CITISTEEL USA, INC. v. GENERAL ELECTRIC COMPANY (D.Del. 2001)

GREGORY SLEET, United States District Judge.

This case involves a contract dispute between CitiSteel USA, Inc. ("CitiSteel") and General Electric Company ("GE"). In 1997, GE repaired and upgraded an industrial transformer for CitiSteel. In February of 1998, only a few months after the repair and upgrade, the transformer failed. GE accepted responsibility for the failure and repaired the transformer in keeping with its warranty. In November of 1999, CitiSteel filed this action seeking to recover consequential damages that it alleges resulted from the failure of the GE transformer. GE claims that by the terms of its warranty, CitiSteel is only entitled to repair and replacement of defective parts, and that it cannot recover consequential damages. CitiSteel counters that GE's warranty does not apply because it was not part of the agreement between the parties. GE has filed a motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.

In the briefing on the motion, the parties have raised two main issues: 1) whether judgment on the pleadings is appropriate in this matter, and 2) whether the GE warranty is a part of the contract between the parties. The court will address these issues in turn.

Rule 12(c) provides that once the pleadings are closed, a party may move for judgment on the pleadings, and the court may rule on such motion, 1) as long the motion has been presented "within such time as not to delay the trial, " and 2) so long as the court does not consider "matters outside the pleadings" (if the court does not exclude such matters, "the motion shall be treated as one for summary judgment") that may have been presented for its consideration. Fed.R.Civ.P. 12(c). GE's Rule 12(c) motion satisfies both prongs of this test. This is so because the court need only consider the pleadings and the contract at issue, the CitiSteel purchase order ("the contract"). See Pension Benefit Guaranty Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (holding that a court may consider documents integral to the complaint without converting a motion to dismiss into a summary judgment motion). CitiSteel argues that the 12(c) motion should be converted into one for summary judgment because extrinsic evidence pertaining to the contract negotiations between the parties must be considered in order to resolve this dispute. The court is not persuaded by this argument. The court need only consider the contract itself to decide if GE's warranty applies. Extrinsic evidence regarding the contract negotiations is not relevant to that consideration. See E. L. DuPont Nemours and Co. v. Adm Thai Ins. Co., 711 A.2d 45, 57 (Del.Super.Ct. 1995) ("The Court may not consider extrinsic evidence in an effort to construe an unambiguous contract.").

After considering the facts in a light most favorable to the plaintiff, as the court must, Institute for ScientWc Info., Inc. v. Gordon and Breach, Sci. Publishers, Inc., 931 F.2d 1002, 1004 (3d Cir. 1991), it seems clear that the contract plainly incorporates the GE Warranty in its entirety. Under the headings "Warranty offering," CitiSteel expressly discussed the duration of the warranty (which is not at issue), and clearly incorporated the GE warranty by reference with the language: "Also included for general warranty information is GE ISS form 4887[sic](CS)(1/89)." GE form 487 (CS) (1/89), entitled "Conditions of Sale for Services" had been provided to CitiSteel by GE during negotiations. Considering the following sequence of events as plaintiff describes them, CitiSteel appears to have had an opportunity to examine GE's warranty before incorporating it into the contract. First, CitiSteel concedes that it was aware that GE intended for its warranty to "apply to these repairs." Plaintiff's brief at 5. Second, CitiSteel was furnished with a copy of GE's warranty provisions. Id. Third, CitiSteel drafted the purchase order and explicitly incorporated the GE warranty by reference after learning that GE intended for the warranty to apply. Id Finally, by its own terms, the contract incorporates GE's warranty. In Section 1 of the agreement entitled "Instructions to Seller" regarding supplemental terms, the contract states that: " Any supplemental conditions of purchase referenced on the face of this order and attached hereto are hereby incorporated into and made part of this order" (emphasis added).

CitiSteel makes two arguments against the validity of the GE warranty: 1) that the GE warranty is either not incorporated at all because it was not specifically negotiated, or 2) in the alternative, it was only incorporated in part. Both of these arguments are unpersuasive. As to its first argument, CitiSteel has offered no evidence to support its claim that it was denied the opportunity to negotiate. For example, if CitiSteel had offered evidence that GE concealed the warranty terms, made misrepresentations, or modified the agreement after it was drafted by them, then there would be a genuine issue for the trier of fact to decide. There is no such evidence in the record before the court. And, while it might seem that the court has put CitiSteel in a bit of a "chicken and egg" dilemmap, this is not so because the plain language of the contract makes it clear that CitiSteel did incorporate the entire GE warranty into the contract. See E. L DuPont Nemours and Co. v. Admiral Ins. Co., 711 A.2d at 56 (holding that interpreting the language of a contractual provision is a question of law for the court to decide).

Thus, after considering the pleadings and the CitiSteel contract, it is clear that the court need only consider the contract language and that, based upon that language, CitiSteel should be barred as a matter of law from recovering consequential damages.

For these reasons, IT IS HEREBY ORDERED that:

1. General Electric's Motion For Judgment On The Pleadings Pursuant To FED. R. CIV. P. 12(c) (D.I. 13)) is GRANTED.