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Southern Illinois Riverboat Casino Cruises, Inc. v. Triangle Insulation and Sheet Metal Co.

August 23, 2002

SOUTHERN ILLINOIS RIVERBOAT CASINO CRUISES, INC., D/B/A PLAYERS ISLAND CASINO, PLAINTIFF-APPELLANT,
v.
TRIANGLE INSULATION AND SHEET METAL COMPANY, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of Illinois. No. 00 C 4303--G. Patrick Murphy, Chief Judge.

Before Bauer, Ripple, and Manion, Circuit Judges.

The opinion of the court was delivered by: Manion, Circuit Judge.

ARGUED FEBRUARY 20, 2002

Southern Illinois Riverboat Casino Cruises, Inc. d/b/a Players Island Casino brought a diversity action against Triangle Insulation & Sheet Metal, alleging that Triangle was negligent and/or breached an express or implied warranty when it recommended and sold Players a certain maritime sealant for the insulation covering the air conditioning ducts on its casino vessel. Players also sought a declaratory judgment that Triangle was liable for the economic damages allegedly resulting from this negligence and/or breach of warranty. The district court dismissed the negligence claim with prejudice to refiling it in this action, but without prejudice to filing a claim for contribution in another pending civil action. The district court also granted Triangle's motion for summary judgment with respect to Players's breach of warranty claim, and dismissed its declaratory judgment count for failure to state a claim. Players appeals only the district court's summary disposition of its breach of warranty claim, which we affirm.

I.

Southern Illinois Riverboat Casino Cruises, Inc. d/b/a Players Island Casino ("Players") owns and operates a casino river boat in Metropolis, Illinois. In March 2000, Players installed new exterior air conditioning unit ducts on the outside stern of its motor vessel, Players II, which operates as a gaming casino. On July 20, 2000, Shay Nolan, Players's facilities manager, contacted Gary Holder, a representative of defendant Triangle Insulation & Sheet Metal ("Triangle"), regarding the need to acquire a waterproof sealant or vapor barrier to protect the insulation then covering the air conditioning ducts from the weather and elements. Later that day, Holder went to the casino vessel to examine and measure the ductwork and site where the sealant would be applied. *fn1 During the course of Holder's visit, Nolan contends that she, along with another Players employee, advised Holder of the casino's proposed use of the sealant. Specifically, they informed Holder that Players intended to apply any sealant he recommend "in the open air at the stern of the vessel during casino business hours," while the vessel was occupied by patrons and employees. *fn2 Players claims that after Holder was informed of the circumstances in which it intended to apply the sealant, he recommended the type of sealant the casino should use and gave advice regarding the proper application of the product. *fn3 Triangle disputes this assertion, contending that when Holder visited the proposed application site "he provided no instructions regarding the application of the product."

On July 21, 2000, Holder delivered to Players a catalog page from the Childers Products Company ("Childers"), listing five vapor barriers approved for maritime use under applicable Coast Guard regulations. That same day, Holder advised Nolan by telephone that Triangle had two of the listed products in stock available for immediate purchase, one of which was Encacel V. On July 25, 2000, Nolan ordered four five-gallon containers of Encacel V. The containers were not delivered to the casino vessel, but were instead picked up later that day by Players at Triangle's place of business in Paducah, Kentucky. Each of the containers had identical labels which, among other things, warned buyers that the product was a "flammable liquid and vapor," detailed the side effects a person might suffer if he inhaled or exposed himself to the product, and gave certain emergency first aid instructions. The container labels also included the following instructions: "FOR INDUSTRIAL USE ONLY BY TRAINED CRAFTSPEOPLE! REFER TO TECHNICAL DATA AND MSDS SHEETS FOR COMPLETE INSTALLATION INSTRUCTIONS AND PRODUCT INFORMATION."

On July 27, 2000, Players, having apparently read these instructions, informed Triangle that at the time its representatives picked up the Encacel V containers they were not given a copy of the Material Safety Data Sheet ("Safety Sheet") for the product. Triangle immediately sent Players, via facsimile, a brief set of instructions regarding the application of Encacel V, as well as a copy of the Safety Sheet provided by Childers. The Safety Sheet extensively elaborated on the warnings, application instructions, and first aid information noted on the Encacel V container labels.

