Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02028/USCOURTS-caed-2_04-cv-02028-3/pdf.json

Nature of Suit Code: 385
Nature of Suit: Property Damage - Product Liabilty
Cause of Action: 28:1441 Petition for Removal- Product Liability

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

WASTE MANAGEMENT, INC.,

NO. CIV. S-04-2028 WBS DAD

Plaintiff,

v. MEMORANDUM AND ORDER RE:

MOTION FOR SUMMARY JUDGMENT

ISHIKAWAJIMA-HARIMA HEAVY

INDUSTRIES, CO., LTD. and DOES

1 through 10, inclusive,

Defendants.

----oo0oo---- 

Plaintiff Waste Management, Inc. filed this lawsuit in

the Superior Court of California in and for the County of Shasta

to recover damages for defendant Ishikawajima-Harima Heavy

Industries, Co., Ltd.’s alleged failure to properly repair an

IM5000 power turbine purchased from defendant by plaintiff’s

predecessor. Defendant removed the case to this court and now

seeks summary judgment pursuant to Federal Rule of Civil

Procedure 56(c). Jurisdiction is predicated on 28 U.S.C. § 1332. 

For the following reasons, defendant’s motion will be granted.

///

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Although these provisions describe “preventative 1

maintenance” inspections and “corrective maintenance” procedures

without specifying who will conduct such activities, the

agreement does specify that “off-site maintenance”, required when

repairs are extensive, will be conducted at “manufacturers’

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I. Factual and Procedural Background

Pursuant to a contract entered into in 1981,

plaintiff’s predecessor-in-interest, Simpson Paper Company,

purchased an IM5000 gas power turbine from defendant for use at

its co-generation power plant in Anderson, California (the

“Wheelabrator Lassen facility”). (Yasunaga Shimura Decl. ¶ 2;

Compl. ¶ 1.) The contract included a warranty that limited

defendant’s liability for “defects in material and workmanship

for a period of twelve (12) months from the date of ACCEPTANCE of

the EQUIPMENT . . . or twenty-three (23) months from delivery of

the EQUIPMENT . . ., whichever occurs first.” (Shimura Decl. Ex.

A at 25 (Article 12.1).) It also excluded liability for

consequential damages arising from the owner’s inability to

operate the turbine due to defects in material or workmanship. 

(Id. at 29 (Article 12.6).) This “Warranty of Quality” was, in

no uncertain terms, defendant’s “sole and exclusive” warranty. 

(Id. (Article 12.5).) It “replace[d] any other warranty or

guarantee imposed or implied by law, customarily or otherwise.” 

(Id.)

Whether future maintenance of the turbine was part of

the 1981 agreement is somewhat less clear. On one hand, Appendix

G in the Technical Specifications discusses a “Maintenance Plan”

and suggests that the parties intended for defendant to perform

future inspections and maintenance on the turbine. (Id. at 178- 1

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facilities.” (Shimura Decl. Ex. A at 178-79 (Tech. Specs. App.

G, Section 5).)

Even the turbine’s rotor (and its component blade 2

retainers), which had been replaced in 1988 after suffering

damage caused by “gas generator HPT disk pieces”, had surpassed

the design life expectation of 100,000 hours by August, 2000. 

(Tsuyoshi Ishizuka Decl. Ex. E at 201.) “At the time of the

alleged failure, [the IM5000] had operated for approximately

137,000 useful life hours” and “the replacement rotor had

operated for approximately 100,800 hours.” (Id. ¶ 6.)

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79 (Tech. Specs. App. G, Section 5); see also id. at 27 (Article

12.3(7) (excluding from warranty coverage replacements made

without defendant’s approval or supervision--thus implying that

replacements made otherwise were covered).) On the other hand,

Article 12 in the purchase agreement details maintenance and

repair services that defendant agreed to supply only “during the

period of the Warranty described in Section 12.1 . . . .” (Id.

at 25 (Article 12.2).) Additionally, the “technical services”

that defendant contracted to supply did not include maintenance

services for the life of the turbine. (Id. at 50 (Tech. Specs

1.1.4).) In contrast to Appendix G, these sections suggest that

maintenance and repair services were not a part of the 1981

agreement beyond the warranty period.

