Performance Contractors, Inc. v. Great Plains Stainless, Inc.

Filing 61

RULING denying 37 Great Plains' Motion for Partial Summary Judgment. Great Plains' 46 Motion for Partial Summary Judgment is GRANTED IN PART, as Great Plains cannot be a manufacturer in regard to Performances claims or under the alter ego definition of manufacturer in the LPLA, and DENIED IN PART, as a genuine issue of material fact exists as to whether Great Plains is a manufacturer in regard to the claims Performance brings as Louisiana Chemical's assignee. Signed by Judge James J. Brady on 11/2/2012. (JDL)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
PERFORMANCE CONTRACTORS, INC.
CIVIL ACTION
VERSUS
NO. 11-485-JJB
GREAT PLAINS STAINLESS, INC.
RULING ON DEFENDANT’S MOTIONS FOR SUMMARY JUDGMENT
Before the Court are Motions for Partial Summary Judgment filed by Defendant Great
Plains Stainless, Inc. (“Great Plains”) (Docs. 37 and 46). Both motions are opposed. Oral
argument is unnecessary.
I.
This suit arises out of the construction of the Plaquemine VCM Plant (“the Project”) in
Iberville Parish, Louisiana. Performance Contractors, Inc. (“Performance”) entered into contract
with Shintech Louisiana LLC (“Shintech”) calling for Performance to provide pipe fabrication
and installation services for the Project. Performance claims it issued Purchase Order No.
45140011 to Louisiana Chemical Pipe Valve and Fitting, Inc. (“Louisiana Chemical”) for piping
and fittings for the Project. Louisiana Chemical ordered the piping and fittings from Great
Plains. Performance claims that Great Plains manufactured and supplied the fittings, and that
numerous fittings were marked “GPSS.” Great Plains requested the fittings be inspected prior to
their shipment from China to the United States. Performance asserts that the fittings failed to
comply with the product specifications found on Great Plains’ website, the specifications set
forth in the applicable purchase order, and other applicable standards including certain ASME,
ASTM, and MSS standards. Performance claims Great Plains refused to replace the fittings.
Performance filed this lawsuit asserting claims for redhibition and products liability and seeking
1

damages incurred as a result of the allegedly defective fittings provided by Great Plains.
Performance subsequently filed a Supplemental and Amended Complaint (Doc. 29) asserting
claims as the assignee of Louisiana Chemical’s rights against Great Plains for redhibition,
products liability, breach of contract, and bad faith and misrepresentation. All claims in this
lawsuit arise under Louisiana law.
II.
Summary judgment is appropriate when “the movant shows that there is no genuine
dispute as to any material fact.” Fed. Rule Civ. P. 56(a). The party seeking summary judgment
carries the burden of demonstrating that there is an absence of evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). When the burden at
trial rests on the non-moving party, the moving party need only demonstrate that the record lacks
sufficient evidentiary support for the non-moving party’s case. Id. The moving party may do this
by showing that the evidence is insufficient to prove the existence of one or more essential
elements of the non-moving party’s case. Id. A party must support its summary judgment
position by “citing to particular parts of materials in the record” or “showing that the materials
cited do not establish the absence or presence of a genuine dispute.” Fed. Rule Civ. P. 56(c)(1).
Although the Court considers evidence in a light most favorable to the non-moving party,
the non-moving party must show that there is a genuine issue for trial. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248–49 (1986). Conclusory allegations and unsubstantiated assertions
will not satisfy the non-moving party’s burden. Grimes v. Tex. Dep’t of Mental Health, 102 F.3d
137, 139–40 (5th Cir. 1996). Similarly, “[u]nsworn pleadings, memoranda or the like are not, of
course, competent summary judgment evidence.” Larry v. White, 929 F.2d 206, 211 n.12 (5th
Cir. 1991). If, once the non-moving party has been given the opportunity to raise a genuine fact
2

issue, no reasonable juror could find for the non-moving party, summary judgment will be
granted for the moving party. Celotex, 477 U.S. at 322.
III.
Great Plains’ first Motion for Partial Summary Judgment (Doc. 37) seeks dismissal of
Performance’s claims on behalf of itself and Louisiana Chemical, which it argues are precluded
by a limited liability provision in the sales documentation exchanged between the parties. Great
Plains bases its argument on the Louisiana law describing waiver of warranty for redhibitory
defects.

