Furniture distributor didn't breach contract with manufacturer over bleached white veneers

By Nicholas Malfitano | Jan 24, 2017

PHILADELPHIA – A panel of appellate judges has chosen to uphold a trial court’s ruling to grant summary judgment to a furniture distributor, saying it did not breach either an implied warrant of merchantability or a contract with a hospitality industry furniture manufacturer.

On Jan. 18, judges D. Brooks Smith, Kent A. Jordan and Patty Shwartz ruled summary judgment was again entered in favor of defendant Materials, Inc., against plaintiff American Atelier, Inc., affirming a decision reached in the U.S. District Court for the Eastern District of Pennsylvania.

Shwartz authored the Court’s opinion in this case.

AAI manufactures furniture for the hospitality industry, and Loews Hotels hired AAI to create furniture for its Loews Philadelphia Hotel. Loews and its interior designer required the furniture feature white veneers of anigre wood manufactured by an Italian company, Tabu. Tabu creates the white veneers by bleaching and dying the anigre wood, which is naturally brown.

AAI contracted to purchase the veneers from Materials, the exclusive distributor for Tabu products in the United States. AAI made the furniture using the veneers, and Loews installed the furniture in its hotel rooms. Some months after the furniture was installed, Loews complained portions of the veneers that were exposed to light “had discolored to an unattractive yellow-brown shade, while veneers not exposed to light remained white.” Loews demanded that AAI replace all of the discolored veneers, and AAI replaced them with maple veneers.

AAI wanted to recoup the costs of replacing the veneers and sued Materials, claiming breach of the implied warranty of merchantability and breach of contract. Subsequent to discovery, Materials filed a motion for summary judgment.

The District Court granted the summary judgment motion in part, concluding AAI did not establish that the veneers were defective because “bleached veneers are inherently prone to discoloration”, and “the contract had not been breached”, a decision which led AAI to appeal.

Shwartz said, “AAI argues that the veneers were defective because they turned to a shade of brown that was unacceptable and required replacement. However, this color change does not indicate that the veneers “functioned improperly.”

Shwartz explained bleached veneers are susceptible to discoloration as a result of light exposure and “entirely consistent” with how they were expected to function, and thus was “not evidence that they were not of a ‘reasonable quality’ for bleached veneers.”

“Therefore, while bleached veneers may have more limited uses than non-bleached veneers because bleached veneers used in areas exposed to light may change color, the veneers here were ‘suitable’ for ordinary use in furniture and performed in line with “the way that goods of that kind should perform,” Shwartz said. “Because AAI has not produced evidence from which a jury could conclude that Materials’ veneers were defective, we will affirm the District Court’s ruling on AAI’s breach of the implied warranty of merchantability claim.”

According to Shwartz and the Third Circuit, the plaintiff’s breach of contract claim also fails, due to not proving three criteria under the law, that “(1) A contract existed between the parties, (2) The defendant breached a duty imposed by that contract, and (3) The plaintiff suffered damages as a result.”

“There is no dispute that the parties had a contract. The contract required Materials to supply white anigre veneers. AAI asserts that this requirement was breached because the veneers provided did not remain white. While it is true that the veneers that were exposed to light changed color, the contract specifically notified AAI that discoloration could occur,” Shwartz said.

Shwartz added the contract in question came with no warranty.

“In addition, the contract specifically stated that ‘since Materials has no control over end products fabricated with the materials sold, no warranty is expressed or implied…Materials makes no warranty based on any usage of trade or fitness for any particular use. Buyer assumes all risks resulting from the use with other substances or in any process,” Shwartz stated.

Therefore, under these terms, AAI received the goods it contracted for.

“AAI also argues that Materials breached the contract because the contract states that Materials “stands behind the recommendations of the Architectural Woodwork Institute (AWI) Architectural Woodwork Quality Standards”, and these standards state that bleached veneers should be avoided because of potential finishing problems. AAI apparently takes the position that Materials breached the contract by selling bleached veneers because the AWI standards discourage the use of bleached veneers,” Shwartz said.

Shwartz said the only purpose of the contract was the sale of bleached veneers, and that it was “illogical” and “unreasonable” to “conclude that Materials was prohibited from selling such products because of its general statement that it ‘stands behind’ AWI’s recommendations” and continued that the Third Circuit was “obligated to give the contract a ‘reasonable construction’, and it “is not reasonable to conclude that a contract for the sale of bleached veneers simultaneously prevents the sale of bleached veneers.”

“Accordingly, we agree with the District Court that these standards are not a strict limitation on the products Materials is permitted to sell. Therefore, we will affirm the District Court’s ruling on AAI’s breach of contract claim,” Shwartz said.

The plaintiff is represented by David F. McComb and Zachary Silverstein of Zarwin Baum DeVito Kaplan Schaer Toddy, in Philadelphia.

The defendant is represented by Donald H. Smith of Mannion & Gray in Pittsburgh and Ryan K. Rubin of Lewis Brisbois Bisgaard & Smith, in Cleveland, Ohio.

U.S. Court of Appeals for the Third Circuit case 16-2107

U.S. District Court for the Eastern District of Pennsylvania case 5:13-cv-07138

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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