Court Opinion

ID: 4116526
Source: CourtListenerOpinion
Date Created: 2017-01-18 18:00:36.061123+00
Date Added: 2024-06-11T07:46:16.753391
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                ______________

                                       No. 16-2107
                                     ______________

                              AMERICAN ATELIER, INC.,
                                              Appellant

                                             v.

                                   MATERIALS, INC.

                                     ______________

                       Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                                (D.C. No. 5-13-cv-07138)
                        District Judge: Hon. Gerald A. McHugh
                                    ______________

                       Submitted Under Third Circuit LAR 34.1(a)
                                   January 13, 2017
                                   ______________

           Before: SMITH, Chief Judge, JORDAN and SHWARTZ, Circuit Judges.

                                 (Filed: January 18, 2017)

                                     ______________

                                        OPINION
                                     ______________

SHWARTZ, Circuit Judge.

       
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
       American Atelier, Inc. (“AAI”) appeals from the District Court’s order granting

summary judgment in favor of Materials, Inc., on AAI’s claims for breach of the implied

warranty of merchantability and breach of contract. For the reasons set forth below, we

will affirm.

                                             I

       AAI manufactures furniture for the hospitality industry. Loews Hotels hired AAI

to manufacture furniture for its Philadelphia hotel. Loews and its interior designer

required that the furniture incorporate white veneers made of anigre wood that were

manufactured by Tabu, an Italian company. Tabu creates these white veneers by

bleaching and dying anigre wood, which is brown in its natural state.

       AAI entered into a contract to purchase the veneers from Materials, the exclusive

distributor for Tabu products in the United States. AAI manufactured the furniture using

the veneers, and Loews installed the furniture in its hotel rooms. Several months after the

furniture was installed, Loews complained that the portions of the veneers that were

exposed to light had discolored to an unattractive yellow-brown shade, while veneers not

exposed to light remained white. Loews demanded that AAI replace all of the discolored

veneers. AAI ultimately replaced them with maple veneers.

       AAI sought to recover the costs associated with replacing the veneers and sued

Materials, alleging, among other things, claims for breach of the implied warranty of

                                             2
merchantability and breach of contract.1 Following discovery, Materials filed a motion

for summary judgment. The District Court granted the motion in part, concluding that

AAI could not establish that the veneers were defective because bleached veneers are

inherently prone to discoloration, and the contract had not been breached.2 AAI appeals.

                                            II3

       1
          The District Court dismissed AAI’s claim for breach of the implied warranty of
fitness for a particular purpose, concluding that the contract expressly disclaimed that
warranty. AAI did not appeal this ruling.
        2
          The District Court entered a final judgment pursuant to Federal Rule of Civil
Procedure 54(b) with respect to these claims but denied summary judgment and retained
jurisdiction over a claim that certain veneers were moldy. The decision to certify a
judgment as final is “left to the sound judicial discretion of the district court,” Curtiss-
Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980), to which we give “substantial
deference,” id. at 10. Of course, “sound judicial administration does not require that Rule
54(b) requests be granted routinely,” id., given the “historic federal policy against
piecemeal appeals,” id. at 8 (citation and internal quotation marks omitted). The District
Court recognized this policy when it found that certification here “would not result in
piecemeal appeals of [the] different claims,” but rather would facilitate litigation, avoid
unnecessary expenses, and possibly prevent the need for a trial on the smaller claim
based on the moldy veneers. App. A23.
        3
          The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have
jurisdiction pursuant to 28 U.S.C. § 1291. See Elliott v. Archdiocese of N.Y., 682 F.3d
213, 219 (3d Cir. 2012) (“Under Rule 54(b), however, a district court may convert an
order adjudicating less than an entire action to the end that it becomes a ‘final’ decision
over which a court of appeals may exercise jurisdiction under 28 U.S.C. § 1291.”). Our
review of the District Court’s grant of summary judgment is plenary. Mylan Inc. v.
SmithKline Beecham Corp., 723 F.3d 413, 418 (3d Cir. 2013). We apply the same
standard as the District Court, viewing facts and making all reasonable inferences in the
non-movant’s favor. Hugh v. Butler Cty. Family YMCA, 418 F.3d 265, 266-67 (3d Cir.
2005). Summary judgment is appropriate where “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). “An issue is genuine only if there is a sufficient evidentiary basis on which a
reasonable jury could find for the non-moving party, and a factual dispute is material
only if it might affect the outcome of the suit under governing law.” Kaucher v. Cty. of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986)). The moving party is entitled to judgment as a matter of law when
the non-moving party fails to make “a sufficient showing on an essential element of [its]
                                             3
                                              A

       We will first address AAI’s claim for breach of the implied warranty of

merchantability. Under Pennsylvania law,4 “a warranty that the goods shall be

merchantable is implied in a contract for their sale if the seller is a merchant with respect

to goods of that kind.” 13 Pa. Cons. Stat. Ann. § 2314(a). The Pennsylvania Supreme

Court has explained that

       [t]he concept of “merchantability” does not require that the goods be the
       best quality, or the best obtainable, but it does require that they have an
       inherent soundness which makes them suitable for the purpose for which
       they are designed, that they be free from significant defects, that they
       perform in the way that goods of that kind should perform, and that they be
       of reasonable quality within expected variations and for the ordinary
       purpose for which they are used.

