Industrial Uniform Rental Co., Inc. v. International Harvester Co.
| Decision Date | 15 July 1983 |
| Citation | 317 Pa.Super. 65,463 A.2d 1085 |
| Parties | , 36 UCC Rep.Serv. 762 INDUSTRIAL UNIFORM RENTAL COMPANY, INC. and Stork Diaper Service, Inc., Appellants, v. INTERNATIONAL HARVESTER CO. |
| Court | Pennsylvania Superior Court |
Arnold M. Kessler, Philadelphia, for appellants.
Francis F. Quinn, Philadelphia, for appellee.
Before HESTER, CIRILLO and JOHNSON, JJ.
The question before this court is whether Pennsylvania courts should recognize a claim in strict liability 1 for recovery of economic losses, 2 where the injury is only in the deterioration of the product itself, and is not the result of a defect causing some untoward occurrence thereby damaging the product.
In September 1971 Avis Rent A Car System, Inc. purchased a certain number of trucks from International Harvester Co. In October 1971 the appellant corporations, Industrial Uniform Rental Co., Inc. and Stork Diaper Service, Inc., leased the trucks from Avis for use in their business. Then in October 1974 the appellant corporations purchased these same trucks from Avis.
In December 1972 two of these trucks had allegedly developed cracks and failures in the frames, which were repaired by Avis. Then, after the 1974 purchase of the trucks, twelve more trucks allegedly developed cracks and failures in the frames. These cracks were repaired by the appellant corporations.
In June of 1978 the appellant corporations commenced this suit in trespass against International Harvester, the manufacturer of the trucks, alleging negligent design, manufacture and sale of the trucks, and requesting damages for the cost of the repairs to the trucks. In its answer, under New Matter, International Harvester raised the bar of the statute of limitations, which the appellants denied in their reply, alleging that this being a "property damage" claim it was within the statute of limitation for trespass actions.
A certain amount of discovery was undertaken until March 1981 when International Harvester filed a motion for summary judgment, arguing that the appellants' claim was solely for economic losses, that the allegations in the complaint that the trucks were defective, poorly designed and not adequate for their contemplated use, sounded in breach of warranty, and that therefore the action was barred by section 2-275 of the Uniform Commercial Code (UCC). 3
In answer to the motion for summary judgment, the appellants argued inter alia that their claim for damages included not only repairs to the trucks but also a "diminution in use expectancy," and that their claim was indeed a tort action. In their memorandum of law in support of their answer the appellants raised for the first time the question of section 402A of the Restatement (Second) of Torts, asserting that Pennsylvania law supported their action "under 402A and in negligence against the manufacturer of trucks where defects cause damages sustained."
The trial court in its opinion stated that the uncontradicted evidence established that the plaintiffs were seeking damages for defects of quality evidenced by internal deterioration or breakdown which constituted economic loss not recoverable in a claim under strict liability, and granted the motion for summary judgment.
On appeal to this court the appellant purchasers of the trucks assert that the (unspecified) defects in the trucks brought about the cracking and caused damages to the trucks, thus creating a cause of action for "property damage" under section 402A of the Restatement (Second) of Torts.
We believe, on the contrary, that the claim in this case is precisely the type of claim envisaged by the UCC. See 13 Pa.C.S.A. § 2714, which provides:
§ 2714. Damages of buyer for breach in regard to accepted goods
(a) Damages for nonconformity of tender.--Where the buyer has accepted goods and given notification (section 2607(c)) he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the breach of the seller as determined in any manner which is reasonable.
(b) Measure of damages for breach of warranty.--The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have if they had been as warranted, unless special circumstances show proximate damages of a different amount.
(c) Incidental and consequential damages.--In a proper case any incidental and consequential damages under section 2715 () may also be recovered.
We do not agree with appellants that the facts of this case call for the application of Section 402A of the Restatement (Second) of Torts, 4 which provides:
§ 402A. Special Liability of Seller of Product for Physical Harm to User or Consumer (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
(2) The rule stated in Subsection (1) applies although
(a) the seller has exercised all possible care in the preparation and sale of his product, and
(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.
There are two lines of cases on the issue presented by this appeal. There is the majority view, led by the landmark decision of the Supreme Court of California in Seely v. White Motor Co., 63 Cal.2d 9, 403 P.2d 145, 45 Cal.Rptr. 17 (1965). There is also the minority view, led by the equally significant decision of the Supreme Court of New Jersey in Santor v. A. & M. Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965).
In Santor the plaintiff sued the manufacturer of carpeting for defects which caused lines to appear in the carpeting. The New Jersey supreme court held first that the plaintiff could sue the manufacturer for breach of implied warranty, that privity of contract was not necessary, and that the action could be maintained even though the damage was limited to loss of value of the carpeting. The New Jersey court then went on to rule that the responsibility of the maker should be no different whether the damage was personal injury, damage to other property or to the product involved, and that strict liability in tort was applicable to actions for economic losses resulting from defective products.
In Seely the plaintiff purchased a truck for heavy-duty hauling. From the beginning the purchasers experienced a "galloping" problem with the truck, which they attempted to repair. Then one day the brakes failed, and the truck overturned, causing no personal injuries but resulting in over five thousand dollars' worth of damage to the truck. The California supreme court, disagreeing with the New Jersey court, ruled that as the UCC system of recovery was not superseded by the doctrine of strict liability which applied to actions for personal injury and property damage only, and not to actions for economic loss alone, there could be no recovery for the injury to the truck under strict liability. As part of its reasoning the California court considered the purpose for the two distinct remedies:
The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the "luck" of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products. He can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. He cannot be held for the level of performance of his products in the consumer's business unless he agrees that the product was designed to meet the consumer's demands. A consumer should not be charged at the will of the manufacturer with bearing the risk of physical injury when he buys a product on the market. He can, however, be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will. Even in actions for negligence, a manufacturer's liability is limited to damages for physical injuries and there is no recovery for economic loss alone.... The Restatement of Torts similarly limits strict liability to physical harm to person or property.
Seely v. White Motor Co., 63 Cal.2d at 18, 403 P.2d at 151, 45 Cal.Rptr. at 23 (citations omitted).
The doctrine of products liability was developed primarily as a means by which consumers could be compensated for personal injury and property damage caused by defective products. See Note, Products Liability in Commercial Transactions, 60 Minn.L.Rev. 1061 (1976). See generally, Note, Economic Loss in Products Liability Jurisprudence, 66 Colum.L.Rev. 917 (1966). The warranty theory, however, now governed by the Uniform Commercial Code, provides for liability for losses on bargains and other injuries resulting from failure of the product to meet the expectations of the buyer where the seller has breached express or implied warranties to the buyer. See Ribstein, Guidelines for Deciding Product Economic Loss Cases, 29 Mercer L.Rev. 493 (1978). 5
It would seem that the Seely and Santor lines of cases differ in that the Seely line focuses on the type of harm caused by the defective product, whereas the Santor line seems to view a defective product as essentially an unmerchantable product under the UCC, see 13 Pa.C.S.A. § 2314(b). See Note, Products Liability in Commercial Transactions, 60...
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