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Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 

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FILED 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

United States Court of Appeals 

Tenth Circuit 

JAN 1 31989 

ROBERT L. H0£CKER 

Clerk V.S. DiCARLO GENERAL CONTRACTORS, INC., ) 

Plaintiff-Appellant, 

v. 

PEABODY-WELLES, INC., a subsidiary of 

Peabody Barnes, Inc., 

Defendant-Appellee. 

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ORDER AND JUDGMENT 

No. 86-2407 

(D.C. No. 86-2143-S) 

(D. Kan.) 

Before LOGAN, LEAVY,* and BRORBY, Circuit Judges. 

*The Honorable Edward Leavy, Circuit Judge, United States Court of 

Appeals for the Ninth Circuit, sitting by designation. 

This appeal concerns a summary judgment entered by the 

district court in favor of Peabody-Welles, Inc., defendantappellee. The district court dismissed the claims of v.s. Dicarlo 

General Contractors, Inc. (Dicarlo), plaintiff-appellant, for 

breach of contract and breach of warranty because it determined 

the claims were barred by the Kansas four-year statute of 

limitations for actions based on a contract for sale. Two issues 

are raised in this appeal. First, at what time did DiCarlo's 

causes of action for breach of contract and breach of warranty 

accrue and, as a result, when did the statute of limitations for 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 1 
these claims run? Second, did the district court abuse its 

discretion in denying DiCarlo's Rule 60(b) motion? We discuss the 

second issue first because of its effect on our review of the 

statute of limitations issue. 

Dicarlo, the principal contractor on a sewer project, entered 

into a contract on April 11, 1980, with Peabody-Welles, Inc., the 

subcontractor, under which Peabody-Welles agreed to design and 

furnish various items of sludge-mixing equipment, including 

floating digester covers which were to be constructed according to 

precise plans and specifications provided by Dicarlo. The items 

were to be incorporated into a wastewater treatment plant located 

in Johnson County, Kansas, which Dicarlo was constructing. 

Peabody-Welles delivered the floating digestive covers to the 

construction site between June and October, 1980. More than one 

year elapsed before Dicarlo was able to install the digestive 

covers in a secondary tank and conduct some preliminary tests. 

The wastewater facility was not completed and put into operation 

until August, 1982. Soon after plant operations commenced, the 

floating digester cover tipped, damaging the cover and some of the 

connected equipment. All the parties involved in the construction 

project, including Peabody-Welles, worked together to determine 

the source of the problem. In January, 1983, expert engineers 

hired to evaluate the situation determined that the problem 

originated from 

because it did not 

dictated in the 

the digestive cover, designed by Peabody-Welles, 

meet the precise plans and specifications 

contract. Dicarlo bore all costs for repairing 

the digestive cover and any related damages. 

2 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 2 
Dicarlo first filed an action for breach of contract and 

breach of warranty in the United States District Court for the 

Western District of Missouri in August of 1985, which action was 

dismissed for lack of jurisdiction. The action was filed again in 

state district court for Johnson County, Kansas. Peabody-Welles 

requested the action be removed to federal court, and shortly 

thereafter moved for judgment on the pleadings or summary 

judgment, arguing that DiCarlo's claims were barred by the Kansas 

four-year statute of limitations for actions based on contracts 

for sale. Kan. Stat. Ann. § 84-2-725 (1981). No discovery had 

been conducted at this time. 

The district court granted Peabody-Welles' motion for summary 

judgment, concluding that, under§ 84-2-725, both DiCarlo's claims 

accrued when the subcontractor delivered the materials in October, 

1980. The action, filed in August, 1985, was therefore held 

barred by the four-year limitations period. The district court 

based its decision on its interpretation of the warranty 

certificate which was attached to the contract filed with 

DiCarlo's petition for damages. 

