Multivac, Inc. v. Rotella's Italian Bakery

Filing 52

ORDER AND OPINION DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON DEFENDANT'S COUNTERCLAIMS, #44 and #46 . Signed on 3/10/16 by District Judge Ortrie D. Smith. (Matthes, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
MULTIVAC, INC.,
Plaintiff,
vs.
ROTELLA’S ITALIAN BAKERY, INC.,
Defendant.

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Case No. 14-1003-CV-W-ODS

ORDER AND OPINION DENYING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF’S MOTION
FOR SUMMARY JUDGMENT ON DEFENDANT’S COUNTERCLAIMS
Pending are Defendant’s Motion for Summary Judgment (Doc. #44) and
Plaintiff’s Motion for Summary Judgment on Defendant’s Counterclaims (Doc. 46). For
the following reasons, both motions are denied.

I. BACKGROUND

Plaintiff Multivac, Inc. (“Multivac”) is a Kansas City, Missouri-based corporation
that manufactures packaging machines used by food processers. Defendant Rotella’s
Italian Bakery, Inc. (“Rotella’s”) is a Nebraska-based wholesale bakery business that
specializes in breads and rolls.
In late 2012 or early 2013, a regional sales manager for Multivac, Mark Snethen,
contacted Rotella’s inquiring about Rotella’s operations in the gluten-free baking
industry. During the phone call, Snethen represented that Multivac packaging machines
succeeded in extending the shelf-life “up to six months to a year” for “two accounts” that
packaged gluten-free bread. Rotella’s expressed interest in purchasing a Multivac
packaging machine for Rotella’s gluten-free bread products. During the discussions
between the two companies, Multivac represented that Rotella’s could expect a shelflife increase with Multivac’s machine, and it could bypass using a freezer for its glutenfree products.

On October 18, 2013, Multivac sent a written proposal to Rotella’s for the sale of
a Multivac Packaging Machine Model R535 (“R535”). The R535 utilizes modified
atmosphere packaging technology, removing air from the package and inserting a gas
or gas mixture into the package and sealing the package. The proposal made
representations about a “significant shelf life increase” as well as Rotella’s ability to “get
out of the freezer” and “maintain quality.”
The parties entered into a contract for the purchase of the R535 for $560,964.
The contract described the R535 as a “[f]ully automatic stainless steel horizontal Form,
Fill and Seal rollstock packaging machine; custom designed and constructed for
durability and reliability to maximize user efficiency and profitability.” Doc. #45-3, at p.
5. The two-page, single-spaced Terms and Conditions included in the nineteen-page
agreement contained the following pertinent language:
1. General: (a) Notwithstanding any prior quotations, correspondence,
conversations, agreements, purchase orders or similar instruments
relative to the Goods, the Terms and Conditions of Sale and the Sales
Agreement to which these Terms and Conditions are attached are the
only terms and conditions applicable to the sale of the Goods….
6. Warranty: (a) Except as otherwise stated herein, [Multivac] warrants
the Goods to be free from defects in material and workmanship for a
period of the lesser of 12 months after commencement of installation or
4,000 operational hours of the Goods; provided, however, that such
period shall not exceed eighteen (18) months following transfer of title of
the Goods (the “Warranty Period”)…. (b) The warranties set forth above
are complete and are in lieu of and customer hereby waives, all other
warranties, express or implied by statute, usage, custom of the trade or
otherwise, including without limitation the implied warranties of
merchantability and fitness for a particular purpose. (c) The liability of
[Multivac] under its above warranty is expressly limited to the repair or
replacement, at [Multivac’s] sole option, of the Goods which breach the
above warranty within the Warranty Period. [Multivac’s] obligation to
repair or replace defective Goods constitutes agreed and liquidated
damages for any breach of warranty of [Multivac]….
9. Limitation of Liability: [Multivac] shall not be liable to [Rotella’s] under
any warranty or otherwise for: (a) the quality, life, handling or other
required specifications of the products that are packaged using the
Goods….

