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GERALD WILLIAMS v. WEST PENN POWER COMPANY (04/22/83)

SUPERIOR COURT OF PENNSYLVANIA


filed: April 22, 1983.

GERALD WILLIAMS, DANIEL BANKS AND LINDA BANKS, HIS WIFE, APPELLANTS,
v.
WEST PENN POWER COMPANY, A CORPORATION, REIMANN AND GEORGER, INC., A CORPORATION, COMMERCIAL SERVICES COMPANY, A CORPORATION, SLOVENIAN HALL ASSOCIATION OF BROUGHTON, PENNSYLVANIA AND JOHN J. BAHR, ALFRED J. BAHR AND NEIL R. BAHR, INDIVIDUALLY AND TRADING AND DOING BUSINESS AS BAHR BROTHERS, V. JERRY LEE MILBEE, INDIVIDUALLY AND B & M ROOFING CONTRACTORS, A PARTNERSHIP; AND DANIEL BANKS

No. 1121 Pittsburgh, 1980, Appeal from the Order of the Court of Common Pleas, Civil Division, Allegheny County, at GD 77-11257.

COUNSEL

Robert Rade Stone, Pittsburgh, for appellants.

John C. Conti, Pittsburgh, submitted a brief on behalf of West Penn, appellee.

David R. Johnson, Pittsburgh, for Reimann and Georger, appellees.

J. Loughren, Pittsburgh, for Commercial Services, appellee.

John E. Hall, Pittsburgh, for Slovenian Hall, appellee.

Dan Cusick, Pittsburgh, for Bahr Brothers, appellee.

Rowley, Beck and Montemuro, JJ. Beck, J., filed a concurring and dissenting opinion.

Author: Montemuro

[ 313 Pa. Super. Page 462]

In this appeal we are presented with the difficult question of what statute of limitations to apply in an action for breach of warranty brought by a direct purchaser as well as a third party for personal injuries under the Uniform Commercial Code*fn1 [hereinafter "Code"]. Our consideration of this issue necessarily involves a complicated and somewhat confusing interplay between case law and a literal application of the Code.

B & M Roofing Contractors [hereinafter "B & M"], a partnership, was hired by Bahr Brothers, a general contractor, to perform work at the Slovenian Hall Association of Broughton. On May 19, 1975, Daniel Banks, one of the

[ 313 Pa. Super. Page 463]

    appellants herein, a partner*fn2 in B & M, and Gerald Williams, also one of the appellants herein, and an employee of the same, were injured at the Slovenian Hall work site when a ladder platform hoist they were using contacted an electrical power line. B & M had purchased the ladder from the Commercial Services Company. As a consequence of the mishap, both appellants suffered severe electrical burns.

On May 20, 1977, both gentlemen, and Mrs. Banks, in a derivative action based on her husband's injuries, filed a praecipe for writ of summons in trespass. Subsequently, on June 29, 1977, a complaint in trespass and assumpsit was filed against West Penn Power company, the electrical power line supplier, the Bahr Brothers, the Slovenian Hall Association of Broughton, Reimann and Georger, Inc., the ladder manufacturer, and Commercial Services Company, the immediate seller. Specifically, the appellants pled counts in negligence, strict liability under Section 402A, Restatement of Torts 2d,*fn3 and breach of warranty pursuant to 13 Pa.C.S.A. § 2314, § 2315 and § 2318.*fn4 All of the

[ 313 Pa. Super. Page 464]

    above named defendants, appellees herein, filed an answer and new matter alleging that the two-year personal injury statute of limitations*fn5 barred both causes of action. Shortly thereafter they filed a motion for summary judgment. The lower court granted the motion, finding that although

[ 313 Pa. Super. Page 465]

    the appellants filed suit in trespass and assumpsit Salvador v. Atlantic Steel Boiler Company, 256 Pa. Super. 330, 389 A.2d 1148 (1978), affirmed per curiam, 492 Pa. 258, 424 A.2d 497 (1981), (Salvador II) nevertheless mandated the application of the two-year statute. In Salvador II, this court held that the two-year statute of limitations applies to a breach of warranty action for third party personal injuries instead of the four-year statute contained in the Code at § 2725(a).*fn6 Notwithstanding the fact that the instant case involves a direct purchaser, appellant Banks, as well as a third party, appellant Williams, the lower court found Salvador II controlling:

