case number two thousand eight hundred and twenty six carhart inc versus innovative textiles inc at all oral argument not to exceed fifteen minutes per side mr de rosier you may proceed for the  summary judgment innovative textiles under section two thousand six hundred and seven of michigan's u c c because whether carr should have discovered the fabric defect at issue and notified innovative sooner than it did it was a question of fact for the jury not a decision for the district court to make as a matter of law the defect issue here involved the fabric flame resistance which is something that can only be discovered through specialized testing the parties contract allocated that testing responsibility to innovat requiring every fabric delivery to meet carhart specifications in disregarding that agreement the district court reason that carhart could have done its own fire resistance testing but reasonable minds can differ on whether current was entitle to rely on buyer tests because you're let me grant you that it does seem to be a weight defect which helps you in one sense but in another sense given that it's so important you know th really is flame resistant clothing you would think the custom would be that buyers would test as the records show one way or the other your honor i can be honest i can't tell you that it doesn't but i'm not aware of that having been developed in s judgment record i'm curious why not i mean it's kind of isn't you see all about custom reasonable ness well yeah i think that's right but what it also does is it supports the party's freedom of contract and so here the parties where you know the thing you have to remember about this fire resistance testing right it's very it's very specialized and even innovative had to contract out to a rd party diversified to have it done and so because of the nature of this to rest in it's destructive because of you know the very you know the importance of the fire resistance and how specialized it is that's why the parties contract it to place that responsibility here on the supplier and so i really think that if you just your client have the capacity to do the testing on its own well that's you know i think that that's a disk that will i would concede that yeah the record seems to suggest that it could have theoretically been done now whether or not it would have revealed these particular defects or not i think it was being i thought it was being done in some areas some thought teresa now know so so that the testing that it did eventually occurred here did not occur until sometime later in the process so this you know really the two thousand and twelve when that when the fabric st started being developed and delivered continued through two thousand and sixteen there was a you know there was a switch in the fabric in two thousand and fourteen that's when you know what we claim these testing failures started to occur it was in it was in june i think may or june of two thousand and sixteen in that approximate time frame that internally carhart did develop a new program for doing  more testing on its own in terms of this fire resistance so that that's kind of how this thing developed but no during during the relevant time period carhart was not was not doing that testing and didn't have the procedures in place at that time that answer your question ok thank you so and i think the again going back to the the late nature of the defect i think it is important here because both the district court and innovative helpful to them in the lower court ruling is that also look like a lake effect they talked about being able to hire an expert and you know use experts for apparent defects so i'm pretty confident i for one would not have been able to tell you this was not a famous race car drivers car so if you have to doing that if you have to get an expert that suggests that was was a late case and the party in your position lost that case well so here's here's your honor i think i think the difference that the court of appeals and smith actually found that it wasn't a latent defect case and here's why number one the buyer had documentation putting it on notice of the use of these inauthentic parts in the car and not only that the court concluded that the use of these replacement parts was something that was readily apparent to the eye so a trained observer in this case an expert appraiser upon visualizing the car would have appreciated the nature of the defect and so it was for that reason that the michigan court of appeals specifically held that this wasn't a defect that was latent or otherwise hidden from view and so really that's the difference between i think that case and this one is it does it is it doesn't matter whether you have an extra not nobody was going to visually determine that this fabric did not meet the framers distance rick that's what made it late because in the words of the court of appeals of michigan it wasn't readily apparent in the sense that it wasn't something that you could observe when you took delivery of the product again it required this destructive testing and so i think that's a really important distinction between our case  the best myth case it's the fact that and look at the end of the day i think that whether this defect here was similar to the one and smith whether it was late and as we claim i think really goes to my ultimate point that these are not issues that were question because the only way the current was going to know about this defect sooner than it did was to do its own fire resistance testing again this this destructive process but the parties again they agreed that it was so yes  it your position that this should go to trial or was your position you should win as a matter of law so so we did move for partial summary judgment on our own and we also responded to a motion for summary judgment that was brought by  by innovative and so i think of if i could fairly characterize our position sure we i think we took up his position or a motion for partial summary just judgment that we thought it was clear but in responding to innovative motion you know the fallback or the bottom line is if there's some question that have been of course it should go to trial absolutely and so you know again just to sort of sum up what the district court concluded their card did next reasonably  relying on innovative for this testing we think that the fundamental nature of the question under the u c c about whether a defect should have been discovered and reasonable notice provided that those are questions that just are naturally suited and here based on the record were developed for presentation to the jury this question you know this is not a case about selling a fancy car it's a case about ultimately distributing  consumers something that has to be safe so think of it you think of these drugs building a submarine or in this case flame or system clothing for people going into fires or places that are quite dangerous why would it be that custom the rule that when you're selling something that is it's really important it's made right the ultimate seller you even though you're the buyer here you're alternately the seller has to always test who wouldn't test a product that has to be safe whether because it's a drug it's clothing or it's a sub that doesn't blow up a little one thousand five hundred feet under water shouldn't someone in that field always test and if that's true that would mean you know you should find out