Exactly what goods and services defendant contracted to

provide--and when--is at the heart of this dispute, which arose

on August 7, 2000 when three “blade retainers of the rotor disk

failed” and “extensively damaged” the turbine. (Compl. ¶¶ 8-9.) 

Leading up to this event, defendant had recently performed

various repairs on the turbine, which had surpassed its designedfor operational capacity of 100,000 hours. In particular, on 2

December 16, 1999, defendant billed plaintiff for $345,000.00 of

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4

“Power Turbine Repair” work. (Akio Suzuki Decl. Ex. F at 224.) 

It also advised plaintiff in January, 2000, that further

inspection and planning would be necessary to prolong the use of

plaintiff’s turbine. (Ishizuka Decl. Ex. D at 197.) 

Subsequently, in May, 2000, defendant’s representative, Tsuyoshi

Ishizuka, prepared a “Report of IM5000 Power Turbine Repair” in

which he noted that the rotor disks were “under high stress” and

recommended that they be replaced “with the new ones if

Wheelabrator plans to use the IM5000 . . . more longer.” (Id.

Ex. E at 201-02.) 

In mid-July, less than a month before the aging turbine

package gave out, plaintiff was still contemplating whether to

replace or refurbish its IM5000. (Furman Decl. Ex. 3 (E-mail

from George Woodward to defendant’s representatives reminding

them that plaintiff was still waiting on a quote for replacement

costs and proposing an alternative plan to extend the life of the

existing IM5000).) Meanwhile, it continued to operate the unit,

despite the fact that several of its components had operated for

significantly longer than their life expectancy. (Id. Ex. 2

(June 5, 2000 letter from Reiji Ishimoto to William Carlson

(reminding plaintiff that its IM5000 had “run more than 133,000

hours to date”)).) Plaintiff does not dispute that it was aware

of a service notice issued by defendant in 1995, in which

defendant warned customers that “continuous operation over

100,000 hours without special inspection and necessary

refurbishment may cause unexpected damage on Power Turbine and

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The invoices sent to plaintiff suggest that it did make 3

some of the replacements recommended in the 1995 service notice. 

(Suzuki Decl. Ex. F at 211-12, 224 (charging for a Power Turbine

Rotor Repair--which, from earlier investigatory notes prepared by

defendant, appears to have included rotor shaft and blade

replacements--and Turbine Casing Spare Parts).)

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other associated equipment.” (Ishizuka Decl. Ex. C at 190-91.) 3

However, it also contends that despite having performed several

recent inspections and repairs of related components, defendant

never advised plaintiff that the blade retainers urgently needed

replacement and that failure to do so as soon as possible might

cause serious damage. (Pl.’s Opp’n to Def.’s Mot. for Summ. J.

7-8.)

As noted above, plaintiff alleges that serious damage

did occur on August 7, 2000 when “three serrations [a.k.a. blade

retaining slots or blade retainers] of the IM5000 power turbine’s

first stage rotor disk failed during operation, releasing each of

their three rotor blades which then passed downstream through the

turbine.” (Compl. ¶ 8.) Subsequently, plaintiff filed suit in

state court, seeking damages for (1) design defect; (2) failure

to warn (of a design defect); (3) negligence; (4) breach of

implied warranty of fitness for a particular purpose; and (5)

breach of contract. (Id. ¶¶ 10-44.) Defendant removed the case

to this court and now seeks summary judgment pursuant to Federal

Rule of Civil Procedure 56(c). 

II. Discussion 

Discovery is still ongoing in this case and dispositive

motions are not due until January 19, 2007. (Jan. 17, 2006 Am.

Scheduling Order 2.) However, to avoid the expense of having to

conduct depositions of defendant’s current and former employees

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in Japan in September, defendant seeks summary judgment now,

arguing that plaintiff cannot bring tort claims (claim one

through three), which require evidence of actual damage, given

that plaintiff suffered only economic loss. Defendant also

contends that plaintiff’s contract claims are barred by the

warranty limitations to which its predecessor agreed and those

implied by law. 

