Public Service Co. of NH v. Westinghouse Elec. Corp.

• Decision Date: 11 May 1988
• Docket Number: Civ. No. 86-481-D.
• Citation: 685 F. Supp. 1281
• Parties: PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE v. WESTINGHOUSE ELECTRIC CORPORATION.
• Court: U.S. District Court — District of New Hampshire

685 F. Supp. 1281

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE v. WESTINGHOUSE ELECTRIC CORPORATION.

Civ. No. 86-481-D.

United States District Court, D. New Hampshire.

May 11, 1988.

Theodore Wadleigh, Manchester, N.H., for plaintiff.

Robert J. Lynn, Concord, N.H., for defendant.

ORDER

DEVINE, Chief Judge.

In this diversity action,¹ plaintiff Public Service Company of New Hampshire ("PSNH"), a public utility company, seeks damages of $3 million from defendant Westinghouse Electric Corporation ("Westinghouse") in connection with Westinghouse's sale to PSNH of a steam turbine electric generator which subsequently malfunctioned. In a six-count amended complaint, PSNH alleges breach of express and implied warranties, strict liability, negligence, and fraud.

At bar are PSNH's motion to amend Count VI, Rule 15(a), Fed.R.Civ.P., Westinghouse's motion for summary judgment, Rule 56(b), and the parties' respective objections. Pleadings, memoranda, affidavits, and exhibits have been filed with the Court, and the issues raised by this litigation are clear; accordingly, the Court resolves said motions on the documents as filed. See Rule 11(g), Rules of the United States District Court for the District of New Hampshire.

Background

On March 1, 1971, PSNH purchased a 400-megawatt steam turbine generator² from Westinghouse for approximately $8 million. The generator, known as Unit # 1, was subsequently installed at PSNH's Newington, New Hampshire, power station and began operating in 1974.

In May 1974, after extended negotiations in response to several failures in the turbine's L-1 stage blades, the parties agreed to a revision of the warranty provisions of the purchase contract. Under the revised warranty, Westinghouse was obligated to retrofit new L-1 blades without charge and extend the warranty on the new blades for one year following retrofit and start-up. See Affidavit of Janice A. Fall, Westinghouse paralegal, Exhibit C (copy of warranty provisions and accompanying letter of May 31, 1974, from Westinghouse to PSNH). Westinghouse executed the retrofit on Unit # 1's low pressure ("LP") turbine between June 19 and September 26, 1975.

On May 27, 1975, effective that date, the parties also entered into an automatically renewable annual service contract under which Westinghouse agreed to perform inspection, maintenance, and repair work on PSNH's generating equipment, including Unit # 1. See Affidavit of Stan Dembkoski, former District Manager of Westinghouse's Framingham, Massachusetts, Power Generation Service Division, at 1 & Exhibit 1 § 1(a)(4) & passim (photocopy of contract). Under the service contract, costs of replacement parts for the turbine generator unit and its auxillaries were to be borne by PSNH and billed at actual cost plus 25 percent. Id., Exhibit 1 at §§ 1(b)(2), 3(a)(7).

In 1976 Westinghouse discovered three cracked blade lugs in the LP turbine and replaced an entire group of six blades. In 1979 Westinghouse discovered two cracked blade roots. After replacing the failed blade roots, Westinghouse submitted them for metallurgical testing. Although Westinghouse issued a 1979 inspection report, it did not report the results of the metallurgical testing of the two failed blade roots to PSNH until January 1986.

In 1982 Westinghouse inspected Unit # 1's high pressure turbine and, at the same time, recommended that the LP turbine be disassembled for inspection. PSNH elected to forego the LP turbine inspection, allegedly because Westinghouse implicitly represented that there was nothing to be concerned about relative to the blade roots at the L-1 stage of the turbine. See Proposed Amended Count VI ¶¶ 9-12. On September 21, 1982, an L-1 blade in Unit # 1's LP turbine failed, necessitating a shut-down of Unit # 1 until December 10, 1982. During the ten-week shut-down period, PSNH allegedly incurred significant expense from having to rebuild the turbine and from losing of revenue while it was inoperable.

Discussion

Westinghouse seeks summary judgment on all counts. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The burden is upon the moving party to establish the lack of a genuine, material, factual issue, Finn v. Consolidated Rail Corp., 782 F.2d 13, 15 (1st Cir.1986), and the court must view the record in the light most favorable to the nonmovant, according the nonmovant all beneficial inferences discernible from the evidence, Knight v. Mills, 836 F.2d 659, 664 (1st Cir.1987); Ismert & Assoc. v. New England Mut. Life Ins. Co., 801 F.2d 536, 537 (1st Cir.1986).

