Peri & Sons Farms, Inc. v. Jain Irrigation, Inc. et al
Filing
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ORDER granting 78 Motion for Partial Judgment on the Pleadings. Judgment shall be entered in favor of Peri & Sons and against Agri-Valley Irrigation, Inc., finding that Agri-Valley breached implied warranty of merchantability and is liable for any and all damages Peri & Sons proves at trial were caused by Agri-Valley's breach. Signed by Magistrate Judge Valerie P. Cooke on 10/18/12. (Copies have been distributed pursuant to the NEF - JC)
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UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
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PERI & SONS FARMS, INC.,
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Plaintiffs,
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vs.
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JAIN IRRIGATION, INC., et al.,
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Defendants.
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____________________________________)
3:11-CV-0757-VPC
ORDER
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Before the court is plaintiff’s motion for partial judgment on the pleadings against defendant
Agri-Valley Irrigation, Inc. (#78).1 Defendant opposed (#81) and plaintiff replied (#82).
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I. FACTUAL AND PROCEDURAL BACKGROUND
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In 2010, Agri-Valley sold irrigation drip tape to Peri & Sons for their 2011 onion crop grown in
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Mason Valley, Nevada (#64, p. 1). Jain Irrigation bid for Peri & Sons’s business through Agri-Valley,
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Jain Irrigation’s distributor. Id. at 5. Jain Irrigation manufactured the drip tape for Peri & Sons and
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delivered it to Peri & Sons in Yerington, Nevada. Id. at 2. Id. Irrigation drip tape is buried in the
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ground and contains small openings through which irrigation water is pumped through the tape. Id. The
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drip tape allows for a designated rate of flow to irrigate the planted crop. Id. Peri & Sons alleges that
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the drip tape was defective because the emitters or slits in the drip tape were misplaced on the tape and
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were blocked or partially blocked and failed to irrigate Peri & Sons’s onion crops. Id. at 23. Peri &
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Sons used initial samples of drip tape in 2009 and 2010 which worked as they were intended to work.
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Id. at 5. Peri & Sons filed its first amended complaint on May 21, 2012 (#64) and Agri-Valley filed an
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answer on June 18, 2012 (#71).
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In its first amended complaint, Peri & Sons alleges that Jain Irrigation manufactured a defective
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irrigation drip tape which plaintiff used in its commercial agriculture (#64 at 1). Plaintiff further claims
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Refers to the court’s docket numbers.
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that Agri-Valley sold the drip tape to Peri & Sons for its 2011 onion crop. Id. at 2. Plaintiff states that
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it suffered damages as a result of the defective drip tape. Id.
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Peri & Sons alleges the following claims against Agri-Valley Irrigation: (1) breach of contract;
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(2) breach of the implied covenant of good faith and fair dealing; (3) breach of express warranty; (4)
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breach of implied warranty of merchantability; and (5) breach of implied warranty of fitness for a
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particular purpose. Agri-Valley answered the first amended complaint (#71), and this motion concerns
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only the fourth claim for a breach of the implied warranty of merchantability against Agri-Valley.
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The facts, as alleged in Peri & Sons’ complaint and admitted in Agri-Valley’s answer, establish
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that (1) Agri-Valley is a merchant in irrigation drip tape, (2) the drip tape Agri-Valley sold to Peri &
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Sons was defective and unfit for the ordinary purpose for which drip tape is used, and (3) Peri & Sons
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suffered damages as a result of the defective drip tape. See first amended complaint (#64) at ¶¶ 159, 1,
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6 & 9; see Agri-Valley’s answer to first amended complaint (#71) at ¶¶ 159, 1, 6 & 9 (#71).
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II. LEGAL DISCUSSION AND ANALYSIS
A.
Discussion
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1.
