Opinion ID: 203275
Heading Depth: 2
Heading Rank: 2

Heading: Future Performance

Text: The Uniform Commercial Code (U.C.C.), as adopted in Massachusetts, provides that an action for breach of warranty must be commenced within four years of the date when the cause of action accrues. [4] Mass. Gen. Laws ch. 106, § 2-725(1). The code section then specifies when the cause of action accrues: 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. Id. § 2-725(2). Thus, the default rule in § 2-725(2) is that the cause of action for breach of warranty is time-barred if brought more than four years after tender of delivery. However, if the warranty explicitly extends to future performance, the four-year clock begins to tick when the breach is discovered or should have been discovered, or when the explicit time period expires, whichever occurs first. Barkley Clark & Christopher Smith, The Law of Product Warranties § 11:4 (2006). Trans-Spec's complaint stated that Trans-Spec accepted delivery of the trucks containing Caterpillar's allegedly defective flywheel housing in December 1999 and January 2000. Trans-Spec filed suit for breach of warranty in August 2004. Thus, on its face, Trans-Spec's complaint is not timely unless the warranty on which its claims are based is one that explicitly extend[s] to future performance of the goods and the circumstances are such that the `discovery of the breach must await' the time of the promised future performance. [5] See Coady v. Marvin Lumber & Cedar Co., 167 F.Supp.2d 166, 170 (D.Mass.2001) (quoting Raytheon Co. v. Helix Tech. Corp., 1999 WL 753483,  (Mass.Super.1999)). The Supreme Judicial Court of Massachusetts has not discussed the proper application of the future performance requirement in § 2-725(2) of the U.C.C. Thus we must make an informed prophecy of what the court would do in the same situation. Blinzler v. Marriott Int'l, Inc., 81 F.3d 1148, 1151 (1st Cir.1996). In making such a prophecy, we look to analogous cases decided by other courts in the forum state, persuasive reasoning in cases from other states, and learned treatises. Id. To determine whether a warranty is one of future performance, we must look to the language of the warranty itself to determine whether it explicitly guarantees the future performance of the goods. See Coady, 167 F.Supp.2d at 170 (In determining whether a warranty explicitly extends to future performance, courts have emphasized the word `explicitly'. . . .). For example, if a warranty states that the product would be free from defects in materials and workmanship for a period of five years, it explicitly extends to the future performance of the goods. See, e.g., Grand Island Exp. v. Timpte Indus., Inc., 28 F.3d 73, 75 (8th Cir.1994); Std. Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813, 820-21 (6th Cir.1978); see also Clark & Smith, supra, § 11:4. If, on the other hand, the warranty states we promise to repair the product if it malfunctions within the first five years, it does not explicitly guarantee the future performance of the goods. Clark & Smith, supra, § 11:4; cf. New Eng. Power Co. v. Riley Stoker Corp., 20 Mass.App.Ct. 25, 477 N.E.2d 1054, 1058-59 (1985). This type of repair promise warrants the future performance of the warrantor, not the goods. Clark & Smith, supra, § 11:4. The warrantor has not guaranteed that the goods will not malfunction in the future, but rather that the warrantor will remedy any problems that arise in a particular way for a limited period of time. Id. ; see, e.g., Neb. Popcorn, Inc. v. Wing, 258 Neb. 60, 602 N.W.2d 18, 23 (1999) (A warranty to repair or replace does not guarantee proper performance. Rather, it anticipates potential defects and specifies the buyer's remedy during the stated period.); Flagg Energy Dev. Corp. v. General Motors Corp., 244 Conn. 126, 709 A.2d 1075, 1086 (1998) (repair or replacement clause provides buyer only the relief expressly promised and is not a promise of future performance of the goods); Tittle v. Steel City Oldsmobile GMC Truck, Inc., 544 So.2d 883, 889-91 (Ala.1989) (repair or replace language does not guarantee that goods will perform free of defects; rather it anticipates that defects will occur). The only warranty language properly before us in considering Caterpillar's motion to dismiss is contained in the On-Highway Vehicle Engine Extended Service Coverage (ESC) document, which was appended to Trans-Spec's complaint. The ESC states: This service contract . . . provides full components and labor coverage for covered components failures due to defects in Caterpillar materials or workmanship under normal use. [6] The ESC guarantees that Caterpillar will pay 100% of the components and labor charges for covered failures, with no deductible charges for failures occurring within the first 60 months or 500,000 miles. It specifies Caterpillar's responsibility to restore the engine to its operating condition prior to failure by repairing/replacing only the defective components and consequential damaged components necessary to remove/repair/install the defective components. The ESC thus never guaranteed that Caterpillar's engines would not fail; it merely warranted that Caterpillar would pay to repair them if they did fail. As such, the warranty provided in the ESC is not a warranty that explicitly extends to the future performance of the goods, and the later accrual date specified in § 2-725(2) does not apply. Thus, Trans-Spec's claims are time-barred by the four-year statute of limitations that began to run on the date of delivery of the trucks. In reaching this conclusion, we note that some courts have interpreted a vehicle manufacturer's promise to repair or replace defective parts as capable of being breached, not at tender of delivery, but only in the event that the promised repairs are refused or unsuccessful. See, e.g., Mydlach v. DaimlerChrysler Corp., 226 Ill.2d 307, 314 Ill.Dec. 760, 875 N.E.2d 1047, 1059-60 (2007) (holding that a promise to repair is not an express warranty and thus accrual for breach of a repair promise is not governed by § 2-725(2), which applies only to breach of warranty). These courts have held that the cause of action for breach of a repair promise accrues when the promisor fails to or refuses to repair the defects. Id. However, this view does not prevail in Massachusetts. [7] In New England Power, the Appeals Court of Massachusetts rejected the position that a promise to repair or replace should be viewed as an independent or separate warranty. 477 N.E.2d at 1058. Instead, the court said that such promises are generally viewed as specifications of a remedy and that if the promise to repair is not fulfilled, then the cause of action is the underlying breach of warranty. Id. The court describes as a fallacy the argument that by failing to remedy its first breach, the defendant committed a second breach, giving rise to a brand new cause of action and starting anew the limitations period. Id. Thus, the court held that the promise to repair had no effect on the statute of limitations for the breach of warranty. See id. at 1058-59. The ESC appears to be framed as a separate service contract, rather than a limitation of remedy on a warranty, and could perhaps be treated as such. However, Trans-Spec styled its complaint as a claim for breach of warranty under the U.C.C., not for breach of a service contract. [8] As such, Trans-Spec's claim is subject to analysis under § 2-725(2), the U.C.C.'s statutory provision regarding the accrual of a claim for breach of warranty. Because Trans-Spec does not allege or even argue that the ESC is a separate service contract, rather than a U.C.C. express warranty, we will not treat it as such for the purposes of our analysis. Cf. Cosman v. Ford Motor Co., 285 Ill.App.3d 250, 220 Ill.Dec. 790, 674 N.E.2d 61, 68 (1996) (dismissing a count framed in U.C.C. terms, but sustaining claim for breach of a promise to repair brought under the Magnuson-Moss Act because such a claim cannot ripen until the promise is broken and has nothing to do with the inherent quality of the goods or their future performance). [9] As a result, any breach of which Trans-Spec is complaining must stem from an underlying U.C.C. warranty on the engines themselves. Trans-Spec has not identified, within the record properly before us, any underlying warranty guaranteeing the future performance of the goods themselves. The claim for breach therefore accrued on the date of delivery of the goods and Trans-Spec's suit, which was filed more than four years after delivery of the trucks, is time-barred.