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Leprino Foods Co. v. DCI, Inc.

United States District Court, D. Colorado

January 3, 2017

LEPRINO FOODS COMPANY, Plaintiff,
v.
DCI, INC., Defendant.

          OPINION AND ORDER

          RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE

         On September 6, 2013, plaintiff Leprino Foods Company (“plaintiff”) filed a Complaint against defendant DCI, Inc. (“defendant”), asserting the following five claims: (1) breach of contract and breach of express warranties related to a 2001 agreement between the parties (“the 2001 Agreement”); (2) breach of contract and breach of express warranties related to a 2007 agreement between the parties (“the 2007 Agreement”); (3) negligent nondisclosure related to the 2001 Agreement; (4) negligent nondisclosure related to the 2007 Agreement; and (5) negligent misrepresentation related to the 2007 Agreement. (ECF No. 1.) Plaintiff brings it's claims under State law, and seeks monetary damages. The dispute in this case concerns 26 crystallizer tanks (“the Equipment”) manufactured by defendant pursuant to the 2001 and 2007 Agreements. (See ECF No. 160 at 6; ECF No. 161 at 1.) More to the point, the dispute centers around the alleged leaking and/or cracking of the Equipment after its exposure to chlorides and other substances. Plaintiff alleges that the leaking/cracking of the Equipment breached warranties contained in the 2001 and 2007 Agreements, and defendant's failure to disclose and/or misrepresentation of facts relevant to the Equipment's potential for leaking/cracking constituted negligence.

         Pending before the Court are opposing motions for summary judgment; specifically, plaintiff's motion for partial summary judgment (“plaintiffs' motion for summary judgment”) (ECF No. 161), and defendant's motion for summary judgment (“defendant's motion for summary judgment”) (ECF No. 160), along with accompanying statements of undisputed material facts for both motions (ECF Nos. 161-1, 169). The parties have filed opposing responses to the motions for summary judgment (ECF Nos. 181, 184-1), and responses to the statements of undisputed material facts (ECF Nos. 174-1, 181-1). The parties have also filed replies in support of their respective motions for summary judgment (ECF Nos. 189, 191), and reply statements of undisputed material facts (ECF Nos. 189-1, 191-1). In addition to the above mentioned dispositive motions, defendant has also filed a motion to exclude plaintiff's rebuttal experts (“the motion to exclude”). (ECF No. 165). Plaintiff has filed a response to the motion to exclude (ECF No. 178), and defendant has filed a reply (ECF No. 190).

         With all motions being fully briefed, the Court makes the following findings.

         I. Legal Standard for Summary Judgment

         Summary judgment is appropriate “when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Initially, the movant bears the “responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986). If this burden is met, then the non-moving party must set forth specific facts showing that there is a genuine dispute for trial. Id. at 324. A fact is material if it has the potential to affect the outcome of a dispute under applicable law. Ulissey v. Shvartsman, 61 F.3d 805, 808 (10th Cir. 1995). An issue is genuine if a rational trier of fact could find for the non-moving party. Adams v. Am. Guarantee & Liab. Ins. Co., 233 F.3d 1242, 1246 (10th Cir. 2000).

         In performing this analysis, the factual record and any reasonable inferences therefrom are construed in the light most favorable to the non-moving party. Adams, 233 F.3d at 1246. However, a mere “scintilla of evidence” is insufficient to avoid summary judgment. Turner v. Public Service Co. of Colorado, 563 F.3d 1136, 1142 (10th Cir. 2009). Instead, a non-movant “must proffer facts such that a reasonable jury could find in her favor.” Id.

         II. Discussion [1]

         A. Breach of Contract/Breach of Express Warranties

         Both parties seek summary judgment as to the breach of contract/warranty claims (Claims 1 and 2). In doing so, the parties raise a host of arguments pertaining to defendant's alleged breach of various alleged express warranties contained within the 2001 and 2007 Agreements, ranging from defendant's assertion of a statute of limitations defense to defendant arguing that the allegedly express warranties are so inexact that they do not actually exist. Ultimately, the Court can resolve the breach of warranty claims on one issue: the statute of limitations.

         In Colorado, a claim for breach of warranty, ordinarily, accrues “when tender of delivery is made, ” regardless of the innocent party's knowledge of the breach. Colo. Rev. Stat. § 4-2-725(2). However, as with all things in the statutory world, there is an exception to the accrual-on-delivery rule. Specifically, when “a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance, the cause of action accrues when the breach is or should have been discovered.” Id. The Court refers to this as the “future performance” exception.

