MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT
TABLE OF CONTENTS
I.INTRODUCTION..........................................................637
A. Factual Background...................................................637
B. Procedural Background................................................638
II. LEGAL ANALYSIS........................................................640
A. Standards For Summary Judgment .....................................640
B. Negligence/Strict Liability Claims ......................................642
1. Immunity of SMA to product claims .................................643
a. Arguments of the parties........................................643
b. Analysis.......................................................644
i. The applicable statute .....................................644
ii. The pertinent “products”...................................646
Hi. Was SMA an “assembler”?.................................647
iv. Summary as to “product defect” claims......................650
v. Remaining negligence claims against SMA..................650
2. Warning or instruction defect claims against Baldor..................651
a. Arguments of the parties........................................651
b. Analysis.......................................................653
3. Design defect claims against Baldor.................................655
a. Arguments of the parties........................................655
b. Analysis.......................................................657
4. Manufacturing defect claims against Baldor and Schlagel.............662
a. Arguments of the parties........................................662
b. Analysis.......................................................662
5. Installation defects and general negligence claims against
Schlagel.........................................................664
a. Arguments of the parties........................................664
b. Analysis.......................................................664
C. Breach Of Implied Warranties..........................................666
1. Warranty of merchantability........................................666
a. Immunity of SMA..............................................666
b. Timeliness of the claim against Schlagel and Baldor..............666
i. Arguments of the parties...................................667
ii. Analysis..................................................667
2. Warranty of fitness for a particular purpose..........................670
a. The claim against SMA.........................................670
i. Arguments of the parties...................................670
ii. Analysis..................................................670
b. Timeliness of the claim against Schlagel and Baldor..............672
i. Arguments of the parties...................................672
ii. Analysis..................................................672
3. Warranty of workmanlike manner...................................674
a. The claim against SMA.........................................674
i. Arguments of the parties...................................674
ii. Analysis..................................................675
b. The claim against Schlagel and Baldor...........................677
D. Breach Of Express Warranties................................... 677
a. Arguments of the parties........................................677
b. Analysis.......................................................678
2. The claims against Schlagel and Baldor.............................681
a. Arguments of the parties........................................681
i. The arguments as to Schlagel...............................681
ii. The arguments as to Baldor................................681
b. Analysis.......................................................682
i. The effect of § 554.2318 ..................................... 682
ii. Schlagel’s other grounds for summary judgment..............685
Hi. Baldor’s other grounds for summary judgment...............685
E. Breach Of Contract....................................................686
1. Arguments of the parties............................................686
2. Analysis..........................................:................688
III. CONCLUSION............................................................691
This diversity action, involving claims of products liability, negligence, and breach of warranties, arises from an explosion and fire on or about July 9, 2008, at a grain elevator in Alton, Iowa. The plaintiff insurance company alleges that the explosion was caused by an overheated or hot pillow block bearing manufactured by one defendant, and selected, specified, and installed on an elevator leg by two others, the general contractor that built the grain elevator and the subcontractor that designed and manufactured the elevator legs that moved the grain around the elevator. Each of the defendants has moved for summary judgment on some or all of the claims against it.
I. INTRODUCTION
A. Factual Background
I will not attempt here an exhaustive dissertation on the undisputed and disputed facts in this case. Rather, I will set forth sufficient of the facts, both undisputed and disputed, to put in context the parties’ arguments concerning the defendants’ motions for summary judgment. Unless expressly indicated otherwise, the parties agree that the facts stated are undisputed. 1
At the center of this litigation is the Midwest Farmers Cooperative grain elevator in Alton, Iowa (the Alton grain elevator), which was constructed in 1997-1998. The Alton grain elevator was equipped with multiple “legs,” or “bucket elevators,” each of which was essentially an enclosed conveyor that carried grain from the “pit,” where farmers dump grain, to the top of the elevator leg, using cups attached to a conveyor belt. When a cup on the convey- or reached the top of the leg, the grain was dumped out and fell by gravity through a distributor, which directed the grain to one of a number of different silos. Near the top of a grain elevator leg is a “head pulley,” which is the shaft, motor, drive, gearboxes, bearings, and other equipment that help to power the movement of the conveyor and also secure the top of the conveyor to the greater elevator structure. The shaft in the head pulley at issue here (on the south receiving leg of
On the afternoon of July 9, 2008, a farmer was unloading grain at the Alton grain elevator. He dumped his grain into the “pit,” and it was conveyed to the top of the grain elevator by the south leg. An explosion and fire occurred shortly after the farmer started dumping his grain. A series of other explosions and fires continued at the Alton grain elevator for a few days after July 9, 2008. The plaintiffs experts have opined that the origin of the ignition of the explosion is at and/or in the head section of the south receiving leg and that the non-drive bearing on that leg became white hot. There is some dispute about whether the overheating of the bearing was because of inadequate lubrication, exposure of the uncovered bearing to weather and contaminants, corrosion, or fatigue, and whether the explosion and fire could have been avoided by adequate dust control or hazard monitoring systems or other measures. In other words, the parties dispute whether the bearing was the cause of the initial explosion and fire or was damaged by the explosion and fire.
The parties in this action are plaintiff Nationwide Agribusiness Insurance Company (Nationwide), as the insurer for Midwest Farmers Cooperative’s Alton grain elevator; defendant SMA Elevator Construction Company (SMA), which was the general contractor for the construction of the Alton grain elevator; defendant Schlagel, Inc. (Schlagel), which was the subcontractor for the grain elevator responsible for designing and manufacturing the grain handling equipment, including the elevator legs; and defendant Baldor Electric Company (Baldor), which is the successor by merger to Reliance Electric Company, and the manufacturer and seller of the Dodge brand bearing at issue here. 2 The role of each of these defendants requires a little more discussion.
SMA was the general “design-build” contractor for the Alton grain elevator. Midwest Farmers Cooperative contracted with SMA to build the Alton grain elevator as a “turnkey operation.” SMA performed the construction of the Alton grain elevator, including installation of equipment supplied by subcontractors. SMA contends that it relied on Schlagel for the design and selection of the elevator leg at issue, and installed the leg supplied by Schlagel, but Nationwide denies this, asserting that SMA acted as a designer, manufacturer, and installer of “the project.”
See, e.g.,
Nationwide’s Response to Defendant SMA’s Statement Of Undisputed Material Facts In Support Of Motion For Summary Judgment (docket no. 161— 1), ¶ 5. Nationwide asserts that “Schlagel products and services were part of the SMA design and installation and approved by SMA.”
Id.
Nationwide alleges that
Sehlagel, as a subcontractor for SMA, designed and manufactured certain equipment, including the elevator legs, for the Alton grain elevator and sold equipment to SMA for use in the design, construction, and installation of the elevator. Sehlagel asserts that it is a manufacturer of grain storage and handling products, but does not sell directly to end users or perform any installation services. Nationwide asserts, however, that Sehlagel did have direct contact -with and made direct sales to Midwest Farmers Cooperative. The parties dispute what installation or operations materials were provided by Sehlagel to SMA for the elevator legs for the Alton grain elevator.
As of 1997, Baldor designed and manufactured approximately 3.5 million bearings per year of different types, including the type at issue here. As of 1997 and through the present, Baldor did not sell bearings, including the type at issue here, to an “end user”; instead, Baldor sold Dodge bearings through licensed distributors (such as GEECO) that stocked and sold Dodge bearings and other products. In fact, Baldor manufactured the bearing at issue here in 1997 and sold it to GEE-CO. Baldor shipped bearings with an attached instruction manual, which included lubrication instructions and other information. Baldor marketed its Dodge bearings by distributing to customers a “Dodge Bearing Engineering Catalog,” which listed the different types of Dodge bearings and accessory products available for the various types of bearings. In 1997 and 1998, Baldor offered a Dodge end closure (also called an “end cap” or “end cover”) as an accessory for the type of bearing at issue here. Such an end cap is more or less a cover that fits over the end of a shaft and attaches to one side of a bearing to cover that side. As of 1996, Baldor also sold as a Dodge auxiliary or accessory product an extra seal known as an “E-tect seal,” which is an extra rubber seal that can be added to a Dodge bearing, such as the one at issue here, to provide an additional seal and additional layer of protection from outside contaminants. The end cap and E-tect seal must be added to the bearing after installation. The bearing at issue here had neither an end cap nor an E-tect seal as installed on the Alton grain elevator, although Nationwide contends that it would have been possible to install both on that bearing. Indeed, Nationwide asserts that the bearing, end cap, and Etect seal should have been sold as a unit.
B. Procedural Background
Nationwide originally filed this action, pursuant to its subrogation rights as Midwest Farmers Cooperative’s insurer, on or about November 24, 2008, in the Iowa District Court for Sioux County, against defendants SMA, Sehlagel, Baldor, and SM Enterprises, Inc.
See
docket nos. 2 and 5. On January 9, 2009, Baldor removed this action to this court, based on this court’s diversity jurisdiction under 28 U.S.C. § 1332(a).
See
Notice Of Removal (docket no. 2). The various defendants all eventually answered Nationwide’s original state court petition or subsequent amendments. S-M Enterprises and another defendant named in a subsequent amend
The pertinent pleading at this point in the proceedings is Nationwide’s Fourth Amended Complaint (docket no. 180), filed March 21, 2011. In that version of the Complaint, Nationwide alleged that it insured Midwest Farmers Cooperative to a certain extent for losses caused by the explosion or fire at the Alton grain elevator and that it has made certain payments to Midwest Farmers Cooperative and/or on behalf of Midwest Farmers Cooperative as a result of the explosion. Nationwide also alleges that Midwest Farmers Cooperative has assigned all of its claims to Nationwide to the extent that Nationwide has paid for the loss to Midwest Farmers Cooperative. Nationwide alleges that it is, therefore, the proper real party in interest. Nationwide asserts claims of negligence/strict liability, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, breach of implied warranty of workmanlike manner, and breach of expressed warranties against each defendant, and a claim of breach of contract against SMA. Baldor filed an Answer (docket no. 131) on April 14, 2011; SMA filed an Answer (docket no. 132) on April 29, 2011; and Schlagel filed an Answer (docket no. 143) on May 11, 2011. Pursuant to a Trial Management Order (docket no. 93), filed April 20, 2010, after the filing of prior amendments to the Complaint, a jury trial was set to begin on September 26, 2011. However, that trial date had to be moved to accommodate my busy criminal trial calendar, so the trial was reset to begin on May 7, 2012, by Order (docket no. 222) filed on August 25, 2011.
On May 2, 2011, each of the defendants filed a separate Motion For Summary Judgment on some or all of the claims against it. See docket nos. 133, 137, 139. 3 Nationwide filed separate Resistances (docket no. 159, 160, 161) to the defendants’ motions on June 8, 2011, with separate briefs and separate responses to the defendants’ separate statements of fact, but a single Combined Statement Of Facts In Support Of Its Resistance To All Defendants’ Motions For Summary Judgment (docket no. 161-2). On July 5, 2011, the defendants filed a Joint Objection And Responses To Plaintiffs Statements Of Additional Fact (docket no. 178). The defendants then filed separate Reply Briefs (docket nos. 176, 181, and 183) in support of their Motions For Summary Judgment on July 5 and 6, 2011.
The defendants all requested oral arguments on their Motions For Summary Judgment. However, my busy court schedule, including a two-week stint as a visiting judge in the District of the Northern Mariana Islands, has not allowed for such oral arguments.
II. LEGAL ANALYSIS
A. Standards For Summary Judgment
Motions for summary judgment essentially “define disputed facts and issues and ... dispose of unmeritorious claims [or defenses].”
Bell Atlantic Corp. v. Twombly,
A fact is
material
when it “ ‘might affect the outcome of the suit under the governing law.’ ”
Johnson v. Crooks,
Procedurally, the moving party bears “the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue,”
Hartnagel,
As the Eighth Circuit Court of Appeals has explained,
“On a motion for summary judgment, ‘facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts.’ ” Ricci v. DeStefano,557 U.S. 557 ,129 S.Ct. 2658 , 2677,174 L.Ed.2d 490 (2009) quoting Scott v. Harris, 550 U.S. 372, 380,127 S.Ct. 1769 ,167 L.Ed.2d 686 (2007) (internal quotations omitted). “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Reeves v. Sanderson Plumbing Prods., Inc.,530 U.S. 133 , 150,120 S.Ct. 2097 ,147 L.Ed.2d 105 (2000), quoting Anderson v. Liberty Lobby, Inc., 477U.S. 242, 255, 106 S.Ct. 2505 ,91 L.Ed.2d 202 (1986). The nonmovant “must do more than simply show that there is some metaphysical doubt as to the material facts,” and must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574 , 586-87,106 S.Ct. 1348 ,89 L.Ed.2d 538 (1986). “ ‘Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.’ ” Ricci,129 S.Ct. at 2677 , quoting Matsushita,475 U.S. at 587 ,106 S.Ct. 1348 .
Torgerson v. City of Rochester,
I will apply these standards to the defendants’ Motions for Summary Judgment. In doing so, I will consider the kinds of claims, in turn, rather than defendant by defendant.
B. NegligencelStrict Liability Claims
Nationwide has asserted what it calls “negligence/strict liability” claims against SMA (in Division I of the Fourth Amended Complaint) and Schlagel (in Division VII) and Baldor (in Division XII). It appears that the majority, but not necessarily all, of these claims are “product liability” claims. Although the precise allegations of conduct giving rise to liability for negligence or strict liability vary somewhat with the defendant against whom they are asserted, they fall into the same three categories for all three of the defendants: product warning and instruction defects, product design defects, and product manufacturing defects. Nationwide also alleges “installation defect — general negligence” claims against SMA and Schlagel, but not Baldor. The grounds for summary judgment on these claims are best addressed topically, rather than defendant by defendant. 4
a. Arguments of the parties
Only SMA asserts that it is immune to liability or damages on Nationwide’s product defect claims against it, set out in Division I of Nationwide’s latest Complaint, pursuant to Iowa Code § 613.18. More specifically, SMA argues that it is immune to Nationwide’s product defect claims, because §§ 613.18(l)(a) and (b), together, render non-assemblers, non-designers, and non-manufacturers who are wholesalers, retailers, distributors, or sellers of products “[ijmmune” from or “[n]ot liable for damages” on product manufacturing, design, and warning defect claims. SMA argues that both parts of § 613.18(1) remain viable after the Iowa Supreme Court adopted the Restatement (Third) of Torts: Products Liability (Restatement (Third)) §§ 1 and 2, which essentially eliminated artificial distinctions between “negligence” and “strict liability” for product defect claims. Here, SMA argues that it is undisputed that it did not manufacture, design, or assemble the specific products alleged to be defective — indeed, it was not the manufacturer at all, but a general contractor. More specifically, SMA argues that it did not manufacture, design, or assemble the bearing alleged to have overheated, because Baldor did; it did not manufacture, design, or assemble the portion of the south leg alleged to be defective, because Schlagel did; and it did not manufacture, design, or assemble the hazard monitoring system, because former defendant S & M did. SMA also argues that Nationwide has not proved that SMA manufactured, designed, or assembled the bearing, the elevator leg, or the hazard monitoring system. Furthermore, SMA argues that the § 613.18(2) “assembler” exception does not apply, because Nationwide cannot prove that SMA’s assembly activities caused Nationwide’s damages, and Nationwide has not even alleged that they did.