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12. Governing Law: These Terms and Conditions of Sale shall be
governed by the laws of the State of Missouri….
Doc. #45-3, at pp. 22-23.
Prior to delivery of the R535, Multivac provided Rotella’s with a loaner machine,
the R140 model, that employed the same technology as the R535 in that it removed
oxygen from a package and replaced it with another gas or gas mixture. Multivac
loaned the R140 to allow Rotella’s to perform shelf life testing and hit the ground
running when the R535 arrived. Rotella’s began testing the R140 and noticed the bread
packaged by the R140 was accompanied by a foul odor within three to four days of
being packaged, and mold appeared within two to three weeks of packaging.
Rotella’s brought these issues to Multivac’s attention. Multivac provided
assistance to Rotella’s to help find a gas, film, and product formula mixture that would
assist Rotella’s with the issues. The parties explored solutions to address the odor,
which included experimenting with various gas mixtures and enlisting third-party
contractors to help diagnose and solve the issues.
In May 2014, Rotella’s sent an email to Multivac stating that although Rotella’s
would continue to cooperate with Multivac’s efforts to successfully employ its vacuumseal and packaging technology, it was becoming apparent to Rotella’s, based upon the
failures to that point, that Multivac’s technology and packaging machines would not
work on Rotella’s gluten-free products. In June 2014, Rotella’s advised Multivac that
although the second payment on the R535 was due, Multivac had yet to demonstrate its
vacuum-seal technology could work on Rotella’s product without compromising it. In
response, Multivac suggested that Rotella’s change its gluten-free bread recipe, lower
the packaging temperature, and change the gas mixture in the machine.
In July 2014, Rotella’s sent another letter to Multivac requesting that Multivac (1)
return Rotella’s $186,350 deposit toward the purchase of the R535, or (2) provide
assurances that Multivac’s technology could work on Rotella’s products, offering
Multivac an additional thirty days to install the R535 and run test samples to prove the
technology could work on Rotella’s gluten-free products. In response, Multivac
requested that Rotella’s fulfill its contractual obligations by making its now-overdue

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payments on the R535 and take delivery of the R535. Thereafter, Multivac would
provide reasonable assistance in the testing and operation of the machine.
The parties were unable to reach a solution, and in November 2014, Multivac
filed this lawsuit alleging breach of contract. Doc. #1. In response, Rotella’s asserted
counterclaims against Multivac. Doc. #7. Multivac filed a motion for summary judgment
on Rotella’s Counterclaims. Doc. #44. Rotella’s also filed a motion for summary
judgment, asking that judgment be entered in Rotella’s favor. Doc. #46. Neither party
sought summary judgment on Multivac’s breach of contract claim.

II. DISCUSSION

A moving party is entitled to summary judgment on a claim only if there is a
showing that “there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” See Williams v. City of St. Louis, 783 F.2d
114, 115 (8th Cir. 1986). “[W]hile the materiality determination rests on the substantive
law, it is the substantive law’s identification of which facts are critical and which facts are
irrelevant that governs.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment.” Wierman v.
Casey’s Gen. Stores, 638 F.3d 984, 993 (8th Cir. 2011) (quotation omitted). In applying
this standard, the Court must view the evidence in the light most favorable to the nonmoving party, giving that party the benefit of all inferences that may be reasonably
drawn from the evidence. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 588-89 (1986); Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984). However, a
party opposing a motion for summary judgment “may not rest upon the mere allegations
or denials of the… pleadings, but… by affidavits or as otherwise provided in [Rule 56],
must set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ.
P. 56(e).

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A. Rotella’s Repudiation Counterclaim

(1) Failure to State a Counterclaim

Rotella’s argues Multivac repudiated the contract, and it is entitled to summary
judgment on this counterclaim. Multivac does not dispute that Rotella’s alleged a
counterclaim of repudiation. But Multivac argues Rotella’s changed the underlying
theory for its repudiation counterclaim during summary judgment. Multivac contends
Rotella’s alleged a counterclaim of repudiation based upon Multivac’s failure to provide
assurances that Multivac’s machine would achieve a six to nine month shelf life. Doc.
#49, at p. 22. Yet, according to Multivac, Rotella’s seeks summary judgment on its
repudiation claim related to the odor resulting from the gluten-free bread packaged with
Multivac’s machine. Multivac’s argument turns on whether Rotella’s properly pled a
claim of repudiation, and if so, whether Multivac had notice of the ground(s) upon which
the repudiation claim rested.
The liberal pleading standard created by the Federal Rules of Civil Procedure
requires Aa short and plain statement of the claim showing that the pleader is entitled to
relief.@ Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Fed. R. Civ. P.
8(a)(2)). ASpecific facts are not necessary; the statement need only >give the defendant
fair notice of what the…claim is and the grounds upon which it rests.=@ Id. (citing Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
“Anticipatory repudiation occurs when a party to a contract repudiates that
contract by manifesting, by words or conduct[,] a positive intention not to perform.” JAS
Apartments, Inc. v. Naji, 230 S.W.3d 354, 362 (Mo. Ct. App. 2007) (quoting Jetz Serv.
Co. v. Botros, 91 S.W.3d 157, 163 (Mo. Ct. App. 2002)). Rotella’s alleges, among other
things, the following in support of its repudiation counterclaim:


The “agreement imposed upon Multivac an obligation that Rotella’s expectation
of receiving Multivac’s performance…would not be impaired.” Doc. #7, at p. 12,
¶ 29.