Dicarlo filed a motion for reconsideration under 

Fed. R. Civ. P. 60, alleging that a mistake had been made by 

Dicarlo, its Missouri counsel, and its Kansas counsel in assuming 

that the warranty certificate submitted with its petition for 

damages was part of the contract with the Peabody-Welles. Through 

the affidavit of Mr. Dicarlo, who owns the corporation, Dicarlo 

asserted in its motion that the allegations of mistake must be 

accepted as true by the court under the standards for summary 

3 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 3 
judgment, and that the court should reinterpret the contract 

without the attached warranty certificate. It did not argue or 

present authority which might show that it was entitled to relief 

under Rule 60(b). In response, the district court failed to make 

any reference to DiCarlo's mistake claim but simply repeated in 

its order that any and all warranties given by Peabody-Welles 

under the contract did not explicitly extend to future performance 

and that the breach of contract and breach of warranty claims 

accrued on the date of delivery and thus were time barred. 

DiCarlo's claim that the warranty certificate was not part of 

the contract may have merit. 1 Under the standard of review for 

Rule 60(b) motions, however, we cannot conclude that the district 

court abused its discretion in refusing to grant appellant's 

motion to reconsider. Combs v. Nick Garin Trucking, 825 F.2d 437, 

441 (D.C. Cir. 1987). Rule 60(b)(l) requires a moving party to 

prove the mistake was more than mere careless failure to evaluate 

or gross carelessness. 2 United States v. O'Neil, 709 F.2d 361, 

373 (5th Cir. 1983); O'Grady v. Secretary of Dept. of Health and 

1 The certificate was dated one month earlier than the date of 

the single page (double sided) contract. The later modifications 

made by the parties, which were each specifically initialed and 

dated, included conditions and terms inconsistent with those 

stated in the certificate. Finally, the separate page containing 

the warranty certificate, marked page 3 of 3, had no signature or 

acknowledgment by the parties. 

2 "[A] party cannot have re l ief under Rule 60(b)(l) merely 

because he is unhappy with the judgment. Instead he must make 

some showing of why he was justified in failing to avoid mistake 

or inadvertence. Gross carelessness is not enough. Ignorance of 

the rules is not enough, nor is ignorance of the law." 11 Wright 

& Miller, Federal Practice & Procedure§ 2858 at 170. 

4 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 4 
Human Servs., 661 F. Supp. 1030, 1034 (E.D.N.Y. 1987}; Ilardi v. 

Bechtel Power Corp., 106 F.R.D. 567, 570 (E.D.N.Y. 1985}; Noland 

v. Flohr Metal Fabricators, Inc., 104 F.R.D. 83, 87 (D. Ala. 

1984}; In re Uiterwyk Corp., 57 Bankr. 166 (Bankr. M.D. Fla. 

1986}; see also Zawadski De Bueno v. Bueno Castro, 822 F.2d 416 

(3d Cir. 1987). The party seeking to vacate a judgment due to 

mistake must show mistake with particularity. 21 Fed. Proc. R. 

Serv. (L. Ed.) § 51:130 (1984). 

Dicarlo gave no account of the particulars of the alleged 

mistake other than the statement that it and its counsel 

improperly assumed the warranty certificate was part of the 

contract when Mr. Dicarlo gave all the case materials to counsel. 

Dicarlo simply argued that the facts alleged in the motion must be 

believed by the court as true under the standards for a motion for 

summary judgment and never addressed the issue under the standard 

for a Rule 60(b) motion. Without more explanation or argument, 

Dicarlo failed to demonstrate a legitimate reason for the 

requested relief. The district court did not abuse its discretion 

in denying the motion. 

The question of when a cause of action based on a contract 

for the sale of goods accrues depends on the time of the breach 

and the nature of the warranty. On appeal, the parties agree that 

the statute of limitations covering a contract for sale of goods, 

Kan. Stat. Ann. § 84-2-725, governs this case. This section, 

adopted from the U.C.C., states: 

(1) An action for breach of any contract for sale must 

be commenced within four years after the cause of action 

has accrued. 

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Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 5 
(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, except that where a warranty 

explicitly extends to the 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. 

