Opinion ID: 1800517
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Heading: The Applicability of Comparative Fault.

Text: A. The elements of a breach of warranty action. Originally warranty actions were seen as tortlike breaches of the seller's representations and assurances to the buyer, but their central role in sales law led them to be treated more generally as an element of contract law. Thus, warranties evolved as a unique amalgam of tort and contract law. As warranty began to be used more and more to cover consequential harms caused by defective products, however, the tortlike nature of the actions was increasingly emphasized. So, in a leading Minnesota case abolishing privity requirements for breach of warranty actions, the tort basis of warranty was used to establish that a buyer could sue a manufacturer for a defective product, even though the buyer's contract had been with the seller-dealer and not the manufacturer. Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670 (1959). Then, in 1978, our comparative negligence statute was amended to include fault, and fault was defined as including, among other things, breach of warranty and misuse of product. Minn. Stat. § 604.01, subd. 1a (1980). To establish a warranty claim the plaintiff must basically prove: the existence of a warranty, a breach, and a causal link between the breach and the alleged harm. An implied warranty of merchantability is defined as requiring that goods be fit for the ordinary purposes for which such goods are used. Minn.Stat. § 336.2-314(2)(c) (1980). This warranty is breached when the product is defective to a normal buyer making ordinary use of the product. Thus, even if the plaintiff has been harmed, a manufacturer may still be able to show no breach by showing that the buyer was somehow abnormal or that the product was not used in an ordinary way and that, consequently, the product was not defective to an ordinary user. If, however, a breach is established, the plaintiff must next prove the alleged harm was caused by the product's defect. If plaintiff's harm was caused by something other than the breach, there is no recovery. The Uniform Commercial Code provides three types of damages for the kinds of harm caused by a breach of warranty. General damages are the difference in value between the goods as accepted and what they would have been worth as warranted. Minn.Stat. § 336.2-714(2) (1980). Second, incidental damages are those expenses reasonably incurred in receipt and custody of the product. Minn.Stat. § 336.2-715(1) (1980). Third, consequential damages are injuries to person or property proximately resulting from the breach. Minn.Stat. § 336.2-715(2)(b) (1980). In this case, all three kinds of damages were claimed; and the trial court, aware of the parties' differing contentions on the applicability of comparative fault, so designed the verdict form by separating the kinds of damages that the jury's answers could be used in any event. B. Defenses to the warranty action. We have consistently held that contributory negligence is a defense to a breach of warranty action insofar as consequential damages are concerned. Gardner v. Coca-Cola Bottling Co., 267 Minn. 505, 511, 127 N.W.2d 557, 562 (1964). See Chatfield v. Sherwin-Williams Co., 266 N.W.2d 171, 176 (Minn.1978), where this court stated that reducing a party's consequential damages by an amount reflecting the extent to which his own conduct caused them appears to be equitable    (emphasis added). Our Comparative Fault Statute, as now amended, makes clear that comparative fault should similarly be a defense to consequential damages in breach of warranty actions. At issue here, however, is whether comparative fault should also apply to nonconsequential damages. Our prior case law strongly suggests that this is not so. [1] The trial court relied on language in Nelson v. Anderson, 245 Minn. 445, 451, 72 N.W.2d 861, 865 (1955), in ruling for the plaintiff. Only consequential damages were at issue in Nelson, but there we stated in dicta, quoting from dicta in a New York decision, Razey v. J. B. Colt Co., 106 App.Div. 103, 106, 94 N.Y.S. 59, 61 (1905), that: Where the plaintiff seeks to recover damages for a breach of a general warranty, which are usually the difference between the value of the thing as it is in fact and as it was warranted to be, the question of negligence does not enter; but, where he seeks to recover consequential damages, he should not be permitted to recover for his own negligence. When we look at the Comparative Fault Statute, we find the language inconclusive as to whether contributory fault should apply to nonconsequential damages. Subdivision 1(a) simply defines fault as including negligent or reckless conduct toward the person or property of the actor or others   . Minn.Stat. § 604.01, subd. 1a (1980). It is helpful, therefore, to refer to the Commission's comments to section 1 of the Uniform Comparative Fault Act from which our state's statute derives: An action for breach of warranty is held to sound sometimes in tort and sometimes in contract. There is no intent to include in the coverage of the Act actions that are fully contractual in their gravamen and in which the plaintiff is suing solely because he did not recover what he contracted to receive. 