of violent bouncing. The California Supreme Court held that since there were no personal injuries, Seely could proceed on a theory of breach of warranty but not one of strict liability. Chief Justice Traynor held that a manufacturer can properly be held responsible when its product is defective and the defect causes personal injury but cannot be held responsible when the defect only interferes with the Plaintiff's economic expectations unless the manufacturer agreed that the product was designed to meet the consumer's demands. Seely v. White Motor Co., 63 Cal.2d at 18, 45 Cal.Rptr. 17, 403 P.2d 145.
It is important not to lose sight of the policies furthered by § 402A. That section, when used in cases involving injury to persons or property, other than the allegedly defective product, places the cost of such injuries on the manufacturer, the party best able to distribute the costs. Since a defective product may injure persons who have not purchased it, there is no price mechanism by which to insure such persons against the risk of loss. Consequently, there is no effective way to internalize the costs of the products which must include the risk that some products will be defective and cause injury. The imposition on manufacturers of strict liability for defective products accomplishes the cost internalization by placing the complete cost of injuries on the manufacturer who in turn can allocate a portion of its costs to its purchasers in the form of higher prices. Jones & Laughlin Steel Corporation v. Johns-Manville Sales Corporation, 626 F.2d 280 at 288 (3d Cir. 1980).
This theory is out of place when economic losses are involved. These losses result when the product does not perform at the level expected by the buyer and the seller and are often measured by the cost of repairing the infirmity or the difference in the value of the product as it exists and the value it would have had if it performed as expected. In such cases there are often consequential losses, such as lost profits or costs of renting substitute equipment. All these losses are almost always incurred by the owner of the product, not by persons who might happen to come in contact with it. The purchaser, particularly when it is a large corporation like Pennsylvania Glass Sand, can protect itself against the risk of unsatisfactory performance by bargaining for a warranty. Alternatively, it may decide to purchase the product for a lower price and forego warranty protection. Because persons other than the owner will not incur economic losses resulting from the product's poor performance, the costs associated with economic loss can be reflected in the price of the product. There is, therefore, no need to internalize these costs by a non-price mechanism such as strict liability. Jones & Laughlin Steel Corporation v. Johns-Manville Sales Corp., at 289.
This reasoning applies regardless of the nature of the defect in the product. Whether the defect is one, as in Posttape which does not involve even a risk of physical injury or is one as alleged in this case and Seely, which poses a risk of physical injury, in both types of cases the actual loss suffered by the plaintiff was economic harm. Because of the policies underlying strict liability, it is not incongruous to permit, for example, the operator of the front end loader in question to sue in strict liability for any personal injuries he might have suffered while preventing Pennsylvania Glass Sand from using that theory or any tort theory to recover its economic losses. Because the operator had no dealings with Caterpillar, there is no price mechanism to internalize the costs of the product. He, therefore, requires the protection afforded by the tort law. Pennsylvania Glass Sand, however, was in a position to bargain with Caterpillar for a warranty if it thought it prudent to do so to protect itself from economic loss. It, therefore, may not rely on § 402A or negligence to bring its claims. See Jones & Laughlin Steel Corp. v. Johns-Manville Sales Corporation, 626 F.2d 280 at 289-290 (3d Cir. 1980).
The Court's conclusion that Pennsylvania Glass Sand may not rely on any tort theory to bring its claims makes it unnecessary for the Court to determine the scope of the limitation on liability, if any, created by what the parties have referred to as the "Caterpillar Warranty" which purports to limit Caterpillar's liability to the cost of replacement parts.
Title 13 Pa.C.S.A. § 2725(a) provides that "(a)n action for breach of any contract for sale must be commenced within four years after the cause of action has accrued." Section 2725(b) provides that:
A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.
In this case, tender of delivery occurred sometime in 1971 and this action was not commenced until June 12, 1979. Plaintiff does not allege that there was a warranty which explicitly extends to future performance; consequently, Plaintiff's claims for relief are barred by the statute of limitations.
Since Plaintiff's claims are barred by the statute of limitations, the Court need not consider whether the "Caterpillar Warranty" effectively limited Caterpillar's liability for either negligence or strict liability. Even if the Court were to find that the Caterpillar warranty does not in any way limit Caterpillar's liability, the Plaintiff's action would still be barred. The case, therefore, is distinguishable from Posttape Associates v. Eastman Kodak Co., 537 F.2d 751 (3d Cir.1976), in which the Defendant could not raise a defense of the statute of limitations because the action was brought two years after the sale. See Posttape Associates v. Eastman Kodak Company, 387 F. Supp. 184 (E.D.Pa.1974). Similarly, the defendant in Keystone Aeronautics Corp. v. R. J. Enstrom Corp., 499 F.2d 146 (3d Cir. 1974), which also involved a determination of the scope of the limitation provided in the warranty, did not raise a defense of the statute of limitations.
The Court recognizes that its ruling with respect to the statute of limitations means that Plaintiff had only approximately two months from the date of the fire in which to institute this action in a timely manner. While this might appear to be a harsh result, it is not so in fact. Plaintiff could have bargained for a warranty which explicitly extended to future performance but did not do so. The warranty provided by Caterpillar extended, therefore, only for four years. Caterpillar thus is entitled to enjoy the repose granted by the statute of limitations.
Having concluded that the Plaintiff may not sustain this action on any tort theory and that its contract claims are barred by the statute of limitations, the Court will grant the Defendant's motion for summary judgment. The Court will also deny all other pending motions as moot.
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