         Here, plaintiff relies upon identical language in § 6.3 of the 2001 and 2007 Agreements. (See ECF No. 184-1 at 14-16.)[2] Given its import, the Court recites the pertinent parts of the provision below:

All goods, materials and equipment furnished under this Agreement will be fit for the purpose intended as specified in the Agreement, of good quality, new, free from faults and defects (whether patent or latent) in material or workmanship and in conformance with this Agreement (which includes all exhibits attached hereto).… The provisions of this Paragraph shall survive acceptance of the Equipment by Leprino, and shall run to Leprino's successors, assigns, customers and users of Leprino's product. The provisions of this Paragraph shall not be deemed waived by reason of Leprino's inspection, acceptance or payment.

         (ECF No. 161-2 at ¶ 6.3; see also ECF No. 161-3 at ¶ 6.3) (strikethrough omitted).

         Plaintiff argues that the second sentence quoted supra (the one discussing survival of the provision) unambiguously extends performance of the warranties quoted in the first sentence to the future, citing the decision from another Judge of this Court in Leprino Foods Co. v. Feldmeier Equip., Inc., 2006 WL 278550 (D. Colo. Feb. 3, 2006). In Feldmeier, the court found that identical language “guarantee[d] future performance” of the product in question, and thus, the statute of limitations accrued when the plaintiff knew or should have known when the product was defective. Id. at *4.

         Although Feldmeier may appear to provide plaintiff with the result that it needs in this case, this Court disagrees with the Feldmeier court's finding that the language quoted supra explicitly guarantees the future performance of the Equipment at issue here. First, the persuasiveness of the finding in Feldmeier is diminished by the lack of analysis therein of Colorado case law interpreting the future performance exception, and the lack of explanation as to why the pertinent language guarantees future performance. Instead, the court in Feldmeier appears to have found (without discussion) that future performance was guaranteed merely because the provision stated that it ran to the plaintiff's successors and survived acceptance. As discussed infra, this Court does not believe that is so, at least not explicitly for purposes of Colo. Rev. Stat. § 4-2-725(2) (“§ 4-2-725(2)”).

         Second, review of Colorado case law reflects that the tenor of its interpretation of the future performance exception is inconsistent with the finding in Feldmeier. The parties discuss three principal cases: Glen Peck, Ltd. v. Fritsche, 651 P.2d 414 (Colo.App. 1981); Smith v. Union Supply Co., 675 P.2d 333 (Colo.App. 1983); and Boyd v. A.O. Smith Harvestore Prods., Inc., 776 P.2d 1125 (Colo.App. 1989). (See ECF No. 160 at 9-10; ECF No. 184-1 at 15-16.) In Glen Peck, the Colorado court found that an express warranty explicitly extended to future performance because the warranty guaranteed the performance of bulls as breeders, “not only at the moment of purchase but at some future date as well, namely, after being used on cows known to be breeders.” 651 P.2d at 415 (quotation omitted). Similarly, in Smith, the Colorado court found that a warranty explicitly extended to future performance, as the warranty unconditionally guaranteed the performance of a roof for a period of five years. 675 P.2d at 335. In Boyd, the Colorado court found that a warranty, promising to repair or replace any part of a purchase proved to be defective, did not explicitly guarantee future performance because the warranty did not guarantee that the equipment would not malfunction. 776 P.2d at 1129. In reaching this finding, the court explained that a key characteristic of a future performance warranty was that it “guarantees the performance of the product itself for a stated period of time.” Id. at 1128 (emphasis omitted).

         Although the Court agrees with plaintiff that requiring a warranty to guarantee performance for a stated period of time may be more than § 4-2-725(2) requires in every case (see ECF No. 184-1 at 14-15), the Court does agree with the court in Boyd that, for a warranty to explicitly extend to future performance, the warranty “must expressly provide a guarantee that the product will perform as promised in the future.” See Boyd, 776 P.2d at 1128. In that light, the decisions in Glen Peck, Smith, and Boyd make sense because tying the warranty to, respectively, a future event, a fixed period of time extending into the future, or none of the above, explicitly indicates that the warranty was either meant to extend to future ...


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