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Milnot Holding Corporation v. Thruway Produce, Inc.

United States District Court, W.D. New York

March 5, 2014

MILNOT HOLDING CORPORATION, Plaintiff,
v.
THRUWAY PRODUCE, INC., Defendant. THRUWAY PRODUCE, INC., Third-Party Plaintiff,
v.
R.M. ZINGLER FARMS, LYNOAKEN FARMS, INC., K.M. DAVIES CO., INC., ORCHARD DALE FRUIT FARM, INC. and C.W. COLD STORAGE, INC., Third-Party Defendants.

DECISION AND ORDER

CHARLES J. SIRAGUSA, District Judge.

INTRODUCTION

This began as a diversity action for breach of a contract between a baby food manufacturer, Milnot Holding Corporation ("Milnot"), and its apple supplier, Thruway Produce, Inc. ("Thruway"), in which Milnot maintained that Thruway supplied apples that were contaminated with rat poison. In response to that claim, Thruway asserted third-party claims against its apple suppliers - R.M. Zingler Farms ("Zingler"), Lynoaken Farms, Inc. ("Lynoaken"), K.M. Davies Co., Inc. ("Davies") and Orchard Dale Fruit Farm, Inc. ("Orchard Dale"), and a cold-storage operator, C.W. Cold Storage, Inc. ("C.W."). The third-party defendants, in turn, asserted cross-claims against each other. Now before the Court is C.W.'s motion for summary judgment (Docket No. [#129]), and Thruway's cross-motion [#136] for partial summary judgment against C.W. or, in the alternative, for leave to file an amended complaint. C.W.'s motion is granted, and Thruway's cross-motion is denied.

BACKGROUND

Unless otherwise noted, the following are the undisputed facts of this case. At all relevant times, Milnot owned Beech-Nut Nutrition Corporation ("Beech-Nut"), which operated a food processing plant in Canajoharie, New York. The Beech-Nut plant produced "an assortment of baby and toddler food products." Complaint [#1] at ¶ 8. In 2005, Milnot and Thruway entered into a contract whereby Thruway agreed to be the exclusive supplier of apples to Beech-Nut, "for the 2005/2006 season." Id. at ¶ 9. The contract required Thruway to supply apples that were free of the rodenticides Brodifacoum and Bromadiolone, which are commonly found in baits used to kill rats and mice.

Thruway did not grow the apples that it supplied to Beech-Nut. Instead, Thruway purchased the apples from various growers, and stored them at various facilities, including a storage operated by C.W., until they were needed by Beech-Nut. At the relevant time, the storage contract between Thruway and C.W. was oral, not written. The oral agreement did not include any provision requiring C.W. to indemnify Thruway.

On four occasions in 2006, Beech-Nut found rodent bait containing Brodifacoum and/or Bromadiolone mixed in with apples that had been supplied by Thruway. However, the only incident that appears to implicate C.W. occurred on February 13, 2006, when one of Beech-Nut's forklift drivers dumped a bin of apples into a processing hopper and observed foreign objects mixed in with the apples. Upon inspection, Beech-Nut found four rectangular plastic containers, with holes cut in them, which appeared to be homemade rodent bait stations. The boxes contained a bluish-green rodenticide material in both solid and granular form.[1] According to the description given by the forklift operator, the plastic boxes had been in the bottom of the apple bin, beneath the apples being dumped.[2] Beech-Nut determined that the bin from which the apples had come belonged to Zingler, and that the apples had been previously stored at C.W. Cold Storage.

By separate Decision and Order, the Court granted summary judgment for Zingler, finding no evidence that Zingler was responsible for the bait boxes. Consequently, the only other party in this action that could be found liable to Thruway for the bait boxes is C.W., which admits that it used identical homemade bait boxes at the relevant time. In that regard, C.W.'s half-owner, Robert Welch ("Welch"), was deposed in this action, and stated the following: 1) C.W. used bait boxes outside of its storage facility; 2) in 2005-2006, C.W. had a total of approximately 72 bait boxes around its storage buildings; 3) the bait boxes were placed around the storage facility by C.W.'s employee, Dan Gilbert ("Gilbert"); 4) Gilbert created the homemade bait boxes, rather than using commercial bait boxes, for cost-saving reasons; 5) the plastic boxes found at Beech-Nut's plant were "similar in style to the bait boxes that C.W. Cold Storage was making, " and "look[ed] familiar"[3] to Welch; 6) the only difference between C.W.'s boxes and the boxes found by Beech-Nut was that the bait inside the boxes found by Beech-Nut appeared "melted";[4] 7) Thruway informed C.W. that the boxes found at the Beech-Nut plant were "similar to what [C.W.] ha[d]";[5] 8) upon being told that bait boxes were found in the apples, Welch considered it a "pretty safe assumption" that the boxes were C.W.'s;[6] 9) Welch asked Gilbert to look and see if any of C.W.'s bait boxes were missing, and Welch "think[s] he [Gilbert] maybe mentioned that there was some missing, " "from... one of the side buildings" where Thruway apples were being stored;[7] 10) Welch had Gilbert "go around and retrieve" the bait boxes distributed around C.W.'s buildings; 11) Welch had Gilbert destroy the remaining boxes, purportedly because he "didn't know exactly how this happened, but [he] was going to make sure that if it was related to what [C.W.] had out there, that it wasn't going to happen again."[8]

Zingler's owner, R.M. Zingler, Jr., also testified at deposition that he spoke with C.W.'s co-owner, Clark Whited ("Whited"), who "acknowledged that the mouse bait stations in question that were involved with [Zingler's] fruit were from his facility, [and] were manufactured at his facility and had nothing to do with [Zingler]."[9]

As for how the bait boxes could have possibly come to be inside one of Zingler's bins, the following testimony by Welch is suggestive:

Q. [T]ypically during the storage season, would you have extra bins - empty bins laying around?
A. We would have a lot of Motts bins laying around.
Q. Did C.W. Cold Storage use any of the apple bins for any purpose for storage or anything other than apples?
A. We have used a Motts bin for trash, to pick up trash. My partner has used it for storing some refrigeration in.
***
Q. And over the years, at least in the course of this work, have there been occasions when ...

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