Case Information
*1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO _______________
LITE COOKIES LIMITED, d/b/a JOSEPH’S
LITE COOKIES, d/b/a L&J LITE COOKIES ,
Plaintiff, v. Civ. No. 08-1172 BB/WDS TASSY & ASSOCIATES, INC., d/b/a T&T
CONSULTING, a/k/a T&T CONSULTING &
ENGINEERING, INC.,
Defendant.
MEMORANDUM OPINION
This matter comes before the Court on Defendant’s Motion for Summary Judgment (Doc. 108). Having reviewed the submissions of the parties and the relevant law, the Court finds that Defendant’s motion should be DENIED in part and GRANTED in part .
Summary of Relevant Facts
Plaintiff is a cookie baking operation with factories in New Mexico and Florida. One of the commercial ovens in the New Mexico factory was severely damaged in an accident and required extensive repairs. Plaintiff’s insurance company, Safeco, elected to repair rather than replace the oven. Safeco ultimately retained Defendant to make the repairs.
Plaintiff and Defendant reached an agreement as to the repairs for the oven. They each signed a contract that detailed the scope of work and specific repairs to be made. Doc. 1-3. Defendant wrote that it could put the oven “back in operation.” Id ., p. 1. In the warranty section of the contract, Defendant agreed that it would “warranty its workmanship on this equipment for the period of 90 days from start up against components failures under normal use. The warranty will be limited to the equipment and work.” Doc. 1-3, p. 4.
Defendant endeavored to make the repairs listed in the contract; Defendant’s employees performed repairs on site at the cookie factory and in Defendant’s shop in Illinois. After making *2 the repairs, the oven still did not function properly. It produced cookies that did not meet FDA size and weight requirements. Plaintiff reported the problem to Defendant, and Defendant sent an engineer to Plaintiff’s New Mexico factory in order to make further repairs to the oven. More than one year after the repair contract was signed, the oven was once again up and running.
Plaintiff then filed suit in this Court, alleging breach of contract, New Mexico Unfair Practices Act violations, and professional negligence. Doc. 71. After nearly three years of litigation, the matter still has not been resolved. Defendant has moved the Court for Summary Judgment on all counts of Plaintiff’s complaint. Doc. 108.
Jurisdiction
The Court has jurisdiction over this suit pursuant to 42 U.S.C. § 1332 (“diversity jurisdiction”). Plaintiff maintains cookie factories in New Mexico and Florida, while Defendant is based in Illinois. The amount in controversy well exceeds $75,000.
Standard of Review
Summary judgment is appropriate “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.”
Medina v. Income Support Div
.,
Discussion
I. Malicious and/or Wanton Breach of Contract
Plaintiff alleges that Defendant breached its contractual obligations by failing to restore the oven to its original cookie-baking capacity. Defendant counters that it “had no obligation to fix problems that arose after it repaired [Plaintiff’s] oven, other than replacing parts.” Doc. 108, p. 5. However, the contract between the parties explicitly states that Defendant warranties “equipment and work .” Doc. 1-3, p. 4 (emphasis added). Work is a synonym for labor. Black’s Law Dictionary , 1014 (4th ed. 1968).
The plain language of the contract directly contradicts Defendant’s belief that it warrantied parts and not labor. “[W]here the terms of an agreement are plainly stated, the intention of the parties must be ascertained from the language used.” Levenson v. Mobley , 744 P.2d 174, 176-177 (N.M. 1984). “Absent a finding of ambiguity, provisions of a contract need only be applied, rather than construed or interpreted.” Id. at 177. Thus, there is no reason to look beyond the terms of the contract. Defendant did warranty the equipment it replaced and its repair work on the oven. Doc. 1-3, p. 4 .
Moreover, Defendant agreed that it would “definitely help to put that baking oven and
depositor back in operation.” Doc. 1-3, p. 1. The record indicates that the oven did not produce
cookies of the appropriate size and weight after Defendant made repairs. Plaintiff maintains that
such inadequate performance, on its face, shows that the oven was not “back in operation.”
Although the contract does not contain cookie size and weight specifications, a fact-finder could
infer that the term “back in operation” means production of the same type of cookies, which meet
government requirements.
Cf. Woodbury Chemical Co. v. Holgerson,
Viewing the evidence in the light most favorable to Plaintiff, there remains a material question of fact as to whether Defendant breached its contract with Plaintiff. As such, summary judgment on Plaintiff’s breach of contract claim is inappropriate at this stage.
Count I of Plaintiff’s complaint brings suit for “malicious and/or wanton breach of
contract”; the Court will assume that the cause of action is for breach of contract, while malicious
or wanton breach refers to the requested damages. “New Mexico law allows a plaintiff who
establishes a cause of action in law to recover punitive damages as long as the wrongdoer's
conduct is willful, wanton, malicious, reckless, oppressive, or fraudulent and in bad faith.”
