Leprino Foods Co v. Feldmeier Equip Inc Document 78: Reply to Response to Motion

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 03-cv-2461-MSK-OES LEPRINO FOODS COMPANY,

Plaintiff,

Vv.

FELDMETER EQUIPMENT, INC.,

Defendant.

DEFENDANT FELDMEIER EQUIPMENT, INC.’S REPLY IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION (DOCUMENT 69)

Defendant Feldmeier Equipment, Inc. hereby submits its Reply in Support of its Motion for Summary Adjudication against Plaintiff as follows:

A. Leprino's Claims are Barred by the Statute of Limitations.

1. The Silo Was Delivered to Leprino October 16, 2000. It is undisputed that the

silo at issue was first delivered in July, 2000. The silo had been damaged in transport and repaired by Feldmeier. After the silo was fully repaired, it was re-delivered to Leprino on October 16, 2000. Leprino does not dispute that it has had full possession of the silo since that time and that Feldmeier did no further work at the Waverly site after that date.

2. Leprino Failed to File its Complaint Within Either the Two-or Three-Year Statute

of Limitations. It is further undisputed that Leprino filed its Complaint against Feldmeier in District Court for the City and County of Denver on November 4, 2003.

3. Leprino Knew of the Alleged Design Defect on or before December 14, 2000, but

Failed to Bring Suit Until November 4, 2003, Missing the Two-Year Statute of Limitations.

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Plaintiff contends that the statute of limitation period did not accrue until it knew of the alleged defect in the venting system. Plaintiff, through an Affidavit executed by one of its in-house attorneys, contends it did not know of the alleged defect until October 2003 when it received Mr. Mott's expert report. Plaintiff's contention in this regard is nothing short of outrageous. '

It is absolutely uncontroverted that Leprino knew of what it calls a vent and overflow defect on or before December 14, 2000. On or about November 13, 2000, one of the Feldmeier silos owned by Leprino suffered a vacuum-induced implosion. Deposition of Chuck Williams, Vol. 1, pp. 68-69, 1. 12, attached as Exhibit A. After the implosion, Leprino called a representative from a Feldmeier competitor, Mr. Eric Merritt of Mueller Silos, to inspect the imploded Feldmeier silo. On or before December 14, 2000, Mr. Merritt told Chuck Williams, Leprino's Plant Engineer of the Lemoore, California facility, that there was a design flaw in the Feldmeier silos and that “the vent and overflow configuration weren't large enough to handle fill rates.” See Exhibit A, p. 71, 1. 10 — p. 73, 1. 4; December 14, 2000 email from Mr. Williams to the Leprino Corporate Office Purchasing Manager, Ron Nowak, attached as Exhibit B, which states, “Eric Merritt believes there is a “design flaw” in the Feldmeier silos.” Leprino Plant Engineer Williams states he “tends to agree with Eric's assessment.” Jd. Engineer Williams testified that he was told that the “design defect” in the Feldmeier silos is the “incorrect size of vent and overflows” by Eric Merritt (in December 2000 as referenced by Exhibit B), SFI (another Feldmeier competitor), and “then also by Larry Mott.” See Deposition

of Chuck Williams, Vol. H, p. 106, 1. 12 — 107, 1. 8 (attached as Exhibit C). Mr. Mott's opinion

' The only evidence provided by Leprino on this subject matter is an Affidavit executed by Leprino's own in-

house counsel, Mr. Alby. The sworn statement of Mr. Alby is in direct contravention of Leprino engineers and plant managers who, during the course of the State Court Action testified at trial and during deposition that they were aware of the alleged "design flaw" as early as December 2000. Leprino's attempt to avoid the statute of limitations based on this sham fact issue should not be permitted, see, Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986), and Mr. Alby's Affidavit should be disregarded.

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did not arrive at Leprino until after the alleged "design flaw” had been investigated by two other companies and after Leprino "upsized" the diameter of the 4” overflow lines to 6” in certain Feldmeier silos in an attempt to remedy the "flaw". See Authorization for Expenditure "AFE", dated March 2002, pp. LFC 1556, 1562 attached as Exhibit D (Expenditure request to spend $61,927 to "upsize" the diameters of the internal overflow lines on Feldmeier tanks); Deposition testimony of Dave Dierking authenticating this exhibit (pp. 84-85 attached as Exhibit E).

Further, during the Trial of the State Court Action, Plant Engineer Chuck Williams testified that Leprino's Trial Exhibit 21, tab 3 constitutes a "spreadsheet breaking out the costs of repairs for upsizing - - for upsizing the six inch overflow lines on six silos.” Trial Transcript, Vol. 7, p. 17, 1.6 — p. 19, 1.11, attached as Exhibit F. Mr. Williams testified that the total cost of upsizing the overflow lines was $67,149.15, id. at p. 18, 1.1, and that these amounts were part of the damages that Leprino was seeking in the State Court Trial.” Jd. at p. 18, ll. 2-4. Plaintiff's Trial Exhibit 21 (tab 3) is attached hereto as Exhibit G.’

