Charleston Marine Containers Inc. v. Sherwin-Williams Co. (Lawyers Weekly No. 002-048-16, 25 pp.) (David Norton, J.) 2:14-cv-00377; D.S.C.
Holding: The parties’ supply agreement, which is governed by Ohio law, bars the plaintiff-purchaser’s claim that the terms of its purchase orders amended the supply agreement to include plaintiff’s “standard terms and conditions” as modified by certain Federal Acquisition Regulation clauses.
The court grants summary judgment for defendant on plaintiff’s claims of breach of contract, breach of contract accompanied by a fraudulent act, and breach of express warranty. The court denies defendant’s motion for summary judgment as to plaintiff’s claim of negligent misrepresentation.
Plaintiff contends that it bought two different primer paints from defendant, it applied them in conformity with the product information sheet provided by defendant, and customers later complained that the primer layers were separating.
The parties had a supply agreement, but plaintiff contends the parties’ contract incorporated plaintiff’s purchase orders, which said that plaintiff’s “standard terms and conditions for US purchase orders” were modified to include certain Federal Acquisition Regulation clauses. However, there is no evidence that the purchase orders actually contained the referenced terms and conditions. Plaintiff cannot confirm that its standard terms and conditions were ever actually presented to, or agreed to, by defendant.
The parties’ supply agreement says it is to be governed by Ohio law.
The purchase orders deal with the same subject matter as the supply agreement: the purchase and sale of “paint, coatings, and related products.” Thus, enforcing the purchase orders would run afoul of the supply agreement’s integration clause, which declares the supply agreement to be the final expression of the parties’ agreement on the subject matter and prohibits any modification by the plaintiff’s purchase orders. Such provisions are valid under Ohio law, which allows parties to restrict the manner in which a contract may be modified.
The supply agreement does not contain any promises regarding the products’ performance or other characteristics. Since the parties’ agreement did not include promises regarding the primer’s performance at certain temperatures, the court grants defendant’s motion for summary judgment on plaintiff’s breach of contract claim.
Although Ohio recognizes a cause of action similar to breach of contract accompanied by fraudulent act, it requires an underlying breach of contract. Therefore, the court grants defendant’s motion for summary judgment on plaintiff’s claim of breach of contract accompanied by fraudulent act.
An express warranty requires the seller to make some positive representation of fact which induces a prospective purchaser to buy. Here, there is no evidence that defendant made any such representation.
Furthermore, the record indicates that defendant never received, much less signed, any document containing plaintiff’s standard terms and conditions. In any event, the supply agreement provides, “Any term, condition or language contained in any purchase order or other writing submitted by Customer to [defendant] shall not be considered an amendment to this Agreement and shall have no effect thereon.”
In the face of such language, the purchase orders and standard terms and conditions could not be fairly regarded as part of the contract. Therefore, the court grants defendant’s motion for summary judgment on plaintiff’s breach of express warranty claim.
It is unclear whether Ohio or South Carolina law controls plaintiff’s negligent misrepresentation claim. As such, the claim will survive summary judgment if it is viable under either Ohio or South Carolina law.
In Ohio, if the parties’ relationship is governed by a contract, the economic loss rule will generally prevent recovery of damages for purely economic loss in connection with a tort claim. However, a tort claim may escape the economic loss rule if it is based on a duty imposed by law to protect the broad interests of social policy.
Under Ohio law, a negligent misrepresentation claim is viable so long as the plaintiff can prove that (1) the defendant provided false information for the guidance of the plaintiff in its business transactions and (2) the plaintiff is one of a limited group of persons for whose benefit and guidance the defendant intended to supply the information or knew that the recipient intended to supply it.
Here, there is at least some evidence that the product information sheet was used to guide plaintiff’s business transactions. A reasonable juror might find that defendant intended, at least in part, that this information would facilitate plaintiff’s use of, and thereby future purchase of, the primer.
Moreover, it is clear that defendant supplied this information in the course of its business and in connection with a transaction in which it had a pecuniary interest. Finally, it is also clear that plaintiff was the specific recipient defendant intended to guide or benefit with this information, as it related to a product made exclusively for plaintiff.
Therefore, there is a question of fact as to whether defendant negligently misrepresented the performance capability of its primer in the product information sheet.
Motion granted in part, denied in part.