Although Salvador [ II ] does, indeed, deal with an injury to a third party, its rationale and the cases and law review articles relied upon in Salvador [II], particularly the writings of Dean Murray, lead to the inescapable conclusion that the four-year statute of limitations is applicable only in those situations where a breach of warranty leads to some economic loss, but is inapplicable where the claim is for personal injury. Where the claim is for personal injury, the Superior Court has made clear that the two-year statute of limitations applies irrespective of whether the Complaint is labeled trespass or assumpsit.

Initially, for the sake of clarity, we shall set forth what is not disputed. First, there is no question that the counts in negligence and strict liability under 402A are barred by the two-year statute. Second, a prerequisite to an action for breach of warranty is that there must be a sale. Clearly, the only "sale" in the instant case was the transaction involving the ladder. As to West Penn Power Company, the Bahr Brothers and the Slovenian Hall Association of Broughton, there was no "sale" and therefore no viable breach of warranty claim. Third, Salvador II unequivocally

[ 313 Pa. Super. Page 466]

    disposes of Mr. Williams' suit. He is, as an employee of B & M, a third party to the sale of the ladder and, therefore, his breach of warranty action is barred by the two-year statute of limitations. See Salvador II, supra. Fourth, Mr. Banks is a direct purchaser only from Commercial Services Company; he is a third party to the sale of the ladder from Reimann and Georger, Inc. to Commercial Services Company. Thus, under Salvador II, Mr. Banks' action is likewise barred by the two-year statute of limitations. In sum, what remains is Mr. and Mrs. Banks' breach of warranty claim against Commercial Services Company. It is to this aspect of the lawsuit that we must determine whether the Code's four-year statute or the two-year personal injury statute applies. Specifically, does the rational enunciated in Salvador II logically extend to the instant situation where the direct purchaser is the injured party?

In Salvador II, the plaintiff was injured in May of 1967 when, during the course of his employment at United Machine & Tool Company, a boiler manufactured by Atlantic Steel Boiler Company exploded. As a result, plaintiff, Mr. Salvador, suffered severe bilateral hearing loss. Mr. Salvador, subsequently, on March 29, 1971 filed a writ of summons in assumpsit and trespass against Atlantic Steel Boiler, the S.H. English Company and Walter Mueller and his wife.*fn7

The first time on appeal this court abolished the requirement of horizontal privity under § 2318 of the Code, finding Kassab v. Central Soya, 432 Pa. 217, 246 A.2d 848, 849 (1968) effectively overruled Hochgertel v. Canada Dry Corp., 409 Pa. 610, 187 A.2d 575 (1963) and permitted Mr. Salvador, as an employee of the purchaser, to maintain a suit for breach of warranty. Salvador v. Atlantic Steel Boiler Company, 224 Pa. Super. 377, 307 A.2d 398 (1973). This decision was affirmed by the Supreme Court in an

[ 313 Pa. Super. Page 467]

    opinion by Mr. Justice Roberts. Salvador v. Atlantic Steel Boiler Company, 457 Pa. 24, 319 A.2d 903 (1974).

The case was remanded to the trial court where the defendants argued in their answers and new matter that the appropriate statute of limitations (§ 2725) had expired. There was no dispute that Mr. Salvador's 402A claim was barred by the two-year statute. The only question of viability concerned the breach of warranty claim. The defendants argued that § 2725 began to run from the tender of boiler and thus time had expired prior to the filing of Mr. Salvador's suit. Further, the defendants contended that this was true no matter which sale was considered dispositive, i.e., from the 1962 original sale of the boiler to English, or from 1964, when United purchased English from the Muellers. Mr. Salvador argued that § 2725 did not begin to run until the date of the injury in May of 1967. The trial court agreed with the defendants and granted their motions for summary judgment on both the warranty and tort claims.