Great Plains argues that its terms and conditions contain a limitation of liability

provision, and that these terms and conditions were contained in every quote, order,
acknowledgement, and invoice that it issued to Louisiana Chemical. Great Plains presents
evidence that numerous items of sales documentation for the Shintech order were provided to
Louisiana Chemical beginning January 19, 2010. Great Plains also presents evidence that it has
had a business relationship with Louisiana Chemical for a number years, has filled about fifty
orders for Louisiana Chemical in the last five years, and that Great Plains’ standard terms and
conditions have remained the same throughout the parties’ relationship. Great Plains asserts that
the limitation of liability provision in question states: “GPS assumes no responsibility for claims
of product defects beyond replacement, repair, or refund of payment to be determined solely by
GPS.”
A “seller warrants the buyer against redhibitory defects, or vices, in the thing sold.” La.
Civ. Code art. 2520. “[P]arties may agree to an exclusion or limitation of the warranty against
redhibitory defects.” La. Civ. Code art. 2548. In order to be effective, a waiver of warranty
must: (1) be written in clear and unambiguous terms; (2) be contained in the contract; and, (3)
either be brought to the attention of the buyer or explained to him. Prince v. Paretti Pontiac
3

Company, Inc., 281 So. 2d 112, 117 (La. 1973); Boos v. Benson Jeep-Eagle Co., Inc., 98-1424
(La. App. 4 Cir. 6/24/98); 717 So. 2d 661, 663–64; Ross v. Premier Imports, 96-2577 (La. App.
1 Cir. 11/7/97); 704 So. 2d 17, 21; Keaty v. Moss Motors, Inc., 93-1452 (La. App. 3 Cir. 6/1/94);
638 So. 2d 684, 687.

The seller bears the burden of proving that the buyer waived the

warranties. Boos, 717 So. 2d at 664; Pias v. Wiggins, 96-499 (La. App. 3 Cir. 10/09/96); 688 So.
2d 1103, 1106. “Such waivers are strictly construed against the seller.” Boos, 717 So. 2d at 664;
Guillory v. Morein Motor Company, Inc., 322 So. 2d 375, 378 (La. App. 3 Cir. 1975).
For a waiver’s terms to be clear and unambiguous, “the language used must be
comprehendible by the average buyer.” Jeffers v. Thorpe, 95-1731 (La. App. 4 Cir. 1/19/96);
673 So. 2d 202, 205; Thibodeaux v. Meaux’s Auto Sales, Inc., 364 So.2d 1370, 1371 (La. App. 3
Cir. 1978). Great Plains argues the one sentence waiver of warranty provision contains clear
language to outline Great Plains’ limited responsibility for claims of product defects, that it is not
responsible for consequential or other special damages that may occur from a product defect. It
argues that the provision is short, concise, and devoid of legalese. Performance argues that the
provision is silent in regard to redhibition or implied warranties, and that the provision therefore
is not clear and unambiguous.1 Performance cites LaRoche Industries, Inc., v. Affholder, Inc.,
1997 U.S. Dist. WL 184834 (E.D. La. 1997), for this proposition. LaRoche Industries held that a
waiver which was silent as to redhibition or implied warranties, since it did not expressly address
redhibition or implied warranties, was not clear and unambiguous as required by Louisiana Civil
Code article 2548. Id. at *3. It distinguished such silence from the circumstances of certain

1

Performance also argues that the waiver of warranty provision is not clear and unambiguous based on certain
factors that it argues are applicable to this determination under Louisiana law: whether the clause (1) is set apart
from other language, (2) has a distinguishing heading, (3) contains bold face or upper case print, and (4) is located
near the buyer’s signature. The law, however, does not provide that these factors be considered when determining
whether a waiver of liability is clear and unambiguous.

