Wenner Petroleum Corp. v. Mitsui & Co. (U.S.A.), Inc., 85CA1790
| Decision Date | 12 November 1987 |
| Docket Number | No. 85CA1790,85CA1790 |
| Parties | 5 UCC Rep.Serv.2d 1338 WENNER PETROLEUM CORPORATION, a Michigan Corporation authorized to do business in the State of Colorado, Plaintiff-Appellant, v. MITSUI & CO. (U.S.A.), INC., a New York Corporation authorized to do business in the State of Colorado, Defendant-Appellee. . II |
| Court | Colorado Court of Appeals |
Minor & Brown, Dan S. Cross, Denver, for plaintiff-appellant.
Weller, Friedrich, Hickisch, Hazlitt & Ward, Edward J. Godin, Denver, for defendant-appellee.
The plaintiff, Wenner Petroleum Corporation, purchased seamless casing from Western Drilling & Mining Supply, Inc., for insertion into an oil well. Western had purchased the casing from Mitsui & Co. (U.S.A.), Inc., the importer of the casing, and it was shipped directly from Mitsui to Wenner. Wenner sued Western Drilling, Mitsui, and the manufacturer of the casing, alleging that it was defective. Wenner also sued a bank to which its note in payment had been assigned by Western Drilling.
On Mitsui's motion, the court granted it partial summary judgment, resolving all issues against Mitsui, but leaving the claims against the other defendants to be resolved by later proceedings. In doing so, the court determined that the provisions of the agreement between Mitsui and Western, which excluded all implied warranties and limited the recoverable damages, were applicable to Wenner. The effect of that ruling was to limit Wenner's recovery from Mitsui to the amount it had paid for the casing. Following certification of that judgment as final pursuant to C.R.C.P. 54(b), Wenner appealed. We agree with the trial court's ruling on exclusion of warranties, but reverse on other grounds.
By an oral agreement, Wenner purchased from Western Drilling 7,200 feet of casing that had been expressly warranted by Mitsui to Western Drilling to withstand 55 pounds of pressure per square inch. The casing was to be inserted into a Wayne County, Ohio, well, and the bill of lading indicated the casing was shipped directly from Mitsui.
After Wenner inserted the casing into the well hole, cemented it into place, and routine work began, loss of pressure was discovered. Attempts to remove the defective casing were futile. Wenner then arranged for the casing to be sealed by forcing cement around it. This process was costly and, of necessity, adversely affected the formation of the oil and gas reservoirs resulting in loss of production.
As the basis for its action against Mitsui, Wenner asserts that Mitsui, as well as the manufacturer and Western Drilling, had expressly represented that the casing was API Standard which would withstand 55 pounds per square inch, and further that Mitsui breached this express warranty and various related implied warranties. In its contract with Western Drilling, Mitsui excluded all implied warranties, warranties of merchantability, and warranties of fitness for any particular purpose. Remedy for breach was limited to the specified price of the casing. Incidental and consequential damages were expressly excluded. In the contract between Western Drilling and Wenner, there were no provisions specifically excluding implied warranties nor limiting recoverable damages.
Wenner first asserts that any exclusion of implied warranties contained in the contract between Mitsui and Western Drilling should not extend to it in regard to its action against Mitsui. We disagree.
We agree with and adopt § 4-2-318, C.R.S. (Official Comment) which provides that properly executed limitations of warranties or available remedies are equally applicable to any one that would be a beneficiary of a seller's warranty. That comment states: "To the extent that the contract of sale contains provisions under which warranties are excluded or modified, or remedies for breach...
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