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Direct Enterprises, Inc. v. Sensient Colors LLC

United States District Court, S.D. Indiana, Indianapolis Division

January 23, 2018

DIRECT ENTERPRISES, INC., OLYMPUS SEED TREATMENT FORMULATOR, INC., Plaintiffs,
v.
SENSIENT COLORS LLC, Defendant. SENSIENT COLORS LLC, Third Party Plaintiff,
v.
SPECTRA COLORANTS, INC., Third Party Defendant.

          ORDER

          HON. JANE MAGNUS-STINSON, CHIEF JUDGE

         Plaintiffs Direct Enterprises, Inc. (“DEI”) and Olympus Seed Treatment Formulator, Inc. (“Olympus”) (collectively “Plaintiffs”) are companies that specialize in blending and selling treatment mixtures for seeds. As is relevant here, Defendant and Third-Party Plaintiff Sensient Colors LLC (“Sensient”) sells colorants that are used as additives in seed treatment blends, and Defendant and Third-Party Defendant Spectra Colorants, Inc. (“Spectra”) manufactures colorants. This matter arises primarily from a dispute among the parties regarding a batch of allegedly defective colorants manufactured by Spectra that Plaintiffs purchased from Sensient. Plaintiffs and Sensient have reached a settlement agreement, and the only issue remaining for the Court's resolution is Sensient's claim against Spectra for contractual duties of indemnification and defense. Sensient has moved for summary judgment on that claim, and for the reasons described below, the Court denies that motion.

         I.

         Background

         Plaintiffs market and distribute farming inputs and agricultural products, including seed treatments such as fungicides and pesticides. [Filing No. 189-1 at 3-4.] By federal regulation, seeds that are treated with compounds that are poisonous to humans and animals must be colored, so that persons handling the seeds are aware of their potential toxicity. [Filing No. 189-1 at 5.] Several of Plaintiffs' seed treatments contain compounds that have a degree of toxicity to humans and animals, and in 2012, Plaintiffs sought to purchase colorants to add to their treatment blends. [Filing No. 189-1 at 6-7.]

         Defendant Sensient is a supplier of colorants, which it promotes for use in food, cosmetic, and industrial applications. [Filing No. 189-4 at 3.] Plaintiffs made their first purchase of colorants from Sensient in May 2012, followed by more purchases in subsequent months. [See, e.g., Filing No. 95-3; Filing No. 95-6; Filing No. 95-7; Filing No. 95-8; Filing No. 189-6.] Plaintiffs mixed those colorants into their seed treatments to create the final blends sold to customers. [Filing No. 189-1 at 3.] The colorants that Plaintiffs purchased from Sensient were manufactured by Spectra.[1][Filing No. 190 at 12.]

         Beginning in the spring of 2013, Plaintiffs received complaints from customers that their seed treatments had “hardened” and become unusable.[2] [Filing No. 189-1 at 25-26.] After investigating those complaints, Plaintiffs became convinced that Sensient's colorants were the source of the problem, and they notified Sensient of the issue. [Filing No. 189-1 at 25-26.] Sensient claims that after learning of the complaints from Plaintiffs, it investigated by speaking to Spectra.[3] [Filing No. 190 at 12 (citing Filing No. 189-14 at 16).] After conducting its own examination, Spectra discovered that some of the red colorants it sold to Sensient “had a greater level of ammonia than originally contemplated.” [Filing No. 195 at 2; Filing No. 189-14 at 15.] As a result of the customer complaints, Plaintiffs provided credits and/or replacements to some of their customers. [Filing No. 189-1 at 28-29.]

         Plaintiffs filed suit in this Court against Sensient, raising six claims: (1) fraud and constructive fraud; (2) breach of contract; (3) breach of express warranty; (4) breach of the implied warranty of merchantability; (5) breach of the implied warranty of fitness for a particular purpose; and (6) violation of the Indiana Products Liability Act (“IPLA”). [Filing No. 95.] Sensient then filed a third-party complaint against Spectra, alleging that Spectra owes Sensient a duty to defend and a duty to indemnify Sensient against Plaintiffs' claims. [Filing No. 44 at 12-13.]

         Sensient moved for summary judgment both on Plaintiffs' claims against it and on its claims against Spectra, [Filing No. 189], which Plaintiffs and Spectra opposed, [Filing No. 195; Filing No. 197]. After the parties' summary judgment briefing was complete, Plaintiffs and Sensient reached a settlement on Plaintiffs' claims, and the parties have filed a stipulation of dismissal as to those claims. [Filing No. 253; Filing No. 254.] Accordingly, the only issue remaining for resolution on summary judgment is whether Spectra is required to defend and indemnify Sensient. [Filing No. 253.] That issue is now ripe for the Court's review.

         II.

         LEGAL STANDARD

         A motion for summary judgment asks the Court to find that a trial is unnecessary because there is no genuine dispute as to any material fact and, instead, the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). As the current version of Rule 56 makes clear, whether a party asserts that a fact is undisputed or genuinely disputed, the party must support the asserted fact by citing to particular parts of the record, including depositions, documents, or affidavits. Fed.R.Civ.P. 56(c)(1)(A). A party can also support a fact by showing that the materials cited do not establish the absence or presence of a genuine dispute or that the adverse party cannot produce admissible evidence to support the fact. Fed.R.Civ.P. 56(c)(1)(B). Affidavits or declarations must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on matters stated. Fed.R.Civ.P. 56(c)(4). Failure to properly support a fact in opposition to a movant's factual assertion can result in the movant's fact being considered undisputed, and potentially in the grant of summary judgment. Fed.R.Civ.P. 56(e).

         In deciding a motion for summary judgment, the Court need only consider disputed facts that are material to the decision. A disputed fact is material if it might affect the outcome of the suit under the governing law. Hampton v. Ford Motor Co., 561 F.3d 709, 713 (7th Cir. 2009). In other words, while there may be facts that are in dispute, summary judgment is appropriate if those facts are not outcome determinative. Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir. 2005). Fact disputes that are irrelevant to the legal question will not be considered. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         On summary judgment, a party must show the Court what evidence it has that would convince a trier of fact to accept its version of the events. Johnson v. Cambridge Indus., 325 F.3d 892, 901 (7th Cir. 2003). The moving party is entitled to summary judgment if no reasonable fact-finder could return a verdict for the non-moving party. Nelson v. Miller, 570 F.3d 868, 875 (7th Cir. 2009). The Court views the record in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir. 2008). It cannot weigh evidence or make credibility determinations on summary judgment because those tasks are left to the fact-finder. O'Leary v. Accretive Health, Inc., 657 F.3d 625, 630 (7th Cir. 2011). The Court need only consider the cited materials, Fed.R.Civ.P. 56(c)(3), and the Seventh Circuit Court of Appeals has ‚Äúrepeatedly assured the district courts that they are not required to scour every inch of the record for evidence ...


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