Nationwide does not dispute the continued viability of § 613.18, but does assert that § 613.18(1) provides no protection to SMA, because SMA did design and assemble the
entire
grain elevator. Nationwide argues that, in
Weyerhaeuser Co. v. Thermogas Co.,
In reply, SMA argues that Nationwide has not alleged that the elevator was defective, only that certain parts incorporated into the elevator were defective. SMA argues that it takes a tortured reading of Weyerhaeuser to transfer liability of component part manufacturers to a general contractor, such as SMA. SMA argues that each of the component parts here had commercial value independent of and detached from the entire elevator. SMA also argues that Weyerhaeuser did not analyze § 613.18(2), but that provision would only hold assemblers liable where the assembling process — not just incorporation of a defective product in the course of assembly — has some causal connection to the alleged defect.
b. Analysis
i. The applicable statute. The statute on which SMA’s immunity argument relies provides, in pertinent part, as follows:
613.18. Limitation on products liability of non-manufacturers
1. A person who is not the assembler, designer, or manufacturer, and who wholesales, retails, distributes, or otherwise sells a product is:
a. Immune from any suit based upon strict liability in tort or breach of implied warranty of merchantability which arises solely from an alleged defect in the original design or manufacture of the product. b. Not liable for damages based upon strict liability in tort or breach of implied warranty of merchantability for the product upon proof that the manufacturer is subject to the jurisdiction of the courts of this state and has not been judicially declared insolvent.
2. A person who is a retailer of a product and who assembles a product, such assembly having no causal relationship to the injury from which the claim arises, is not liable for damages based upon strict liability in tort or breach of implied warranty of merchantability which arises from an alleged defect in the original design or manufacture of the product upon proof that the manufacturer is subject to the jurisdiction of the courts of this state and has not been judicially declared insolvent.
Iowa Code § 613.18(l)-(2) (emphasis added).
As the Iowa Supreme Court observed almost two decades ago, “the statute is not a model of clarity.”
Bingham v. Marshall & Huschart Machinery Co., Inc.,
The statute is divided into two subsections. Subsection 613.18(1) pertains to wholesalers, retailers, distributors and other sellers who are not the manufacturer or designer of the product and who do not assemble the product. Subsection 613.18(2) pertains to retailers who do assemble the products they sell.
Subsection 613.18(1) is itself divided into two paragraphs. Paragraph 613.18(l)(a) provides for immunity from suit when the potential claim arises solely from defects in the original design or manufacture of the product. Paragraph 613.18(l)(b) limits strict liability and implied warranty claims when the claims do not arise solely from an alleged defeet in the original design or manufacture of the product. Examples of suits arising under paragraph 613.18(l)(b) include suits under strict liability for failure to warn about the dangers of a product. See, e.g., Cooley v. Quick Supply Co., 221 N.W.2d 763, 768-69 (Iowa 1974) (citing Restatement § 402A); LaCoste v. Ford Motor Co., 322 N.W.2d 898 , 900 (Iowa App.1982); Prosser & Keeton on Torts § 99, at 695 (5th ed. 1984); 63 Am.Jur.2d Products Liability § 545 (1984).
Bingham,
If the defendant sold, but did not assemble, the product, subsection 613.18(1) may be applicable, but “subsection 613.18(2) is inapplicable.”
Id.
If the defendant did not assemble (or design or manufacture) the product, and the claim arises “solely from an alleged defect in the original design or manufacture of the product,” then subsection 613.18(l)(a) is applicable, and provides the wholesaler, retailer, distributor, or seller with immunity; and if the defendant did not assemble (or manufacture or design) the product, subsection 613.18(l)(b) “limits strict liability and implied warranty claims when the claims do not arise solely from an alleged defect in the original design or manufacture of the products,” such as “suits under strict liability for failure to warn about the dangers of a product.”
Id.
The immunity provided by subsection 613.18(l)(a) is not dependent upon proof that the manufacturer of the product is subject to the jurisdiction of the courts of this state and has not been declared judicially insolvent, as is required in subsections 613.18(l)(b) and (2).
Id.
On the other hand, subsection 613.18(2) is applicable if the defendant
did
assemble the product, but it bars liability for damages if the assembly had “no causal relationship to the injury from which the claim arises.” Iowa Code § 613.18(2);
Bingham,
The statutory protection from product defect claims in Iowa Code § 613.18(l)(a) expressly applies only to claims “which arise[ ] solely from an alleged defect in the original design or manufacture of the products,” and the protection from product defect claims in Iowa Code § 613.18(l)(b) applies to other claims “for the product,” which the Iowa Supreme Court has explained includes “failure to warn” claims.
Bingham,
There are at least two preliminary questions that control the applicability of any portion of § 613.18 here. The first ques
ii.
The pertinent “products.”
In
Kolarik v. Cory International Corp.,
Neither a grain elevator, elevator leg, hazard monitoring system, or bearing is an agricultural or food product, but that is not the extent of possible “products” within the meaning of the statute. What is determinative here is that the Alton grain elevator clearly does not fit the definition applied by the Iowa Supreme Court in
Kolarik,
because a grain elevator is not distributed commercially for use or consumption, is not tangible personal property, and has not passed through a chain of commercial distribution before ultimate use or consumption. The Alton grain elevator is a building erected upon and affixed to real
property
— i.e., it
is
“real property.”
See, e.g.,
Black’s Law Dictionary 1218 (6th ed. 1990) (defining “real property” as “Land, and generally whatever is erected or growing upon or affixed to land”). In contrast, an elevator leg, a hazard monitoring system, and a bearing not only meet these requirements but also are the result of fabrication or processing.
See Kolarik,
Perhaps just as importantly, none of Nationwide’s product liability claims can be asserted against SMA on the basis that the Alton grain elevator in its entirety is the pertinent “product.” As the Iowa Supreme Court noted in
Kolarik,
§ 613.18 “is aimed at situations giving rise to product liability actions.”
Kolarik,
iii. Was SMA an “assembler”?
The next question is whether or not SMA was an “assembler” — or, for that matter, a “manufacturer” or “designer” — of the elevator leg, the hazard monitoring system, or the bearing, which is determinative of whether subsection (1) or (2) of § 613.18 is or might be applicable here. As the Iowa Supreme Court has noted, § 613.18 does not define “assembler.”
Weyerhaeuser Co.,
We therefore resort to its common and ordinary meaning. See Gerst v. Marshall,549 N.W.2d 810 , 814 (Iowa 1996).
The verb “assemble” means “to bring together or gather together into one place, company, body, or whole.” Webster’s Encyclopedic Unabridged Dictionary 125 (rev. ed. 1996). “Assembler” is defined as “a person or thing that assembles.” Id. Thus, the dictionary meanings of “assemble” and “assembler” contemplate a person or thing that brings together [two or more] things into a whole.
The dictionary definition of “assembler” closely resembles the definition of “assembler” in a torts liability setting.
Weyerhaeuser Co.,
In
Weyerhaeuser,
the Iowa Supreme Court explained that an assembler can be held liable for failure of a component that it did not manufacture.
Id.
at 825. Here, Nationwide asserts that SMA’s “assembly” of the leg involved placing the cups on the belts and shimming the bearings, and SMA admits that it put the cups on the belts and shimmed the bearings.
See
Nationwide’s Combined Statement Of Facts In Support Of Its Resistance To All Defendants’ Motions For Summary Judgment (docket no. 161-2), ¶ 196; Defendants’ Joint Objections And Responses To Plaintiffs Statements Of Additional Facts (docket no. 181-1), ¶ 196. While I would not so find, taking the facts in the light most favorable to Nationwide, the non-moving party,
see Torgerson,
The determination that there are genuine issues of material fact as to whether or not SMA was an “assembler” of the elevator leg does not end the inquiry as to SMA’s potential immunity or non-liability for defect claims related to the elevator leg, however. Rather, I must also consider whether SMA can raise the non-liability protection of § 613.18(2), even if it was an “assembler” of the elevator leg.
See Bingham,
Thus, notwithstanding genuine issues of material fact as to whether or not SMA was an “assembler” or “installer” of the elevator leg, SMA is entitled to immunity or non-liability for product defect claims relating to the elevator leg. If SMA was not an “assembler” of the elevator leg, it is entitled, as a matter of law, to the immunity and non-liability protection of § 613.18(1) to defect claims relating to the elevator leg, but if SMA was an “assembler,” it is entitled, as a matter of law, to the non-liability protection of § 613.18(2) as to claims of defects relating to the elevator leg. Thus, SMA is entitled to summary judgment on Nationwide’s product defect claims relating to the elevator leg pursuant to § 613.18.
The analysis is somewhat different as to whether or not SMA has statutory protection from Nationwide’s manufacturing, design, and warning defect claims as to the bearing and the hazard warning system. Nationwide offers no facts from which a reasonable jury could find that SMA assembled (or designed or manufactured) the bearing or the hazard warning system. For purposes of § 613.18(l)(a), SMA is entitled to immunity to any claims which arise solely from an alleged defect in the original design or manufacture of the bearing or the hazard warning system. For purposes of § 613.18(l)(b), where there is no dispute that Baldor, the manufacturer of the bearing, and S-M, the manufacturer of the hazard warning system, are not only subject to the jurisdiction of the courts of this state, but are or were parties to this litigation, and neither has been judicially declared insolvent, SMA is entitled to non-liability for damages on warning defect claims relating to the bearing and the hazard warning system. Thus, SMA is entitled to statutory protection pursuant to § 613.18(1) from product defect claims relating to the bearing and the hazard warning system and is, therefore, entitled to summary judgment on Nationwide’s product defect claims as to the bearing and the hazard warning system.
The “installation defect” claims against SMA, relating to any of the “products” at issue — the elevator leg, the bearing, or the hazard monitoring system — also require separate consideration. As noted above, statutory protection, if any, from “installation defect” claims must come from Iowa Code § 613.18(2), where the general definition of “assembler” under the statute appears to encompass “installation.” SMA’s statutory protection from certain “product defect” claims pursuant to § 613.18(2), where SMA allegedly “assembled,” ie., “installed,” the products applies only if “such assembly ha[d] no causal relationship to the injury from which the claim arises.” Iowa Code § 613.18(2). Here, I find no claims of “installation defects” that did allegedly have a causal relationship to the injury from which Nationwide’s claims arise, because the only claim that appears to be an “installation defect” claim is actually, as a matter of law, a “design defect” claim masquerading as an “installation defect” claim. As such, it cannot evade SMA’s statutory protection from “design defect” claims.
Specifically, Nationwide claims in ¶ 17(4)(a) of the Fourth Amended Complaint that SMA “fail[ed] to install the head pulley bearing correctly, including, but not limited to, the failure to install a non-expansion and expansion pillow block bearing on the head section of the south leg.” I have found no specification in the
iv. Summary as to “product defect” claims. In short, Nationwide’s product defect claims will not lie against SMA as they relate to the grain elevator as a whole, because the grain elevator is not a “product” within the meaning of either § 613.18 specifically or Iowa products liability law generally. SMA was not an “assembler” (or manufacturer or designer) of the bearing or the hazard warning system, so that, as a matter of law, SMA is entitled to the immunity and non-liability protections of § 613.18(1) as to defect claims relating to the bearing and the hazard warning system. SMA is also entitled to immunity or non-liability for product defect claims relating to the elevator leg. If SMA was not an “assembler” of the elevator leg, it is entitled, as a matter of law, to the immunity and non-liability protection of § 613.18(1) to defect claims relating to the elevator leg, but if SMA was an “assembler,” it is entitled, as a matter of law, to the non-liability protection of § 613.18(2) as to claims of defects relating to the elevator leg. Thus, SMA is entitled to summary judgment on Nationwide’s product defect claims relating to the elevator leg pursuant to § 613.18. SMA is also entitled to summary judgment on the only claim cognizable as an “installation defect” claim, because that claim is really a “design defect” claim, from which SMA has statutory protection, masquerading as an “installation defect” claim.
I need not and will not consider any of SMA’s other grounds for summary judgment on Nationwide’s design, manufacture, warning, or installation product defect claims in Division I of the Fourth Amended Complaint.
v. Remaining negligence claims against SMA.
The conclusions just above do not mean that SMA is entitled to summary judgment on
all
of the claims in Division I, however. I note that, in addition to claims that are plainly “product defect” claims, Nationwide also asserts in Division I of the Fourth Amended Complaint various claims, including those expressly denominated “general negligence” claims, that are not necessarily “product defect” claims.
