In re Bicoastal Corp.

178 B.R. 875, 8 Fla. L. Weekly Fed. B 410, 1995 Bankr. LEXIS 326, 1995 WL 116207
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedFebruary 10, 1995
DocketBankruptcy No. 89-8191-8P1
StatusPublished

This text of 178 B.R. 875 (In re Bicoastal Corp.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Bicoastal Corp., 178 B.R. 875, 8 Fla. L. Weekly Fed. B 410, 1995 Bankr. LEXIS 326, 1995 WL 116207 (Fla. 1995).

Opinion

ORDER ON OBJECTION TO CLAIM OF YORK INTERNATIONAL CORPORATION

ALEXANDER L. PASKAY, Chief Judge.

THIS IS a confirmed Chapter 11 ease and the matter under consideration is the reorganized Debtor’s Objection to Claim Number 3278 filed by York International Corporation (York). The claim was filed in the amount of $619,564.57 and states that it is based upon “Indemnity for York’s liability to Limbach Company arising from sale by York to Lim-bach of defective Singer products.” The Debtor, which was formerly known as the Singer Company (Singer), asserts that York has no contractual right to indemnification and also that Singer’s products were not defective at the time that they left the Singer facility.

During the course of the proceedings, York filed a Motion for Summary Judgment contending that there were no genuine issues of material fact, and that the Debtor’s Objection should be overruled and its claim should be allowed as a matter of law. On April 16, 1993, this Court entered an Order and denied York’s Motion. In this Order, the Court determined that' there are genuine issues of material facts concerning both issues raised by the Debtor’s Objection to York’s Claim. [876]*876At the outset of the final evidentiary hearing, this Court severed the issue of damages from the issue of liability and ruled that the trial would deal only with the issue of liability. In the event that liability is found, the Court reserved the question of whether York would then be required to establish its damages, or whether the Michigan state court’s determination of damages would be accepted.

The facts as developed at the final eviden-tiary hearing and relevant to the issues specified above can be summarized as follows:

This controversy initially stems from the development in the mid-1970’s of a project known as the Renaissance Center in Detroit, Michigan. The Renaissance Center consisted of a large complex which included a restaurant and shopping area, a hotel and four office towers. Limbach Company (Limbach) was the chief mechanical contractor for the project and subcontracted the heating, ventilating and air-conditioning (HVAC) work to York. The S-3 system, which constituted one portion of this HVAC work, was designed to heat the four office towers. In August of 1974, York purchased 32 steam distribution coils from Singer for placement in the S-3 system. Singer manufactured the 32 coils at its facility in Wilmington, North Carolina, and delivered them to the project site, but did not install the coils and had nothing to do with the design of the S-3 system. In any event, it appears that the coils were installed in approximately 1976 or 1977, and that leaks began to develop in the coils by the winter of 1977-1978. According to the stipulated testimony of William Maines, all of the coils in the S-3 system leaked from the joints as well as from very small holes on the face of the coils. Nevertheless, the S-3 system was operated for approximately four years with the Singer coils, and the coils were then removed in 1980 or 1981.

In 1979, Limbach sued the Renaissance Center Partnership, the owner of the project, in the state court in Michigan for breach of contract. The Partnership then filed a counterclaim against Limbach alleging various deficiencies in the construction of the project, including the heating and air-conditioning systems. Limbach filed a third-party action against York claiming that certain deficiencies were actually caused by defective equipment used in the system. York subsequently filed fourth party actions against the Debtor and other suppliers claiming that the parts furnished by them were defective. The Debtor answered the fourth-party complaint and demanded a jury trial. The state court thereafter bifurcated the proceeding and ruled that it would first try the original claim against the Partnership, the counterclaim against Limbach, and the third party claim against York, and that after these proceedings were concluded it would then try the fourth party claims against Singer and the other suppliers. Singer accordingly did not participate in the first stage of the litigation which ended on February 8, 1990, when the state court in Michigan entered a Corrected Partial Final Judgment in favor of the Partnership and against Limbach pertaining to the steam coils in the S-3 systems. This award was in the principal amount of $209,-744.28. The Corrected Partial Final Judgment also included a determination that Lim-baeh is entitled to recover this same amount from York. The state court previously had ruled on April 7, 1988, that its findings of liability from the first stage of the proceedings were binding on Singer and that Singer was estopped from relitigating the issues surrounding the alleged defects in the S-3 coils. On April 4, 1991, however, the Michigan Court of Appeals reversed this order and ruled that “Singer should not be bound to the trial court’s finding” regarding the existence of any manufacturing defect. Consequently, based on this decision of the appellate court, it appears undisputed that the findings of the Michigan state court concerning the manufacture of the coils have no binding effect in this proceeding.

York’s proof of claim states only that it is based upon “Indemnity for York’s liability to Limbach.” (sic) The Orders entered by the trial court in Michigan are attached to the Proof of Claim as exhibits. The claim was filed on May 14, 1990, prior to the entry of the order by the Michigan Court of Appeals which reversed the trial court’s 1988 order and determined that the trial court’s findings were not binding on Singer. The Proof of [877]*877Claim was never amended. Having realized that it no longer can rely on the trial court’s order, York now appears to assert that its claim is actually based on two alternative theories: (1) contractual indemnity; and (2) breach of the implied warranties of merchantability and fitness. In. opposition, the Debtor contends that (1) York never had a contractual right to indemnity; (2) that the coils were not defectively manufactured; and (3) and that the manufacturing process of the coils was not the proximate cause of any leakage.

I. CONTRACTUAL INDEMNITY

According to York, its contractual right to indemnity arises from the purchase order or orders under which York requested the 32 steam coils from Singer in August of 1974. York contends that this purchase order contained language which obligated Singer to indemnify York against any liability which it incurred as a result of the coils supplied under the purchase order.

It should be noted at the outset that Rule 3001(c) of the Federal Rules of Bankruptcy Procedure provides that “[whenever] ... a claim is based upon a writing, the original or a duplicate of the writing shall be filed with the proof of claim.” In addition, Rule 1002 of the Federal Rules of Evidence states that, in order to prove the content of a writing, the original writing is required. Rule 1002 and Rule 1004 of the Rules of Evidence set forth the circumstances under which a duplicate is permitted or other evidence of the contents may be admissible, none of which is applicable here.

It is clear in this case that neither the original purchase order nor a copy of the purchase order was produced.

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Bluebook (online)
178 B.R. 875, 8 Fla. L. Weekly Fed. B 410, 1995 Bankr. LEXIS 326, 1995 WL 116207, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bicoastal-corp-flmb-1995.