SUPREME COURT
STATE OF NEW YORK MONROE COUNTY
____________________________________________________
ROCKBURL INDUSTRIES, INC.,
Plaintiff,
-vs- INDEX # 2000/05333
INDUSTRIAL BEARING CORP. and
AMERICAN RING AND TOOL, CO.,
Defendants.
_____________________________________________________
APPEARANCES:
Attorney for Plaintiff: Robert S. Attardo, Esq.
Ward Norris Heller & Reidy LLP
Two State Street, Suite 1000
Rochester, NY 14614-1329
Attorney for Defendant David E. Gutowski, Esq.
Industrial: Damon & Morey LLP
1000 Cathedral Place
298 Main Street
Buffalo, NY 14202-4096
Attorney for Defendant Jeffrey J. Calabrese, Esq.
American Ring: Harter Secrest & Emery LLP
1600 Bausch & Lomb Place
Rochester, NY 14604-2711
Thomas A. Stander, J.
Plaintiff, Rockburl Industries, Inc. ("Rockburl"), has moved for an order granting it summary judgment against Defendant Industrial Bearing Corp. ("Industrial") on the causes of action set forth in its Complaint. Plaintiff's causes of action are as follows, First Cause of Action: Breach of Contract; Second Cause of Action: Breach of Express Warranty; and Third Cause of Action: Implied Warranty of Merchantability. Plaintiff's claims against Defendant American Ring and Tool, Co. ("American Ring") have previously been resolved and are not before this Court.
Defendant Industrial has cross moved for summary judgment, also pursuant to CPLR 3212, for dismissal of Rockburl's claims against it with prejudice.
Defendant American Ring has also submitted a notice of motion seeking summary judgment dismissing co-Defendant Industrial's cross-claim for contribution and/or indemnification.
Plaintiff Rockburl is a machine shop that machines parts and manufactures assemblies to specifications provided by their customers. Here, Rockburl had a contract with its client, Alstom Transportation, Inc. ("Alstom"), to manufacture clamp assemblies for the power units of new train locomotives, which Alstom was manufacturing.
Rockburl sent a request for a quote to purchase spring washers from Defendant Industrial. Rockburl's request states, "Please quote price and delivery for 5,780 pcs. Stainless Steel Mat'l per attached print," and included a drawing of the spring washer which set forth the physical dimensions and the deflection capability for the spring washers sought by Rockburl ("Rockburl Drawing"). Defendant Industrial then sent Rockburl's request on to Defendant American Ring, which responded with a quote for 5,780 spring washers made of 304 stainless steel. American Ring also provided its own drawing of the washers that would be provided ("American Ring Drawing"). While the Rockburl drawing indicated a certain deflection capability, the "American Ring Drawing" did not.
After receiving American Ring's price quote, Industrial faxed Rockburl an offer to supply "304 stainless steel" washers at $2.49 per washer. Later the same day, Rockburl's Vice President, Richard K. Ludwig, called Industrial to accept their offer of the 304 stainless steel washers.
Industrial timely delivered the washers, pursuant to the specifications set forth in the "American Ring Drawing" at various dates set by the parties. A second purchase order for more of the same spring washers was sent to Industrial by Rockburl on May 18, 1999. In total, Rockburl ordered more than 7,000 of the 304 stainless steel washers.
Payment in full for each of the purchase orders was received from Rockburl by Industrial pursuant to the terms of the purchase orders. Rockburl accepted each shipment from Industrial, without rejection either in writing or by conduct.
Nearly a year after the first shipment of spring washers was accepted by Rockburl, on July 5, 1999, Mr. Ludwig called the Branch Manager of Industrial's Rochester, NY office and alleged that the spring washers were "failing." On July 9, 1999, Rockburl requested that the spring washers be tested to determine whether they conformed to the contract between the parties. American Ring performed the test, and confirmed that the spring washers conformed to both the purchase order for 304 stainless steel spring washers and the "American Ring Drawing."
On July 26, 1999, Jack Morrissey, on behalf of American Ring, and David Ramage, on behalf of Industrial, held a settlement discussion as to the dispute between American Ring and Industrial. American Ring offered Industrial a $15,000.00 check to settle the future and present claims relating to the purchase of the spring washers. Along with the check, Morrissey sent a cover letter explaining that the check was sent in resolution of the dispute. On August 24, 1999, Industrial cashed the check, without noting any objection or reservation.
However, Industrial now claims that it accepted American Ring's offer of settlement only upon the condition that Rockburl accepted Industrial's offer of settlement. Industrial further argues that because Rockburl declined to accept Industrial's offer of settlement, it is still entitled to contribution and/or indemnification from American Ring.
