New Jersey Transit Corp. v. Harsco Corp.

• Decision Date: 07 August 2007
• Docket Number: No. 06-3507.,06-3507.
• Citation: 497 F.3d 323
• Parties: NEW JERSEY TRANSIT CORPORATION, Appellant v. HARSCO CORPORATION; Harsco Track Technologies, Division of Harsco Corporation; Harsco Fairmont Tamper Track Technologies, Division of Harsco Corporation; W.W. Williams Southeast, Inc.; Detroit Diesel Corporation.
• Court: U.S. Court of Appeals — Third Circuit

497 F.3d 323

NEW JERSEY TRANSIT CORPORATION, Appellant v. HARSCO CORPORATION; Harsco Track Technologies, Division of Harsco Corporation; Harsco Fairmont Tamper Track Technologies, Division of Harsco Corporation; W.W. Williams Southeast, Inc.; Detroit Diesel Corporation.

No. 06-3507.

United States Court of Appeals, Third Circuit.

Argued June 28, 2007.

Opinion Filed: August 7, 2007.

David W. Smith [Argued], Kevin J. Hughes, Cozen & O'Connor, Philadelphia, PA, for Appellant.

John J. Weinholtz [Argued], David H. Tennant, Nixon Peabody LLP, Buffalo, NY, David W. Field, Lowenstein Sandler PC, Roseland, NJ, for Appellee Harsco Corp.

E. Graham Robb, John C. Falls, John A. Miller, Jr. [Argued], Christie, Pabarue, Mortensen and Young, PC, Philadelphia, PA, Counsel for Appellees Detroit Diesel Corp., W.W. Williams Southeast, Inc. et al.

Before: BARRY, FUENTES, and GARTH, Circuit Judges.

OPINION

GARTH, Circuit Judge:

This appeal requires us to decide if, in a contract governed by Article 2 of New Jersey's Uniform Commercial Code ("U.C.C."), see N.J. Stat. Ann. § 12A:2-101 et seq., appellant New Jersey Transit Corporation ("Transit") can rely on the implied warranties of merchantability and fitness for a particular purpose to recover damages, where the contract's one-year express warranty had expired at the time of the loss. The District Court, exercising diversity jurisdiction, 28 U.S.C. § 1332, granted summary judgment in favor of appellee Harsco Corporation ("Harsco") and all other appellees,¹ holding that the express warranty of one year governs. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We will affirm.

I.

In March 1998, Transit issued an Invitation for Bid for the procurement of a new track geometry inspection vehicle ("TGIV"). The Invitation for Bid included Transit's required specifications for the TGIV; 57 paragraphs over 27 pages detailed all the equipment, material, and design requirements Transit mandated for the TGIV. Paragraph 55 stated:

Warranty:

The contractor shall warranty the car and all equipment and components installed on it for one (1) year after break in period and final acceptance. This shall be one (1) warranty and shall be provided by the contractor, not the suppliers, subcontractors, or anyone else. The warranty period shall start on the day after the service representative leaves and the car has been finally accepted. Final acceptance is when NJ TRANSIT inspects the car after the service representative has been on the property for at least one (1) week and the car is found to meet specifications and is functioning properly. Abuse (by NJ TRANSIT), accidents and lack of proper (as stated in instruction books) maintenance are not covered by the warranty. Minor items, like lamps and fuses, are not part of the warranty. The warranty shall cover the cost of both parts and labor required to repair defects that occur during the term of the warranty. Corrections shall be made in a timely manner. Any modifications requiring redesign necessary to satisfy the warranty shall be completed within thirty (30) calendar days of notification.

(App.456.) (emphasis added).

In June 1998, Harsco submitted a bid to Transit to manufacture the TGIV at a price of $2,296,500. As required by Transit's bid procedure, Harsco also submitted a technical proposal dated May 22, 1998, setting forth the details as to how Harsco planned to satisfy all 57 paragraphs of Transit's specifications for the TGIV.

Harsco was awarded the contract. The contract attached and incorporated the specifications that were included in Transit's Invitation for Bid, including paragraph 55, the warranty provision. Harsco signed and returned the copies of the contract, and Transit provided Harsco with a copy of the fully-executed contract on August 24, 1998.