4

Louisiana cases which enforced a waiver or limitation of implied warranties, noting that the
contracts in those cases specifically addressed implied warranties. Id. at *2; Louisiana National
Leasing Corp. v. ADF Serv., Inc., et al, 377 So. 2d 92, 95 (La. 1979); FMC Corp. v. Continental
Grain Co., 355 So. 2d 953, 956 (La. App. 4 Cir. 1977).
The Court finds LaRoche applicable to the case at hand. As in LaRoche, Great Plains’
limitation of liability provision is silent as to redhibition and implied warranties. Accordingly,
the provision is not clear and unambiguous as required by law. The Court therefore does not
reach the other elements of an effective limitation of liability. As Great Plains cannot prove that
the provision is clear and unambiguous, it fails to carry its burden for proving that the limitation
of liability provision is effective against Performance as required by the law addressing waiver of
warranty for redhibitory defects.
IV.
Great Plains’ second Motion for Partial Summary Judgment (Doc. 46) moves for
summary judgment dismissing Plaintiff’s Louisiana Products Liability Act (“LPLA”) and bad
faith seller redhibition claims which are based on Great Plains’ status as the apparent
manufacturer of the subject piping and fittings.

Great Plains argues that it cannot be the

“manufacturer” as that term is defined by applicable industry standards and an agreed definition.
This argument is split into three parts: (1) that Great Plains is not a manufacturer according to the
industry standards; (2) that the apparent manufacturer doctrine does not apply; and (3) that
Performance can provide no evidence that Great Plains can be considered a manufacturer under
the “alter ego” definition of “manufacturer.”
The Court first addresses Great Plains’ argument that it is not a manufacturer according
to the ASTM standards, some of the standards applicable to the products that the form the basis
5

of this lawsuit. Great Plains claims Performance agreed these standards would apply to the
products in question, and accordingly, these standards apply to determine the definition of
manufacturer. Performance claims that it did not agree to the ASTM definition of manufacturer.
Great Plains has not carried its burden in asserting that it is not a manufacturer under the ASTM
standards. Further, Great Plains fails to adequately explain how the ASTM standards and the
ASTM definition of manufacturer affect Performance’s claims that Great Plains is a
manufacturer under Louisiana law.
The Court next addresses Great Plains’ argument that the apparent manufacturer doctrine
does not apply. The LPLA provides remedies against the manufacturer for claimants harmed by
an unreasonably dangerous product. La. Rev. Stat. § 9:2800.54(A). Louisiana redhibition law
provides remedies against a manufacturer for defects or vices in a thing sold. La. Civ. Code art.
2520; Chastant v. SBS-Harolyn Park Venture, 510 So. 2d 1341, 1344 (La. App. 3 Cir. 1987).
However, one does not need to be the actual manufacturer to be considered a manufacturer under
the LPLA or Louisiana redhibition law. Chevron USA, Inc. v. Aker Maritime, Inc., 604 F.3d
888, 895 (5th Cir. 2010); Chastant, 510 So. 2d at 1344. It may be the apparent manufacturer,
which is defined as “[a] person or entity who labels a product as his own or who otherwise holds
himself out to be the manufacturer of the product.” La. Rev. Stat. 9:2800.53(1)(d). Louisiana
cases “demonstrate that when the distributor's actions give the buying public a basis to assume
that it may be the manufacturer of a product it distributes, a jury will usually be within its
province to conclude that the distributor held itself out as the product's manufacturer.” Chevron,
604 F.3d at 897.
Great Plains claims that Performance knew Great Plains was not the manufacturer, and
that this keeps the apparent manufacturer doctrine from applying. Great Plains supports this
6