A. Legal Standard

Summary judgment is proper “if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(c). A material fact is one that could affect the outcome of

the suit, and a genuine issue is one that could permit a

reasonable jury to enter a verdict in the non-moving party’s

favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). The party moving for summary judgment bears the initial

burden of establishing the absence of a genuine issue of material

fact and can satisfy this burden by presenting evidence that

negates an essential element of the non-moving party’s case. 

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). 

Alternatively, the movant can demonstrate that the non-moving

party cannot provide evidence to support an essential element

upon which it will bear the burden of proof at trial. Id.

Once the moving party meets its initial burden, the

non-moving party must “go beyond the pleadings and by her own

affidavits, or by ‘the depositions, answers to interrogatories,

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This rule is otherwise known as the “Economic Loss 4

Doctrine” and it is based on an accepted understanding that a

merchant cannot be held liable when a product does not meet the

consumer’s commercial expectations, absent “an agreement, defined

by practice or otherwise” to deliver a certain level of quality. 

Seely, 63 Cal. 2d 16-17; id. at 18 (“[A manufacturer] cannot be

held [liable] for the level of performance of his products in the

consumer’s business unless he agrees that the product was

designed to meet the consumer’s demands.”).

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and admissions on file,’ designate ‘specific facts showing that

there is a genuine issue for trial.’” Id. at 324 (quoting Fed.

R. Civ. P. 56(e)). The non-movant “may not rest upon the mere

allegations or denials of the adverse party’s pleading.” Fed. R.

Civ. P. 56(e); Valandingham v. Bojorquez, 866 F.2d 1135, 1137

(9th Cir. 1989). However, any inferences drawn from the

underlying facts must be viewed in the light most favorable to

the party opposing the motion. Matsushita Elec. Indus. Co., Ltd.

v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 

B. Products Liability (Claims One and Two)

Plaintiff’s first and second causes of action, for

design defect and failure to warn of a design defect, are

essentially products liability tort claims. In California,

“plaintiffs may [only] recover in tort for physical injury to

person or property [and] not for purely economic losses that may

be recovered in a contract action.” S.F. Unified Sch. Dist. v. 4

W.R. Grace & Co., 37 Cal. App. 4th 1318, 1327 (1995) (citing

Seely v. White Motor Co., 63 Cal. 2d 9, 18-19 (1965)); Aas v.

Superior Court, 24 Cal. 4th 627, 646 (2000) (“[A]ppreciable,

nonspeculative present injury is an essential element of a tort

cause of action.”), superceded on other grounds by Cal. Civ. Code

§§ 895-945.5. The California Supreme Court has further clarified

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that physical injury to property must consist of “damage to

‘other property,’ that is, property other than the product

itself.” Jimenez v. Superior Court, 29 Cal. 4th 473, 483 (2002). 

“The law of contractual warranty governs damage to the product

itself.” Id.

Given this standard, the court’s inquiry is seemingly

straightforward, as the only damage plaintiff suffered was damage

to the allegedly defective turbine caused by its component parts. 

However, the overwrought blade retainers are not necessarily part

of “the product itself” (i.e., the turbine). “In a case

involving component-to-component damage [the trier of fact must]

determin[e] whether the defective part is a sufficiently discrete

element of the larger product that it is not reasonable to expect

its failure invariably to damage other portions of the finished

product.” KB Home v. Superior Court, 112 Cal. App. 4th 1076,

1087 (2003). More specifically, the character of the responsible

part is defined by the answers to the following questions: 

(1) Does the defective component . . . perform an

integral function in the operation of the larger

product . . . ? 

(2) Does the component have any independent use to the

consumer, that is some use other than as incorporated

into the larger product? 

(3) How related is the property damage to the inherent

nature of the defect in the component? 