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

The demonstration machine provided by Multivac to Rotella’s “repeatedly failed
to properly vacuum seal Rotella’s bakery products to achieve a shelf life of six (6)
to nine (9) months.” Doc. #7, at p. 12, ¶ 31



“[T]he Demonstration Machine rendered Rotella’s bakery products consistently
rancid and inedible within only a few days of their having been packaged.”
Doc. #7, at p. 8, ¶ 9 (emphasis added).



“[T]he Demonstration Machine never successfully vacuum sealed Rotella’s
bakery products as intended.” Doc. #7, at p. 8, ¶ 10.



Due to “multiple failed test results produced by Multivac’s Demonstration
Machine, and Multivac’s inability to cure the problem over several months…,
Rotella’s had strong reservations about Multivac’s ability to perform under the
agreement….” Doc. #7, at p. 9, ¶ 13.



“Because there existed reasonable grounds for insecurity with respect to
Multivac’s ability to perform under the Agreement…, Rotella’s was justified in
suspending its performance under the Agreement, and in demanding adequate
assurances of performance from Multivac.” Doc. #7, at p. 13, ¶ 33.



On July 28, 2014, “Rotella’s notified Multivac in writing that it was not willing to
pay any additional amounts to Multivac until Multivac could prove that its vacuum
seal packaging technology would perform consistent with the represented
performance capabilities that Rotella’s relied on….” Doc. #7, at pp. 8-9, ¶ 11;
see also Doc. #7, at p. 13, ¶ 34.



In the July 28, 2014 communication, “Rotella’s informed Multivac that, upon
assurances from Multivac that the R535 packaging machine would comply with
the performance capabilities that Multivac represented to Rotella’s when
Rotella’s ordered the machine, Rotella’s would agree to give Multivac the
opportunity to install the R535 packaging machine at Rotella’s plant and prove,
within a reasonable time, that the R535 was capable of performing consistent
with the performance capabilities previously represented to Rotella’s.” Doc. #7,
at p. 9, ¶ 15.1



On August 20, 2014, Multivac sent a communication to Rotella’s and “provided
no assurances that the R535 packaging machine would comply with the

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This paragraph also specifically referred to the July 28, 2014 letter, which was
attached to Defendant’s Counterclaims. See Fed. R. Civ. P. 10(c) (“A copy of a written
instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”).
That letter states, among other things, that “utilizing Multivac’s vacuum seal machine,
our products have been found to be consistently rancid and inedible within a few days
after having been packaged.” Doc. #7-1, at p. 2 (emphasis added).
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performance capabilities that Multivac represented to Rotella’s when Rotella’s
ordered the machine.” Doc. #7, at p. 10, ¶ 17.


On October 20, 2014, “Rotella’s…again requested that Multivac: provide
reasonable assurances that the R535 packaging machine would work…and
confirm whether Multivac would take the steps necessary to provide the R535
packaging machine would properly package Rotella’s bakery products and
extend their shelf life.” Doc. #7, at p. 10, ¶ 18.



Multivac responded on October 23, 2014, “but did not provide the assurances
Rotella’s requested. Multivac instead demanded that Rotella’s pay the entire
remaining amount of the purchase price….” Doc. #7, at p. 10, at ¶ 19.



“By failing to provide adequate assurances of performance to Rotella’s, despite
Rotella’s justified demand for such assurances, Multivac wrongfully repudiated
the Agreement.” Doc. #7, at p. 13, ¶ 37.
Based upon the allegations set forth by Rotella’s counterclaims, the Court finds

that Multivac was given fair notice that Rotella’s asserted a counterclaim of repudiation.
The Court also finds that Multivac was given fair notice that Rotella’s counterclaim of
repudiation was based upon its allegation that Multivac’s machine could not properly
package Rotella’s bread. And although not required by Rule 8(a)(2) of the Federal
Rules of Civil Procedure, which only requires “a short and plain statement of the claim
showing that the pleader is entitled to relief,” the Court also finds Multivac was on notice
that Rotella’s repudiation claims were based upon Multivac’s failure to assure Rotella’s
that Multivac’s machine would result in a six to nine months shelf life and would not
result in a rancid odor.2 Accordingly, the Court denies Multivac’s argument that

