Joswick v. Chesapeake Mobile

• Decision Date: 08 January 2001
• Docket Number: No. 35,35
• Citation: 765 A.2d 90,362 Md. 261
• Parties: Charles JOSWICK, et ux., v. CHESAPEAKE MOBILE HOMES, INC., et al.
• Court: Maryland Court of Appeals

765 A.2d 90

362 Md. 261

Charles JOSWICK, et ux., v. CHESAPEAKE MOBILE HOMES, INC., et al.

No. 35, Sept. Term, 2000.

Court of Appeals of Maryland.

January 8, 2001.

Charles J. Brown, Newark, DE, for petitioners.

Amy Leete Leone (Robert B. Hetherington of McCarthy, Wilson & Ethridge, on brief), Rockville, for respondents.

Argued before BELL, C.J., ELDRIDGE, RODOWSKY¹, RAKER, WILNER, CATHELL and HARRELL, JJ.

WILNER, Judge.

The issue before us is whether an action filed by petitioners in 1997 for breach of an express warranty that accompanied their purchase of a mobile home in 1988 is barred by the statute of limitations set forth in the Maryland Uniform Commercial Code (Maryland Code, § 2-725 of the Commercial Law Article). The Circuit Court for Harford County and the Court of Special Appeals, for different reasons, held that the action was barred. We agree with the reasoning of the Circuit Court and, on that basis, shall affirm the judgment of the Court of Special Appeals.

BACKGROUND

Petitioners purchased the mobile home in March, 1988, from Chesapeake Mobile Homes, Inc. In February, 1995, they noticed, for the first time, that the roof was and had been leaking, due, apparently, to the fact that the shingles at the eaves had been improperly installed and did not sufficiently overhang in order to allow rain water to drip off the roof. That, according to their experts, caused water to back into the facia area and rot out facia boards and plywood. Correction of the problem would cost $4,275. It is undisputed that the alleged defect was present when the mobile home was delivered to petitioners in 1988.

The mobile home was sold with an express limited warranty by the manufacturer, Brigadier Homes of North Carolina, Inc. (Brigadier). In relevant part, Brigadier warranted the mobile home "when purchased new, to be free from substantial defects of material and workmanship under normal use and service for a period of twelve (12) months from the date of delivery to the first retail purchaser." The warranty expressly stated, however, that "[t]he exclusive remedy for any such defect is the Manufacturer's obligation to repair or replace, at its option without cost to the purchaser ... at the site of the mobile home, any defective part or parts within the scope of this limited warranty, provided that written notice of the defect is received from the purchaser ... by the Manufacturer or dealer ... within one (1) year and ten (10) days from the date of delivery to the first retail purchaser." The warranty was stated to be in lieu of all other express and implied warranties and provided that the manufacturer assumed no responsibility for any consequential or incidental damages incurred as a result of any defect in the mobile home.

In June, 1997, petitioners filed suit in the District Court against Brigadier, Chesapeake, and Sterling Bank and Trust Co., which financed the purchase of the home, for breach of the warranty. The suit sought not only the $4,275 cost of repair but also $15,681 for damage to the interior of the mobile home allegedly caused by the leakage from the roof.² Upon Brigadier's demand for jury trial, the case was transferred to the Circuit Court for Harford County which, after some discovery and in three separate orders, entered summary judgment in favor of the three defendants on the ground that the action was barred by limitations. Petitioners appealed all three judgments to the Court of Special Appeals but later dismissed their appeals with respect to Chesapeake and Sterling, leaving Brigadier as the only defendant. The Court of Special Appeals affirmed. Joswick v. Chesapeake Mobile Homes, Inc., 130 Md.App. 493, 747 A.2d 214 (2000).

DISCUSSION

Mobile homes are considered to be "goods" under the Maryland Uniform Commercial Code (U.C.C.). See Lewis v. Hughes, 276 Md. 247, 346 A.2d 231 (1975)

; Ritz-Craft Corp. v. Stanford Management Group, 800 F.Supp. 1312 (D.Md.1992); also Poppenheimer v. Bluff City Motor

Homes, 658 S.W.2d 106 (Tenn.App.1983); Hull v. Moore's Mobile Homes Stebra, Inc., 214 A.D.2d 923, 625 N.Y.S.2d 710 (1995).³ Accordingly, the sale of such a home is governed by the Maryland U.C.C., which, in § 2-725, contains its own statute of limitations governing actions for breach of contract and warranty.⁴ Subsections (1) and (2) of that section, which are the ones relevant to this dispute, provide as follows:

"(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. 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."

