to the affirmation of promise." Md. [Com. Law] Code Ann. § 2-313(1)(a). Plaintiff in its brief states that the express warranties alleged were contained in advertising or promotional material that was received by the plaintiff. However, the plaintiff ignores the effect of the parol evidence rule on this transaction. Under Maryland's Commercial Code if the parties intended the written contract to be a "final" expression of their agreement, then it may not be contradicted by evidence of any prior agreement or contemporaneous oral agreement, and if the parties intended the contract to be the "complete and exclusive" statement of their agreement, it may not be supplemented even by non-contradictory terms. Md. [Com. Law] Code Ann. § 2-316(1), 2-202.
The Equipment Contract contains an integration provision which reads in relevant part, "this contract contains the entire agreement between the parties." Thus, the contract plainly states that it constitutes the entire understanding between the parties. Courts applying the Uniform Commercial Code's provisions to similar integration provisions have found that such language is sufficient to render the contract the final and exclusive agreement of the parties, thereby preventing the introduction of parol evidence to vary the contract's terms. See, e.g., Earman Oil Co. v. Burroughs Corp., 625 F.2d 1291, 1294, n. 8, 1298 (5th Cir. 1980) (applying Florida law); Bruffey Contracting Co., 522 F. Supp. at 772 (applying Michigan law); Aplications, Inc., 501 F. Supp. at 132-33 (applying California law); Investors Premium Corp., 389 F. Supp. at 44 (applying South Carolina law); Zugarek v. Walck, 54 A.D.2d at 1075, 388 N.Y.S.2d at 757-58. In reaching the same conclusion, this Court has considered that the parties involved are merchants who had equal bargaining power with respect to the subject matter of their transaction. There is no suggestion that the plaintiffs were unaware of the significance of the disclaimer and integration clauses which were part of the contracts. See Price Brothers Co. v. Philadelphia Gear Corp., 649 F.2d 416, 423 (3d Cir.), cert. denied, 454 U.S. 1099, 70 L. Ed. 2d 641, 102 S. Ct. 674 (1981); Aplications, Inc., 501 F. Supp. at 133. Because allowing plaintiffs to base an express warranty claim on language not present in the contract would be inconsistent with the integration clause, plaintiffs' express warranty claim fails to state a claim upon which relief may be granted and will be dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
The same result must be reached on the issue of implied warranties of fitness for a particular use, since such warranties have been expressly and adequately disclaimed. According to the statute, "language to exclude all implied warranties of fitness is sufficient if it states, for example, that 'There are no warranties which extend beyond the description on the face hereof.'" Md. [Com. Law] Code Ann. § 2-316(2). Since the disclaimer of the implied warranty of fitness in the present contracts is in writing as required by the Code, the primary issue remaining to be addressed is whether the disclaimer of the implied warranty of fitness is conspicuous. A clause is conspicuous when it is "so written that a reasonable person against whom it is to operate ought to have noticed it." Md. [Com. Law] Code Ann. § 1-201(10). A sentence in the body of the contract is "conspicuous" if it is "in larger or other contrasting type or color." Md. [Com. Law] Code Ann. § 1-201(10). The decision as to whether a term is conspicuous is to be made by the Court. Md. [Com. Law] Code Ann. § 1-201(10).
The disclaimers in the present case are printed in larger type and in contrasting type, thereby satisfying either prong of the "conspicuous" requirement. A Maryland court has found a disclaimer conspicuous where the disclaimer language was separately underscored and a heading in capital letters demarcated the section. Houck v. DeBonis, 38 Md. App. 85, 99-100, 379 A.2d 765, 773 (1977), cert. denied, 28 Md. 765 (1978), cert. denied, 434 U.S. 967, 98 S. Ct. 511, 54 L. Ed. 2d 454 (1977). Other courts in construing their Uniform Commercial Code have held that disclaimer clauses set forth in a manner nearly identical to that of the contract at issue in this case, i.e., in dark type and large capital letters, are conspicuous. See, e.g., Earman Oil Co., 625 F.2d at 1294, n. 6, 1298 (applying Florida law); Bruffey Contracting Co., 522 F. Supp. at 772 (applying California law); Aplications, Inc., 501 F. Supp at 132-33 (applying Michigan law); Investors Premium Corp., 389 F. Supp. at 45 (applying South Carolina law); Rudy's Glass Construction Co., 404 So.2d at 1089. The fact that a disclaimer is located on the reverse side of a contract, as in the present case, is also a factor to be considered in determining conspicuousness. However, Maryland courts have ruled that an otherwise conspicuous disclaimer located on the reverse side of a contract is not rendered inconspicuous if, as in the present case, the front of the document contains a noticeable reference to the terms and conditions which are located on the reverse side. See, e.g., Houck, 38 Md. App. at 98-100, 378 A.2d at 772-73. See also Rudy's Glass Construction Co., 404 So.2d at 1089-99; Childers & Venters, Inc. v. Sowards, 460 S.W.2d 343 (Ky. 1970).
