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American Aerial Services, Inc. v. Terex USA, LLC

United States District Court, D. Maine

August 15, 2014

AMERICAN AERIAL SERVICES, INC., Plaintiff,
v.
TEREX USA, LLC, and THE EMPIRE CRANE COMPANY, LLC, Defendants

Page 96

For AMERICAN AERIAL SERVICES INC, Plaintiff: JOHN A. HOBSON, LEAD ATTORNEY, DAWN M. HARMON, PERKINS THOMPSON, PA, PORTLAND, ME.

For TEREX USA LLC, Defendant: ERIK PETERS, JONATHAN M. DUNITZ, LEAD ATTORNEYS, FRIEDMAN, GAYTHWAITE, WOLF & LEAVITT, PORTLAND, ME; HAROLD J. FRIEDMAN, LEAD ATTORNEY, FRIEDMAN GAYTHWAITE WOLF, PORTLAND, ME; CARY HILTGEN, SCOTT C. SUBLETT, HILTGEN & BREWER PC, OKLAHOMA CITY, OK.

For EMPIRE CRANE COMPANY LLC, Defendant: MICHAEL D. TRAISTER, LEAD ATTORNEY, MURRAY PLUMB & MURRAY, PORTLAND, ME; TERRY J. KIRWAN, JR., KIRWAN LAW FIRM PC, EAST SYRACUSE, NY.

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ORDER ON THE DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

JON D. LEVY, UNITED STATES DISTRICT JUDGE.

This matter is before the court on the Motions for Summary Judgment filed by the defendants, Terex USA, LLC (" Terex" ) and The Empire Crane Company, LLC (" Empire" ) (ECF Nos. 87 and 89, respectively). After careful review, I conclude that the defendants' motions should be GRANTED IN PART and DENIED IN PART.

I. INTRODUCTION

The plaintiff, American Aerial Services, Inc. (" American Aerial" ) is a Maine company which supplies cranes and labor for the construction of steel buildings and other steel structures, and also rents cranes.

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Pl.s Opp'n. Br., ECF No. 93 at 2. In late 2011, the president and founder of American Aerial, James Read (" Read" ), decided to purchase a new crane to replace two existing cranes in American Aerial's fleet. Read Dep., ECF No. 80-1 at 12-13. One of the cranes that Read was interested in and eventually purchased was the crane which is the subject of this lawsuit -- a Terex Model T-780 truck crane (" the Crane" )[1] manufactured by Terex. ECF No. 93 at 2-3.

In December 2011, Read contacted Chet Zerrillo, a salesman working for Empire, which is an authorized Terex dealer for the northeast United States, including the State of Maine. ECF No. 93 at 3. Shortly after speaking with Read about the potential purchase of a new crane and his interest in the Terex T-780, Zerrillo emailed Read on December 14, 2011, stating that, " [w]e found 1 T-780. It is at the factory, having just come off the line. I will not know until tomorrow if we can get it (however the dealer that ordered it has gotten many units from us)[.] I will not know the specs, or the price until tomorrow." ECF No. 95-7 at 2. Zerrillo attached to his email a Terex advertising brochure (the " Data Sheet" ) which included the Crane's various specifications and information about its lifting capacity, which was presented in the form of a " load chart." ECF No. 93 at 3. Read stated that the Data Sheet was " a primary factor" in his decision to purchase a T-780. Id. at 4. Each page of the Data Sheet containing load chart information also contained a disclaimer at the bottom which read, in small print, " [d]ata published herein is intended as a guide only and shall not be construed to warrant applicability for lifting purposes." Data Sheet, ECF No. 75-4 at 8-17.

Unknown to American Aerial, and contrary to Zerrillo's December 14 email, the Crane had not " just come off the line" and was not at the Terex factory, but instead was parked on a nearby storage lot. ECF No. 77-2 at 16. The Crane had actually been built five months earlier in July 2011, when it was purchased by a Terex distributor, Cropac Equipment, Inc. (" Cropac" ), and was then parked and stored on Cropac's storage yard awaiting a final purchaser. Id.; ECF No. 77-3 at 48.

On December 16, just two days after Zerrillo sent his email to Read, American Aerial signed a one-page sales contract with Empire to purchase the Crane for $615,000.00. ECF No. 77-1. The contract did not contain any language concerning warranties, warranty exclusions or limitations. Id. Approximately one week later, both parties agreed to a contract modification, whereby Empire agreed to deliver the Crane to American Aerial in Maine " no later than 11:49 pm on December 31, 2011." ECF No. 95-8 at 2. American Aerial took delivery at its headquarters in Gray, Maine on December 30. ECF No. 93 at 4.

On January 6, 2012, a technician from Empire came to Maine to perform a delivery inspection of the Crane, and determined that the Crane's engine was 22 quarts low on coolant and had likely been driven from Iowa to Maine in that condition. ECF No. 95 at 5-6, ¶ ¶ 20, 22-25. The same day, Read wrote a letter to Zerrillo to announce that he was " revoking the acceptance" of the Crane due to a partially shredded serpentine belt in the engine and the fact that the Crane had apparently been driven 1500 miles without

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adequate coolant in the engine. ECF No. 95-9 at 3. In an accompanying email sent to Zerrillo later the same day, Read stated that his primary reason for sending the letter was " to preserve all of the rights of American Aerial Services to ensure that it received what it paid for and to timely notify all concerned parties of the problem." ECF No. 95-10 at 2.