The case law cited by Leprino supports Defendant’s analysis of the statute of limitations issues. Housing Authority of the Town of Limon vy. Leo A. Daly Company, 35 Colo. App. 244, 533 P.2d 937 (1975), holds that once a plaintiff determines the possibility that negligence is involved, the statute of limitations provides two years to conduct tests and determine what theory it will proceed against defendants. In Boyd v. A.O. Smith Harvestore Products, Inc., 776 P.2d 425 (Colo. App. 1989), the Court held that a claim arises when plaintiff becomes aware of some damage, and the possibility that negligence was involved. “Tt is not necessary to know the exact

cause of the damage, just the possibility that a defect was involved.” /d. Here, Leprino

° Notably, Attorney Alby sat at Leprino's counsel table every day during the Trial of the State Court Action

and was well aware of the fact Leprino was seeking to collect upsizing repair costs as damages from Feldmeier.

3 Included under Exhibit G is the same Authorization for Expense for upsizing as well as numerous canceled checks demonstrating payment made for the repairs in 2002, more than a year before Leprino received Mr. Mott's October 2003 report. See Exhibit G; Exhibit F at p. 17 Il. 18-23; p. 18, Hl. 5-11.

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4, Plaintiff's Negligence, Product Liability, and Negligent Misrepresentation Claims are Time-Barred by the Two-Year Statute of Limitations. Plaintiff concedes, as it must, that all of its claims (except breach of warranty and contract claims) have two-year statutes of limitations. As such, Leprino's negligence, product liability, and misrepresentation claims are time-barred and summary judgment is appropriate on the same.”

5. Plaintiff's Breach of Warranty and Breach of Contract Claims are Time-Barred by the Three-Year Statute of Limitations. With regard to the warranty and contract claims, it is well

established that “[a] cause of action accrues when the breach occurs regardless of the aggrieved party's lack of knowledge of the breach.” C.R.S. § 4-2-725(2). Further, a breach of warranty occurs “when tender of delivery is made.” Jd. See also, Glenn Peck, Ltd. v. Fritsche, 051 P.2d 414, 415 (Colo. App. 1981), cert den’d. (1982); Prutch v. Ford Motor Co., 618 P.2d 657, 660 (Colo. 1980).

In order to escape this strict limitation period, Leprino contends that Feldmeier made warranties regarding “future performance.” A warranty regarding future performance must

‘ During this time, Leprino received a second opinion from SFI and spent over $67,000 "upsizing" the diameter of the internal lines in Feldmeier silos in March/April 2002 based on the information it received. Exhibit D, pp. 1555, 1556.

° C.R.S. §§ 13-80-106 and 107 provides a two-year statute of limitations for all actions against manufacturers of products (except breach of warranty claims). C.R.S. § 13-80-102(1) provides the same for negligence, manufacturer’s liability and product liability, and any other tort.

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expressly provide a guarantee that the product will perform as promised in the future. Boyd v. A.O. Smith Harvestore Products, Inc., 776 P.2d 125 (Colo. App. 1989), citing Smith v. Union Supply Co., 675 P.2d 333 (Colo. App. 1983). The majority of courts interpreting this section have “been very harsh in determining whether a warranty explicitly extends to future performance.” H. Sand & Co., Inc. v. Airtemp Corp., 738 F.Supp. 760, 770 (SDNY 1990) quoting Standard Alliance v. Black Clawson Co., 587 F.2d 813, 820 (6" Cir. 1978) cert den’d. 441 U.S. 923, 60 L.Ed. 2d 396, 99 S.Ct. 2032 (1979). See, also, J. White & R. Summers, Uniform Commercial Code § 11-9, 551 (3d ed. 1988) (“extension of the normal warranty period does not occur in the usual case, even though all warranties in a sense apply to future performance of goods’’).

No such express warranty regarding future performance was provided by Feldmeier. The following are the relevant contract provisions:

e Final Completion occurred October 16, 2000.

e Paragraph 6.3 contains an express warranty. It states in part:

“All goods, materials and equipment furnished under this Agreement will be fit for the purpose intended, merchantable, of

good quality, new, free from faults and defects...in material or workmanship and in conformance with this Agreement...”

e Paragraph 6.4 contains a limited 12-month repair-or-replace remedy. It states in part:

“In addition to all other warranties made by Seller for the benefit of Leprino, Seller agrees that for a period of twelve months from and after the date of Final Completion, the Equipment is guaranteed to be and remain free from defects in material and workmanship under normal and proper use. If the Equipment (or any portion thereof), fails through defect in material or workmanship during such one year period, Seller will repair or replace such defective portion of the Equipment free of charge at the Property.”