assertion by pointing to the deposition of Jerome Mabile, Performance’s appointed corporate
representative, who affirmed that Performance was aware that the items supplied by Great Plains
to Louisiana Chemical and then to Performance were manufactured by entities other than Great
Plains. Performance responds that Great Plains’ assertion is “stretching the truth,” and this
testimony by Mr. Mabile only refers to his personal knowledge. Performance’s assertion is
unmistakably meritless. The law is clear that as Performance’s corporate representative, Mr.
Mabile spoke for Performance. Fed. R. Civ. P. 30(b)(6); Brazos River Authority v. GE Ionics,
Inc., 469 F.3d 416, 433 (5th Cir. 2006).
This Court, in Ayo v. Honeywell Intern., Inc., No. 06-688, 2010 U.S. Dist. WL 4117726,
at *5 (M.D. La. Oct. 13, 2010), recently addressed the apparent manufacturer doctrine as it
related to a buyer who had knowledge that the seller was not the manufacturer. Ayo involved a
products liability claim by the plaintiff against the distributor of an allegedly defective chlorine
transfer hose, which ruptured. Citing the Fifth Circuit in Chevron, Ayo held that “Plaintiffs have
failed to set forth the evidence from which a reasonable fact-finder could conclude that
Defendant either held the hose out as its own, gave the customers a basis to assume that
Defendant may be the manufacturer of the product it distributed, or that Defendant had a
reputation as a manufacturer of the hose.” In reaching this conclusion, the court focused on the
fact that the purchaser’s reliability engineer knew the identity of the actual manufacturer of the
hose and knew that the Defendant distributor was not the manufacturer.
As in Ayo, Performance knew that Great Plains was not the manufacturer of the items
Great Plains supplied to it. This evidence precludes a reasonable fact-finder from concluding
that Great Plains held the items out as its own. Since Performance knew Great Plains was not
the manufacturer, no reasonable juror could find that Great Plains’ actions gave Performance “a
7

basis to assume that it may be the manufacturer.” Chevron, 604 F.3d at 897. Therefore, with
regard to Performance’s claims on behalf of itself, Great Plains is not the apparent manufacturer
of the products in question.
Regarding Great Plains’ assertion that Louisiana Chemical also had knowledge that Great
Plains was not a distributor, the evidence Great Plains presents does not establish this.
Therefore, we look to a series of factors to determine whether Great Plains is not a manufacturer
as a matter of law with regard to Performance’s claims brought as Louisiana Chemical’s
assignee. The factors for whether Great Plains labeled the product as its own include: 1) the
actual wording of the label; 2) whether the company in the label was a well-known manufacturer
of the product; 3) whether the product bears the actual manufacturer's mark; 4) whether the seller
is the entity that labeled the product; and 5) whether the label denotes ownership of the product.
Chevron, 604 F.3d at 896; Allstate Ins. Co. v. Fred’s Inc., 44,508 (La. App. 2 Cir. 3/17/10); 33
So. 3d 976, 984–85; Louviere v. Ace Hardware Corp., 2005-259 (La. App. 3 Cir. 11/2/05); 915
So. 2d 999, 1002; Peterson v. G.H. Bass and Co., Inc., 1997-2843 (La. App. 4 Cir. 5/20/98); 713
So. 2d 806, 808; Penn v. Inferno Mfg. Corp., 199 So. 2d 210, 217 (La. App. 1 Cir. 1967). Labels
both on the products themselves and on their packaging are taken into consideration.
Additionally, courts recognize that to be an apparent manufacturer, an entity must have some
level of control over the properties of the products. Parks ex rel. Parks v. Baby Fair Imports,
Inc., 726 So. 2d 62 (5th Cir. 1998); see also Penn, 199 So. 2d at 218 (stating the seller of a
product must be considered as a party to the manufacturing process as the product was made
using the seller’s equipment). Aside from product labeling, Louisiana courts have considered
whether the product itself left the consumers with the impression that the seller was the
manufacturer, product marketing, product guarantees, and whether the seller had a reputation as
8

a manufacturer in its market. Peterson, 713 So. 2d at 808; Landry v. State Farm Fire & Cas. Co.,
504 So. 2d 171, 173-74 (La. App. 3 Cir. 1987); Penn, 199 So. 2d at 217. “It takes very little
under Louisiana law to present a jury issue if a product does not bear the actual manufacturer's
mark.” Chevron, 604 F.3d at 896.
Great Plains presents evidence that the “GPSS” mark on the body of the product is
insufficient to put any consumer on notice that Great Plains intended to be known as the
manufacturer, that the mark was placed for tracing purposes and to avoid confusion with the
actual manufacturer, and that it did not personally mark the products. It further argues that the
label was merely initials and not a trademark or logo, Great Plains is not a well known
manufacturer of the subject pipe and fittings but is instead a well known distributor, and the
initials do not denote ownership.

