Opinion
Civil No. 99-16 (DWF/AJB).
June 5, 2001
Robert Lentz, Esq., Daar Fisher Kanaris Vanek, Chicago, IL., appeared on behalf of Plaintiffs and Cross-Claim Defendants Emmett and Karen Erpelding.
Derrick Kirby, Esq., Goldstein Price, St. Louis, MO., appeared on behalf of Plaintiffs and Cross-Claimants Stephen Bennington and Gerald Shannon.
Aaron Biber, Esq., Mansfield Tanick Cohen, Minneapolis, MN., appeared on behalf of Plaintiffs and Cross-Claimants Michael S. and Deborah J. Cox.
Thomas Peterson, Esq., Peterson Hektner, Minneapolis, MN., appeared on behalf of Plaintiffs David Johnson and The Afton Marina Yacht Club. Craig Dokken, Esq., Yost Baill, Minneapolis, MN., appeared on behalf of Intervenor United Services Automobile Association.
Tim Schupp, Esq., Gartner Bennett Schupp, Minneapolis, MN., appeared on behalf of Third-Party Defendant Sears, Roebuck Co.
Ben Bohnsack, Esq., and Patrick Reilly, Esq., Erstad Riemer, Minneapolis, MN., appeared on behalf of Defendant and Third-Party Plaintiff Skipperliner Industries, Inc.
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter came on for hearing before the undersigned United States District Judge on May 23, 2001, pursuant to Defendant and Third-Party Plaintiff Skipperliner Industries, Inc.'s motion for summary judgment and Plaintiffs' motion for partial summary judgment. In the Complaint, Plaintiffs allege breach of express and implied warranties with respect to a boat assembled by Skipperliner Industries, Inc ("Skipperliner") and sold to Emmett and Karen Erpelding ("the Erpeldings"). For the reasons set forth below, the motions are denied.
Background
Skipperliner designs, assembles, and sells boats. In October of 1996, the Erpeldings entered into a contract with Skipperliner to purchase a large, luxury houseboat. The boat, as delivered in May of 1997, came equipped with a number of amenities and appliances, including a Kenmore dishwasher manufactured by Third-Party Defendant Sears, Roebuck Co.
The Erpeldings lived on the boat from May of 1997 to October of 1997. In October of 1997, the boat was "winterized" and placed in storage at the Afton Marina and Yacht Club. On May 5, 1998, the Erpeldings returned to the Afton Marina and Yacht Club to resume residence on the boat. In the early morning hours of May 28, 1998, Karen Erpelding-who was alone on the boat-awoke to discover that the vessel was on fire. Mrs. Erpelding saw flames in the galley of the boat and went to a neighboring vessel to call for emergency assistance. Despite Mrs. Erpelding's attempts to unmoor the boat, the boat burned while docked. The flames spread to a number of nearby boats, seriously damaging and/or destroying them.
The Erpeldings allege that the fire was electrical in nature and originated in the control panel of the Kenmore dishwasher or in the immediately adjacent wiring to the dishwasher. They further allege that the fire was the result of some latent defect in the dishwasher, or, at a minimum, the result of some latent defect in the wiring of the boat itself.
The Erpeldings brought this action against Skipperliner alleging breach of implied and express warranties as a result of the alleged defect in the boat. The remaining plaintiffs are individuals and entities who lost property as a result of the fire on the Erpeldings' boat. Skipperliner has brought a third-party complaint against Sears, Roebuck Co., the manufacturer of the allegedly defective dishwasher.
Discussion
1. Standard of Review
Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court must view the evidence and the inferences which may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Enterprise Bank v. Magna Bank of Missouri, 92 F.3d 743, 747 (8th Cir. 1996). However, as the Supreme Court has stated, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to 'secure the just, speedy, and inexpensive determination of every action.'" Fed.R.Civ.P. 1. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enterprise Bank, 92 F.3d at 747. The nonmoving party must demonstrate the existence of specific facts in the record which create a genuine issue for trial. Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik, 47 F.3d at 957.
2. Implied Warranty of Merchantability
The sales agreement between the Erpeldings and Skipperliner includes a number of provisions under the general heading "WARRANTY." Those provisions state, in relevant part:
I. THERE ARE NO EXPRESS WARRANTIES ON PRODUCTS MANUFACTURED BY SKIPPERLINER INDUSTRIES, EXCEPT THAT THE COMPANY WILL, THROUGH ITS SELLING DEALER, REPLACE OR REPAIR, AT THE COMPANY'S OPTION, ANY PART (EXCEPT AS HEREINAFTER PROVIDED) WHICH IS PROVEN TO ITS SATISFACTION TO HAVE BEEN DEFECTIVE AT THE TIME OF DELIVERY TO THE FIRST OWNER, AND WHICH DEFECT IS DISCOVERED WITHIN 12 MONTHS FROM THE DATE OF DELIVERY TO THE FIRST OWNER, IF THE PART IS RETURNED, TRANSPORTATION PREPAID, WITHIN THIRTY DAYS AFTER THE DEFECT IS DISCOVERED, TO THE DEALER OR TO SUCH OTHER POINT OF MANUFACTURE AS THE COMPANY MAY DESIGNATE.
