Craftsman Builder's Supply, Inc. v. Butler Mfg. Co.

• Decision Date: 05 March 1999
• Docket Number: No. 970345,970345
• Parties: Prod.Liab.Rep. (CCH) P 15,464, 364 Utah Adv. Rep. 22, 1999 UT 18 CRAFTSMAN BUILDER'S SUPPLY, INC., a Utah corporation, Plaintiff and Appellant, v. BUTLER MANUFACTURING COMPANY, a Delaware corporation, and U.S. Construction, Inc., a Utah corporation, Defendants and Appellees.
• Court: Utah Supreme Court

Page 1194

974 P.2d 1194

Prod.Liab.Rep. (CCH) P 15,464, 364 Utah Adv. Rep. 22,

1999 UT 18

CRAFTSMAN BUILDER'S SUPPLY, INC., a Utah corporation Plaintiff and Appellant, v. BUTLER MANUFACTURING COMPANY, a Delaware corporation, and U.S. Construction, Inc., a Utah corporation Defendants and Appellees.

No. 970345.

Supreme Court of Utah.

March 5, 1999.

Taylor D. Carr, Trent J. Waddoups, Salt Lake City, for Craftsman Builders.

Royal I. Hansen, Salt Lake City, for Butler Manufacturing.

George T. Naegle, Salt Lake City, for U.S. Construction.

RUSSON, Justice:

¶1 Craftsman Builder's Supply, Inc., appeals from the district court's entry of summary judgment barring its claims against defendants. Craftsman sued Butler Manufacturing Company and U.S. Construction, Inc., for damages arising out of the collapse of Craftsman's building. The district court held that Utah Code Ann. § 78-12-25.5 (1996) (the "builders statute of repose") barred Craftsman's causes of action. We affirm.

BACKGROUND

¶2 In 1977, Craftsman entered into a contract with U.S. Construction wherein U.S. Construction agreed to locate and erect a prefabricated metal building for Craftsman. Pursuant to the specifications provided by Craftsman, the roof of the building was to withstand forty pounds per square foot. U.S. Construction ordered the building from Butler and erected it in 1978. Fifteen years later, on February 25, 1993, the roof of the building collapsed under the weight of snow.

¶3 On February 24, 1995, Craftsman sued Butler, seeking damages under theories of products liability, breach of express warranty, breach of implied warranty of merchantability, and negligence. Craftsman later amended its complaint, adding U.S. Construction as a defendant. Thereafter, U.S. Construction moved for summary judgment, arguing that Craftsman's claims were barred by the applicable statutes of limitation and by the builders statute of repose. The district court agreed and, on August 19, 1996, granted U.S. Construction's motion.

¶4 First, the court held that the products liability action was filed within the two-year products liability statute of limitations. The products liability statute requires the action to be brought within two years from the time that both the harm and its cause were discovered or should have been discovered. See Utah Code Ann. § 78-15-3 (1996). Because the court found no evidence that Craftsman should have discovered its action prior to February 25, 1993, the products liability action filed on February 24, 1995, was within the limitations period.

¶5 Second, the court held that the contract to locate and erect a prefabricated metal building was predominantly a contract for the sale of goods and, as a result, the Uniform Commercial Code's ("UCC") four-year statute of limitations applied. Id. § 70A-2-725 (Supp.1998). Section 70A-2-725 provides in part:

(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, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.

Craftsman argued that the transaction was for the sale of services and, thus, the UCC statute of limitations should not apply, but that even if it did apply, the written specifications that the roof was to withstand forty pounds per square foot constituted a warranty explicitly extending to future performance. Therefore, Craftsman asserted, its warranty causes of action did not accrue until 1993 when the building collapsed. The court rejected this argument and held that the references in the building's specifications to "a live load of 40" and "40# psf LL" did not "create a credible issue of material fact that an explicit warranty was given" and that, as a result, the warranty claims were barred.

¶6 Third, the court held that under Utah Code Ann. § 78-12-25(3), an action for negligence must be brought within four years from the date on which the negligent act giving rise to the claim occurred and that any negligent act by U.S. Construction occurred in 1978; thus, the negligence claim was barred.

¶7 Fourth, the court held that in any event, all the claims, including the products liability claim, were subsumed and barred by the builders statute of repose. See § 78-12-25.5 (1996).

