc., 795 F.2d at 460 (emphasis in original). Thus, the
16
Court finds that the language in the Express Limited Warranty is
sufficiently clear and unambiguous.
Notre Dame argues that the language of the Express Limited
Warranty conflicts with the language in the Purchase Order. By its
own terms, the Purchase Order warrants against defects and warrants
that the product will be fit for its ordinary use. Additionally,
the Purchase Order includes “any warranty . . . implied by law.”
The warranty of fitness and the warranty against redhibitory
defects are implied by law in every sales contract. Radalec, Inc.
v. Automatic Firing Corp., 81 So. 2d 830, 833 (La. 1955) (warranty
against redhibitory defects); Ca. Chem. Co. v. Lovett, 204 So. 2d
633, 636 (La. Ct. App. 1967) (warranty of fitness). However, the
Express Limited Warranty clearly refers only to Kolbe, while the
Purchase Order warranties refer to the “seller,” named in the
contract
as
Grand
Openings.
The
distinction
between
the
two
entities should have been clear and unambiguous to Landis and Notre
Dame.
The waivers contained in the Express Limited Warranty are valid.
Thus, Landis waived all warranties with respect to Kolbe but
preserved the claims as to Grand Openings. Notre Dame may maintain
its contractual claims against Grand Openings but not against
Kolbe.
Its
sole
remedy
against
violations of the LPLA.
17
Kolbe
is
based
on
tort
and
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Notre Dame’s Motion for Partial
Summary Judgment is DENIED.
IT IS FURTHER ORDERED that Kolbe’s Motion for Partial Summary
Judgment is GRANTED.
IT IS FURTHER ORDERED that the oral argument set for June 1,
2016 is CANCELED.
IT IS FURTHER ORDERED that the pending Motions for Leave to
File Reply (Rec. Doc. 118; Rec. Doc. 119; Rec. Doc. 123) are DENIED
as moot.
New Orleans, Louisiana this 27th day of May, 2016.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
18
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