II. THIS WARRANTY SHALL NOT APPLY TO:
* * * D. PRODUCTS NOT OF THE COMPANY'S MANUFACTURE. ANY WARRANTY PROVIDED BY THE MANUFACTURER WILL BE PASSED ON TO THE OWNER IF POSSIBLE.
* * *
III. THE DURATION OF ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE SHALL BE LIMITED TO AND COINCIDENT WITH THE DURATION OF THIS EXPRESS WARRANTY.
* * * A. SOME STATES DO NOT ALLOW LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY LASTS OR ON THE EXCLUSION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION ON THE DURATION OF IMPLIED WARRANTIES AND THE ABOVE EXCLUSION OF INCIDENTAL AND CONSEQUENTIAL DAMAGES MAY NOT APPLY TO YOU.
Aff. of Patrick D. Reilly, Ex. 1 (emphasis in the original). The entire sales agreement is written in the same font, all capitalized; none of the warranty provisions or exclusions are set off by bold type, larger type, underlining, or any other demarcation other than the standard paragraph numbering and lettering.
The parties agree that this transaction is governed by the Uniform Commercial Code (U.C.C.), as adopted by the State of Minnesota. Under the U.C.C. "[u]nless excluded of modified . . ., a warranty that the goods shall be merchantable is implied in a contract for their sale . . . ." Minn. Stat. § 336.2-314. "[T]o exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous . . . ." Minn. Stat. § 336.2-316. Skipperliner argues that the sales agreement between Skipperliner and the Erpeldings effectively limits the duration of the implied warranty of merchantability to one year, so that the implied warranty had expired at the time of the fire. The Court disagrees.
A contract "term or clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it." Minn. Stat. § 336.1-201(10); see also Valley Paving, Inc. v. Dexter Chaney, Inc., 2000 WL 1182800 (Minn.App. 2000) (unpublished opinion). Whether a term is conspicuous is a question for the court to decide. Minn. Stat. § 336.1-201(10). "Courts have considered capitalization, typeface, contrasting color, and location of the clause in determining whether it is conspicuous." Agristor Leasing v. Guggisberg, 617 F. Supp. 902, 909 (D.Minn. 1985) (citation omitted).
Skipperliner argues that the disclaimer was conspicuous because "The warranty provisions in the sales agreement are easily noticeable and conspicuous. Each of the various subheadings within the agreement are capitalized, printed in bold-face type and are underlined. A quick review of the sales agreement draws attention to the fact that there are warranty provisions contained in the agreement." Defendant Skipperliner's Memorandum of Law in Support of Motion for Summary Judgment at 10. It is true that the warranty provision, as a whole, is "conspicuous"; a reasonable person reading the document would be aware that there is language pertaining to warranties within the document. However, the disclaimer is not conspicuous at all. The provision which disclaims the implied warranty of merchantability is simply another numbered paragraph, the third of ten, under the general heading of "warranty." The disclaimer language is not set off by a separate heading, by different typeface, or by contrasting color. It is about as inconspicuous as words on a page can be.
It is true that the Erpeldings both testified that they understood there to be a one year warranty on the boat. However, the record is not clear whether they understood that one year warranty to be the express warranty generally described and disclaimed in the sales contract or whether they understood the one-year duration to apply more specifically to the implied warranty of merchantability. Indeed, John Cushman, the Senior Vice President of Operations for Skipperliner-who oversees the warranty department-could not himself explain the exact scope of the express and implied warranties under the sales agreement. While Mr. Cushman's state of mind is not determinative, it is certainly illustrative of the confusion created by the warranty language.
The Court concludes that Skipperliner did not adequately limit the duration or scope of the implied warranty of merchantability.
Skipperliner also seems to argue that the implied warranty of merchantability does not guarantee a product which is fire-proof. The Erpeldings complaint, however, is not that the boat was susceptible to consumption by fire, but rather that the boat spontaneously combusted. Surely the parties can agree that the implied warranty of merchantability protects against a product which suddenly and without provocation erupts in flame.
2. Causation
Both parties have moved for summary judgment on the issue of what caused the fire on the Erpeldings' boat. Skipperliner argues that the Erpeldings have failed to identify an inherent defect in the dishwasher or wiring which caused the fire. The Erpeldings argue that Skipperliner has failed to provide evidence of any possible source of the fire other than an inherent defect in the dishwasher or wiring. The Court is not persuaded by either party: the record creates a genuine issue of material fact as to the cause of the fire which precludes summary judgment of either party.
For the reasons stated, IT IS HEREBY ORDERED:
1. Plaintiffs' Motion for Partial Summary Judgment (Doc. No. 59) is DENIED; and
2. Defendant's Motion for Summary Judgment (Doc. No. 56) is DENIED.
DONOVAN W. FRANK, Judge of United States District Court