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Even if the Court found that Rotella’s failed to plead these particular bases for a claim
of repudiation, the Court finds Rotella’s properly set forth an affirmative defense of
repudiation. That is, Rotella’s alleged Multivac refused to provide adequate assurances
to Rotella’s regarding Multivac’s packaging machines ability to “perform[] as
represented,” which constituted a wrongful anticipatory repudiation. Doc. #7, at p. 6, ¶¶
4-5. “The rules do not require a party to plead every step of legal reasoning that may be
raised in support of its affirmative defense; they only require a defendant to state in
short and plain terms its defenses to a plaintiff's claims.” Wisland v. Admiral Beverage
Corp., 119 F.3d 733, 737 (8th Cir. 1997) (citation omitted). An affirmative defense
“need not be articulated with any rigorous degree of specificity, and is sufficiently raised
for purposes of Rule 8 by its bare assertion.” Strauss v. Centennial Precious Metals,
Inc., 291 F.R.D. 338, 341 (D. Neb. 2013) (quoting Zotos v. Lindbergh Sch. Dist., 121
F.3d 356, 361 (8th Cir. 1997)).
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Rotella’s failed to state a counterclaim of repudiation based upon Multivac’s alleged
failure to assure Rotella’s that its machine would not result in a rancid odor.

(2) Analysis of Rotella’s Repudiation Counterclaim

Rotella’s argues that it is entitled to summary judgment on its repudiation
counterclaim. Multivac contends that all of Rotella’s counterclaims, including its
repudiation counterclaim, fail because the claims are based upon representations made
prior to parties’ execution of the contract, which Multivac maintains is fully integrated.
Pertaining specifically to the repudiation counterclaim, Multivac argues the fully
integrated contract does not set forth obligations that Multivac did not fulfill, and
because the agreement is fully integrated, the Court should not be permitted to consider
parol evidence establishing other obligations Multivac may or may not have had.
“A written agreement is integrated if it represents a final expression of one or
more terms of the agreement.” Rosenfeld v. Boniske, 445 S.W.3d 81, 87-88 (Mo. Ct.
App. 2014), reh'g and/or transfer denied (Aug. 7, 2014), transfer denied (Oct. 28, 2014)
(citation omitted). To determine whether a writing is integrated, the Court must look to
the face of the document without considering the surrounding facts and circumstances.
Id. (citation omitted). “If the document appears to be a complete agreement on its face,
it is conclusively presumed to be the final and complete agreement between the
parties.” Id. (citing Jake C. Byers, Inc. v. J.B.C. Invs., 834 S.W.2d 806, 812 (Mo. Ct.
App. 1992)).
“Merger clauses are express statements of the merger doctrine and are intended
to prevent extrinsic evidence of other agreements influencing the interpretation of a
final written contract….” Johnson ex rel. Johnson v. JF Enters., LLC, 400 S.W.3d 763,
768 (Mo. banc 2013) (citations omitted) (emphasis added). Although the inclusion of a
merger clause “does not establish that a writing is a complete and final agreement, a
merger clause should be given great weight and aids the court in determining whether
the writing is the final expression of all terms agreed upon.” Johnson, 400 S.W.3d at
766 (citations omitted). “If the parties have integrated their agreement into a single
written memorial, all prior negotiations and agreements in regard to the same subject
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matter are excluded from consideration, whether they were oral or written.” Sedalia
Mercantile Bank & Trust Co. v. Loges Farms, Inc., 740 S.W.2d 188, 193 (Mo. Ct. App.
1987) (citation omitted) (emphasis added); see also Jake C. Byers, Inc., 834 S.W.2d at
811 (citation omitted).
The parties included a merger clause in the agreement. Doc. #45-3, at p. 22.
But this is merely evidence that the parties intended all prior and contemporaneous
agreements should have been merged into the contract. See Rosenfield, 445 S.W.3d
at 88. The contract specifies that the R535 is supposed to “maximize user efficiency
and profitability” and will be used to “package bread.” Doc. #45-3, at 5. Without looking
beyond the contract, Multivac cannot sincerely maintain it met its obligations under this
contract in providing a machine that could “maximize user efficiency and profitability”
when the machine it provided to Rotella’s consistently resulted in bread that emitted a
rancid odor after three days and mold growth after seven days.
Beyond this scant description of the R535, the contract does not set forth what
exactly the R535 is supposed to do. Accordingly, this contract, on its fact, is not
complete.3 Therefore, the Court has considered evidence pertaining to representations
made by Multivac to Rotella’s about the capabilities and performance of the R535
before the contract was executed. The Court will also allow testimony at trial regarding
what the R535 was supposed to do, including information and representations made by
Multivac to Rotella’s prior to the contract being executed.
The Court’s review of the record reveals there are disputed issues of material
fact that preclude entry of judgment as a matter of law with respect to Rotella’s
counterclaim of repudiation. At a minimum, there are disputed material facts pertaining
to Multivac’s obligations to Rotella’s as well as the grounds and the reasonableness of
those grounds for Rotella’s insecurity regarding Multivac’s performance. Accordingly,
both parties’ motions for summary judgment on this counterclaim are denied.

