Safeway Stores, Inc. v. Certainteed Corp.

• Decision Date: 07 May 1986
• Docket Number: No. C-3838,C-3838
• Citation: 710 S.W.2d 544
• Parties: 1 UCC Rep.Serv.2d 1237 SAFEWAY STORES, INCORPORATED, Petitioner, v. CERTAINTEED CORPORATION and Certainteed Products Corp., et al., Respondents.
• Court: Texas Supreme Court

Page 544

710 S.W.2d 544

1 UCC Rep.Serv.2d 1237

SAFEWAY STORES, INCORPORATED, Petitioner, v. CERTAINTEED CORPORATION and Certainteed Products Corp., et

al., Respondents.

No. C-3838.

Supreme Court of Texas.

May 7, 1986.

Rehearing Denied June 18, 1986.

George A. Staples, Jr., Hurst, Phillip W. Gilbert, Riddle & Brown, Russell W. Schell, Dallas, for petitioner.

Mike M. Tabor, Clark, West Keller, Butler & Ellis, Hollye C. Fisk, Greenberg, Benson, Fish & Fielder, Dallas, for respondents.

McGEE, Justice.

This case involves a contract for the sale of goods governed by the Texas Business & Commerce Code. Safeway Stores sued Certainteed Corporation and Certainteed Products Corporation for alleged breach of express and implied warranties in connection with roofing material affixed to Safeway's warehouse roof. The trial court granted an instructed verdict for Certainteed because Safeway failed to prosecute its claim within the statute of limitations. The court of appeals affirmed the trial court's judgment. 687 S.W.2d 22. We must decide whether Certainteed's express and implied warranties explicitly extend to future performance under Tex.Bus. & Com.Code Ann. § 2.725(b) (Tex.UCC) (Vernon 1968) so that Safeway's cause of action did not accrue until discovery of the breach. Because we hold there is a fact issue whether Certainteed's express warranties explicitly extend to future performance, we reverse the judgment of the court of appeals and remand the cause to the trial court.

In 1970, Safeway Stores contracted with Herman Smith & Company to build a warehouse. Herman Smith subcontracted with Gunn & Briggs to install a roof. The original plans and specifications called for a "20-year bonded type built-up roof." Gunn & Briggs contacted Certainteed to supply roofing material. Certainteed advertised that its "Dual 80" two-ply roof was "bondable up to 20 years." The Safeway/Herman Smith contract was amended to include the "Dual 80" roof and construction of the roof was completed in 1970.

Safeway first experienced leaks in the roof in 1977. Nine years after the roof was completed, in 1979, Safeway filed this action against Certainteed alleging breach of express and implied warranties. The trial court granted an instructed verdict for Certainteed.

Safeway appealed. The court of appeals affirmed the trial court's judgment, holding that Certainteed's advertisement did not create a warranty that explicitly extended to future performance. Thus, Safeway's action was barred by the four-year statute of limitations as suit was brought nine years after the roof was "delivered." Tex.Bus. & Com.Code Ann. § 2.725 (Tex.UCC) (Vernon 1968).

Safeway contends that Certainteed's implied and express warranties covering its roofing material fall under the exception to section 2.725. It argues that the warranties explicitly extended to future performance; therefore, the four-year statute of limitations should not begin to run until discovery of the breach, i.e., the roof started leaking.

The purpose of a statute of limitations is to establish a point of repose and to terminate stale claims. Society's interest in repose is to have disputes either settled or barred within a reasonable time. It is based on the theory that the uncertainty and insecurity caused by unsettled claims hinder the flow of commerce. See Wood v. Carpenter, 101 U.S. [11 OTTO] 135, 139, 25 L.Ed. 807 (1879). The limitations statute prevents fraudulent and stale claims from springing up many years after a sale and avoids the attendant problems of litigating As a statute of limitations, section 2.725 seeks to balance two conflicting social policies. If implied warranty liability extends past a definite time, merchants will not be able to close their books with certainty; yet, if merchants are allowed to close their books with certainty; buyers who later discover defects will have no remedy. Section 2.725 states:

a claim when memories have faded and documents have been destroyed.

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

(b) 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.

Tex.Bus. & Com.Code Ann. § 2.725 (Tex.UCC) (Vernon 1968). The language of the statute clearly states that a cause of action in breach of warranty arising from a contractual relationship accrues at the time of delivery, not at the time of discovery. This occurs "regardless of the aggrieved party's lack of knowledge of the breach" unless the exception applies. Id.

The drafters' intentions were to establish a reasonable period of time, four years, beyond which business persons need not worry about stale warranty claims. Standard Alliance Industries v. Black Clawson Co., 587 F.2d 813, 820 (6th Cir.1978). The Code seeks "to make uniform the law among the various jurisdictions" to provide "needed relief for concerns doing business on a nationwide scale." Tex.Bus. & Com. Code Ann. § 1.102(b)(3) and § 2.725 comment (Tex.UCC) (Vernon 1968). Adoption of a uniform date of accrual and rejection of the discovery rule in warranty cases is a permissible means adopted by the state legislatures to protect commercial transactions. This end would not have been accomplished had the legislatures merely adopted a four-year statute of limitations without specifying when the statute would begin to run.

