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Vanguard Transportation Systems, Inc. v. Volvo Trucks North America

August 14, 2006

VANGUARD TRANSPORTATION SYSTEMS, INC., PLAINTIFF,
v.
VOLVO TRUCKS NORTH AMERICA, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Graham

OPINION AND ORDER

This matter is before the Court on Defendant Volvo Trucks North America, Inc.'s, a Division of Volvo Group North America, Inc. ("VTNA") motion for summary judgment (Doc. 56). Plaintiff Vanguard Transportation Systems, Inc. ("Vanguard") has also moved this Court for leave to file a sur-reply brief with respect to VTNA's motion for summary judgment (Doc. 65).

I. Vanguard's Claims and Procedural Background

This case concerns numerous commercial truck tractor units ("trucks") assembled by VTNA that Vanguard acquired over a number of years. In Vanguard's Verified Complaint, it alleges that VTNA, itself and through its "agents" Jack Conaghan ("Conaghan") and Kamps Truck Centers, Inc. ("Kamps"), represented, assured, and warranted to Vanguard that the trucks at issue were fully tested; would meet or surpass high industry performance standards with regard to durability, maintenance requirements, and downtime; were improving in quality each year; and would be "defect free." Vanguard argues it relied on these representations in acquiring these trucks though lease-purchase agreements or financing. Vanguard also claims that it informed VTNA, Conaghan, and Kamps of its intended uses for the trucks and that VTNA warranted that the trucks would be fit for this particular purpose.

Vanguard argues the trucks were materially defective by virtue of the following: "electrical problems, torque problems, water separation for fuel system problems, defective drive shafts, defective differentials, defective release bearings, defective transmissions, cylinder oil distribution problems, defective cabs, fire hazard problems, defective U-bolts, injector problems, poor front end alignment, defective front bumpers, defective side farings, and defective electrical dashboard systems." Vanguard alleges that VTNA knew or should have known from testing the trucks that they were defective.

Vanguard maintains that due to these defects, it incurred over $500,000.00 in damages resulting from: severe and extensive downtime; cost increases related to having to use more trucks or substitutes; losses from customers refusing to book business that would involve VTNA trucks; a fire causing total loss to one truck; expenses to transport, lodge, and feed drivers abandoned by downed trucks; towing, repair, and labor costs; loss of qualified drivers who refuse to drive the VTNA trucks; and a reduced residual value on the trucks after their leases expired or the financing loans were paid in full.

Vanguard claims: VTNA has not honored its written warranty to provide it with "defect free" trucks; VTNA failed to abide by its implied and express warranties to provide competitive and tested units; VTNA's limited warranty "failed of its essential purpose," and is not enforceable; VTNA failed to establish a nationwide used truck market as well as a market to support maintenance, repair, and parts systems to support its warranties; and VTNA failed to honor its written warranty when confronted with demands to do so by Vanguard. Finally, Vanguard claims that when it informed VTNA's president, Mark Gustafson, of the alleged defects, Gustafson promised to remedy the defects, but failed to do so.

Vanguard alleges breach of express warranty and alternatively, breach of contract. In its alternative breach of contract claim, it states that it entered into an express contract with VTNA to acquire trucks of high quality and that VTNA materially breached this contract by conveying substandard trucks to Vanguard. Vanguard further alleges it was unable to mitigate its damages because VTNA failed to make replacement parts or vehicles available. Vanguard maintains that it confronted VTNA with evidence of the truck failures and VTNA, through "agents" Kamps and Conaghan, promised to reimburse Vanguard, but has since refused to do so.

Vanguard filed this case in the Western District of Michigan (Doc. 1). VTNA initially moved for dismissal due to lack of personal jurisdiction and improper venue (Doc. 4). The court denied VTNA's motion (Doc. 22). Upon VTNA's motion to change venue pursuant to 28 U.S.C. § 1404(a) (Doc. 23), the case was transferred to this Court (Doc. 33).

