Scott Bader, Inc. v. Sandstone Products, Inc.

248 S.W.3d 802, 2008 Tex. App. LEXIS 1473, 2008 WL 522870
CourtCourt of Appeals of Texas
DecidedFebruary 28, 2008
Docket01-05-00940-CV, 01-06-00593-CV
StatusPublished
Cited by86 cases

This text of 248 S.W.3d 802 (Scott Bader, Inc. v. Sandstone Products, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scott Bader, Inc. v. Sandstone Products, Inc., 248 S.W.3d 802, 2008 Tex. App. LEXIS 1473, 2008 WL 522870 (Tex. Ct. App. 2008).

Opinions

OPINION

LAURA CARTER HIGLEY, Justice.

These two appeals arise from a product liability suit brought by appellee, Sandstone Products, Inc. (“Sandstone”), against appellants, Scott Bader, Inc. (“Scott Bader”) and National Pigments & Chemicals, Inc.1 In appellate cause number 01-05-00940-CV, Scott Bader and its trial counsel, Amy C. Wright, and Wright’s law firm, Kern & Wooley, L.L.P., appeal sanctions assessed against them. The trial court awarded sanctions against Scott Bader for abusing the discovery process and against Wright and her firm for violating an in limine order during trial. Scott Bader contends that it did not abuse the discovery process and that the sanctions were not otherwise “just.” Wright and her firm challenge the sanctions award against them by asserting that the sanctions were excessive.2

In appellate cause number 01-06-00593-CV, Scott Bader and National Pigments challenge the trial court’s judgment rendered against them in favor of Sandstone. Presenting four issues and numerous sub-issues, Scott Bader contends that (1) the testimony of Sandstone’s causation expert was unreliable and constituted no evidence of causation, (2) the evidence was legally insufficient to support the damages awarded by the jury, (3) the trial court erred when it included a “binding instruction” in the jury charge that Scott Bader had breached its contract and breached its warranty with Sandstone, and (4) alternatively, the trial court’s judgment should be modified because it awarded prejudgment interest on future damages.

In appellate cause number 01-05-00940-CV, we affirm, in part, and reverse and [807]*807remand, in part. In appellate cause number 01-06-00593-CV, we reverse the judgment and remand.

Factual and Procedural Background

Scott Bader is a United States company and a wholly-owned subsidiary of a British company. Scott Bader sells a resin, known as Texigel, which is used as a component ingredient in roof coatings. Although its British parent company manufactures the resins it sells, Scott Bader does not manufacture Texigel, rather, it contracts with “toll” or sub-manufacturers to make the product. Goodrich Corporation (“Goodrich”) was Scott Bader’s toll manufacturer until 1999. At that point, Para-Chem Southern, Inc. (“Para-Chem”) began to manufacturer Texigel for Scott Bader.

Sandstone manufactures and sells roof sealant coatings. From 1994 until 2002, Sandstone purchased Texigel from Scott Bader to use in manufacturing its roof coating.3 Texigel was the component ingredient in Sandstone’s roof coating that caused the roof coating to “bind” or adhere to roofs. Scott Bader provided a formula to Sandstone instructing it how to mix Texigel with nine other ingredients to make Sandstone’s roof coating.

In 1999, Sandstone began receiving customer complaints that its roof coating was failing. Specifically, Sandstone’s roof coating was swelling with water and not adhering to the roofs to which it had been applied. Sandstone contacted Scott Bader about the problems. Initially, Scott Bader attributed the problems to improper application of the roof coating. As more complaints arose, Scott Bader worked with Sandstone to modify the formula used to make Sandstone’s roof coating. The modified formulas continued to include varying amounts of Texigel. Despite the modifications, Sandstone’s roof Coating continued to fail. Sandstone worked with its customers by supplying new roof coating materials and, in some instances, labor. However, the roof coatings continued to fail.

During the same time frame, Sandstone sought to meet an industry standard for roof coatings. The State of Florida required roof coatings to meet this standard. As a result, Sandstone could not sell its product in Florida until its coating passed the industry-standard test (referred to as the “Dade County Test”). Sandstone submitted its roof coating for testing on three separate occasions, but its product never passed the test. On each occasion, Sandstone’s product failed the Dade County Test’s “water swell” requirements.

Sandstone ultimately attributed the failure of its roof coating to Texigel. Scott Bader denied that claim, contending that Sandstone was mixing the roof coating improperly. Sandstone sued Scott Bader asserting claims for breach of contract, breach of warranty, violations of the Texas Deceptive Trade Practices Act (“DTPA”), fraud, and negligent misrepresentation. Sandstone also sued NPCI, Para-Chem, and Goodrich.

During the course of the litigation, Sandstone alleged that Scott Bader had made a number of misrepresentations:

• Scott Bader misrepresented that Texi-gel was water resistant and could be used as an adhesive in roof coatings. It is undisputed that Texigel is a styrene acrylic resin not a pure acrylic [808]*808resin. .Styrene acrylic contains the compound acrylamide, a water absorbent material, not a water resistant material. As such, Sandstone contended that Texigel was unsuitable for use in commercial roof sealant coatings, such as those manufactured by Sandstone.
• Scott Bader misrepresented that it manufactured Texigel, when in fact it was manufactured by toll manufactures Goodrich and Para-Chem.
• Scott Bader misrepresented that Texi-gel could be used to pass the Dade County Test. Sandstone contended that an acrylamide resin could never pass the test; rather, only pure acrylic resins can meet the standard.
• Scott Bader misrepresented that Texi-gel contained the same ingredients as the resin manufactured by Scott Bad-er’s British parent company, when, in fact, the resin manufactured by Scott Bader’s parent company contained pure acrylic, while Texigel was made from acrylamide.
• Scott Bader misrepresented that Sandstone was the only customer to complain about roofing problems associated with Scott Bader’s products. Sandstone contended that Scott Bader had received other customer complaints.

Sandstone also alleged that Scott Bader was aware that Texigel deviated from its product specifications; that is, it was aware that Goodrich, its toll manufacturer, had at some point deviated from the resin formula of Scott Bader’s parent company and had started using styrene acrylic instead of pure acrylic to make Texigel. Sandstone alleged that Scott Bader was also aware that quality control issues persisted with Texigel, even after Scott Bader contracted with a new toll manufacturer, Para-Chem. Sandstone asserted that, despite Scott Bader’s awareness of these problems and its awareness of Sandstone’s customer complaints, Scott Bader never disclosed this information to Sandstone.

During the course of the litigation, a discovery dispute arose between the parties. Sandstone filed two separate motions to compel production of information and documentation regarding product specification and testing, other customer complaints received by Scott Bader, and the identity of the current or former Scott Bader employee most knowledgeable regarding product development and formulation issues.

In its response to Sandstone’s second motion to compel, Scott Bader represented that it had produced all testing documents and that it had no customer complaints, other than those of Sandstone.

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Bluebook (online)
248 S.W.3d 802, 2008 Tex. App. LEXIS 1473, 2008 WL 522870, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scott-bader-inc-v-sandstone-products-inc-texapp-2008.