In resolving the issues raised by this motion, the Court considers the counts of the complaint seriatim.

Count I

Count I relates to the purchase contract and is brought pursuant to New Hampshire's enactment of the Uniform Commercial Code ("UCC"), New Hampshire Revised Statutes Annotated ("RSA") 382-A (1961 & Supp.1987). Count I alleges that because the Unit # 1 turbine was defective in design, material, and workmanship, Westinghouse breached RSA 382-A:2-313 (1961), which pertains to "express warranties by affirmation, promise, description, sample." Westinghouse argues that Count I is barred by the UCC statute of limitations and by limitation of warranty provisions explicitly set forth in the contract.

RSA 382-A:2-725 (1961) sets a four-year statute of limitations for breach of contract and breach of warranty actions:

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued....

(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 ... where a warranty explicitly extends to future performance of the goods....

Tender of delivery of Unit # 1 occurred in 1975. The revised warranty agreed to by the parties in connection with the retrofit of new L-1 blades extended warranty coverage for one year following retrofit and start-up. See Fall Aff., Exhibit C. Westinghouse executed the retrofit on the Unit # 1 low pressure ("LP") turbine between June 19 and September 26, 1975; therefore, the warranty negotiated by the parties expired on or about September 26, 1976.

The instant lawsuit was commenced in state court by writ of summons dated September 19, 1986. Petition for Removal ¶ 1. Whether measured from the date of tender of delivery or from expiration of the revised warranty—a distinction the Court need not address at this juncture—the instant action was clearly filed subsequent to the expiration of the four-year statute of limitations. PSNH concedes that it has no evidence to offer that the warranty explicitly extends to future performance. Objection of PSNH to Motion for Summary Judgment hereinafter "PSNH Objection" at 12. The inescapable result is that Count I must be barred for its failure to be filed within the statute of limitations period. See, e.g., Wentworth v. Kawasaki, Inc., 508 F.Supp. 1114, 1116 (D.N.H.1981); Raymond v. Eli Lilly & Co., 412 F.Supp. 1392, 1403 (D.N.H.1976), aff'd, 556 F.2d 628 (1st Cir.1977).

Because the statute of limitations is an absolute bar to Count I, the Court need not address whether Count I is barred by contractual limitation of warranty provisions.

Count II

Count II is also brought pursuant to the UCC, RSA 382-A:2-314 (1961). It alleges breach of implied warranties: that due to the defective design, construction, and manufacture of the L-1 stage rotor blades, the LP turbine was not merchantable, was unfit for the ordinary purposes for which such turbines are used, and was unfit for the particular purpose for which it was sold.

Actions for breach of implied warranties are also subject to the UCC four-year statute of limitations, as the UCC does not differentiate between implied and express warranties for the purpose of limiting the period in which actions may be brought. See RSA 382-A:2-725(2). Accordingly, the Court's discussion of the viability of Count II may be short-circuited by referring to the discussion above regarding Count I. For the same reasons, Count II is barred.

Count III

Count III is brought under a theory of strict liability. PSNH alleges that because Unit # 1 was defectively designed, constructed, and manufactured, it was unreasonably dangerous to users or consumers of the product, and Westinghouse is therefore liable for property loss occasioned by the unit's malfunction "regardless of whether the ultimate impact of any hazard is on people, other property, or upon the product itself." PSNH Objection at 18 (citing Pennsylvania Glass Sand v. Caterpillar Tractor Co., 652 F.2d 1165, 1172-73 (3d Cir.1981)). The Court disagrees. The circumstances herein are such that PSNH does not have a viable claim under a theory of strict liability.

The determinative issue in Count III is whether a manufacturer may be held strictly liable for selling a defective product in a commercial transaction if, in malfunctioning, the product damages only itself and causes only economic loss. This issue was previously addressed by Judge Loughlin of this court in Limbach Co. v. Owens-Corning Fiberglass Corp., Civil No. 83-759-L (D.N.H. Jan. 28, 1987) (Order on Motion to Dismiss and for Summary Judgment) available on WESTLAW, 1987 WL 46869, in which two oil storage tanks developed leaks within two years of installation but caused no harm to other property or persons. Based in part on Buttrick v. Lessard, 110 N.H. 36, 260 A.2d 111 (1969), the case in which the New Hampshire Supreme Court recognized the doctrine of strict liability, Judge Loughlin held that the plaintiff had stated a viable strict liability claim for property damages to the tanks themselves....