4.99 See Answer

Question: Plaintiffs allege that the defendants provided


Plaintiffs allege that the defendants provided their customers (plaintiffs) with inferior, adulterated heating oil, i.e. that the fuel oil that was delivered to them contained oils of lesser value mixed into the ordered grade of fuel oil, so that the delivered product did not meet the standards of the parties’ contracts.
A sample of No. 4 fuel oil delivered by Castle Oil Corporation to a Manhattan New York building owned by plaintiff BMW Group LLC did not conform to the specifications for No. 4 fuel oil which BMW had ordered from Castle.
Mid Island L.P. and Carnegie Park Associates, L.P. own and manage residential and commercial buildings in the New York metropolitan area.
They allege that they contracted with Hess [Corporation] for the purchase of No. 4 and No. 6 fuel oil, but received a blend containing waste oil.
BMW and the other property owners filed a suit in a New York state court against Castle and Hess. Each defendant moved to dismiss the complaint against it. The court granted those motions.
It agreed with defendants that the complaints, while alleging that a blended fuel oil was delivered to plaintiffs, did not allege that any injury was caused to them by the use or the burning of this blended oil.
The issue is whether plaintiffs’ claims amount to merely “theoretical nonconformities” that do not justify a claim for breach of warranty or breach of contract.
If the goods that are delivered do not conform to the goods contemplated by the sale contract the purchaser has a cause of action under the Uniform Commercial Code.
An issue is raised as to whether plaintiffs successfully alleged that the delivered goods were nonconforming.
The Administrative Code of the City of New York defines “heating oil” as “oil refined for the purpose of use as a fuel for combustion in a heating system and that meets the specifications of the American Society for Testing and Materials.” The applicable American Society of Testing and Materials (ASTM) specifications for fuel oil establish detailed requirements for the different grades of oil, using such categories as minimum flash point temperature, viscosity, density, and maximum percentages of ash and sulfur.
Plaintiffs essentially allege that, consistent with the ASTM specifications, as well as common commercial usage, and pursuant to the UCC, customers purchasing goods described as No. 4 and No. 6 fuel oil are entitled to presume that they are receiving 100% fuel oil of the specified grade, and not a product consisting of a blend of No. 4 or No. 6 fuel oil with some other types of oil that do not meet the criteria of those ASTM specifications.
More specifically, plaintiffs in the Castle Oil matter allege that “Castle intentionally adulterates its fuel oil products by using other, cheaper oils (primarily used motor and lubricating oil) as filler, resulting in an inferior blended petroleum product.” They explain that lubricating oil and fuel oil are different chemical substances, and that lubricating oils are designed with a higher boiling point than fuel oil and do not burn efficiently at temperatures typical in nonindustrial heating systems. Additionally, because lubricating oils contain chemical additives not found in fuel oil, burning them in heating systems such as those in plaintiffs’ buildings will tend to produce more soot and particulate matter pollution, reducing the efficiency of the heating system and creating an increased risk of fire. They also assert that while regulations permit used lubricating oil to be re-refined and used as fuel in high temperature industrial settings, the used lubricating oil purchased by Castle to blend with its fuel oil was never refined for use as fuel……………………………..

Required:
1. What did the contracts between the plaintiffs and the defendants require the defendants to do? What goods did the contracts involve? What standards applied to the goods?
2. What was the plaintiffs’ complaint? Why was this important?
3. What did the trial and appellate courts conclude with respect to the plaintiffs’ allegations? Why?


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4.99

See Answer