Mastercraft Furniture, Inc. v. SABA North America, LLC

Filing 39

OPINION AND ORDER: Plaintiff's motion for partial summary judgment 29 is GRANTED as to liability on plaintiff's contract claims and defendant's fifth affirmative defense, with the amount of defendant's damages to be determined at trial or upon further motion. See formal OPINION AND ORDER. Signed on 3/31/2015 by Chief Judge Ann L. Aiken. (rh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

MASTERCRAFT FURNITURE, INC.,
an Oregon corporation,
Plaintiff,

v.
SABA NORTH AMERICA, LLC,
a Michigan limited liability
company,
Defendant.
Renee E. Rothauge
Adam M. Starr
Markowitz Herbold PC
Suite 3000, Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204-3730
Attorneys for Plaintiff
Glenn E. Barger
Barger Law Group, PC
4949 Meadows Road, Suite 620
Lake Oswego, OR 97035
Mark H. Verwys
Plunkett Cooney
333 Bridge St. NW, Suite 530
Grand Rapids, MI 49504
Attorneys for Defendant

1

OPINION AND ORDER

Civ. No.

6:14-01303-AA

OPINION AND ORDER

AIKEN, Chief Judge:
Plaintiff Mastercraft Furniture,

Inc.

( "Mastercraft")

filed

suit against SABA North America, LLC ("SABA"), al'leging breach of
contract and breach of the implied covenant of good faith and fair
dealing.

Plaintiff

declaratory

seeks

relief.

damages,

Plaintiff

interest

now

moves

on its
for

judgment pursuant to Fed. R. Civ. P. 56 on:

damages,

partial

and

summary

(1) plaintiff's first

claim for breach of contract on the issue of liability only;

( 2)

plaintiff's second claim for breach of the covenant of good faith
and

fair

dealing

defendant's

fifth

on

the

issue

affirmative

of

liability

defense,

asserting

only;

and

(3)

limitation

of

liability. Defendant opposes plaintiff's motion.
Plaintiff's motion for partial summary judgment on the matters
listed above is granted.
I. BACKGROUND
Mastercraft is a furniture company located in Stayton, Oregon,
which builds and supplies furniture for companies including IKEA.
As

a

part

IKEA' s

of

its

agreement

manufacturing

prohibit Mastercraft

and

with

IKEA,

sourcing

Mastercraft must

requirements,

from using products

in its

some

follow

of

which

furniture

that

contain certain chemicals, including diisobutyl phthalate ( "DIBP") .
SABA

North

America,

LLC,

located in Michigan which is
supplier of adhesive.

2

is
an

a

limited

company

international manufacturer

SABA North America,

OPINION AND ORDER

liability

and

LLC is a subsidiary of

SABA

Internationil

Sometime

during

negotiations

for

BV,

which

2012,
SABA to

is

owned

by

and

SABA

Dinxperlo
entered

into

supply adhesive to Mastercraft,

which

Mastercraft

SABA

BV.

Mastercraft would use when building and supplying furniture

to

IKEA, one of its main customers. On July 2, 2012, SABA presented a
quote to Mastercraft. On July 17, 2012, Matercraft agreed with the
quote and signed the Equipment Agreement. Subsequently, SABA signed
the Equipment Agreement.
On July 20, 2012, James Turner, the President of SABA, signed
the IWAY/Mastercraft Vendor Agreement. As part of the agreement,
SABA

received

IKEA'S

Specifications

document,

identifying

the

chemical compound and substances that IKEA prohibits the use of in
its

products,

including

DIBP.