Id. The statute of limitations clearly mandates that the cause of 

action for breach of contract or warranty accrues when the breach 

occurs, regardless of the aggrieved party's lack of knowledge of 

the breach. It is also clear that the breach occurs when tender 

of delivery is made unless the warranty explicitly extends to 

future performance. Voth v. Chrysler Motor Corp., 218 Kan. 644, 

545 P.2d 371, 374-77 (1976). Dicarlo contends that the warranty 

contained in the contract falls into the future performance 

exception under subsection (2), so that the action would not 

accrue until it discovered the defect. The district court 

concluded the warranties in the contract did not extend to future 

performance. We agree. 

Courts have interpreted the future performance exception very 

narrowly. See Annotation, What Constitutes Warranty Explicitly 

Extending To "Future Performance" For Purposes of UCC § 2-725(2), 

93 A.L.R. 3d 690 (1979). Generally, courts have refused to find a 

warranty of future performance unless the contract shows an 

explicit or clear and unequivocal intent that the warranty 

pertains to future performance. Ontario Hydro v. Zallea Sys., 

Inc., 569 F. Supp. 1261, 1266 (D. Del. 1983}; Binkely Co. v. 

Teledyne Mid-America Corp., 333 F. Supp. 1183, 1186 (E.D. Mo. 

1971), aff'd, 460 F.2d 276 (8th Cir. 1972); Patton v. Mack 

6 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 6 
Trucks, Inc., 360 Pa. Super. 1, 519 A.2d 959, 963 - 64 (1986), 

appeal denied, 515 Pa. 623, 531 A.2d 531 (1987); Wright v. 

Cutler-Hammer, Inc., 358 So. 2d 444, 445 (Ala. 1978); 

Augustine, 3 UCC Rep. Serv. (Callaghan) 735 

Perry v. 

(Pa. Super. 

1965)(action on warranty covering the sale of a heater which 

expressly extended to performance of heater in minus twenty-degree 

weather, did not accrue until heater could be tested). But see 

Parzek v. New England Log Homes, Inc., 92 A.D.2d 954, 460 N.Y.S.2d 

698 (1983)(warranty that logs were insect free by nature extended 

to future performance of goods). The Kansas Supreme Court, in 

Voth, defined "explicit" as "characterized by full clear 

expression: being without vagueness or ambiguity: leaving nothing 

implied." 545 P.2d at 377. 

Repeatedly, courts have held that a warranty to replace or 

repair does not extend to future performance. Long Island 

Lighting Co. v. Transamerica Delaval, Inc., 646 F. Supp. 1442, 

1455 (S.D.N.Y. 1986); Ranker v. Skyline Corp., 342 Pa. Super. 510, 

493 A.2d 706, 709 (1985); New England Power Co. v. Riley Stoker 

Corp., 20 Mass. App. Ct. 25, 477 N.E.2d 1054, 1058, review denied, 

395 Mass. 1103, 481 N.E.2d 197 (1985); Allis-Chalmers Credit Corp. 

v. Herbolt, 17 Ohio App. 3d 230, 479 N.E.2d 293, 300 (1984); 

Poppenheimer v. Bluff City Motor Homes, 658 S.W.2d 106, 110-11 

(Tenn. 1983); Centennial Ins. Co. v. General Elec. Co., 74 Mich. 

App. 169, 171-72, 253 N.W.2d 696, 697 (1977). But see R.W. Murray 

Co. v. Shatterproof Glass Corp., 697 F.2d 818 (8th Cir. 1983). 

The court in Ontario Hydro succinctly described the distinction 

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Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 7 
between a warranty for future performance and a warranty for 

repair: 

The key distinction between these two kinds of 

warranties is that a repair or replacement warranty 

merely provides a remedy if the product becomes 

defective, while a warranty for future performance 

guarantees the performance of the product itself for a 

stated period of time. In the former case, the buyer is 

relying upon the warranty merely as a method by which a 

defective product can be remedied which has no effect 

upon his ability to discover a breach. In the latter 

instance, the buyer is relying upon the warranty as a 

guarantee of future performance and therefore has no 

opportunity to discover the breach until the future 

performance has been tested. 

