Whitecap Inv. Corp. v. Putnam Lumber & Export Co.

58 V.I. 635

WHITECAP INVESTMENT CORP. d/b/a/ Paradise Lumber, Plaintiff,

v.PUTNAM LUMBER & EXPORT COMPANY; Putnam Family Properties, Inc.; Great Southern Wood Preserving, Inc.; Mike Noble; XYZ Corp.; John Doe; and Jane Doe, Defendants,andGary Chapin, Intervenor-defendant.

Putnam Family Properties, Inc., Cross-claimant,

v.Great Southern Wood Preserving, Inc., Cross-claim defendant.

Putnam Lumber & Export Company, Cross-claimant,

v.Great Southern Wood Preserving, Inc., Cross-claim defendant.

Mike Noble, Cross-claimant,

v.Great Southern Wood Preserving, Inc., Cross-claim defendant.

Putnam Family Properties, Inc., Counterclaimant,

v.Whitecap Investment Corp. d/b/a Paradise Lumber, Counterclaim defendant.

Civil No. 2010–139

District Court of the Virgin Islands, Division of St. Thomas and St. John

Filed: 05/30/2013

Alex Moskowitz, Esq., Dudley, Topper & Feuerzeig, Christopher A. Kroblin, Esq., Shari N. D'Andrade, Esq., Erika A. Kellerhals, Esq., Kellerhaals Ferguson Fletcher Kroblin LLP, St. Thomas, VI, For the plaintiff/counterclaim defendant Whitecap Investment Corp. d/b/a Paradise Lumber,

Lisa M. Kömives, Esq., Bolt Nagi PC, St. Thomas, VI, Robert A. Carlson, Esq., Lee, Hernandez, Landrum, Garofalo and Blake APC, Miami, FL, For the defendants/cross-claimaints Putnam Lumber & Export Co. and Mike Noble; and for the defendant/cross-claimant/counterclaimant Putnam Family Properties, Inc,

Daryl C. Barnes, Esq., Sunshine S. Benoit, Esq., Bryant, Barnes, Moss & Beckstedt, St. Croix, VI, Lee M. Hollis, Esq., Stewart Andrew Kelly, Esq., Lightfoot, Franklin & White, LLC, Birmingham, AL, For the defendant/cross-claim defendant Great Southern Wood Preserving, Inc.,

Terri L. Griffiths, Esq., Terri Griffiths, Attorney at Law, Carbondale, IL, For the intervenor-defendant Gary Chapin.

MEMORANDUM OPINION

GÓMEZ, C.J.

Before the Court is the motion of defendant/cross-claim defendant Great Southern Wood Preserving, Inc. (“GSWP”), for summary judgment on all claims and cross-claims asserted against it.

I. FACTUAL AND PROCEDURAL BACKGROUND

From in or about 2003 until in or about 2009, GSWP sold treated lumber and provided lumber-treatment services to the defendant/cross-claimant Putnam Family Properties, Inc., then doing business as Putnam Lumber & Export Co. (“Putnam Family”). Putnam Family, a Florida corporation, was a lumber wholesaler. The defendant/cross-claimant Putnam Lumber & Export Co. (“Putnam Lumber”), also a Florida lumber wholesaler, is a successor of Putnam Family. The defendant/cross-claimant Mike Noble (“Noble”) was formerly a salesperson employed by Putnam Family, and now is the president and chief executive officer of Putnam Lumber.

Putnam Family allegedly sold lumber treated by GSWP to the plaintiff, Whitecap Investment Corporation, doing business as Paradise Lumber (“Paradise Lumber”). Paradise Lumber is a lumber retailer operating in St. John, United States Virgin Islands.

Paradise Lumber claims to have sold lumber that it had purchased from Putnam Family, and which had been treated by GSWP, to various consumers in St. John. These consumers used the lumber in their sundry buildings. Paradise Lumber further claims that the GSWP-treated lumber prematurely decayed, causing damage to the buildings into which it had been incorporated.

On December 29, 2010, Paradise Lumber initiated this action. Paradise Lumber's complaint (the “Complaint”) sets forth eight counts. Count One asserts a claim for breach of contract against the Putnam Defendants. Count Two asserts a claim for breach of warranty against all defendants. Count Three asserts a claim for negligence against all defendants. Count Four asserts a claim for strict liability against all defendants. Count Five asserts a claim for indemnity against all defendants. Count Six asserts a claim for contribution against all defendants. Count Seven asserts a claim for fraudulent inducement and misrepresentation against all defendants. Count Eight asserts a claim for civil conspiracy against all defendants. Count Nine seeks a declaration that all defendants are liable for the various claims set forth in the previous counts.

On March 1, 2012, Putnam Family, Putnam Lumber, and Noble each filed cross-claims against GSWP (the “Cross-claims”). Each cross-claim asserts two counts. Count One asserts a claim for indemnity. Count Two asserts a claim for contribution.