The label on the Encacel V containers also included the following disclaimer of warranties and remedy limitation:

IMPORTANT: Childers warrants that the materials herein contained, when shipped, conform to specifications and are of first class materials and workmanship. This product is sold upon the condition and agreement that there have been no representations or undertakings made by or on behalf of manufacturer and/or seller, and that there are no guarantees or warranties, express or implied in fact or by law, except as contained herein. Manufacturer and/or seller shall not be responsible, obligated or liable for any application or use of or to which the products may be put, either singly or in combination with other products or ingredients. It being expressly understood and agreed that manufacturer's and/or seller's liability shall in no event exceed the purchase price.

On July 28, 2000, at approximately 9:00 a.m., Players personnel began applying, in the open air, Encacel V to the surface of the insulation covering the air conditioning ductwork at the stern of the casino vessel. *fn4 Later that afternoon, guests and employees of Players began complaining that they felt ill from the air inside the vessel. At approximately 4:00 p.m., Holder received a telephone call from a representative of Players advising him of the problem, expressing the opinion that Encacel V was the cause, and requesting that he come to the vessel at once to assess the situation. In response, Holder and two other Triangle employees, Lewis Bowles and Kent Buchanan, immediately traveled to the vessel and, upon their arrival, inspected the site where the product had been applied and recommended that the insulation be removed. The Triangle representatives then removed the insulation, placed it in "heavy" vinyl garbage bags, and deposited the bags on a garbage scow behind the casino vessel. According to Triangle, its representatives discovered the following during the process of removing the insulation: (1) that Players applied an excessive amount of Encacel V to the air conditioning ductwork insulation; (2) that "no seal had been applied [by Players] to the joints in the sheet metal ductwork so as to prevent outside air from entering the intake portion of the duct"; and (3) that a "diesel motor located on a work barge just behind the aft portion of the boat . . . was emitting heavy diesel fumes into the aft area of the boat where the air conditioning ductwork was located." Players disputes that its employees applied an excessive amount of Encacel V, and contends the lack of a seal to the joints of the sheet metal ductwork is irrelevant because the air conditioning units do not pull outside air into the vessel but "simply recirculate air inside the boat."

As a result of the foregoing, Players closed the casino vessel for several hours. The casino reopened for business later that day, however, after the local fire marshal and certain governmental agencies performed air quality testing and other inspections to the vessel, determining that it was safe for re-entry. Although no further Encacel V was applied to the insulation of the air conditioning ducts, the casino vessel was, nevertheless, closed again when patrons and employees of Players continued to complain of feeling ill from the air within the boat. The casino vessel was then closed for two to three business days, during which time Players employees, outside vendors, and contractors all worked on cleaning the vessel from the damage allegedly caused by Encacel V fumes. According to Players, the cleanup "involved virtually the entire vessel, including air conditioning coils and fan motors on all of the air handlers on the boat," and cost thousands of dollars.

On December 5, 2000, Players filed a three-count diversity action, pursuant to 28 U.S.C. § 1332, against Triangle in federal district court, alleging negligence, breach of warranty, and requesting a declaratory judgment on the issue of damages. In Count I, Players alleged that Triangle was negligent in failing to warn or advise it of the "dangerous nature of the ENCACEL V product" or the "risks associated with the intended use." In Count II, Players averred that Triangle breached an express or implied warranty of the parties' sales contract by failing to use reasonable care in selling and recommending Encacel V as the appropriate sealant for the insulation covering the air conditioning ducts on its casino vessel. In Count III, Players sought a declaratory judgment, pursuant to 28 U.S.C. § 2201, that Triangle was liable for all of the damages allegedly resulting from Counts I and II.

On May 3, 2001, Triangle filed a combined motion to dismiss and motion for summary judgment. On September 25, 2001, the district court dismissed the negligence claim without prejudice, allowing Players to refile it as a contribution claim in another pending civil action. *fn5 The district court then granted Triangle's motion for summary judgment of Players's breach of warranty claim. In doing so, the district court held that Players could not "as a matter of law, establish that [Triangle] breached any warranty, express or implied," *fn6 and "[m]oreover, the label disclaims all warranties and limits [Triangle's] liability to the purchase price." Finally, the district court dismissed Players's ...


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