Hydronic Energy, Inc. v. Rentzel Pump Mfg., LP

Decision Date29 October 2013
Docket NumberNo. A-12-828,A-12-828
PartiesHYDRONIC ENERGY, INC., APPELLEE, v. RENTZEL PUMP MANUFACTURING, LP, APPELLANT.
CourtNebraska Court of Appeals
MEMORANDUM OPINION AND JUDGMENT ON APPEAL

NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION

AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).

Appeal from the District Court for Douglas County: LEIGH ANN RETELSDORF, Judge. Affirmed.

James B Luers and Krista M. Carlson, of Wolfe, Snowden, Hurd, Luers & Ahl, L.L.P., for appellant.

E.J. Kelly and Patrick T. Vint, of Hopkins & Huebner, P.C., for appellee.

INBODY, Chief Judge, and IRWIN and RIEDMANN, Judges.

RIEDMANN, Judge.

I. INTRODUCTION

Rentzel Pump Manufacturing, LP (Rentzel), appeals from an order of the district court for Douglas County. After a bench trial, the district court found that Rentzel had breached the warranty it provided to Hydronic Energy, Inc. (Hydronic), that Hydronic had provided timely and sufficient notice of defective products, that there was a failure of the essential purpose of the warranty, and that Hydronic was entitled to damages. Because we find there was competent evidence to support the district court's findings, we affirm.

II. BACKGROUND

In 2007, Hydronic purchased a vertical turbine pump assembly from Rentzel to be installed in a new addition at a hospital in Omaha, Nebraska. The pump was to be used as part of the air conditioning system in order to cool the surgical rooms at the hospital. The pumps were designed to pump water from a pit to the cooling towers which then cool the chilled water so thechillers can create air conditioning for the surgical rooms. When the external temperature reaches 40 degrees, the pumps need to be working so that the chillers can be turned on. The pump was delivered and installed without incident.

In April 2008, Hydronic purchased two more identical pumps from Rentzel, referred to as "CTP-2" and "CTP-3." These two pumps were shipped on May 16, 2008. They were shipped partially assembled so that they would fit inside the building. In order for the pumps to be operational, they had to be put into the ground, reassembled, have a motor attached, and be wired to electricity. The pumps were assembled between May 27 and June 4, 2008, and started on May 21, 2009. CTP-2 "went online" on June 1, and CTP-3 "went online" on August 8.

Rentzel sold the pumps to Hydronic subject to a limited warranty, which provided:

[Rentzel] warrants to [Hydronic] on that products, materials and supplies ("Products") manufactured by [Rentzel] when properly installed, used and maintained, shall be free from defect in material and workmanship ("Defects["]). [Rentzel's] obligation under this warranty shall be limited to replacing or repairing the part or parts ("Warranty Service"), at [Rentzel's] option, which prove to contain Defects within twelve (12) months from the date of installation or fifteen (15) months from the date of shipment, whichever occurs first, provided that [Hydronic] gives [Rentzel] notice as hereinafter provided of any Defects and satisfactory proof thereof ("Warranty Claims"). Warranty Claims by [Hydronic] must be submitted to [Rentzel] or [Rentzel's] authorized representative, in writing, within thirty (30) days after the later of the pulling date or failure date of Products. Any defective part or parts, except for surface electronics, will be performed at the site of installation [sic]. Parts for which Seller provides replacement under this warranty shall become the property of Seller.

The agreement also included a limitation of liability, which provided, "In no event shall [Rentzel] be liable, either directly or indirectly, for any special, incidental or consequential damages including, but not limited to . . . costs and expenses incurred in connection with labor, overhead, transportation or substitute facilities or supply sources."

On August 12, 2009, Clint Kmoch, a salesman for Hydronic, e-mailed Tom Hogan, a product manager at Rentzel, notifying him that the motors in CTP-2 and CTP-3 were "running hot" and "over amping." Kmoch asked Hogan what the normal temperature and maximum temperature for the motors should be. Hogan responded the same day. The following month, Hogan e-mailed Jack Trisler, a sales manager for Hydronic, with the specifications for the pumps. In December, Kmoch contacted Hogan again about the motors in CTP-2 and CTP-3 running hot and over amping. Kmoch suggested that perhaps the impellers were trimmed to a size other than what was specified. The parties then continued to exchange e-mails in an attempt to diagnose the problem with the pumps.