On March 21, 2013, the Court dismissed Counts Three, Four, Seven, and Eight of the Complaint as against GSWP on the ground that they were barred by the economic-loss doctrine.

GSWP now moves for summary judgment in its favor on Counts Two, Five, Six, and Nine of the Complaint ¹ as well as all counts of the Cross–Claims. Paradise Lumber, Putnam Family, Putnam Lumber, and Noble all oppose the motion.

II. DISCUSSION

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); see alsoHersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir.1986).

The movant has the initial burden of showing there is no genuine issue of material fact, but once this burden is met it shifts to the non-moving party to establish specific facts showing there is a genuine issue for trial. Gans v. Mundy, 762 F.2d 338, 342 (3d Cir.1985). The non-moving party “may not rest upon mere allegations, general denials, or ... vague statements.” Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir.1991). “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

“[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. In making this determination, the Court draws all reasonable inferences in favor of the opposing party. See Bd. of Educ. v. Earls, 536 U.S. 822, 850 (2002); see alsoArmbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir.1994).

III. ANALYSIS

A. Count Two of the Complaint: Breach of Warranty

GSWP argues that it is entitled to summary judgment with respect to Count Two of the Complaint because: (1) it is not a seller of goods, and therefore the Uniform Commercial Code (“UCC”) does not apply; and (2) to the extent any warranties were made, they were made only by GSWP to Putnam Family, and not to Paradise Lumber.

1. UCC Claims

GSWP argues it is entitled to summary judgment on “any breach of warranty claim asserted by [Paradise Lumber] under the U.C.C.....” (GSWP's Mot. for Summ J. 3.)

The Virgin Islands has adopted the UCC to govern the sales of goods. See V.I. Code Ann. tit. 11A, § 1–101, et seq. (2012). The UCC “applies to transactions in goods”. See V.I. Code Ann. tit. 11A, §§ 2– (2012). “Goods” are “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale ... investment securities ... and things in action.” V.I. Code Ann. tit. 11A, § 2–105 (1).

The UCC does not, however, “govern agreements to provide services.” In re Merritt Logan, Inc., 901 F.2d 349, 361 (3d Cir.1990) Where a contract involves both goods and services, the applicability of the UCC hinges on whether the goods or services predominate. Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 676 (3d Cir.1991). This determination turns on “the purpose or essence of the contract.” Id. In making this determination, there are at least two critical factors: (1) the relative cost of the materials supplied versus the costs of the labor and (2) the interrelationship of the goods and services to be provided, including whether one is incidental to the other. See id.; see alsoTriangle Underwriters, Inc. v. Honeywell, Inc., 604 F.2d 737, 743 (2d Cir.1979) (“A contract is for ‘service’ rather than ‘sale’ when ‘service predominates, and the sale of items is ‘incidental.’ ”).

GSWP maintains that it did not sell any goods to either Putnam Family or Paradise Lumber. In support of this position, GSWP offers the deposition testimony of William Freeman (“Freeman”), the general manager of GSWP's wood-treatment plant in Jesup, Georgia. Freeman testified that GSWP regularly purchases wood, treats it, and sells it wholesale to various lumber retailers under the brand name “YellaWood.” (Tr. of Dep. of Freeman, Sept. 25, 2012, 34–35 [hereinafter “Freeman Dep.”] ). GSWP sells YellaWood only after treating it in accordance with industry standards, and thereafter subjecting it to a rigorous inspection process. (Freeman Dep. 198–200.) YellaWood is also sold with an express warranty. (Freeman Dep. 204.)

GSWP also provides to its customers what is known as “treatment services only.” When GSWP performs treatment services only, or “TSO”, it does not purchase the wood to be treated. (Freeman Dep. 35–36.) Instead, the customer purchases the wood, and has it delivered to GSWP for treatment. (Freeman Dep. 34–36, 362–64.) Freeman testified that TSO lumber is treated only in accordance with the customer's specifications, and is not tested by GSWP after treatment. (Freeman Dep. 172, 196.)

Freeman further testified that virtually all of the lumber purchased by Putnam Family and resold to Paradise Lumber was of the TSO variety. (Freeman Dep. 76.) Specifically, he estimated that TSO lumber constituted more than ninety-nine percent of the total lumber sold by Putnam Family to Paradise Lumber. (Freeman Dep. 76.) The TSO lumber was typically treated in batches as Putnam Family needed it; there was no general contract or other agreement between GSWP and Putnam Family for the provisioning of TSO lumber. (Freeman Dep. 391–92; see also Tr. of Dep. of Mike Noble May 22, 2012, 121–22 [hereinafter “Noble Dep.”] ) Instead, Putnam Family would typically place an order for TSO lumber, have the untreated lumber delivered to GSWP, then have the lumber returned after treatment. (...