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SUZY PHILLIPS ORIGINALS, INC. v. COVILLE

August 23, 1996

SUZY PHILLIPS ORIGINALS, INC., Plaintiff, against COVILLE, INC., Defendant.


The opinion of the court was delivered by: GLASSER

 GLASSER, United States District Judge:

 SUMMARY

 This case arises out of a shipment of defective fabric from defendant Coville, Inc., a textile converter, to plaintiff Suzy Phillips Originals, Inc., a garment manufacturer. Suzy Phillips alleges claims against Coville for breach of contract, negligence, and misrepresentation. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332 because of diversity of citizenship and an amount in controversy exceeding $ 50,000.

 Defendant Coville has moved for summary judgment asking the Court to dismiss plaintiff's Third Cause of Action for Negligence, its Fourth Cause of Action for Misrepresentation, and its Second Cause of Action for Breach of Contract, which alleges damages for lost profits and incidental expenses. Dismissal of these claims would leave remaining only the First Cause of Action for Breach of Contract, which alleges damages for the cost of the goods sold, an amount less than $ 50,000. Because jurisdiction under 28 U.S.C. § 1332 would no longer be proper if plaintiff's claims were for less than $ 50,000, the defendant has moved that the case be remanded to state court if its summary judgment motion is granted.

 FACTS

 In 1994, the parties entered into three separate agreements for plaintiff's purchase of "Highlander Fleece" fabric from defendant. As alleged in plaintiff's complaint,

 
On or about the 27th day of April, 1994, plaintiff ordered from the defendant, and defendant agreed to sell to plaintiff; approximately 1800 yards of defendant's fabric, named "Highlander Fleece" style number P1613, at an agreed price of $ 4.30 per yard. . . . On or about the 27th day of April, 1994, the plaintiff ordered from defendant and defendant agreed to sell to plaintiff; 1800 yards of defendant's product, a fabric named "Highlander Fleece," style WB134-13, at an agreed price of $ 4.50 per yard. . . . On or about the 1st day of October, 1994, the plaintiff ordered from the defendant and the defendant agreed to sell to plaintiff; approximately 3659 yards of a fabric manufactured by the defendant called "Highlander Fleece" style number BW134A, at an agreed price of $ 4.90 per yard.

 Complaint PP 8, 10, 12. In response to and acknowledgment of plaintiff's orders, Coville sent Suzy Phillips certain forms entitled "Sales Contract[s]." *fn1" The forms memorialize the terms previously agreed upon by the parties, namely the style, amount, and price of the fabric ordered, and the date the fabric was to be shipped. The forms also contain the following clauses relevant to plaintiff's claims:

 
1. CONTRACT ACKNOWLEDGEMENT: This contract embodying the terms on the face and reverse side hereof confirms the agreement to buy and sell the goods herein described and is hereby acknowledged by the parties to be correct. It shall become binding and enforceable against the Buyer either (a) when signed or accepted in writing by the Buyer or its agent or broker, or (b) when signed and delivered by the Seller to the Buyer unless the Buyer gives the Seller written notice of objection to its contents within ten days after receipt hereof; or (c) when Buyer has paid for or accepted delivery of the whole or any part of the goods herein described, or (d) when Buyer has given either delivery dates, shipping instructions, instructions to bill and hold, instructions as to colors, designs, patterns, specifications or assortments, as to all or any part of the goods herein described.

 Defendant's Ex. A. P 1.

 
CLAIMS AND ALLOWANCES: (a) Seller shall not be liable for normal manufacturing defects nor for customary variations from quantities or specifications, nor for defects or irregularities beyond control of Seller or natural to or inherent in any particular fiber, yarn, fabric or construction. In the event of any claim that the quality of the goods delivered is not according to contract, they must be promptly and properly offered to Seller for examination without cost to Seller, in the same condition as when delivered to Buyer or its agent. . . . (b) Claims of any kind or nature, except for latent defects, are specifically barred, unless made in writing within thirty (30) days after the date of invoice. Claims for latent defects are barred unless made in writing within ninety (90) days after the date of invoice. Notwithstanding the foregoing, all claims, whether for latent or patent defects, are specifically barred for goods after they have been cut or processed or changed from the original state. . . (c) The limit of liability of Seller for defective merchandise shall be the difference in value on contract date of delivery between goods specified and goods actually delivered . . . (e) In no event shall the Buyer be entitled to claim or receive from Seller any other damages whatsoever or any consequential, indirect and/or special damages, and in no instance shall damages include loss of profit on contemplated use or profit of any description.

 Defendant's Ex. A. P 11 (emphasis added).

 Although it never signed these forms, Suzy Phillips does not deny having received them. Also undisputed is Coville's delivery of the goods ordered and plaintiff's acceptance of them. Complaint PP 9, 11, 13; Defendant's 3(g) Statement P 5. Suzy Phillips cut the goods into garments which it sold and delivered to its customers in the fall of 1994.

 In January, 1995, upon being notified by the Consumer Products Safety Commission of the potential flammability of certain styles of Highlander Fleece fabric, Coville instituted a recall program whereby it agreed to treat any Highlander Fleece fabric and garments made from such fabric that had not yet been sold to the general public. Coville notified its customers of the potential problem with the Highlander Fleece fabric and of its recall program. Defendant's 3(g) Statement P 13-15. Pursuant to the recall program, plaintiff returned approximately 900 yards of uncut fabric and 4,750 garments to Coville. Defendant's 3(g) Statement PP 16, 17. The uncut fabric was treated and returned to ...


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