Cf. Estate of Pearson ex rel. Latta v. Interstate Power and Light Co.,
Specifically, while I read claims alleging negligence “[i]n designing the elevator” in ways that relate specifically to the elevator leg, the hazard monitoring system, or the bearings, which are “products,” as alleging “product defect” claims, and SMA has statutory protection from any such “product defect” claims, I do not read claims alleging negligence in other respects that relate to the design of the elevator as a whole as “product defect” claims, whatever their designation in the Fourth Amended Complaint. The claims in Division I that I find can fairly be read to assert general “negligence” claims, rather than “defective product” claims — and that, as such, survive summary judgment — are the following: “failing to use reasonable care in designing the elevator,” see Fourth Amended Complaint, 1117(2)(g); “designing the elevator such that it did not include a distributor and/or gates that would prevent the propagation of fire and/or pressure waves,” see id. at ¶ 17(2)(n); negligence “[i]n manufacturing a grain elevator with a manufacturing defect,” see id. at ¶ 17(3)(c), although this claim is too vague to state any claim; negligence “[i]n violating NFPA 61,” which is the National Fire Protection Association Standard For The Prevention Of Fires And Dust Explosions In Agricultural And Food Processing Facilities, see id. at ¶ 17(4)(b); negligence “[i]n the selection of the hazard monitoring subcontractor,” see id. at ¶ 17(4)(c); negligence “[i]n failing to commission the hazard monitoring system,” see id. at ¶ 17(4)(d); and negligence “[i]n failing to provide the Dodge maintenance manual to the end user,” see id. at ¶ 17(4)(e). Therefore, SMA is not entitled to summary judgment on these portions of Nationwide’s claims in Division I.
2. Warning or instruction defect claims against Baldor
I turn, next, to Nationwide’s product liability claims based on warning or instruction defects. Although Nationwide asserted such claims against all three defendants, I determined, above, that SMA has statutory protection from such claims, and Schlagel does not seek summary judgment in its favor on these claims in its Motion For Partial Summary Judgment (docket no. 139). Thus, I need only consider Baldor’s motion for summary judgment on the merits of the warning or instruction defect claims against it.
a. Arguments of the parties
Baldor contends that, in
Olson v. Proso
co,
Inc.,
Baldor also argues that any failure to warn on its part was not a proximate cause of the incident at issue, because Midwest Farmers Cooperative’s personnel admit that they never read the Dodge bearing instruction manual and claimed never to have received it and never communicated with Baldor regarding the bearing; Baldor provided Schlagel with information regarding the use of expansion and non-expansion bearings and sold both kinds, but Schlagel made the decision to use two non-expansion bearings on the leg in question and did not pass along information about expansion and non-expansion bearings to SMA or others; Baldor provided a catalog to Schlagel that included information about hazard monitoring systems and bearings pre-drilled for internal sensing equipment, E-tect seals, and end caps, but Schlagel made the decisions about whether or not to use any such components; and there is no evidence that internal sensing equipment, an E-tect seal, or an end cap would have prevented or affected the incident at issue. Finally, Baldor argues that Nationwide’s vague “catch all” allegations of inadequate warnings are insufficient bases for any claim.
Nationwide counters that Iowa’s adoption of the Restatement (Third) renders invalid the “sophisticated intermediary” defense, which was premised on Restatement (Second) of Torts § 338, comment n. Nationwide argues that, if the defense is still viable, the Iowa Supreme Court has only recognized it in the context of prescription drugs and medical devices. Moreover, Nationwide argues that, if the defense is viable, the question of “reasonableness” on which the defense depends is for the jury to decide. Nationwide argues that a reasonable jury could reject such a defense in this case, if it is otherwise viable, because Baldor had repeated contact with Midwest Farmers Cooperative, Baldor knew that Schlagel was not properly warning end users, Baldor knew that Schlagel was not knowledgeable about bearings, and Baldor gave inadequate warnings and instructions in the first place. In other words, Nationwide argues that the disputed facts are sufficient to present a jury question on whether Baldor acted in a manner reasonably calculated to assure that the necessary information would be passed to Midwest Farmers Cooperative or that Midwest Farmers Cooperative’s safety would otherwise be addressed.
Somewhat more specifically, Nationwide argues that a jury could find from the record that Baldor knew that Schlagel was using the bearings for elevating legs in grain elevators; that the risk of a grain dust explosion in a grain elevator posed by an overheated bearing was grave; that Baldor could relatively easily have warned Midwest Farmers Coopera
b. Analysis
Baldor is correct that the Iowa Supreme Court has repeatedly held that “[flailure to warn claims cannot be brought under a theory of strict liability.”
Scott v. Dutton-Lainson Co.,
That section of the RESTATEMENT (THIRD) defines a warning defect claim, in pertinent part, as follows:
§ 2. Categories of Product Defect
A product is defective when, at the time of sale or distribution, it ... is defective because of inadequate instructions or warnings. A product:
* * *
(c) is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe.
Restatement (Third) § 2(c). 6
As Baldor contends, I find that the “intermediary” defense is still viable under
Depending on the circumstances, Subsection (c) may require that instructions and warnings be given not only to purchasers, users, and consumers, but also to others who a reasonable seller should know will be in a position to reduce or avoid the risk of harm. There is no general rule as to whether one supplying a product for the use of others through an intermediary has a duty to warn the ultimate product user directly or may rely on the intermediary to relay warnings. The standard is one of reasonableness in the circumstances. Among the factors to be considered are the gravity of the risks posed by the product, the likelihood that the intermediary will convey the information to the ultimate user, and the feasibility and effectiveness of giving a warning directly to the user. Thus, when the purchaser of machinery is the owner of a workplace who provides the machinery to employees for their use, and there is reason to doubt that the employer will pass warnings on to employees, the seller is required to reach the employees directly with necessary instructions and warnings if doing so is reasonably feasible.
Restatement (Third) § 2(c), comment i (emphasis added). The apparently wholesale adoption of § 2 in Wright, as reiterated in Scott, leads me to believe that the “intermediary” defense in comment i was also adopted wholesale. Contrary to Nationwide’s contentions, I find nothing in Wright to limit the availability of the defense, recognized in the Restatement, to the context of prescription drugs and medical devices.
I do conclude, however, that, taking the facts in the light most favorable to Nationwide, the non-moving party,
see Torgerson,
Therefore, Baldor’s motion for summary judgment on the failure-to-warn claims will be denied.
3. Design defect claims against Baldor
Again, Nationwide has asserted product design defect claims against all three defendants, but I determined, above, that SMA has statutory protection from such claims, and Schlagel does not seek summary judgment on such claims. Thus, once again, I need only consider Baldor’s motion for summary judgment on the merits of these claims against it.
a. Arguments of the parties
Baldor argues that Nationwide has no evidence to support a design defect claim against it. Baldor contends that, in Wright, the Iowa Supreme Court rejected either “negligence” or “strict liability” theories of design defect claims, allowing only a risk/utility analysis of such claims. Baldor argues that, using this analysis, Nationwide must have expert testimony in support of this claim, but all of Nationwide’s proffered bearing experts have admitted that they have no criticism of the design of the bearing; that Nationwide can offer no evidence of an alternative design for the bearing at issue; and that Nationwide cannot even produce any evidence to establish that the bearing itself (as opposed to the receiving leg of which it was made a part) was not reasonably safe as designed. Baldor develops these arguments further.
First, Baldor asserts that expert testimony is necessary to establish a design defect unless the feasibility of a reasonable alternative design is obvious and understandable to laypersons. Here, Baldor asserts, there is no doubt that Nationwide’s alleged design theories regarding various aspects of a bearing involve technical and engineering issues that require expert testimony, but all of Nationwide’s experts have testified that they have no criticism of the design of the bearing.
Second, Baldor asserts that Nationwide must prove that a reasonable alternative design was available and that the alternative design would have prevented or reduced the harm to the injured party. Here, however, Baldor asserts that Nationwide has offered no proof of any alternative design for the bearing, much less evidence that any alternative design would have prevented the incident.
Third, Baldor contends that Nationwide has no evidence that the bearing was defective when it left Baldor’s control. Baldor points out that none of Nationwide’s experts has criticized the design of the bearing’s sealing system, and it was physically impossible to manufacture a bearing with a cover over it, as a cover would prevent the bearing from fitting on a shaft, and Baldor sold end caps as an item that could be added to a bearing after it was
In response, Nationwide argues that its defective design claims arise from at least five design flaws: (1) lack of E-teet seals; (2) lack of end caps; (3) lack of corrosion-proof coatings; (4) lack of bearings predrilled with internal bearing temperature sensors; and (5) use of a non-expansion bearing in lieu of an expansion bearing. Nationwide acknowledges that Dodge actually offered E-tect seals, end caps, corrosion-proof coatings, and pre-drilled bearings at the time that the Alton grain elevator was built, but contends that this simply demonstrates that the feasibility of these alternatives cannot be honestly contested. Nationwide also argues that Baldor admits that E-tect seals and end caps are reasonable alternative designs.
Nationwide argues that Baldor sells a large portion of its bearings to the grain industry, but sells them with seals (R-seals) that it knows are dramatically inferi- or to the E-tect seals for dust and water environments. Nationwide argues that Baldor was reckless in selling E-tect seals and end caps as separate add-ons buried in its catalog, so that Baldor had to help buyers select appropriate additions. Nationwide argues that a jury could find that there was no reasonable excuse for Baldor not to include E-tect seals and end-caps in its design for bearings that it targeted for sale into the grain industry, particularly for one of its best accounts, Schlagel. Nationwide acknowledges that the E-tect seal is not a replacement for the existing R-seal on the bearings in question, but fits over the R-seal to protect it, and the end caps then fit over the E-tect seal. Nationwide also acknowledges that its experts do not criticize the R-seal alone. Nevertheless, Nationwide argues that its experts do criticize the failure to include the E-tect seal and end caps into the design of a bearing destined for use in an elevator leg. Nationwide also argues that the bearings could have been coated to reduce the chances of corrosion. While such coating may double the cost of the bearing, Nationwide argues that such an alternative is still reasonable in light of the risks of overheating and dust explosions. Nationwide also argues that internal temperature sensors are not only feasible, but more effective than external sensors. Finally, Nationwide argues that a vibration hazard monitoring system was a reasonable alternative design, but that vibration monitoring and internal temperature monitoring, together, constitute a reasonable alternative to external temperature monitoring alone.
In reply, Baldor reiterates its contention that Nationwide’s design defect claims are not based on a claim that the bearing
b. Analysis
“Under a design-defect claim, a plaintiff is essentially arguing that, even though the product meets the manufacturer’s design specifications, the specifications themselves create unreasonable risks.”
Parish v. Jumpking, Inc.,
Prior to this court’s recent decision in Wright v. Brooke Group Ltd.,652 N.W.2d 159 (Iowa 2002), design defect claims could be brought under a theory of either strict liability or negligence. See, e.g., Chown v. USM Corp.,297 N.W.2d 218 , 220 (Iowa 1980); HawkeyeSecurity Ins. Co. v. Ford Motor Co.,174 N.W.2d 672 , 682-84 (Iowa 1970). In Wright, we adopted the Restatement (Third) of Torts: Products Liability sections 1 and 2 (1998) [hereinafter Third Products Restatement]. Wright,652 N.W.2d at 169 . The Third Products Restatement recognizes that “strict liability is appropriate in manufacturing defect cases, but negligence principles are more suitable for other defective product cases.” Id. at 168. Therefore, Wright adopted a standard of risk-utility analysis, which incorporates a consideration of reasonableness, for design defect claims, but chose to “label a claim based on a defective product design as a design defect claim without reference to strict liability or negligence.” Id. at 169.
Scott v. Dutton-Lainson Co.,
Section 2(b) of the Restatement(Third) defines a design defect claim, in pertinent part, as follows:
§ 2. Categories of Product Defect
A product is defective when, at the time of sale or distribution, it ... is defective in design____A product:
(b) is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe[.]
Restatement (Third) § 2(b) ;6
Scott,
I find that Nationwide’s design defect claims against Baldor are fatally flawed, because they blur the distinction between different “products,” the Dodge TAF bearing designed and manufactured by Baldor, on the one hand, and the elevator leg designed and manufactured by Schlagel, which incorporated the Dodge bearing, on the other. As I explained above, both the bearing and the elevator leg are “products” within the meaning of Iowa tort law.
There is no genuine issue of material fact that the Dodge TAF bearing is a multipurpose one that can be used for any number of purposes in any number of different industries or applications. More specifically, as Baldor argues, none of Nationwide’s experts has opined that the bearing, itself, was defective. See Baldor’s Appendix at 104 (Basta Deposition at 81:21-24) (admitting that Basta was not offering any opinions that he had a design criticism of the Dodge bearing at issue); id. at 110 (Bessette Deposition at 61:9-15) (admitting that he was not offering an opinion criticizing Dodge for the design of the bearing at issue and averring that he had no opinions criticizing the design of the bearing); id. at 254-56 (Hanke Deposition at 105:25-106:4; 170:22-25) (admitting that he had no criticism of the design of the Dodge TAF bearing at issue and was not offering any criticisms of any aspect of the design of that bearing); id. at 268 (Sibley Deposition at 61:4-10) (admitting that he had no criticism of the design of the seal on the Dodge TAF bearing or the TAF bearing involved in the case).
Nevertheless, Nationwide argues that design of the bearing was defective, because it failed to include the E-tect seal, end caps, and, presumably, also failed to include a corrosion resistant coating, predrilling for internal sensors, and “expansion” rather than “non-expansion” form. Indeed, Nationwide contends that its “experts have clearly opined that it was a dereliction of design principles to not in-
Specifically, Nationwide cites the following from the report of its expert, Jim Maness:
One of the items addressed by bearing manufacturers is the need to protect the bearing from the environmental conditions that can be the source of contaminants (grain dust and water) getting into bearings and causing failure. This is addressed by some in the industry by placing a shroud that is made as a separate cover that is attached to the top head cover of the leg for outside legs pulley to protect the bearings from rain and snow. When used it is important to keep the area between the bearing and the head cover dust seal clean of expelled grease and grain or dust accumulations. The Dodge catalog offers an option for bearings subject to moisture and particle (dust) contamination, a new “E-Tect” bearing seal kit [which(?) ] should be a mandatory part of the bearings intended for use in the grain industry on bucket elevators since standard seals do not adequately protect against the contamination problem.
Nationwide’s Appendix at 14 (Maness’s report at 9) (emphasis added). Although Maness states that the E-tect seal kit “should be a mandatory part of the bearings intended for use in the grain industry on bucket elevators,” id. (emphasis added), it is only by a semantic sleight of tongue that a “separate” cover or a “seal kit” that is sold as an “option” — items that Nationwide does not dispute are sold separately from the bearing itself — become “part of the bearings.” Moreover, Maness’s opinion that these items should be a “mandatory part of the bearings” for certain applications — specifically, “use in the grain industry on bucket elevators” — gives rise to reasonable inferences only about the proper design of a bucket elevator, not about the design of the bearings themselves.