In late February 2012, Read emailed Zerrillo again, stating that the recently-replaced serpentine belt in the Crane's engine had disintegrated again and that " the roof of the driver's cab leaks, the jib will not retract properly, the boom is not fully retracting, fluid leaks under the engine, the boom sheaves slides [sic] side to side during operation causing the cable to fall off the boom and the smell of coolant is wafting through the air as the engine ran [sic]." ECF No. 95-11 at 2. Throughout March, April, and May 2012, Read spoke by telephone with Empire personnel about the Crane's multiple problems. ECF No. 95 at 8, ¶ 33. In June 2012, Read sent an email to Luke Lonergan, Empire's owner, regarding " issues that remain unresolved with the [Crane] that I purchased from you," and stating additional alleged problems with the Crane, including a bent pulley, a faulty driver cab door, and an allegedly defective lock on the crane boom. ECF No. 95-12 at 2.

In August 2012, American Aerial hired a third-party vendor, Certified Boom Repair Service Northeast, LLC (" Certified Boom" ), to repair damage to the " rooster sheave," a component of the Crane which bolts to the top of the main telescoping boom. ECF No. 95 at 9, ¶ 41. In the course of making these repairs, service personnel at Certified Boom informed Read that certain welds on the Crane's main boom and jib were defective. Id. at ¶ 42. The Crane was then inspected two weeks later by Ed Fleischer, a Terex Technical Support Representative, who met with Read to review all of American Aerial's complaints about the Crane. Def.'s Stmt. Undisp. Mat. Fact, ECF No. 88 at 13, ¶ 69.

Two days after Fleischer inspected the Crane on behalf of Terex, American Aerial hired its own consultant, Roaring Brook Consultants, Inc. (" Roaring Brook" ), to inspect the Crane. ECF No. 95 at 10, ¶ 46. As part of its inspection, Roaring Brook performed a " load test" to determine whether or not the Crane could safely lift the amount of weight for which it was rated. Id. at 11, ¶ 50. Paul Roberts, the Roaring Brook inspector, testified that he ended the load test early when the Crane was lifting only 60% of its rated capacity because he was concerned about the Crane rolling over. Roberts Dep., ECF No. 82-1 at 12-13.

In mid-September, Fleischer submitted a written report to Empire regarding American Aerial's complaints with the Crane. Fleischer Rept., ECF No. 78-11. The report recommended that an authorized dealer of the engine manufacturer replace a fan shroud which covered the engine's radiator and otherwise " troubleshoot" the Crane's engine. ECF No. 78-11 at 3 and 10. With regard to the other alleged defects, Fleischer suggested variously that the problem had already been repaired; or that it was the result of " operator error; " or was the result of unspecified " unknown repairs; " some of the asserted defects did not exist; or that the problem could be corrected by " dressing up the bad areas." See id. at 2-10. In short, the Fleischer report suggested that Cummins, Inc., the manufacturer of the Crane's engine, should perform work on the Crane and do follow-up troubleshooting, but that there was no corrective work for Terex to perform.

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Empire did not deliver Fleischer's report to American Aerial because American Aerial did not provide Empire with information it had requested regarding the repairs performed by Certified Boom. ECF No. 103 at 16, ¶ 57. Instead, by email dated September 17, 2012, Empire offered to replace the fan shroud covering the engine's radiator and attempt to fix an " outrigger switch" that Read had complained of previously. ECF No. 95-17 at 2. Read declined, stating that " these repairs . . . will have no material effect on the usability of the crane." Id. When Read received no further proposed action to address the Crane's alleged defects, American Aerial filed this lawsuit in the Cumberland County Superior Court on October 25, 2012. ECF No. 3-1. The case was removed to this court on November 27, 2012. ECF No. 1.

II. SUMMARY JUDGMENT STANDARD

A. Federal Rule of Civil Procedure 56

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); Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). " A dispute is genuine if 'the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party.'" Johnson v. University of Puerto Rico, 714 F.3d 48, 52 (1st Cir. 2013) ( quoting Thompson v. Coca-Cola Co., 522 F.3d 168, 175 (1st Cir. 2008)). " A fact is material if it has the potential of determining the outcome of the litigation." Id. ( quoting Maymi v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008)).

The party moving for summary judgment must demonstrate an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether this burden is met, the court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Johnson, 714 F.3d at 52. Once the moving party has made a preliminary showing that no genuine issue of material fact exists, the nonmovant must " produce specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue." Brooks v. AIG SunAmerica Life Assur. Co., 480 F.3d 579, 586 (1st Cir. 2007) ( citing Clifford v. Barnhart, 449 F.3d 276, 280 (1st Cir. 2006)); Fed.R.Civ.P. 56(c). " As to any essential factual element of its claim on which the nonmovant would bear the burden of proof at trial, its failure to come forward with sufficient evidence to generate a trialworthy issue warrants summary judgment to the moving party." In re Spigel, 260 F.3d 27, 31 (1st Cir. 2001) (citation and internal punctuation omitted).

