Holbrook v. LINK-BELT CONST. EQUIPMENT

• Decision Date: 09 November 2000
• Docket Number: No. 24953-7-II.,24953-7-II.
• Citation: 12 P.3d 638,103 Wash.App. 279
• Parties: HOLBROOK, INC., a Washington corporation, Appellant, v. LINK-BELT CONSTRUCTION EQUIPMENT COMPANY, Isuzu Diesel of North American, Inc. and Howard Cooper Corporation, Respondents.
• Court: Washington Court of Appeals

12 P.3d 638

103 Wash.App. 279

HOLBROOK, INC., a Washington corporation, Appellant, v. LINK-BELT CONSTRUCTION EQUIPMENT COMPANY, Isuzu Diesel of North American, Inc. and Howard Cooper Corporation, Respondents.

No. 24953-7-II.

Court of Appeals of Washington, Division 2.

November 9, 2000.

Peter Thomas Petrich, Davies Pearson Pc, Tacoma, for Appellant.

Jerret E. Sale, Elizabeth Curie Kim, Bullivant Houser Bailey, P.c., John Alan Knox, Margaret A. Sundberg, Williams Kastner & Gibbs, Seattle, for Respondents.

HUNT, J.

Holbrook, Inc. (Holbrook) appeals the summary judgment dismissal of its product liability lawsuit to recover on warranties for a defective log loader from Link-Belt Construction Equipment Company and Isuzu Diesel of North America, Inc. Holbrook argues the trial court erred in ruling that statutes of limitations barred its claims. We affirm, holding that: (1) Holbrook's warranty claims do not fall within the "future performance" exception of the statute of limitations; (2) the warranty statute of limitations was not tolled by Link-Belt's and Isuzu's repair efforts; and (3) Holbrook's product liability claim was also time-barred because Holbrook knew of the defect more than three years before filing suit.

FACTS

Holbrook is a logging company. In August 1988, Holbrook entered into a "Flex Lease" agreement with Howard-Cooper Corporation, a Link-Belt distributor, for the purchase of a Link-Belt hydraulic log loader. The log loader was constructed from a converted excavator and powered by an Isuzu engine. Holbrook's president, Jerry Holbrook, negotiated the agreement with Howard-Cooper sales manager Cecil White. Under the "Flex Lease" agreement, Holbrook could rent the log loader for six months and then either purchase or return it. The, $266,574 purchase price included the cost of extended Link-Belt and Isuzu warranties.

Link-Bels issued its standard warranty when it delivered the log loader on September 9, 1988. The warranty provided:

[Link-Belt] warrants all products manufactured by it to be free from defects in material and manufacture at the time of shipment for twelve (12) months from date of shipment or 1500 hours of operation, whichever shall occur first. [Link-Belt] will furnish without charge, f.o.b. its factory, replacements for such [of] the parts as [Link-Belt] finds to have been defective at the time of shipment, or at [Link-Belt's] option, will make or authorize repairs to such parts....

(Emphasis added.) Link-Belt's extended warranty for powertrain components covered "a time period of thirty[-]six (36) months after initial delivery of the machine or 5000 operating hours, whichever occur[red] first."

Isuzu's standard engine warranty covered parts and labor for 12 months or 1,800 hours of operation under the following conditions:

[Isuzu's] products and parts, when shipped, will meet all applicable specifications and will be free from defects in material and workmanship....

All claims for defective products or parts under this warranty must be made in writing immediately upon discovery and, in any event, but not to exceed twelve (12) months after delivery....

The repair of defective engine parts qualifying under this warranty will be performed by an authorized service outlet, using new parts, within a reasonable time following the delivery of the engine to the service outlet's place of business.

(Emphasis added.) The extended Isuzu warranty, labeled an "Extended Service Plan," required Isuzu to "pay 100% of parts and labor to repair or replace" defective engine components for three years or 5,000 hours of operation, whichever occurred first.

The log loader was plagued by mechanical problems from the beginning. A Howard-Cooper mechanic had to fix "a fuel problem... [or] some filter" just to off-load the log loader from the delivery truck. And in the three or four months following delivery:

The hydraulic pressures were real sporadic and ... would spike and blow hoses. The boom control was extremely radical. It would shake. The pressures would get so high that it would shake the cab and [you] couldn't control the operation of the machine.

In November 1988, frustrated by the log loader's performance, Jerry Holbrook contacted White to ask about returning the log loader to Link-Belt and canceling the flex lease. White convinced Holbrook to keep the log loader, "insisting that Link-Belt and Howard-Cooper could fix" it. But according to Jerry Holbrook, "for far more than two years, Howard-Cooper, Link-Belt, Isuzu, and their authorized repair companies ... made repeated attempts to replace and repair parts on both the log loader and the engine" with little success. From 1989 through 1992, Howard-Cooper and Link-Belt represented that they could fix the log loader.

