Federal Signal Corp. v. Safety Factors, Inc.
| Decision Date | 15 December 1994 |
| Docket Number | No. 60970-5,60970-5 |
| Citation | 886 P.2d 172,125 Wn.2d 413 |
| Court | Washington Supreme Court |
| Parties | , 25 UCC Rep.Serv.2d 765 FEDERAL SIGNAL CORPORATION, Respondent, v. SAFETY FACTORS, INC., Appellant. |
Law Offices of Blado Stratton, P.S., Barbara Stratton, Tacoma, for respondent.
This case presents issues of express warranties, implied warranties, mitigation, and damages. Appellant Safety Factors, Inc. (Safety Factors) bought seven Night Warrior light towers from Respondent Federal Signal Corporation (Federal Signal). Safety Factors experienced a number of problems with the equipment and never paid Federal Signal for the towers. Federal Signal sued Safety Factors to recover amounts due and Safety Factors counterclaimed for damages for breach of warranty. The trial court found in Federal Signal's favor. The case was then certified for appeal to this court. We reverse several of the trial court's conclusions and remand for additional findings.
Federal Signal sued Safety Factors to collect amounts owed for items purchased, including the price of the light towers. 1 Safety Factors counterclaimed that Federal Signal breached both express and implied warranties and that it had suffered incidental and consequential damages as well as general damages. Safety Factors alleged no specific efforts to mitigate other than giving Federal Signal notice of the breaches. In its reply, Federal Signal did not plead failure to mitigate, but only raised affirmative defenses of an account stated, limited warranty, excluded damages, and disclaimer. Trial was before the bench.
Safety Factors is in the business of renting, repairing, and selling equipment. The Night Warrior light towers were purchased for rental and sale. Steve Fors, president of Safety Before renting or selling the Night Warriors, Safety Factors tested the towers "through a full field of motion" for approximately 5 minutes without incident. Report of Proceedings (RP), at 182-83, 211-12. However, problems arose as soon as the towers were used in the field, beginning in late February 1989 with the first rental customer, Tucci & Sons. The first night Tucci & Sons used the towers, it experienced what the parties referred to as the "restrike problem". RP, at 183-84. The lamps would either fail to relight following an interruption of operation or shut down once the lamps reached full intensity. One of the towers would not run because the fuel lines were reversed. Safety Factors replaced these with other towers after it unsuccessfully attempted to repair the defective towers. On the second night, one of the replacement towers failed due to the restrike problem. Tucci & Sons experienced the problem with all of the rental towers over a 4- or 5-day period until it threw the towers off the job.
Factors, testified that before Safety Factors purchased the light towers he and David Robbins of Federal Signal discussed the capabilities and features of the Night Warrior and compared this newer product to the TPME, an older model with which Safety Factors had good experiences. These statements were made either orally or in an advertising brochure. Safety Factors purchased seven of these newer towers.
Within a week, Brian Gillespie, Safety Factors' service manager at the time, contacted Herbert Moore at Federal Signal regarding the problem. Moore ran some tests but could not simulate the problems. He then came out to Safety Factors in an effort to resolve the problem. Moore testified that he visited twice, but Gillespie could only recall one visit "for sure". RP, at 188. Moore said that the second time he was met by representatives from Hatz, the manufacturer of the Night Warrior engine, and Lima, the manufacturer of its generator. This time, Moore brought a prototype device that he believed would fix the towers, once installed. The restrike problem was finally traced to the Lima generator which did By sometime in May, a local Lima generator service company, Cascade Electric, retrofitted all of Safety Factors' Night Warriors with Moore's device, at no cost. "The fix essentially was a voltage regulator device that would go between the generator as the source of power and the lighting unit, which is a ballast in a light bulb, ... and it was a voltage regulator that compensated for the mismatch between the source of power and the use of power." RP, at 50. Before renting the towers out again, Safety Factors tested the towers to insure that they would not fail. The towers were ready for rental by the end of May 1989 and Safety Factors resumed renting the towers in June.
not meet the towers' power requirements. Moore concluded that Lima would have to take care of the problem.
