St. Croix Printing Equipment, Inc. v. Rockwell Intern. Corp., C0-88-792

• Decision Date: 20 September 1988
• Docket Number: No. C0-88-792,C0-88-792
• Citation: 428 N.W.2d 877
• Parties: 8 UCC Rep.Serv.2d 1009 ST. CROIX PRINTING EQUIPMENT, INC., Appellant, v. ROCKWELL INTERNATIONAL CORPORATION, et al., Respondents.
• Court: Minnesota Court of Appeals

Page 877

428 N.W.2d 877

8 UCC Rep.Serv.2d 1009

ST. CROIX PRINTING EQUIPMENT, INC., Appellant, v. ROCKWELL INTERNATIONAL CORPORATION, et al., Respondents.

No. C0-88-792.

Court of Appeals of Minnesota.

Sept. 20, 1988.

Review Denied Nov. 16, 1988.

Syllabus by the Court

1. No unequal bargaining power existed between merchants, and the "AS IS--WHERE IS" language located on the face of the contract barred recovery for a claim of breach of express warranty. Defendant's motion for summary judgment was properly granted on that claim.

2. Because justification involving reliance on an oral statement that contradicted the language in the body of the contract raises a question of fact, summary judgment was inappropriate on the claim of misrepresentation.

Robert S. Brill, Martha A. Sundberg, Poindexter Jacobson Stromme & Harwood, P.A., Minneapolis, for appellant.

John R. O'Brien, Timothy Crom, Lawrence M. Rocheford, Jardine, Logan & O'Brien, St. Paul, for respondents.

Heard, considered, and decided by FOLEY, P.J., and NORTON and LESLIE, ^* JJ.

OPINION

DAVID R. LESLIE, Judge.

Appellant St. Croix Printing Co. appeals from a summary judgment granted defendant Rockwell, Inc. St. Croix contends the trial court erred in finding no genuine issues of material fact exist as to its breach of express warranty and misrepresentation claims. We affirm in part and reverse and remand in part.

FACTS

Appellant St. Croix Printing Equipment, Inc. (St. Croix) is a corporation located in Minneapolis and is involved in the purchase and resale of new and used printing equipment. Deborah Sexton is the CEO for St. Croix. On September 4, 1985, St. Croix entered into an "as is" agreement with Tobi's Graphics (Tobi's) of California. This agreement required St. Croix to locate a used printer for Tobi's to purchase.

Sometime prior to September 12, 1985, Sexton had a telephone conversation with Stan Stevens, an employee of Rockwell Graphics, Inc. (Rockwell), located in Illinois. Per this telephone conversation, Sexton agreed to purchase a used 226 RZ Adast Perfector (press) from Rockwell.

Rockwell took the press "in trade" from Bartow Printing Company (Bartow) of Florida; consequently, the press is considered to be located in Florida. Sexton desired to ship the press directly from Rockwell to Tobi's without inspecting it. Sexton alleges she asked Stevens about the condition of the press and was told that it was in working condition. The press was believed to be a two-color press capable of four-color printing. The contract between Rockwell and St. Croix stated the agreed-upon price of $15,000 and contained an "as is" clause. In addition, there was an integration clause in the contract stating that the contract encompassed the entire agreement between the parties.

Tobi's received the press on October 18, 1985. After an inspection, Tobi's found the press was not functioning properly. Tobi's promptly rejected the press because it was incapable of four-color printing. St. Croix agreed to take the press back from Tobi's and commenced an action against Rockwell in Hennepin County District Court on two counts: (1) breach of express warranty, and (2) misrepresentation. On January 28, 1988, the trial court dismissed the complaint with prejudice. This appeal followed.

St. Croix urges this court to find that factual issues exist regarding a breach of express warranty, as Rockwell represented that the press was in good working condition, and also to find factual issues regarding misrepresentation, as St. Croix relied on the representation to its detriment.

Rockwell contends that this suit is barred by the "as is--where is" language located on the face of the contract that was written subsequent to any oral representations. In addition, they contend the contract disclaims any and all express or implied warranties, including a warranty of merchantability. Finally, Rockwell points out that the signed contract states that all agreements made between the parties are contained in the written document.

ISSUE

Did the trial court err in granting respondents' motion for summary judgment?

ANALYSIS

Summary judgment is appropriate only where the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact existing and either party is entitled to judgment as a matter of law. Minn.R.Civ.P. 56.03.

In reviewing a decision of summary judgment by the trial court, the function of this court is to determine (1) whether there are any genuine issues of material fact, and (2) whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). In cases involving summary judgment, the evidence is to be viewed in the light most favorable to the nonmoving party. Campion v. County of Wright, 347 N.W.2d 289, 291 (Minn.Ct.App.1984), pet. for rev. denied (Minn. July 26, 1984).

a. Breach of Express Warranty.

A somewhat extended analysis on this subject appears appropriate.

Express warranties may be created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

U.C.C. Sec. 2-313 (1972).

Express warranties are considered terms that have been "dickered" out and go directly to the essence of the bargain. Id. at comment 1. Because the warranty is basic to the agreement, a general disclaimer is ineffective. Id. Implied warranties must be conspicuously and unambiguously disclaimed to be effective. Id.

Implied warranties can effectively be disclaimed by using such words as "as is" or "with all faults" that are conspicuous enough to call to buyers' attention the fact that there are no such warranties. U.C.C. Sec. 2-316(3)(a) (1972). In commercial usage, such terms imply that the risks are on the buyer, not the seller. Id. at comment 7.

When an apparent conflict arises between express and/or implied warranties, wherever possible they are to be construed as consistent with each other. U.C.C. Sec. 2-317 (1972). However, if there is no reasonable construction in construing them together, the intent of the parties will dominate. In ascertaining that intention, the following rules apply:

Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant. In ascertaining that intention the following rules apply:

(a) Exact or technical specifications displace an inconsistent sample or model or general language of description.

(b) A sample from an existing bulk displaces inconsistent general language of description.

(c) Express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose.

U.C.C. Sec. 2-317 (1972).

Additional guidance for determining the intentions of the parties concerns an agreement that has been reduced to writing and is set forth as:

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented

(a) by course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and

(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

U.C.C. Sec. 2-202 (1972).

The written agreement may only be challenged when it was not intended by the parties as the final expression of their agreement. White & Summers, Uniform Commercial Code Sec. 12, at 434 (2d ed. 1980). Unless a contract is ambiguous, a clause stating that the "written agreement is a complete and exclusive statement of the terms of the agreement" will likely be sufficient to exclude from any evidence proof of any oral warranty. Id. at 435. Moreover, courts should not interfere with a contract when the rights of the parties are evidenced by writing which purports to express their full agreement. Cady v. Bush, 283 Minn. 105, 110, 166 N.W.2d 358, 362 (1969).

In this case, St. Croix urges the court to find a breach of express warranty. St. Croix argues that the oral representations made by Stevens to Sexton concerning the condition of the press became express warranties under U.C.C. Sec. 2-313. Moreover, these express warranties became a basis of the bargain. Although St. Croix recognizes that while the written contract contained "as is--where is" language negating any warranties, they argue it applies only to implied, as opposed to express, warranties. See U.C.C. Sec. 2-316(3)(a). In essence, St. Croix contends that a fact question exists concerning the creation of the express warranty.

Rockwell, on the other hand, contends that the parol evidence rule prevents St. Croix from prevailing on this argument. Because the final agreement has been reduced to...