(4) Was the component itself or the larger product

placed into the stream of commerce (or, viewed from the

buyer’s perspective, was the larger integrated product

or the component itself the item purchased by the

plaintiff)? 

Id. at 1086; Cal. BAJI 9.02 (further noting that at trial,

plaintiff has the burden of establishing that the damaged

property is separate from the defective property).

Generally, whether a component part damaged part of a

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larger product (the product itself) or other property is a

question for the jury to resolve. KB Home, 112 Cal. App. 4th at

1087. Nevertheless, if the facts required to address these

inquiries are uncontested, the court can draw the line between

the defective product and other property. Id. at 1080 n.2

(“Summary judgment, of course, may be proper if ‘the

uncontradicted facts established through discovery are

susceptible of only one legitimate inference . . . .’” (quoting

Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1112 (1988)

(alteration in original)). 

Although the parties largely ignore the KB Home factors

in their submitted arguments, it appears undisputable that the

“IM5000 is an integrated machine, manufactured and sold in its

entirety by [defendant] . . . .” (Def.’s Reply 5; see also

(Shimura Decl. Ex. A (purchase agreement and specifications).) 

Defendant also argues, albeit without explanation, that the

IM5000 is “nonfunctional” without the blade retainers. 

Additionally, it is clear from the photographs submitted that the

blade retainers (and the rotor disks of which they are a seamless

part) are specifically designed to accommodate the rotor blades

manufactured by defendant and consequently, the court cannot

imagine any independent use for this component outside of its use

within the turbine. (See Furman Decl. Ex. 1.7.) Therefore,

based on defendant’s arguments and other evidence, the first,

second, and fourth factors favor treatment of the turbine and its

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The court in McDowell Valley Vineyards, Inc. v. Sabate 5

USA Inc., No. C-04-708, 2004 WL 1771574, at *4 (N.D. Cal. Aug. 6,

2004), extracted four additional factors from KB Home that

address: (1) “whether the component was purchased from another

manufacturer;” (2) “whether the larger product was sold in other

markets without the component;” (3) “whether the component can be

readily removed from the larger product; and” (4) “whether the

component has been used in other applications.” Here, the

component was not purchased from another manufacturer (additional

factor 1). Additionally, plaintiff did not challenge defendant’s

assertion that the machine can not function without the rotor

components and from this the court can infer (1) that the IM5000

is not sold in other markets without blade retainers and (2) that

these components cannot be removed from the larger product

(additional factors 2 and 3). Finally, although the parties have

not presented direct evidence of the fourth factor, use in other

applications, the fact that plaintiff and other IM5000 owners

must share a limited pool of spare parts amongst themselves (see,

e.g., July 28, 2006 Suzuki Decl. Ex. H at 2) suggests that some

of the internal parts of the turbine, including perhaps the

retaining blades, are not used in other applications. Taken

together then, the additional McDowell Valley factors also do not

support plaintiff’s position.

10

component parts as a single product. Significantly, plaintiff 5

produced no evidence that might cast doubt on these conclusions

and provided only bald assertions that the blade retainers are a

discrete product. 

Regarding the third factor, neither party has fully

described the “extensive[] damage[]” that allegedly occurred. 

(Compl. ¶ 9.) Nevertheless, given that plaintiff has

characterized the defective part as “blade retainers” and failure

to retain the rotor blades allowed them to break free and cause

damage, the only reasonable conclusion a jury could draw in this

case is that the damage resulted from the inherent nature of the

defect in the component. The third factor therefore further

supports defendant’s argument that the rotor components were part

of the product itself, which was the only property that suffered

damage. Cf. East River S.S. Corp. v. Transamerica Delaval, 476

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Contrary to plaintiff’s arguments, the blade retainers 6

in the IM5000 are not comparable to windows in a house. Cf.

Jimenez, 29 Cal. 4th at 484 (“[T]he manufacturer of a defective

window installed in a mass-produced home may be held strictly

liable in tort for damage that the window’s defect causes to

other parts of the home in which it is installed.”). The

retainers are not fungible fixtures made by a third party who is

not responsible for, or even involved in, completion of the final

product. Rather, they are integral and necessary components of a

machine that is designed, constructed, and supplied by a single

entity.

