Axiall Corp. v. Descote S.A.S.

AXIALL CORPORATION, Plaintiff, v. DESCOTE S.A.S., and AMERICAN RAILCAR INDUSTRIES, INC., Defendants.

2:15-CV-00250-LPL

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA PITTSBURGH

January 30, 2018

ECF NOS. 268, 272, 276 & 278

OPINION

Pending before the Court are four motions for summary judgment: (1) Axiall's motion for partial summary judgment against descote (ECF No. 268); (2) descote's motion for summary judgment against Axiall (ECF No. 272); (3) ARI's motion for summary judgment against descote (ECF No. 276) on descote's cross-claim for contribution and indemnity; and (4) ARI's partial motion for summary judgment against Axiall (ECF No. 278) on Axiall's breach of implied warranty claims. For the reasons set forth below, the Court will: (1) grant Axiall's motion for partial summary judgment against descote (ECF No. 268); (2) grant in part and deny in part descote's motion for summary judgment against Axiall (ECF No. 272)—granted as to Axiall's misrepresentation claims and denied in all other respects; (3) grant ARI's motion for summary judgment (ECF No. 276) as to descote's cross-claims against it; (4) and grant ARI's motion for partial summary judgment (ECF No. 278) as to Axiall's implied warranty claims against it. The Court will also dismiss ARI's cross-claims against descote.

I. FACTS¹

This litigation arises out of a commercial transaction for the purchase of manually operated dual angle valves ("MOVs" or the "descote 922 valves"), manufactured by descote S.A.S. ("descote"), a French company with a principal place of business in Feyzin, France, by Axiall Corporation ("Axiall"),² a manufacturer of chemicals, including chlorine, at several plants in the United States and Canada. (Stipulations, ¶¶ 1-2, ECF No. 304-18.) Most of the chlorine sold by PPG, and now Axiall, is transported to customers in railroad tank cars. (Axiall Corp.'s Concise Statement of Material Facts in Support of Motion for Partial Summary Judgment ("Axiall's CSMF") at ¶ 5, ECF No. 270 at 2; descote's Responsive Concise Statement of Material Facts in Response to Axiall's Motion for Partial Summary Judgment ("descote's Resp. CSMF") at ¶ 5, ECF No. 308 at 2 (neither admitted or denying thisstatement).)³ The chlorine is loaded into railroad tank cars through a valve system. (Axiall's CSMF at ¶ 6.)

FC Tech, LLC ("FC Tech"), which is headquartered in Baton Rouge, Louisiana, has held the" exclusive rights to buy and resell all descote-branded products from their factory in France for [intended sale in] the U.S. and Canada" since 2006. (Id. at ¶4; Axiall's CSMF at ¶ 8, ECF No. 270 at 2.) Mark Fucich is the president of FC Tech. (Stipulations, ¶5.) FC Tech is one of the owners of descote. (Axiall's CSMF at ¶ 10.)

Salco Products, Inc. ("Salco") is in the business of, among other things, distributing products used in railroad tank cars. (Stipulations, ¶ 6.) FC Tech and descote have an agreement with Salco in which Salco is the exclusive distributor of descote valves to the railcar industry in the United States and Canada. (Richer Dep. at 61, ECF No. 308-1 at 11; Degutis Dep. at 20, ECF No. 308-1 at 13.) In particular, Salco was the exclusive distributor in the United States and Canada for the descote 922 valves. (Ex. A to descote's Resp. CSMF, ECF No. 308-1 at 1.)

American Railcar Industries, Inc. ("ARI") is engaged in the business of designing and manufacturing railcars, custom designed railcar parts, and other railcar industry products. (Id. at ¶¶ 7-8.)

On October 29, 2007, Mark Fucich communicated with Julie Bart at PPG, Axiall's predecessor-in-interest, via email regarding the price of descote bellows seal chlorine angle valves that were available for purchase. (ECF No. 285 at 109.) In this email,Fucich represented to Ms. Bart that "[t]his valve will carry a 100% descote warranty back (sic) by the factory." (Id.) Ultimately, PPG decided not to purchase these valves. (11/11/15 Fucich Dep. at 56, descote App., ECF No. 308-1 at 5.)

Sometime thereafter, Frank Reiner of The Chlorine Institute⁴ and Julie Bart from PPG approached Mark Fucich to ask if descote would manufacture a manually operated dual angle valve similar to one produced by a competitor, Midland, and this was the impetus for descote's decision to produce this valve (the descote MOVs). (11/11/15 Fucich Dep. at 51:2-7, 235:18-22, ECF No. 304-1 at 13, 27.) When asked if a 100% descote warranty went with the descote 922 valves sold to PPG, Fucich stated that he "believe[d] that when a valve manufactured by descote is purchased by an end user in the United States for transportation or process, that that warranty applies." (Fucich Dep. at 56-57, ECF No. 304-1 at 15-16.) Other than the sales to Axiall, descote has never sold its MOVs for chlorine service to another customer. (11/11/15 Fucich Dep. at 238-39, ECF No. 304-1 at 29-30; Richer Dep. at 15, ECF No. 304-8 at 3.)