Summary Judgment on the First, Second, and Third Causes of Action
Plaintiff seeks summary judgment on the three causes of action set forth in its Complaint for breach of contract, express warranty, and implied warranty of merchantability.
Breach of Contract
With respect to Rockburl's first cause of action for breach of contract, the submitted proof is insufficient to establish Plaintiff's claim as a matter of law.
The affidavits and exhibits before this Court demonstrate that Rockburl sent out an invitation to bid, seeking to purchase spring washers with certain specifications according to the "Rockburl Drawing" attached to the request. The submissions also establish that Defendant Industrial responded to this by offering to supply certain spring washers at a certain price, and attached the "American Ring Drawing" to its offer. This was an offer to Rockburl. The evidence shows that Rockburl accepted this offer. Since the offer was for the spring washers as set forth in the "American Ring Drawing," the goods delivered cannot be said to be in breach of the contract terms. Further, Rockburl accepted the goods delivered and failed to make an effective rejection of the goods.
1. Rockburl Accepted the Goods
Section 2-606(1) of the UCC provides in relevant part:
Acceptance of goods occurs when the buyer
N.Y. UCC Section 2-606 (McKinney 1993). In determining whether a buyer accepted goods, inquiry must be made into whether the buyer had a reasonable amount of time to inspect the goods. What constitutes a reasonable time for inspection is determined on a case by case basis. Clearly, the difficulty of determining that a defect exists is a consideration in determining the amount of time necessary to inspect the goods.
Here, Rockburl had a reasonable opportunity to inspect the goods for conformity, but it did not do so. The "American Ring Drawing" provided to Rockburl with Industrial's offer, which became part of the contract, did not indicate a deflection capability. Thus, Rockburl was, or should have been, on notice of the need for it to test the spring washers provided. If Rockburl, a sophisticated business in the field of manufacturing, required specific deflection capability, it had a duty to independently ensure that the goods contracted for contained that capability or, failing that, to test the goods upon delivery and notify Industrial of any nonconformity in the goods.
A buyer's actions following delivery, including payment for the goods and the reorder of similar goods, also indicates whether goods have been accepted. Here, Rockburl accepted each of the five separate lots of 304 Stainless Steel Washers shipped to it between August, 1998 and June, 1999 without complaint. Rockburl also reordered additional spring washers under the parties' contract. There is no dispute that Rockburl paid for the goods received and did not timely indicate any problems, despite having had ample opportunity to inspect the goods to determine if they were conforming. The goods were accepted by Rockburl. See N.Y. UCC Section 2-606 (1)(b); Mayo v. Caldwell, 145 Misc. 2d 533, 535-36 (N.Y. Town Court 1989).
2. Rockburl Could Not Revoke Acceptance of the Goods
UCC Section 2-608 provides that a buyer may revoke its acceptance of goods if the buyer "reasonable assumed" a non-conformity would be cured and it was not, or if the buyer's acceptance was "reasonably induced" by the difficulty of discovery of the non-conformity before acceptance, or as a result of the seller's assurances. N.Y. UCC Section 2-608 (1) (McKinney 1993). Section 2-608 also mandates that the revocation must happen "within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects." N.Y. UCC Section 2-608 (2).
Revocation of acceptance is not available to Rockburl under the facts of this case. The contract between the parties included the "American Ring Drawing," which did not indicate a defection capability. The spring washers delivered to and accepted by Rockburl conformed with the "American Ring Drawing." Therefore, there was no non-conformity to justify revocation of acceptance.
Even assuming, however, that there was a non-conformity, revocation of acceptance is still unavailable to Rockburl, because Rockburl has no excuse for failing to discover what it alleges was a non-conformity within a reasonable time frame. In fact, a simple question to Industrial could have revealed the alleged non-conformity between what Rockburl sought and that which Industrial delivered. Also, there is no showing that Industrial, as the seller, ever gave assurances of the deflection capability of the 304 Stainless Steel Washers, thus inducing Rockburl to accept the spring washers.
3. Industrial is Entitled to Judgement as a Matter of Law
Rockburl is obligated to conduct its business in a commercially reasonable manner, and it failed to do so in the case before this Court. Not only did Rockburl retain the spring washers for over a year before any objection was made, but Rockburl, on notice of the different drawing submitted by American Ring, did not mention the deflection capability when the purchase order was submitted or take any independent steps to confirm that the spring washers offered by Industrial would conform to the specifications Rockburl needed.
Rockburl has not established that Industrial breached the contract. Defendant Industrial has established that it delivered the spring washers Rockburl agreed to in the parties' contract. Rockburl did not inspect the shipment, and/or notify Industrial of any non-conformity or problems within a commercially reasonable time.
Plaintiff's motion for summary judgment on the breach of contract claim is DENIED. Defendant Industrial's motion for summary judgment as to the breach of contract claim is GRANTED.
