Hot Energy Services, LLC v. Quikwater, Inc. et al

Filing 140

OPINION AND ORDER by Chief Judge Gregory K Frizzell ; terminating party WEG Electric Corp. (a Florida corporation) ; granting 77 Motion for Summary Judgment (Re: 127 Order, Ruling on Motion for Summary Judgment ) (kjp, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
HOT ENERGY SERVICES, LLC,
Plaintiff,
v.
QUIKWATER, INC., a dissolved Oklahoma
corporation; OGI PROCESS EQUIPMENT, INC.;
SCOTT PUMP, a division of Ardox corporation;
ARDOX
CORPORATION,
a
Delaware
corporation; and WEG ELECTRIC CORP., a
Florida corporation,
Defendants.

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Case No. 15-CV-236-GKF-FHM

OPINION AND ORDER
By an Order dated February 13, 2017, this court denied WEG’s motion for summary
judgment as to Hot Energy’s claim for breach of the implied warranty of merchantability, and
granted the motion as to Hot Energy’s claim for breach of an implied warranty of fitness for a
particular purpose. Upon further review of applicable caselaw and the briefs and materials
submitted by the parties, the court hereby reconsiders sua sponte its partial denial of the motion.
and, for the reasons set forth below, grants summary judgment in favor of WEG on plaintiff’s
claim for breach of the implied warranty of merchantability.
Goods are considered merchantable in Oklahoma when, at the least, they are fit for the
ordinary purposes for which they are used. Perry v. Lawson Ford Tractor Co., 613 P.2d 458, 463
(Okla. 1980); Okla. Stat. tit. 12A, § 2-314(2)(c) (2004 & Supp. 2017); Schrock v. Wyeth, Inc., 727
F.3d 1273, 1288 (10th Cir. 2013). Merchantability is a flexible concept which does not connote
best quality or perfection in detail; merchantability does require, however, that goods operate for

their ordinary purpose. Id. “This is not to say there cannot be problems or breakdowns with a
merchantable machine.” Id.
To recover on a claim for a breach of the implied warranty of merchantability, a plaintiff1
must prove: (1) a sale of goods by a merchant; (2) the goods were not “merchantable” at the time
of sale; (3) injury and damage to the plaintiff or his property proximately caused by the defective
nature of the goods; and (4) appropriate notice of breach to the seller. Farmers Ins. Co. v. Big
Lots, 2015 WL 5943447, at *5 (N.D. Okla. Oct. 13, 2015); American Fertilizer Specialists, Inc. v.
A. J. Wood, Jr., 635 P.2d 592, 595 (Okla. 1981); Collins Radio Co. of Dallas, Tex. v. Bell, 623
P.2d 1039, 1053 (Okla. App. 1980) (citing J. White & R. Summers, Uniform Commercial Code §
9-6, at 343 (2d ed. 1980)).
WEG argues there is no evidence that its motors had any defect at the time of sale, or that
any defect in the motors was the proximate cause of Hot Energy’s claimed loss.

Hot Energy

points to the following in support of its contention that the motors were defective – that the circuit
breakers tripped on the fracking trailer shortly after being placed into service; that the motors were
manufactured in 2010; and that after the bearings in the first motor were replaced, the motor
“functioned flawlessly.” WEG replies that Hot Energy has offered no admissible evidence
creating a question of fact that there was a defect in the motors at the time of their sale.
Hot Energy has offered no expert testimony to prove the motors had a defect at the time of
sale, but there is no strict rule requiring such testimony, as the fact of a defect may be proven by
circumstantial evidence. Heartland Ceramic Applications, Inc. v. Pro-Tek-USA, LLC, 2016 WL
5762769 (N.D. Okla. 2016) (citing Lucas v. Firestone Tire & Rubber Co., 458 F.2d 495, 497 (5th

1

An ultimate consumer in the distribution chain in Oklahoma can bring a direct breach of warranty action
against a manufacturer, notwithstanding its lack of privity. Patty Precision Products Co. v. Brown & Sharpe Mfg.
Co., 846 F.2d 1247, 1254 (10th Cir. 1988).