Immediately, another major problem arose. Excessive oil leakage from the diesel motor caused the towers to shut down. Thomas Hallett, Safety Factors' current service manager, described the problem: RP, at 402; see also RP, at 191-92. Gillespie opined that this was caused by "[e]xcessive vibration". RP, at 216. He attempted to fix this problem by tightening the bolts and using Locktight and silicone "to lock this device down so it wouldn't vibrate apart again". RP, at 191. This solved the problem, but only temporarily. Gillespie called Federal Signal and was referred to All Power, the "authorized service agent" for Hatz, the engine manufacturer. RP, at 328-29. Federal Signal said the problem would be fixed "under warranty". RP, at 215-17. At trial, witnesses testified that they were unsure what warranty applied. According to Fors, Federal Signal referred them to Hatz, stating that the problem was with the engine manufacturer, not with it. Hatz then referred Safety Factors to All Power. Fors admitted that Safety Factors did not contact Federal Signal again because "they said that they wouldn't ... accept any of the problems for the engine". RP, at 333. It was undisputed that Safety Factors All Power was backlogged with other work and the first unit was not accepted for repair until October. Ultimately, the repairs were unsuccessful; the repaired units "[c]ontinuously" leaked oil within 2 weeks of being rented. RP, at 329, 402. Hallett estimated that the units went back to All Power twice each. All Power attempted to repair the units for 9 to 12 months before refusing to do any more repairs under warranty. Safety Factors itself eventually came up with a solution. Hallett described the problem as a design defect--insufficient motor mounts. He was able to "make the bond between where the oil leak is a more rigid unit so the vibration doesn't affect it ...". RP, at 403. He added a gasket and a different commercial engine sealer, "replaced the Allen head screws with hex headed bolts and a lock washer", "squashed the threads on the bolts to make them lock and not come out", and "used a commercial thread locker chemical to hold them in". RP, at 404. By the end of July 1991, Hallett made this repair to every tower.
had to switch "[q]uite a few" towers for its customers as a result of this leakage problem. RP, at 223.
Donald Beck of Robinson Construction, a customer of Safety Factors, testified that the towers had a problem with the low pressure oil lights as well. Beck stated that the light would come on without reason, causing the towers to shut down automatically. Beck testified that his company solved the problem on one tower by clipping the wires to the oil light.
Another problem that arose "from day one" was the failure of the electric winches to raise and lower the lights, unlike the "touch of a finger" representations in the brochure. RP, at 299, 396; Def.'s Ex. 20; see also RP, at 122. Beck stated that his company "had a lot of trouble" with the winches: "They'd go up fine, but half the time you couldn't get them back down." RP, at 435. Because of this, his company had to grab the towers and move them by crane "because it was the only way you could move them with the tower standing 30 feet in the air". RP, at 435-36. This technique caused damage to the mast of one of the light towers. Hallett testified that the winches were "grossly underpowered".
RP, at 396. He further explained: "The electric motor that dr[o]ve this had a high carbon steel gear that ran against some aluminum or pot metal teeth on the inside of this wheel. The motor was underpowered for this whole system to start with, and with this aluminum, any sort of binding in the mast, it would chew the gear up and the motor would go out." RP, at 396
The problem with the winches did not end there. They were not watertight and leaks caused the brushes to stick and the towers to shut down. This problem occurred "[o]ften", contradicting the all-weather durability representations in the brochure. RP, at 397. To solve this problem, Hallett dismantled the winches, cleaned all the pieces, and reinstalled them. He had to do this to "[v]irtually all" of the towers. RP, at 397. Safety Factors "recently" solved all of its winch problems by replacing the pulleys and installing "more robust ... hand-operated winches, rather than electric". RP, at 397.
Other problems occurred. Excessive vibration caused the ignitions mounted on the generator to vibrate apart. The switch itself and its contacts would come apart, the wires that connected the ignition switch to other components would break off, and the unit would shut down. This happened every time each of the towers was used. Hallett finally fixed the problem by rewiring the entire system. He installed a "more robust alternator" and replaced the plastic ignition switches--which he described as "of insufficient strength for the vibration"--with "an after market steel switch". RP, at 400-01.
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