SABA

Dinxperlo

BV

signed

and

acknowledged receiving the Specifications document.
Between August 13, 2012 and March 2013, Mastercraft and SABA
entered into a series of contracts for the purchase, sale, shipment
of,

and payment for 16 totes of Sababond 3175,

the agreed-upon

adhesive product. The backside of SABA's invoices contained

~Terms

and Conditions of Sale" in small print. Olson Decl. at 8, Ex. 3. At
the top of the Terms and Conditions is a paragraph entitled "Offer
and Acceptance." Olson Decl. Ex. 3; Turner Aff., Ex. 5. The first
line of that paragraph states,

~seller's

[SABA's] offers are made

strictly on the terms and conditions stated herein and no others.
Acceptance of Seller's offers [by Mastercraft] is strictly limited

3

OPINION AND ORDER

to the terms and conditions stated herein and no others." Id. The
seventh paragraph of the Terms and Conditions attempts to limit
damages · for

defective

adhesive

products

to

the

amount

of

the

purchase price of the product. Id. Mastercraft, without reading the
Termi and tonditions,

paid for the adhesive and incorporated it

into its furniture. Olson Decl. at 8.
In

September

2012,

IKEA

conducted

a

routine

test

of

Mastercraft's furniture and found DIBP in Mastercraft's furniture.
After further testing, it was determined that SABA was the source
and cause

of the

DIBP.

On April

11,

2013,

Jim Turner,

SABA's

President,

sent an email to Mastercraft's President stating that

some of the adhesive orders shipped by SABA mistakenly contained
DIBP. On August 14, 2014, plaintiff filed this suit.
II. STANDARD
Summary judgment is appropriate

"if the movant

shows that

there is no genuine dispute as to any material fact and the movant
-

is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
A court may grant judgment to a party on all or part of a claim.
Id. The substantive law on an issue determines the materiality of
a fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809
F.2d 626, 630 (9th Cir. 1987). A factual dispute is genuine if the
evidence is such that a reasonable jury could determine the issue
in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc.,
477 u.s. 242, 242

4

(1986).

OPINION AND ORDER

The moving party has the burden of establishing the absence of
a genuine issue of material fact.
U.S. 317, 323

Celotex Corp.

v.

Catrett,

4 77

(1986). If the moving party meets this burden, the

nonmoving party must go beyond the pleadings and identify facts
which show a genuine issue for trial. Id. at 324.
Special

rules

judgment motions:

of

construction apply to evaluating summary

(1) all reasonable doubts as to the existence of

genuine issues of material fact
moving

party;

and

(2)

all

should be resolved against the

inferences

to

be

drawn

from

the

underlying facts must be viewed in the light most favorable to the
nonmoving party.

T.W. Elec., 809 F.2d at 630.
III. DISCUSSION

A. Breach of Contract Claims
Plaintiff alleges that defendant breached its contract with
plaintiff and violated the covenant of good faith and fair dealing
by shipping adhesive product to plaintiff containing DIBP, which is
a

prohibited

chemical

substance

under. the

parties'

agreement.

Defendant does not contest this fact and admits that it shipped
some

adhesive

product

to

plaintiff

containing

DIBP.

However,

defendant argues that there are genuine issues of material fact
with respect to the causal relationship between its breach and
plaintiff's

claimed

damages.

Plaintiff

argues

that

defendant

conflates causation of damages with the amount owed in damages. I
agree.

5

OPINION AND ORDER

Defendant correctly states that
requires the

( 1)

~a

breach of contract claim

existence of a valid contract;

breach of the contract;

and

( 3)

( 2)

defendant's

a proximate cause relationship

between the defendant's breach and harm to plaintiff." Def.'s Br.
at 4 (citing Nw. Nat. Gas Co. v. Chase Gardens, Inc., 333 Or. 304
(2002)).
for a
are:

Similarly, defendant correctly states that the elements

~breach

of an implied covenant of good faith and fair dealing

( 1) existence of a valid contract;

( 2) action by defendant to

deprive the plaintiff of expected contractual benefits; and (3) a
proximate cause relationship between the defendant's actions and
harm to plaintiff." Id.
facts

in

plaintiff's

~substantially

Defendant admits that the statement of

motion

for

partial

summary

judgment

is

correct and can be conceded for the purposes of

plaintiff'·s motion." Def.'s Br. at 2. Consequently, defendant has
admitted its breach of contract by mistakenly shipping adhesive
containing DIBP, a prohibited chemical, to plaintiff.
For example, defendant admits that 6 of the 16 adhesive orders
snipped by SABA to Mastercraft mistakenly contained DIBP I

even

though SABA was aware that DIBP was forbidden by IKEA and, in turn,
Mastercraft. Olson Decl. Ex. 4. Additionally, in an email from SABA
to Mastercraft, SABA's President wrote:
that

the

initial

indeed batches

shipments,

of the

and

~unfortunately

several

later

it was found

shipments,

were

old formulation which contained DIBP.

cannot give a concrete explanation as to how this occurred." Id.

