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Mastercraft Furniture, Inc. v. SABA North America, LLC

United States District Court, District of Oregon

March 31, 2015

MASTERCRAFT FURNITURE, INC., an Oregon corporation, Plaintiff,
v.
SABA NORTH AMERICA, LLC, a Michigan limited liability company, Defendant.

Renee E. Rothauge Adam M. Starr Markowitz Herbold PC Attorneys for Plaintiff

Glenn E. Barger Barger Law Group, PC Mark H. Verwys, Plunkett Cooney Attorneys for Defendant

OPINION AND ORDER

ANN AIKEN UNITED STATES DISTRICT JUDGE

Plaintiff Mastercraft Furniture, Inc. ("Mastercraft") filed suit against SABA North America, LLC ("SABA"), alleging breach of contract and breach of the implied covenant of good faith and fair dealing. Plaintiff seeks damages, interest on its damages, and declaratory relief. Plaintiff now moves for partial' summary judgment pursuant to Fed.R.Civ.P. 56 on: (1) plaintiff's first claim for breach of contract on the issue of liability only; (2) plaintiff s second claim for breach of the covenant of good faith and fair dealing "on the issue of liability only; and (3) defendant's fifth affirmative defense, asserting limitation of liability. Defendant opposes plaintiff's motion.

Plaintiff's motion for partial summary judgment on the matters listed above is granted.

I. BACKGROUND

Mastercraft is a furniture company located in Stayton, Oregon, which builds and supplies furniture for companies including IKEA. As a part of its agreement with IKEA, Mastercraft must follow IKEA's manufacturing and sourcing requirements, some of which prohibit Mastercraft from using products in its furniture that contain certain chemicals, including diisobutyl phthalate ("DIBP").

SABA North America, LLC, is a limited liability company located in Michigan which is an international manufacturer and supplier of adhesive. SABA North America, LLC is a subsidiary of SABA International BV, which is owned by SABA Dinxperlo BV. Sometime during 2012, Mastercraft and SABA entered into negotiations for SABA to supply adhesive to Mastercraft, which Mastercraft would use when building and supplying furniture to IKEA, one of its main customers. On July 2, 2012, SABA presented a quote to Mastercraft. On July 17, 2012, Matercraft agreed with the quote and signed the Equipment Agreement. Subsequently, SABA signed the Equipment Agreement.

On July 20, 2012, James Turner, the President of SABA, signed the IWAY/Mastercraft Vendor Agreement. As part of the agreement, SABA received IKEA'S Specifications document, identifying the chemical compound and substances that IKEA prohibits the use of in its products, including DIBP. SABA Dinxperlo BV signed and acknowledged receiving the Specifications document.

Between August 13, 2012 and March 2013, Mastercraft and SABA entered into a series of contracts for the purchase, sale, 'shipment of, and payment for 16 totes of Sababond 3175, the agreed-upon adhesive product. The backside of SABA's invoices contained "Terms and Conditions of Sale" in small print. Olson Decl. at 8, Ex. 3. At the top of the Terms and Conditions is a paragraph entitled "Offer and Acceptance." Olson Decl. Ex. 3; Turner Aff., Ex. 5. The first line of that paragraph states, "Seller's [SABA's] offers are made strictly on the terms and conditions stated herein and no others. Acceptance of Seller's offers [by Mastercraft] is strictly limited to the terms and conditions stated herein and no others." Id. The seventh paragraph of the Terms and Conditions attempts to limit damages' for defective adhesive products to the amount of the purchase price of the product. Id. Mastercraft, without reading the Terms and Conditions, paid for the adhesive and incorporated it into its furniture. Olson Decl. at 8.

In September 2012, IKEA conducted a routine test of Mastercraft's furniture and found DIBP in Mastercraft's furniture. After further testing, it was determined that SABA was the source and cause of the DIBP. On April 11, 2013, Jim Turner, SABA's President, sent an email to Mastercraft's President stating that some of the adhesive orders shipped by SABA mistakenly contained DIBP. On August 14, 2014, plaintiff filed this suit.

II. STANDARD

Summary judgment is appropriate "if the movant shows that 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). A court may grant judgment to a party on all or part of a claim. Id. The substantive law on an issue determines the materiality of a fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). A factual dispute is genuine if the evidence is such that a reasonable jury could determine the issue in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden, the . nonmoving party must go beyond the pleadings and ...


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