in his motion is clear, and since he has briefed the issue of summary judgment as pertains his breach of warranty claims, the court will consider plaintiff's motion for summary judgment with respect to both C.P.A. and non-C.P.A. causes of action.
A. Consumer Protection Act Claims
The C.P.A. outlaws "unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws Ann. ch. 93A, § 2 (West 1984). For aid in interpreting this broad language, courts are guided by the interpretations of section 5(a)(1) of the Federal Trade Commission Act by federal courts and the Federal Trade Commission, as well as by the regulations issued by the Massachusetts attorney general. Mass. Gen. Laws Ann. ch. 93A, § 2 (West 1984). Both failure to disclose and misrepresentation constitute unfair and deceptive practices. First, it is an unfair or deceptive act to fail to disclose facts that are material or that would influence a party's decision to enter into the transaction. Mass. Regs. Code tit. 940, §§ 3.05(1), 3.16(2) (1994). The duty to disclose is limited to facts that are known at the time of the transaction -- "there is no liability for failing to disclose what a person does not know." Underwood v. Risman, 414 Mass. 96, 605 N.E.2d 832, 835 (Mass. 1993). Secondly, it is an unfair or deceptive act to make a "claim or representation . . . by any means concerning a product which directly, or by implication . . . has the capacity or tendency or effect of deceiving buyers or prospective buyers in any material respect." Mass. Regs. Code tit. 940, § 3.05(1) (1994). Unlike the duty to disclose, a misrepresentation may occur in the absence of actual knowledge -- "a negligent misrepresentation of fact the truth of which is reasonably capable of ascertainment is an unfair and deceptive act or practice within the meaning of [ch.] 93A, § 2(a)." Glickman v. Brown, 21 Mass. App. Ct. 229, 486 N.E.2d 737, 741 (Mass. App. Ct. 1985); see also Briggs v. Carol Cars, Inc., 407 Mass. 391, 553 N.E.2d 930, 933 (Mass. 1990); Acushnet Fed. Credit Union v. Roderick, 26 Mass. App. Ct. 604, 530 N.E.2d 1243, 1245-46 (Mass. App. Ct. 1988) (liability may accrue where speaker has not "checked the available facts").
1. RP Associates
Plaintiff alleges that defendant RP Associates has committed unfair and deceptive acts and has also made willful use of unfair and deceptive practices in violation of chapter 93A of the Massachusetts C.P.A. Defendant RP Associates asserts that plaintiff does not claim that RP Associates violated section two of the C.P.A., made any misrepresentations, or breached any warranties.
Plaintiff alleges that RP Associates supplied the Knytex A130 fiberglass and System Three epoxy resin used in the manufacture of the Josher III. He alleges further that the resin softened at a low temperature, that a "pick yarn" woven into the fiberglass permitted resin to accumulate and aggravated the resin softening, that the resin was incompatible with the peel ply and the fiberglass, and that RP Associates failed to warn Concordia Yacht about these defects. These allegations do not state a claim of unfair and deceptive acts because plaintiff nowhere alleges that RP Associates was aware of the conditions about which he asserts RP Associates should have warned Concordia Yacht. In fact, he asserts that RP Associates never tested the products it distributed, emphasizing that RP Associates was unaware of any possible defects. In the absence of even an assertion that RP Associates either knew of any defects in the products that it distributed or negligently represented that the alleged defects were not present, summary judgment is denied to the plaintiff on his C.P.A. causes of action against RP Associates, and summary judgment is entered for RP Associates. See Project Release, 722 F.2d at 969 (summary judgment may be granted to non-moving party where no genuine issues of material fact are shown); Siderius, Inc. v. M.V. "Ida Prima", 613 F. Supp. 916, 923 (S.D.N.Y. 1985) (Leval, J.) ("moving for summary judgment is not without its risks to the moving party").
2. System Three
Plaintiff alleges that defendant System Three has committed unfair and deceptive acts and has also made willful use of unfair and deceptive practices in violation of chapter 93A of the C.P.A. These C.P.A. claims are based on several alleged acts. First, plaintiff asserts that the Phase Two epoxy resin manufactured by System Three and used in the manufacture of the Josher III was incompatible with the SRB Peel Ply and that as a result the hull laminate did not bond properly. He asserts that System Three knew of the incompatibility as early as 1986, that it asserted after that date that its epoxy resin was appropriate for use with peel ply, and that it did not warn its customers of the incompatibility.
It is uncontested that System Three manufactured the epoxy resin and that the resin was incompatible with SRB Peel Ply. System Three claims, however, that it was unaware of the incompatibility until Concordia Yacht sent it laminate samples taken from the deck of the Josher III for testing purposes in December, 1988, and that as soon as it discovered the incompatibility it informed Concordia Yacht of the fact. The basis for plaintiff's assertion that System Three knew of the incompatibility earlier is a memorandum from W. Kern Hendricks of System Three to RP Associates dated December 31, 1988, stating, "Tests we did two years ago and repeated just last week show that the secondary bond of Phase Two to Phase Two is excellent after post cure providing that the proper peel ply was used on the first laminate." Contrary to plaintiff's assertion, this memo does not prove that System Three had discovered two years earlier that its epoxy resin was incompatible with SRB Peel Ply. The statement is at best ambiguous -- the 1986 tests may have shown only that Phase Two bonds well to Phase Two, and Hendricks may have added the caution about using the proper peel ply merely out of prudence. On the other hand, it is certainly possible that the 1986 tests showed that SRB Peel Ply was incompatible with the resin. Given Hendricks' denial that he knew about the incompatibility prior to 1988, a factual question remains, making summary judgment inappropriate.