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“A judgment on the pleadings [under Federal Rule of Civil Procedure 12(c)] is properly granted
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when, taking all allegations in the pleadings as true, the moving party is entitled to judgment as a matter
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of law.” Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1988) (citing McGann v. Ernst & Young,
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102 F.3d 390, 392 (9th Cir. 1996)). A motion for judgment on the pleadings brought pursuant to Federal
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Rule of Civil Procedure 12(c) may be brought “[a]fter the pleadings are closed but within such time as
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not to delay the trial . . . .” Fed.R.Civ.P. 12(c).
Judgment on the pleadings
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Generally, “judgment on the pleadings is improper when the district court goes beyond the
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pleadings to resolve an issue . . . .” Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d
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1542, 1550 (9th Cir. 1989). If a court considers “matters outside the pleadings” in its determination on
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a motion for judgment on the pleadings, “the motion shall be treated as one for summary judgment and
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disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity present all
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material made pertinent to such a motion by Rule 56.” Fed.R.Civ.P. 12(c); see also Hal Roach Studios,
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896 F.2d at 1550 (holding that if, on a 12(c) motion, a court considers evidence outside the pleadings,
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the court should apply the summary judgment standard).
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2.
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Because jurisdiction in this case is based on diversity of citizenship, the court applies the
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substantive law of Nevada, the forum statue. See Conestoga Servs. Corp v. Executive Risk Indem., 312
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F.3d 976, 980-91 (9th Cir. 2002). Under the Nevada Uniform Commercial Code (“UCC”), there is an
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implied warranty that a good is merchantable and suitable for a particular purpose. Vacation Vill., Inc.,
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v. Hitachi Am., Ltd., 110 Nev. 481, 874 P. 2d 744, 747 (Nev. 1994) (citing Nev.Rev.Stat. §§ 104.2314-
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2315). Thus, “[u]nless excluded, or modified, a warranty of merchantability is implied in a contract if
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the seller is a merchant with respect to the good in question.” Mohasco Indus., Inc., v. Anderson
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Halverson Corp., 90 Nev. 114, 520 P.2d 234, 235-36 (1974) (citing Nev.Rev.Stat. § 104.2314). “In a
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breach of warranty cause of action, a plaintiff must prove that a warranty existed, the defendant breached
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the warranty, and the defendant’s breach was the proximate cause of the loss sustained.” Nevada
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Contract Servs., Inc., v. Squirrel Cos., Inc., 119 Nev 157, 161, 68 P.3d 896, 899 (2003).
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B.
Implied Warranty of Merchantability
Analysis
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1.
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Peri & Sons argues that Agri-Valley breached the implied warranty of merchantability when it
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sold defective drip tape to Peri & Sons (#78 at 6). Peri & Sons claims that Agri-Valley admitted in its
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answer that it is a retailer of drip irrigation tape and that it entered into a contract with Peri & Sons,
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pursuant to which Agri-Valley would sell and Peri & Sons would buy the drip tape at issue in this case.
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Agri-Valley argues that the implied warranty of merchantability does not exist between Peri &
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Sons and Agri-Valley and thus cannot be breached (#81, p. 6). Agri-Valley claims that Peri & Sons did
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not rely on Agri-Valley’s skill or judgment in purchasing the drip tape and thus, no implied warranty of
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merchantability exists. Id. Agri-Valley cites to Mohasco in support of this argument. However, in that
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case, the Nevada Supreme Court determined that the seller did not breach an implied warranty of
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merchantability because the implied warranty was limited by an express warranty to a precise description
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of a product. Mohasco Indus., Inc., 90 Nev. 114, 520 P.2d at 236. Further, in Mohasco, the product
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The Implied Warranty of Merchantability
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delivered to the buyer was precisely the product the buyer specified and ordered. This case is clearly
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distinguishable because Peri & Sons alleges and Agri-Valley admits that the drip tape was defective.
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Further, it is not clear at this time whether there was an express warranty between Peri & Sons and Agri-
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Valley.
