Opinion ID: 745376
Heading Depth: 2
Heading Rank: 2

Heading: PFI's Claims Against Carbide

Text: 13 The district court held that PFI's contract and warranty claims were barred by Ohio's statute of limitations. 6 In its view, the stipulation entered into by the parties was not sufficient to alter § 1302.98 of Ohio's version of the Uniform Commercial Code. Section 1302.98 states that [a]n action for breach of any contract for sale must be commenced within four years after the cause of action has accrued. Ohio Rev.Code Ann. § 1302.98(A). A cause of action for breach of contract accrues when the breach occurs; a cause of action for breach of warranty accrues when tender of delivery is made. See id. § 1302.98(B). Thus, in this case, the limitations period began to run when Carbide delivered the shipments to PFI. Carbide made deliveries of VYES to PFI from March 16, 1984 to October 1, 1986. Many of PFI's claims based on the earlier deliveries were already barred by the time Carbide and PFI entered into the four-month tolling agreement on August 10, 1989. Carbide concedes that the claims relating to the later deliveries were then timely filed in court on December 18, 1989. 14 On October 8, 1991, PFI and Carbide entered into a stipulation of voluntary dismissal. That stipulation provided: 15 Pursuant to Fed.R.Civ.P. 41(a)(1), plaintiff [PFI] and defendant [Carbide], by and through counsel, hereby stipulate that the within action is dismissed, at plaintiff's costs, without prejudice to refiling in federal court within the time provided therefor by Section 2305.19 of the Ohio Revised Code. 16 R.97 at 30. Section 2305.19 of the Ohio Revised Code provides: 17 In an action commenced, ... if in due time a judgment for the plaintiff is reversed, or if the plaintiff fails otherwise than upon the merits, and the time limited for the commencement of such action at the date of reversal or failure has expired, the plaintiff ... may commence a new action within one year after such date. 18 Ohio Rev.Code Ann. § 2305.19. 19 PFI then filed this action in September 1992, within one year of the stipulation of voluntary dismissal. Nevertheless, the district court held that PFI's contract claims were barred by Ohio's U.C.C. statute of limitations, which provides: 20 Where an action commenced within the time limited by division (A) of this section is so terminated as to leave available a remedy by another action for the same breach, such other action may be commenced after the expiration of the time limited and within six months after the termination of the first action unless the termination resulted from voluntary discontinuance.... 21 Ohio Rev.Code Ann. § 1302.98(C). The district court held, and Carbide insists on appeal, that PFI's claims are barred because it voluntarily dismissed the first action and because, in any event, PFI did not refile within six months of the dismissal. Carbide asserts that the stipulation entered into by the parties was not explicit enough to preempt § 1302.98(C). The district court agreed with PFI and held that, if parties want to preempt § 1302.98(C), they must do so in specific terms. R.97 at 32. 22 We cannot agree. Parties can vary the effect of many U.C.C. provisions, including the provisions contained in § 1302, by agreement. Ohio Rev.Code Ann. § 1301.02(C); see Miles v. N.J. Motors, Inc., 44 Ohio App.2d 351, 338 N.E.2d 784, 788 (1975). The district court conceded as much but found that explicit language was necessary to preempt § 1302.98. Yet neither the court nor Carbide has cited any authority for that proposition. The parties' stipulation agreement provides that the dismissal was without prejudice to refiling within the time provided therefor by Section 2305.19 of the Ohio Revised Code. The time provided by § 2305.19 is one year; the effect of this agreement was to alter the effect of the otherwise applicable U.C.C. limitations period. Our interpretation of the stipulation agreement is confirmed by the fact that Carbide's interpretation renders the stipulation without any function whatsoever. Carbide claims that the stipulation preserved only PFI's tort claims, but they would have been preserved under § 2305.19 absent any stipulation. At oral argument, counsel for Carbide defended the district court's decision with reasoning to the effect that § 1302.98(C) cannot be waived. But affirmative defenses, including statutes of limitations, can be waived if they are not pleaded. It would be anomalous to say that § 1302.98, which can be waived by silence and inaction, cannot be waived by agreement unless the parties use the most explicit words imaginable. The agreement here is clear enough; Carbide agreed that PFI could refile its action, including its contract and warranty claims, within the specified time period of one year. We believe that the most sensible reading of this stipulation is that PFI had a year within which to refile its claims. It did file within that period, so the district court improperly dismissed them as time barred. 