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U.S. 858, 871 (1986) (concluding that defective turbines that

damaged themselves were a single unit based simply on the fact

that, as here, “each turbine was supplied by [the turbine

designer, manufacturer, and installer] as an integrated package .

. . .” ). Defendant is thus entitled to summary judgment 6

because all four factors suggest that the blade retainers were

intrinsic, not discrete, elements of the turbine and, as noted

above, a purchaser cannot bring a products liability claim absent

damage to “property other than the product itself.” Jimenez, 29

Cal. 4th at 483.

C. Negligence (Claim Three)

To the extent that plaintiff’s negligence claim is

based on defendant’s “duty to exercise reasonable care in their

design, manufacture, supply, [and] sale” of the IM5000, (Compl. ¶

26), the analysis is the same as for its products liability

claims. Seely, 63 Cal. 2d at 18 (“Even in actions for

negligen[t] [construction], a manufacturer’s liability is limited

to damages for physical injuries and there is no recovery for

economic loss alone.”); Aas, 24 Cal. 4th at 636. Consequently,

this portion of the claim is likewise subject to summary

judgment.

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However, plaintiff’s negligence claim also alleges

negligent “inspection, service, repair, maintenance and/or

recertification of the stage one rotor and its component parts.” 

(Compl. ¶ 26.) In other words, it alleges that defendant

negligently performed services, separate and apart from supplying

defective products. At least one California court has observed

that “[t]he question of whether a plaintiff may recover damages

for economic loss, absent physical injury to person or property,

has been answered differently in cases involving the quality and

condition of goods from when plaintiff’s loss arises from a

negligent performance of services.” N. Am. Chem. Co. v. Superior

Court, 59 Cal. App. 4th 764, 777 (1997). Articulating the

specifics of this difference, the North American Chemical court

noted that “[a] contract to perform services gives rise to a duty

of care which requires that such services be performed in a

competent and reasonable manner” and “negligent failure to do so

may be both a breach of contract and a tort.” Id. at 774; see

also Moreno v. Sanchez, 106 Cal. App. 4th 1415, 1435 (2003)

(“[T]he negligent failure to exercise reasonable care and skill

in undertaking to perform a service contract . . . is a tort, as

well as a breach of contract.”). 

The California Supreme Court has refused to adopt the

North American Chemical reasoning, noting that “[a] person may

not ordinarily recover in tort for the breach of duties that

merely restate contractual obligations”, but at the same time it

has continued to apply the J’Aire test on which North American

Chemical is based. Aas, 24 Cal. 4th at 643; J’Aire Corp. v.

Gregory, 24 Cal. 3d 799 (1979). J’Aire establishes a six factor

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balancing test that determines when a contractual duty rises to a

duty of care capable of supporting a negligence claim. The

factors include:

(1) the extent to which the transaction was intended to

affect the plaintiff, 

(2) the foreseeability of harm to the plaintiff, 

(3) the degree of certainty that the plaintiff suffered

injury, 

(4) the closeness of the connection between the

defendant’s conduct and the injury suffered, 

(5) the moral blame attached to the defendant’s conduct

and 

(6) the policy of preventing future harm.

J’Aire Corp., 24 Cal. 3d at 804. Neither party addressed this

test and its application in this case.

Regardless, even assuming that the J’Aire requirements

are satisfied here and that defendant owed plaintiff a duty of

care beyond its contractual obligations, the undisputed facts

conclusively show that defendant fulfilled the duty that

plaintiff alleges. Specifically, plaintiff claims that defendant

had a duty to inspect the blade retainers and warn plaintiff that

they needed to be repaired or replaced. (Compl. ¶¶ 28-29.) Yet

defendant did warn plaintiff in May, 2000 that the “disks for

state 1 to 3 [were] under high stress” and recommended that they

be replaced “with the new ones if Wheelabrator plans to use the

IM5000 . . . more longer.” (Ishizuka Decl. Ex. E at 201-02.) 