sooner than three years that this wasn't compliant that brick so your honor i guess i would again come back to you know that that that's a very good question but i don't that's not something that can get a court can decide as a matter of law i mean there's a part there was no case law supplied there was no evidence that that this is something that was customary she you know or you know should have been made part of a policy for the reasons you articulated but certainly if it innovative wanted to take that position at trial and try to convince a jury of that that in this situation for all the reasons you just  identified the testing should have been done and the defect should have been discovered sooner then you know that would be a jury determination but again i think every question that that has come up and that you know has come up in my own mind i think it it really just goes to show why this was a case that is not appropriate for a court decided as a matter of law it should have it should have been for the jury and that's why we would ask the court reverse the entry of summary judgment to innovative been remanded and let the case the claims for breach of contract and breach of warranty go to the jury where where we think that's where they're they're properly resolved conclude that carhart properly failed to inspect this product for over two years i think the main difference between carhart and i t i really comes down to what the you should have been able to see the next paragraph of the opinion says that even if it wasn't obvious you had a duty to hire an expert or an appraiser to look at does it did you put any evidence  custom in the industry is about the body or the folks in cars positions responsibility normally yes when it comes to testing we put in evidence about what carhart's did he was so we didn't put in evidence about other companies what we showed was that when carhart st began buying the right place at that highly relevant me i have all kinds of ideas what would make sense in this area because flame resistant clothing is pretty important it's flame resistant but what i want to know why wouldn't that be kind of thing that we should expect some evidence on and if the evidence is one sided maybe summary judgment is appropriate the evidence is not one under bents beth there is a duty to get an expert in because carhart did not get an expert to look for this to look for this defect we know as a matter of law that it was required to do so so we don't have to know you're right i want to take that to its logical extreme if we can for just a minute as you know michigan is a car state i have a simply plant about a quarter mile right down the road from my  chambers it seems to me if you take your argument and you extend it to its natural conclusion every part that comes in to one of the auto plants down the road would have to be subject to destructive testing if that's really the obligation and the best smith and poses firm reasonable under the u c c and i'm just it seems to me that can't possibly be the rule the safety of cars is obviously as dependent on the strength of the metal and they used to use metal or plastic that they use now as the safety of the garment and whether i think it's going to vary depending on what you're talking about a consumer or a manufacturer such as car heart but in the hypothetical that you gave your honor and if you're getting a balance of parts it's not too this duty to inspect products is a function of the duties and so carhart didn't even try to contract out of these delays then stand specht of the product you're just saying that their inspection didn't go as far as you think test this fabric every every piece of material that came in every bolt of cloth every truckload what keep in mind now we're talking about this matter a lot as a matter of fact so what are you saying was the outpatient well i don't think best move goes into detail about how often they need to do it it's going to vary by the product in this case i think each inch backs be sure to inspect and i think that's matter of law as opposed to submitting it to the jury there's a few facts one is carhart in two thousand and eight expressly said that he was going to test the product it said that again in two hundred and  parties correct well the current track was and is an integrated contractor so i mean i think that those emails would be relevant to the jury as to whether they acted reasonably but you're not saying that they have that they have assumed don't have to test the product back not what the contract says and so the contract has to be read in light of the u c c and in light of the custom and in light of everything carhart was telling i i does distinguish between a latent and a patent defect because in bad smith the court found that it was latent but then went on to say even it was if it was late and you had to get an expert so that extra step means it doesn't matter whether it's late late and or patent you had to take whatever steps were necessary the buyer must take whatever steps it needs to to make sure it conforms with the buyer's specs and actually this court's opinion in ontario supports that reading about smith in ontario you had some these kind of tarps that went on a side of a truck and they would hold dirt and some of the buyer in two thousand and eleven knew that there was a problem and didn't look in to it until a whole point is they knew there was a problem for two years and they didn't do anything what where is there any evidence that hard knew there was a problem well i think i don't think there is evidence t knew there was a problem but i do know it was so if there isn't any evidence they knew they have a problem seems to be out areas out but more importantly to go back to the sort of the fundamental premise that you and judge clay or talk about do the e mails assuming that you attach the significance to them contractually that you do is they say the current will do destructive flame resistant testing they don't but i don't think they need to so so mere the mere fact that they said that they'll that they'll that they'll test or inspect yes would be you know it what it that's then enough to trigger the duty to do just struck if expert testing the absence of which means their conduct was not reasonable under the u c c correct yes sir is there a case that even comes close to what i think is an astounding argument beyond bev smith where the defect was clearly late why i disagree about best meth they said if you get an act you need an expert you have to get an expert the ontario case is important here because they knew there was a problem they didn't know the source of the problem and what the what this court held is you had a duty once you knew there was a problem to find out what the source of the problem was both were later you know that if you know there's a problem you've got a duty to investigate where was there any knowledge of a problem there we were not claiming that there was now it's a problem that we are claiming is that carhart had a duty of good faith shaped by the bad smith case to inspect the ba it's an antique the whole point is this really is the mona lisa when you when that's the whole point of the purchase it is on you to make sure it's actually the mona lisa you're not allowed to say three years later hoops we bought a forgery and so maybe that's what pestis means but that's not what this case is there's no doubt the fabric was so all they got what