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Greenwich Industries, L.P. v. Leggett & Platt

June 11, 2009

GREENWICH INDUSTRIES, L.P., PLAINTIFF,
v.
LEGGETT & PLATT, INC., DEFENDANT.



The opinion of the court was delivered by: John F. Grady, United States District Judge

MEMORANDUM OPINION

Before the court is defendant's motion for summary judgment. For the reasons explained below we grant defendant's motion.

BACKGROUND

Plaintiff Greenwich Industries, L.P., d/b/a Clarin ("Clarin"), manufactures and sells folding chairs. (Def. Stmt. of Undisputed Material Facts (hereinafter, "Def. Stmt.") ¶ 1.) Over a period of approximately 18 months Clarin purchased foam from the defendant Leggett & Platt, Inc. ("Leggett") to be used in chair cushions. (Id. ¶ 8, 38.) Clarin alleges in this lawsuit that, contrary to Leggett's representations, the purchased foam did not comply with Clarin's internal density specifications and was not suitable for seating. (Pl. Stmt. of Add'l Material Facts (hereinafter, "Pl. Stmt.") ¶¶ 3-4, 9.) Leggett's alleged misrepresentations are disputed. But even accepting Clarin's version of events, Leggett argues that it is entitled to summary judgment because it did not receive notice of its alleged breach within a reasonable time after Clarin should have discovered it.

Leggett first approached Clarin about supplying foam products in 2003. (Id. at ¶ 1; see also Pollard Dep. at 64-70; Altmeyer Dep. at 46-47.) During the period from June 2003 to April 2004 Leggett's sales manager, John Altmeyer, sent price quotes to Clarin's purchasing agent, Cherie Pollard. (Pl.'s Stmt. ¶ 2; Def.'s Stmt. ¶ 4.) At some point during this process Pollard gave Altmeyer seat-cushion drawings indicating dimensions and other product specifications, including density. (Pl.'s Stmt. ¶ 3; see also Clarin Specification Drawings, attached as Ex. 6 to App. to Def.'s Stmt. (indicating a density of 1.75-1.85 lb./cu. ft.).) Clarin contends that this occurred in the spring of 2004, although the witnesses' testimony seems to indicate an earlier date. (Pollard Dep. at 59-61; Altmeyer Dep. at 59-62; Woodbury Dep. at 47-48.) In any case, it is undisputed that Altmeyer received the drawings before he submitted his final quote in April 2004 and that he was aware that Clarin's internal specifications called for a foam density of 1.75-1.85 pounds per cubic foot. (Def.'s Stmt. ¶ 5; Altmeyer Dep. at 62.) The primary fact dispute in this case concerns what Altmeyer told Pollard and her colleague, Thomas Woodbury, about Leggett's ability to supply foam meeting Clarin's density specifications. Altmeyer contends that he told Pollard that Leggett did not sell foam with that density specification.

(Altmeyer Dep. at 63 ("I told them we don't make that foam.").) Pollard and Woodbury contend that Altmeyer told them that Leggett could supply foam that met Clarin's "specifications." (Pollard Dep. at 72 (testifying that Altmeyer told her that Leggett could supply foam with the "same specifications" as the foam Clarin was purchasing from its then-current supplier); Woodbury Dep. at 48-49 (testifying that Altmeyer told him that "he could supply the equivalent of our description - the product we need for our chair. He could match our specifications."). In her affidavit, Pollard further states that Altmeyer gave her sample foam with a density of 1.5 pounds per cubic foot - a fact that she presumably learned much later - and represented that it "was the same as the foam products that Clarin was using at the time in the seat cushions and backs of its folding chairs." (Pollard Aff. ¶ 7.)*fn1

Leggett does not dispute that beginning in August 2004 it began selling foam to Clarin with a density below Clarin's specifications: 1.4-1.6 pounds per cubic foot instead of 1.75-1.85. (Def.'s Stmt. ¶ 8.) During the period in question, Clarin required suppliers like Leggett to provide a "certificate of inspection" with each product shipment indicating the product's characteristics. (Id. at ¶ 24.) The policy's purpose was to permit Clarin to determine whether the product met Clarin's specifications. (Id. at ¶ 25.) Leggett's certificates - 78 in total over a period of 18 months - all clearly indicate the density specification and the actual density derived from tested samples. (Id. at ¶¶ 28-29; Leggett Certificates of Inspection, attached as Ex. 11 to App. to Def.'s Stmt.) All 78 certificates indicate a density specification of 1.4 to 1.6 pounds per cubic foot and an actual density within that range. (Def.'s Stmt. ¶ 29.) Clarin's failure to recognize the non-compliant foam is baffling, even to Clarin's own employees. (Id. at ¶¶ 34, 36.) Standard operating procedure at the company dictated that someone review the certificates as they arrived with the products and reject any non-compliant foam. (Id. at ¶¶ 27, 32.) If Clarin had followed its own procedures it would not have used any of Leggett's 15060 foam. (Id. at ¶ 35.) Instead, Clarin did not reject any of Leggett's shipments and the foam was incorporated into nearly 175,000 chairs. (Id. at ¶¶ 9, 11.)

No problems have been reported concerning a significant majority of the chairs. (Id. at ¶ 9.) However, Clarin's largest customer, the Church of Jesus Christ of Latter Day Saints (the "Church"), complained in late January 2006 that Clarin's chair cushions were "pancaking," i.e., compressing and not returning to their original form. (Def. Stmt. ¶ 12.) Clarin began shipping chairs to the Church incorporating Leggett's foam almost one year earlier, in February 2005, by which time Clarin had received approximately 30 certificates of inspection indicating that the cushions did not comply with Clarin's internal specifications. (Id. at ¶ 10; Certificates of Inspection, attached as Ex. 11 to App. to Def.'s Stmt.) Clarin contends that it discovered the non-compliance only after it checked the certificates in response to the Church's complaints. (Pl.'s Stmt. ¶¶ 6-7, 10-12.) In all, Clarin received complaints from between 10 and 15 Church facilities out of approximately 100 facilities that received chairs incorporating Leggett's foam. (Def. Stmt. ¶ 13; Schoenfeld Dep. at 148-49, 183.) Pursuant to Clarin's contract with the Church, however, Clarin was required to replace all of the chairs sent to the Church containing Leggett's foam (approximately 46,000 in all) because they did not comply with Clarin's foam-density specifications. (Def. Stmt. ¶ 17.) Clarin estimates the total cost to replace the cushions at approximately $750,000. (Am. Compl. ¶ 15.)

DISCUSSION

A. Legal Standard

Summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering such a motion, the court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999). "Summary judgment should be denied if the dispute is 'genuine': 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court will enter summary judgment against a party who does not "come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question." McGrath v. Gillis, 44 F.3d 567, 569 (7th Cir. 1995).

B. Whether Clarin has Timely Revoked its Acceptance

The parties agree that the Uniform Commercial Code, as adopted by Illinois, governs their dispute. Clarin admits that it accepted Leggett's foam shipments, thereby precluding rejection. 810 ILCS § 5/2-607 ("Acceptance of goods by the buyer precludes rejection of the goods accepted . . . ."). It now contends that it revoked its acceptance pursuant to § 5/2-608, which provides in pertinent part:

(1) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to ...


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