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Warren W. Fane, Inc. v. Tri-State Diesel, Inc.

United States District Court, N.D. New York

May 7, 2014

WARREN W. FANE, INC., Plaintiff,


THOMAS J. McAVOY, Senior District Judge.

Plaintiff commenced the instant action against Defendants, alleging that they violated warranties and contracts in delivering tractors that failed to perform as promised. Presently before the Court are Defendants' motions for summary judgment pursuant to Federal Rule of Civil Procedure 56(a). See dkts. #33-35.


This case concerns Plaintiff's purchase of ten tractors manufactured by Defendant Kenworth Truck Company ("Kenworth") from Defendant Tri-State Diesel, Inc. ("Tri-State"). The tractors' engines were manufactured by Defendant Cummins Northeast, LLC ("Cummins"). Plaintiff contends that the tractors, which were purchased to haul heavy loads as a part of Plaintiff's trucking business, were defective, did not perform properly or as promised, and caused Plaintiff's business considerable disruption and loss of income. Plaintiff alleges that Defendants' conduct breached warranties and contracts between the parties and demands a variety of damages.

Plaintiff Warren W. Fane, Inc., is an excavating and hauling company based in Mechanicville, New York. (Defendant Kenworth's Statement of Material Facts, dkt. # 33-1 ("Kenworth's Statement"), at ¶ 1).[1] In or around September 2010, Plaintiff, through its President and Owner, Warren W. Fane, decided to purchase ten new trucks. (Id. at ¶ 2). One of the reasons for purchasing these new trucks was Plaintiff's concerns about new Environmental Protection Agency regulations. (Id.). Plaintiff also sought new trucks as part of its regular purchase of vehicles for the business. (Plaintiff's Statement of Material Facts in Response to Defendant Kenworth's Statement, dkt. # 43-1 ("Plaintiff's Response to Kenworth") at ¶ 2). Greg Fane, who had many years experience in purchasing trucks, served as Plaintiff's chief negotiator. (Kenworth's Statement, at ¶ 3-4; Plaintiff's Response to Kenworth, at ¶ 3-4). Greg and Warren Fane were both very experienced and knowledgeable in the hauling industry and in reference to the truck specifications required for efficient hauling. (Kenworth's Statement, at ¶ 5).

Defendant Cummins Northeast, LLC, ("Cummins"), is the northeast regional distributor for Cummins Inc. (Defendant Cummins Northeast, LLC's State of Material Facts, dkt. 35-1 ("Cummins Statement") at ¶ 2). Cummins provides warranty service and parts for diesel engines that Cummins, Inc., manufactures. (Id. at ¶ 3). Cummins does not manufacture diesel engines or sell such engines to truck manufacturers like Kenworth, but did provide repairs to the engines at issue in this case. (Id. at ¶ 4; Plaintiff's Response to Defendant Cummins Northeast, LLC's Statement of Material Facts and Statement of Additional Material Facts, dkt. #42-1, ("Plaintiff's Response to Cummins") at ¶ 4).

Plaintiff sought trucks and engines with similar capabilities to those already in its fleet. (Plaintiff's Response to Kenworth at ¶ 6). Greg Fane testified that Plaintiff had a set of specifications that it was seeking in the new trucks. (See Greg Fane Deposition, Exh. B to Defendant Kenworth's Motion for Summary Judgment, dkt. #33, at 11-13). Plaintiff sought a thirteen-speed manual transmission, 14, 600-pound front axle, 46, 000-pound rear axle, a 391 gear ratio, and an engine similar to the 475horsepower Caterpillar engines on other trucks owned by Plaintiff. (Id.). Kenworth models offered a 485-horsepower Cummins engine, which to Greg Fane seemed similar to the Caterpillar engine with which Plaintiff was familiar. (Id. at 15). Greg Fane did not do any independent research on Kenworth Trucks and Cummins engines before purchasing the truck, though he did consult with Warren Fane. (Kenworth's Statement at ¶ 7; Plaintiff's Response to Kenworth at ¶ 7). Warren Fane himself did not do research prior to purchasing trucks, though the Plaintiff notes that he "continually received literature regarding the newest lines of trucks and engines, including those manufactured by Cummins." (Kenworth Statement at ¶ 9, Plaintiff's Response to Kenworth at ¶ 9). Defendant Kenworth alleges that Warren Fane relied on information from colleagues in the trucking industry in deciding to seek trucks with a 485horsepower Cummins engine, but did not rely on any advertising when deciding to purchase the trucks. (Kenworth's Statement at ¶¶ 8, 10). Plaintiff alleges that Fane relied on the representations of Defendant's agent, Thomas Jennings, about the performance he could expect from the 485-horsepower Cummins engine. (Plaintiff's Response to Kenworth at ¶¶ 8, 10).