¶8 On October 23, 1996, Butler moved for summary judgment, arguing, as U.S. Construction did, that Craftsman's claims were barred by the applicable statutes of limitation and by the builders statute of repose. Craftsman opposed the motion, arguing that the builders statute of repose was unconstitutional under article I, section 11 of the Utah Constitution (the "open courts" clause). In granting Butler's motion, the court ruled that the applicable statutes of limitation and the builders statute of repose barred Craftsman's claims as set forth in its ruling on U.S. Construction's motion. The court also held that the builders statute of repose was constitutional.

¶9 Craftsman now appeals. First, Craftsman argues that the builders statute of repose violates the open courts clause and thus cannot operate to bar any of its claims. Craftsman further argues that the applicable statutes of limitation cannot bar its claims for the following reasons: (1) The warranty claims are not barred because the contract was for services, not goods, and, thus, the UCC statute of limitations does not apply. Alternatively, if the UCC statute applies, then the specification that the building's roof withstand forty pounds per square foot constituted an express warranty which extended to future performance; thus, the express warranty claim falls within the discovery rule provision of the UCC statute of limitations and is not barred. (2) The negligence cause of action is not barred because it did not accrue, and its four-year statute of limitations did not start to run, until the building collapsed in 1993 and Craftsman suffered damage. (3) The products liability claim is not barred because, as the court had previously held, it was filed within the two-year statute of limitations for products liability claims.

¶10 Second, Craftsman argues that even if the builders statute of repose is constitutional, then (1) it does not bar Craftsman's claims because the plain language of the statute provides that the periods of repose are "subject to" a discovery rule, and Craftsman brought its claims within two years after discovery; (2) it does not bar Craftsman's breach of express warranty claim because the alleged warranty that the roof withstand forty pounds per square foot extended beyond six years and was thus preserved under the terms of the statute; and (3) it does not bar Craftsman's products liability claim because the products liability statute of limitations is more specific and should apply instead of the broader builders statute of repose.

¶11 Therefore, the threshold issue before us is whether the builders statute of repose is constitutional under the open courts clause. Because we hold that the statute is constitutional, the remaining issues we must address are (1) whether the repose periods are "subject to" a discovery rule; (2) whether there was a warranty extending beyond six years, thus rendering the statute of repose inapplicable to the express warranty claim; and (3) whether the products liability statute of limitations should apply instead of the builders statute of repose, because the products liability statute is the more specific statute.

STANDARD OF REVIEW

¶12 Summary judgment is appropriate only when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Utah R. Civ. P. 56(c). When reviewing a grant of summary judgment, we review the district court's conclusions of law for correctness. See Taylor v. Ogden Sch. Dist., 927 P.2d 159, 162 (Utah 1996).

ANALYSIS

I. OPEN COURTS CLAUSE

¶13 We first address the constitutionality of the builders statute of repose under the open courts clause of the Utah Constitution. That statute provides that actions for injury to persons or property arising out of an improvement to real property must be brought within a certain number of years of the triggering event. See Utah Code Ann. § 78-12-25.5 (1996). ¹ If the action is for breach of contract or warranty, then the action must be brought within six years after completion of the improvement or abandonment of construction; if the breach is discovered in the sixth year, however, then the injured party has two additional years from the date of that discovery in which to bring the action. See id. § 78-12-25.5(4). ² All other actions, e.g., those based in tort, must be brought within twelve years after completion or abandonment, unless the act or omission giving rise to the action is discovered in the twelfth year, in which case the injured party has two years from the date of that discovery to commence the action. See id. § 78-12-25.5(5). ³ In any case, if the act or omission giving rise to the action is discovered or should have been discovered at any time prior to the six- and twelve-year periods, then the injured party only has two years in which to bring his claim. See id. § 78-12-25.5(3). ⁴

¶14 If the injured party discovers his cause of action before the respective six- and twelve-year periods have run, the statute acts as a statute of limitations. Statutes of limitation operate to preclude a cause of action after it has accrued and are "intended to compel the exercise of a right of action within a reasonable time and to suppress stale and fraudulent claims so that claims are advanced while evidence to rebut them is still fresh." Horton v. Goldminer's Daughter, 785 P.2d 1087, 1091 (Utah 1989). However, if the injured party does not discover (and...