Hadar also claims that System Three affirmatively misrepresented that its Phase Two epoxy resin was compatible with all types of peel ply. System Three issued a brochure in 1987 containing the following instruction on how to use its epoxy resin to construct a hull laminate:
The skin next to the mold is laminated first and may be allowed to cure prior to attaching the cord. When done this way, peel ply should be used as the last layer and removed after the skin has hardened leaving a good bonding surface. The core is bedded in thickened Phase Two epoxy and vacuum-bagged until the Phase Two has set.
This claim that the epoxy resin can be used with peel ply obligates System Three to warn its customers about any incompatibilities between epoxy resin and SRB Peel Ply that are "readily ascertainable." Glickman, 486 N.E.2d at 741. Summary judgment is inappropriate on this point, however, because there remains a question of fact regarding whether information regarding the incompatibility was "readily ascertainable."
Plaintiff also claims that the epoxy resin had a low heat transition temperature, causing it to soften at a low temperature, and that this characteristic impeded its ability to bond, making the epoxy resin inappropriate for use on dark-hulled boats. He claims further that System Three failed to warn Concordia Yacht about this defect. Plaintiff does not prove, however, that System Three either claimed that its epoxy resin was appropriate for use on dark-hulled boats or had actual knowledge that the resin would not bond properly when used on such boats. Therefore, summary judgment cannot be granted on this point.
B. Express and Implied Warranty Claims Against Concordia Yacht and Concordia Custom
1. Express Warranty Claims
Under the Massachusetts U.C.C., "any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise." Mass. Gen. Laws Ann. ch. 106, § 2-313(1) (West 1990). Hadar claims that express warranties regarding the Josher III were created by several statements made in a document entitled "General Specifications for 52' Performance Cruising Boat." This document is undated and unsigned, and Hadar provides no explanation of how the document was created or whether it can be considered a promise by Concordia Yacht. Therefore, the court cannot determine whether the statements created express. warranties, and summary judgment on plaintiff's breach of express warranty claims is inappropriate.
2. Implied Warranty Claims
Hadar claims that Concordia Yacht and Concordia Custom breached the warranties of merchantability and fitness for a particular purpose. A warranty of fitness for a particular purpose is created "where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods." Mass. Gen. Laws Ann. ch. 106, § 2-315 (West 1990). Hadar asserts that the terms of the contract informed Concordia Yacht that the yacht was to be used for offshore racing, but he does not point to any specific contract provisions that indicate this. Concordia Yacht disputes that the yacht was built for a particular purpose, pointing to Hadar's deposition testimony that the Josher III was purchased for use as a pleasure yacht and raising an issue of fact on this point precluding the entry of summary judgment.
Since Concordia Yacht was in the business of selling yachts, a warranty of merchantability was clearly created. Mass. Gen. Laws Ann. ch. 106, § 2-314(1) (West 1990). A warranty of merchantability requires that a product be "fit for the ordinary purposes for which such goods are used." Mass. Gen. Laws Ann. ch. 106, § 2-314(2) (West 1990). The warranty "is primarily directed at the operating essentials of a product . . . . It is not intended to guarantee high quality or perfection of detail." Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 434 N.E.2d 611, 616 (Mass. 1982) (quoting Tracy v. Vinton Motors, Inc., 130 Vt. 512, 296 A.2d 269 (Vt. 1972)). "Hadar does not complain of a loss of perfection of detail. Rather, he complains that his yacht was not seaworthy . . . ." (Pl.'s Mem. in Supp. of Cross-Mot. to Am. Compl. & for Partial Summ. J. on Liability Against Defs. & in Opp'n to Mots. for Summ. J. on Behalf of Defs. Concordia Yacht, Concordia Custom, & Burlington at 66.) Concordia Yacht disputes this characterization of the extent of the damage to the yacht and argues that the damage was merely cosmetic. Defendant bases this assertion on Hadar's deposition testimony that after the boat was repaired he was offered $ 600,000 for its purchase and on the fact that even after the delamination at the Annapolis boat show the yacht was sailed to Florida. See also discussion supra at 30-31. Given this factual dispute regarding the extent to which the defective laminate impaired the normal functioning of the boat, summary judgment is inappropriate on this point.
Summary judgment is granted in favor of Burlington on all causes of action asserted against it by plaintiff and on all cross-claims asserted against it by co-defendants. Summary judgment is denied to Concordia Custom on the grounds that it is an improper party. Summary judgment is granted in favor of all defendants on plaintiff's strict liability and negligence causes of action. Summary judgment is granted to defendants System Three, Northern and RP Associates on plaintiff's breach of warranty causes of action against them. Summary judgment is denied to Concordia Yacht and Concordia Custom on plaintiff's breach of express and implied warranty causes of action against them, but plaintiff is precluded from recovering consequential damages from them for breach of express warranties. Northern is granted summary judgment on the cross-claims brought against it by Concordia Custom, RP Associates and System Three. Plaintiff may amend his complaint to add causes of action under the Massachusetts C.P.A. against defendants System Three and RP Associates; to add breach of warranty claims against defendants System Three, RP Associates and Northern; and to add allegations regarding the original causes of action against Concordia Yacht, Concordia Custom, System Three, RP Associates and Northern. Summary judgment is denied to plaintiff and granted to RP Associates on plaintiff's Massachusetts C.P.A. causes of action against RP Associates. Summary judgment is denied to plaintiff on the issue of System Three's liability for C.P.A. violations and on the issue of Concordia Yacht and Concordia Custom's liability for breach of express and implied warranties.
IT IS SO ORDERED
Dated: New York, New York
April 13, 1995
ROBERT L. CARTER