they thought they were getting the point wasn't whether there was a forgery the point was whether  court of appeals surely knew that this is a section that applies to lots of condo trends between buyers and sellers and is central to commerce in the state of michigan so i don't think the court of appeals cent and that narrow fashion without realizing what he was doing and what it did is it made a rule that said if you need to get an expert to make sure this product meets your specs you need to get an expert and kno reasonable i'm not sure i know the answer to that question i do to my knowledge no i think that smith was quoted in ontario just certainly unpublished so i don't think i'm aware of a published case that treated and that in that  fashion and your argument is that that correctly respects what the michigan supreme court would say relative to the duty to do destructive testing on some unknown percentage of batches incomers it is because michigan has a rule that puts the burden on the cheapest cost voigt are and that's the buyer and the bar here carhart sat on its rights for over two years and now wants to look back what why is why is current the cheapest cost avoider i understood that phrase correctly innovative is the one that has all this fabric they can test the fabric that's not even know whether this product meets its its specs and one of the critical i know a lot of time i don't know if i can i am just trying to figure out why are they any better place to determine whether something that meets the specs than the supplier will one reason it got the buyer has sole control over when this product is being used in this case when current st bought the fabric it past all the past carhart said this passed all the tests it was only years later when cart went back and read tested it that it found that there were problems when i t i sold this fabric we had no ability to hang onto it and test it two years later because we had to fulfill carhart's order did we ask to go to the jury and i just i just want to be clear and i actually went back and just kind of refresh my my memory you know look we obviously did move for partial summary judgment as i said we also responded and asked that the summary judgment motion brought by innovative be denied the hearing on the motion all kinds of discussion but just record made lots of references to the decision being about whether the case should go to a jury but i mean i want to be frank i don't know that we certainly certainly didn't make the plea that we're making on appeal that this is a jury's admissible issue and we certainly did advocate at the time that this was something that could be decided in in karts favor i don't think that alters you know the fundamental question that's ultimately before the court but i did just want to clarify that let me just address a couple of things from the other point that i judge sutton raise that i think is interesting and i think is an important and helpful insight on bess net i don't think we need to rely on this in order to prevail but i do think that that smith is unique because you couple of cases that the court cites if you take a look at those cases those are both art cases and so i think that you know what what we're talking about here in terms of what ben smith was recognizing is look you had you had evidence that this car contained and so that's why it wasn't considered late but i do think that that's a different case and you know returning i think to to what judge clay was sort of teasing out i really do think that this case comes down to whether this was a latent defect or whether it was regrettably apparent and that is fundamentally a jury question and then you know with respect to the allocation of responsibility and judge mckee got into that it in terms of you know what prevents the parties from assigning responsibility by contract and i just want to reiterate that there's nothing that precludes that and again you think about the very specialized nature of this relationship you know carhart you know goes out in obtains a supplier a very specialized you know fabric it has to be fire resistant for it to market these products to its customers so it's going to rely on the expertise of the supplier that was put into the contract and you know again at the at the end of the day if there's any question about a reasonable list of that i think you can still safely return to you know same well if there's any question then it goes to the jury it's not something that a court can look at all of these circumstances and just determine you know on a summary judgment motion that you know this is this is what carhartt should have done should have sooner these are these are all fundamentally jury questions real quickly the other things i just wanted to touch on you know the e mails about testing me judge clay you're right this was not part of the contract the other thing about those e mails and again i think i throw those into the mix of factual questions the e mails made vague references to random testing but there was deposition testimony that clarified that what you know what you're what you're talking about typically is you're you know you're you're observer in the material is it the right color you know your is your visual you visually inspecting the things as they come in so i think there's at the very least a question about whether they're talking about fire resistance testing in those e mails which you know i think if should this case go to trial it'll be revealed that that's not in fact what was being discussed because again the testing responsibility was placed on an innovative and then finally i disagree that this that reliance on the contract is you know contracting around or contracting out of you know the good faith obligation the due care obligation to the u c c i think all this does is it recognizes that in this in this particular situation the contract is something that the parties are free to look at you know we cited thirty in our brief from the michigan court of appeals about how the u c c is about freedom of contract it's the hayward versus postma case thirty and twenty dollars so i don't think that what we're doing here is seeking to contract around an obligation and at the end of day again if the jury concludes given all of these facts that we've been discussing discussing that you know that that car should have done more that that's for them to determine the one last thing and i apologize i've actually lost track of my time the one other thing i just wanted to mention is this idea of latent versus readily apparent defects it's not you it mission is not somehow unique that we don't we don't recognize that there's always a uniform you know unbendable requirement to hire an expert to inspect no matter what it requires it you know i think we have discussed this and i think i've shown the best myth itself recognizes the difference but also more importantly if we cited this very well established authority in our brief if you go to anderson on the uniform commercial code it's of civically talks about a reasonable time to give notice of breach requires an examination of the facts and circumstances of each case particularly where late in defects are claimed so the idea that michigan somehow has this special unique approach to the u just don't think there's any support for and so with that i apologize if i if i ran over i'm happy to answer any questions but i really appreciate your time thank you very much