Bogle
v. Summit Investment Co.
, LLC,
Plaintiff asserts that Defendant knew it was breaching the contract by not properly repairing the oven. See, e.g. , Doc. 71 ¶ 41. However, intentional breach of contract by itself is not enough to support an award of punitive damages. See id. at 531 (plaintiff was not entitled to punitive damages where he only showed Defendant’s knowledge of wrong-doing). Plaintiff must show that Defandant’s acts were without justification. See id.
Defendant has not provided a justification for breaching the contract, other than to assert that its labor was not under warranty. As discussed above, the plain language of the contract indicates that the labor was covered in the warranty. Without a justification for breaching the contract, a jury could find that punitive damages were appropriate in this case. The Court will deny summary judgment as to Count I of Plaintiff’s Amended Complaint.
II. New Mexico Unfair Practices Act Violations
Plaintiff makes multiple claims against Defendant pursuant to New Mexico’s Unfair Practices Act, NMSA § 57-12-1 et seq . The Court will address each in turn.
A. Deceptive representations in connection with services, § 57-12-2(D)(4) In the repair contract, Defendant stated that it would repair the oven in 8-10 weeks and that the repairs would cost about $400,000. Doc. 1-3. However, the oven was not repaired until more than a year after the contract was signed. Plaintiff argues this fact alone supports its claim pursuant to NMSA § 57-12-2(D)(4). Defendant counters that the long delay in repairing the oven “was due to unexpected problems and additional work required once [Defendant] began its repair and opened the oven.” Doc. 121, p. 16.
“New Mexico courts have emphasized that the gravamen of an unfair trade practice is a
misleading, false, or deceptive statement made knowingly in connection with the sale of goods or
services.”
Guidance Endodontics, LLC v. Dentsply Intern., Inc.
,
B. Representing that services have characteristics or benefits that they do not have, § 57- 12-2(D)(5)
Plaintiff argues that Defendant made representations that “far exceeded what [it] could in reality offer.” Doc. 116, p. 19. The fact that the repairs took over one year to complete is the basis for this element of Count II of Plaintiff’s complaint. Id . Additionally, Plaintiff argues that Defendant’s statement that Tomas Tassy was an engineer “conferred [Defendant’s] services with a status which in fact [Tomas Tassy] did not possess.” Doc. 116, p. 20.
Defendant states that the repairs took longer than expected due to problems with the oven that were not discovered until it began the repair process. It also argues that Plaintiff did not rely on Tomas’s statement that he is an engineer when contracting with Defendant, so that misrepresentation is irrelevant to this claim. Furthermore, Defendant argues that Mr. Tassy did not misrepresent himself because he did not state he had an engineering degree or was licensed as an engineer; rather, he stated that he is an engineer in the oven-repair industry, which is apparently routine practice among workers in the industry. Doc. 121, p. 15.
Plaintiff has not provided any evidence to show that Defendant knowingly misrepresented
the services it could provide. Although there was certainly confusion as to Mr. Tassy’s
professional status, there is nothing in the record to show he knowingly misrepresented himself.
He did not proclaim to have an academic degree or professional licensure, nor did he include the
initials “P.E.” for “Professional Engineer” after his name. Instead, he used the terminology
common to his industry and referred to himself generally as an engineer. Doc. 121-2, ¶ 4.
Without evidence of a knowing mispresentation, the Court must grant Defendant’s Motion for
Summary Judgment as to this element of Count II of Plaintiff’s complaint.
See Eck
,
C. Representing that services are of a particular standard or quality if they are of another, § 57-12-2(D)(7)
Plaintiff did not make any allegations specific to this claim, so the Court will assume its arguments for similar claims apply to this one as well. As discussed above, Plaintiff must present *7 some evidence to show that Defendant made a knowing misrepresentation as to the standard or quality of its services. Plaintiff has not provided such evidence, so the Court will grant Defendant’s Motion for Summary Judgment on this element of Plaintiff’s Unlawful Practices Act (“UPA”) claim.
D. Stating that services, replacements or repairs are needed if they are not needed, § 57- 12-2(D)(16)
Plaintiff did not make any allegations specific to this claim. On the contrary, the record contains ample evidence that Plaintiff’s oven required extensive services, repairs, and replacement parts. The Court will grant Defendant’s Motion for Summary Judgment on this element of Plaintiff’s UPA claim.
E. Failing to deliver the quality of services contracted for, § 57-12-2(D)(17) Plaintiff and Defendant contracted for repairs that would make the oven functional.
