Frey Dairy v. A.O. Smith Harvestore Products, Inc., 88-1285
| Decision Date | 22 September 1989 |
| Docket Number | No. 88-1285,88-1285 |
| Parties | 9 UCC Rep.Serv.2d 925, Prod.Liab.Rep.(CCH)P 12,386 FREY DAIRY, a Michigan co-partnership, Plaintiff-Appellant, v. A.O. SMITH HARVESTORE PRODUCTS, INC., a Delaware corporation, and Michigan Glass Lined Storage, Inc., a Michigan corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Mark Granzotto (argued), Detroit, Mich., John Paterson, Sandusky, Mich., for Frey Dairy.
Jack J. Mazzara (argued), William Vanderhoef, Detroit, Mich., for A.O. Smith Harvistore Products, Inc.
Terry S. Welch, Michael Reynolds (argued), Mt. Clemens, Mich., for Michigan Glass Lined Storage, Inc.
David Aldrich, Lansing, Mich., for Blue Water Harvestore Systems, Inc.
Before MERRITT and NELSON, Circuit Judges, and LIVELY, Senior Circuit Judge.
Frey Dairy, plaintiff-appellant in this Michigan contract and tort law case, challenges the order of the District Court granting summary judgment to defendants for damages arising from the performance of grain silos manufactured by defendant A.O. Smith Harvestore Products, Inc. and sold to Frey Dairy by defendant Michigan Glass Lined Storage, Inc. 680 F.Supp. 253.
Specifically, Frey Dairy challenges as erroneous the District Court's ruling that its tort claims are barred by the economic loss doctrine, a judicially created doctrine which bars recovery in tort where the relationship between the parties is contractual and the only losses alleged are economic. The doctrine is used when a contract does not spell out the legal remedies contemplated by the parties with clarity and when the provisions of a contract do not specifically waive tort remedies in favor of enumerated contract remedies. Additionally, Frey Dairy challenges as erroneous the District Court's ruling that Frey Dairy's breach of implied warranty claim is time-barred under the statute of limitations of the Michigan Uniform Commercial Code, which requires that all claims be brought within four years of tender of delivery, regardless of when the breach was discovered.
We conclude, however, that the very contract which Frey Dairy entered into with Michigan Glass precludes the relief it now requests. The contract itself expressly waives tort remedies in favor of limited contract remedies which the plaintiff does not seek to enforce in this action. For this reason, we affirm the order of the District Court dismissing the case.
Frey Dairy is a Michigan co-partnership which operates a large dairy farm in Brown City, Michigan. In the spring of 1980, Frey Dairy entered into an agreement to purchase three new scientifically designed, steel and glass silos manufactured by Harvestore and constructed and distributed by Michigan Glass. The purchase order, signed by Mike Frey, Lulubell Frey and David Siegers as buyers, contained inter alia the following "Preamble":
Preamble--Buyer understands the conditions of use of the products and is not relying on the skill or judgment of the Manufacturer or Seller in selecting them because Buyer acknowledges that farming and livestock feeding results are very much the product of individual effort combined with various climatic, soil, water, growing and feeding conditions which are beyond the control of the Manufacturer and Seller. Buyer recognizes that any advertisements, brochures, and other written statements which he may have read, including any farm profit plan which may have been shown to him, as well as any oral statement which may have been made to him, concerning the potential of the Harvestore and or Slurrystore units and allied machinery and equipment, are not guarantees and he has not relied upon them as such because the products will be under Buyer's exclusive management and control.
The purchase order contained the following "WARRANTY OF MANUFACTURER AND SELLER" clause:
If within the time limits specified below, any product sold under this purchase order, or any part thereof, shall prove to be defective in material or workmanship upon examination by the Manufacturer, the Manufacturer will supply an identical or substantially similar replacement part f.o.b. the Manufacturer's factory, or the Manufacturer, at its option, will repair or allow credit for such part. The Seller warrants only that the foundation will be properly installed and that the product will be erected in strict conformance with the Manufacturer's specifications. It is not intended hereby, and under no circumstances shall this writing be so construed, to extend any warranty whatsoever by A.O. Smith Harvestore Products, Inc. ("AOSHPI") to or for any product sold under this purchase order which has not been manufactured by or for AOSHPI and marked accordingly.
The purchase order also contained the following "DISCLAIMER":
SECOND DISCLAIMER
NO OTHER WARRANTY, EITHER EXPRESS OR IMPLIED AND INCLUDING A WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE HAS BEEN OR WILL BE MADE BY OR IN BEHALF OF THE MANUFACTURER OR THE SELLER OR BY OPERATION OF LAW WITH RESPECT TO THE EQUIPMENT AND ACCESSORIES OR THEIR INSTALLATION, USE, OPERATION, REPLACEMENT OR REPAIR. NEITHER THE MANUFACTURER NOR THE SELLER SHALL BE LIABLE BY VIRTUE OF THIS WARRANTY, OR OTHERWISE, FOR ANY SPECIAL OR CONSEQUENTIAL LOSS OR DAMAGE (INCLUDING BUT NOT LIMITED TO THOSE RESULTING FROM THE CONDITION OR QUALITY OF ANY CROP OR MATERIAL STORED IN THE STRUCTURE) RESULTING FROM THE USE OR LOSS OF THE USE OF EQUIPMENT AND ACCESSORIES. THE MANUFACTURER MAKES NO WARRANTY WITH RESPECT TO THE ERECTION OR INSTALLATION OF THE EQUIPMENT, ACCESSORIES, OR RELATED EQUIPMENT BY THE HARVESTORE DEALER, WHO IS AN INDEPENDENT CONTRACTOR, OR BY ANY OTHER INDEPENDENT CONTRACTOR. IRRESPECTIVE OF ANY STATUTE, THE BUYER RECOGNIZES THAT THE EXPRESS WARRANTY SET FORTH ABOVE, IS THE EXCLUSIVE REMEDY TO WHICH HE IS ENTITLED AND HE WAIVES ALL OTHER REMEDIES, STATUTORY OR OTHERWISE.
Finally, the purchase order contained the following "ACKNOWLEDGEMENT AND RELIANCE" clause:
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