Plaintiff solicited prices from several dealers in the area before deciding to purchase ten Kenworth vehicles from Defendant Tri-State. (Kenworth Statement at ¶ 11). Plaintiff alleges that price alone did not guide its decision to purchase the trucks from Defendants; Plaintiff also relied on assurances from Defendant that the trucks would offer performance comparable to Plaintiff's current fleet. (Plaintiff's Response to Kenworth at ¶ 11). Plaintiff purchased eight tandem trucks and two tri-axle trucks. (Kenworth Statement at ¶ 12). Warren and Greg Fane negotiated the truck sale over the telephone with Thomas Jennings. (Id. at ¶ 13; Plaintiff's Response to Kenworth at ¶ 13). They did not meet Jennings in person or inspect any trucks before the purchase. (Id.). Plaintiff initially relayed exact specifications to Defendant, including the purchase of a 485-horsepower Cummins engine. (Kenworth Statement at ¶ 14; Plaintiff's Response to Kenworth's Statement at ¶ 14). Plaintiff alleges that Thomas Jennings recommended that Fane purchase the trucks at issue. (Plaintiff's Statement at ¶ 14). On Jennings' recommendation, Plaintiff purchased trucks with horsepower greater than the 485-horsepower engines that Plaintiff originally sought. (Kenworth Statement at ¶ 15). Jennings made this recommendation after being informed of how Plaintiff intended to use the trucks. (Id.). The parties disagree about whether Jennings actually recommended to Greg Fane that Plaintiff purchase trucks with 500-horsepower Cummins engines. (See Kenworth's Statement at ¶¶ 15-16; Plaintiff's Response to Kenworth's Statement at ¶¶ 15-16). Defendant alleges that Jennings recommended purchasing a 525-horsepower engine, while Plaintiff insists that Jennings did not recommend an engine that large. (Kenworth's Statement at ¶ 17; Plaintiff's Statement at ¶ 17).

Plaintiff placed an order for the ten Kenworth trucks from Tri-State on August 16, 2010. (Kenworth's Statement at ¶ 18). The trucks each had a 500-horsepower Cummins ISXI5 engine. (Id.; Cummins Statement at ¶ 9). Tri-State inspected the trucks upon receipt. (Kenworth's Statement at ¶ 19). Greg Fane periodically examined these trucks as they arrived at Tri-State to ensure that they contained all of the components that Plaintiff had requested. (Id. at ¶ 20). William Deegan, Plaintiff's office manager, inspected the trucks to ensure that they matched the purchase orders when those trucks were delivered to Plaintiff. (Id. at ¶ 21). Deegan's inspections revealed that the trucks matched the specifications required in the purchase contract, with the exception that two trucks had a lower rating on the axles than requested. (Id. at ¶ 22). Plaintiff denies that the trucks matched the requirements in the purchase order, but "admits that based upon Mr. Deegan's inspection of the trucks it appeared that, minus two trucks with an incorrect rating, the trucks delivered matched the specifications agreed to by Plaintiff and Tri-State." (Plaintiff's Response to Kenworth's Statement at ¶ 22). Plaintiff admits that Tri-State corrected the improper axle ratings when brought to Defendant's attention. (Id. at ¶ 23). Plaintiff eventually approved and took possession of the ten trucks. (Kenworth's Statement at ¶ 24). Plaintiff did not have any contact with anyone at Defendant Kenworth before taking delivery of the trucks. (Id. at ¶ 25).

When Plaintiff agreed to purchase the trucks, Plaintiff received and executed Retail Purchase Orders for the two tri-axle trucks and eight tandem tractors. (Id. at ¶ 26). The Purchase Orders contained all the specifications for the trucks Plaintiff purchased. (Id. at ¶ 27). They did not contain any estimates for fuel mileage. (Id. at ¶ 29). The Orders indicated that Plaintiff intended to purchase an extended warranty for five years and 400, 000 miles on the Cummins engine. (Id. at ¶ 28). Plaintiff executed the Retail Purchase Orders, which indicates that Plaintiff approved the specifications contained in the Orders. (Id. at ¶ 30). Plaintiff contends, however, that Plaintiff's acceptance of the specifications contained on the Orders was premised, in part, on Thomas Jennings' promises about the trucks' capabilities. (Plaintiff's Response to Kenworth at ¶ 30).