(Emphasis added).

As is evident from a reading of the two provisions, the general rule is that a breach of warranty occurs when tender of delivery is made, and an action for breach of that warranty must be filed within four years after that event, even if the buyer is unaware of the breach. If the warranty explicitly extends to future performance of the goods, however, and discovery of the breach must await the time of that performance, the cause of action accrues not upon tender of delivery but when the breach is or should have been discovered, and the buyer has four years after that time within which to file suit. The threshold question in this case is whether the warranty by Brigadier "explicitly extends to future performance" of the mobile home and discovery of any breach must await the time of that performance. If not, the breach occurred in March, 1988, when the mobile home was delivered to petitioners, and their lawsuit, filed nine years later, is barred. If so, there is the additional question of whether the discovery rule is limited by the one-year period of the warranty.

The Circuit Court construed the warranty language as "naming a twelve month period in which the buyer can expect the product to be free from substantial defects" and found from that that the warranty did extend to future performance and that the breach therefore occurred when petitioners discovered or should have discovered the defect. It concluded, however, that, as the warranty period was twelve months, the extended period of limitations was applicable only to the extent that the defect was discovered within that twelve-month period. In effect, it construed § 2-725(2), in light of the warranty period, as requiring an action to be brought within four years after expiration of the twelve-month warranty—a total of five years after delivery. The summary judgment for Brigadier stemmed from the undisputed fact that the action was not filed within that five-year period. The Court of Special Appeals, as noted, affirmed, but on a different basis. That court seemed to accept that there was a warranty that the mobile home was to be free of substantial defects for twelve months but determined that Brigadier's only commitment with respect to that warranty was its promise to repair or replace any defective parts. Accordingly, it concluded that "because the only remedy available to [petitioners] was repair and replacement, the warranty was a promise to cure defects, and not an `explicit reference to future performance.'" Joswick v. Chesapeake Mobile Homes, Inc., supra, 130 Md.App. at 504, 747 A.2d at 220.

There have been dozens—perhaps hundreds—of cases throughout the country construing § 2-725(2) with respect to whether a warranty, limited or not limited by a promise to repair or replace, constitutes a warranty explicitly extending to future performance and thus invokes the discovery rule set forth in that subsection. The language of the warranty under consideration often differs from case to case, which may explain some of the variations in result, but a number of the cases do go in different directions and cannot easily be reconciled.

One thing that does seem clear is that a commitment to repair or replace defective parts (1) is not, itself, a warranty explicitly extending to future performance, and (2) does not serve either to convert a separate warranty that does not otherwise explicitly extend to future performance into one that does so or, conversely, convert a warranty that does extend to future performance into one that does not do so.⁵ The predominance of this view in the case law has led one learned commentator to make the flat statement that "[a] warranty to repair or replace is not a warranty as to the future performance of the goods." Ronald Anderson, UNIFORM COMMERCIAL CODE, § 2-725:129 at 293 (3d ed.1994 rev.). The rationale for that view was given by the U.S. District Court for the District of Delaware in Ontario Hydro v. Zallea Systems, Inc., supra, 569 F.Supp. at 1266, and by the Colorado court in Boyd v. A.O. Smith Harvestore Products, Inc., supra, 776 P.2d at 1128. As the Ontario Hydro court explained:

"A warranty of future performance of a product must expressly provide some form of guarantee that the product will perform in the future as promised. The U.C.C. provides the exception in § 2-275(2) because without it, a situation could arise where a buyer, after tender of delivery, could be awaiting such future performance only to have the four year limitation period expire and the future performance promised subsequently fail to occur, thereby leaving the buyer without legal recourse upon such an expressed warranty.

On the other hand, a repair or replacement warranty does not warrant how the goods will perform in the future. Rather, such a warranty simply provides that if a product fails or becomes defective, the seller will replace or

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