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SSAB Alabama, Inc. v. Kem-Bonds, Inc.

United States District Court, S.D. Alabama, Southern Division

December 27, 2017

SSAB ALABAMA, INC., Plaintiff,
v.
KEM-BONDS, INC., Defendant.

          ORDER

          WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on defendant Kem-Bonds, Inc.'s Motion for Partial Summary Judgment (doc. 37). The Motion has been briefed and is now ripe for disposition.

         I. Background Facts.

         The basic facts giving rise to this dispute have not been controverted for purposes of the present Motion. Plaintiff, SSAB Alabama, Inc., operates a recycling steel mill in Axis, Alabama. During the steel-making process, SSAB utilizes a product known as tap-hole sand (also known by the trade name EZ-POR). At all relevant times, SSAB purchased EZ-POR directly from defendant, Kem-Bonds, Inc. SSAB maintains that in June 2016, its Axis facility experienced multiple “burn-through” incidents in which the tap-hole sand supplied by Kem-Bonds catastrophically failed, [1] thereby causing SSAB to suffer significant property loss damages, production delays and lost profits. According to SSAB, the tap-hole sand furnished by Kem-Bonds failed because it was defective, in that it had a loss-of-ignition value well in excess of the industry standard of 2%.[2]

         Based on these events, SSAB brought this action to assert state-law claims against Kem-Bonds on theories of breach of contract (Count One), breach of warranty (Count Two) and the Alabama Extended Manufacturer's Liability Doctrine (Count Three). In Count One, SSAB alleges that Kem-Bonds breached the direct contracts set forth in SSAB's purchase orders numbered MB153592 and MB151229 by supplying SSAB with tap-hole sand that did not satisfy industry standards, failing to perform chemical testing and analysis of its product, and failing to notify SSAB that it had secured a different supplier. (Doc. 24, ¶ 11.) In Count Two, SSAB alleges that by selling it defective tap-hole sand, Kem-Bonds “breached its express and implied warranties to SSAB including … the express warranty section found in paragraph ten of the terms and conditions …, as well as the implied warranty of merchantability and the implied warranty of fitness for a particular purpose.” (Id., ¶ 17.) Finally, in Count Three, SSAB alleges that Kem-Bonds is liable under the AEMLD because the tap-hole sand “reached SSAB … in a defective condition and/or in a condition that was unreasonably dangerous to SSAB as the ultimate user or consumer.” (Id., ¶ 26.)

         In its Answer (doc. 29) to the Amended Complaint, Kem-Bonds raised a pair of affirmative defenses that are of central importance to the Motion for Partial Summary Judgment. In particular, Kem-Bonds explained that its “invoices associated with SSAB Purchase Orders numbered MB153592 and MB151229 contain a waiver of warranties and a limitation of damages.” (Doc. 29, at 4.) Kem-Bonds further pleaded that “its Invoices contain a clear and an enforceable limitation of remedy under the Alabama Uniform Commercial Code.” (Id.) Kem-Bonds now moves for summary judgment on the basis of those defenses.

         In this posture, analysis of Kem-Bonds' Rule 56 Motion requires scrutiny of the relevant contract language contained in both SSAB's purchase orders and Kem-Bonds' invoices for the subject EZ-POR. The mechanics of these transactions, the course of dealing between the parties, and the relevant contract language have not been disputed for purposes of the pending Motion for Partial Summary Judgment. What is disputed is whether the language of the SSAB's Purchase Orders or Kem-Bonds' Invoices governs, such that the parties' disagreement on summary judgment essentially boils down to a “battle of the forms.”

         Kem-Bonds had been selling tap-hole sand to SSAB for years prior to the June 2016 “burn-through” incidents that gave rise to this litigation. (DeSanto Aff. (doc. 37, Exh. 2), ¶ 5.) The parties' course of dealing was as follows: SSAB would contact Kem-Bonds in Missouri and place an order for EZ-POR, after which SSAB would issue a corresponding Purchase Order. (Id., ¶ 6.) Upon receipt of the Purchase Order, Kem-Bonds would ship truckloads of EZ-POR to SSAB, accompanied by Invoices corresponding with each shipment. (Id.) Both the Purchase Orders and the Invoices were form documents containing preprinted terms and conditions that did not vary from one order or shipment to the next.

         SSAB placed large orders of tap-hole sand with Kem-Bonds in both March 2016 (Purchase Order MB151229) and May 2016 (Purchase Order MB153592). (DeSanto Aff., ¶¶ 8, 13.) Each order was for ten truckloads of EZ-POR, with each truckload consisting of 46, 800 pounds of tap-hole sand. (Id. at Exhs. B & C.)[3] Paragraph 1 of each Purchase Order provided that “[t]his Order shall be deemed to be accepted and shall be a binding contract for the sale of the Goods … upon … Supplier shipping or delivering the Goods to SSAB.” (Id. at Exhs. B & C ¶ 1.) Paragraph 2 bore the heading “Governing Terms and Conditions, ” and stated as follows:

“The terms and conditions set forth in this Order … shall together constitute the sole and exclusive agreement between SSAB and Supplier …. Acceptance of this Order is expressly limited to the terms and conditions set forth in this Order …. SSAB hereby gives notice that it objects to and rejects any terms or conditions contained in any document which has been or may in the future be supplied by Supplier to SSAB which are in addition to, different from, inconsistent with or attempt to vary any of the terms or conditions of this Order …. SSAB's acceptance of the Goods … shall not be construed as an acceptance of any terms or conditions contained in any such document.”

(Id., ¶ 2.) And Paragraph 4 unequivocally provided that “[n]o revision or modification of the terms and conditions of this Order shall be binding on SSAB unless such revision or modification is expressly accepted in writing by an authorized officer of SSAB.” (Id., ¶ 4.) In Paragraph 18, the Purchase Order addressed the concept of waiver by stating, “No waiver of any provision of this Order shall: (a) be binding unless given in writing and signed by an authorized officer or agent of the party to be bound thereby; or (b) imply a waiver of that provision for the future or of any other provisions in this Order unless the waiver expressly so states.” (Id., ¶ 18.) On its face, each Purchase Order designates Alabama law as governing its interpretation, validity and enforceability. (Id., ¶ 20.)[4]

         Each of SSAB's Purchase Orders also included a detailed “Warranty” provision in Paragraph 10, which SSAB's Amended Complaint accuses Kem-Bonds of violating. Paragraph 10 reads, in pertinent part, as follows:

“In addition to any other express or implied warranties, Supplier expressly warrants that … (b) all Goods supplied … shall be … in accordance with all applicable specifications, drawings, descriptions or samples furnished and in accordance with all other requirements of this Order and the representations of the Supplier; (c) all Goods shall be of new and first class material and workmanship, shall be fit and suited for the purpose and use contemplated by this Order, and shall be of merchantable quality; (d) … all Goods … furnished shall be free from defects in material, design or workmanship for a period of 12 months from the date that … the Goods are used or put into operation by SSAB ….”

(Id., ΒΆ 10.) Kem-Bonds' evidence is that it never signed Purchase Order MB151229, although Purchase Order MB153592 was admittedly signed by Kem-Bonds, as shown in movant's own ...


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