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Vincent R. Depinto and Depinto Drywall & Painting, Inc v. the Sherwin-Williams Co. and Pulte Holmes

March 9, 2011

VINCENT R. DEPINTO AND DEPINTO DRYWALL & PAINTING, INC., PLAINTIFFS,
v.
THE SHERWIN-WILLIAMS CO. AND PULTE HOLMES, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Vincent R. DePinto and DePinto Drywall & Painting ("DePinto Drywall") (collectively, "plaintiffs") filed an amended complaint against The Sherwin-Williams Company ("Sherwin-Williams") and Pulte Homes, Inc. ("Pulte") (collectively, "defendants") seeking money damages relating to work that DePinto Drywall performed at Pulte's Winchester Glen housing development. The amended complaint alleges that Sherwin-Williams sold defective paint to DePinto (Counts I and II), that Pulte breached its contract with DePinto Drywall by refusing to pay for the costs DePinto Drywall incurred as a result of having to repair damage caused by the defective paint (Count III), that Sherwin-Williams and Pulte damaged DePinto Drywall's reputation by making defamatory statements regarding DePinto's work at Winchester Glen (Count IV), that Sherwin-Williams and Pulte intentionally interfered with DePinto Drywall's relationships with its customers (Count V), and that Sherwin-Williams and Pulte intentionally caused emotional distress to DePinto by making false statements regarding DePinto Drywall's work and refusing to pay for the work done by DePinto Drywall (Count VI). Defendants have filed motions for summary judgment with respect to Counts IV, V, and VI. See Dkt. Nos. 184, 187. For the reasons stated below, the motions are granted.

BACKGROUND*fn1

DePinto Drywall is an Illinois corporation that is in the business of installing drywall and painting new homes. DePinto Drywall is owned by Mariella DePinto, the wife of plaintiff Vincent DePinto. Mariella DePinto manages DePinto Drywall's office, which includes overseeing the company's books, payroll, and invoices. Vincent DePinto manages DePinto Drywall's painting operations in the field. Pulte is a Michigan corporation with its principal place of business in Bloomfield, Michigan. Pulte's business includes building and selling houses. Sherwin-Williams is an Ohio corporation with its principal place of business in Cleveland, Ohio. Sherwin-Williams manufactures and sells paint. This court has jurisdiction under 28 U.S.C. § 1332 and venue is proper under 28 U.S.C. § 1391(a).

I. The Paint Problems at Winchester Glen

In February of 2006, DePinto Drywall was working under contract with Pulte to paint approximately 300 homes at Pulte's Winchester Glen development in Carpentersville, Illinois. Pursuant to a national contract with Sherwin-Williams, Pulte informed DePinto Drywall that it would need to use Sherwin-Williams paint on the homes at Winchester Glen. The first paint selected for use at Winchester Glen was a product known as "Builder's Solution," denoted by the formula number A61W7011. Later, a different paint product, labeled "Pulte Homes Interior Latex Flat" and denoted by the formula number B30WJ6901 (the "6901 paint" or "Showcase Plus"), was substituted in place of Builder's Solution.*fn2 The 6901 paint was first delivered to the Winchester Glen development in May of 2006. Not long afterwards, "microcracking" and catastrophic peeling were observed in a number of the homes at Winchester Glen that had been painted with the 6901 paint. Repairs were required, and Pulte began to have problems closing homes on schedule at Winchester Glen. Pulte also had to move some homeowners out of their homes and provide alternate housing while the repair work was being performed.

Sherwin-Williams initiated an investigation to determine the cause of the problems at Winchester Glen. As part of the investigation, Sherwin-Williams conducted lab analysis of the 6901 and other paints and attempted to duplicate the cracking in the lab. Sherwin-Williams also developed a prototype paint product as part of its efforts to duplicate and resolve the cracking and sent different test products to DePinto Drywall to be used at Winchester Glen. In addition, Sherwin-Williams examined the way in which the 6901 paint had been applied in the field, which included measuring the thickness of the paint that had been applied to various homes. The measurements from the field were then compared to Sherwin-Williams's paint application guidelines, which initially recommended 6--8 wet mils*fn3 per coat and were later revised to recommend 5--7 wet mils per coat.*fn4 Preliminary reports of the lab testing, discussed in emails among Sherwin-Williams personnel in July 2006, suggested that "[a]pplication at various thickness did not correlate to [the] amount of cracking in the film" and that "[h]igh film build contributes to the cracked appearance but is not the root cause" of the cracking. See Plaintiffs' Revised Stmt. of Additional of Fact ("Pls.' Stmt."), at ¶¶ 41, 42; Pls.' Exs. 53, 55, 57. As the investigation continued, Sherwin-Williams's lab technicians concluded that high film build contributed "very significantly" to the cracking appearance of the 6901 paint and "was more likely the root cause" than had been understood in July 2006. DePaulo Dep. 123:12--18; see also id. at 110:14--18. As of the fall of 2006, Sherwin-Williams's "position" was that "high film build along with potentially humidity and other factors caused the cracking." Kaufmann Dep. 246:18--20.

DePinto Drywall maintained that it had applied the paint correctly and pursuant to Sherwin-Williams's specifications. Sherwin-Williams also monitored the paint thickness as many of the houses were being painted by DePinto Drywall. See Burns Dep. 95--96. By August 2006, however, Pulte began to question why contractors at other Pulte developments had not experienced the same type or scope of problems with the 6901 paint. When some Pulte employees asked Sherwin-Williams employees whether other contractors were having problems with the 6901 paint, they were told that the catastrophic peeling and cracking was limited to Winchester Glen.