569 F. Supp. at 1266. 

Peabody-Welles' warranty certificate stated that the 

equipment covered by the contract will "be free from defects in 

materials and workmanship for a period of one year from the date 

of initial operation or 18 months after shipment, which ever shall 

occur first .... Peabody will replace or repair without charge 

any part which fails due to defects in workmanship or 

materials during the warranty period." The certificate also 

contained the following disclaimer provision: 

Any contrary terms in any other writing relating to this 

transaction are rejected and disclaimed by [defendant]. 

The express warranties and remedies stated herein are 

exclusive and in lieu of all warranties, obligations, 

remedies or liabilities. Any warranties of 

merchantability or fitness for purpose, and all 

incidental, consequential, or liquidated damages, are 

hereby expressly excluded. 

8 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 8 
Clearly, if this certificate is part of the contract, DiCarlo's 

remedies are limited under the disclaimer. 3 The contract itself 

contains the following warranty provisions: 

Subcontractor shall promptly amend and make good 

any defective material and/or workmanship to the entire 

approval and acceptance of the Owner and/or Architect or 

their authorized representatives. Should the 

Subcontractor refuse or neglect to proceed at once with 

the correction of rejected or defective materials and/or 

workmanship after receiving notice to do so, it is 

agreed that General Contractor shall have the right and 

power to have the defects remedied or changes made at 

the expense of Subcontractor and Subcontractor agrees to 

pay to General Contractor on demand any and all loss 

and/or expense paid or incurred by general Contractor in 

remedying such defects and/or making such changes 

together with interest thereon at the rate of six 

percent (6%) per annum, until paid. 

If at any time during one year after the date of 

completion and acceptance of the work by the Owner or 

later, if so provided in General Contractor's contract 

with the Owner, any part of the materials or workmanship 

furnished by Subcontractor shall prove defective or not 

in conformance with plans and specifications, 

Subcontractor shall upon receipt of General Contractor's 

written notice to that effect, replace or repair to 

General Contractor's satisfaction, including all costs 

incidental thereto, without cost to General Contractor. 

It is obvious that the language contained in both the main 

part of the contract and the certificate focuses on the remedy, 

repair and replacement, and not on performance. The main contract 

does refer to the future in terms of the completion of the 

project, but the difference between this warranty section and 

provisions contained in the warranty certificate is mainly a 

3 The disclaimer provision negates the specific promises 

terms contained in the main part of the contract which terms 

explicitly acknowledged by the parties. In opposition to 

summary judgment, however, Dicarlo never argued that 

disclaimer clause is unconscionable or otherwise invalid. 

9 

and 

were 

the 

the 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 9 
matter of the duration of the warranty, not its subject matter. 

We agree with the district court that the contract does not 

explicitly refer to future performance and, thus, does not fall 

under the exception in the limitations statute. As a result, any 

reference or argument concerning the time of discovery or a 

party's ability to discover the defect is irrelevant. See Sellen 

v. General Motors Corp., 571 F. Supp. 1094, 1099 (D. Del. 1983). 

Dicarlo presents several additional arguments to avoid the 

consequences of the statute of limitations. First, it argues that 

Peabody-Welles' obligation under the contract was not complete 

until installation was finished, thereby extending the actual date 

of delivery. The district court distinguished the facts of this 

case from those finding the date of delivery occurred on 

completion of installation. In Dowling v. Southwestern Porcelain, 

Inc., 237 Kan. 536, 701 P.2d 954 (1985), the seller not only 

provided the materials for the construction of a silo but also 

contracted to install the structure. In Atlas Industries, Inc. v. 

National Cash Register Co., 216 Kan. 213, 531 P.2d 41 (1975), the 

court likewise concluded tender of delivery occurred after 

installation was complete because the contract specifically made 

the seller responsible for installation. The nature of the 

contracts in these two cases differs from the contract in the 

present case in the most significant aspect, the seller's 

responsibility for installation. The present contract at most 

provided for on-site advice from Peabody-Welles' employees, and 

did not amount to a promise to install the equipment. 

Furthermore, the parties specifically excluded "on-site labor 

10 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 10 
provisions of this agreement" and "testing of the digester covers" 

from Peabody-Welles' responsibility under the contract, thereby 

explicitly relieving Peabody-Welles of any obligations which might 

be inferred from other contract provisions. 