Significantly, the blade retainers at issue here are an

inseparable part of the turbine’s first stage rotor (i.e., the

disk for stage 1), which plaintiff continued to use despite

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At oral argument, in an attempt to show that defendant 7

expressly misrepresented that the blade retainers were in working

condition, plaintiff selectively quoted a report prepared by

defendants regarding repairs conducted in May, 2000. However, in

the report, under the subheading “Operation”, defendant simply

wrote that “the power turbine is in a good condition except disk

space tempe-rature.” (Ishizuka Decl. Ex. E at 200 (emphasis

added).) Furthermore, in the subsequent subsection covering its

“Recommendations”, defendant explicitly advised plaintiff to

replace rotor disks 1 through 3. (Id. at 201-02.) Plaintiff

thus has no basis for its assertion that defendant represented

that the rotor in general and the blade retainers in particular

were capable of continued use without repair.

14

defendant’s advice to replace it. Plaintiff appears to take 7

issue with defendant’s failure to really impress upon plaintiff

that it needed to take immediate action. However, this does not

change the fact that defendant advised plaintiff to replace the

rotor disks and thereby discharged any duty it may have had to

warn plaintiff that these parts needed repair. Defendant is thus

entitled to summary judgment on the entirety of plaintiff’s

negligence claim.

D. Breach of Implied Warranty (Claim Four)

Plaintiff further alleges that defendant breached an

implied warranty of fitness for a particular purpose when,

despite “know[ing] that Plaintiff intended to use its first stage

one blade retainers for a particular purpose”, defendant failed

to replace or repair them. (Compl. ¶¶ 33-36.) To the extent

that plaintiff alleges that defendant was negligent while

performing repairs, in other words provided inadequate services,

plaintiff has failed to state a claim for breach of implied

warranty. (See compl. ¶ 35 (attributing its failure to replace

the retainers to its reliance on defendant’s “skill and

judgment”).) The implied warranty of fitness for a particular

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Defendant erroneously cites California Civil Code § 8

1791.1(3) for the proposition that even if an implied warranty

existed, it expired in 1989--one year after defendant supplied a

new rotor (in 1988). Id. (“[I]n no event shall such implied

warranty have a duration of . . . more than one year following

the sale of new consumer goods to a retail buyer.”). By its

terms, § 1791.1 applies only to individual consumers and not

sophisticated corporate customers like plaintiff. Cal. Civ. Code

§ 1791(a)-(b) (defining the protected “retail buyer” as “any

individual who buys” “new product[s] . . . that [are] used,

bought, or leased for use primarily for personal, family, or

household purposes” (emphasis added)). The applicable source for

plaintiff’s implied warranty claim in this case is California

Commercial Code § 2315.

Defendant argues that the 1981 warranty, which covered 9

defects in material for less than two years and otherwise

“replace[d] any other warranty or guarantee imposed or implied by

law, customarily or otherwise”, should primarily bar plaintiff’s

fourth cause of action. (Id. (Article 12.5).); see Cal. Com.

Code § 2316 (“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.’”). It further argues that modification of that written

warranty cannot be implied from defendant’s repair activities. 

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purpose applies only to sales contracts. Allied Props. v. John

A. Blume & Assocs., 25 Cal. App. 3d 848, 855 (1972) (“[T]he well

settled rule in California is that where the primary objective of

a transaction is to obtain services, the doctrines of implied

warranty and strict liability do not apply.”); Gottsdanker v.

Cutter Labs., 182 Cal. App. 2d 602, 608 (1960) (“[I]mplied

warranties of fitness and of merchantability are enforceable only

against a seller.”). 