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Moreover, there is no requirement that the buyer rely on the seller’s skill or knowledge in order
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to successfully maintain an action based on the implied warranty of merchantability. Neither the Nevada
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law nor the Uniform Commercial Code governing the implied warranty of merchantability discusses this
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alleged requirement. The Code provision governing the implied warranty of fitness for a particular
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purpose requires that the buyer relied on the seller’s skill or judgment to select or furnish suitable goods.
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See Nev.Rev.Stat. § 104.2315. However, this motion concerns a claim arising under the implied
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warranty of merchantability. Thus, the court disagrees with defendant’s argument that no implied
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warranty exists simply because Peri & Sons did not rely on Agri-Valley’s skill or judgment.
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Agri-Valley admitted in its answer that some portions of drip tape contained manufacturing
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defects (#71, p. 1). Agri-Valley also admitted that it markets and sells irrigation equipment, including
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drip irrigation tape. Id. at 3. Therefore, the pleadings establish the warranty of merchantability is
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implied, as a matter of law, in the agreement between Peri & Sons and Agri-Valley.
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2.
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For goods to be merchantable, they must be “fit for the ordinary purpose for which the goods are
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used.” Nev.Rev.Stat. § 104.2314. Agri-Valley sold drip tape to Peri & Sons that was not fit for the
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ordinary purpose for which drip tape is used because the slits in the drip tape were admittedly blocked
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and/or partially blocked by the glue seam (#71, paras. 7 & 8). It is undisputed that the drip tape failed
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to deliver water to Peri & Sons’ onion crop, which rendered it unfit for its intended purpose – irrigation.
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Id. at 6. Agri-Valley breached the implied warranty of merchantability because the drip tape failed to
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emit water for irrigation - its ordinary use; therefore, it failed to qualify as merchantable.
Breach of the Warranty of Merchantability
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3.
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Agri-Valley argues that even if an implied warranty of merchantability exists, Agri-Valley was
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not the proximate cause of plaintiff’s damages (#81, p. 8). Agri-Valley states that it did not manufacture
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Proximate Cause
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the drip tape, take possession of the drip tape, inspect the drip tape, or deliver the drip tape to plaintiff.
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Id. Further, Agri-Valley asserts that it was not responsible for any changes in condition to the drip tape
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after defendant Jain Irrigation manufactured and delivered the drip tape to plaintiff. Id.
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The court disagrees. The fact that Agri-Valley did not manufacture the drip tape does not relieve
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it of liability under these facts. The causation burden in a warranty case is satisfied when a plaintiff can
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show that the product malfunctioned and the malfunction caused the plaintiff to suffer damages. See.,
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e.g., Nevada Contractor Serve., Inc. v. Squirrel Companies, Inc., 119 Nev. 157, 161-62 (2003). A
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plaintiff is not required to show the specific cause of the defect to satisfy its causation burden. See id.
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Finally, any concern that Agri-Valley is unfairly facing liability in the case is ameliorated because Jain’s
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insurance company has agreed to indemnify Agri-Valley in this case (#82 at p. 8).
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The court concludes that the cause of the defect in the drip tape or who created the defect is
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irrelevant to the causation inquiry in a warranty context. The pivotal question is whether the defect in
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the drip tape caused Peri & Sons to suffer damages. It is admitted that the blocked and partially-blocked
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emitters caused Peri & Sons to suffer damages; therefore, Agri-Valley’s failure to provide merchantable
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goods to Peri & Sons caused Peri & Sons’ damages.
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III. CONCLUSION
For the foregoing reasons, Peri & Sons’ motion for partial judgment on the pleadings against
Agri-Valley (#78) is GRANTED.
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Judgment shall be entered in favor of Peri & Sons and against defendant Agri-Valley Irrigation,
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Inc., finding that Agri-Valley breached the implied warranty of merchantability and is liable for any and
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all damages Peri & Sons proves at trial were caused by Agri-Valley’s breach.
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IT IS SO ORDERED.
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Dated: October 18, 2012.
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_____________________________________
UNITED STATES MAGISTRATE JUDGE
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