A.C. Hoyle Co. v. Sperry Rand Corp.

• Decision Date: 16 November 1983
• Docket Number: Docket No. 64037
• Parties: A.C. HOYLE COMPANY, a Michigan corporation, Plaintiff-Appellant, v. SPERRY RAND CORPORATION, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 326

340 N.W.2d 326

128 Mich.App. 557

A.C. HOYLE COMPANY, a Michigan corporation, Plaintiff-Appellant, v. SPERRY RAND CORPORATION, Defendant-Appellee.

Docket No. 64037.

Court of Appeals of Michigan.

Submitted May 20, 1983.

Decided Aug. 23, 1983.

Released for Publication Nov. 16, 1983.

Petrucelli & Petrucelli by Vincent R. Petrucelli, Iron River, for plaintiff-appellant.

Bodman, Longley & Dahling by Walter O. Koch and Thomas Van Dusen, Troy, for defendant-appellee.

Before CYNAR, P.J., and J.H. GILLIS and WAHLS, JJ.

PER CURIAM.

Plaintiff, A.C. Hoyle Company, appeals as of right from an April 13, 1982, order of partial summary judgment against it pursuant to GCR 1963, 117.2(1), failure to state a claim upon which relief can be granted.

In its complaint plaintiff alleged that it had entered into a contract with Bethlehem Steel Corporation to supply deck machinery for four ocean-faring oil tankers which Bethlehem was building. The machinery to be supplied by plaintiff was designed to be hydraulically powered.

Plaintiff contracted with Vickers, a division of the defendant corporation, for the design, manufacture, and delivery of 60 hydraulic motors to be incorporated into the system powering the deck machinery. Defendant, however, failed to deliver the motors according to the contracted delivery schedule, and the motors, when delivered and installed, failed to conform to the agreed-upon specifications. Defendant admitted both these allegations.

Plaintiff alleged that it was not able to cancel the contract with defendant because the deck machinery was designed solely for the application of the defendant's motors and the urgencies of Bethlehem Steel's sailing dates did not allow for the substitution of other hydraulic motors.

Plaintiff further alleged:

"[I]n an effort to remedy SPERRY-VICKERS' breach of contract and honor its contract with Bethlehem Steel Corporation, HOYLE was required to expend considerable time and expense in correcting the defective SPERRY-VICKERS split-rise motors; was required to make substantial engineering revisions; was required to incur additional costs from subcontractors; was required to secure substitute subcontractors at a greater expense and cost to complete portions of the contract and that these damages amounted to a sum of money in the excess of One Hundred Ninety Thousand ($190,000.00) Dollars and were a direct proximate cause of SPERRY-VICKERS' breach of contract."

Plaintiff did not allege that the motors were themselves damaged by virtue of their defect, nor did plaintiff allege that the motors caused physical injury to persons or other property.

In its complaint plaintiff sought damages under three theories: breach of contract (Count I), breach of express and implied warranties (Count II) and negligence (Count III). Defendant moved for partial summary judgment as to the negligence count. In that count, plaintiff alleged:

"2. The Defendant owed a duty to plaintiff to properly design the split-rise MHT hydraulic motors, to provide correct technical data to Plaintiff, to inform Plaintiff of any known defects in its equipment, to properly manufacture the MHT motors, to use materials free of any defects of any nature, and the duty to maintain adequate control.

"3. The Defendant, in violation of these duties owed Plaintiff, did negligently design the split-rise MHT hydraulic motors, did negligently provide erroneous technical data to Plaintiff, which caused Plaintiff to incorporate SPERRY-VICKERS' equipment in the winch units, were negligent in failing to inform Plaintiff of any known defects in its equipment, prior to the failure of same alleged herein, and additionally were negligent in failing to properly manufacture the MHT motors, were negligent in using defective materials and were negligent in failing to maintain adequate quality control."

The trial court, in reliance on McGhee v. General Motors Corp., 98 Mich.App. 495; 296 N.W.2d 286 (1980), granted defendant's motion and dismissed the negligence count.

In McGhee, plaintiff purchased a used truck tractor from defendant. While plaintiff was working on the tractor's transmission, the cab fell from the frame to the ground and sustained substantial damage. Plaintiff brought an action for damages against defendant, claiming breach of express and implied warranties, fraud, and negligence. This Court affirmed the trial court's entry of summary judgment dismissing all counts.

Regarding dismissal of the negligence count, the Court held that "no cause of action is stated in the complaint, where the foundation of the relationship between the parties is contractual and no personal injury or damage to property other than the subject goods themselves is alleged". In so holding, the Court adopted the position expressed in S.M. Wilson & Co. v. Smith International, Inc., 587 F.2d 1363, 1376 (CA9, 1978):

" 'Where the suit is between a non-performance seller and an aggrieved buyer and the injury consists of damage to the goods themselves and the costs of repair of such damage or a loss of profits that the deal had been expected to yield to the buyer, it would be sensible to limit the buyer's rights to those provided by the Uniform Commercial Code. See Keeton, Torts, Annual Survey of Texas Law, 25 SW L J 1, 5 (1971); Franklin, When Worlds Collide: Liability Theories and Disclaimers In Defective-Product Cases, 18 Stan L Rev 974, 996-97, 1012-14 (1966). To treat such a breach as an accident is to confuse disappointment with disaster. Whether the complaint is cast in terms of strict liability in tort or negligence should make no difference.' "...