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AMERICAN DREDGING CO. v. PLAZA PETROLEUM INC.

March 16, 1992

AMERICAN DREDGING COMPANY Plaintiff, against PLAZA PETROLEUM INCORPORATED, KERR-MCGEE REFINING CORPORATION, ROYAL PETROLEUM, a division of KERR-MCGEE REFINING CORPORATION, and EKLOF MARINE CORPORATION, Defendants.


The opinion of the court was delivered by: STERLING JOHNSON, JR.

 JOHNSON, District Judge:

 Plaintiff American Dredging Company ("ADC") purchased 38,000 gallons of "No. 2 fuel oil" from Plaza Petroleum Inc. ("Plaza"). Plaza, in turn, contacted Royal Petroleum, a division of Kerr McGee Refining Corporation, Inc. (collectively "KMRC") and purchased 38,000 gallons of fuel from KMRC. Eklof Marine Corp. ("Eklof") was engaged to transport the fuel. Plaintiff alleges that the oil it received was contaminated and seeks monetary compensation for the damages that such contamination caused. Defendants Plaza and KMRC move for summary judgment. Each of the motions has been fully briefed and oral argument was heard on January 17, 1992.

 a. Plaza's Motion

 "Under Fed.R.Civ.P. 56(c), summary judgment should be granted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. 'Viewing the evidence produced in the light most favorable to the nonmovant, if a rational trier could not find for the nonmovant, then there is no genuine issue of material fact and entry of summary judgment is appropriate.'" Suburban Propane v. Proctor Gas, Inc., 953 F.2d 780 (2d Cir. 1992). Furthermore, when the issue is construction of a contract, summary judgment is proper only when the contract is "'wholly unambiguous.'" Mycak v. Honeywell, Inc., 953 F.2d 798 (2d Cir. 1992) quoting Wards Co. v. Stamford Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir. 1985)). The mere assertion of ambiguity is insufficient to preclude summary judgment.

 Plaintiff raises four claims against Plaza: (1) breach of express warranty; (2) breach of implied warranty of merchantability; (c) negligently shipping the fuel on the Eklof barge; and (4) unseaworthiness of the Eklof barge.

 a. Express Warranty and Implied warranty Claims

 1. Incorporation by Reference.

 The plaintiff concedes that there was an express contract between itself and ADC, but challenges what terms it assented to in that agreement. The contract from which this dispute arises consists of a telex (the "Telex") that was sent by Plaza to ADC and which contains a notation on it ("ADCO CMDN") showing its receipt by ADC. Plaintiff does not allege that it objected to the Telex in any way and, indeed, it accepted the fuel. Plaintiff argues, however, that it did not intend to assent to the Terms and Conditions incorporated by reference into the Telex. Specifically, at the bottom of the Telex, there is a clause which states:

 THE PRODUCT IS SOLD . . . SUBJECT TO THE "TERMS AND CONDITIONS OF SALE OF PETROLEUM PRODUCTS" ISSUED BY PLAZA PETROLEUM, INC. WHICH IS AVAILABLE FOR REVIEW UPON REQUEST.

 Paragraph 12(c) of the "Terms and Conditions of Sale of Petroleum Products," (the "Terms and Conditions") provides that:

 EXCEPT AS EXPRESSLY PROVIDED IN THE CONTRACT, THE SELLER SHALL NOT BE LIABLE FOR CONSEQUENTIAL, INDIRECT OR SPECIAL LOSSES OR SPECIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OF OR FAILURE TO PERFORM THE CONTRACT.

 Because it purports not to have seen or agreed to the Terms and Conditions, ADC argues that the paragraph limiting damages was not validly incorporated and is therefore without effect. On that basis, ADC believes that it is entitled to the damages sought. I disagree.

 There is no dispute that the Telex is the contract between the parties. At issue only is whether the Terms and Conditions were validly incorporated into the main agreement. To be sure, the Telex was a valid contract: it contains the names of the parties, the price and quantity of goods to be sold and identifies that it is a contract for the sale of goods. In addition, the symbol "ADCO CMDN" is appropriately treated as a signature under U.C.C. 2-201 (39). Pursuant to U.C.C. 2-201, therefore, the Telex was a valid contract. See also, Apex Oil Co. v. Vanguard Oil Service Co., Inc., 760 F.2d 417, 423 (2d Cir. 1985) (citing U.C.C. § 2-201(2)). And, no objections to the Telex were made by ADC in any form.

 A contract can be comprised of separate writings or documents if the contract makes it clear that it is to be read with other writings. Dietrich v. Chemical, Bank 115 Misc. 2d 713, 454 N.Y.S.2d 490 (1981); see also, Texaco Export, Inc. v. Overseas Tankship Corp., 477 F. Supp. 289 (S.D.N.Y.), aff'd F. Supp. 1291 (1979). The doctrine of incorporation by reference requires that the document to be incorporated be referred to and described in the contract so that the referenced document may be identified beyond doubt. Chiacchia v. National Westminster Bank, 124 A.D.2d 626, 507 N.Y.S.2d 888 (2d Dep't. ...


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