Nationwide also cites Basta’s opinion that “the ‘E-Tect’ pillow block bearing seal and optional end cap components available to the Midwest Farmers’ Alton Terminal’s elevator and elevator leg design/construction companies at the time of the facility’s construction would have provided increased protection against the noted bearing grease contamination via external moisture sources and grain dust, as well as other sources of external bearing grease contamination.” Nationwide’s Joint Appendix (docket no. 161) at 82 (Basta’s Expert Report at 12, conclusion (5)) (emphasis indicating language omitted from Nationwide’s quotation in its Brief at 12). This opinion simply is not an opinion that the bearing, itself, was defective because it was designed without an E-tect seal or end cap. The only reasonable inference from this opinion is that the design of the elevator leg was defective without such “optional” or “available” protection for the bearing.
Nationwide also cites the opinion of its expert metallurgist, Larry Hanke, that “[t]he bearing assemblies for the head pulley shaft were inadequately sealed to prevent moisture ingress into the bearings.” Nationwide’s Joint Appendix at 207 (Hanke’s Expert Report at 3). Again, Hanke’s opinion simply
is not
an opinion
Finally, Nationwide asserts that Sibley opined that an E-Tect seal would have been preferred over the R-seal, but cites in support of this contention only Sibley’s affidavit incorporating his November 1, 2010, report, not any specific provision of that report. Even assuming that Sibley would or did state the opinion attributed to him, that opinion, again, is that the addition of an E-tect seal would have been preferred over use of the R-seal alone, which again gives rise only to a reasonable inference that the design of the elevator leg was defective without adequate additional moisture seals for the bearing, where there is no dispute that the E-tect seal does not replace the R-seal, but is an optional, additional seal that can be used over a bearing with the R-seal, when circumstances warrant.
In the alternative, even if the pertinent product were
the bearing assembly,
not just the
bearing,
Baldor still would not be liable for defective design of the
bearing assembly,
as a matter of law. In
Scallan v. Duriron Co., Inc.,
In Scallan, the court rejected the plaintiffs argument that the pump manufacturer could be liable for a design defect based on failure to use an automatic annunciator, rather than a sight glass detection system, on the pump, as follows:
As evidence that the automatic annunciator is safer than the manual sight glass, Scallan points to the testimony of Mr. Bloch, Seallan’s pump expert, who testified that although either the manual or automatic system would be acceptable, he prefers the automatic annunciator because it decreases the risk of operator negligence and human error. The district court rejected Scallan’s claim that the pump was defectively designed due to its lack of an automatic annunciator because Allied had knowingly selected the manual monitoring system.
The district court properly focused on the critical fact that Duriron offered an automatic annunciator as an option on the P/D II pump. The record is uncontradicted that Allied elected to purchase the pump with the manual sight glass instead. Allied had full knowledge of its processes and procedures for handling the chlorine in its plant. According to Richard Schwab, an Allied supervisor, Allied did not divulge all these facts to Duriron. To determine whether thepump would meet its needs, Allied engineers made a detailed study of the specifications and actually visited the Duriron facility for performance testing of the P/D II pump. Upon Allied’s request, adjustments were made to the pump after the performance tests were completed. The only inference permissible from the summary judgment evidence is that Allied made an informed decision to purchase the pump with the sight glass rather than the annunciator. The question therefore remains whether Duriron has potential liability under a design defect theory for failing to furnish an arguably safer warning device when the purchaser rejected Duriron’s offer to provide the device.
Scallan,
The court then rejected the plaintiffs argument that a manufacturer cannot avoid liability for an unreasonably designed product by shifting responsibility for the product’s design to the purchaser or another party, because in the case cited by the plaintiff, the manufacturer “did not present an option to the purchaser to furnish the [product] with [the safer alternative design].”
Id.
In the case before it, the Fifth Circuit Court of Appeals was “persuaded that [the manufacturer] fulfilled its duty to provide the arguably safer product by offering the annunciator to Duriron.”
Id.
The court noted, further, that it was unable to find authority from any jurisdiction that would support the plaintiffs argument “that a manufacturer is liable for the failure to incorporate a safety device that the purchaser knowingly rejects.”
Id.; see also Austin v. Clark Equip. Co.,
Scallan
is instructive here. The “critical fact” here is that Baldor offered the precise options that Nationwide now contends would have made the bearing assembly safer, and it is uncontradicted that Schlagel did not purchase those options for its elevator leg.
Cf. id.
(“The district court properly focused on the critical fact that Duriron offered an automatic annunciator as an option on the P/D II pump. The record is uncontradicted that Allied elected to purchase the pump with the manual sight glass instead.”). I am persuaded that Baldor fulfilled its duty to provide the arguably safer product by offering the end cap, E-tect seal, pre-drilled bearings, coated bearings, and “expansion” bearings as options.
See id.
Nationwide has not cited, and I have not found, authority for the proposition that a manufacturer is liable for failure to incorporate into the “design” of a multi-purpose product certain safety devices that it provides as separate, optional products, for particular uses, but a purchaser rejects.
Cf. id.
Indeed, Restatement (Third) § 2(b) contemplates that a product may be defectively designed because “the seller or other distributor, or a predecessor in the commercial chain of distribution” failed to reduce or avoid the harm posed by the product by failing to adopt a reasonable alternative design. Restatement (Third) of Torts: Products Liability § 2(b). Thus, even where a design defect claim will not lie against the original manufacturer/designer of a product, such a claim may still lie against a party in the commercial chain of distribution who incorporates that product into another product, but in doing so fails to adopt a reasonable alternative design that avoids the harm that the original product might pose in the particular use at issue. Here, in light of
Although the court in Scállan rejected design defect liability for the manufacturer where an intermediary or end user knowingly rejected options available from the manufacturer, see id., Nationwide has not generated a genuine issue of material fact that Schlagel, a designer of elevator legs, did not know of available options to protect bearings in such an application. Instead, Nationwide’s response is that Baldor sold the additional options “recklessly” by burying the options in a complex catalog and failing to make Schlagel — and others who would use the bearing in question in a grain elevator — aware of available and appropriate additional products to protect the bearing in certain uses. This is not a design defect claim as to the bearing or even as to the bearing assembly, however; it is, if anything, a warning and instruction defect claim concerning inadequacies of instructions about available and appropriate options for protection of the bearing in certain circumstances. I denied Baldor’s motion for summary judgment on warning defect claims, above.
Baldor is entitled to summary judgment on Nationwide’s design defect claims against it.
4. Manufacturing defect claims against Baldor and Schlagel
Nationwide has asserted product manufacturing defect claims against all three defendants. I determined, above, that SMA has statutory protection from such claims. Therefore, I will consider Baldor’s and Schlagel’s motions for summary judgment on the manufacturing defect claims against them.
a. Arguments of the parties
Baldor and Schlagel both argue, succinctly, that Nationwide has no evidence that either the bearing or the elevator leg at issue deviated from the intended design, as required to sustain a manufacturing defect claim. Baldor adds that Nationwide also has no evidence that any deviation from the design of the bearing caused the incident at issue. I can find no response by Nationwide to Baldor’s motion for summary judgment on the manufacturing defect claim. Nationwide’s response to Schlagel’s motion for summary judgment on the manufacturing defect claims is also succinct: Nationwide contends that it has demonstrated a manufacturing defect with respect to Schlagel’s failure to follow Baldor’s design directions to install an expansion bearing upon the shaft. It also appears that the “manufacturing” defect by Schlagel at issue is actually an “installation” defect, the failure to use an expansion bearing, which Nationwide asserts the law simply dresses as a product defect claim, citing Restatement (Second) of Torts § 404. In its reply, Baldor points out Nationwide’s failure to respond to this portion of its summary judgment motion. Similarly, in its reply, Schlagel points out that Nationwide still has cited no evidence that the manufacturing of Schlagel’s product deviated from its intended product design.
b. Analysis
As the Iowa Supreme Court has explained, unlike design defect and warning defect claims, to which negligence principles are applicable, “[t]he Third Products Restatement recognizes that ‘strict liability is appropriate in manufacturing defect cases.’ ”
Scott,
As to a strict liability manufacturing defect claim, the Restatement (third) § 2(a) provides as follows:
§ 2. Categories of Product Defect A product is defective when, at the time of sale or distribution, it contains a manufacturing defect----A product:
(a) contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product....
Restatement (Third) § 2(b);
Scott,
As the Restatement (Third) explains, in comment n to § 2, the strict liability rule set forth in subsection (a) does not require risk-utility assessment, but a negligence claim does. Restatement (Third) § 2(a) cmt. n. However, “[w]hat must be shown under either [a negligence or strict liability] theory is that the product in question did, in fact, have a manufacturing defect at the time of sale that contributed to causing the plaintiff’s harm.” Id. Thus, if the bearing or elevator leg did not have a manufacturing defect at the time of sale, then Nationwide’s manufacturing defect claim would fail under either a negligence or a strict liability theory.
Baldor and Schlagel are correct that Nationwide has utterly failed to generate any genuine issue of material fact that, at the time of sale, either the bearing or the elevator leg was
not
in the condition intended by the manufacturer. Restate
5. Installation defects and general negligence claims against Schlagel
Nationwide alleges “installation defect— general negligence” claims against SMA and Schlagel, but not against Baldor. These claims against SMA were addressed, above, in Section II.B.b. The disposition of Schlagel’s motion for summary judgment on these claims requires separate consideration.
a. Arguments of the parties
Schlagel argues that Nationwide’s “installation defect” claims fail, because Schlagel owed no duty as an installer or repairer. Schlagel argues that the duty of reasonable care on a claim of negligent installation is confined to installers and repairers, but does not reach a party that manufactured a component part. Indeed, Schlagel contends, there are no Iowa decisions in which an installation defect claim has been brought against a products manufacturer for allegedly failing to install correctly specific pieces on the component part. Thus, Schlagel contends that Nationwide is simply trying to reassert a negligence-based design defect claim in the guise of an installation defect claim. Schlagel argues that the record shows that it played no role in the installation of the product in which its component parts were used, nor did it play a role in post-installation inspection.
In its response, Nationwide first identifies its “manufacturing defect” claim against Schlagel as, for example, an “installation defect” claim. Nationwide explains its “manufacturing defect” claim is that Schlagel deviated from Baldor’s design by placing two non-expansion bearings on the shaft. Nationwide then argues that its manufacturing claim against Schlagel is a negligent installation claim, for all practical purposes, which the law simply dresses as a product defect claim, citing Restatement (Second) of Torts § 404. Thus, Nationwide argues, it is making a negligent installation claim that merely arises under the legal definition of a manufacturing defect. Nationwide does not argue, however, that the claims it has actually denominated “installation defect-general negligence” claims against Schlagel are somehow viable.
In its reply, Schlagel argues that Nationwide does not appear to contest that it failed to demonstrate that Schlagel was an installer or repairer. Thus, Schlagel contends that it is entitled to judgment as a matter of law on Nationwide’s claim for installation defects.
b. Analysis
I find that nearly all of Nationwide’s purported “installation defect” claims against Schlagel are, in fact, simply repackaged “design defect” and “manufacturing defect” claims. Indeed, the difference is usually just substituting “install” for “design” or “manufacture.” While it is not necessarily impermissible to allege an
Nationwide relies on Restatement(Second) of Torts § 404 for the required legal basis for its “installation defect” claims. That section provides as follows:
§ 404. Negligence in Making, Rebuilding, or Repairing Chattel
One who as an independent contractor negligently makes, rebuilds, or repairs a chattel for another is subject to the same liability as imposed upon negligent manufacturers of chattels.
Restatement (Second) of Torts § 404. The Iowa Supreme Court has explained a § 404 claim, briefly, as follows:
Section 404 of the Restatement involves claims against an independent contractor who negligently rebuilds or repairs a chattel. Where, as here, the contractor has not acted to increase the chattel’s dangerous propensities, comment b of section 404 invokes the same rationale of “deceptive appearance of safety” that has been recognized in the application of section 403.
Anderson v. Glynn Constr. Co., Inc.,
Schlagel’s contention is that it was neither a “repairer” nor an “installer” subject to any such duty, because it played no role in the installation of the product in which its component parts were used and played no role in post-installation inspection. Nationwide has not identified any record evidence giving rise to genuine issues of material fact that Schlagel “installed”
the elevator,
or even that Schlagel “installed”
the elevator leg
into the elevator. The undisputed evidence is that Schlagel delivered a fully assembled or almost fully assembled elevator leg to SMA, which SMA then installed in the elevator. Thus, Schlagel was not an independent contractor who made, rebuilt, repaired, or installed a chattel for another,
but the original designer and manufacturer of the leg. See
Restatement (Second) of Torts § 404;
Anderson,
C. Breach Of Implied Warranties
In addition to “product defect” claims, Nationwide asserts various “breach of warranty” claims. I will address these claims to the extent that they are put at issue in the defendants’ motions for summary judgment.
1. Warranty of merchantability
Nationwide asserts claims of breach of the implied warranty of merchantability against SMA (Division II), Schlagel (Division VIII), and Baldor (Division XIII). All three defendants challenge these claims, in their motions for summary judgment, but not all on the same grounds.
a. Immunity of SMA
Only SMA asserts that it has statutory protection from Nationwide’s claims of breach of the implied warranty of merchantability pursuant to Iowa code § 613.18. SMA’s statutory protection from claims of breach of the implied warranty of merchantability is co-extensive with its statutory protection from product defect claims. See Iowa Code § 613.18. Thus, SMA is entitled to summary judgment on Nationwide’s claim against it for breach of the implied warranty of merchantability pursuant to § 613.18 for essentially the same reasons that I found that SMA had statutory protection from various product defect claims, beginning on page 16. I will not consider SMA’s other grounds for summary judgment on this claim.
b. Timeliness of the claim against Schlagel and Baldor
Only Schlagel has challenged Nationwide’s claim of breach of implied warranty of merchantability on the ground that the claim is untimely pursuant to Iowa Code § 554.2725(2), which provides, generally, that the statute of limitations for a breach of warranty claim begins to run upon delivery of the goods, regardless of the aggrieved party’s lack of knowledge of the breach. Although Baldor did not move for summary judgment on this ground, I find that Schlagel’s statute of limitations argument would be equally applicable to Baldor.