Plaintiff asserts that Defendant failed to deliver a functional quality of services where the oven
did not produce the appropriate size of cookies and contained parts that endangered Plaintiff’s
employees. The record contains evidence that the oven was not functioning properly for over a
year, as well as evidence that the oven was potentially dangerous to Plaintiff’s employees after
the initial repairs were made.
See
Doc. 116-11. However, there is also evidence in the record
that Defendant made multiple attempts to repair the oven, including sending an engineer to
Plaintiff’s factory after the initial repairs failed. Although the repairs were not successful for
quite some time, there is no evidence that Defendant was knowingly deceptive in its attempt to
deliver repair services.
See Guidance Endodontics, LLC
,
F. Committing acts or practices in connection with offering services which to Plaintiff’s detriment results in a gross disparity between the value received and the price paid. § 57-12- 2(E)(2)
Plaintiff did not make any allegations specific to this claim. The record contains evidence that Plaintiff’s oven did eventually work, though it took more than a year of repairs to return it to a working condition. Plaintiff did not dispute the $400,000 cost of repairs, nor did it indicate that the value of its working oven would be worth less than $400,000. As such, there are no facts in the record to support this claim. The Court will grant Defendant’s Motion for Summary Judgment on this element of Plaintiff’s UPA claim.
III. Negligent Misrepresentation in the Inducement
“Negligent misrepresentation is an action governed by the general principles of the law of
negligence. Absent fraud, negligent misrepresentation requires a duty on the part of the person
furnishing information; the person receiving the information must have a right to rely on it.”
R.A.
Peck, Inc. v. Liberty Federal Sav. Bank
,
Plaintiff’s negligent misrepresentation claims fall into two categories: Defendant’s
misrepresentation as to the oven repairs and Mr. Tassy’s misrepresentation as to his
qualifications as an engineer. Regarding the oven repairs, Plaintiff argues that Defendant
misrepresented the fact that it could repair the oven in 8-10 weeks. Doc. 116, p. 119. It is
undisputed that it took Defendant over a year to fully repair the oven. However, there is no
evidence in the record that Defendant “made a misrepresentation of fact intentionally or with
reckless disregard for the truth”–an essential element of a negligent misrepresentation claim.
*9
Saylor,
As discussed above, there is nothing in the record to show Mr. Tassy knowingly or recklessly misrepresented himself as a licensed engineer. Without evidence that Defendant knowingly or recklessly misrepresented facts about the oven repair or Mr. Tassy’s qualifications, the Court must grant Defendant’s Motion for Summary Judgment as to Count III of Plaintiff’s complaint.
IV. Professional Negligence
Plaintiff classifies Defendant’s services as “professional,” and Defendant does not
challenge that classification. “New Mexico holds providers of professional services to a higher
standard of care than other non-professional occupations.”
Farmers Alliance Mut. Ins. Co. v.
Naylor
,
“In professional negligence cases, both breach of the implied warranty to use reasonable
skill under contract law and negligence resulting in a finding of malpractice must be proved by
expert testimony
unless
the case is one where exceptional circumstances within the common
experience or knowledge of a layman are present.”
Adobe Masters, Inc.
,
Plaintiff has provided the opinion of two experts in the field of commercial oven repair, Manuel Campos Jr. and Timothy Gallus, in support of its claim for professional negligence. In his notarized letter regarding the safety of Plaintiff’s oven, Mr. Campos described several potential violations of the Occupational Safety and Health Administration (“OSHA”) standards. Doc. 116-11. He noted that if the oven were put into operation in the same state he observed, it “would be of great detriment to the safety of the employees.” Id ., p. 1. Mr. Gallus also assessed Plaintiff’s oven after repairs had been performed, and he wrote a letter to Plaintiff outlining his observations. Doc. 108-5. Although he did not address specific laws or standards, he did opine that the oven was not in running condition and would need additional repairs. Id .
Mr. Gallus and Mr. Campos did not explicitly address the standard of care owed by oven
repair engineers, but they did discuss the state of the oven and whether it was functional. Mr.
Campos stated that several components of the oven did not meet OSHA standards. In sum, they
both were of the opinion that the repairs did not meet the industry standards because the oven
was unsafe and not functioning. This information could be used to show that Defendant did not
“apply the knowledge, care, and skill of reasonably well-qualified professionals practicing under
similar circumstances.”
New Mexico Pub. Schs. Ins. Authority,
Conclusion
Pursuant to the foregoing, the Motion for Summary Judgment will be GRANTED as to Counts II and III. It will be DENIED as to Counts I and IV.
_______________________________ BRUCE D. BLACK UNITED STATES DISTRICT JUDGE