Gall by Gall v. Allegheny Cty. Health Dep’t, 555 A.2d 786, 789–90 (Pa. 1989) (citations

omitted). Thus, to establish a breach of this warranty, a plaintiff must show, among other

things, that the product at issue was defective. Altronics of Bethlehem, Inc. v. Repco,

Inc., 957 F.2d 1102, 1105 (3d Cir. 1992). A plaintiff can meet this burden by proving

that the product “functioned improperly in the absence of abnormal use and reasonable

secondary causes.” Id. (citation and internal quotation marks omitted).

       AAI argues that the veneers were defective because they turned to a shade of

brown that was unacceptable and required replacement. However, this color change does

not indicate that the veneers “functioned improperly.” Altronics, 957 F.2d at 1105

(citation and internal quotation marks omitted). As AAI’s expert reports explain,

case with respect to which [it] has the burden of proof.” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986).
      4
        The parties do not dispute that Pennsylvania law applies.
                                              4
bleached veneers are inherently susceptible to discoloration as a result of light exposure.

Accordingly, the fact that veneers exposed to less light retained their color and that

veneers exposed to light discolored is entirely consistent with how they were expected to

function and thus is not evidence that they were not of a “reasonable quality” for

bleached veneers. Gall, 555 A.2d at 789. Therefore, while bleached veneers may have

more limited uses than non-bleached veneers because bleached veneers used in areas

exposed to light may change color, the veneers here were “suitable” for ordinary use in

furniture and performed in line with “the way that goods of that kind should perform.”

Id. Because AAI has not produced evidence from which a jury could conclude that

Materials’ veneers were defective, we will affirm the District Court’s ruling on AAI’s

breach of the implied warranty of merchantability claim.

                                              B

       AAI’s breach of contract claim also fails.5 To prove a claim for breach of

contract, a plaintiff must show that (1) a contract existed between the parties, (2) the

defendant breached a duty imposed by that contract, and (3) the plaintiff suffered

       5
         In its reply brief, AAI suggests that it did not have an opportunity to oppose
summary judgment on its breach of contract claim because Materials’ motion for
summary judgment explicitly addressed only the claim for breach of the warranty of
merchantability. A court is required to give a party notice that it is considering granting
summary judgment and an opportunity to oppose summary judgment. Gibson v. Mayor
& Council of City of Wilmington, 355 F.3d 215, 222–23 (3d Cir. 2004). Here, AAI
received such notice and had the opportunity to respond. AAI filed a brief in opposition
to Materials’ motion for summary judgment on the warranty claim, which overlapped
substantially with the breach of contract claim; the District Court sent a notice to the
parties indicating that it was considering granting summary judgment on AAI’s entire
complaint and cancelling the trial date; and the District Court permitted the parties to file
supplemental briefs and present oral arguments. Thus, AAI’s claim that it had no
opportunity to defend its breach of contract claim lacks merit.
                                              5
damages as a result. McShea v. City of Phila., 995 A.2d 334, 340 (Pa. 2010). There is

no dispute that the parties had a contract. The contract required Materials to supply white

anigre veneers. AAI asserts that this requirement was breached because the veneers

provided did not remain white. While it is true that the veneers that were exposed to light

changed color, the contract specifically notified AAI that discoloration could occur. See

App. A341 (“All wood surfaces, like all materials, will alter in color due to exposure to

ultraviolet (UV) light or simply aging of the wood.”). In addition, the contract

specifically stated that “[s]ince [Materials] has no control over end products fabricated

with the materials sold, no warranty is expressed or implied. . . . [Materials] makes no

warranty based on any usage of trade or fitness for any particular use. Buyer assumes all

risks resulting from the use with other substances or in any process.” App. A341. Tabu

provided the veneers to Materials, Materials distributed them to AAI, and AAI used the

veneers in the furniture. Materials explicitly notified AAI that it made no warranty

concerning such products and by entering into the contract, AAI thereby disclaimed any

warranty covering the product when used in the way AAI did—in furniture that would be

placed in areas exposed to light. Thus, aware there were no warranties, AAI received

what it was promised, white anigre veneers.

       AAI also argues that Materials breached the contract because the contract states

that Materials “stand[s] behind the recommendations of the [Architectural Woodwork

Institute (‘AWI’)] Architectural Woodwork Quality Standards,” App. A341, and these

standards state that bleached veneers should be avoided because of potential finishing

problems. AAI apparently takes the position that Materials breached the contract by

                                              6
selling bleached veneers because the AWI standards discourage the use of bleached

veneers. The sole purpose of the contract, however, was the sale of bleached veneers. To

conclude that Materials was prohibited from selling such products because of its general

statement that it “stand[s] behind” AWI’s recommendations would be illogical and thus

unreasonable. We are obligated to give the contract a “reasonable construction,” Mellon

Bank, N.A. v. Aetna Bus. Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980) (citation

omitted), and it is not reasonable to conclude that a contract for the sale of bleached

veneers simultaneously prevents the sale of bleached veneers. See id. at 1012 n.13 (“If

no ‘reasonable’ alternative meanings are put forth, then the writing will be enforced as

the judge reads it on its ‘face.’” (citation omitted)). Accordingly, we agree with the

District Court that these standards are not a strict limitation on the products Materials is

permitted to sell. Therefore, we will affirm the District Court’s ruling on AAI’s breach

of contract claim.

                                             III

       For the foregoing reasons, we will affirm the District Court’s order granting

summary judgment in favor of Materials.

                                              7