6

OPINION AND ORDER

I

Despite this admission,

defendant argues that plaintiff has

not shown there is no genuine issue of material fact as to the
element

of

proximate

cause,

plaintiff's claimed damages.
plaintiff has

i.e.,

that

its

Defendant argues

not proffered pleadings,

breach

caused

specifically that

depositions,

answers

to

interrogatories, admissions and affidavits proving that defendant's
admitted breach caused the amount of damages claimed by plaintiff.
Def.'s Br. at 7.
including
furniture,
defendant

Defendant states that questions of fact remain,

when

plaintiff

why

plaintiff

of

the

DIBP

first

learned

waited

in the

over

adhesive,

about
seven

the

DIBP

months

to

in

its

inform

and how and when

IKEA

suspended production of plaintiff's furniture. Id. at 8. Defendant
thus argues that plaintiff's motion is premature since discovery
has not been conducted by either party.
In response, plaintiff argues that even after discovery, there
will be no change in the fact that defendant's actions caused some
damage

to

plaintiff by the

defendant's breach of the parties'

contract, which has already been admitted by defendant. Pl.'s Rep.
Br. at 2. I agree. Defendant conflates proving causation of damages
with proving the amount of damages; plaintiff need only show that
defendant caused some amount of damages for purposes of this motion
and does not need to show the exact amount of damages caused.
Plaintiff correctly argues

that defendant has

not

shown a

question of fact as to whether the damages it incurred as a result

7

OPINION AND ORDER

of

defendant's

breach

zero.

equals

Chamberlain

Grp. ,

Inc.

v.

(W.D. Wash. Oct. 25, 2010). To the

Nassimi, 2010 WL 4286192 at *8

contrary, plaintiff presents Mr. Olson's declaration stating that
plaintiff

suffered

damages

adhesive.

Olson Decl.

at

as

11.

a

At

result

of

a minimum,

the

contaminated

plaintiff

incurred

testing costs of its furniture, and it could not sell the furniture
that had been built utilizing the adhesive with the prohibited
chemical

in

it.

Id.

Defendant

has

not

shown

that

plaintiff's

damages are equal to zero, and I find that plaintiff has satisfied
the

damages

element

for

the

purposes

of

its

current

motion.

However, after further discovery, defendant is not foreclosed from
challenging the amount of damages claimed to be proximately caused
by its breach.
Accordingly, partial summary judgment on Counts I and II as to
liability is granted.
B. Defendant's Fifth Affirmative Defense
Plaintiff also moves for summary judgment on defendant's fifth
affirmative defense,

which claims that plaintiff is barred from

recovering

due

damages

to

the

limitation

of

liability

defendant's terms and conditions on its invoice form.

in

Plaintiff

argues that this is a classic "battle of the forms" case which is
governed by UCC section 2-207.
Oregon has codified this section of the UCC as Or. Rev. Stat.
§72.2070 which states:

8

OPINION AND ORDER

(1) A definite and seasonable expression of acceptance or
a written confirmation which is sent within a reasonable
time operates as an acceptance even though it states
terms additional to or different from those offered or
agreed upon,
unless acceptance is expressly made
conditional on as sent to the additional or different
terms.
(2) The additional terms are to be construed as proposals
for addition to the contract. Between merchants such
terms become part of the contract unless:
(a) The offer expressly limits acceptance to the
terms of the offer;
(b) They materially alter it; or
(c) Notification of objection to them has already
been given or is given within a reasonable time
after notice of them is received.
(3)
Conduct by both parties which recognizes the
existence of a contract is sufficient to establish a
contract for sale although the writings of the parties do
not otherwise establish a contract. In such case the
terms of the particular contract consist of those terms
on which the writings of the parties agree, together with
any supplementary terms incorporated under any other
provisions of the Uniform Commercial Code. Or. Rev. Stat.
§72.2070 (emphasis added)
Plaintiff argues that the terms and conditions did not become
part

of

the

agreement

when

UCC

§2-207

is

applied.