First, the implied warranty claims against both of these defendants arise from the sale of “goods.” In
Speight v. Walters Dev. Co., Ltd.,
Second, it would be appropriate for me to grant summary judgment in Baldor’s favor,
sua sponte,
on this ground, if it is appropriate to grant summary judgment to Schlagel on this ground, because Nationwide has had sufficient advance notice of the timeliness issue as to warranty claims involving goods and an adequate opportunity to demonstrate why summary judgment should not be granted, where Schlagel squarely presented the issue in its summary judgment motion, and Nationwide responded to the issue.
See Figg v. Russell,
i. Arguments of the parties. As to its timeliness challenge to this claim, Schlagel argues, on the basis of Iowa Code § 554.2725(2), that the applicable five-year statute of limitations began to run at the time of tender of the goods, so that the statute of limitations expired in 2003. Schlagel then cross-references its statute of limitations argument to a “Section IV. A.” of its brief, but there is no such section in its brief. There is, however, a Section III.D. that discussed the statute of limitations for a claim of breach of implied warranty of fitness for a particular purpose, which adds an argument that the statute of limitations begins to run at the time of delivery, even though the buyer does not know the goods are defective. In response, Nationwide contends that the “discovery rule” tolls the statute of limitations on common-law warranty claims until the time when the explosion occurred, and its lawsuit was filed the same year as the explosion. Nationwide argues that Schlagel improperly focuses on a statutory warranty claim, but Iowa law recognizes both statutory and common-law claims based on implied warranties. In reply, Schlagel contends that Nationwide’s argument for application of the discovery rule, to defeat its statute of limitations argument, is flawed, because the case on which Nationwide relied was not a “goods” case, but this one is.
ii. Analysis. The parties apparently agree that the statute of limitations applicable to Nationwide’s breach-of-implied-warranty claims is the following:
Actions may be brought within the times herein limited, respectively, after their causes accrue, and not afterwards, except when otherwise specially declared: * * *
4. Unwritten contracts — injuries to property — fraud—other actions.
Those founded on unwritten contracts, those brought for injuries to property, or for relief on the ground of fraud in cases heretofore solely cognizable in a court of chancery, and all other actions not otherwise provided for in this respect, within five years, except as provided [for claims not presented here].
Iowa Code § 614.1(4). What they dispute is the “trigger” for the running of this five-year statute of limitations in this case.
Nationwide contends that the “discovery rule” applies here, which Schlagel disputes. “Under the discovery rule, a cause of action does not accrue until the injured party has actual or imputed knowledge of the facts that would support a cause of action.”
Speight v. Walters Dev. Co., Ltd.,
However,
Speight,
on which Nationwide relies, demonstrates that this “discovery rule” is not applicable here. As the Iowa Supreme Court explained in
Speight,
under Iowa Code § 554.2725(2), all actions for breach of implied warranty involving “goods” “accrue at the time of delivery, not at the time the damage is discovered.”
Speight,
In Speight, the Iowa Supreme Court agreed with the plaintiffs that their claim was not based on the sale of “goods” and, therefore, § 554.2725(2) did not apply. Id. The court explained,
Goods are “all things ... which are movable at the time of identification to the contract for sale.” [Iowa Code] § 554.2105(1). Clearly, the construction of a home is not a transaction for the sale of goods to which the UCC applies. Therefore, the limitation provided in section 554.2725(2) does not apply to cases such as the present one. We made that clear in Brown v. Ellison,304 N.W.2d 197 (Iowa 1981), in which we distinguished cases involving breach of implied warranties of workmanship from those under the UCC.
We hold that the discovery rule is applicable to cases arising from express and implied warranties. This holding, of course, does not apply to situations in which statutes expressly provide that a cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. See, e.g., Iowa Uniform Commercial Code, § 554.2725.... The trial court was, therefore, correct in applying the discovery rule.
Brown,
Speight,
While the “discovery rule” applied in
Speight,
because the construction of a home was not a “good,” it is equally clear that the “discovery rule” does
not
apply here, pursuant to IOWA CODE § 554.2725(2), where the elevator legs clearly were “goods.”
Cf. Speight,
Nationwide’s assertion that its claim based on the implied warranty of merchantability is a “common-law” claim is a red herring. While Iowa common-law undoubtedly recognizes some common-law
Because Nationwide’s claim of breach of implied warranty of merchantability against Schlagel is not subject to the “discovery rule,” Schlagel is entitled to summary judgment on that claim, because it is time-barred by the applicable five-year statute of limitations from the time of delivery of the elevator legs. See Iowa Code §§ 618.1(4) (statute of limitations); 554.2725(2) (time runs from delivery of goods). I need not and will not consider Schlagel’s other grounds for summary judgment on this claim. 10
Precisely the same analysis would apply to the timeliness of Nationwide’s claim of breach of implied warranty of merchantability against Baldor. Nationwide has been fully heard on the issue of the timeliness of a claim of breach of implied warranty of merchantability arising from the sale of “goods,” so that entry of summary judgment
sua sponte
in Baldor’s favor on the untimeliness of the claim is also appropriate.
See Figg v. Russell,
Nationwide asserts claims of breach of the implied warranty of fitness for a particular purpose against SMA (Division III), Schlagel (Division IX), and Baldor (Division XIV). All three defendants move for summary judgment on these claims against them, but they do so on slightly different grounds. I will again consider their challenges defendant-by-defendant.
a. The claim against SMA
i. Arguments of the parties. SMA acknowledges that a claim of breach of implied warranty of fitness for a particular use may be either statutory or common-law, but that the tests for the two claims are quite similar and that Nationwide cannot prevail on whichever theory it is asserting. SMA argues that, for this claim against a contractor who agrees to build a structure for a particular purpose, Nationwide must plead the particular purpose for which the building is intended, but Nationwide has failed to do so. SMA also argues that Nationwide cannot prove that a breach of such a warranty caused any damage to Nationwide.
Nationwide contends that SMA’s argument is cursory and erroneous. Nationwide argues that the purpose of a grain elevator can be inferred from the name of the structure. Nationwide argues that this is a case in which it is obvious that the ordinary purpose and particular purpose of a grain elevator are the same. Nationwide also alleges that it has adequately pleaded a number of representations that SMA made about the safety and “state of the art” quality of the grain elevator that it would build. Nationwide contends that it is not required to plead the obvious. Nationwide argues that there can be no dispute that the Iowa Supreme Court has recognized an implied warranty of fitness for a particular purpose against a contractor who agrees to build a structure for a particular purpose. Finally, Nationwide argues that it has generated genuine issues of material fact that SMA’s breach of this implied warranty caused damage by pointing to all of the evidence that it has amassed showing that the Alton grain elevator was not safe to use as a grain elevator owing to omissions of critical safety features.
In reply, SMA reiterates that it is entitled to summary judgment on this claim, because Nationwide blurs the differences between breach of the implied warranty of merchantability, which is a warranty of fitness for ordinary purposes, and the implied warranty of fitness for a particular use. Notice pleading is not enough, SMA argues: Nationwide must generate genuine issues of material fact on the right claim. SMA argues that Nationwide presents no “bargain-related” facts in its Resistance to support a particular use of the grain elevator.
ii. Analysis. Some time ago, the Iowa Supreme Court recognized an implied warranty of fitness for a particular purpose in a contract to build or install a structure:
[W]e adopt the following as a summary and extension of the construction contract implied warranty:
Where a contractor agrees to build a structure to be used for a particular purpose, there is an implied agreement on his part that the structure when completed will be serviceable for the purpose intended....
Where the contract contains a guarantee or warranty, express or implied, that the contractor’s work will be sufficient for a particular purpose or to accomplish a certain result, unless waived by the owner, the risk of accomplishing such purpose or result is on the contractor, and there is no substantial performance unless the work is sufficient for such purpose or accomplishes such result.
17 A C.J.S., Contracts, § 494(2)(a), at 715-16 (1963).
Semler v. Knowling,
In Semler, the Iowa Supreme Court also identified the elements of recovery on such a claim:
The following elements for recovery must be present under the theory of implied warranty of fitness for a particular purpose:
(1) the seller must have reason to know the consumer’s particular purpose;
(2) the installation contractor must have reason to know that the consumer is relying on his skill or judgment to furnish appropriate installation services; and
(3)the consumer must, in fact, rely upon the installer’s skill or judgment.
See [Farm Bureau Mut. Ins. Co. v. Sandbulte,302 N.W.2d 104 , 110 (Iowa 1981)]; Iowa Code § 554.2315 (1981).
Semler,
It is difficult to discern here the required “particular purpose” or “peculiar need.” There is no doubt that the
purpose
of the grain elevator here was to be a grain elevator, but that conclusion does nothing to establish the particular needs of Midwest Farmers Cooperative, just the general purpose for the construction project.
See id. &
n. 2 Nationwide also has not generated any genuine issues of material fact as to a “peculiar need” that was known to SMA, from either the pleadings or Nationwide’s briefing on the summary judgment motion.
See id.
I doubt that a “safe” grain elevator is a “peculiar need,” because an elevator must also be “safe” to serve its general or ordinary purpose of storing and protecting grain. It appears that, at least now, Nationwide asserts that its “particular purpose” or “peculiar need” was a “state of the art” grain elevator and that this is what SMA promised to construct. Nationwide has not shown, however, that this “purpose” — even if it were more than “puffery” — was formulated at
Therefore, SMA is entitled to summary judgment on this claim of breach of the implied warranty of fitness for a particular purpose.
b. Timeliness of the claim against Schlagel and Baldor
Only Schlagel asserts that it is entitled to summary judgment on Nationwide’s claim of breach of the implied warranty of fitness for a particular purpose on the ground that the claim is untimely. Nevertheless, as with the claim based on breach of the implied warranty of merchantability, I will also consider, sua sponte, whether Baldor is also entitled to summary judgment on this claim on the ground that it is untimely. See supra at 666.
i. Arguments of the parties. As with the Nationwide’s claim against Schlagel based on the implied warranty of merchantability, Schlagel contends that this claim based on the implied warranty of fitness for a particular purpose is time-barred by the applicable five-year statute of limitations, because the “discovery rule” is inapplicable. Similarly, Nationwide also reiterates here, with regard to the claim based on the implied warranty of fitness for a particular purpose, its responses to Schlagel’s statute of limitations arguments concerning the claim based on the implied warranty of merchantability. In reply, Schlagel contends that Nationwide should not be able to pick and choose whether it is asserting a common-law or statutory implied warranty claim, where the statutory claim plainly applies to the “goods” at issue and, hence, the “discovery rule” does not salvage an untimely claim.
ii. Analysis.
Nationwide is correct that, “[ujnder Iowa law there are both statutory and common-law implied warranties of fitness for a particular purpose.”
Chicago Cent. & Pac. R.R. Co. v. Union Pac. R.R. Co.,
The Iowa Supreme Court’s decision in
Chicago Central & Pacific Railroad Company
does not support the contention that
both
common-law and statutory claims can be asserted on the same facts or in the same contexts. Rather, in that decision, the Iowa Supreme Court cited as authority for
statutory
implied warranties of fitness for a particular purpose IOWA CODE § 554.2315, which establishes such a warranty for the sale of “goods,” and § 554.13213, which establishes such a warranty for leases, but cited cases recognizing an implied warranty of fitness for a particular purpose in the context of bailments or contracts for hire.
Chicago Cent. & Pac. R. Co.,
Thus, for essentially the same reasons that I concluded, above, beginning at page 60, that the
statutory
implied warranty of merchantability claim against Schlagel is time-barred, I now conclude that the
statutory
implied warranty of fitness for a particular purpose claim against Schlagel is also time-barred: Under IOwa Code § 554.2725(2), all actions for breach of implied warranty involving the sale of “goods” “accrue at the time of delivery, not at the time the damage is discovered.”
Speight,
Baldor, as well as Schlagel, is entitled to summary judgment on Nationwide’s claims of breach of the implied warranty of fitness for a particular purpose, because those claims are time-barred. This is the sole ground on which Schlagel is entitled to summary judgment on this claim.
12
On the other hand, I conclude that Baldor would be entitled to summary judgment on
3. Warranty of workmanlike manner
Nationwide’s last implied warranty claim is a claim for breach of implied warranty of workmanlike manner. Nationwide asserts such a claim against SMA (Division IV), Schlagel (Division X), and Baldor (Division XV). All three defendants have moved for summary judgment on these claims.
a. The claim against SMA
i. Arguments of the parties.
SMA argues that, under Iowa law, the implied warranty of workmanlike manner is designed to be used when home construction is at issue, based on a policy of protecting home buyers who are in an inferior bargaining position compared to experienced home builders. SMA argues that the policy reasons for implying such a warranty are not present in this case. Even if the warranty is applicable in the circumstances presented here, SMA contends that Nationwide cannot generate a genuine issue of material fact that SMA breached the warranty. SMA argues that it did not design, manufacture, or install any of the systems that Nationwide alleges were de
Nationwide contends that Iowa courts have expressly extended the reach of the implied warranty of workmanlike manner beyond residential construction to construction of commercial facilities, including construction of agricultural facilities and roads and construction projects generally. Nationwide also points out that the Minnesota Supreme Court relied on an Iowa decision to extend the warranty to allow a grain elevator relief for faulty construction. Nationwide points out that SMA cites no cases refusing to apply the warranty outside of residential construction or expressly limiting it to residential construction. Nationwide also argues that, as the designer and general contractor for the elevator, SMA was under a duty to perform in a workmanlike manner. Had SMA chosen appropriate components for the elevator, Nationwide contends, the result would not have been an unsafe and unfit elevator.
In reply, SMA points out that Nationwide cites no recent authority from the Iowa Supreme Court suggesting that warranty claims based on performance in a workmanlike manner are applicable in a commercial context and contends that the older cases cited by Nationwide offer dubious support, because one is actually a breach of contract case, not an implied warranty case, and the other is unclear about the precise implied warranty at issue. SMA argues that recent Iowa precedent suggests that the warranty of workmanlike manner should not apply outside of the residential construction context. SMA reiterates that it was not the designer of any of the allegedly defective systems on which Nationwide now premises its warranty of workmanlike manner claim.
ii.
Analysis.
