United States District Court, D. Minnesota
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Wilhelmina M. Wright United States District Judge
matter is before the Court on Defendant Agri Systems's
motion for partial summary judgment. (Dkt. 26.) For the
reasons addressed below, Agri Systems's motion is granted
in part and denied in part.
Southern Minnesota Beet Sugar Cooperative (SMBSC) is a
Minnesota cooperative that processes sugar beets for sugar
production. Defendant Agri Systems (ASI) is a Montana
corporation that designs and constructs storage facilities.
April 2014, SMBSC and ASI entered into a contract, the
Design-Build Agreement (Agreement), for ASI to design and
construct six sugar-storage silos for SMBSC's use. An
integral part of the silo design is the reclaimer system, a
device that empties the sugar stored within the silo. A
reclaimer stirs the sugar so as to move the sugar from the
perimeter to the center of the silo so that the sugar flows
out of the silo during the emptying process. The type of
reclaimer system at issue here is a “top-down”
reclaimer, which stirs the sugar from the top of the silo
while the sugar empties from the bottom. A top-down reclaimer
system presents the risk that machinery will be sucked into
the sugar as it is stirred.
reclaimer system designed by ASI for SMBSC's silos had a
T-shaped walkway-the gantry-that hung from a circular rail
attached to the perimeter of the silo. Attached to the
reclaimer system were rotating trolleys, wheeled devices
through which a large metal pin was inserted, that moved
along the track. The reclaimer device hung from cables
attached to the rotating trolleys that pulled the reclaimer
through the sugar at the top of the silo. The trolleys that
ASI selected for the reclaimer system included a pin that was
parallel to the reclaimer's direction of travel, rather
than perpendicular to it.
silo project was completed in the summer or fall of 2015. On
December 30, 2015, the reclaimer system in one of the six new
ASI silos fell to the bottom of the silo into the sugar.
SMBSC ceased using the five remaining silos, sought
alternative storage options, and subsequently found
replacement storage for the sugar in Eaton, Colorado, and a
market sale in Atlanta, Georgia. SMBSC shipped the sugar to
those destinations and sent ASI the invoice.
several attempts to repair the reclaimer system and resolve
the areas of dispute between the parties, SMBSC commenced
this lawsuit against ASI. SMBSC's complaint alleges six
counts: (I) breach of contract - failure to perform; (II)
breach of express warranty; (III) breach of implied warranty;
(IV) contract void as against SMBSC; (V) professional
negligence; and (VI) product defect. ASI now moves for
summary judgment on Counts III through VI of SMBSC's
judgment is proper when “there is no genuine dispute as
to any material fact” and the moving party “is
entitled to judgment as a matter of law.” Fed R. Civ.
P. 56(a); see Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1986). A district court views the evidence and
any reasonable inferences drawn from the evidence in the
light most favorable to the nonmoving party. Krenick v.
Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). The
moving party bears the initial burden of production. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When
this burden is met, to defeat the motion, the nonmoving party
must cite “particular parts of materials in the
record” that support the contention that a genuine
dispute of material fact exists. Fed.R.Civ.P.
SMBSC's Breach-of-Implied-Warranty Claim (Count
seeks summary judgment on SMBSC's
breach-of-implied-warranty claim. Under Minnesota law,
“[t]o establish breach of an implied warranty of
fitness for a particular purpose, a plaintiff must prove
that: (1) the seller had reason to know of the buyer's
particular purpose; (2) the seller had reason to know the
buyer was relying on the seller's skill or judgment to
furnish suitable goods; [and] (3) the buyer actually relied
on the seller's skill or judgment.” Travelers
Prop. Cas. Co. of Am. v. Saint-Gobain Tech. Fabrics Canada
Ltd., 474 F.Supp.2d 1075, 1084 (D. Minn. 2007) (citing
Willmar Cookie Co. v. Pippin Pecan Co., 357 N.W.2d
111, 115 (Minn.Ct.App. 1984); Minn. Stat. § 336.2-315).
ASI does not argue that it is entitled to judgment as a
matter of law based on the elements of this claim. Instead,
ASI seeks summary judgment on three alternative grounds.
ASI maintains that the Agreement is not governed by the
Uniform Commercial Code (UCC). Rather, because the Agreement
is a contract for services, not goods, the Agreement's
implied warranty disclaimer controls and SMBSC's
breach-of-implied-warranty claim must fail, according to ASI.
Minnesota has incorporated the UCC into Minnesota laws
pertaining to contracts for the sale of goods. See
Minn. Stat. § 336.2-102. When a “hybrid”
contract-a contract involving both the sale of goods and the
provision of services-is at issue, the “predominant
factor” test determines whether the contract should be
treated as one for goods or for services. Duxbury v. Spex
Feeds, Inc., 681 N.W.2d 380, 386 (Minn.Ct.App. 2004).
This test asks “whether the predominant factor in the
transaction is the transfer of goods or the provision of
services, ” assessing relevant factors such as
“the language of the contract, the business of the
supplier, and the ‘intrinsic worth' of the goods
involved.” Id. “In practice, courts
generally rely on the relative costs of the services and the
goods” to determine the primary purpose of the
contract. Id. at 387.
the predominant factor test is applied here, the Agreement is
a contract for goods, which is governed by the UCC. The
purpose and central focus of the contract are the procurement
of six sugar-storage silos, a good. The cost of materials
used to construct the silos was vastly higher than the labor,
engineering, and construction costs, a consideration that
supports the conclusion that the Agreement is a contract for
goods. These two factors outweigh ...