## Facts

- Southern Recycling, LLC contracted to buy 500,000 pounds of scrap copper wire from Gibbs International, Inc.
- The written delivery term required goods to be “F.O.B., loaded in bulk into Buyer’s 20’ sea container at Port of Manila, Philippines,” with shipments completed by November 30, 2012, and with buyer and seller representatives signing bills of lading at each loading.
- Payment was due by wire transfer the next business day after the buyer’s inspection and acceptance and the seller’s delivery as described, with incremental payments per shipment.
- Gibbs sourced the material through a third party, Regent Phoenix Imports and Exports.
- Thirteen containers were loaded in the Philippines, transported to the Port of Manila, shipped to Long Beach, California, and moved overland to Dallas, Texas.
- When opened in Dallas, the containers allegedly contained debris (e.g., cement blocks and slag) rather than scrap copper wire.
- Gibbs’s corporate representative testimony did not materially dispute that the contents had been substituted during the shipping process.
- CNA Insurance Company Limited paid Southern’s loss and sued as a subrogated co-plaintiff.
- Plaintiffs moved for partial summary judgment on liability for breach of contract and moved to exclude additional evidence offered by Gibbs.

## Issues

1. Under the contract’s “F.O.B.” term tied to loading at the Port of Manila and the inspection/loading provisions, when did risk of loss shift from Gibbs to Southern?
2. Did Gibbs breach the sales contract by failing to deliver conforming goods where the containers arrived with debris rather than scrap copper wire?
3. Should Gibbs’s additional evidence be excluded, and if considered, did it create a genuine dispute of material fact defeating summary judgment?

## Decision

- The court denied plaintiffs’ motion to exclude Gibbs’s additional evidence.
- The court granted plaintiffs’ motion for partial summary judgment on liability for breach of contract.
- The court held that, on the undisputed record, Southern received nonconforming goods, establishing Gibbs’s breach as a matter of law.
- The court treated disputes about the precise point in transit when the substitution occurred as immaterial to liability under the contract and the UCC framework.
- The case proceeded with liability resolved for plaintiffs, leaving damages and remaining issues for later proceedings.

## Legal Principles

- A contract for the sale of goods is governed by the UCC as adopted by the forum, including rules on delivery terms and risk of loss.
- “F.O.B.” terms under UCC § 2-319 are construed in context; accompanying contractual requirements (location, loading method, inspection/acceptance, documentation) may affect when risk shifts.
- A seller’s core obligation is to tender conforming goods as required by the contract; delivery of nonconforming goods constitutes breach.
- Uncertainty about which third party caused a loss during transit does not relieve the seller of contractual responsibility absent an effective contractual allocation of that risk to the buyer.
- On summary judgment, disagreements that do not affect whether the buyer received conforming goods under the contract are not “material” disputes sufficient to defeat judgment as a matter of law.

## Conclusion

The court concluded that the contract required Gibbs to tender conforming scrap copper wire in the specified manner and location, and because Southern ultimately received debris rather than copper, Gibbs was liable for breach; evidentiary disputes did not create a material fact issue preventing partial summary judgment on liability.


S. Recycling, LLC v. Gibbs Int'l, Inc., No. 7:13-cv-3125-BHH, 2016 WL 1258402 (D.S.C. Mar. 31, 2016)