Breach of Express Warranty
Rockburl's claim of an express warranty pursuant to a contract under New York UCC Section 2-313 must also fail. The only drawing that became a part of the contract between the parties was the "American Ring Drawing". Industrial did not warrant conformity with the "Rockburl Drawing." Rockburl's assertions in its papers that the contract was based upon both the "American Ring Drawing" and the "Rockburl Drawing" are unsubstantiated . The Statement of Conformance issued by American Ring confirms that all of the spring washers provided by Industrial to Rockburl conformed in every respect to the parties' contract, including the "American Ring Drawing."
Rockburl's motion for summary judgment as to the second cause of action for breach of express warranty is DENIED. Defendant Industrial's cross motion for summary judgment as to the second cause of action is GRANTED.
Breach of Implied Warranty of Merchantability
Likewise, Rockburl's third cause of action for breach of implied warranty of merchantability must fail. As the "Rockburl Drawing" was not a part of the contract between Rockburl and Industrial, Industrial cannot be liable for breaching an implied warranty that arose from the "Rockburl Drawing." The 304 Stainless Steel Washers were subject to an implied warranty of merchantability pursuant to UCC Section 2-314(1). However, because the spring washers conformed with the contract entered into by the parties, there was no breach of that warranty.
Rockburl's motion for summary judgment as to the third cause of action for breach of implied warranty of merchantability is DENIED. Defendant Industrial's cross motion on the third cause of action is GRANTED.
Defendant American Ring's Cross Motion
Defendant Industrial's cross claim against Defendant American Ring seeks indemnification and/or contribution to the extent Rockburl is successful against Defendant Industrial.
Contribution
Where the potential liability between two parties to a third party is for economic loss resulting solely from a breach of contract, CPLR Section 1401 does not allow contribution between the two parties. See Board of Education of the Hudson City School District v. Sargent Webster, Crenshaw & Folley, 71 N.Y.2d 21, 23-24 (1987). The Complaint submitted to the Court by the parties states three claims: breach of contract, express warranty, and implied warranty. There is no claim for losses for actions sounding in tort except in the "Wherefore" clause of the Complaint. Not only has Rockburl failed to properly state a claim for a tort in its Complaint, but no evidence has been presented that Rockburl seeks to litigate or further pursue this claim which is made only in the "Wherefore" clause. Rockburl has not sought leave from this Court to amend its Complaint to add a cause of action for harm to Rockburl's reputation. In its papers to this Court on this motion, Rockburl has not sought to advance any claims in this regard.
Defendant American Ring's motion for summary judgment to dismiss Defendant Industrial's cross claim as to contribution is GRANTED.
Indemnification
The acceptance of a check without reservation in full settlement of a disputed unliquidated claim operates as an accord and satisfaction discharging the claim. See Merrill Lynch Realty/ Carll Burr, Inc. v. Skinner, 63 N.Y.2d 590, 596 (1984). These "agreements are enforceable, however, only when the person receiving the check has been clearly informed that acceptance of the amount offered will settle or discharge a legitimately disputed unliquidated claim." See id.
The letter relied upon by American Ring states as follows:
Per your telephone conversation with Jack Morrissey on Friday, July 23, 1999, American Ring and Tool Company will be mailing, attention to you at Industrial Bearing, a one-time payment of $15,000.00 for the resolution of the issues pertaining to P/N K611-1114341-E1332-RT-T-087.
(Emphasis added). A check in that amount was then sent to Industrial, described in its notes as "SETTLEMENT FOR P/N K611-1114341-E1332-RT-R-087." A little over one month later, Industrial deposited this check into its account. Industrial has not submitted anything to the Court, other than self-serving statements, to indicate that this check was received and deposited on the condition that Industrial reached a settlement with Rockburl. In fact, when Rockburl rejected Industrial's settlement attempt, Industrial did not try to return the $15,000.00.
The cover letter and check prove accord and satisfaction of the claims between the Defendants as a matter of law. The check was cashed without reservation, and thereby Industrial waived any claim to additional payment.
Defendant American Ring's motion to dismiss Defendant Industrial cross claim is GRANTED.
Based upon the papers submitted in support and in opposition to the motion and cross-motions, the above Decision, and after due deliberation, it is hereby
ORDERED that Plaintiff's motion for summary judgment on the first cause of action, second and third causes of action is DENIED and it is further
ORDERED that Defendant Industrial's cross motion for summary judgment on the first, second, and third causes of action is GRANTED; and it is further.
ORDERED that Defendant American Ring's cross motion for summary judgment to dismiss Defendant Industrial's cross claim for contribution and/or indemnification is GRANTED.
Dated: December ____, 2001
Rochester, New York
_________________________________________
THOMAS A. STANDER
Supreme Court Justice
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