Opinion ID: 2602125
Heading Depth: 3
Heading Rank: 2

Heading: Standards From Analogous Doctrines

Text: ¶ 25 The theories of liability that are included within product liability lawnegligence, strict liability, tortious misrepresentation, and breach of warrantyshare the common characteristic of arising from an injury caused by a product. One of them, however, is unique because of its status as a contract cause of action. Breach of warranty is the general description of three causes of action that can be brought under the Uniform Commercial Code: breach of express warranty, breach of implied warranty of merchantability, and breach of warranty of fitness for a particular purpose. See 1 David G. Owen et al., Madden & Owen on Products Liability § 1:5, p. 17 (3d ed.2000). Including a contract claim in a family of claims that is otherwise composed entirely of tort claims appears misplaced at first, but further examination of these claims reveals that breach of warranty is one of the roots of strict product liability. ¶ 26 The tort of strict product liability evolved from the negligence cause of action and the contractual breach of warranty action. Denny v. Ford Motor Co., 87 N.Y.2d 248, 639 N.Y.S.2d 250, 662 N.E.2d 730, 734 (1995). A negligence action has always been available as a potential claim against a seller of a faulty product, although all of the elements of a negligence claim had to be proven, including the point in the process of manufacturing the product where the seller's conduct fell below the required standard of care. This particular requirement presented a substantial obstacle to recovery, especially in the case of mass-produced products. 1 David G. Owen et al., Madden & Owen on Products Liability § 1:5, p. 21 (3d ed.2000). Contract warranty was the original cause of action for recovering for injuries caused by defective products without having to prove negligence, but privity of contract between the injured party and the seller of the product was required. Denny, 639 N.Y.S.2d 250, 662 N.E.2d at 734. In response to the barriers to recovery presented by negligence and breach of warranty, the concept of strict liability in tort developed. See Greenman v. Yuba Power Prods., Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1963). Strict product liability combined the concept from negligence that an action can be brought when there is no privity with the contract requirement that the defendant be a seller of the type of product that caused the injury. By combining these two concepts, the new strict product liability cause of action discarded the privity requirement and the need to establish a breach in a standard of care. ¶ 27 The combination of tort and contract concepts to form a new theory of liability demonstrates the substantial overlap between the two doctrines where safety of a product is concerned. In Davidson Lumber Sales, Inc. v. Bonneville Investment, Inc., we noted that in some cases, breach of warranty has been used to describe both the strict liability tort action and the contract action. 794 P.2d 11, 14 (Utah 1990). The ability to use breach of warranty to describe both a tort action and a contract action has tempted some jurists into applying the UCC statute of limitations to the tort portions of a plaintiff's complaint whenever the plaintiff alleges breach of warranty. Id. at 15-16. Conversely, some courts have argued for merging the contract cause of action into the strict liability cause of action. See, e.g., Denny, 639 N.Y.S.2d 250, 662 N.E.2d at 740 (Simons, J., dissenting). Both of these approaches, however, ignore the important conceptual differences between contract and tort that justify resisting their merger. See id. at 736 (explaining that contract law directs its attention to the purchaser's disappointed expectations and tort law traditionally has concerned itself with social policy and risk allocation). Additionally, application of the UCC statute of limitations to the tort portion of a plaintiff's complaint has been specifically rejected by this court. See Davidson, 794 P.2d at 15-16. ¶ 28 In Davidson, Davidson Lumber brought an action for negligence, breach of implied warranty of merchantability and fitness for a particular purpose, indemnity, and contribution. 794 P.2d at 12. The action for which Davidson Lumber sought indemnity was a suit alleging strict product liability, breach of implied warranties of merchantability and fitness for a particular purpose, and negligence. Id. The trial court held that the UCC statute of limitations, Utah Code Ann. § 70A-2-725, barred Davidson Lumber's claims. Davidson, 794 P.2d at 12. We reversed, holding that the UCC statute of limitations only covers claims for damages recoverable under contract law and does not cover actions for personal injury or personal property damage. Id. at 16. Since only some of the claims for which Davidson Lumber sought indemnity were contract claims, we held that Davidson Lumber's claims for injury to persons or property were governed by the relevant tort statute of limitations. Id. at 18. ¶ 29 Davidson forecloses applying the UCC statute of limitations to ULGT's tort claim merely because it is alleged in the same complaint as ULGT's contract claim. The tort statute of limitations must be applied to the tort claim, and the contract statute of limitations to the contract claim. And we must still determine which statute of limitations is the relevant tort statute of limitations by determining what constitutes a product. However, the overlap between tort and contract pointed out in Davidson and the fact that contract and tort each contributed to the formation of the new theory of product liability indicates that elements of each body of law may be looked to in order to shape the law of product liability. In this instance, we can look to the UCC for assistance in defining product. ¶ 30 The UCC defines goods as all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities ... and things in action. Utah Code Ann. § 70A-2-105 (2001). In contrast to the absence of law giving direction to a court facing a product-service hybrid transaction under product liability law, Utah law does address hybrid transactions under the UCC. In Beehive Brick Co. v. Robinson Brick Co., the court of appeals applied the predominant purpose test to determine the status of a hybrid transaction under the UCC. 780 P.2d 827, 832 (Utah Ct.App.1989); see also 1-3 Commercial Law and Practice Guide p. 3.02 (2007). The court stated that if service predominates, and the transfer of title to personal property is only an incidental feature of the transaction, the contract does not fall within the ambit of [the UCC]. Beehive Brick, 780 P.2d at 832. ¶ 31 The predominant purpose test was also applied in Neilson Business Equipment Center, Inc. v. Monteleone, 524 A.2d 1172 (Del.1987). In that case, the Delaware Supreme Court addressed whether a contract for a turn-key computer system that included software specifically designed for Monteleone's business was a contract for goods or services. The court held that [w]hen a mixed contract is presented, it is necessary for a court to review the factual circumstances surrounding the negotiation, formation and contemplated performance of the contract to determine whether the contact is predominantly or primarily a contract for the sale of goods. Id. at 1174. Using this test, the court found that where [t]he hardware and software elements are combined into a single unitthe computer systemprior to sale[,] ... the computer system is predominantly `goods.' Id. ¶ 32 The close association between tort and contract law in the area of product liability and the similarity of the Beehive Brick test and the product liability essence of the transaction test support using the Beehive Brick test to determine whether a hybrid tort claim concerns a product or a service. Therefore, it is appropriate to remand this case for a determination of the predominant purpose of the transaction at issue. ¶ 33 Having described the test for when a hybrid transaction is considered the sale of a product, we will now address the test for determining when the product was sold. Even if the transaction was for the sale of a product, a claim for product liability may not lie if the product became dangerous after it was sold.