In or about November 2010, Jennings provided Plaintiff with Kenworth's invoices for the purchase, as well as the Kenworth Truck Company Limited Warranty Agreement-Class 8 Standard Service Warranty, the Cummins Plan 11 Warranty Agreement and a form for component extended coverage election forms. (Kenworth's Statement at ¶ 31). Jennings also traveled to Plaintiff's facility to go over all of the documents with Plaintiff prior to having Plaintiff execute them. (Id. at ¶ 32). Jennings specifically reviewed and discussed the Kenworth Warranty and the Cummins Warranty with Plaintiff. (Id. at ¶ 33). Plaintiff signed the invoices and the Kenworth Warranty. (Id. at ¶ 34). Plaintiff declined extended warranties on the components, but did sign an extended Cummins Warranty. (Id. at ¶ 35).

The Kenworth Warranty expressly disclaims any warranties other than those contained in the agreement, and expressly disclaims any warranties for merchantability or fitness for a particular purpose. (Id. at ¶ 36). The Kenworth warranty also excludes from coverage the engine or engine accessories. (Id. at ¶ 37). The Kenworth warranty also provides that the warranty applies only to original factory equipment and is subject to the terms and conditions contained in the warranty. (Id. at ¶ 38). The warranty limits remedies under the warranty to repair or replacement of failed parts. (Id. at ¶ 39). No coverage is provided for incidental and consequential damages. (Id.). Warren Fane signed the warranty on Plaintiff's behalf. (Id. at ¶ 40).

The warranty provided by Defendant Cummins applied expressly to the new EPA 2010 ISXI1.9 and ISXI5 series engines that had been sold by Cummins. (Id. at ¶ 41). The Cummins warranty covered any failures of the Engine under normal use and service caused by defects in Cummins material or factory workmanship. (Id. at ¶ 42). Cummins promised to pay for all parts and labor needed to repair damage to the engine from warrantable failure. (Id. at ¶ 43). Plaintiff purchased an extended warranty, which increased the warranty from two years and 250, 000 miles to five years and 500, 000 miles. (Id. at ¶ 44).

Warren Fane admitted at his deposition that the instant action in this case concerns the performance of the Cummins engine. (Id. at ¶ 45). Plaintiff acknowledges that the case concerns problems with the engine, but alleges as well that the lawsuit concerns the supposed failure of Kenworth and Tri-State to address problems with the vehicles and engines at issue. (Plaintiff's Response to Kenworth at ¶ 45). The engines in the trucks Plaintiff purchased suffered from performance issues. (Kenworth's Statement at ¶ 46). Plaintiff emphasizes that problems with the trucks' fan hubs and flexible exhaust pipes also occurred. (Plaintiff's Response to Kenworth's Statement at ¶ 46). Problems with the trucks' engines included lack of hauling power, backfiring and/or coughing, lurching, constant illumination of check-engine lights and engine deratings, which required Plaintiff to take the trucks out of service. (Kenworth's Statement at ¶ 47). Plaintiff blamed the problems with coughing, loss of power, lurching and poor fuel mileage on the engines. (Id. at ¶ 48). The trucks jerked when ascending on elevated roads, had a coughing problem that appeared to stem from the trucks' turbo chargers, and suffered breakdowns due to engine issues. (Id. at ¶ 50). The fuel mileage on the trucks was less than that on comparable vehicles in Plaintiff's fleet. (Id. at ¶¶ 51-52). All ten of the trucks Plaintiff purchased had similar problems. (Id. at ¶ 53).

In November 2011, Cummins replaced the turbo charges on every truck and recalibrated the engines' Electronic Control Modules to increase their horsepower from 500 to 525. (Id. at ¶ 54). Kenworth alleges that this repair resolved the coughing and lurching issues, but that problems with engine power and fuel economy persisted. (Id. at ¶ 55). Without pointing to contrary evidence, Plaintiff denies these claims. (Plaintiff's Response to Kenworth's Statement at ¶ 55). The deposition of William Deegan, cited by Defendant for this proposition, indicates that the repairs made the coughing stop, but that other problems persisted. (William Deegan Deposition, Exh. C to Defendant Kenworth's Motion, at 56). The parties disagree over whether Defendant ever requested that Tri-State take the trucks back and refund the purchase price. (Kenworth's Statement at ¶ 56; Plaintiff's Response to Kenworth at ¶ 56). Plaintiff informed Defendant of the problems with the truck and demanded an adequate remedy. (See Exh. I to Plaintiff's Response, dkt. #49).