I reject SMA’s argument that a claim of breach of the implied warranty of workmanlike manner is not available outside the context of residential construction contracts. I cannot simply ignore the Iowa Supreme Court’s prior recognition of a broader scope to the implied warranty, despite that court’s more recent focus on warranty in the context of the home construction contract, because I find nothing in
Speight,
on which SMA relies, that suggests an intention by the Iowa Supreme Court to overrule or limit its prior broader recognition of the claim. Rather, I find that, in
Speight,
the court discussed the implied warranty in the context of home building, because that was the kind of case before it, but neither expressly nor impliedly limited the implied warranty to that context.
See Speight,
The case of
Kirk v. Ridgway,
Thus, SMA is not entitled to summary judgment on this claim on the ground that the implied warranty of workmanlike manner does not extend beyond the context of home construction.
SMA’s alternative ground for summary judgment on this claim is that it did not breach the warranty as a matter of law, because it did not design, manufacture, or install any of the systems that Nationwide alleges were defective, so that there is no specific defect, in breach of the warranty, for which SMA could be responsible. Nationwide also argues that, as the designer and general contractor for the elevator, SMA was under a duty to perform in a workmanlike manner, but chose inappropriate components, resulting in an unsafe and unfit elevator.
Reformulating the elements of this claim of breach of implied warranty to the commercial building context, Nationwide must ultimately prove the following: (1) that the Alton grain elevator was constructed to be used as a grain elevator; (2) that SMA built or constructed the Alton grain elevator for use by another (Midwest Farmers Cooperative); (3) that when turned over to Midwest Farmers Cooperative, the grain elevator was not reasonably fit for its intended purpose or had not been constructed in a good and workmanlike manner; (4) that, at the time the grain elevator was turned over to Midwest Farmers Cooperative, Midwest Farmers Cooperative was unaware of the defect and had no reasonable means of discovering it; and (5) that by reason of the defective condition, Midwest Farmers Cooperative suffered damages.
Cf. Speight,
SMA is not entitled to summary judgment on this claim.
In light of the foregoing analysis of the proper entity against whom a claim of breach of the implied warranty of workmanlike manner can be brought, it is clear that both Schlagel and Baldor are entitled to summary judgment on this claim. Schlagel contends that Nationwide’s insured, Midwest Farmers Cooperative, contracted with another party, SMA, to deliver a grain elevator, and that Schlagel did not sell directly to Midwest Farmers Cooperative, but was a subcontractor for the provision of certain pieces of equipment. Schlagel plainly was not a “builder” against whom this claim can be brought. See id. Indeed, I can find no resistance to summary judgment in favor of Schlagel on this claim in Nationwide’s brief. Baldor also contends that a claim of breach of the implied warranty of workmanlike manner is not recognized under Iowa law in these circumstances, because Baldor was not the “builder.” Again, I can find no resistance to summary judgment in favor of Baldor on this claim in Nationwide’s brief.
Therefore, Schlagel and Baldor are entitled to summary judgment on Nationwide’s claim of breach of the implied warranty of workmanlike manner against them.
D. Breach Of Express Warranties
Nationwide also asserts a claim of breach of express warranties against SMA (Division V), Schlagel (Division XI), and Baldor (Division XVI). All three defendants have moved for summary judgment on these claims.
1. The claim against SMA
a. Arguments of the parties
SMA contends that Nationwide cannot generate genuine issues of material fact on the following elements of its breach of express warranties claim: (1) the existence of an express warranty; (2) Midwest Farmers Cooperative’s reliance on any such warranty; (3) SMA’s breach of any such warranty; or (4) damages proximately caused by SMA’s breach of the warranty.
More specifically, SMA argues that purported promises of a “turnkey operation” and “state of the art” elevator are insufficient to constitute an express warranty as a matter of law, because those references would be statements of opinion, not affirmations of fact or promises. SMA argues that it intended to, and did, deliver a functional grain elevator. SMA also argues that there is no evidence that Midwest Farmers Cooperative relied on these statements, because SMA already had the job before the statements were made. SMA also argues that there was no breach of the express warranty, if there was one and Midwest Farmers Cooperative relied on it, because SMA did deliver a “turnkey operation,” that is, one in a state of readiness for immediate use, and Nationwide cannot prove that the elevator was not “state of the art,” because it cannot prove that SMA failed to provide what was technologically and practically feasible in terms of safety and technology features when the elevator was constructed. Finally, SMA argues that there is no record to support Nationwide’s allegations that breach of express warranties caused damage to Nationwide or Midwest Farmers Cooperative. SMA contends that the failure, if any, to deliver a “turnkey operation” could not proximately cause damage ten years after construction was completed, and even if SMA failed to deliver a “state of the art” elevator, the record is replete with evidence of substandard maintenance and housekeeping by Midwest Farmers Cooperative, including permanently disabling safety systems, all long after delivery of the elevator to Midwest Farmers Cooperative, cutting the
Nationwide contends that SMA breached its express warranty to provide “state of the art” features. Nationwide contends that SMA promised a facility that had the safety features and the “state of the art” equipment in it that was available at the particular time. It contends that the scope of SMA’s express warranty is a jury question, because the “real” question is whether SMA provided an express warranty when it agreed to provide a turnkey facility with “state of the art” safety systems. Nationwide contends that “state of the art” is capable of definition as use of best available technology reasonably available at the time and, thus, capable of being the basis for an express warranty. Nationwide also argues that combining the “turnkey” requirement with the “state of the art” requirement means that SMA was obligated to turn over a safe working elevator that was ready without any adjustments to the elevator. In other words, the elevator was supposed to be in such a condition, custom-built for Midwest Farmers Cooperative, that Midwest Farmers Cooperative would not need to add anything to it for safety or otherwise. Nationwide contends that Midwest Farmers Cooperative “obviously” relied on SMA’s express warranty, because the parties were intimately aware that grain dust explosions are the greatest risk to the facility, so that they would try to eliminate ignition sources. Nationwide also argues that SMA breached the warranty by providing a dangerous elevator more prone to explosion risk and more likely to be damaged in explosions, not less so, because there were numerous defects and safety violations in the design, assembly, and construction of the elevator, including its component parts. Finally, Nationwide argues that a “sole proximate cause” defense is not available to SMA, because the maintenance problems that SMA asserts caused or contributed to the explosion were foreseeable by SMA. Indeed, Nationwide argues that the facility was clean and the sensor on the bearing was turned on the day the explosion occurred. Nationwide also argues that, but for the lack of expansion bearings, the explosion would not have occurred, even if there were other maintenance problems.
In reply, SMA argues that Nationwide has only cited testimony about what Midwest Farmers Cooperative was seeking in the construction of the elevator, not evidence that SMA expressly warranted those features to Midwest Farmers Cooperative. SMA argues that any alleged statements pertaining to a “turnkey operation” or to providing a “state of the art” facility pertained merely to the value of the goods or were the seller’s opinion or commendation, which is not sufficient to create an express warranty.
b. Analysis
SMA and Nationwide agree that the Iowa Supreme Court’s decision in
Flom v. Stahly,
Although words such as “warranty” or “guaranty” need not be used to create an express warranty, the plaintiff must show that the seller made some distinct assertion of quality concerning the thing to be sold as distinguished from a mere statement of opinion or of praise, and that he intended such assertion to be believed and relied on by the purchaser as an undertakingon his part that the article is what he represents it to be, and that it was so understood and believed and relied on by the purchaser.
Carleton D. Beh Co. v. City of Des Moines,228 Iowa 895 , 900,292 N.W. 69 , 71 (1940) (citing Zimmerman v. Bran-non,103 Iowa 144 , 147,72 N.W. 439 , 440 (1897)).
Flom,
The first and second elements are close questions here. In
Flom,
the Iowa Supreme Court held that statements, written into the sales contract, about the manner in which the walls of a building and the heating system were to be constructed were not mere expressions of opinion or praise, so that they could give rise to an express warranty claim.
Flom,
Although perhaps just barely, Nationwide has generated genuine issues of material fact that the content of the alleged express warranties was given sufficient specificity to make those statements assertions of quality, not mere “puffery” or opinion. First, Nationwide has suggested that “state of the art,” at least in the context of construction projects, is not too nebulous to support an express warranty claim, because it is understood in that context to mean “generally recognized engineering or safety standard[s], criteria, or design theory” in existence at the time of the construction.
See Fischer v. City of Sioux City,
The element requiring proof that the buyer did actually rely upon the assertions in question,
see Flom,
The “breach” and “proximate cause” elements,
see Flom,
Therefore, SMA’s motion for summary judgment on Nationwide’s claim of breach of express warranty will be denied.
2. The claims against Schlagel and Baldor
The claims of breach of express warranties against Schlagel and Baldor present somewhat different issues, because they relate to their “products,” rather than to construction of the grain elevator in its entirety. There is no dispute that the U.C.C., and more specifically IOWA CODE § 554.2313, applies to these express warranty claims.
a. Arguments of the parties
i. The arguments as to Schlagel. Schlagel argues that, while Iowa Code § 554.2313 explains how an express warranty for goods is created, Iowa Code § 554.2318 does not extend the reach of such a warranty to third-party beneficiaries, such as Midwest Farmers Cooperative, who have suffered only economic loss, because the Iowa Supreme Court has interpreted the term “injured” to include only “physical harm to the plaintiff or his property.” Schlagel also argues that, so far, Nationwide has not identified any written materials or express statements in support of its allegations that Schlagel breached some express warranty, let alone any statement that served as the basis for the bargain. I have found nothing in Nationwide’s brief responding to these arguments. Neither did Schlagel, as it pointed out in its reply.
ii. The arguments as to Baldor. Baldor argues that Nationwide has no evidence, only conclusory assertions, that Baldor ever communicated any purported express warranty to Midwest Farmers Cooperative regarding the bearing at issue in this case, either before or after its sale. Similarly, Baldor argues that Nationwide has no evidence that any purported express warranty was part of the basis of any bargain by which the bearing was sold or that Baldor breached any such promise.
In response to Baldor’s motion for summary judgment on this claim, Nationwide argues that Iowa Code § 554.2318 does not bar its express warranty claim against Baldor, because it was an end user to whom the warranty properly extends, even though Baldor made no such argument (Schlagel did). Nationwide argues that a jury could find that Schlagel relied upon Baldor to choose the proper bearing, because Baldor had toured Schlagel facilities and knew that its bearings were being
Nationwide also argues that a jury could find Baldor liable for breach of express warranty. Nationwide points to Baldor’s advertisement of its bearing as having “exclusive sealing designs and features,” such that the bearings’ “rolling elements [are] never exposed to contaminants,” and describing the R-seals as “keepfing] contaminants out, lubricants in.” Nationwide argues that these representations are critical, because the defendants argue that the bearing failure was caused by an under-lubricated and contaminated bearing. Nationwide also argues that Baldor’s lubricating instructions implied that, if the bearing was lubricated according to the manual, then the bearing should not suffer catastrophic failure. However, Nationwide argues that it has generated genuine issues of material fact that the seal actually allowed in moisture and contaminants, causing the emulsification of the grease, and ultimately led to the events causing the explosion. Nationwide also asserts that the R-seal does not keep lubricants in, but leaks lubricants, while the bearing is running.
In reply, Baldor argues that Nationwide’s arguments concerning the effect of Iowa Code § 554.2318 are in response to arguments that it never made. Baldor also argues that Nationwide has now identified, for the first time, language purportedly constituting an express warranty by Baldor regarding the bearing, but that Nationwide has offered no evidence establishing that any such purported express warranty was part of the basis of the bargain for Schlagel’s purchase of the bearing, as required to establish breach of an express warranty under Iowa law. Baldor also argues that there is no evidence that any express warranty was relied on by Schlagel or Midwest Farmers Cooperative.
b. Analysis
i. The effect of § 554.2318.
For essentially the same reasons that I found that it was appropriate for me to grant Baldor summary judgment,
sua sponte,
on Nationwide’s claim of breach of implied warranty of merchantability on the ground that the claim was untimely pursuant to Iowa Code § 554.2725(2), it also would be appropriate for me to grant summary judgment in Baldor’s favor, sua sponte, on the ground that Nationwide’s express warranty claim is barred by Iowa Code § 554.2318, which Baldor did not raise, if it is appropriate to grant summary judgment to Schlagel on this ground, which Schlagel did raise. Nationwide has had sufficient advance notice of this issue as to the express warranty claims involving goods against both Schlagel and Baldor and an adequate opportunity to demonstrate why summary judgment should not be granted, where Schlagel squarely presented the issue in its summary judgment motion, and Nationwide responded to the issue, albeit in its response to Baldor’s motion for summary judgment, even though the issue was only raised in Schlagel’s motion.
See Figg,
Although Iowa Code § 554.2313, defining the circumstances that create an express warranty for goods, like other provisions of the U.C.C., is drafted to determine the rights and obligations of the immediate parties to a sales transaction, the Iowa Supreme Court has recognized that the U.C.C. also provides for “extended beneficiaries” in Iowa Code § 554.2318.
Kolarik v. Cory Int’l Corp.,
Even so, the extended beneficiaries who may seek relief for breach of an express warranty for goods are still limited, because the Iowa Supreme Court has held that they “do not include remote buyers seeking economic-loss damages.”
Kolarik,
We have recently held that non-privity buyers cannot recover consequential economic loss damages under a theory of express warranty. Beyond the Garden Gate, Inc. v. Northstar Freeze-Dry Mfg., Inc.,526 N.W.2d 305 , 309-10 (Iowa 1995). This rule bars any recovery by Tomka under his express warranty theory.
Whether a party is “in privity” with another party depends on whether they are parties to a contract. If the parties have contracted with each other, they are in privity. 1 James J. White & Robert S. Summers, Uniform Commercial Code § 11-2, at 528 (3d ed. 1988) (hereinafter “White and Summers”). If they have not, they are not in privity. Id. White and Summers gives an example of a non-privity plaintiff as one who purchases a product but does not buy it directly from the defendant. Id.
That is the situation we have here. Even if Tomka can be considered a buyer, he did not buy the product from the defendant manufacturer. He purchased Finaplix from the veterinarians. Therefore, Tomka was not in privity with Hoechst.