Appellee Detroit Diesel Corporation ("Detroit Diesel"), the manufacturer of the diesel drive engine Harsco used in the TGIV, and appellee W.W. Williams Southeast, Inc. ("Williams"), the Detroit Diesel distributor that sold the engine to Harsco, provided a one-year limited warranty for the engine. The limited warranty provided coverage for the repair or replacement of any engine component that failed during the first twelve months of operation as a result of a defect in material or worksmanship. It also provided that:

THIS LIMITED WARRANTY IS THE ONLY WARRANTY APPLICABLE TO THESE ENGINES AS USED IN CONSTRUCTION AND INDUSTRIAL APPLICATIONS. DETROIT DIESEL CORPORATION MAKES NO OTHER WARRANTIES EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY

OR FITNESS FOR A PARTICULAR PURPOSE. DETROIT DIESEL CORPORATION SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES AS DESCRIBED ABOVE.

(App.559.) The terms of this warranty were also included with the Engine Operator's Guide provided to Transit.

Harsco delivered the TGIV to Transit in April 2000, and it was placed in service in June or July 2000. According to Transit's allegations, on or about September 17, 2002, while "Transit employees were operating the TGIV under normal and foreseeable conditions, the engine of [the] TGIV caused and/or contributed to the cause of a fire" and "[a]s a result of the fire, the TGIV was a total loss." (App. 74 at ¶¶ 12, 13.)

Transit filed a complaint in the United States District Court for the District of New Jersey against Harsco on June 4, 2003, alleging claims for negligence, product liability, and breach of warranties. In turn, Harsco filed a third-party complaint against Detroit Diesel and Williams, alleging claims for contribution, indemnification, and breach of warranties. Transit then filed an amended complaint, adding Detroit Diesel and Williams as direct defendants. In the amended complaint, Transit alleges that Harsco, Detroit Diesel, and Williams breached both the express warranty and the warranties implied in the sale under the New Jersey U.C.C. Transit alleges that it sustained property damage and extra expenses of over $3 million.

Harsco filed a motion for summary judgment,² arguing, inter alia, that any applicable warranty governing the TGIV had expired at the time of the fire. The District Court heard oral argument on this issue, and rendered an oral opinion granting summary judgment in favor of all appellees. Transit appeals.

II.

We exercise plenary review over a district court's order granting summary judgment. Horn v. Thoratec Corp., 376 F.3d 163, 165 (3d Cir.2004). As did the District Court, we must view the facts in the light most favorable to the non-moving party, and draw all reasonable inferences therefrom in that party's favor. Id. at 166. Summary judgment is appropriate only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

III.

Transit alleges that Harsco breached both the express warranty and the implied warranties of fitness for a particular purpose and merchantability. There is no disagreement that paragraph 55 of the contract provided an express warranty of one year; the dispute here focuses on whether paragraph 55 also limited the duration of any implied warranties to one year.

As the contract at issue here involved the sale of goods, the parties agree that it is governed by Article 2 of the U.C.C., as adopted by New Jersey. See N.J. Stat. Ann. § 12A:2-101 et seq. There are several provisions of the U.C.C. relevant to this dispute. First, section 12A:2-314 provides, in relevant part, that "[u]nless excluded or modified (12A:2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind." N.J. Stat. Ann. § 12A:2-314(1). The next section, 12A:2-315, states that:

[w]here the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

N.J. Stat. Ann. § 12A:2-315. Section 12A:2-316, entitled "Exclusion or modification of warranties," declares, in part, that:

(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof."

N.J. Stat. Ann. § 12A:2-316(2). Finally, section 12A:2-725, entitled "Statute of limitations in contracts for sale," provides, in part, that:

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made. . . .

N.J. Stat. Ann. § 12A:2-725(1), (2).

Transit argues that in order to "exclude or modify" either the implied warranty of merchantability or fitness for a particular purpose, the contract must satisfy the requirements of § 12A:2-316. In that regard, Transit points out that paragraph 55 does not mention the word "merchantability." Nor does paragraph 55 include any general language, such as that offered in § 12A:2-316, to disclaim...