Both parties, apparently, conceded that § 2725 was applicable to Mr. Salvador's status as a third party and therefore, the thrust of their arguments were directed solely to the appropriate time at which the cause of action accrued, i.e., the defendants argued for the date of delivery while, Mr. Salvador argued for the date of injury. This court found both arguments unpersuasive and went further, disagreeing that § 2725:

For the sake of brevity, the Salvador II rationale can be divided into three parts:

1) Toward achieving the desirable goal of legal symmetry, privity had been abolished whether a party sued in

[ 313 Pa. Super. Page 468]

    tort or in assumpsit. Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966) (adoption of § 402A of the Restatement of Torts 2d); Kassab v. Central Soya, 432 Pa. 217, 246 A.2d 848 (1968) (abolition of requirement of vertical privity under § 2318) and Salvador v. Atlantic Steel Boiler (Salvador II), supra (horizontal privity abolished). In light of this development, the court believed that legal symmetry required the application of the two-year personal injury statute.

2) In order to reach the desired end, Salvador II necessarily had to distinguish two prior Supreme Court cases which seemingly held to the contrary. In Gardiner v. Philadelphia Gas Works, 413 Pa. 415, 197 A.2d 612 (1964) and Rufo v. Bastian-Blessing Company, 417 Pa. 107, 207 A.2d 823 (1965), the Supreme Court found § 2725 applicable to a purchaser's breach of warranty action for personal injuries. Gardiner, supra, was distinguished as follows:

First, the Gardiners were purchasers of the natural gas so that they were in privity of contract and would have been entitled to recover for breach of warranty even under the doctrine of Hochgertel v. Canada Dry Corp., supra. Second, when Gardiner, supra, was decided the Code offered the only remedy for defective products which permitted the use of a strict liability theory, because Webb v. Zern, supra, had not been decided. Finally, Section 10-103 of the Code could not have repealed the two-year statute of limitations with respect to third party personal injuries because, as Hochgertel would establish, the Code provided no remedy for such injuries, except to the limited extent specifically set forth in Section 2-318. (Emphasis added) Rufo, supra, was distinguished on the same basis:

[ 313 Pa. Super. Page 469]

    a direct purchaser, we would be ignoring the explicit and exact language contained in the Code which provides for the recovery of personal injury damages caused by a breach of warranty. There is also no doubt that primarily Salvador II distinguished Gardiner, supra, and Rufo, supra, which applied the four year statute to a breach of warranty action for personal injuries, on the basis that in those cases a direct purchaser was the injured party. On the other hand, if we find Salvador II 's rationale inapplicable we will have a very unfair result. Mr. Banks, a direct purchaser, will be permitted to maintain his breach of warranty action; however, Mr. Williams, as a third party, will not. This will be so even though both parties were injured at the same time, at the same place and by the same electrical charge. Obviously, this approach will create legal asymmetry within the context of a breach of warranty action in reestablishing privity when applying the appropriate statute of limitations based upon a right under the Code which recognizes no such restriction. If a party has the right to initiate a particular cause of action, he should likewise be accorded all that follows.

We can, however, find no way to avoid the explicit provisions contained in § 2715 and § 2725. Both provide a purchaser with a breach of warranty claim against a seller for personal injuries which can be brought within four years. We believe that the Code and § 402A provide alternative remedies. Each remedy should be effectuated by its particular statute of limitations and find dispositive what was stated in Gardner, supra, 413 Pa. at 419-20, 197 A.2d at 614:

In this Commonwealth we have always recognized that a personal injury claim based upon a breach of warranty is a distinct claim from a personal injury claim based on negligence: Cunningham v. Joseph Horne Co., 406 Pa. 1, 176 A.2d 648; Loch et ux. v. Confair et ux, 361 Pa. 158, 162, 63 A.2d 24; Bonenberger v. Pittsburgh Mercantile Co., 345 Pa. 559, 561, 28 A.2d 913, 143 A.L.R. 1417. Under such circumstances, a holding that Section 2-725

[ 313 Pa. Super. Page 471]

    controls in this instant situation will effect no change in the substantive law of the Commonwealth.

Bearing in mind the language of Sections 2-725, 2-715 and 1-103 and the basic purposes underlying passage of the Code and the need for uniformity in this area of the law, we have no hesitancy in construing Section 2-725 to mean exactly what its language says . . . .