II. Summary Judgment Standard

Under Fed. R. Civ. P. 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See LaPointe v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir. 1993); Osborn v. Ashland County Bd. of Alcohol, Drug Addiction & Mental Health Servs., 979 F.2d 1131, 1133 (6th Cir. 1992)(per curium).

The moving party has the burden of showing that there are no genuine issues of material fact in the case. LaPointe, 8 F.3d at 378. The moving party may meet its burden by showing that the nonmoving party lacks evidence to support an essential element of its case. Barnhart v. Pickrel, Schaeffer & Ebeling Co., L.P.A., 12 F.3d 1382, 1389 (6th Cir. 1993).

In response, the nonmoving party "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must 'present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" Street v. J. C. Bradford & Co., 886 F.2d 1472, 1476 (6th Cir. 1989) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986)). The Court must view the evidence, all facts, and any inferences that may permissibly be drawn from the facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). See also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456 (1992).

In reviewing summary judgment motions, "this Court must determine whether 'the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993)(quoting Anderson, 477 U.S. at 251-52). However, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48 (emphasis in original); see generally Booker v. Brown & Williamson Tobacco Co., Inc., 879 F.2d 1304, 1310 (6th Cir. 1989).

Thus, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252. See also Gregory v. Hunt, 24 F.3d 781, 784 (6th Cir. 1994).

Finally, a district court considering a motion for summary judgment may not weigh evidence or make credibility determinations. Adams v. Metiva, 31 F.3d 375, 379 (6th Cir. 1994).

III. Facts of the Case

The following facts have been gleaned from the admissible evidence in this matter, consisting of the evidence presented by VTNA in support of its motion for summary judgment and statements from Vanguard's Verified Complaint that are not conclusory, hearsay, or otherwise inadmissible.

Vanguard is an Ohio corporation with offices in Cincinnati, Ohio. VTNA is a Delaware corporation with its principal place of business in Greensboro, North Carolina. VTNA assembles "heavy trucks, with diesel engines, typically used to haul materials, such as loads of freight, several thousand pounds worth, via attached trailers that commonly are in lengths in the range of 45 to 50 feet." (Def. Mot. for Summ. J., Ex. 2, Second Affidavit of Heino W. Scharf, Feb. 10, 2006 ("Second Scharf Aff.") ¶¶ 5, 9.) VTNA markets and represents that these are fully tested quality trucks, meeting industry standards for corporate vehicles and the attendant performance requirements. VTNA markets its products in various media markets within the United States through print and television advertising.

Vanguard acquired twenty-one VTNA-assembled trucks, which are the subject of this dispute.*fn1 (Verified Compl. ¶ 6; Second Scharf Aff. ¶¶ 5-6, Ex. A.) All of the subject trucks were acquired through dealerships in either Ohio or Georgia. One such dealership was Kamps Trucks Centers, Inc. ("Kamps"), owned by James Kamps, in Fairfield, Ohio.

Vanguard claims VTNA made representations through "agents" including Jack Conaghan, the Regional Vice President of Sales for VTNA whose sales territory included Fairfield, Ohio, and Kamps. Vanguard relied on VTNA's advertising and the representations of VTNA, through the affidavit of Heino Scharf, VTNA's Director, Product Assurance, submitted a spreadsheet (Exhibit A to his Affidavit) of VTNA trucks acquired by Vanguard "claimed to be involved in this litigation" ascertained through discovery from Vanguard in this matter. (Second Scharf Aff. ¶¶ 5-6; see also Def. Mot. for Summ. J., Ex. 1, Affidavit of Thomas L. Davis). Exhibit A to Scharf's affidavit "is the referenced compilation of data pertaining to the Vanguard trucks using the VIN numbers supplied to VTNA from information supplied to it in response to discovery." (Id. ¶ 6.) Twenty-one individual trucks are identified in Exhibit A; these trucks were put into service, defined by Scharf as the "date the customer took physical possession of the truck," in 1998, 1999, and 2001. (Id.; Id. at Exhibit A.)

