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GARDEN STATE FOOD DISTRIBS. v. SPERRY RAND CORP.

April 20, 1981

GARDEN STATE FOOD DISTRIBUTORS, INC., Plaintiff,
v.
SPERRY RAND CORPORATION, SPERRY UNIVAC DIVISION, a corporation, Defendant



The opinion of the court was delivered by: FISHER

This case is before me on motion of defendant, Sperry Corporation (Sperry), for partial summary judgment pursuant to Fed.R.Civ.P. 56(c). Defendant requests summary judgment on its second affirmative defense, contending that the damages sought by plaintiff are expressly limited by the agreement between the parties. Plaintiff contends that defendant's breach of express and implied warranties permits it to recover damages in accordance with relevant portions of New Jersey's Uniform Commercial Code, unlimited by the language of the contract.

To earn summary decision, a party must merit judgment as a matter of law upon genuinely indisputable material facts. Fed.R.Civ.P. 56(c). Only a clear showing of authentic non-dispute will satisfy the Rule 56(c) standard which demands the absence of triable fact issues. Ely v. Hall's Motor Transit Co., 590 F.2d 62, 66 (3d Cir. 1978). The movant bears this burden. Manetas v. International Petroleum Carriers, Inc., 541 F.2d 408, 413 (3d Cir. 1976). The opposing party receives the benefits of all reasonable doubts and inferences drawn from underlying facts. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 (1977). A disfavored motion, summary judgment should only issue when the movant demonstrates a clear, uncontestable right to judgment, and the opponent is not entitled to judgment under any circumstances. Ledwith v. Douglas, 568 F.2d 117, 119 (8th Cir. 1978). The record must be adequate for determination of the legal questions raised; a deficient factual foundation cannot support summary resolution. 6 MOORE'S FEDERAL PRACTICE § 56.15, at 609 (2d ed. 1980). The slightest doubt as to the facts precludes granting the motion. Tomalewski v. State Farm Life Insurance Co., 494 F.2d 882, 884 (3d Cir. 1974).

 For purposes of this motion, the parties do not dispute the facts upon which this case is based. Plaintiff, Garden State Food Distributors, Inc., is engaged in the wholesale distribution and sale of perishable and non-perishable food products in the metropolitan New Jersey and New York area. Defendant Sperry produces and sells computer equipment and services. In June 1978 plaintiff and defendant entered into a lease/purchase agreement for a Sperry Univac BC/7 Computer System, including hardware, software and related services.

 
6. Limitation of Liability
 
Except as expressly stated herein, there are no warranties, express or implied, by operation of law or otherwise, of the products or services furnished under this agreement, Sperry Univac disclaims any implied warranty of merchantability or fitness for particular purpose. The customer's sole remedies for liability of any kind with respect to the products furnished under this agreement and all other performance by Sperry Univac under or pursuant to this agreement or with respect to customer's use thereof, including negligence, shall be limited to the remedies provided in the warranty or remedy section in each and all of the schedules incorporated in this agreement and shall in no event include any incidental, indirect, special or consequential damages or loss of use, revenue or profit even if Sperry Univac has been advised of the possibility of such damages.
 
In no event shall Sperry Univac's liability for damages with respect to any of the products or services furnished under this agreement exceed the charges previously paid by the customer to Sperry Univac for such products or services.

 The first page of the Agreement states, in large capital letters:

 
"Customer acknowledges and understands that the provisions of the general terms and conditions schedule, including but without limitation, Section 6, Limitation of Liability, apply fully to all schedules and attachments thereto incorporated into and made part of this agreement."

 Pursuant to the Agreement, plaintiff tendered a downpayment of $ 3,399, and defendant delivered the computer hardware on October 16, 1978. Plaintiff also made rental and maintenance payments totalling $ 4,045.06.

 Plaintiff argues that a series of letters written by Sperry to plaintiff, containing various express and implied warranties, must be considered as integrated with the June 1978 contract. For the purposes of this motion, defendant admits that the goods were warranted in accordance with the representations contained in the aforementioned letters, and that these warranties were breached.

 At issue here is whether, on the facts stipulated to by the parties, defendant can rely upon the "Limitation of Liability" clause set forth in the contract to limit otherwise applicable remedies for breach of warranty. See N.J.S.A. 12A:2-714(2). N.J.S.A. 12A:2-719(1) provides that an agreement may limit or alter the measure of damages recoverable under Article 2 of the Code, subject to the provisions of subsections (2) and (3) of this section:

 
"the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts..."

 N.J.S.A. 12A:2-719(1)(a). Before a limitation on a party's liability may be enforced, it must be established that the remedy "is expressly agreed to be exclusive." N.J.S.A. 12A:2-719(1)(b). A limited remedy must be viewed against the standard of N.J.S.A. 12A:2-719(2), which provides that, "(w)here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act." Further, "consequential ...


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