Additionally, the damages that Tomka seeks to recover are consequential economic loss damages. As we explained in Beyond the Garden Gate, “direct economic loss” damage is “ ‘the difference between the actual value of the goods accepted and the value they would have had if they had been as warranted.’ ” Beyond the Garden Gate, Inc.,526 N.W.2d at 309 (quoting White and Summers at 536). “Consequential economic loss” includes “ ‘loss of profits resulting from the failure of the goods to function as warranted, loss of goodwill, and loss of business reputation.’ ” Id. Tomka seeks damages for lost profits and loss of good will. Therefore, his damages are consequential economic loss.
Because Tomka is at best a non-privity buyer and because he seeks to recover only consequential economic loss damages, he may not rely on a theory of breach of express warranty. Id. at 310. The trial court correctly directed a verdict for the defendant on this theory of liability.
Tomka,
The Iowa Supreme Court explained the difference between these two types of economic loss in
Beyond the Garden Gate, Inc.
In that case, the Iowa Supreme Court noted that “direct economic loss” is defined in IOWA CODE § 554.2714(2) as “‘the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted.’ ”
Beyond the Garden Gate, Inc.,
(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty.
Iowa Code § 554.2715(2). Thus, “consequential economic loss” includes “‘loss of profits resulting from failure of the goods to function as warranted, loss of goodwill, and loss of business reputation,’ and ‘other loss proximately resulting from a defective product beyond direct economic loss.’ ”
Beyond the Garden Gate, Inc.,
Midwest Farmers Cooperative was not in privity with either Schlagel or Baldor, because Midwest Farmers Cooperative did not buy Schlagel’s or Baldor’s products directly from them.
See Tomka,
Schlagel and Baldor are entitled to summary judgment on Nationwide’s express warranty claims on this ground. Nevertheless, I will also consider these defendants’ other arguments for summary judgment.
ii.
Schlagel’s other grounds for summary judgment.
Nationwide failed to meet, or even to attempt to meet, its burden as the non-movant resisting summary judgment on the merits of its claim of breach of express warranty against Schlagel. Nationwide must go beyond the pleadings and by depositions, affidavits, or otherwise, designate “specific facts showing that there is a genuine issue for trial.” Fed.R.CivP. 56(e);
Mosley,
iii. Baldor’s other grounds for summary judgment. Although it made no such effort to marshal evidence to support its claim of breach of express warranty against Schlagel, Nationwide has tried to marshal evidence to support its claim of breach of express warranty against Baldor. Thus, I must consider whether that claim can survive summary judgment on the merits, if it is not barred as explained above.
Iowa Code § 554.2313 explains how an express warranty for goods is created, as follows:
1. Express warranties by the seller are 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 the seller 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.
Iowa Code § 554.2313.
Nationwide argues that Baldor created express warranties in its advertising materials. There is authority for the proposition that advertising materials can be the basis for an express warranty, but only if the other elements of the claim, including reliance, are met.
See, e.g., Midland Forge, Inc.,
I agree with Baldor that Nationwide has offered no evidence establishing that any express warranty in the sales literature was part of the basis of the bargain for Schlagel’s purchase of the bearing, or otherwise relied upon by Schlagel or Midwest Farmers Cooperative, as required to establish breach of an express warranty under Iowa law. Nationwide’s purported evidence of reliance — that Baldor had toured Schlagel facilities and, thus, knew that its bearings were being used by Schlagel for bucket elevators and that Schlagel was relying on Baldor for selection of the proper bearings and appropriate greasing instructions-does nothing to raise an inference of reliance
by Schlagel,
or the ultimate buyer, Midwest Farmers Cooperative, on the purported express warranties in the sales literature, because it suggests only what Baldor knew, not what Schlagel or Midwest Farmers Cooperative relied upon.
See, e.g., Midland Forge, Inc.,
Thus, Baldor is also entitled to summary judgment on this claim on this alternative ground.
E. Breach Of Contract
Nationwide has asserted a breach-of-contract claim only against SMA (Division VI of the Fourth Amended Complaint). SMA seeks summary judgment on that claim.
1. Arguments of the parties
SMA’s argument for summary judgment on the breach-of-contract claim against it is surprisingly brief. SMA argues that Nationwide has failed to allege a violation of a single term of the contract between SMA and Midwest Farmers Cooperative. Instead, SMA asserts that Nationwide alleges that SMA violated its contractual duty (1) to construct an elevator that was
In its response, Nationwide does not challenge SMA’s description of the alleged breaches of the contract. Nationwide argues, however, that there are jury questions on its breach-of-contract claim. Nationwide argues that SMA has admitted that the “contract” was merely a preliminary document to lock SMA in for the start of the design. Nationwide contends that the design of the elevator was not complete until after the original contract was signed and that SMA admits that there were other documents pertaining to its duty, but that they have not been produced in this case by any party. Nationwide argues that, consistent with Restatement (Second) of Contracts § 202, to determine the parties’ intent, a preliminary contract must be interpreted in the context of the parties’ course of dealing, preliminary negotiations, course of performance, and buyer expectations. Here, Nationwide argues that the established purpose of the contract was to design and construct a reasonably safe-to-operate grain elevator. Nationwide also argues that the contract was not “integrated,” because SMA admits that it was only preliminary; indeed, it was simply a bid that refers only to conceptual drawings; there is no merger or integration clause in the document; the document is missing essential terms relating to quality and safety features one would expect in a multi-million dollar state-of-the-art facility; and the parties’ course of dealing confirms that adequate safety features were expected.
In reply, SMA argues that Nationwide’s attempts to create fact questions are contradicted by the express agreement between SMA and Midwest Farmers Cooperative. SMA asserts that Exhibit 1055 (SMA Appendix at 145-56) describes itself as a contract, not a “preliminary” contract. SMA also argues that it is undisputed that neither SMA nor Midwest Farmers Cooperative is in possession of any other agreements or documents regarding the construction of the elevator and the intent of the parties. Thus, SMA argues that Exhibit 1055 is the agreement between the parties. SMA argues that Nationwide’s brief is devoid of any discussion of the interpretation of any provision of the contract and, instead, attempts to add additional terms to the contract with extrinsic evidence. Moreover, SMA argues that Nationwide is trying to bootstrap its defect and implied warranty claims into the breach-of-contract claim without citing any provision of the contract that was purportedly breached. SMA contends that Nationwide is not seeking to add any implied terms that are necessary to the contract, just vague notions of safety that cannot be found in the written contract. Thus, SMA argues that Nationwide’s claim is really more akin to a claim of breach of warranty than a claim of breach of contract.
The Iowa Supreme Court has stated the elements of a breach-of-contract claim as follows:
In a breach-of-contract claim, the complaining party must prove: (1) the existence of a contract; (2) the terms and conditions of the contract; (3) that it has performed all the terms and conditions required under the contract; (4) the defendant’s breach of the contract in some particular way; and (5) that plaintiff has suffered damages as a result of the breach.
Molo Oil Co. v. River City Ford Truck Sales, Inc.,
I find the Iowa Supreme Court’s decision in
Horsfield Construction, Inc. v, Dubuque County, Iowa,
This court has adopted Restatement (Second) of Contracts, section 27, which provides:
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show" that the agreements are preliminary negotiations.
Restatement (Second) of Contracts § 27 (1981);
Faught v. Budlong,
Parties who plan to make a final written instrument as the expression of their contract necessarily discuss the proposed terms of the contract before they enter into it and often, before the final writing is made, agree upon all the terms which they plan to incorporate therein. This they may do orally or by exchange of several writings. It is possible thus to make a contract the terms of which include an obligation to execute subsequently a final writing which shall contain certain provisions. If parties have definitely agreed that they will do so, and that the final writing shall contain these provisions and no others, they have then concluded the ■contract.
Restatement (Second) of Contracts § 27 cmt.
a
(emphasis added);
Faught,
Comment b provides:
On the other hand, if either party knows or has reason to know that the other party regards the agreement as incomplete and intends that no obligation shall exist until other terms are assented to or until the whole has been reduced to another written form, the preliminary negotiations and agreements do not constitute a contract.
Restatement (Second) of Contracts § 27 cmt.
b; Faught,
the extent to which express agreement has been reached on all the terms to be included, whether the contract is of a type usually put in writing, whether it needs a formal writing for its full expression, whether it has few or many details, whether the amount involved is large or small, whether it is a common or unusual contract, whether a standard form of contract is -widely used in similar transactions, and whether either party takes any action in preparation for performance during the negotiations.
Restatement (Second) of Contracts § 27 cmt. c;
Faught,
It is undisputed in this case that HCI’s bid was an offer to do the work as outlined in the County’s plans and specifications. The bid was specific as to (1) the start date (two weeks after the award of contract), (2) the number of working days to complete the project (80), and (3) the consideration (the per unit price and total price for each bid item was set forth in the bid). Additionally, each bid item was cross-referenced in the County’s engineering plans and further referenced in the Blue Book. The record shows that the parties would not be agreeing to any new terms or conditions upon signing a formal contract.
The Board’s October 7 letter was unconditional. It approved HCI’s bid with no mention that its approval was subject to a written contract to be entered into later.
See Jameson v. Joint Drainage Dist.,
In short, the “contract” document that was to follow was a mere formality and redundant to HCI’s bid and the Board’s October 7 approval. Moreover, before the Board’s unconditional approval, there was no evidence indicating that either party considered something further had to be done to make the contract complete. In its October 7 approval, the Board left no doubt that it believed an agreement had been reached when it commented: “We look forward to working with you and understand that you can begin some work on the project yet this fall.”
In reliance on the Board’s acceptance of its bid, HCI purchased a portable cement mix plant with accessories for $203,000. It also purchased a John Deere rubber tire end loader for approximately $95,000. Additionally, HCI contacted providers of materials and other subcontractors. There was testimony from HCI representatives that the company would not have taken these steps without the approval of its bid by the Board.
All of these facts are undisputed and lead us to conclude as a matter of law that the parties intended to be bound when the Board accepted HCI’s bid and
Horsfield Construction,
I conclude that Exhibit 1055, like the “bid” and unconditional acceptance in
Horsfield,
was, and was intended by the parties to be, the complete and binding contract between SMA and Midwest Farmers Cooperative. The document is denominated
“FORM OF AGREEMENT BETWEEN OWNER AND CONTRACTOR
” and shows approval by Midwest Farmers Cooperative of SMA’s bid with only conditions unrelated to the terms of the agreement and no indication that Midwest Farmers Cooperative’s approval was subject to some further written contract or documents to be entered into later.
See
SMA’s Appendix at 145 (Exhibit 1055 at 1);
and compare Horsfield,
I also find that Nationwide has failed to generate any genuine issues of material fact that the contract was not integrated, even though whether the contract is integrated is a question of fact to be determined from the totality of the evidence.
C & J Vantage Leasing Co. v. Wolfe,
Conspicuous by their absence from the fully integrated contract between SMA and Midwest Farmers Cooperative are any terms requiring SMA (1) to construct an elevator that was safe for use, (2) to construct an elevator that was intended for the purpose of safely handling grain, and (3) to use components that were “state of the art.” While I found, above, that there were genuine issues of material fact as to whether similar matters were the subject of express warranties, I do not find any genuine issue of material fact that they were terms of the contract. Because Nationwide has failed to generate genuine issues of material fact that these matters were terms of the contract,
see Molo Oil Co.,
SMA is entitled to summary judgment on Nationwide’s breach-of-contract claim.
III. CONCLUSION
Upon the foregoing,
1. Defendant Baldor’s May 2, 2011, Motion For Summary Judgment (docket no. 133) is granted in part and denied in part, as follows:
a. The motion is denied on Nationwide’s product defect claims alleging warning defects, but granted on Nationwide’s product defect claims alleging design and manufacturing defects, against Baldor in Division XII of Nationwide’s Fourth Amended Complaint.
b. The motion is granted on the merits of Nationwide’s claim of breach of the implied warranty of merchantability against Baldor in Division XIII of Nationwide’s Fourth Amended Complaint, because summary judgment was granted on Nationwide’s design defect claim in Division XII of Nationwide’s Fourth Amended Complaint.
c. The motion is granted on the merits of Nationwide’s claim of breach of the implied warranty of fitness for a particular purpose against Baldor in Division XIV of Nationwide’s Fourth Amended Complaint.
d. The motion is granted on Nationwide’s claim of breach of the implied warranty of workmanlike manner against Baldor in Division XV of the Fourth Amended Complaint.
e. The motion is granted on Nationwide’s claim of breach of express warranties against Baldor in Division XVI of Nationwide’s Fourth Amended Complaint.
2. In addition or in the alternative, summary judgment is also granted to Baldor, sua sponte, on the following claims:
a. The claim of breach of the implied warranty of merchantability against Baldor in Division XIII, because such claim is untimely.
b. The claim of implied warranty of fitness for a particular purpose against Baldor in Division XIV, because such claim is also untimely.
c. The claim of breach of express warranty, because such claim against Baldor falls beyond the scope of remote buyers’ claims authorized by IOWA CODE § 554.2318.
3. Defendant SMA’s May 2, 2011, Motion For Summary Judgment (docket no. 137) is granted in part and denied in part, as follows:
a.The motion is granted on Nationwide’s product defect claims relating to the elevator as a whole, because the elevator as a whole is not a “product,” and as to product defect claims in Division I of the Fourth Amended Complaint relating to the bearing, the hazard warning system, and elevator leg, because SMA is entitled to the statutory protection from such claims provided by Iowa Code § 613.18. On the other hand, SMA did not seek and is not entitled to summary judgment on those portions of Division I that I have identified herein as asserting negligence claims. See Fourth Amended Complaint, ¶¶ 17(2)(g), 17 (2)(n), 17(3)(c), 17(4)(b), 17(4)(c), 17(4)(d), and 17(4)(e).
b. The motion is granted as to the breach of the implied warranty of merchantability against SMA in Division II of the Fourth Amended Complaint, because SMA is also entitled to the statutory protection from such claims provided by Iowa Code § 613.18.
c. The motion is granted as to the claim of breach of the implied warranty of fitness for a particular purpose against SMA in Division III of the Fourth Amended Complaint.
d. The motion is denied as to the claim for breach of implied warranty of workmanlike manner against SMA in Division TV of the Fourth Amended Complaint.
e. The motion is denied as to the claim of breach of express warranties against SMA in Division V of the Fourth Amended Complaint.
f. The motion is granted as to the claim of breach of contract against SMA in Division VI of the Fourth Amended Complaint.