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Cir. 1972). “The general rule is that ‘[i]f the matter in issue is one within the knowledge of experts
only and not within the common knowledge of laymen, it is necessary for the plaintiff to introduce
expert testimony in order to establish a prima facie case.’” Id. (quoting Reybold Grp., Inc. v.
Chemprobe Techs., Inc., 721 A.2d 1267, 1270 (Del. 1998)). “For circumstantial evidence to
substantiate a prima facie case that there was a breach of the implied warranty of merchantability,
it must tend to negate other reasonable causes of the injury sustained or there must be expert
opinion that the product was defective.” Id. (quoting Reybold).
Hot Energy’s proffered circumstantial evidence requires analysis as to whether that
evidence is admissible and sufficient to create a question of fact.
First, in support of its contention that WEG’s motors caused the circuit breakers to trip on
the fracking trailer, Hot Energy points to the testimony of its manager, Ralph Reddell. Reddell’s
testimony is inadmissible because he has no personal knowledge about the cause of the problem.
Reddell testified that he only knew what Jose at Quikwater told him about the first motor when
the circuit breakers tripped (“He [Jose] was just telling me that the motor was taking a load”), and
he conceded he never learned the cause of the problem the second time the breakers tripped. And
Reddell’s testimony as to what Jose at Quikwater told him when they were trying to determine
what was causing the breakers to trip is inadmissible hearsay. Furthermore, WEG’s expert witness,
Dale Basso, testified that the motor did not short or fail, and that the bearings of the motor did not
cause the breaker to short. Basso testified that something else tripped the circuit breakers, most
likely the load created by the limestone sediment inside the pump. Hot Energy’s circumstantial
evidence does not tend to negate this other reasonable cause for the circuit breakers to trip, and
thus does not substantiate a prima facie case that the motor was defective at the time of sale.

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Second, Hot Energy points to the facts that the motors were manufactured in November,
2010, and delivered to Scot Pump in 2013, hypothesizing that the motors were adversely affected
by storage in WEG’s warehouse before they were shipped. But Reddell admitted in his deposition
that he had no information that the manufacture date of the motor had any impact on its
performance in the field. The uncontroverted evidence before the court is that WEG stores its
motors in climate-controlled warehouses where humidity is low and temperature is kept within a
standard range. In addition, the hot water unit, including the motors, ran without a problem for at
least 8 hours when Hot Energy was being trained in its use.

And there is no evidence, only

speculation, that the motors had been used and returned by another customer prior to delivery to
Scot Pump. Here again, Hot Energy’s circumstantial evidence does not tend to negate Dale
Basso’s reasonable explanation for why the circuit breakers tripped.
Third, Hot Energy observes that after the bearings in the first motor were replaced, the
motor functioned flawlessly. But the motor ran when taken to the repair facility at Prairie
Mountain, and the uncontroverted testimony of the repair technician is that the bearing roughness
was minor. Furthermore, the limestone sediment found in the pump at the Prairie Mountain repair
facility had been removed when the motor was placed back into service.

In short, this

circumstantial evidence, like Hot Energy’s other circumstantial evidence, does not negate expert
witness Dale Basso’s reasonable explanation for why the circuit breakers tripped. Hot Energy has
not substantiated a prima facie case that WEG breached the implied warranty of merchantability,
and WEG is entitled to summary judgment in its favor on Hot Energy’s remaining claim.
For the foregoing reasons, the portion of the court’s previous order [Doc. #127] denying
WEG’s motion for summary judgment in part is hereby withdrawn, and defendant WEG’s Motion

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for Summary Judgment on plaintiff’s claim for breach of the implied warranty of merchantability
[Doc. #77] is granted.
IT IS SO ORDERED this 24th day of February, 2017.

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