On September 18, 2006, Sherwin-Williams executives Mark Henderson, Dennis Karnstein, and Steve Revnew met with Pulte executives over dinner. Henderson Dep. 100:3--11. In preparation for the meeting, Sherwin-Williams's lab technicians prepared a report titled Pulte Homes Investigation (the "Pulte Investigation Report"). The Pulte Investigation Report contained micrographs, spreadsheets, and paint chip and drywall samples to illustrate the findings of Sherwin-Williams's investigation of the complaints it had received from contractors for Pulte in the Chicago area. See Pls.' Ex. 149; S-W Ex. 82.*fn5 At the meeting, the representatives from Sherwin-Williams discussed the fact that the 6901 paint had been applied more thickly than Sherwin-Williams recommended. Henderson Dep. 102:2--103:2.

On September 21, 2006, Jeffrey Kaufmann, the wholesale marketing director for Sherwin-Williams, met again with Pulte representatives. Kaufmann displayed several micrographs that purported to show the thickness of paint samples taken from Winchester Glen. Kaufmann also showed micrographs and paint samples from lot 134 at Winchester Glen and said that the paint at lot 134 was at least 12 mils dry and had been applied in excess of Sherwin-Williams's recommendations. The next day, John Martinie, the former trim superintendent for Pulte, wrote a follow-up email about the meeting to Bernard Pallardy, the vice president of land development for Pulte. Martinie stated that he had tested the paint in lot 134 and had concluded that "there is no way the paint cracking in this home is 12 mils dry like Mr. Kaufmann claimed yesterday." Martinie Dep. 156:23--157:24.

On October 2, 2006, Vincent DePinto met with representatives from both Sherwin-Williams and Pulte at Pulte's offices in Elgin. Steve Revnew, who worked in the labs at Sherwin-Williams, discussed the lab testing that Sherwin-Williams had performed on the samples taken from Winchester Glen. He stated that in many instances the paint measured at more than 20 mils dry film thickness, which he characterized as "not even close" to Sherwin-Williams's specifications. Revnew passed around micrographs that had been taken from lots 116 and 118 at Winchester Glen and which showed that the paint had been measured at 18--23 mils dry film thickness. Kaufman was also present at the meeting. Kaufmann told James Coffey, a Pulte employee, "This is the situation here: Mr. DePinto's crews are not applying the paint properly. As you can see from the analytical reports and the microscopy, they are applying it too thick -- and the microscopy doesn't lie." Id. ¶ 94. DePinto said to Kaufmann, "I've used multiple Sherwin-Williams products for years, including at the Winchester site, without issue. Are you telling me that we don't know how to paint?" Kaufmann replied, "Yeah, Mr. DePinto." Id. ¶ 98. Kaufmann also stated that "Mr. Depinto overcharged Pulte" by $60,000 to $80,000 for the repairs. Id. ¶ 93.

II. DePinto Drywall's Repair Work For Pulte

DePinto Drywall was required to do extensive repair work on several homes that were painted with the 6901 paint product at Winchester Glen. It is currently seeking contractual damages of approximately $240,000 for repair work performed on approximately 38 homes.

On October 23, 2006, Vincent DePinto met with Pallardy and Schmit, the former director of purchasing for Pulte, to discuss DePinto Drywall's outstanding invoices to Pulte. DePinto informed Pallardy that he had already paid his labor costs for his workers and that DePinto Drywall would be out of business if Pulte did not pay DePinto Drywall's outstanding invoices. DePinto also stated that he had borrowed money on a line of credit to pay his employees' labor costs and that he needed the money immediately. Pallardy told Vincent DePinto, "Well, we are gonna need our hundred grand back or you will have to reimburse Pulte for the costs associated with moving homeowners into hotels so that their homes could be repaired." Id. ¶ 116. Pallardy stated, "The little guy always gets squeezed. You are not the first and you won't be the last. You had better bow down. This is bigger than you and me both, and you can't fight two multi-million dollar companies because we will bury you." Id. ¶ 120.

On April 30, 2007, Vincent DePinto received a faxed copy of a check from Pulte that stated that DePinto Drywall's checks were ready to be picked up at the Chicago Title Company in Wheaton, Illinois. On May 1, 2007, Mariella DePinto went to the Chicago Title Company to pick up the checks. When she arrived, she was told that the checks had been sent back to Pulte at its request.

III. DePinto Drywall's Relationship With Other Contractors And Its Customers DePinto Drywall's contracts with several other customers were terminated or rebid after the problems at Winchester Glen occurred. In early 2007, Vincent DePinto called several builders that DePinto Drywall had worked with for years, including Kirk Homes, Centex, Pasquinelli, and Pulte. His phone calls were not returned. Every non-party builder that was deposed in this litigation, including Kirk Homes and Centex, has testified that it awarded the contracts to a different painting or drywall company because of the need to reduce costs.

LEGAL STANDARD

Summary judgment obviates the need for a trial where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). To determine whether any genuine issue of fact exists, the court must pierce the pleadings and assess the proof as presented in depositions, answers to interrogatories, admissions, and affidavits that are part of the record. Id. While the court must construe all facts in a light most favorable to the non-moving party and draw all reasonable inferences in that party's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), where a claim or defense is factually unsupported, it should be disposed of on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The party seeking summary judgment bears the initial burden of proving there is no genuine issue of material fact. Id. at 323. In response, the non-moving party cannot rest on bare pleadings alone but must use the evidentiary tools listed above to designate specific material facts showing that there is a genuine issue for trial. Id. at 324; Insolia v. Philip Morris Inc., 216 F.3d 596, 598 (7th Cir. 2000).

DISCUSSION

I. Defamation - ...


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