Vanguard has thus failed to show that there is a genuine dispute of material fact as to which VTNA trucks are at issue, how many trucks are at issue, and when these trucks were put into service, and the Court will only consider the twenty-one trucks identified by VTNA in this claim.

The serial numbers of the trucks at issue, with the in-service dates listed in parentheses, are as follows: 238771 (Aug. 31, 1999); 238772 (Aug. 31, 1999); 238773 (Aug. 31, 1999); 308913 (Mar. 19, 2001); 308914 (Mar. 19, 2001); 771016 (May 26, 1998); 771017 (May 26, 1998); 771018 (May 26, 1998); 771019 (May 26, 1998); 771020 (May 26, 1998); 771021 (May 29, 1998); 771022 (May 29, 1998); 771023 (Jun. 4, 1998); 782611 (Oct. 30, 1998); 782612 (Oct. 30, 1998); 782613 (Oct. 30, 1998); 782614 (Oct. 30, 1998); 782615 (Oct. 30, 1998); 782616 (Oct. 30, 1998); 782617 (Oct. 30, 1998); 782618 (Oct. 30, 1998). (Second Scharf Aff. Ex. A.)

VTNA, Kamps, and Conaghan in acquiring the subject trucks. Vanguard would not have decided to acquire these trucks without a system of "product and warranty support." (Verified Compl. ¶ 48.)

Each of the identified Vanguard trucks would have come with a written, limited warranty. The warranty, attached to Scharf's Affidavit as Exhibit B, states in pertinent part:

[VTNA] warrants each new VN model Volvo truck to be free from defects in material and workmanship under normal use and service up to the periods as specified, provided all required [VTNA] maintenance is followed. All warranty periods are calculated from the date in service . . . .

1. Basic Warranty: 12 Months, or 100,000 Miles, or 161,000 Kilometers, whichever occurs first . . . .

NOTE: LIMITATIONS AND EXCLUSIONS TO THIS WARRANTY APPEAR ON THE REVERSE SIDE OF THIS CERTIFICATE . . . .

THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND REPRESENTATIONS OR CONDITIONS, STATUTORY OR OTHERWISE, EXPRESSED OR IMPLIED INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

(Second Scharf Aff. Ex. B.) (Emphasis in original.) The warranty also stated,

THESE LIMITATIONS AND EXCLUSIONS ARE IMPORTANT AND MUST BE READ AND UNDERSTOOD. LIMITATIONS - [VTNA's] obligation is limited to, at its option, repair or replacement of parts which are acknowledged by it to be defective. In the case of acknowledged defective assemblies, exchange with factory rebuilt units may be given . . . . Warranty repairs performed by the dealer's shop in accordance with the terms of the warranty set forth herein are free of charge. Warranty repairs do not constitute an extension of the original warranty period for the vehicle or any part thereof. Warranty consideration can only be given if the deficiency is brought to the attention of an authorized Volvo Truck dealer immediately upon discovery.

NO PAYMENT OR OTHER COMPENSATION WILL BE MADE FOR CONSEQUENTIAL, INDIRECT OR INCIDENTAL EXPENSES OR DAMAGES OF ANY KIND . . . .

Exclusions . . . Misc. Expense: Road service, towing, meals, lodging, telephone calls, travel time, loss of cargo, downtime, shop supplies, lube oil, lubricants, sealers, anti-freeze, filter elements, and labor performed by a non-approved location are not covered.

Id. (Emphasis in original.) Scharf avers that the time periods on the warranty are "calculated from the date in service." (Second Scharf Aff ¶ 7.)

Scharf notes that customers who purchase or acquire a VTNA truck are to review and sign a warranty registration form, explaining the limitations of the warranty. VTNA has provided such a Warranty Registration, attached as Exhibit C to Scharf's Affidavit, for truck serial number 782618, purportedly signed by Menne on behalf of ...


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