Opinion ID: 894577
Heading Depth: 1
Heading Rank: 3

Heading: The Five-Year Warranty

Text: Although JMB cannot recover treble damages under the DTPA (by assignment or otherwise), the jury's answers to two warranty questions would support JMB's recovery of actual damages and attorney's fees. JMB can assert breach of warranty claims against PPG because, unlike DTPA claims, warranty claims pass with the underlying goods [62] and are assignable to a subsequent purchaser. [63] One Houston Center was substantially completed April 1, 1978. Upon completion, PPG issued a five-year limited warranty of its materials and work: PPG Industries, Inc. warrants all material furnished and work performed is in accordance with plans and specifications as amended by changes thereto by the owner or his authorized representative, and further warrants material furnished and labor performed to be free of defects and watertight for five years from April 1, 1978. Should such a defect occur within this warranty, PPG Industries, Inc. shall, upon receipt of written notice, repair and/or replace the defective product. The jury found PPG breached this five-year warranty; [64] PPG asserts the claim is barred by limitations.
The UCC generally requires suit on breach of warranty claims within four years of delivery, regardless of when the buyer discovers defects in the goods. [65] This absolute limitation period was intended to provide a uniform date of accrual beyond which sellers need not worry about stale warranty claims, or retain records to defend against them. [66] Under that provision, limitations on PPG's warranty would have run on April 1, 1982. But accrual is extended for warranties that explicitly guarantee future performance: A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered. [67] Because PPG explicitly warranted the Twindows would be free of defects for five years, it falls within this exception. [68] Thus, warranty claims against PPG accrued not upon initial delivery, but when a reasonable buyer should have discovered any defects, up until the end of the five-year warranty period (when the time of such performance expired). The parties signed a tolling agreement preserving all claims that could have been brought as of September 24, 1993 (a date ten months before JMB actually filed suit on July 21, 1994). In the liability questions, the jurors were instructed not to consider any breach of warranty that should have been discovered before September 25, 1989 (four years before the tolling agreement was signed, and three months before JMB bought the building). PPG asserts the jurors' affirmative answers represent a misunderstanding and misapplication of the discovery rule, as major defects with the Twindows were discovered more than seven years earlier.
By July 27, 1982, HCC had discovered serious problems with the Twindows, and complained in a letter of deterioration of the reflective coating. Necessarily, a buyer files a complaint about a product only after learning of a defect. Thus, the discovery rule generally ends upon such a complaint, at least with respect to matters asserted therein. [69] After receiving the 1982 complaint, PPG undertook a massive remedial effort. Between 1982 and 1985, it replaced more than 3,000 Twindows at Houston Center, a quarter of the total in the forty-six-story skyscraper. These activities could hardly have gone unnoticed. As the court of appeals noted, a failure rate of 25% might suggest something was amiss. [70] But JMB asserts the discovery rule does not apply because neither HCC nor JMB learned until much later that the problem was a defective design, and thus extended to every window in the building. The court of appeals agreed, pointing to evidence that JMB acted diligently in attempting to determine the cause of the problem and in attempting to correct it. [71] But the discovery rule does not linger until a claimant learns of actual causes and possible cures. Instead, it tolls limitations only until a claimant learns of a wrongful injury. [72] Thereafter, the limitations clock is running, even if the claimant does not yet know: โ the specific cause of the injury; [73] โ the party responsible for it; [74] โ the full extent of it; [75] or โ the chances of avoiding it. [76] It is true that not even PPG could spot a defect in every Twindow at this time. But at trial JMB asserted a design defect affecting every Twindow from inception, whether noticeable yet or not; when 3,000 Twindows failed, as a matter of law HCC should have known of this claim. For the same reason, we must reject the argument that each window unit was a separate product and separately warranted, and thus should be treated separately for discovery rule purposes. If that were the rule, limitations would never begin to run until a defect was discovered in every single window. Texas limitations law is not that patient. This is not to say either HCC or JMB was required to file suit every time it noticed a scratch. The evidence was undisputed that a few defective window units are inevitable in a construction project of this size; a few isolated defects would not establish discovery as a matter of law. Thus, the federal Eighth Circuit held 23 defective windows on a project involving 2,004 did not establish as a matter of law the buyer should have known the windows were defective. [77] Similarly, the court of appeals has repeatedly held in the context of underground leaks that the discovery rule does not end when the first leak is discovered; nor does it continue until all the leaks are known C instead, it ends when an owner knows of enough leaks to indicate the problem is not isolated. [78] As a matter of law, the problems here were not isolated, and 3,000 defective windows is not a few. It was undisputed that PPG had never experienced a failure on this scale, either before or since. While the end of the discovery rule is normally a fact question for the jury, [79] there can be no difference of opinion under the circumstances presented here. Indeed, if this extraordinary number of failures is not enough to put a claimant on notice that something is amiss as a matter of law, then the discovery rule has no boundaries other than those each juror cares to set.