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Even if the Court were to find that the contract was complete, the parol evidence rule
only prohibits evidence of prior negotiations and agreements when there is a fully
integrated agreement. Sedalia Mercantile Bank & Trust Co., 740 S.W.2d at 193.
Therefore, representations made by Multivac to Rotella’s regarding what the R535
would be admissible.
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(B) Rotella’s Breach of Warranty Counterclaims

(1) Breach of Express Warranty

As with the repudiation counterclaim, Multivac argues Rotella’s failed to assert a
counterclaim of breach of express warranty. While Rotella’s did not set forth a
counterclaim labeled as “breach of express warranty,” it set forth several allegations that
support a claim for breach of express warranty. To state a claim for breach of express
warranty, a party must plead: (1) there was a sale of goods; (2) the seller made a
statement of fact about the kind or quality of those goods; (3) the statement of fact was
a material factor inducing the buyer to purchase the goods; (4) the goods did not
conform to that statement of fact; (5) the nonconformity injured the buyer; and (6) the
buyer notified the seller of the nonconformity in a timely fashion. Stefl v. Medtronic, Inc.,
916 S.W.2d 879, 882-83 (Mo. Ct. App. 1996) (citation omitted).
Rotella’s alleged that Multivac sold the R535 packaging machine to Rotella’s,
Multivac made representations to Rotella’s about the quality of the R535, Rotella’s
relied upon Multivac’s representations about the quality of the R535, the loaner machine
given by Multivac to Rotella’s did not work properly on Rotella’s bakery products,
Rotella’s was injured by the loaner machine’s inability to work properly on Rotella’s
bakery products, and Rotella’s notified Multivac of this nonconformity. Doc. #7, at pp. 79. These allegations are sufficient to assert a counterclaim of breach of express
warranty.
Contrary to the suggestion of Rule 10(b) of the Federal Rules of Civil Procedure,
Rotella’s failed to set forth this counterclaim as a “separate count,” as it did with its
repudiation counterclaim and breach of warranty of fitness counterclaim. Fed. R. Civ. P.
10(b) (stating “[i]f doing so would promote clarity, each claim founded on a separate
transaction or occurrence – and each defense other than a denial – must be stated in a
separate count or defense.”). While it would have been preferable and clearer for
Rotella’s to separately set forth a count enumerated as breach of express warranty, the
Court finds that Multivac was on notice that Rotella’s alleged Multivac breached its
express warranty.
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Even if Rotella’s failed to sufficiently plead a counterclaim of breach of express
warranty, Rotella’s set forth the following affirmative defense: “Plaintiff’s claims are
barred by Plaintiff’s prior material breaches of warranty and contract.” Doc. #7, at p. 6,
¶ 6. As set forth above, affirmative defenses must be articulated in “short and plain
terms” and “need not be articulated with any rigorous specificity.” Wisland, 119 F.3d at
737; Zotos, 121 F.3d at 361. Given the lesser standard required for affirmative
defenses, the Court finds that Multivac was well aware that Rotella’s was alleging
breaches of warranty claims, including a breach of express warranty.4
Pursuant to Rule 8(c)(2) of the Federal Rules of Civil Procedure, “[i]f a party
mistakenly designates a defense as a counterclaim, or a counterclaim as a defense, the
court must, if justice requires, treat the pleading as though it were correctly designated,
and may impose terms for doing so.” Fed. R. Civ. P. 8(c)(2). The Court finds that
justice requires treatment of Rotella’s affirmative defense of breach of warranty as a
counterclaim.
With regard to Rotella’s allegation that Multivac breached its express warranty,
Multivac contends any express warranty has been disclaimed in the contract, and
therefore, Rotella’s has waived any claim of breach of express warranty. Rotella’s
contends that Multivac cannot make affirmations of fact regarding the capabilities of the
R535 and then shield itself from those affirmations with the warranty disclaimer clause
in the contract. Rotella’s argues that Multivac was obligated under the contract to
provide a machine that worked as Multivac had represented to Rotella’s. The Court
agrees and concludes there are disputed issues of material fact that preclude entry of
judgment as a matter of law with respect to this counterclaim (or affirmative defense).
In particular, there are disputed issues of material fact regarding the reconciliation of the
express warranty(ies) made by Multivac with the disclaimer clause. Thus, both parties’
motions for summary judgment are denied with regard to this counterclaim (affirmative
defense).

