518 F.Supp.3d 863
W.D. Pa.2021Background
- Plaintiff Douglas Bieda purchased a new 2018 Case IH 2150 12-row planter (with optional hydraulic attachments and a 22 gpm PTO pump) from dealer Lamb & Webster (L&W) in April 2018.
- CNH had learned in 2016 that the 22 gpm PTO pump could not provide adequate hydraulic pressure and developed a separate "Hydraulic Completing Kit" to remedy the defect, but CNH did not include or separately notify dealers/purchasers about the kit when selling the Planter.
- After L&W calibrated the planter in May 2018, the Planter produced hydraulic error codes; L&W ordered the Completing Kit May 31 but Bieda did not receive it until July 2, after the planting season; Bieda alleges about $250,000 in crop losses.
- Sale documents (L&W Purchase Order and CNH Retail Installment Sale Contract) contained conspicuous "AS IS / NO WARRANTY" disclaimers; court previously held those disclaimers valid as to L&W, and L&Ws liability was later resolved.
- Bieda sued CNH for breach of implied warranty of merchantability; CNH moved for summary judgment arguing (1) enforceable disclaimer of implied warranties and (2) buyer failed to give seller statutory notice under 13 Pa. C.S. § 2607(c)(1).
- Magistrate Judge Kelly denied CNH's motion, finding triable issues on unconscionability of the disclaimer and on whether notice to the dealer satisfied the statutory notice requirement; consequential damages and negligent-misrepresentation issues were left unresolved for trial or further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of disclaimer of implied warranties | Disclaimer is unconscionable because CNH knowingly sold a defective Planter and concealed the defect, so disclaimer should be void | Disclaimers are conspicuous and enforceable under UCC § 2316; law of the case supports enforcement | Court: Disclaimer procedurally and substantively unconscionable as applied here; SJ denied on this ground |
| Statutory notice under 13 Pa. C.S. § 2607(c)(1) | Notice to dealer L&W suffices as notice to CNH because dealer performs warranty service under dealer agreement | CNH: dealer agreement disclaims agency; buyer failed to notify CNH directly so claim barred | Court: Not decided as matter of law; factual question exists whether dealer notice constituted reasonable notice to CNH; SJ denied |
| Recovery of consequential damages | Plaintiff seeks consequential damages for crop loss | CNH argues disclaimers preclude consequential damages | Court: Declined to find consequential damages precluded as matter of law; issue not resolved on SJ |
| Negligent misrepresentation / parol evidence | CNH's nondisclosure supports voiding disclaimer (akin to negligent misrepresentation) | CNH: parol evidence rule and statute of limitations bar such claims | Court: Did not decide negligent misrepresentation; unnecessary because disclaimer found unconscionable; no new claim resolved |
Key Cases Cited
- Altronics of Bethlehem, Inc. v. Repco, Inc., 957 F.2d 1102 (3d Cir.) (defines elements for breach of implied warranty of merchantability)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S.) (summary judgment standard: genuine issue for trial)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S.) (summary judgment burden-shifting principles)
- Carlson v. Gen. Motors Corp., 883 F.2d 287 (4th Cir.) (manufacturer's pre-sale knowledge of defects can render disclaimer unconscionable)
- Salley v. Option One Mortg. Corp., 925 A.2d 115 (Pa.) (requirements and allocation of proof for unconscionability)
- Harbison v. Louisiana-Pacific Corp., [citation="602 F. App'x 884"] (3d Cir.) (adhesion contracts and procedural unconscionability analysis)
- Harris v. Green Tree Financial Corp., 183 F.3d 173 (3d Cir.) (procedural vs. substantive unconscionability factors)
- Axalta Coating Sys., LLC v. Midwest II, Inc., 217 F. Supp. 3d 813 (E.D. Pa.) (enforceability of conspicuous disclaimers under Pennsylvania law)