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AFA CORP. v. PHOENIX CLOSURES

November 6, 1980

THE AFA CORPORATION, A FLORIDA CORPORATION, PLAINTIFF,
v.
PHOENIX CLOSURES, INC., A NEW YORK CORPORATION ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

AFA Corporation ("AFA") brings this diversity action against Phoenix Closures, Inc. ("Phoenix") and Selig Sealing Products, Inc. ("Selig"),*fn1 claiming that in 1975 Phoenix and Selig sold AFA defective liquor bottle cap liners to be inserted into bottle caps manufactured by AFA for its customers. AFA's original Complaint was brought solely against Phoenix. That action was tried to a jury, but at the close of AFA's case the court granted a directed verdict in favor of Phoenix on each count of the four-count complaint. That judgment was reversed by our Court of Appeals, which determined that many erroneous evidentiary rulings had made it impossible for AFA to prove its case.*fn2

AFA has now moved for entry of summary judgment on each of the four alternative counts of its Amended Complaint against Phoenix and Selig: Count I claiming an account stated, Count II claiming a settled account, Count III claiming breach of express warranty and Count IV claiming breach of implied warranties. For the reasons stated in this memorandum opinion and order, summary judgment is entered in favor of AFA and against Phoenix and Selig jointly and severally on the grounds relied on in Counts III and IV.

The Facts*fn3

AFA is a manufacturer of plastic materials, including bottle caps sold principally to three distilleries (James B. Beam Distilling Company, Hiram Walker & Sons and American Distilling Company, Inc.). Phoenix and Selig are manufacturers and suppliers of liners and liner materials for such bottle caps, their cardboard or pulp liners covered with a thin plastic film being inserted into the interior of AFA's plastic bottle caps to seal off the contents of the liquor bottles.

For many years through late 1975 AFA purchased all of its bottle cap liners and liner materials from Phoenix or Selig on open account. In the latter part of 1975 AFA received numerous complaints from its distillery customers concerning staining and leakage problems with the liners. AFA immediately notified Phoenix of the reported defects. Phoenix requested samples of the closures and lining materials and was supplied such samples from AFA's inventory and from AFA's customers. Phoenix's own laboratory tests of the returned liners and lining materials originally supplied by Phoenix and Selig confirmed the defects. All of the plastic bottle caps suspected of containing defective lining materials were returned at Phoenix's request and expense to a Chicago warehouse,*fn4 where Phoenix inspected and inventoried the defective merchandise. Phoenix and Selig have paid all storage charges to the warehouse.

Phoenix's own physical inventory of the returned plastic bottle caps was contained in a September 10, 1976 letter from its Vice President-Sales Baumgartner to AFA. That letter confirmed an aggregate of 2,839,700 Vinylite lined caps and 25,203,000 Lasan lined caps, totalling the 28,042,700 bottle caps that form the subject matter of AFA's Complaint.*fn5

Although footnotes 4 and 5 have adverted in less than flattering terms to the efforts of Phoenix and Selig, through their counsel, to raise factual issues in opposition to summary judgment, the most egregious of these relates to the attempt to construct such an issue regarding the source of the defective materials. As already stated, Phoenix and Selig had long been AFA's sole supplier for cap liners and lining materials. In October 1975 AFA for the first time placed orders for such materials with 3-M Company, and defendants' counsel seeks to interpose a claimed inconsistency between the deposition testimony of AFA's personnel and their affidavits identifying Phoenix and Selig as the sole source of the defective materials.

But they can do so only by a selective treatment of the deposition of AFA's plant manager Dunn. Reference to a Dunn deposition page (in fact, the very next page) omitted by them makes it plain that the materials ordered from 3-M beginning in October 1975 were not (and could not have been) delivered to AFA and incorporated into its deliveries to its customers until substantially after AFA had received from Phoenix and Selig all of the defective materials that gave rise to the customer complaints and were thereafter returned to Phoenix.*fn6 Moreover, counsel have persisted in their efforts to characterize Dunn's testimony as "contrary to his affidavit," as creating a conflict "enough to raise a genuine issue of material fact and preclude summary judgment" and to "place Dunn's veracity in doubt"-even though the actual situation is obvious from reading the documents and has been specifically addressed by AFA in responding to defendants' motion to strike the affidavits of Dunn and AFA sales manager Miller. This can only be viewed as a continuation and extension of the conduct criticized by the Court of Appeals in its earlier reversal of the directed verdict for Phoenix.

Returning to the true issues in the case, the Court finds it uncontroverted that AFA has invoiced Phoenix for the bottle caps returned by AFA and its customers that are still in the possession of Phoenix and Selig. Those invoices, dated from March 1, 1976 to October 29, 1976, total $163,848.42. Phoenix and Selig have not paid the invoices although repeatedly requested to do so.

Counts I and II-Account Stated and Settled Account

Count III-Express Warranty

Amended Complaint Count III alleges breach of an express warranty that the liners and lining materials supplied by Phoenix and Selig would conform to various representations made and samples provided to AFA. Section 2-313 of the Illinois adoption of the Uniform Commercial Code ("Code"), Ill.Rev.Stat. ch. 26, § 2-313, provides:

  (1) Express warranties by the seller are created
      as follows:
    (a) Any affirmation of fact or promise made by
    the seller to buyer which relates to the goods
    and becomes part of the basis of the bargain
    creates an express warranty that the goods
    shall conform to the affirmation or promise.
    (b) Any description of the goods which is made
    part of the basis of the bargain creates an
    express warranty that the goods shall conform
    to the description. (c) Any sample or model
    which is made part of the basis of the bargain
    creates an express warranty that the whole of
    the goods shall conform to the samples or
    model.
  (2) It is not necessary to the creation of an
      express warranty that the seller use formal
      words such as `warrant' or `guarantee' or
      that he have a specific intention to make a
      warranty, but an affirmation merely of the
      value of the goods or a statement purporting
      to be merely the ...

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