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e Paragraph 11 specifies that “any notice required or permitted to be given under this Agreement shall be in writing....”

e Paragraph 14 states in part: “This Agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado.” Sale Agreement, attached to Leprino’s Response Brief as Exhibit 2.

6. The Repair or Replace Remedy in {6.4 is Not a Warranty of Future Performance. The Court in Boyd specifically held that a repair and replace warranty such as that set forth in paragraph 6.4, is not subject to the “future performance” exception in C.R.S. § 4-2-725 as alleged by Plaintiff. Boyd, 776 P.2d at 1128-1129.

7. Leprino's Assertion that Representations Made Outside the Contractual Documents are Actionable is Misplaced. Leprino contends that oral representations including those regarding the “Feldmeier Advantage” were warranties of “future performance.” Such a contention is misplaced. Here the commercial contractual documents between the parties contain merger and integration provisions disclaiming other earlier representations. See Sales Agreement, 913. (‘This Agreement and the exhibits attached hereto . . . constitute the entire agreement between the parties pertaining to the subject matter herein and supercedes all prior and contemporaneous agreements, representations and understandings. No supplement, modification or amendment ... or any assurance, statement or representation shall be binding ..”) See also, Boyd, 776 P.2d at 1130; Batterman vy. Wells Fargo Agency Credit Corp., 802 P.2d 1112, 1115 (Colo. App. 1990) (all prior agreements, conditions and covenants are merged into the final, formal, written contract); Stuart v. D’Ascenz, 22 P.3d 540, 542 (Colo. App. 2000) (the last agreement between the parties on the same subject matter supercedes all former

agreements).

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Since no “explicit” warranties of future performance were made, the statute of limitations accrues on the date of the silos re-delivery after its repair, October 16, 2000. Since Leprino failed to bring suit until after October 16, 2003, the three-year statue of limitations relating to breach of warranty and breach of contract was missed.

B. Leprino Previously Released Ail Claims Against Feldmeier.

1. A Valid Settlement _Agreement_was Entered by the Parties. Leprino does not dispute that a Settlement Agreement was entered by the parties on September 25, 2000 nor does it dispute that the Settlement Agreement was entered in fairness and good faith. Additionally, Leprino does not dispute that it ratified the Agreement and never rescinded or disaffirmed the same.

2. Leprino Contends that the Agreement is Plain and Unambiguous. Leprino, the author of the Settlement Agreement, contends that the Agreement is unambiguous, but nevertheless attempts to use parol evidence to demonstrate a different intent than that reflected in the language of the Settlement Agreement. Leprino may not do this. Boyer v. Kavakehian, 915 P.2d 1295, 1299 (Colo. 1996). (A court should only admit parol evidence when the contract between the parties is so ambiguous that their intent is unclear); Cheyenne Mountain School Dist. #12 y. Thompson, 861 P.2d 711, 715 (Colo. 1993) (same).

3. The Unambiguous Language of the Agreement Bars all Claims Asserted in this

Litigation, Including Those that Were Not Known at the Time the Parties Executed the

Agreement. The Settlement Agreement plainly states that it is a full settlement, accord and satisfaction of any and all of the disputes between the parties and that:

The parties acknowledge that they may hereafter discover facts different from, or in addition to, those which each now knows or believes to be true, and each of the parties agrees that this Settlement shall be and remain effective in all respects

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notwithstanding such different or additional facts or the discovery thereof. (Emphasis applied).

Such broad language, authored by Leprino, clearly indicates that all of Leprino’s claims, even those it did not have knowledge of at the time of execution of the Agreement, are barred. Goff v. Boma Investment Co., 116 Colo. 359, 365-366, 181 P.2d 459, 462 (1957); Mountain Stone Co. v. H.W. Hammond, Co., 564 P.2d 958, 961 (Colo. App. 1977). Leprino discovered new facts relating to the venting of Feldmeier silos in December 2000. The Settlement Agreement makes it clear that despite that discovery, the Settlement "remain[s] effective in all

respects... .". As such, Leprino's claims are barred and summary judgment on all claims 1s

appropriate.

Respectfully submitted this 14" day of September, 2005.

FOWLER, SCHIMBERG & FLANAGAN, P.C.

s/ Catherine A. Tallerico Catherine A. Tallerico 1640 Grant Street Denver, Colorado 80203 Telephone: 303.298.8603

ATTORNEYS FOR DEFENDANT

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