This appeal presents a question of first impression in the appellate courts of this Commonwealth. Our examination of Sections 2-725, 2-715 and 1-103 and the background of the Code indicates that is was the legislative intent that there be a four year period of limitations on all actions for breach of contracts for sale, irrespective of whether the damages sought are for personal injuries or otherwise. (Emphasis added -- footnotes omitted)

The adoption of § 402A in Pennsylvania by the Supreme Court did not and could not vitiate what the legislature has provided in the Code and, accordingly, we find that § 2725 applies to a purchaser's breach of warranty action for personal injuries.

We hold, therefore, that § 2725 applies to the Banks' breach of warranty claim. However, there are no facts appearing on this record indicating the date upon which the sale of the ladder occurred. This will have to be resolved before it can be determined that Mr. and Mrs. Banks have filed a timely suit. Mr. Williams' suit for breach of warranty is barred by the two-year personal injury statute because of our holding in Salvador II, affirmed per curiam by our Supreme Court.

Order is affirmed in part and reversed in part.

BECK, Judge, concurring and dissenting:

Preliminarily, I acknowledge the majority's careful and discerning treatment of this complex subject. Additionally, I note that the majority's holding rests upon the precedential

[ 313 Pa. Super. Page 472]

    weight of current Pennsylvania cases.*fn* However, I write to highlight the present trend which may be a pattern that should be considered. Having reviewed other jurisdictions' resolution of the relationship between the Code*fn1 and Section 402A of the Restatement,*fn2 I am convinced that permitting both third-party beneficiaries and direct purchasers to sue within the Code's four-year statute of limitations is more logically consistent with the Code's express purposes. I, therefore, would remand as to Mr. Williams as well as to Mr. and Mrs. Banks.

As the majority explains, Pennsylvania case law is frought with repeated, if futile, attempts to reconcile decisions pursuant to the Code with pre-Code tort/contract law and with judicial rulings under Section 402A of the Restatement.

Over the years warranty actions metamorphosed dramatically. "[A]t early common law breach of warranty was a trespass action. As such, no privity was required. The later-developed indebitatus assumpsit was created as an alternative remedy. The privity requirement was later only applied to assumpsit." Salvador v. Atlantic Steel Boiler Co. ("Salvador I"), 457 Pa. 24, 25 n. 1, 319 A.2d 903, 904 n. 1 (1974). Eventually, warranty became a "'hybrid of both

[ 313 Pa. Super. Page 473]

    tort and contract . . . [and operated] between parties not in privity of contract.'" Salvador v. Atlantic Boiler Co. ("Salvador I"), 224 Pa. Super.Ct. 377, 386, 307 A.2d 398, 403 (1973) (citations omitted), aff'd, 457 Pa. 24, 319 A.2d 903 (1974).

Today, the Uniform Commercial Code establishes a statutory cause of action for breach of warranty. Nevertheless, courts have been reluctant to relinquish dependence upon common-law tort/contract warranty distinctions. See, e.g., Salvador v. Atlantic Boiler Co. ("Salvador II"), 256 Pa. Super.Ct. 330, 389 A.2d 1148 (1978), aff'd per curiam [without a published opinion], 492 Pa. 258, 424 A.2d 497 (1981), wherein the Superior Court asserted that the theory of recovery in a strict products liability suit under the Code sounded in tort and accordingly was subject to the two-year statute of limitations on personal injury actions. This hesitancy to function within the statutory framework of the Code has resulted in the very anomaly which the courts have struggled to avoid -- legal asymmetry.

At present, if a direct purchaser and his employe are simultaneously injured in a fall from a defective ladder, the direct purchaser will have four years within which to sue for breach of warranty whereas the employe (third-party beneficiary) will have just two years within which to sue for breach of warranty. Compare Gardiner v. Philadelphia Gas Works, 413 Pa. 415, 197 A.2d 612 (1964) with the Superior Court's analysis in Salvador II (Gardiner applied the Code's four-year statute of limitations to a direct purchaser's suit for personal injuries while Salvador II applied the two-year statute of limitations on personal injury suits to an action brought by an injured employe of a direct purchaser).