The court of appeals disregarded what HCC surely knew about defects in the Twindows by pointing to PPG's efforts to repair them. But once HCC discovered widespread defects, PPG's efforts to comply with its warranty obligations, without more, did not re-start the discovery rule. JMB begins by asserting PPG admitted the discovery rule tolled limitations on all warranty claims until 1989 when it refused to repair or replace any more Twindows. The trial court instructed the jury that PPG's breach of warranty could not have been discovered until PPG refused to perform its obligations under the warranty ( i.e., its duty to repair). PPG did not object to this part of the charge, though it did assert in motions at the end of JMB's case, at the conclusion of all the evidence, and after the verdict that the discovery rule barred JMB's warranty claims as a matter of law. We disagree that PPG's failure to object to the jury instruction was an admission. A judicial admission must be a clear, deliberate, and unequivocal statement; [80] a party's failure to object at trial may constitute waiver, but it is no judicial admission. JMB further implies this was a waiver. But a party asserting that a claim or defense is established as a matter of law does not have to object to the form in which the question is submitted to the jury; a matter-of-law complaint objects to any submission, proper form or not. Next, JMB asserts that even if PPG did not admit the matter, the jury was entitled to find that PPG's repair efforts extended limitations. But almost one hundred years ago, we held a seller's repair efforts do not extend the limitations period for breach of warranty claims. [81] Texas courts have been applying that rule ever since, [82] as do the courts of most other states. [83] Serious problems would arise if the rule were otherwise. For example, if the statute of limitations was tolled every time a car needed repairs during a warranty period (and what car does not), the warranty period would become perpetual, and dealers would be loath to make any. We should encourage sellers to attempt repairs; tolling limitations every time they do might discourage them from doing so at all. And it would give consumers little in return. Faulty repairs or false assurances of repair are already independently actionable under current law โ either for breach of the implied warranty applicable to repair services, [84] or as DTPA laundry-list violations. [85] Accordingly, consumers who discover defects and ask a seller to repair them do not need to toll limitations on the initial warranty claim, as they have a new limitations period relating to the repairs. JMB chose not to assert such claims, but that is not a good reason to extend the limitations period on warranties in all other cases beyond the normal term. We did not hold (as JMB asserts) in Austin Co. v. Vaughn Building Corp. [86] that limitations was tolled until a seller stops making repairs; instead, we held a warranty for repair services was not breached until further repairs were refused. [87] A warranty to make repairs is a warranty for services, not of goods, and thus falls outside the UCC. [88] We long ago held that limitations accrues upon breach of a repair warranty only if that was the basis of the suit; if instead the basis was a warranty as to the goods themselves, limitations accrues upon delivery. [89] In this case, JMB asserted no claim for breach of a repair warranty. The basis of JMB's complaint was not that PPG refused to supply more Twindows; according to everything pleaded and proved, more Twindows was the last thing JMB wanted. JMB's complaints arose from defects in the underlying goods, and thus accrued when they failed, not when PPG refused to keep manufacturing and sending replacements with the same problem. If a defective product is sold and the seller repairs it defectively, a buyer loses nothing by suing on the latter defect instead of the former. More important, if the seller repairs it properly, the buyer has a working product instead of a lawsuit. Accordingly, we reaffirm our long-standing rule that a seller's repair efforts are not alone enough to extend the limitations period for breach of warranty claims.
The court of appeals also pointed to assurances and misrepresentations PPG allegedly made about its repairs. [90] Even if false assurances can toll limitations, neither the court of appeals nor JMB point to a shred of evidence establishing that is what occurred here. In its brief, JMB assures us PPG affirmatively represented it had completely remedied any problem, the problem existed only in certain units, PPG could and would completely remedy the problem, the problem was fixed, and there was no reason for concern. But a careful review of every record reference JMB cites discloses nothing of the kind. Instead, we are directed to testimony that HCC asked for such assurances, [91] tried to get them, [92] assumed it would get them, [93] and was satisfied it had gotten them. [94] There was also evidence that HCC thought the problems were fixed, [95] believed they were fixed, [96] and could reasonably have believed they were fixed. [97] But nobody swore PPG's agents ever said so. The only statement placed in the mouths of PPG's agents was that they thought they could solve the problem by replacing the defective windows. This is a statement of opinion, not an affirmative representation. Further, it is undisputed that after all replacements were made, PPG unequivocally quashed any false hopes HCC may have entertained. In an internal memo, the Assistant Property Manager of Houston Center's management company acknowledged that PPG gave no guarantees or assurances about the repairs: The replacement of defective lites by PPG is now completed. This completion satisfies all surveys and inspections to date. Activities ended approximately March 18, 1985. We finally received a return call from Bill Unrath, a quality control engineer with PPG in Pittsburgh on March 20th. He cited causes for the lites' coating deterioration as follows.... Bill went on to say that there is no way to predict if more lites will become affected. He also said that PPG would continue to stand behind their product, and if we have any more defective lites to please call him. In my opinion, the above causes cited sound somewhat logical. However, I find it hard to believe that the tolerances of the coating in regard to temperature are so critical. Rather, I suspect that formulation of the coating or application to the glass was substandard. PPG may simply be attempting to provide a scientific explanation when an apology for sloppy workmanship may be more appropriate. In either case, they are picking up the tab. Future action regarding lite replacement may be necessary as more defects are discovered. PPG will be notified should this occur. If Houston Center's representatives believed just the opposite of what the record shows they were told, [98] as a matter of law they should have known better. It is true there was evidence PPG knew far more than it was telling anyone about the Twindows' defects. But mere silence is not fraudulent unless there is a duty to disclose; [99] no such duty existed between these contracting corporations. [100] In sum, PPG's repair efforts may have been futile and its explanations much less than forthcoming, but JMB points to no evidence that either owner was misled by PPG's false assurances rather than its own false hopes. False hopes are not enough to extend limitations. Accordingly, JMB's five-year warranty claims were barred as a matter of law.