In April or May 1990, a Holbrook employee was operating the log loader when the cab broke apart from the rest of the machine. Jerry Holbrook examined the log loader and its detached cab both "on the job and at Howard-Cooper"; he suspected that the "the weld around the riser portion wasn't properly adhered, wasn't welded properly."

Sometime before 1992, Jerry Holbrook consulted an attorney regarding repair problems Holbrook was experiencing with Howard-Cooper and Link-Belt. Link-Belt continued to approve warranty claims for repairs by Howard-Cooper and its successor as late as February 1993. In May 1993, a Howard-Cooper mechanic confirmed Holbrook's earlier suspicion that the cab had not been properly welded to the body of the log loader.

In December 1993, Holbrook sued Link-Belt and Isuzu, later adding Howard-Cooper as a defendant.¹ Holbrook claimed negligent manufacture, breach of express and implied warranties, and violation of the Washington Product Liability Act (WPLA), RCW ch. 7.72. Jerry Holbrook later testified in his deposition that he did not fault Isuzu for the cab's separation.² The trial court granted Link-Belt and Isuzu summary judgment and dismissed Holbrook's case, ruling that the statutes of limitations had run on Holbrook's breach of warranty and WPLA causes of action.³

ANALYSIS

I. BREACH OF WARRANTY CLAIMS—TIMELINESS

The statute of limitations for a breach of warranty claim is "four years after the cause of action has accrued." RCW 62A.2-725(1). "A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach." RCW 62A.2-725(2).

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.

RCW 62A.2-725(2). In other words, the four-year limitations period normally begins to run upon delivery of the goods. But if goods are sold with a warranty of future performance, the limitations period runs from the date on which the defect is or should have been discovered.⁴

A. EXPRESS WARRANTIES OF FUTURE PERFORMANCE

Holbrook contends: (1) The log loader's extended warranties "explicitly extend to future performance";⁵ (2) therefore, the time for filing this action did not commence on the log loader's delivery date, some five years and three months before filing the complaint; (3) rather, it began to run "when the seller notified Holbrook that it considered the warranties expired and that it would not undertake any further attempts to repair."

No Washington appellate court has considered warranties under RCW 62A.2-725 similar to those issued by Link-Belt and Isuzu.⁶

Presumably ... a [future performance warranty] case would be one in which the seller gave a "lifetime guarantee" or one in which seller, for example, expressly warranted that an automobile would last for 24,000 miles or four years whichever occurred first. If the automobile failed in the 20,000th mile and after three years of driving, the buyer (if she had no notice or knowledge of the defect prior to the failure) would have four years from that date to commence her suit notwithstanding that her suit would then be brought seven years after the sale had occurred.

1 JAMES J. WHITE & ROBERT S. SUMMERS, UNIFORM COMMERCIAL CODE § 11-9, at 608-09 (4th ed.1995) (footnote omitted).

Holbrook relies primarily on Wienberg v. Independence Lincoln-Mercury, Inc., 948 S.W.2d 685 (Mo.Ct.App.1997), and Anderson v. Crestliner, Inc., 564 N.W.2d 218 (Minn.Ct. App.1997). In Wienberg, an automobile had a "bumper to bumper limited warranty" for 34 months or 34,000 miles, whichever occurred first. 948 S.W.2d at 687. The warranty provided that the manufacturer's

authorized dealers will repair, replace, or adjust all parts (except tires) that are found to be defective in factory-supplied materials and workmanship. The defects must occur under normal use of the car during the warranty coverage period.

Wienberg, 948 S.W.2d at 687 (emphasis added). The Missouri Court of Appeals held that the warranty was a future performance warranty because the manufacturer had promised to "repair or replace any defects in the vehicle ... for a specified period of time." Wienberg, 948 S.W.2d at 689-90.

The Link-Belt and Isuzu warranties, however, differ from the warranty in Wienberg. The Wienberg warranty contained a commitment to repair, to replace, or to adjust defects that might occur during a specified future period. The Link-Belt and Isuzu warranties, on the other hand, contained commitments to repair or to replace, during a limited time period, defects already present at the time of shipment.

Holbrook's reliance on Anderson is similarly misplaced. The warranty in Anderson provided that the hull and deck structure of a boat would "be free from any defects in material and workmanship for a period of five years," 564 N.W.2d at 221, and that the retailer would repair or replace the defects, 564 N.W.2d at 220. In characterizing this warranty as one of future performance, the Anderson court differentiated...