It presents evidence that it exhibits no control over the

manufacture, design, or composition of the fittings, and that it could only require the products
meet ASTM standards. It presents evidence that it is not the exclusive representative of the
manufacturer and it did not market the products as its own. Great Plains finally presents
evidence that it did not certify the quality of any product, which is the purpose of Material Test
Reports.
Performance presents evidence to show that Great Plains labeled the products as its own
and held itself out to be the manufacturer by deliberately stenciling “GPSS” on the products and
by making no effort to notify Performance or Louisiana Chemical that it was merely serving as a
vendor. It presents evidence that the products did not contain the markings of Zhejiang JNDIA,
the purported actual manufacturer of the products. It argues that knowingly requesting that the
fittings be marked “GPSS” means they were labeled as Great Plains’ own fittings. Performance
further argues that section 16 of ASTM A815 – 09a, which it claims is applicable to the instant
9

case, requires that all fittings have the manufacturer’s name or trademark “suitably marked on
each fitting.” Note 2 of section 16 of ASTM A815 – 09a provides that, “[f]or purposes of
identification marking, the manufacturer is considered the organization that certifies that the
piping complies with this specification.” Performance asserts that by providing products in
response to a purchase order that required compliance with ASTM 815 and by marking such
products with its own initials, Great Plains certified that the fittings complied with the applicable
specification, so it is the manufacturer. Performance also argues that Great Plains certified the
fittings by having a third-party inspect the fittings.
Performance points to two cases for comparison to show that a genuine issue of material
fact exists here. The Court of Appeal of Louisiana, Third Circuit, in Laughlin v. Kulkoni, Inc.,
93-1613 (La. App. 3 Cir. 9/14/94); 643 So. 2d 206, 207–08, considered a claim by drilling rig
worker against the supplier of an allegedly defective wire rope. The worker argued the supplier
occupied the position of manufacturer, since it did not disclose the identity of its manufacturers
and suppliers, only the supplier’s name appeared in its catalog, the supplier required the alleged
actual manufacturer to comply with United States manufacturing regulations, the supplier
required test certificates from the manufacturer but re-issued them after replacing the actual
manufacturer’s name with its name, and it occasionally conducted independent tests on the wire
rope although it had no duty to do so. Id. at 210. The supplier responded that it did not identify
the rope with its trade name or logo, the only identifying marks were that of the manufacturer,
and that it only required manufacturers to meet U.S. government requirements. Id. Laughlin
held the issue to be a factual one, genuinely disputed by the parties. Id.
The Western District of Louisiana, in Justiss Oil Co., Inc. v. T3 Energy Services, Inc.,
2011 WL 539135, at *1 (W.D. La. Feb. 7, 2011), addressed a products liability claim by an oil
10