The Court has concluded that the disclaimers of the implied warranty of fitness in the contracts at issue here are conspicuous and are not rendered inconspicuous by their location on the reverse side of the contracts. In both the Equipment and the Maintenance Contracts, there is a reference in bold-faced capital letters to the terms and conditions of the contracts on the reverse side of the documents, located just above the signatures on the front side of the contracts. This reference to the reverse side of the contracts provided the plaintiffs with sufficient notice that the terms on the reverse side of the contracts were part of the agreement. See Houck, 38 Md. App. at 98-100, 379 A.2d at 772-73. Accord Rudy's Glass Construction Co., 404 So.2d at 1089-90. Further, the disclaimer terms themselves were conspicuous and the Court has no difficulty concluding that plaintiffs ought to have noticed them. Finally, the language utilized to disclaim the implied warranty of fitness was sufficient. Both contracts contain disclaimer clauses which read: "EXCEPT AS SPECIFICALLY PROVIDED HEREIN, THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE OR REVERSE SIDE HEREOF." This language is more specific than the wording that the Maryland Commercial Law provides is adequate to exclude implied warranties of fitness. See Md. [Com. Law] Code Ann. § 2-316(2) (sufficient to state "'There are no warranties which extend beyond the description on the face hereof.'"). Since the disclaimer provisions for the implied warranty of fitness comply with the statutory requirements for the exclusion of such implied warranties, the Court will grant the defendant's motion to dismiss the plaintiffs' implied warranty of fitness claims for failure to state a claim upon which relief may be granted. The plaintiffs will be left with their claim in Count II for breach of the implied warranty of merchantability, since the disclaimer provisions in the contracts, although conspicuous, fail to mention the word merchantability as is required under Maryland law. Md. [Com. Law] Code Ann. § 2-316(2).
The defendant also moves to dismiss the fourth count in the complaint which alleges that the computer equipment and programs were negligently designed because they were insufficient to perform their contemplated tasks. In this count, the plaintiffs sought damages for the loss of value of the computer system and the attendant replacement costs resulting from this negligence. The defendant contends that the gravamen of Jaskey's action is a claim for breach of contract or breach of warranty, not a tort claim. It appears that the plaintiffs have dropped their negligent design claim because they did not contest or oppose defendant's motion to dismiss that claim. Even assuming that the plaintiffs have not abandoned their negligent design claim, the Court has determined that this claim must be dismissed pursuant to Rule 12(b)(6).
Since there does not appear to be authoritative Maryland precedent on this issue, the Court must predict how the state's Supreme Court would rule. See Barris v. Bob's Drag Chutes & Equipment Inc., 685 F.2d 94, 98 (3d Cir. 1982). When a plaintiff characterizes a claim that a product was insufficient to perform its designated function as a tort claim, and alleges solely economic loss without any allegation of physical harm to a person or to property, courts have decided that such a claim sounds in contract not in tort. See, e.g., Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., 652 F.2d 1165, 1174-75 (3d Cir. 1981); S.M. Wilson & Co. v. Smith International, Inc., 587 F.2d 1363 at 1376; Cloer v. General Motors Corp., 395 F. Supp. 1070, 1071 (E.D. Tex. 1975). A number of jurisdictions have held such economic losses are not recoverable in tort. See Flintkote Co. v. Dravo Corp., 678 F.2d 942, 949 (11th Cir. 1982) (applying Georgia law); Kingston Shipping Co. v. Roberts, 667 F.2d 34, 35 (11th Cir. 1982); Pittway Corp. v. Lockheed Aircraft Corp., 641 F.2d 524, 525-26 (7th Cir. 1981) (applying Illinois law); Office Supply Co. v. Basic/Four Corp., 538 F. Supp. 776, 791-91 (E.D. Wisc. 1982) (applying California law). See also Battista v. Lebanon Trotting Ass'n, 538 F.2d 111, 117 (6th Cir. 1976) (addition of averment of malice did not change a contractual action into one in tort); Investors Premium Corp., 389 F. Supp. at 45-46 (negligent design, manufacture, and installation claim held to restate breach of warranty claim). The Court is convinced that the Maryland courts would follow this approach. Cf. Thomas v. Ford Motor Credit Co., 48 Md. App. 617, 429 A.2d 277 (1981) (a breach of express warranty is contractual, not tortious in nature and punitive damages cannot be awarded in a pure breach of contract case). According to the Court in Pennsylvania Glass Sand, injuries classified as economic loss which are not recoverable in tort are those where the product's value is diminished because of its qualitative inferiority and its failure to work for the general purposes for which it was sold. 652 F.2d at 1169. Warranty law, not tort law, protects the purchaser's expectation of suitability and quality. 652 F.2d at 1169. On the other hand, tort law has traditionally redressed injuries classified as physical harm. 652 F.2d at 1170. Applying Pennsylvania law, the Court in Pennsylvania Glass Sand held that the physical injury to a product stemming from an allegedly hazardous defect in the product was the sort of physical injury to property that was compensable under tort law. 652 F.2d at 1175.
In Count IV of its complaint, Jaskey alleges that the computer system was "insufficient" to perform its function in accordance with Jaskey and Display Data's expectations. The plaintiffs do not allege that an unreasonably hazardous condition in the equipment caused physical harm to property or to a person, or physically damaged the equipment itself. The only claims of damage for the unsuitable computer system were for loss of value of the computer system and the accompanying replacement costs. Because Jaskey's claim in Count IV is solely for economic loss and not for physical harm to a person or property, the claim is actually in contract. As a result, Count IV which contains the plaintiffs' negligence claim will be dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
AND NOW, this 27 day of April, 1983, the Court having considered the defendant's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and the parties' memoranda in connection with this motion, for the reasons set forth in the Court's Memorandum of April 27, 1983,
IT IS ORDERED that defendant's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) those portions of Count II relating to the breach of express warranties and to the breach of an implied warranty of fitness for a particular purpose is GRANTED.
IT IS FURTHER ORDERED that defendant's motion to dismiss Count IV of the complaint pursuant to Fed.R.Civ.P. 12(b)(6) is GRANTED.
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