WTI, Inc. v. Jarchem Industries, Inc.
2:10-cv-00238
N.D. Ga.Jul 30, 2012Background
- WTI, Inc. sues Jarchem Industries, Inc. over sodium diacetate used in WTI's IONAL product line.
- Jarchem allegedly sold sodium diacetate that did not meet FCC/FDCA standards; WTI had a continuing product guaranty as of each shipment.
- On Feb. 9, 2009, WTI ordered sodium diacetate (purchase orders 2889–2891) and received 810 bags under PO 2891 with a certificate stating FCC conformity.
- WTI later discovered turbidity and contaminants (parasitic wax with iron/aluminum/silicon) in diacetate solution used in Tyson Foods’ products, leading to recalls and credits.
- WTI filed multiple claims including breach of warranties, negligence, and contract, while Jarchem counterclaimed for breach of contract; various motions followed, including for summary judgment and to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing law for warranties and waiver | WTI argues NY law governs; SOA may limit liability. | Jarchem argues Georgia law or some waiver; but accepts NY law applies if terms conflict. | NY law governs; warranty disclaimer not conspicuous and not controlling under NY law. |
| Economic loss rule applicability to negligence | Plaintiff contends damages extend beyond the product itself, avoiding the economic loss rule. | Rule bars purely economic losses in tort absent property or personal injury. | Economic loss rule does not bar due to damages to others’ products and properties; genuine issue of material fact remains. |
| Causation and product adulteration evidence | Contamination (paraffinic wax with metals) caused damages in Tyson and WTI products. | Turbidity may have resulted from high concentration use; adulteration not conclusively proven. | Issues of material fact preclude summary judgment on causation/adulteration. |
| Amendment and scope of discovery after scheduling order | New evidence from Lamb deposition supports more claims; amendment should be allowed. | Late amendment after close of discovery; futile or prejudicial. | Court grants amendment; discovery extended for 60 days; some related motions denied or granted accordingly. |
Key Cases Cited
- Busbee v. Chrysler Corp., 524 S.E.2d 539 (Ga. Ct. App. 1999) (economic loss rule overview in Georgia torts case law)
- Long v. Jim Letts Oldsmobile, Inc., 217 S.E.2d 602 (Ga. Ct. App. 1976) (economic loss rule application guidance)
- Squish La Fish, Inc. v. Thomco Specialty Prods., Inc., 149 F.3d 1288 (11th Cir. 1998) (economic loss / tort vs. contract distinctions in product disputes)