Additionally, to the extent that plaintiff is asserting

that the blade retainers supplied by defendant in 1988 (as part

of the rotor replacement) were not fit for their intended

purpose, this claim is not supported by the evidence in this

case. Even assuming that defendant’s 1981 warranty disclaimer 8

does not apply to this component, the implied warranty of 9

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See Eisenberg v. Alameda Newspapers, Inc., 74 Cal. App. 4th 1359,

1387 (1999) (“There cannot be a valid express contract and an

implied contract, each embracing the same subject, but compelling

different results.”). Finally, defendant contends that allowing

repair and replacement activities to put this case outside the

scope of a carefully negotiated limitation on its liability would

violate the intent of the 1981 agreement. (Def.’s Reply 3.) 

Nevertheless, as observed above in note 1 and the accompanying

text, the warranty is vague regarding its application to repair

and replacement parts and it is thus not as “carefully”

constructed, or as clearly applicable, as defendant insists. 

Because the court can grant defendant’s motion as to the fourth

cause of action on other grounds, however, it need not interpret

the intent and scope of the 1981 purchase agreement. 

Significantly, in the face of defendant’s summary 10

judgment motion, plaintiff has not even defined the “particular

purpose” that it allegedly communicated to defendant.

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fitness for a particular purpose that plaintiff seeks to invoke

arose “at the time of contracting”, meaning when the sale or

supply of the rotor occurred in 1988. The component then

proceeded to function as expected for 100,800 hours over the

course of twelve years and exceeded its design life--a limitation

that defendant repeatedly reminded plaintiff of over the years. 

Assuming that the “particular purpose” on which plaintiff’s

implied warranty was based pertains to its intent to operate the

IM5000 beyond its design life, plaintiff has failed to produce 10

any evidence that it communicated such expectations to defendant

“at the time of contracting.” Moreover, as discussed in more

detail in the next section, plaintiff has no evidence that

defendant ever agreed that the IM5000 could operate beyond

100,000 hours. See Cal. Com. Code § 2316 (“An implied warranty

can . . . be . . . modified by course of dealing or course of

performance . . . .”). Therefore, plaintiff has no grounds for

asserting an implied warranty of fitness and summary judgment on

its fourth cause of action is warranted. 

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E. Breach of Contract (Claim Five)

Plaintiff also alleges breach of contract based on the

service/repair contracts that it argues were separate and

distinct from the 1981 purchase agreement (which expressly

limited any and all warranties to those provided in the

agreement). From the pleadings and the papers related to this

motion, it appears that plaintiff’s claim is based on a belief

that the scope of the maintenance work performed by defendant

included an agreement to evaluate the residual life of the

turbine package. Additionally, plaintiff seems to suggest that

defendant’s “re-certification” of the turbine following its

inspections and repairs included some unsaid guarantee that the

turbine would operate indefinitely.

However, as previously noted, based on the facts before

the court, plaintiff had no reasonable basis for expecting that

defendant’s product would continue to operate for an additional

indefinite, or even fixed, amount of time beyond the 100,000 hour

mark. Defendant reminded plaintiff on several occasions that its

product was designed to last for 100,000 hours and described

operation after that point as “a new challenge to a new

millennium.” (Shimura Decl. Ex. G at 197.) Significantly,

plaintiff admits that defendant made no guarantees that the

turbine could endure continued operations. (Pl.’s Opp’n to

Def.’s Mot. for Summ. J. 10 (conceding that “[defendant] did not

communicate its expectations to Plaintiff regarding the further

useful life of the retainer slots”).) Moreover, any such

guarantee would have been totally inconsistent with defendant’s

well documented position that its product’s capacity for

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The available evidence casts considerable doubt on 11

plaintiff’s contention that an agreement to evaluate the residual

life of plaintiff’s IM5000 existed. Notably, when asked whether

it was interested in an “IM5000 PT residual Part Life Study

program”, plaintiff responded on May 10, 2000 that it was “not

familiar with this program.” (July 28, 2006 Suzuki Decl. Ex. K

(Questionnaire on IHI IM5000 Power Turbine).) If plaintiff had,

as alleged, already contracted for such a study, one would expect

that it would have responded accordingly in the survey. 

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operating beyond 100,000 hours was unknown. 

Additionally, even if, as plaintiff contends, defendant

had contracted to determine the residual life of the turbine,11

this does not translate into a guarantee that the turbine would

survive long enough for defendant to complete this investigation. 

