International Tape v. Technicote CV-97-084-M 05/17/00 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

International Tape Company, Inc., Plaintiff

v.

Technicote, Inc., Defendant

AND Civil No. 97-084-M (Consolidated Cases) Opinion No.

Universal Tape Company, Inc., Plaintiff

v.

Technicote, Inc. and International Tape Company, Inc., Defendants

O R D E R

These consolidated cases arise out of the manufacture and

distribution by Technicote, Inc. ("Technicote") of an allegedly

defective product. International Tape, Inc. says that it

contracted to purchase from Technicote a "release liner," which

it then incorporated into a security tape product that it sold to Universal Tape Company ("UTP"). It appears that UTP is related

to, or affiliated with. International, and operates as the entity

through which International distributes its products.

After what it claims were unsuccessful efforts to have

Technicote repair or replace the defective product. International

sued Technicote for breach of contract (count 1) and intentional

interference with advantageous economic relations (count 2).

UTP, in turn, sued both Technicote and International, seeking

compensation for losses it claims to have sustained when it re­

sold the product manufactured by International that incorporated

the allegedly defective release liner supplied by Technicote.

Technicote moves to dismiss UTP's complaint, saying that it

fails to allege a viable cause of action. See Fed. R. Civ. P.

12(b)(6). UTP objects, saying that Technicote breached the

implied warranty of merchantability and, as a consequence, caused

it to suffer compensable damages.

2 With regard to International's claims, Technicote moves for

partial summary judgment, saying that any damages awarded to

International must, as a matter of law, be limited to the amount

that International paid for the allegedly defective release

liner. In support of that position, Technicote points to a

limitation of damages provision set forth on the invoices it

provided to International with each shipment of goods.

International objects, asserting that the limitation of damages

provision on which Technicote relies: (1) was not a part of the

parties' contract; and (2) even if it were a part of the

contract, it is not enforceable.

The existence of genuine issues of material fact (e.g.,

whether Technicote was notified of, and honored, its obligation

to repair or replace the allegedly defective product) preclude

the court from ruling, as a matter of law, that Technicote is

entitled to enforce the damages limitation provision (including

the disclaimer of liability for consequential damages) against

Universal. Even if the court were able to determine on this

3 record whether the limitation of damages provision set forth on

Technicote's invoices actually became a part of the parties'

contract, see RSA 382-A:2-207, genuine issues of material fact

prevent the court from determining whether that provision failed

its essential purpose and is, therefore, unenforceable. See

generally Hvdraform Products Corp. v. American Steel & Alum.

Corp.,

(1985). See also RSA 382-A:2-719(2).

Similarly, because the remedies available to, and

limitations imposed upon, UTP would appear to be derivative of

the rights of International, the court cannot rule that, as a

matter of law, UTP has no viable cause of action against

Technicote. See RSA 382-A:2-318.

Technicote's motion for partial summary judgment (document

no. 33), and its motions to dismiss (documents no. 29 and 30) are

denied.

SO ORDERED.

4 Steven J. McAuliffe United States District Judge

May 17, 2000

cc: Armand M. Hyatt, Esq. Douglas L. Ingersoll, Esq. Mark F. Sullivan, Esq.

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