Defendant

contends that it did not receive enough information to be able to
respond properly to plaintiff's argument that defendant's terms and
conditions regarding liability did not become part of the parties'
contract. I do not agree.
Here,

plaintiff was

the

offeror

and

stated

its

requested

quantity and price in its purchase orders to defendant. Pl.'s Mot.
Part .. Sum.

J.

at 8.

In response,

defendant attempted to impose

additional terms and conditions regarding liability, in the "Terms

OPINION AND ORDER

and Conditions of Sale" section of its invoice. As plaintiff points
out, defendant's invoice essentially operates as a counteroffer; if
assent is given by plaintiff, then these terms become a part of the
contract.
1443 (9th

Diamond Fruit
Cir.

1986)

Growers

If

no

v.

assent

Krack Corp,
is

given,

794

then

F.2d 1440,

the

parties'

contract is limited to the terms that both parties agreed upon to
be

in

the

Plaintiff

contract.

at

1443;

that

contends

Id.

it

did

Or.

not

Rev.

Stat.

assent

to

§72.2070(3).

the

terms

and

conditions of defendant's invoice, and they are not binding.
Under the Ninth Circuit's ruling in Diamond Fruit Growers, a
party must
a

~specifically

contract.

Diamond Fruit

Textile Unlimited,
(9th Cir.

and unequivocally assent" to new terms of

2001)

Growers,

794

Inc. v. A .. BMH & Co.,

(same).

Here,

F.2d at
Inc.,

1445;

See

also

240 F.3d 781,

787

defendant attempted to impose new

terms upon plaintiff through its invoice statements, and defendant
presents no evidence that plaintiff ~speci~ically and unequivocally
assented" to those new terms. Id.
Generally,

a buyer's silence is not considered

~assent"

to

additional terms in a seller's acknowledgment.

Smith & Loveless,

Inc.

(D.

2005)

v.

Caicos Corp.,
(~plaintiff's

2005 WL 1533116,
theory

of

withstand judicial scrutiny");

'assent

at *3
by

Kan.

silence'

10

~buyer's

would

not

see also Altronics of Bethlehem,

Inc. v. Repco, Inc., 957 F.2d 1102, 1108 (3d Cir. 1992)
argument that

June 29,

(rejecting

continued performance with constructive or

OPINION AND ORDER

actual knowledge of the disclaimers demonstrated their acceptance
of the new terms"); McJunkin Corp. v. Mechanicals, Inc., 888 F.2d
481,

488

Collins

(6th
&

Cir.

Aikman

1989) (assent

Corp.,

453

must

F.2d

be

1161,

explicit);
1168

(6th

Dorton
Cir.

v.

1972)

(rejecting silence as assent to additional or different terms).
Defendant does not dispute that in this case a contract was
formed. Under Or. Rev. Stat. §72.2070(3), the terms of the contract
are

those

upon which . the parties

agreed,

consisting of price,

quantity, and place of delivery; and do not include such terms to
which both parties' did not agree,

such as the limited liability

clause. See Textile Unlimited, 240 F.3d at 787

(so stating).

Accordingly, plaintiff's motion for partial summary judgment
is granted with respect to defendant's fifth affirmative defense
regarding limited liability under the terms and conditions in the
invoice.
CONCLUSION
Therefore,

plaintiff's motion for partial summary judgment

(doc. 29) is GRANTED as to liability on plaintiff's contract claims
and defendant's
defendant's

fifth

damages

affirmative

defense,

with

amount

to be determined at ·trial or upon

motion. IT IS SO ORDERED.

:21~

Dated this G2L_ day of March, 2015.

a~ W~vU

Ann Aiken
United States District Judge
11

the

OPINION AND ORDER

of

further