On March 29, 2011, PPG purchased ten (10) retrofit kits, each of which contained, among other things, three descote MOVs, by submitting a purchase order to Salco. (Stipulations, ¶9.) In 2012, PPG either purchased, or directed ARI to purchase, railcar kits from Salco which collectively included a total of nine hundred (900) descote MOVs, for use in PPG's chlorine railroad tank cars. (Axiall's Add'l Mat. Facts in Opp'n todescote's Mot. for Summ. J. (Axiall's Add'l Mat. Facts in Opp'n"), ¶ 64, ECF No. 303 at 24; descote's Resp. to Axiall's Add'l Mat. Facts in Opp'n at ¶64, ECF No. 319 at 27.) Ms. Bart requested that ARI install 600 of the descote MOVs for chlorine transportation on the 150 railcars it was manufacturing for PPG. (Bart Aff. dated 10/26/17, ¶29, ECF No. 204-19 at 5; descote's Resp. to Axiall's Add'l Mat. Facts in Opp'n at ¶71, ECF No. 319 at 30.) Salco also shipped a number of retrofit kits containing the descote MOVs to various locations for installation on Axiall's existing tank cars and for future installation at a later date. (Axiall's Add'l Mat. Facts in Opp'n"), ¶ 78, ECF No. 303 at 27; descote's Resp. to Axiall's Add'l Mat. Facts in Opp'n at ¶ 78, ECF No. 319 at 34.)

In August of 2013, a spring in the descote check valve located below the gas valve on car AXLX broke after three loadings. (Stipulations, ¶15.) Axiall informed descote of the problem and, in response, FC Tech was present on 10/29/13 on site and participated in the removal of the 922 and 926 parts and replaced all of the damaged parts. (Report dated 11/18/13 by Jean-Pierre Richer re: Descote Valves Failure on Chlorine Axiall Tank Cars ("descote Report"), Axiall App. Ex. U, ECF No. 304-21 at 4.) On 11/5/13, Fucich and Richer participated in a complete investigation of the four damaged valves. (Id., ECF No. 304-21 at 4-5.)

In October of 2013, Axiall reported a second valve failure to descote. (Id., ECF No. 304-21 at 5.) On 11/13/13, Fucich participated in a full examination of the four valve sets (926/922) at Watco along with representatives from ARI, SALCO, and Axiall. (Id.; Stress Eng'g Rept. Dated 12/4/13, Axiall App. Ex. R, ECF No. 270-1 at 157.) At the instruction of descote's president, Mr. Richer, FC Tech/Mark Fucich, on behalf ofdescote, hired Stress Engineering to conduct a valve failure analysis, and the information was sent directly to the factory. (2/24/16 Fucich Dep. at 283:24-25 to 284:2-15, Axiall App. F, ECF No. 270-1 at 53-54; 11/11/15 Fucich Dep. at 256:3-16, Axiall App. Ex. D, ECF No. 270-1 at 43; Stress Eng'g Final Rpt., Axiall App. Ex. R, ECF No. 270-1 at 154-202.) On December 2, 2013, Stress Engineering issued a draft report to Mark Fucich. (Stipulations, ¶16.) Subsequently, Mr. Richer instructed Fucich to direct Stress Engineering to delete the last two sentences on page 10 of its draft report. (2/24/16 Fucich Dep. at 288, Axiall App. Ex. F, ECF No. 270-1 at 55; Fucich email to M. Bartel dated 12/4/13, Axiall App. Ex. JJ, ECF No. 304-36 at 2.) Stress Engineering issued its final report to FC Tech on December 4, 2013. (Axiall App. Ex. R, ECF No. 270-1 at 154-202.) Following the issuance of that report, Axiall engaged Stress Engineering to conduct further analysis. (Stipulations, ¶ 17.)

Unable to reach a resolution of the various issues, Axiall commenced this civil action on February 24, 2015 against descote and ARI. Axiall has asserted four claims against descote: (1) breach of express warranty (Count I); (2) breach of implied warranty of merchantability (Count II); (3) breach of implied warranty of fitness for a particular purpose (Count III); and (4) misrepresentation (Count IV). (Am. Compl., ECF No. 9.) In addition, Axiall has asserted four claims against ARI: (1) breach of contract (Count V); (2) breach of express warranty (Count VI); (3) breach of implied warranty of merchantability (Count VII); and (4) breach of implied warranty of fitness for a particular purpose (Count VIII). (Id.) Descote has filed a cross-claim against ARIfor contribution or indemnity (ECF No. 15 at 10). ARI has filed a cross-claim for contribution and/or indemnity against descote (ECF No. 20 at 18).

Discovery has been completed and Defendants have moved for summary judgment on some or all of the claims and cross-claims asserted against them. In addition, Axiall has moved for partial summary judgment on the issue of agency. The motions have been fully briefed and are now ripe for disposition.

II. STANDARD OF REVIEW

Summary judgment is appropriate if, drawing all inferences in favor of the nonmoving party, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, and for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

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