In late January 2010, Trisler asked Ray Martin Company (Ray Martin), the mechanical engineer on the hospital project, for an estimate of the cost to remove and disassemble the pumps, replace the impellers, and reassemble the pumps. Trisler testified at trial that he requested this estimate because of the urgency of getting the pumps repaired before the external temperature reached 40 degrees, the baseline outdoor temperature at which the chillers wereneeded. At this time, the engineer and plant manager from the hospital continued to express concern over the temperature nearing 40 degrees.

Trisler sent Ray Martin's estimate to Hogan, and Hogan responded on February 1, 2010. Hogan stated that it was Rentzel's position that the problems with the pumps were not covered by the limited warranty due to lack of timely notice. At this point, Hydronic and Ray Martin believed the problem with the pumps was the result of improperly trimmed impellers. On February 5, Hogan again contacted Trisler and iterated Rentzel's position that the warranty had expired; however, Rentzel made the following offer:

If, after all other possible causes of the problems are eliminated, it is found necessary to remove the units, we strongly recommend a teardown inspection of the pumps at our facility. Should any pump assembly or manufacturing problems be discovered, those problems will be corrected, without waiver of the terms and conditions of our warranty, in an expeditious manner at no charge.

After another month of troubleshooting with Rentzel, Hydronic finally asked Ray Martin to remove the pumps for inspection. Ray Martin disassembled the pumps, removed the impellers, and took the impellers to America Machine Works, which discovered the impellers had been trimmed to 10.41 inches instead of 9.41 inches. American Machine Works trimmed the impellers to the proper size, and Ray Martin reassembled the pumps. After the impellers were trimmed and reinstalled, the pumps performed without further incident.

On March 22, 2010, Hydronic submitted the invoices from Ray Martin and American Machine Works to Rentzel. On May 21, Rentzel responded to the invoices and reiterated its position that notice of a defect was untimely and therefore not covered by the limited warranty.

Hydronic commenced this action on October 19, 2010. Following a bench trial, the district court resolved all issues in favor of Hydronic. The district court found that a defect in the pumps was present, because the impellers were not trimmed to the specified size, and that therefore, the warranty was implicated. The court determined that the warranty expired on August 16, 2009, 15 months after shipment, and that the August 12 e-mail constituted a timely, valid warranty claim under the terms of the limited warranty. The court found that the limited warranty failed in its essential purpose, and thus, Hydronic's damages were not limited to the cost of repairing or replacing the defective part. Finally, the district court found that Hydronic incurred $17,818.39 in expenses and was entitled to recover that amount from Rentzel.

Rentzel moved for a new trial, which the district court denied. Rentzel timely appealed to this court.

III. ASSIGNMENTS OF ERROR

Rentzel assigns, condensed, renumbered and restated, that the district court erred in (1) finding that Hydronic gave timely and sufficient notice of a warranty claim, (2) finding that Rentzel breached the limited warranty, (3) finding that the limited warranty failed in its essential purpose, (4) calculating the amount of damages to which Hydronic was entitled, and (5) failing to grant Rentzel a new trial.

IV. ANALYSIS

The purchase contract provides that it "shall be construed, interpreted and governed in accordance with the laws of the State of Oklahoma." We will therefore apply Oklahoma law to resolve the issues before us.

1. TIMELINESS AND SUFFICIENCY OF NOTICE
(a) Timeliness of Notice

Rentzel argues that the district court erred in failing to find that the warranty expired on June 4, 2009, a year from the date that it alleges installation of the pumps was complete. Pursuant to the terms of the agreement, the limited warranty was to expire 12 months from the date of installation or 15 months from the date of shipment, whichever occurred first. It is undisputed that the pumps were shipped on May 16, 2008, and that thus, if the "shipping date" provision of the warranty applies, the warranty expired on August 16, 2009. The parties disagreed on the date on which the warranty expired using the "installation date," however, because they did not agree upon what constituted "installation."

The first step in addressing a dispute over the language in a contract is for the court to determine as a matter of law whether the language is ambiguous. Andres v. OFB, 227 P.3d 1102 (Okla. Civ. App. 2009). Neither party in this case argues that the term "installation" is ambiguous, nor do we find it to be so. As such, the meaning of the term is a question of law and it should be given effect according to its plain and ordinary meaning. See, Ferguson Advisors, LLC v. Malherbe, 274 P.3d 839 (Okla. Civ. App. 2011); B.A.P., L.L.P. v. Pearman, 250 P.3d 332 (Okla. Civ. App. 2011).

Issues of law are reviewed de novo since an appellate court has plenary, independent and non-deferential authority to reexamine a trial court's legal...

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