Paul Gottlieb & Co., Inc. v. Alps South Corp.

Paul Gottlieb & Company, Inc. (Gottlieb) (plaintiff) was a fabric converter based in New York that supplied its customers with specialty knitted fabrics. Alps South Corporation (Alps) (defendant) was a medical device company located in St. Petersburg, Florida, that produced various liners that amputees used to attach prosthetic devices to the appendage. Alps contracted with Gottlieb to provide a new specialty fabric for its products. Approximately six months into the relationship the parties began to have disputes. Alps sent a letter notifying Gottlieb of product deficiencies and conditioned their future relationship on Gottlieb improving the quality of the fabric supplied. However, Alps did not inform Gottlieb that it might incur substantial costs as a result of using a different fabric. After Gottlieb substituted a yarn that caused Alps’ products to deteriorate more quickly, Alps began receiving numerous customer complaints and was forced to recall the liners it had placed on the market. When Gottlieb did not receive payment from Alps it brought suit to collect damages due to the nonpayment. Alps counterclaimed for damages caused by Gottlieb’s breach of warranty. After a bench trial, the court awarded damages to both parties and determined that under Florida’s Uniform Commercial Code (U.C.C.) provisions, a limitation of liability clause on the back of Gottlieb’s finished goods contract was unenforceable. The trial court declined to enforce the provision concluding that by operation of law, it was not a part of the contract. Gottlieb appealed.