12 U.L.A. 35 (Supp.1982). Such is our case here. As to general damages (the loss in value of the mobile home from its warranted value), Mrs. Peterson is only suing to recover for what she contracted to receive, namely, a habitable mobile home. Her claim in this respect is not to recover for damages to her person or to any other property that might be caused by the defective mobile home; rather her claim is to recover for the mobile home itself, a claim sounding in contract. Bendix argues that plaintiff failed to pursue her remedies under the Uniform Commercial Code and thus respondent is limited to her breach of warranty claim within the Comparative Fault Statute. We have difficulty understanding this argument. The Comparative Fault Statute does not create any claims or causes of action; it only prescribes how losses under claims arising elsewhere are to be allocated among the parties. Mrs. Peterson's breach of warranty claim arises under the Uniform Commercial Code, specifically section 336.2-314 (implied warranty of merchantability) and sections 336.2-714(2) and 336.2-715 (remedies for breach). This claim, insofar as it is for general and incidental damages, is not subject to the fault allocation formula of the Comparative Fault Statute. The same result emerges from an analysis of the warranty claim itself. Since the buyer did not design or make the defective product, the buyer cannot be legally responsible for the original defect. Ordinarily, a buyer's contributory fault in a warranty action will be some kind of product misuse or assumption of risk. But while the buyer's acts may bring on or avoid certain consequential harms from the product and thus bar recovery for such consequential harms, this conduct should not affect the buyer's right to recover money paid for the defective goods. [2] The buyer is seeking a remedy for a bad bargain, a matter more like contract, not for consequential damages resulting from a bad product, a matter more like tort. This is also the view of the commentators. In his article entitled Buyer's Conduct as Affecting the Extent of Manufacturer's Liability in Warranty, Joel R. Levine states flatly: Consideration of the buyer's fault would be limited to the issue of consequential damages. 52 Minn. L.Rev. 627, 651 (1968). See also M. Steenson, The Anatomy of Products Liability in Minnesota: Principles of Loss Allocation, 6 Wm. Mitchell L.Rev. 243, 338 (1980), and 63 Am.Jur.2d Products Liability § 99 at 104. C. The nature of plaintiff's fault. At trial, Bendix attempted to show no breach of warranty of merchantability by evidence that its product was not defective to the ordinary user. To accomplish this, Bendix had to show either that Mrs. Peterson's own conduct created the problems in her home or that she was so hypersensitive to formaldehyde that she was not an ordinary consumer. [3] On appeal, however, Bendix does not seek to disturb the jury's finding that it breached its warranty of merchantability, nor does it seek to set aside the jury's finding that its fault contributed to cause Mrs. Peterson's damages. Before us, Bendix accepts the jury's determinations and argues that the jury's finding of 75% fault on Mrs. Peterson bars her from any recovery at all. Bendix points to the jury's finding that, in the words of the special verdict, Mrs. Peterson's behavior caused the damages claimed. Since only one comparative fault question was given to the jury, Bendix argues the jury must have found plaintiff's fault contributed to cause a diminution in the value of the mobile home itself. If this were so, it would mean our holding that contributory fault is not a defense to general damages in a warranty action is inconsistent with the true facts. Bendix's argument, however, does not withstand close analysis. Bendix lists numerous acts on which the jury could have based a finding of fault against Mrs. Peterson: that Mrs. Peterson could have been at fault for failing to return the home to the dealer, failing to sell the home elsewhere, failing to recognize the odor when inspecting the home before purchase, using a medication for hypertension which caused a symptomatic reaction, failing to use the dehumidifier supplied by Bendix, and failing to obey the order of her doctor to move out of the mobile home. While any or all of these failures may well have contributed to plaintiff's consequential damages for her health problems, none, it is clear, could have created the defect in the home itself, namely, the unacceptable level of formaldehyde fumes which made the home uninhabitable. Failing to move out of the home has nothing to do with what is wrong with the home in the first place. In addition, Bendix says the jury may have found Mrs. Peterson at fault for bringing a deodorizer and various personal belongings into the mobile home, both of which contained some formaldehyde. This evidence might have been relevant on the issue of breach of warranty, to show the mobile home was uninhabitable because of formaldehyde from sources foreign to the mobile home itself; the jury, however, decided this issue adversely to Bendix. The evidence, including a report of Bendix's own people, amply indicated that it was the particleboard in the home that was the substantial source of the formaldehyde problem. On the other hand, Mrs. Peterson's fault (if it was a fault), in bringing items into the already defective home which might contain formaldehyde, would go to the issue of contributory fault on the consequential damages claim and may have been taken into account on that issue by the jury. D. To sum up, we hold, in a buyer's action for breach of warranty against the manufacturer of a product for damages to the product itself and for incidental damages, that the Comparative Fault Statute is not applicable and the buyer's contributory fault is not a defense. We affirm the trial court's ruling that plaintiff's fault did not bar her recovery for nonconsequential damages, only for consequential damages.