The present case is similar to J.I. Hass Co. v. 

Frank A. Kristal Associates, Inc., 127 A.D.2d 541, 512 N.Y.S.2d 

104, appeal denied, 517 N.Y.S.2d 1025, 511 N.E.2d 84 (1987), a 

case involving a contract to sell sewage plant equipment, in which 

the court held the services of providing advisors during 

installation and testing as incidental to the sale of goods. 

"Contracts for sale of sophisticated equipment frequently provide 

for some initial supervision, testing and instruction by the 

manufacturer, it is still a contract for sale subject to four-year 

limitations period." Id. at 105; see also Chase Resorts, Inc. v. 

Johns-Manville Corp., 476 

aff'd, 620 F.2d 203 (8th 

F. Supp. 633, 639 

Cir. 1980)(warranty 

( E . D . Mo • 19 7 9 ) , 

action based on 

contract for sale of irrigation equipment, which included some 

instruction on installation, accrued when equipment was 

delivered); Yorke v. B.F. Goodrich Co., 130 Ill. App. 3d 220, 474 

N.E.2d 20, 22 (1985)(sale of vinyl pellets to be used to produce 

vinyl siding was predominately contract for sale of goods; any 

technical assistance that seller agreed to provide was incidental 

to the sale of goods). 

In another argument, Dicarlo attempts to distinguish its case 

from Kansas cases that have held breach of warranty claims accrue 

upon delivery. For instance, Dicarlo claims its situation differs 

from the facts of Voth v. Chrysler Motor Corp., 545 P.2d 371 (Kan. 

11 

Appellate Case: 86-2407 Document: 01019962042 Date Filed: 01/13/1989 Page: 11 
1976), which involved a warranty for an automobile, because the 

equipment provided by Peabody-Welles was not a complete product 

(like an automobile} and thus would require additional time for a 

breach to be discovered. 4 No authority was provided for a 

distinction on grounds that the product was intended to be 

incorporated into some larger structure or product. In fact, two 

cases that have addressed similar arguments have been decided 

against the buyer. Raymond-Dravo-Langenfelder v. Microdot, Inc., 

425 F. Supp. 614, 618 (D. Del. 1976}(date concrete forms were 

delivered held as date of breach, even though concrete forms were 

to be incorporated into the construction of a bridge}; Binkely 

Co. v. Teledyne Mid-America Corp., 333 F. Supp. at 1186-87 (cause 

of action accrued on delivery and not when the buyer discovered 

that machine did not conform to specified representations, only 

after it had been able to install the machine and put it into 

operation); see also Yorke v. B.F. Goodrich Co., 474 N.E.2d at 22 

(statute of limitations commenced on day of delivery for breach of 

warranty claim involving for vinyl pellets to be incorporated into 

vinyl siding}. 

Dicarlo also argues that its contract was not completely 

executed until the owner approved the final project, and, 

therefore, a breach could not occur until approval was given. A 

similar argument was raised in Rochester Welding Supply Corp. v. 

4 Under Voth, the exception provided in § 84-2-725(2) has two 

requirements: 1) the warranty must explicitly extend to future 

performance, and 2) discovery of the breach must await the time of 

such performance. 545 P.2d at 376. 

12 

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-. 

Burroughs Corp., 78 A.D.2d 983, 433 N.Y.S.2d 888, 889 (1980). 

There the court held the contract not completed, and thus delivery 

not tendered, until the computer was programmed and functioning to 

the satisfaction and approval of the buyer. This appears to be 

the minority view, see Ontario Hydro v. Zallea Sys., Inc., 569 F. 

Supp. at 1266 n.5 (acceptance is irrelevant where warranty clause 

refers only to correction of defects, not future performance), and 

we have found nothing under Kansas law which would tend to support 

such a finding. 

Accordingly, we conclude the entry of summary judgment in 

favor of Peabody-Welles was correct with respect to both DiCarlo's 

breach of contract and breach of warranty claims. The judgment of 

the United States District Court for the District of Kansas is 

AFFIRMED. 

ENTERED FOR THE COURT 

PER CURIAM 

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