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The Court notes that Multivac inquired about the warranty provision contained in the
parties’ agreement during depositions, leading the Court to believe that Multivac knew
full well that Rotella’s alleged a breach of express warranty.
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(2) Breach of Implied Warranty of Merchantability

Rotella’s alleges that Multivac breached the implied warranty of merchantability
by delivering a machine incapable of properly packaging Rotella’s bread. Multivac first
argues Rotella’s failed to sufficiently plead this counterclaim.
Section 400.2-314 of the Missouri Revised Statutes creates an implied warranty
of merchantability, which includes an implied warranty that the goods sold “are fit for the
ordinary purpose for which such goods are used.” Mo. Rev. Stat. § 400.2-314; see also
Ragland Mills, Inc. v. Gen. Motors Corp., 763 S.W.2d 357, 360 (Mo. Ct. App. 1989). To
recover under the provisions of section 400.2-314, a party must prove (1) a merchant
sold goods, (2) which were not “merchantable” at the time of the sale, (3) injury and
damages to the buyer, (4) which were caused proximately or in fact by the defective
nature of the goods, and (5) notice to the seller of the injury. Ragland Mills, 763 S.W.2d
at 360 (citation omitted). The same analysis and allegations set forth supra, section
II(B)(1), apply here.
Rotella’s set forth sufficient allegations to set forth a counterclaim of breach of
implied warranty of merchantability, many of those allegations appear within Rotella’s
Count I of its Counterclaims. While Rotella’s failed to set forth a separate counterclaim
designated as breach of implied warranty of merchantability, it set forth an affirmative
defense of “breaches of warranty.” The Court finds that justice requires that, to the
extent Rotella’s did not sufficiently plead a counterclaim of breach of implied warranty of
merchantability, Rotella’s affirmative defense of breaches of warranty be construed as a
counterclaim of breach of implied warranty of merchantability.
With regard to Rotella’s allegation that Multivac breached the implied warranty of
merchantability, Multivac contends that Rotella’s waived such a claim when it signed the
contract, which purportedly disclaimed such warranties. “[T]o exclude or modify the
implied warranty of merchantability…the language must mention merchantability and in
case of a writing must be conspicuous….” Mo. Rev. Stat. § 400.2-316. “A term or
clause is conspicuous when it is so written that a reasonable person against whom it is
to operate ought to have noticed it… Language…is ‘conspicuous’ if it is in larger or
other contrasting type or color.” Mo. Rev. Stat. § 400.1-201(10).
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Based upon the record before it, the Court finds the disclaimer of warranties in this
contract was not “conspicuous” in that it did not meet the requirements of the Missouri
statutes. The disclaimer neither appears in larger font nor is in a contrasting type or
color.
The Court concludes there are disputed issues of material fact that preclude
entry of judgment as a matter of law with respect to this counterclaim (or affirmative
defense), particularly with regard to whether Multivac breached the implied warranty of
merchantability. Therefore, both parties’ motions for summary judgment with regard to
this counterclaim (affirmative defense) are denied.

(3) Breach of Implied Warranty of Fitness

Rotella’s final counterclaim is breach of implied warranty of fitness. Multivac
does not dispute that Rotella’s properly pleaded such a counterclaim. Multivac argues,
as it did with regard to Rotella’s counterclaim of breach of implied warranty of
merchantability, that this counterclaim has been disclaimed. The analysis set forth
above applies here. Similarly, the Court finds that there are disputed issues of material
fact precluding entry of judgment as a matter of law with respect to this counterclaim,
specifically regarding whether Multivac breached the implied warranty of fitness. Both
parties’ motions for summary judgment with regard to this counterclaim are denied.

III. CONCLUSION

The parties’ Motions for Summary Judgment are denied.

IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: March 10, 2016

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