Faced with problems that were "continual, " William Deegan began keeping a handwritten log of the problems and the amount of time those problems kept trucks out of service. (Kenworth's Statement at ¶ 57). Defendant contends that Plaintiff eventually created a truck-by-truck table of problems, testing, and any resolution of those problems from Deegan's notes. (Id. at ¶ 58). Plaintiff admits to using the notes to respond to discovery requests. (Plaintiff's Response to Kenworth at ¶ 58). The notes identified engine problems. (Kenworth's Statement at ¶ 59). They also described a variety of efforts to make the trucks function as Plaintiff expected. (Kenworth's Statement at ¶ 60; Plaintiff's response to Kenworth's Statement at ¶ 60).

Beyond issues with the engines, the charts created by Plaintiff also note numerous problems with air sensors, flex pipes, and fan hubs, which were covered by the Kenworth Warranty. (Kenworth's Statement at ¶ 61; see also Exh. A to Plaintiff's Brief in Opposition to Kenworth's Motion, dkt. #43-3). Deegan and Warren Fane admitted that the exhaust pipe and fan hub replacements were minor jobs. (Kenworth's Statement at ¶¶ 62-3). Plaintiff admits that Deegan made this statement, but contends that "Plaintiff lost use of the trucks during the time period that exhaust pipe and fan hubs were being replaced[.]" (Plaintiff's Response to Kenworth's Statement at ¶¶ 62-63). Moreover, the labor required to replace the parts was performed by Plaintiff's employees. (Id.). The fan hubs and flex pipes that were replaced were covered by the Kenworth warranty. (Kenworth's Statement at ¶¶ 64-65). Plaintiff points out, however, that Plaintiff's employees performed the labor. (Plaintiff's Response to Kenworth's Statement at ¶¶ 64-65). Plaintiff admits that Plaintiff elected to have the fan hubs and flex pipes sent to its facility to have Plaintiff's mechanics install the new parts. (Kenworth's Statement at ¶ 66; Plaintiff's Response to Kenworth's Statement at ¶ 66). The repairs took about 30 minutes to perform, but Plaintiff complains that Fane lost use of the trucks during the time when these parts were being replaced. (Kenworth's Statement at ¶ 67; Plaintiff's Response to Kenworth's Statement at ¶ 67). The only other problems with the vehicles that did not involve the Cummins engines were broken air sensors and excessive anti-freeze use on the two tri-axle trucks. (Kenworth's Statement at ¶ 68). These issues were fully resolved under the Kenworth warranty. (Id.).

Plaintiff admits that Fane did not have to pay for any warranty repairs to the trucks or for any replacement parts, but alleges that it was required to "pay for (i) the loss of use of the trucks while the repairs were being performed, (ii) added fuel and fuel additive costs associated with the lower than anticipated and represented fuel economy; and (iii) additional administrative costs associated with truck and engine failures." (Kenworth's Statement at ¶ 69; Plaintiff's Response to Kenworth at ¶ 69). Plaintiff eventually replaced all of the vehicles in question with vehicles manufactured by a competitor. (Kenworth's Statement at ¶ 70). Plaintiff traded in the Kenworth trucks on those new vehicles. (Id.). In calculating damages, Plaintiff includes losses due to the resale of the trucks, loss of use of the trucks, increased fuel costs due to lowerthan-expected gas mileage, lost time for trips taken to get trucks repaired, and lost time for workers whose trucks broke down or required repair. (Kenworth's Statement at ¶ 71 71; Plaintiff's Response to Kenworth's statement at ¶ 71).

Plaintiff filed a Complaint in the Supreme Court of New York, Rensselaer County, November 20, 2012. See Notice of Removal, dkt. #1, at ¶ 1. Defendant Cummins Northeast, Inc., removed the action to this Court on December 28, 2012. Id . After the parties engaged in discovery, Defendants filed motions for summary judgment, bringing the case to its present posture.


A. Legal Standard

Defendants seek summary judgment. It is well settled that on a motion for summary judgment, the Court must construe the evidence in the light most favorable to the non-moving party, see Tenenbaum v. Williams , 193 F.3d 581, 593 (2d Cir. 1999), and may grant summary judgment only where "there is no genuine issue as to any material fact and... the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is genuine if the relevant evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby , 477 U.S. 242, 248 (1986).

A party seeking summary judgment bears the burden of informing the court of the basis for the motion and of identifying those portions of the record that the moving party believes demonstrate the absence of a genuine issue of material fact as to a dispositive issue. Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). If the movant is able to establish a prima facie basis for summary judgment, the burden of production shifts to the party opposing summary judgment who must produce evidence establishing the existence of a factual dispute that a reasonable jury could resolve in his favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986). A party opposing a properly supported motion for summary judgment may not rest upon "mere allegations or denials" asserted in ...

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