23 We do agree with the district court, however, that Carbide did not extend any warranties to PFI of future performance. PFI contends that its action did not accrue until 1986 or 1987 when it learned of the field failures. It relies on § 1302.98(B): A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods ..., the cause of action accrues when the breach is or should have been discovered. Ohio Rev.Code Ann. § 1302.98(B). Carbide, however, did not provide PFI with a warranty explicitly extending to future performance. The courts have applied a stringent standard in determining whether a warranty explicitly extends to future performance. Standard Alliance Indus. v. Black Clawson Co., 587 F.2d 813, 820 (6th Cir.1978) (Ohio law), cert. denied, 441 U.S. 923, 99 S.Ct. 2032, 60 L.Ed.2d 396 (1979); see also Stumler v. Ferry-Morse Seed Co., 644 F.2d 667 (7th Cir.1981). In order for such a warranty to exist, there must be specific reference to a future time in the warranty. Standard Alliance, 587 F.2d at 820. The only mention of time in any document in this case is that vinyl paints maintain their good appearance for many years. That statement cannot satisfy the tough burden set forth in Standard Alliance to create a warranty of future performance.
24 When Cooper sued PFI, PFI cross-claimed against Carbide for indemnification. Insofar as PFI's indemnity claim sounds in tort, it is barred by the economic loss doctrine. 7 Nor can PFI recover under an implied contract of indemnity. Such contracts exist only when the liable party is so related to another that the other should be required to pay for the wrongs committed by the liable party. Motorists Mut. Ins. Co. v. Huron Rd. Hosp., 73 Ohio St.3d 391, 653 N.E.2d 235, 238 (1995). Special relationships that give rise to implied contracts of indemnity include wholesaler/retailer, abutting property owner/municipality, independent contractor/employer, and master/servant. Id. (internal quotation and citation omitted). On the other hand, the relationship between vendor and vendee is insufficient to give rise to such an implied indemnity right. Myrtle Beach Pipeline Corp. v. Emerson Elec. Co., 843 F.Supp. 1027, 1065 (D.S.C.1993) (The courts have uniformly held that [the] vendor-vendee relationship does not constitute a 'special' or 'unique' circumstance justifying implied contractual indemnity.), aff'd per curiam 46 F.3d 1125 (4th Cir.1995) (unpublished). The buyer-seller relationship in this case is unremarkable and does not create any implied indemnity rights. 25 There is, moreover, a more fundamental problem with PFI's implied rights. The economic loss doctrine dictates that implied indemnity claims of the sort claimed by PFI have no place in a suit for commercial losses governed by the U.C.C. 8 Because Cooper cannot recover in tort from Carbide directly on account of the economic loss doctrine, it would be inappropriate to allow PFI to assert indemnity, which recognizes the right of a person who has been compelled to pay what another should have paid to require complete reimbursement. Mahathiraj v. Columbia Gas of Ohio, 84 Ohio App.3d 554, 617 N.E.2d 737, 743 (1992). If Cooper is relegated solely to contract theories (and, indeed, in this case can obtain no recovery from Carbide), it makes no sense to allow PFI to recover Cooper's economic damages from Carbide absent contract or warranty. See Bethlehem Steel Corp. v. Chicago Eastern Corp., 863 F.2d 508, 521-25 (7th Cir.1988); Myrtle Beach, 843 F. Supp. at 1065. Rather, commercial law provides the appropriate basis for PFI, a commercial buyer in privity with Carbide, to recover any commercial losses it may have suffered. 26 We express no opinion on the damages that may be available to PFI under its breach of contract and warranty claims, but we note that the U.C.C. allows for the recovery of consequential damages in certain situations. See Ohio Rev.Code Ann. § 1302.89(B). Whether PFI can recover consequential damages from Carbide under the U.C.C. (including its viable warranty and contract theories) to compensate it for any Cooper-related liability is an issue we leave for the district court on remand. PFI's contract and warranty claims are the proper vehicles through which to resolve this commercial dispute.