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Caravan Ingredients, Inc. v. Azo, Inc.

United States District Court, D. Kansas

March 20, 2015

Caravan Ingredients, Inc., Plaintiff,
v.
AZO, Inc., and Sefar, Inc., Defendants.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, District Judge.

This matter is before the court on several motions, including a Motion in Limine (Dkt. 86), a Motion for Summary Judgment (Dkt. 104), and a Motion for Reconsideration (Dkt. 99). The latter addresses the court's ruling (Dkt. 93) which concluded that defendant AZO, Inc. had failed to fully convey to plaintiff Caravan Ingredients the extent of its knowledge as to the viability of a metal screen for use in Caravan's flour milling production. The court granted Caravan's motion for partial summary judgment. Caravan then filed its motion for summary judgment (Dkt. 104), essentially arguing that the earlier decision effectively resolves the case. The general background of the case, and the relevant summary judgment standards, have been set forth in the court's earlier rulings, and need not be repeated here.

The court notes that the parties have recently commenced an additional round of summary judgment motions. Caravan seeks summary judgment as to the amount of damages (Dkt. 122) and seeks to strike Paragraph 2 of AZO's Comparative Fault Identification, which alleges that the accident was caused by the screen frame. (Dkt. 124). AZO has moved for summary judgment on Caravan's claims of strict liability, negligence, and breach of contract. (Dkt. 126). Finally, Caravan has moved to strike AZO's expert, Philip Buckley. These motions remain at issue before the court. However, to clarify issues in the action and permit more efficient briefing and resolution of the subsequent motions, the court enters this present order to address those matters which have been fully briefed.[1]

Findings of Fact

On June 27, 1990, AZO sold the the machine sifter to Caravan's predecessor. Accompanying the sifter was an Operating Instructions/Spare Parts List which stated that AZO stocked replacement screens, either nylon or steel.

In the Fall of 2011, Caravan decided to add a 30-mesh screen on the sifter in order to meet milling standards of the American Institute of Baking

Victor Gutierrez of Caravan contacted AZO Customer Service Representative Cindy Asquino on October 31, 2011, asking for pricing and specifications for a 30-mesh stainless steel screen. Asquino was the only AZO employee who directly interacted with Caravan. Gutierrez said the screen would be used in an AZO E 650 screener. Asquino emailed specifications for both stainless steel and nylon screens.

Michael Nichols, AZO's Director of Customer Service, was designated as AZO's Rule 30(b)(6) corporate representative for the following topics:

1. Any and all communications between AZO and Caravan related to the selection of the failed 30-mesh screen at issue in this litigation;
....
3. The specifications for the 30-mesh screen at issue in this litigation;
....
5. The method of assembling and installing the failed 30-mesh screen at issue in this litigation;
6. The content of any operator manuals, or other documents issued by AZO for the E-650 cyclone screener involved in this litigation, including the Operating & Maintenance Instructions editions from October 199.4 (see deposition Exhibit 16) and June 16, 2000 (see deposition Exhibit 17), as well as the Operating Instructions/Spare Parts list marked as deposition Exhibit 19.

Caravan's motion rests on Nichols' deposition. During the course of this testimony, Caravan argues that Nichols essentially admitted that the defendant knew the screen was not a viable option, but that it sold the screen to without communicating this fact to the plaintiff.

According to Asquino, Gutierrez originally "wanted a metal screen, " and after further discussion "they insisted" on it. The evidence does not show that this "insistence" was contemporaneously conveyed to Nichols, who admitted that "[ a ] ll she related to me was that they wanted to buy a 30-mesh [metal] screen." (Emphasis added).

AZO responds by claiming that Nichols "did not use the specific words not a viable option.'" (Dkt. 108, at 6). It further notes Asquino's October 31, 2001 email which cautioned against the "misconception that stainless screens are stronger" than nylon screens, and that "[o]nce the metal is fatigued, you run the risk of metal in your product." Asquino further testified that she told Gutierrez that "we do not recommend stainless steel screens in that mesh." Finally, Nichols testified "we let them know it's not a strong screen."

The court finds that AZO failed to fully inform Caravan that the screen was not viable. While Gutierrez may have alerted Caravan to the fact that stainless steel is not stronger than nylon, and the "risk" of fatigue and failure, she did not fully inform Caravan of the extent of the defendant's knowledge. Nichols testified that he knew the metal screen was "not going to work." He agreed that he "knew [the screen] was not sufficient." After the learning of the failure of the screen, he testified that "[t]hat is would I would expect, " that is "how it is going to fail." He explicitly agreed with the proposition that the metal screen "was not a viable option." In sum, AZO knew failure of the metal screen was certain ("it is going to fail"), but it told Caravan only that such failure was possible ("you run the risk" of failure).

It is uncontroverted that Asquino's "risk" of failure email does not accurately convey AZO's express disclaimer as to the use of metal screens. That written disclaimer is much stronger, stating:

Please note that AZO, Inc. does not recommend using the Stainless Steel Screens over 10 mesh size. We will sell this Stainless Steel Screen with no refund or warranty against damage to your equipment or product loss.

(Emphasis in original).

On November 7, 2011, Gutierrez emailed Asquino that he was authorized to order the stainless steel screen, and asked if the screen would be made of 400-series stainless steel. Asquino replied the same day that the quote was based on 304-series. She said she would ask about 316-series and 400-series.

On November 17, 2011, Asquino confirmed the specifications for the screen, and Gutierrez placed Caravan's order.

Tony Gionti, AZO's Purchasing Manager, was designated as AZO's Rule 30(b)(6) corporate representative for the following topics:

2. Any and all communications between AZO and Sefar related to the failed 30-mesh screen at issue in this litigation;
....
14. The chain of custody for the subject 30-mesh screen between AZO's purchase and shipment to Caravan;
15. Any testing, verification or product modification by AZO after receiving the screen from Sefar before shipping to Caravan.

Gionti admitted that AZO received the screen shipped to it by Sefar. AZO visually verified that the screen matched the specifications quoted by AZO, and, without doing any testing or more detailed verification, repackaged the screen for ...


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