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Magno-Humphries, Inc. v. Apex Label & Systems, Inc.

Court of Appeals of Oregon

March 11, 2015

MAGNO-HUMPHRIES, INC., an Oregon corporation, dba Magno-Humphries Laboratories, Inc., Plaintiff-Appellant,
APEX LABEL & SYSTEMS, INC., dba Tapp Technologies Portland, Defendant, and ALS HOLDING, INC., an Oregon corporation, fdba Apex Label & Systems, Inc., dba Tapp Technologies Portland; and Tapp Technologies, Inc., a foreign business entity, dba Adams Labels, dba Apex Label & Systems, Defendants-Respondents

Argued and Submitted July 24, 2014.

Washington County Circuit Court C092777CV. Suzanne Upton, Judge.

Terrence Kay argued the cause and filed the briefs for appellant.

Jennifer J. Roof argued the cause for respondents. With her on the brief were Michelle Barton Smigel and Miller Nash LLP.

Before Ortega, Presiding Judge, and DeVore, Judge, and Garrett, Judge.


Page 1140

[269 Or.App. 563] DEVORE, J.

Plaintiff brought an action with limited success for breach of contract against two of three related companies. Plaintiff alleged that it had received defective labels from defendants, ALS Holdings, Inc., formerly doing business as Apex Labels & Systems, Inc. (Apex), and its parent company, Tapp Industries, Inc., (Tapp). Plaintiff did not bring a claim against a third company, Adams Labels (Adams), which was inactive, had been a subsidiary of Tapp, and had also sold labels to plaintiff. Plaintiff appeals from the judgment, assigning error to the court's order that granted defendants' motion for partial summary judgment on two issues. First, the order enforced a contract provision that limited plaintiff's damages to the price of the defective labels, $8,304.01, and, second, the order determined that plaintiff has no recourse against defendants for plaintiff's contracts with the non-party Adams.

Given the legal and procedural issues presented, we review for errors of law. Jones v. GMC, 325 Or. 404, 408, 939 P.2d 608 (1997). For context, we recount plaintiff's arguments below, but reject plaintiff's arguments on the first issue without written discussion. We address the second issue, but we conclude that plaintiff's arguments involving Tapp's liability for Adams are not supported, so as to present a genuine issue of material fact, or are not properly presented, so as to permit review. In the end, we agree with the trial court on both issues and affirm.

The dispositive facts are undisputed. Plaintiff manufactures vitamins, supplements, and over-the-counter products. Apex prints labels for pharmaceutical companies, and Tapp, the parent corporation, prints wine and food labels. Adams, formerly a subsidiary of Tapp, became inactive after selling its assets to Tapp in a " Distribution Agreement" in December 2006.

Beginning in March 2006, plaintiff purchased labels from Apex through a series of eight purchase orders. Plaintiff purchased labels from non-party Adams in two other purchase orders. In the typical scenario, when plaintiff would ask a price, Apex would respond with a quotation, detailing the quantity, price, and terms, and plaintiff would reply with [269 Or.App. 564] a purchase order. The Apex quotation forms included the statement, " Liability for defective product is limited to the price charged for the labels and/or labeling products only." At the time of the transactions, plaintiff did not dispute the provision for limitation of liability. As it happened, the Adams forms lacked such a provision to limit liability.

The labels were double-sided so as to allow a consumer to peel back the label for more information about the product. Plaintiff claimed that, in late 2006, the labels were defective, because they would tear, stick, or not open properly. In 2008, a recall ensued. Plaintiff filed this action against Apex and Tapp, alleging damages of $1,105,000 from the recall, lost net income, and lost future sales.

In the first of three rounds of motions for summary judgment on a variety of issues, the trial court determined that plaintiff owed Apex $34,914.79 for failure to pay for labels. In a second round of motions, plaintiff sought partial summary judgment, contending that parent company Tapp was liable as an assignee who had assumed Adams' responsibility on its label sales. About the same time, Apex and Tapp sought summary judgment, renewing earlier arguments that liability should be limited to the price of the defective ...

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