4. Defendant Schlagel’s May 2, 2011, Motion For Partial Summary Judgment (docket no. 139) is granted on each of the challenged claims, as follows:
a. The motion is granted on Nationwide’s manufacturing defect and installation defect claims against Schlagel in Division VII of Nationwide’s Fourth Amended Complaint. (Schlagel did not seek summary judgment on the warning or design defect claims against it.)
b. The motion is granted on Nationwide’s claim of breach of the implied warranty of merchantability againstSchlagel in Division VIII of Nationwide’s Fourth Amended Complaint.
c. The motion is granted on Nationwide’s claim of breach of the implied warranty of fitness for a particular purpose against Schlagel in Division IX of Nationwide’s Fourth Amended Complaint.
d. The motion is granted on Nationwide’s claim for breach of implied warranty of workmanlike manner against Schlagel in Division X of Nationwide’s Fourth Amended Complaint.
e. The motion is granted on Nationwide’s claim of breach of express warranties against Schlagel in Division XI of Nationwide’s Fourth Amended Complaint.
5. Thus, this case will proceed to trial on the following claims:
a. Those portions of Division I of Nationwide’s Fourth Amended Complaint that I have identified herein as asserting negligence claims against SMA, see Fourth Amended Complaint, ¶¶ 17(2)(g), 17(2)(n), 17(3)(c), 17(4)(b), 17(4)(c), 17(4)(d), and 17(4)(e); the claim for breach of implied warranty of workmanlike manner against SMA in Division IV of the Fourth Amended Complaint; and the claim of breach of express warranties against SMA in Division V of the Fourth Amended Complaint.
b. Nationwide’s product defect claims against Schlagel alleging warning and design defects in Division VII of the Fourth Amended Complaint.
c. Nationwide’s product defect claims against Baldor alleging warning defects in Division XII of the Fourth Amended Complaint.
IT IS SO ORDERED.
Notes
. I have not necessarily stated facts precisely as the parties have stated them in their respective statements of facts or responses to each other’s statements of facts; instead, I have occasionally recast them to eliminate disputed language, to track more precisely the language of documents or deposition testimony, and for other editorial or organizational reasons. Nevertheless, I believe that I have accurately indicated what facts are undisputed and which are disputed and why.
. Baldor is sometimes described in the parties' submissions, including those by Baldor, as ‘'Dodge.” Schlagel purchased the Dodge bearing at issue in this case from General Electric and Equipment Company (GEECO). GEECO was a defendant in this action, but it settled with Nationwide. S-M Enterprises, which designed, manufactured, and supplied the dust collector system that SMA approved and installed into the Alton grain elevator, was also previously a party to this litigation, but has also settled with Nationwide.
. Also on May 2, 2011, the defendants jointly filed a Motion For Spoliation Sanctions And Request For Dismissal With Prejudice (docket no. 135), asserting that sanctions, including dismissal, are appropriate, because Nationwide allowed the scene of the grain elevator explosion and fire to be destroyed before any of the defendants had an opportunity to conduct an independent investigation. That motion is pending before Chief United States Magistrate Judge Paul A. Zoss.
. Although I will consider these claims on the grounds asserted, I have some question about whether tort claims are viable in the circumstances presented here. The Iowa Supreme Court considered the relationship between product defect claims and breach of warranty claims in
Wright v. Brooke Group, Ltd.,
Almost twenty years ago, we observed that a warranty of merchantability "is based on a purchaser’s reasonable expectation that goods ... will be free of significant defects and will perform in the way goods of that kind should perform.” Van Wyk v. Norden Labs., Inc.,345 N.W.2d 81 , 84 (Iowa 1984) (emphasis added). More recently, this court has held that proof of a "serious product defect” was sufficient to support submission of strict liability and breach of warranty theories. Ballard v. Amana Soc'y, Inc.,526 N.W.2d 558 , 562 (Iowa 1995). Notwithstanding a shared focus on defects, warranty claims have been distinguished from strict liability claims on the ground that " 'defects of suitability and quality are redressed through contract actions and safety hazards through tort actions.’ ” Am. Fire & Cas. Co. v. Ford Motor Co.,588 N.W.2d 437 , 439 (Iowa 1999) (citations omitted); cf. Shell,489 So.2d at 571 ("The implied warranty mandated by this section of the U.C.C. is one of commercial fitness and suitability____That is to say, the U.C.C. does not impose upon the seller the broader obligation to warrant against health hazards inherent in the use of the product when the warranty of commercial fitness has been complied with. Those injured by the use of or contact with such a product, under these circumstances, must find (heir remedy outside the warranty remedies afforded by the U.C.C.”). Despite this distinction, we have found no error in submitting personal injury claims under both strict liability and breach of warranty theories. See Mercer,616 N.W.2d at 621 . In contrast, where only economic loss is alleged, recovery is limited to warranty claims. E.g., Tomka v. Hoechst Celanese Corp.,528 N.W.2d 103 , 107 (Iowa 1995) (affirming dismissal of negligence and strict liability claims in case alleging purely economic injuries).
As this review of our case law reveals, we have distinguished product claims premisedon tort theories from product claims grounded on warranty theories on the basis of the damages sought rather than on the basis of the nature of the wrongful conduct. And, although we have limited cases involving only economic loss to warranty theories, personal injury plaintiffs are permitted to seek recovery under tort and warranty theories that in essence allege the same wrongful acts. Wright, 652 N.W.2d at 180-81 . This excerpt from Wright seems to beg the question, not presented in the motions for summary judgment in this case, of whether or not Nationwide’s product defect claims will lie, where there is no personal injury and only economic damages are sought.
. I do not find any genuine issues of material fact as to whether SMA "manufactured” or "designed” the elevator leg. Like the Iowa Supreme Court in
Weyerhaeuser,
when it sought a definition of “assemble,” I must rely on dictionary definitions of "manufacture” and "design,” because the statute provides no definitions of those terms.
Weyerhaeuser,
. The current version of Iowa Civil Jury Instruction No. 1000.3 (2010) formulates the elements of a product liability failure-to-warn claim, in light of Wright and Restatement (Third) § 2(c), as follows:
In order to recover on a claim that defendant’s product was defective because of inadequate instructions or warnings, the plaintiff must prove all of the following propositions:
1. Defendant sold or distributed the (product);
2. The defendant was engaged in the business of selling or distributing the (product);
3. The foreseeable risks of harm posed by the (product) could have been reduced or avoided by the provision of reasonable instructions or warnings, in one or more of the following ways:
(Set out particulars as supported by the evidence).
4. The omission of the instruction(s) or warning(s) renders the (product) not reasonably safe;
5. The risk to be addressed by the instruction^) or warning(s) was not obvious to, or generally known by, foreseeable product users;
6. The omission of the instruction(s) or warning(s) was a proximate cause of plaintiff's damages; and
7. The amount of damages.
If the plaintiff has failed to prove any of these propositions, the plaintiff is not entitied to damages. If the plaintiff has proved all of these propositions, the plaintiff is entitled to damages in some amount. [If an affirmative defense is submitted, delete the second sentence and insert the following: If the plaintiff has proved all of these propositions, then you will consider the defense of _as explained in Instruction No___]
I find that this formulation of the elements of a warning defect claim is consistent with the formulation of the claim in Wright and Restatement (third) § 2(c).
.Iowa Civil Jury Instruction No. 1000.2 states the elements of a design defect claim, in light of Wright and Restatement (Third) § 2(b), as follows:
In order to recover on the claim that defendant's product was defective in design, the plaintiff must prove all of the following propositions:
1. The defendant sold or distributed the (product);
2. The defendant was engaged in the business of selling or distributing the (product);
3. The product was in a defective condition at the time it left defendant's control, in one or more of the following ways: (Set out particulars as supported by the evidence.)
4. A reasonable alternative safer design could have been practically adopted at the time of sale or distribution;
5. The alternative design would have reduced or avoided the foreseeable risks of harm posed by the (product);
6. The omission of the alternative design renders the (product) not reasonably safe;
7. The alternative design would have reduced or prevented the plaintiff's harm;
8. The design defect was a proximate cause of plaintiff's damage; and
9. The amount of damage.
If the plaintiff has failed to prove any of these propositions, the plaintiff is not entitled to damages. If the plaintiff has proved all of these propositions, the plaintiff is entitled to damages in some amount. [If an affirmative defense is submitted, delete the second sentence and insert the following: If the plaintiff has proved all of these propositions, then you will consider the defense of _as explained in Instruction No___]
I find that this formulation of the elements of a design defect claim is consistent with the formulation of the claim in Wright and Restatement (third) § 2(b).
. Iowa Civil Jury Instruction No. 1000.1 states the elements of a manufacturing defect claim, in light of Wright and Restatement (Third) § 2(a), as follows:
In order to recover on a claim that defendant's product contains a manufacturing defect, the plaintiff must prove all of the following propositions:
1. The defendant sold or distributed the (product);
2. The defendant was engaged in the business of selling or distributing the (product);
3. The (product) at the time it left defendant’s control contained a manufacturing defect that departed from its intended design, in one or more of the following ways: (Set out particulars as supported by the evidence);
4. The manufacturing defect was a proximate cause of plaintiff's damages; and
5. The amount of damages.
If the plaintiff has failed to prove any of these propositions, the plaintiff is not entitled to damages. If the plaintiff has proved all of these propositions, the plaintiff is entitled to damages in some amount. [If an affirmative defense is submitted, delete the second sentence and insert the following: If the plaintiff has proved all of these propositions, then you will consider the defense of _as explained in Instruction No___]
I find that this formulation of the elements of a design defect claim is consistent with the formulation of the claim in Wright and Restatement (third) § 2(a).
. Unlike the situation with SMA, I do not find any "general negligence” claims in Division VII, ¶ 59(4) of the Fourth Amended Complaint (docket no. 130) that are not
product defect
claims, at least if "the elevator” in the subsections of this section is read to mean “the elevator legs” rather than the elevator as a whole, which is a logical reading, because there is no genuine issue of material fact that
. Schlagel’s additional grounds were that it adequately disclaimed all implied warranties and that Nationwide cannot prevail on such a claim, because Nationwide has failed to identify specific promises made by Schlagel that would support such an implied warranty. As to the latter contention, Schlagel contends that Nationwide’s own experts have testified that the bearings at issue failed because of inadequate lubrication, not because of any breach of any promise by Schlagel giving rise to a warranty.
. The ground that Baldor asserted was that, under Iowa law, a claim of breach of the implied warranty of merchantability requires the same proof as is required to establish product defect claims under the Restatement (Third) of Torts: Products Liability § 2. Baldor argues that, for the same reasons that it was entitled to summary judgment on Nationwide’s product defect claims against it, it is also entitled to summary judgment on Nationwide’s claim of breach of the implied warranty of merchantability. Nationwide responds that it had generated genuine issues of material fact on Baldor's
design defect
claim. In
Wright,
the Iowa Supreme Court held, "[C]on-duct that gives rise to a warranty claim based on fitness for ordinary purposes mirrors conduct that gives rise to tort liability for a defective product. Thus, warranty liability under section 554.2314(2)(c) requires proof of a product defect as defined in Products Restatement section 2.”
Wright,
652 N.W.2d at ISO-82. While I find nothing in
Wright
suggesting that only "design defect” claims must be viable for a "breach of warranty of merchantability” claim to survive,
see Wright,
. Schlagel's additional grounds for summary judgment on this claim were that it effectively disclaimed the warranty and that Nationwide cannot show that it was aware of Midwest Farmers Cooperative's particular purpose for the elevator leg or knew that Midwest Farmers Cooperative was relying on Schlagel to meet that particular purpose.
Even if I were to hold that the disclaimer was sufficiently conspicuous, as a matter of law, the ground on which Schlagel has moved for summary judgment, Nationwide has dem
As to summary judgment on the merits, there is evidence from which a reasonable jury could find that Schlagel knew, through SMA, Midwest Farmers Cooperative's particular purposes for the elevator legs, knew that Midwest Farmers Cooperative was relying on Schlagel’s skill to furnish an appropriate elevator leg, and that Midwest Farmers Cooperative did, indeed, rely on Schlagel’s skill to provide an elevator leg that was up to the task, consisting of evidence that Schlagel knew that SMA required an elevator leg custom-built to site-specific criteria provided by SMA, including blueprints of the Alton facility, blueprints of the leg, and other information peculiar to the site, and Schlagel purported to have an engineering department devoted to helping customers design the right equipment to meet the special needs of their applications, and the ordering process for a particular leg was long and detailed.
. I agree with Baldor that Nationwide has failed to generate any genuine issues of material fact that Baldor knew the particular purpose of the particular bearing, or that anyone — Schlagel, Midwest Farmers Cooperative, or GEECO — was relying on Baldor to select the particular bearing that ultimately ended up in the elevator leg on the Alton grain elevator. Evidence cited by Nationwide does give rise to inferences that, at times, Schlagel had drawn upon Baldor’s expertise with bearings and that Baldor was aware that Schlagel was doing so. Nothing connects those times to this particular project (the Alton grain elevator) or to the elevator leg ultimately incorporated into the Alton grain elevator sufficiently to create an implied warranty of fitness of the Dodge bearing for a particular purpose. The lack of connection is even more glaring, where it is undisputed that the bearing at issue is a multi-purpose bearing that can be used for any number of purposes in any number of different industries or applications, and where the bearing was sold "blind” to a distributor that stocked and sold the bearing along with other bearings and other products, the year before the bearing was purchased by Schlagel to be incorporated into the elevator leg for the Alton grain elevator.
. Iowa Model Civil Jury Instruction 1100.1 states the essentials for recovery on an express warranty claim as follows:
The plaintiff must prove all of the following propositions:
1. The defendant sold [description of the product or service sold] and expressly warranted [the particulars alleged by plaintiff].
2. The plaintiff made the purchase relying on the express warranty.
3. The [description of the product or service] did not conform to the express warranty.
4. The breach of express warranty was a proximate cause of the plaintiff's damage.
5. The amount of damage.
If the plaintiff has failed to prove any of these propositions, the plaintiff is not entitled to damages. If the plaintiff has proved all of these propositions, the plaintiff is entitled to damages in some amount.
I note that this formulation of the elements leaves out the requirement that the seller intend that the buyer believe and rely on the seller’s representation.
See Flom,