B. Local Rule 56

The evidence that the court may consider in deciding whether genuine issues of material fact exist for purposes of summary judgment is circumscribed by the local rules of this district. See Loc. R. 56. The moving party must first file a statement of material facts that it claims are not in dispute. See Loc. R. 56(b). Each fact must be set forth in a numbered paragraph and supported by a specific record citation. See id. The nonmoving party must then submit a responsive " separate, short, and concise" statement of material facts in which it must " admit, deny or qualify the facts by reference to each numbered paragraph of the moving party's statement of material facts[.]" Loc. R. 56(c). The nonmovant likewise must support each denial or qualification with an appropriate record citation. See id. The

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nonmoving party may also submit its own additional statement of material facts that it contends are not in dispute, each supported by a specific record citation. See id. The movant then must respond to the nonmoving party's statement of additional facts, if any, by way of a reply statement of material facts in which it must " admit, deny or qualify such additional facts by reference to the numbered paragraphs" of the nonmovant's statement. See Loc. R. 56(d). Again, each denial or qualification must be supported by an appropriate record citation. See id.

Local Rule 56 directs that " [f]acts contained in a supporting or opposing statement of material facts, if supported by record citations as required by this rule, shall be deemed admitted unless properly controverted." Loc. R. 56(f). In addition, " [t]he court may disregard any statement of fact not supported by a specific citation to record material properly considered on summary judgment" and has " no independent duty to search or consider any part of the record not specifically referenced in the parties' separate statement of fact." Id.; see also, e.g., Borges, ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010); Fed.R.Civ.P. 56(c)(2) (" If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion[.]" ).

III. LEGAL ANALYSIS

A. Agency Law

In order to rule on Terex and Empire's respective motions for summary judgment, it is necessary to first address the parties' arguments for and against the existence of an agency relationship between Terex and Empire.

Agency is a fiduciary relationship resulting from " the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." J& E Air, Inc. v. State Tax Assessor, 2001 ME 95, 773 A.2d 452, 456 (Me. 2001) (quotation omitted). An agency-principal relationship may be based upon either actual or apparent authority. Libby v. Concord Gen. Mut. Ins. Co., 452 A.2d 979, 981 (Me. 1982). In this case, there is no dispute as to the absence of actual authority. ECF No. 93 at 12; ECF No. 102 at 1. Instead, the parties dispute whether Empire was the agent of Terex pursuant to apparent authority.

Apparent authority is that " which, though not actually granted, the principal knowingly permits the agent to exercise or which he holds him out as possessing." Steelstone Industries, Inc. v. North Ridge Ltd. Partnership, 1999 ME 132, 735 A.2d 980, 983 (Me. 1999) ( quoting Williams v. Inverness Corp., 664 A.2d 1244, 1246 (Me. 1995)). " Apparent authority exists only when the conduct of the principal leads a third party to believe that a given party is his agent." Id. (emphasis omitted). It exists " only to the extent that it is reasonable for the third person dealing with the agent to believe that the agent is authorized." Restatement (Second) of Agency § 8, comment c (1958).

American Aerial argues that Empire was the agent of Terex based upon the following alleged conduct: Terex allowed Empire to be an authorized Terex dealer; Terex listed Empire on the " dealer locator" section of its website; Terex allowed Empire to display the Terex name and logo on Empire's website and in its retail locations; Terex supplied promotional materials such as the Data Sheet for Empire to use in selling its products; and Terex maintained control over warranty

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issues involving its products that Empire sold. ECF No. 93 at 12-13. To support the notion that such conduct could reasonably lead a third party to believe that an agency relationship existed, American Aerial cites Williams v. Inverness Corp., 664 A.2d 1244 , supra, where the Law Court found apparent authority between Inverness Corporation, a manufacturer of earrings and ear-piercing kits, and a jewelry store owner who used and sold Inverness products. Id. at 1244-45. The court based its finding of apparent authority on the fact that the jewelry cart owner used Inverness' training program, purchased ear-piercing equipment directly from Inverness, and gave third-party customers both a release form and after-care instructions that were furnished by Inverness and which bore Inverness' name. Id. at 1247.

Here, by contrast, there is no such evidence that Terex trained Empire personnel or sold equipment directly to Empire. None of the documents signed by American Aerial's principal, James Read, featured the Terex logo or even mentioned Terex other than to identify the type of crane being sold. Modified Contract, ECF No. 95-8 at 2. Although Terex did supply Empire with its Data Sheet, which Empire in turn furnished to American Aerial, this alone is not a sufficient basis upon which to reasonably believe that an agency relationship existed, according to American Aerial's own cited authority. See Malmberg v. American Honda Motor Co., Inc., 644 So.2d 888, 891 (Ala. 1994) (" although there was evidence that Honda logos were displayed upon signs, literature, products, brochures, and plaques at the [co-defendant's] place of business, that evidence was not sufficient, in itself, to create an inference of agency." ) (quotation and emphasis ...


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