I believe that the judicial posture most consistent with the Code's purposes*fn3 is that articulated by the Supreme Court

[ 313 Pa. Super. Page 474]

    of Texas in its well-reasoned opinion, Garcia v. Texas Instruments, Inc., 610 S.W.2d 456 (Tex. 1980). Like Pennsylvania, Texas had a two-year statute of limitations on personal injury suits but had also adopted the Uniform Commercial Code which provided a four-year statute of limitations on suits alleging breach of a sales contract. In Garcia the Texas Supreme Court utilized the Code's four-year statute of limitations to allow an employe's (i.e., thirdparty beneficiary's) action for personal injuries arising from a breach of the Code's implied warranty of merchantability. "[A] statutory cause of action exists under the Code for personal injuries suffered as [a] result of a breach of implied warranty. The Code provides a statutory remedy, hence the traditional distinctions between tort and contract are not relevant." Id. at 463 (emphasis added).

However, in Salvador II imposition of the two-year personal injury statute of limitations was premised not only upon the historical tort/contract dichotomy but also upon the Superior Court's interpretation of Section 2-725 of the Code. In pertinent part Section 2-725 states:

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

(2) 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 . . . .

The court opined that "it takes a very strained reading of Section 2-725 to conclude that it was ever meant to apply to persons other than the contracting parties . . . ." Id., 256 Pa. Superior at 341, 389 A.2d at 1154.

[ 313 Pa. Super. Page 475]

To the contrary, I find the wording of Section 2-725 as relevant to third-party beneficiaries as to direct purchasers. The initial sentence of Subsection (1) declares the general rule that an action for breach of a sales contract must be brought within four years from the accrual of the cause of action (defined in Subsection (2) as the occurrence of the breach when tender of delivery of the defective product is made). The precept contains no references to the parties to the sales contract; nor does it otherwise designate persons who may maintain an action.

Admittedly, the second sentence of Subsection (1) does specifically mention the "parties"*fn4 to the original agreement.*fn5,*fn6 But the second sentence simply states that the parties to the original agreement may not (i) restrict the period for asserting an action to less than one year from the date on which the cause of action accrued or (ii) expand the statute of limitations to a period exceeding four years. Thus, the second sentence of Subsection (1) is similar in scope and intent to the second sentence of Section 2-318 (the rights of third-party beneficiaries) which provides that "[a] seller may not exclude or limit the operation of [Section 2-318]." Both "second sentences" acknowledge that as the contracting parties, only the seller and the direct buyer can negotiate the terms of the sales contract delimiting the available warranties and remedies for breach of warranty.

The necessity for this interdictory language is explained by Comment *fn17 to Section 2-318:

To the extent that the contract of sale contains provisions under which warranties are excluded or modified, or

[ 313 Pa. Super. Page 476]

    remedies for breach are limited, such provisions are equally operative against [third-party] beneficiaries of warranties . . . . What . . . [the second] sentence [of Section 2-318] forbids is exclusion of liability by the seller to the persons [ i.e., third party beneficiaries] to whom the warranties which he has made to his buyer would extend under this section.

Therefore, the applicability of the general rule allowing four years for the commencement of an action is not limited by the second sentence of Subsection (1) solely to actions brought by direct purchasers.

As the Superior Court observed in Salvador II, "Section 2-725[(2)] also states that the cause of action accrues when the breach occurs, 'regardless of the aggrieved party's lack of knowledge of the breach.' [And] . . . [Section 1-201 of] the Code defines an aggrieved party as anyone entitled to a remedy." Id., 256 Pa. Superior at 342, 389 A.2d at 1155.

Construing Subsection (2) according to the facts before the court, in Salvador II, the Superior Court argued that "[i]t . . . [could] not be said . . . that Mr. Salvador [third-party beneficiary employed by a direct purchaser] was an aggrieved party on the date delivery of the boiler was tendered to his employer; at that time Mr. Salvador was not entitled to a remedy [because he had not yet incurred damages]." Id., 256 Pa. Superior at 342, 389 A.2d at 1155. Consequently, the court determined that Section 2-275 was not intended to cover actions by third-party beneficiaries.

