273 F. Supp. 3d 627
N.D. Miss.2017Background
- Steel Dynamics (buyer) contracted with Altech (seller) in August 2010 for two continuous emissions monitoring systems (CEMS) required by Steel’s Title V air permit; systems installed in 2011.
- From 2011–2013 the CEMS repeatedly malfunctioned (notably NOx measurement and DAS/computer software), numerous service visits occurred, and Altech attempted repairs under warranty but problems persisted.
- Steel received a Notice of Violation from the Mississippi Department of Environmental Quality in June 2013, negotiated and paid a $135,000 fine, and retained third parties for interim emissions testing.
- Steel sued for negligence, breach of contract (express contractual warranty), breach of implied warranties (merchantability and fitness), and contractual indemnity; bench trial held in June 2016.
- Court dismissed contractual indemnity at close of plaintiff’s case; after trial the court dismissed negligence and implied-warranty claims but found Altech breached the express contractual warranty that the CEMS would be suitable for the Title V purpose.
- Damages: the court awarded $83,320.27 (incidental costs and third-party testing), denied recovery for the purchase price, the MDEQ fine, attorney’s fees, and consequential damages beyond proven amounts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligence claim viable separate from contract | Altech’s performance breached a duty; contractual obligations can satisfy negligence duty | Breach of contract alone is not a tort unless there is an independent tort duty; no separate duty or careless performance alleged | Negligence claim dismissed — no independent tort duty proven; mere contract breach not tort |
| Whether implied-warranty claims barred by contract terms | Implied-warranty disclaimers invalid under Mississippi law (§ 75-2-719(4)) | Terms expressly disclaim implied warranties; § 75-2-719(4) does not bar disclaimers of liability in non-consumer sales | Implied-warranty claims dismissed — contractual disclaimer enforced (§ 11-7-18 inapplicable; § 75-2-719(4) construed as limiting remedies, not liability) |
| Whether express limited remedy (repair/replace) bars broader relief | Limited remedy failed of essential purpose; buyer entitled to other UCC remedies | Contract limits remedies to repair/replace and caps liability to purchase price; consequential damages disclaimed | Repair-or-replace remedy failed of essential purpose after repeated unsuccessful attempts; buyer may pursue UCC remedies (limitations inoperative) |
| Measure and extent of recoverable damages for breach of warranty | Seeks purchase price, incidental and consequential damages (including MDEQ fine and attorneys’ fees) | Damages limited by contract and plaintiff failed to prove causation/amount with reasonable certainty | Awarded $83,320.27 for provable incidental costs and third-party testing; purchase price and MDEQ fine/attorney fees denied for lack of proof of value/wrongful causation |
Key Cases Cited
- Duckworth v. Warren, 10 So.3d 433 (Miss. 2009) (elements of negligence under Mississippi law)
- Clausell v. Bourque, 158 So.3d 384 (Miss. Ct. App. 2015) (contract breach not actionable in tort absent independent duty)
- Hazell Machinery Co. v. Shahan, 161 So.2d 618 (Miss. 1964) (contractual duties vs. tort duties analysis)
- Montgomery v. Citi‑Mortgage, Inc., 955 F.Supp.2d 640 (S.D. Miss. 2013) (failure to use reasonable care in contract performance can support tort duty)
- Massey‑Ferguson, Inc. v. Evans, 406 So.2d 15 (Miss. 1981) (statutory limitations on disclaimers and consequential damages under Mississippi law)
- Mercury Marine v. Clear River Construction Co., 839 So.2d 508 (Miss. 2003) (when limited remedy fails of essential purpose, buyer may seek UCC remedies)
- Delhomme Industries v. Houston Beechcraft, Inc., 669 F.2d 1049 (5th Cir. 1982) (test for whether limited remedy failed of essential purpose; value/conformity measure under UCC)