well owner and operator against the seller of an allegedly defective well head component. It held
that the evidence of the seller putting its name and logo on the product’s packaging and mailing
labels, with no branding on the product itself, and no other indication that another entity was the
manufacturer, was insufficient to establish the seller as the apparent manufacturer. Id. at 2.
Rather, such evidence created a genuine issue of fact. Id.
The Court agrees that as in Laughlin and Justiss Oil Co., a genuine issue of fact exists as
to whether Great Plains is an apparent manufacturer in regard to Performance’s claims as
Louisiana Chemical’s assignee. As stated by the Fifth Circuit, “[t]t takes very little under
Louisiana law to present a jury issue if a product does not bear the actual manufacturer's mark.”
Chevron, 604 F.3d at 896. For purposes of this Motion, the evidence shows that fittings in this
case did not bear the alleged actual manufacturer’s mark. Further the industry standards that the
parties agreed would apply to the fittings provide that that all fittings shall have the
manufacturer’s name or trademark “suitably marked on each fitting.” ASTM A815 – 09a section
16. The fittings bore the mark of Great Plains. The Court finds this sufficient to create a fact
issue as to whether Great Plains labeled the fittings as its own or otherwise held itself out to be
the manufacturer of the fittings.
The Court next addresses Great Plains’ argument that Performance can provide no
evidence that Great Plains can be considered a manufacturer under the “alter ego” definition of
manufacturer in the LPLA. Great Plains argues that accordingly, under this definition, it is not a
manufacturer as a matter of law. The Definitions section of the LPLA provides in pertinent part:
(1) “Manufacturer” also means:
(d) A seller of a product of an alien manufacturer if the seller is in the business of
importing or distributing the product for resale and the seller is the alter ego of the
11

alien manufacturer. The court shall take into consideration the following in
determining whether the seller is the alien manufacturer's alter ego: whether the
seller is affiliated with the alien manufacturer by way of common ownership or
control; whether the seller assumes or administers product warranty obligations of
the alien manufacturer; whether the seller prepares or modifies the product for
distribution; or any other relevant evidence. A “product of an alien manufacturer”
is a product that is manufactured outside the United States by a manufacturer who
is a citizen of another country or who is organized under the laws of another
country.
La. Rev. Stat. 9:2800.53(1)(d).
Performance fails to present evidence or argument that any of the statute’s defined factors
apply to Great Plains or its relationship with Zhejiang Jndia. Despite this, Performance argues
that the relevant holding in Andry v. Murphy Oil, U.S.A., Inc., (La. App. 4 Cir. 6/14/06); 935 So.
2d 239, is sufficient authority to allow for Great Plains to be considered a manufacturer as
Zhejiang Jndia’s alter ego. Andry held that a seller who imported valves, placed a label on them,
and sold them as its own, was the alter ego of an alien manufacturer under the LPLA. Andry did
not specifically address the factors the statute requires for consideration.
Great Plains argues that an earlier Louisiana Fourth Circuit opinion, Matthews v. WalMart Stores, Inc., 97-0449 (La. App. 4 Cir. 3/11/98); 708 So. 2d 1248, is more relevant
precedent for this case. Matthews involved a product defect suit against Wal-Mart, the seller of a
lamp solely labeled with a sticker stating “Made in China.” Id. at 1248–49. Matthews held that
the plaintiff, who presented no evidence or inference of any of the defined alter ego factors,

12

could not “bring herself within the ambit of the protection afforded by the LPLA” as the alter
ego of an alien manufacturer. Id. at 1249.
The Court agrees with Great Plains that the holding in Matthews is more applicable to the
case at hand. Performance has failed to present evidence or even argument that Great Plains and
Zhejiang Jndia had common ownership or control, that Great Plains assumed or administered
product warranties obligations of Zhejiang Jndia, or that Great Plains prepared or modified
Zhejiang Jndia’s products for distribution. Accordingly, no reasonable juror could find that
Great Plains is a manufacturer as Zhejiang Jndia’s alter ego. As a matter of law, Great Plains is
therefore not a manufacturer under the alter ego definition. To find otherwise, despite the fact
that no evidence has been provided of any of the statute’s stated factors, would be in
contravention of the statute.
V.
Accordingly, Great Plains’ Motion for Partial Summary Judgment (Doc. 37) is DENIED.
Great Plains’ Motion for Partial Summary Judgment (Doc. 46) is GRANTED IN PART, as
Great Plains cannot be a manufacturer in regard to Performance’s claims or under the “alter ego”
definition of manufacturer in the LPLA, and DENIED IN PART, as a genuine issue of material
fact exists as to whether Great Plains is a manufacturer in regard to the claims Performance
brings as Louisiana Chemical’s assignee.
Signed in Baton Rouge, Louisiana, on November 2, 2012.





JAMES J. BRADY, DISTRICT JUDGE

13