Pride Packing, Co. v. MAF Industries, Inc.

          MEMORANDUM OPINION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION DOC. # 71

         This is an action in diversity by plaintiff Pride Packaging Corporation ("Plaintiff") for breach of contractual and quasi-contractual warrantees against defendant MAF Industries, Inc. ("Defendant"). Currently before the court is the Defendants motion for summary judgment or summary adjudication as to all claims alleged in Plaintiff's complaint. The parties do not dispute that the court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. Venue is proper in this court.

         PROCEDURAL HISTORY

         The complaint in this action was filed on April 18, 2013. Defendant filed an answer on June 5, 2013. The trial date, which was originally set for February 27, 2014, was continued by successive stipulations to April 26, 2016. The parties filed a joint pretrial statement on January 21, 2016, and the court issued a pretrial order on February 1, 2016, and motions in limine were filed by both parties on February 29, 2016. After review of the joint pretrial statement and the motions in limine, the court observed that a number of purely legal issues had been raised in motions in limine that could be more productively raised in a motion for summary judgment. This observation was communicated to the parties by the court's order of March 25, 2016, setting a telephonic conference for March 31, 2016, to explore the possibility of scheduling briefing for dispositive motions. At the telephonic conference the court vacated the trial date and all trial-associated dates and set a briefing schedule for further dispositive motions. Pursuant to that order, Defendant filed its motion for summary judgment on May 16, 2016. Plaintiff's opposition was filed on June 6, 2016, and Defendant's reply was filed on June 20, 2016. The matter was taken under submission as of July 5, 2016.

         MATERIAL FACTS

         This action arises out of Plaintiff's efforts to enforce the terms of what both parties understand is a written contract for the sale and installation of a cherry packing line manufactured by Defendant to and for use by Plaintiff (hereinafter, the "Contract"). There is no dispute as to what is written in the Contract; only dispute as to its legal significance. The parties do not materially dispute that "[t]he purchase agreement for the cherry line between Defendant and Plaintiff consists of a six-page parts list and a double-sided, one page document that lists the price and representations on one side and the ‘Terms and Conditions' on the other." Doc. # 73 at ¶ 2. Plaintiff's opposition quotes extensively and accurately from the portion of the Contract that is referred to as "Terms and Conditions." While Plaintiff acknowledges that the provisions in the Terms and Conditions contain an integration clause, disclaim any warranty other than what is expressly stated and deny liability for special, incidental or consequential damages; Plaintiff contends these provisions are unenforceable because: (1) the Contract is not fully integrated, (2) the Terms and Conditions portion of the Contract constitutes a contract of adhesion, and (3) the Terms and Conditions are unconscionable.

         This action arises out of the failure of the cherry packing line to process cherries at a rate Plaintiff alleges was agreed upon and represented as achievable by Defendant. Specifically, Plaintiff alleges it was promised that the processing line would process cherries at a rate of six tons per hour. Plaintiff alleges that a six-ton-per-hour processing rate is achievable only for batches containing the largest cherries and that rates closer to one to two tons per hour are achieved for more a more normal distribution of cherry sizes. Based on its contentions that the provisions of the Terms and Conditions Defendants might rely upon to deny or limit liability due to failure of the cherry line to perform as promised are unenforceable, Plaintiff alleges a total of five claims for relief. There are, in order, breach of express warranty, breach of implied warranty, and a single claim for relief alleging negligence, fraud and misrepresentation.

         LEGAL STANDARD

         Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Poller v. Columbia Broadcast System, 368 U.S. 464, 467 (1962); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985); Loehr v. Ventura Count y Community College Dist., 743 F.2d 1310, 1313 (9th Cir. 1984).

Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, " which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Although the party moving for summary judgment always has the initial responsibility of informing the court of the basis for its motion, the nature of the responsibility varies "depending on whether the legal issues are ones on which the movant or the non-movant would bear the burden of proof at trial." Cecala v. Newman, 532 F.Supp.2d 1118, 1132-1133 (D. Ariz. 2007). A party that does not have the ultimate burden of persuasion at trial - usually but not always the defendant - "has both the initial burden of production and the ultimate burden of persuasion on the motion for summary judgment." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). "In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Id.

         If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979). In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the mere allegations or denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e); Matsushita, 475 U.S. at 586 n.11; First Nat'l Bank, 391 U.S. at 289; Strong v. France, 474 F.2d 747, 749 (9th Cir. 1973). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is ge nuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Anderson, 477 U.S. 248-49; Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

         In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290; T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e) advisory committee's note on 1963 amendments); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

         In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); Poller, 368 U.S. at 468; SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir. 1982). The evidence of the opposing party is to be believed, Anderson, 477 U.S. at 255, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, Matsushita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)(per curiam); Abramson v. University of Hawaii, 594 F.2d 202, 208 (9th Cir. 1979). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th Cir. 1987).

         DISCUSSION

         I. Enforceability of Contract Terms

         At its core, this action is predicated on the extent to which the Contract, and specifically the Terms and Conditions portion of the Contract is enforceable. The court will consider each of Plaintiff's three arguments for unenforceability of the Contract listed above in order.

         A. Integration of Contractual Terms

         Plaintiff's opposition quotes the integration clause from the Contract as follows:

This order constitutes the entire agreement between the parties, representations, commitments or statements made by Seller or any of its agents, servants of employees except as provided herein. No terms or conditions other than those contained herein, whether contained in Purchaser's purchase order, acknowledgement or elsewhere can vary or add to these terms and conditions, and no written or oral agreement which purports to alter these Terms and Conditions shall be binding upon Seller unless set forth in writing and signed by an authorized representative of Seller.

Doc. # 76 at 4:20-26.

         The parties dispute to some extent the standard by which courts are to determine whether a written agreement is integrated, partially integrated or not integrated. Plaintiff contends that a court's determination of whether a contract is integrated is based on the consideration of five factors, in support of which Plaintiff cites Stevenson v. Oceanic Bank, 223 Cal.App.3d 306, 316 (1990). See Doc. # 76 at 7:3-9 (listing five factors). Defendant contends that Plaintiff has misstated the holding in Stevenson and that the integration of a contract is to be determined by its own terms and nothing else. See Doc. # 80 at 2:19-25 (citing Masterson v. Sine, 68 Cal.2d 222, ...