It is clear that a buyer and a seller can freely negotiate to extend liability into the future; that is why specific allowance was made for warranties "explicitly" extending to future performance. Black Clawson Co., 587 F.2d at 820. Then, the warranty cause of action does not accrue until discovery of the breach. Tex.Bus. & Com.Code Ann. § 2.725(b) (Tex.UCC) (Vernon 1968).

IMPLIED WARRANTY

Implied warranties relate to the condition, kind, characteristics, suitability, etc. of sold goods at the time of sale; thus, the statute of limitations on implied warranties runs from the date of sale. Iowa Manufacturing Co. v. Joy Manufacturing Co., 669 P.2d 1057, 1060 (Mont.1983). See Citizens Utilities Co. v. American Locomotive Co., 11 N.Y.2d 409, 417, 230 N.Y.S.2d 194, 198, 184 N.E.2d 171, 174 (1962); Allen v. Todd, 6 Lans. 222 (N.Y.1872). The drafters of the Uniform Commercial Code intended to reserve the benefits of an extended warranty to those who explicitly bargained for them. Raymond-Dravo-Langenfelder v. Microdot, Inc., 425 F.Supp. 614, 618 (D.Del.1976). Therefore, only express warranties may explicitly extend to future performance. Dickerson v. Mountain View Equip. Co., 109 Idaho 711, 710 P.2d 621, 626 (1985); G.M. v. Tate, 257 Ark. 347, 352, 516 S.W.2d 602, 606 (1974); Wilson v. Massey-Ferguson, Inc., 21 Ill.App.3d, 867, 315 N.E.2d 580, 583 (1974); South Burlington School District v. Calcagin-Frazier-Zajchowski Architects, Inc., 138 Vt. 33, 410 A.2d 1359, 1366 (1980); Wright v. Cutler-Hammer, Inc., 358 So.2d 444, 445-46 (Ala.1978). Annot., 93 A.L.R.3d 690 § 2 (1979); 67 Am.Jur.2d, Sales § 700 (1985).

The Code did not intend that an implied warranty could be explicitly extended to future performance. The words "explicit" and "implied" are contradictory. "Explicitly," while not defined in the Code, means "expressly and not merely by implication"; "being without vagueness or ambiguity: leaving nothing implied: unequivocal." Synonyms for the word "explicit" include "express," "specific," and "definite." 3 Oxford English Dictionary 437-38 (1933); Webster's Third World International Dictionary 801 (unabridged 1971).

The exception relied upon by Safeway is immediately preceded by the statement that the cause of action accrues when the breach occurs, regardless of lack of knowledge of the breach. Tex.Bus. & Com. Code Ann. § 2.725(b) (Tex.UCC) (Vernon 1968). The universal rule in other jurisdictions is that an implied warranty does not fall under the exception in the Code because, by its very nature, it cannot explicitly extend to future performance. Stumler v. Ferry-Morse Seed Co., 644 F.2d 667, 671 (7th Cir.1981) (Indiana law); Clark v. DeLaval Seperator Corp., 639 F.2d 1320, 1325 (5th Cir.1981) (Texas law); Standard Alliance Industries, Inc. v. Black Clawson Co., 587 F.2d 813, 820 (6th Cir.1978), cert. denied, 441 U.S. 923, 99 S.Ct. 2032, 60 L.Ed.2d 396 (1979) (Ohio law); Holdridge v. Heyer-Schulte Corp., 440 F.Supp. 1088, 1104 (N.D.N.Y.1977); Binkley Co. v. Teledyne Mid-America Corp., 333 F.Supp. 1183, 1187 (D.C.E.D. Mo.1971), aff'd, 460 F.2d 276 (8th Cir.1972); Wright v. Cutler-Hammer, Inc., 358 So.2d 444, 445-46 (1978); General Motors v. Tate, 257 Ark. 347, 352, 516 S.W.2d 602, 606 (1974); Stoltzner v. American Motors Jeep Corp., Inc., 127 Ill.App.3d 816, 819-20, 82 Ill.Dec. 909, 469 N.E.2d 443, 445 (1984); City of Carlisle v. Fetzer, --- Iowa ----, 381 N.W.2d 627 (1986); Rutland v. Swift Chem. Co., 351 So.2d 324, 325 (Miss.1977); Grand Island School District No. 2 of Hall County, Nebraska v. Celotex Corp., 203 Neb. 559, 567-68, 279 N.W.2d 603, 609 (1979). See also Sponseller v. Meltebeke, 280 Or. 361, 365, n. 2, 570 P.2d 974, 976, n. 2 (1977); Southern Burlington School District v. Calcagin-Frazier-Zajchowski Architects, Inc., 138 Vt. 33, 48, 410 A.2d 1359, 1366 (1980). The most noted commentators in the field of commercial law agree that implied warranties cannot "explicitly" extend to future performance. 5 R. Anderson, Anderson on the Uniform Commercial Code § 2-725:90 (1984); 3 W. Hawkland, Uniform Commercial Code Series § 2-725:02, at 480 (1984); J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code § 11-9, at 419, n. 73 (2d ed. 1980); Special Project,...