Opinion ID: 202101
Heading Depth: 2
Heading Rank: 3

Heading: Lockheed's Implied Warranties Claims

Text: 21 Lockheed also brought claims for breach of implied warranties under New Hampshire's Uniform Commercial Code (UCC). 11 The district court assumed, arguendo, that the contract was governed by the UCC. 12 The court then found that the UCC's statute of limitations — codified as N.H.Rev.Stat. § 382-A:2-725 (Section 2-725) — applied to Lockheed's claims. Section 2-725 provides for a four-year statute of limitations commencing at the time the cause of action accrues. N.H.Rev.Stat. Ann. § 382-A:2-725(1). The statute also provides 22 A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. 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. 23 Id. § 382-A:2-725(2). 24 The district court found that Lockheed accepted the chamber in 1993 and did not file its complaint until 1999. The court therefore found that Lockheed's claims were barred by the statute of limitations. The court, moreover, found no reason for equitable tolling. 25 On appeal, Lockheed makes two arguments. First, it argues that the statute of limitations in Section 2-725 does not apply to its case. Alternatively, it argues that equitable tolling applies. We address each argument in turn. According to Lockheed, the substance of its action is not a malfunctioning of the anechoic chamber, but rather, sudden flooding and resulting property damage. As a result, Lockheed argues, the substance of this action is a tort claim for property damage and therefore the applicable statute of limitations is found in N.H.Rev.Stat. Ann. § 508:4 (Section 508:4), which provides a three-year statute of limitations for personal actions. Section 508:4 also explicitly contains a discovery rule exception to the statute of limitations, which is why Lockheed is attempting to persuade us that Section 508:4 applies. 13 26 We reject Lockheed's argument for two reasons. First, in its complaint, Lockheed brought tort claims and contract claims. We have already disposed of Lockheed's tort claims, leaving only the contract claim for implied warranties, and both the form and substance of this claim appear to us to be a contract claim. Further, given our discussion of the economic loss rule, it is clear that the damage Lockheed suffered was the failure of the product to function properly[, which] is the essence of a warranty action.... East River, 476 U.S. at 868, 106 S.Ct. 2295. In other words, the substance of this action is a malfunctioning anechoic chamber, not sudden flooding and resulting property damage as Lockheed claims. Given this, we see no reason to allow Lockheed to convert its contract claim for implied warranty into a tort claim. Second, all of the cases involving a warranty claim brought under New Hampshire's UCC have used Section 2-725's statute of limitations. See Gagnon v. G.D. Searle & Co., 889 F.2d 340, 343 (1st Cir.1989) (The statute of limitations applicable to [appellant's] breach of warranty claim requires that an action be commenced `within four years after the cause of action has accrued.')(quoting N.H.Rev.Stat. Ann. § 382-A:2-725(1)); Pub. Serv. Co. of New Hampshire v. Westinghouse Elec. Corp., 685 F.Supp. 1281, 1284 (D.N.H.1988) (Actions for breach of implied warranties are also subject to the UCC four-year statute of limitations....); Morrissette v. Sears, Roebuck & Co., 114 N.H. 384, 322 A.2d 7, 11-12 (N.H.1974). 14 We therefore find that Lockheed's implied warranties claims brought under the UCC are subject to the UCC's statute of limitations. 27 Lockheed's second argument is that, even if we apply Section 2-725's limitations period, equitable tolling should apply. The district court rejected this argument, finding no evidence sufficient to create a genuine issue as to whether equitable tolling should apply. We agree. Lockheed notes that Section 382-A:725(4) states that the UCC statute of limitations does not alter the law on tolling of the statute of limitations.... It also notes that the New Hampshire Supreme Court has recently recognized equitable tolling in other contexts and that equitable tolling should apply here. 15 See Portsmouth Country Club v. Town of Greenland, 883 A.2d 298, 304 (N.H.2005). However, Portsmouth Country Club involved a tax abatement proceeding with a different statute of limitations, not an implied warranty claim governed by Section 2-725's statute of limitations. Given the fact that the New Hampshire Supreme Court has recently stated that the discovery rule is not applicable in implied warranties claims governed by Section 2-725, it is likely that court would also find that equitable tolling is inapplicable, especially considering Section 2-725's statement that [a] cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach. N.H.Rev.Stat. Ann. § 382-A:2-725(2). Moreover, even if the New Hampshire Supreme Court were to allow equitable tolling for certain claims governed by Section 2-725, such relief is unavailable here. Portsmouth Country Club noted that equitable tolling is typically available only if the claimant was prevented in some extraordinary way from exercising his or her rights.... It applies principally if the plaintiff is actively misled by the defendant about the cause of action. 883 A.2d at 304 (emphasis added) (citation and internal quotation marks omitted). Here, Lockheed has not even attempted to argue that it was actively misled by Rantec about its cause of action. Further, we see nothing extraordinary about what happened. This is a case of a party who received a product that malfunctioned several years after purchase. Such cases occur all the time, and we see no reason to apply the rarely used doctrine of equitable tolling to Lockheed's case. We therefore find that Lockheed's implied warranties' claims are barred by the four-year statute of limitations period in Section 2-725.