However, a reading of Subsection (2) does not compel the court's conclusion in Salvador II that only a person who suffers damages upon tender of delivery of a defective product can obtain relief pursuant to Section 2-725 of the Code.*fn8 While the Code defines an aggrieved person as anyone entitled to a remedy, the Code does not place time constraints, other than those of Subsection (1), on a person's ability to qualify for a remedy. The rule proclaimed in

[ 313 Pa. Super. Page 477]

Subsection (2) is merely that whether a product contains a patent or a latent defect, the period stipulated under Subsection (1) for filing a warranty action begins to run upon the seller's tender of delivery of the defective product to the direct buyer.

In his article "Products Liability -- Another Word"*fn9 John E. Murray, Jr., points to the case of Mendel v. Pittsburgh Plate Glass Co., 25 N.Y.2d 340, 305 N.Y.S.2d 490, 253 N.E.2d 207 (1969), overruled, Victorson v. Bock Laundry Machine Co., 37 N.Y.2d 395, 373 N.Y.S.2d 39, 335 N.E.2d 275 (1975), as an example of the absurd result supposedly required by including third-party beneficiaries in the class of persons covered by Section 2-725 (four-year statute of limitations) of the Code. In Mendel the New York Court of Appeals applied the Code's four-year statute of limitations to bar the action of a non-purchaser who was injured seven years after the defective product was delivered and installed. According to the Mendel approach, the third-party beneficiary's suit was precluded by the running of the Code's four-year period before the third-party's cause of action arose (i.e., the third-party beneficiary's injury occurred seven years after delivery to the buyer).

But the Mendel result is not mandated in Pennsylvania. In Pennsylvania the Uniform Commercial Code and Section 402A of the Restatement (Second) of Torts afford alternative -- not identical -- causes of action in strict products liability. Salvador II; accord, Garcia; Redfield v. Mead, Johnson & Co., 266 Or. 273, 512 P.2d 776 (1973); see, e.g., Demise of Horizontal Privity on Pennsylvania Breach of Warranty Actions, 48 Temple L.Q. 807 (1975); The Tocsin Has Sounded: A Post-Mortem Examination of Privity of Warranty in Pennsylvania, 13 Duquesne L.Rev. 53 (1974-75); Speidel, The Virginia "Anti-Privity" Statute: Strict Products Liability under the Uniform Commercial Code, 51 Va.L.Rev. 804 (1965).

[ 313 Pa. Super. Page 478]

A few examples will demonstrate the disparity between the Code and Section 402A. While the Code comprises a comprehensive statutory scheme, Section 402A of the Restatement is a special exception carved from the extant body of tort law. Section 2-607 of the Code debars a remedy for the purchaser where the purchaser has failed to notify the seller of a breach within a reasonable time after the purchaser has discovered, or should have discovered, the breach.*fn10 Section 402A of the Restatement does not contain a similar notice provision. See Comment m to Section 402A of the Restatement. Several Code sections permit the exclusion or modification of warranties and remedies. See, e.g., Sections 2-314, 2-316, 2-718, and 2-719; see also Comment 1 to Section 2-318. Section 402A of the Restatement does not allow disclaimers except to the extent that appropriate warnings or instructions in the use of a product may reduce a seller's liability. See Comment j to Section 402A of the Restatement.

Thus, since the Code and Section 402A of the Restatement are not coterminous,*fn11 a third-party beneficiary should be able to maintain an action under Section 402A within two years of the date on which he suffered an injury or should have discovered his injury, see, e.g., Bickell v. Stein, 291 Pa. Super.Ct. 145, 435 A.2d 610 (1981), or under the Code's statutory framework within four years of tender of delivery

[ 313 Pa. Super. Page 479]

    of the defective product to the direct buyer.*fn12 Peeke v. Penn Central Transportation Co., 403 F.Supp. 70 (E.D.Pa. 1975), aff'd [without a published opinion], 538 F.2d 320 (3rd Cir. 1976); accord, Garcia.

I therefore, would remand as to Mr. Williams as well as to Mr. and Mrs. Banks.


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