Assuming that such a contract even existed, plaintiff has not

suggested a deadline for this work. Consequently, defendant

could not have actually breached any agreement. At most, the

damage, assuming it is irreparable, relieved defendant of any

obligation to complete its residual life evaluation. See Levy v.

Caledonian Ins. Co., 156 Cal. 527, 530 (1909) (reciting the “well

established rule” that performance is excused “where a contract

is made in contemplation of the continued existence of a

subject-matter which is, after the making of the contract,

destroyed without the fault of either party.”). 

Based on these circumstances, summary judgment on

plaintiff’s fifth cause of action is proper. Additionally, the

court declines to exercise its discretion pursuant to Rule 56(f)

to continue this motion to permit further discovery. Plaintiff

has no evidence, not even a declaration from one of its

employees, that defendant made any representations regarding the

turbine’s useful life after 100,000 hours. Similarly, plaintiff

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Plaintiff concedes that it does not have all of the 12

terms of the contracts for services performed in December, 1999

and May, 2000 and that it has not even “alleged the nature or

terms of any contract pertaining to these services.” (Pl.’s

Opp’n to Def.’s Mot. for Summ. J. 14.) The little evidence that

plaintiff has produced demonstrates only that an ongoing contract

to evaluate the residual life of the turbine may have existed. 

(Id. at 15.) Plaintiff offers no support, or even an explanation

of the basis, for its theories that (1) the contract for a

residual life investigation was past due and thus breached at the

time of the accident; (2) defendant agreed to repair “the turbine

engine as a whole prior to the failure”; or (3) the terms of the

alleged contract guaranteed future functionality of the turbine.

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has no evidence, and has not even alleged, that an agreement to

complete the residual life evaluation before August 7, 2000

existed. Perhaps most troubling, plaintiff has not presented, in

response to defendant’s motion for summary judgment, the facts on

which it based its decision to file a claim for breach of

contract. The contracts and whatever other documents there might

be to support plaintiff’s claim are something that should already

be in plaintiff’s possession. The court cannot continue a motion

for summary judgment based solely on plaintiff’s hope that some

document obtained through future discovery might sustain a claim

for which it seemingly has no basis. Compare 321 Studios v. 12

Metro Goldwyn Mayer Studios, Inc., 307 F. Supp. 2d 1085, 1091

(N.D. Cal. 2004) (noting that to secure a continuance of a motion

for summary judgment, a party should “identif[y] relevant

information to be discovered, and [the] basis for believing that

such information actually exists.” (citing VISA Int’l Serv. Ass’n

v. Bankcard Holders, 784 F.2d 1472, 1475 (9th Cir. 1986)), with

(Fruman Decl. ¶ 4 (stating very generally his reasons for needing

further time for discovery: “I intend to ask the deponents, inter

alia, about the material facts described by the parties hereto as

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both ‘disputed’ and ‘undisputed’”)).

III. Conclusion

Although plaintiff’s property was damaged when

allegedly defective rotor blade retainers failed to perform as

expected, the defective parts were not a sufficiently discrete

element of the turbine such that their failure would not be

expected to cause damage to other portions of the IM5000. 

Accordingly, the economic loss doctrine bars plaintiff’s claims

for products liability and negligent product design. Summary

judgment on the portion of plaintiff’s negligence claim alleging

the negligent provision of services is likewise proper because

the facts show that, assuming defendant had a duty above and

beyond its contractual obligations, it performed the duties that

plaintiff attempts to charge it with. 

Summary judgment is also warranted on plaintiff’s

breach of warranty and contract claims because plaintiff has

failed to identify any evidence of terms that defendant may have

breached (or even explain what terms it suspects might exist). 

Plaintiff is not entitled to further discovery on claims that

appear to be based on nothing more than theories and conjecture. 

IT IS THEREFORE ORDERED that defendant’s motion for

summary judgment be, and the same hereby is, GRANTED. 

DATED: August 28, 2006

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