Court Opinion

ID: 9519398
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:15:55.575985+00
Date Added: 2024-06-11T12:44:20.925740
License: Public Domain

Levin, J.
(dissenting). The plaintiffs are dairy farmers. They seek in these actions to recover for injury to their herds claimed to have been caused by defects in automated milking systems purchased from the defendant manufacturers and their representatives.
The circuit judge granted the defendants summary disposition, and the Court of Appeals affirmed.1
The question presented is whether the plaintiff dairy farmers may maintain an action in tort for property loss. The majority holds that their exclusive remedy is an action for breach of warranty under the Uniform Commercial Code, and that an action in tort cannot be maintained for property loss, at least where the loss is deemed to be within the commercial or economic expectation of the parties.2
The dairy farmers commenced these actions more than four years after delivery of the automated milking systems.3 They did not press a *539claim for breach of implied warranty under the ucc,4 it apparently being assumed that the four-year statute of limitations for commencement of such an action had expired.5
*540We would hold that the plaintiffs may maintain an action in tort. While a tort action must be commenced within three, not four, years of accrual of the claim, the action does not accrue before the plaintiff should have discovered the claim.
I
The relationships between the plaintiff dairy farmers and the defendant manufacturers/ representatives arose out of the sale of goods, automated milking systems. Manufacturers and sellers of goods have sought to confine persons who suffer damage as a result of product defect to the remedy for breach of implied warranty provided in the sale of goods article of the Uniform Commercial Code.6
Courts throughout the land have considered whether the ucc provides the exclusive remedy for personal injury or death resulting from a product defect. There seems to be universal agreement that a tort action may be maintained to recover for personal injury or death resulting from product defect.7 _
*541A
Manufacturers have been somewhat more successful in limiting recovery where personal injury or death is not involved, and the loss is essentially economic.
There are two lines of authority. One line of authority, originally set forth in an opinion of the California Supreme Court, Seely v White Motor Co, 63 Cal 2d 9; 403 P2d 145 (1965), and adopted by most courts that have considered the matter,8 precludes maintenance of a tort action, and confines the purchaser to an action for breach of warranty under the ucc, where the damage is essentially to the defective product sold by the seller and no other property is damaged. That is the view, adopted by the United States Supreme Court in East River Steamship Corp v Transamerica Delaval Inc, 476 US 858; 106 S Ct 2295; 90 L Ed 2d 865 (1986).
The second line of authority, originally set forth in an opinion of the New Jersey Supreme Court, Santor v A & M Karagheusian, Inc, 44 NJ 52; 207 A2d 305 (1965), permits a purchaser of a defective product to maintain a tort action for loss of the defective product without regard to whether prop*542erty other than the defective product is also damaged by reason of the defect.9
Under either of the established lines of authority, Seely/East River or Santor, the purchaser may maintain an action in tort where the product defect causes damage to other property. Accordingly, under either established line of authority, this action may be maintained because plaintiffs claim injury to their dairy herds, property other than the purchased automated milking system.10
B
The majority relies, not on a line of authority, *543but on a decision of a nisi prius court, the United States District Court for the District of South Dakota, Agristor Leasing v Spindler, 656 F Supp 653, 654 (D SD, 1987), and a decision of the Minnesota Supreme Court, Hapka v Paquin Farms, 458 NW2d 683, 688 (Minn, 1990).
In Agristor, the court ruled that a tort action could not be maintained for lost profits claimed to have been caused by the malfunctioning of a feed-storage system.
In Hapka, the court ruled that a tort action could not be maintained for damage to a potato field claimed to have been caused by the sale of seed potatoes infected with ring rot; the disease had been spread by the purchasers’ farm equipment from one field to another.11
The court in Agristor, rather than disagreeing with Seely, noted that the Seely approach had been followed by the majority of jurisdictions,12 and sought to distinguish Seely on the basis that the plaintiff in Agristor sought primarily to recover lost profits.13 In the instant cases, permanent damage to other property, the dairy herd, is claimed.
*544In Hapka, the court, in refusing to allow tort recovery, held that "the Uniform Commercial Code must control exclusively with respect to damages in a commercial transaction which involves property damage only,” where the parties are commercial purchasers who regularly acquire the product, persons "knowledgeable and of relatively equal bargaining power” as the sellers.14 It does not appear that the plaintiffs in the instant cases were experienced or regular buyers of automated milking systems.
The court in Hapka said that the ucc remedy is "something less than adequate in the ordinary consumer transaction.”15 It expressly reaffirmed the availability of actions for strict products liability and negligence, as well as for breach of warranty, in an ordinary consumer transaction.16 It thus appears that the court in Hapka would have reached a result opposed to the result reached by the majority in the instant cases had the court there been presented with the instant cases.17
*545II
The majority is troubled that under either the Seely/East River or Santor lines of authority, actions may be maintained under more than one theory, a products liability action in tort as well as a warranty action under the ucc. The drafters of the ucc were not so troubled.18 Nor are courts throughout the land that have allowed recovery in tort where there is damage to other property.19
A purpose in enacting a Uniform Commercial Code is to provide uniformity in the law. Agristor and Hapka, relied on by the majority, are distinguishable. In Agristor, there was no permanent *546damage to the other property, the herd, resulting from the one-time purchase of a defective feed storage system. In Hapka, the plaintiff was a potato farmer, a regular commercial buyer of potato seeds, who had purchased seed from other suppliers in the same year he purchased the defective potato seeds from the defendant; this was not a one-time purchase.
The approach of the majority in the instant cases, in refusing to allow recovery in tort for loss of other property resulting from a one-time purchase of defective equipment, is not in accord with the concept of uniformity in law underlying the ucc.
A
The majority cites cases that, on examination, permit maintenance of a tort action where, as here, there is damage to other property.20
Michigan Court of Appeals cases, and federal court cases applying Michigan law, cited by the majority as indicative of the "regular” invocation of the economic loss doctrine,21 concern factual situations where purchasers did not suffer damage to other property.22
*547B
The majority’s reliance on Seely as support for its view of the economic loss doctrine23 is misplaced. The plaintiff there sought to recover for damage to a truck allegedly caused by a defective tire. The court in Seely premised its refusal to allow the plaintiff to recover in tort on the absence of proof that the damage to the truck was in fact caused by the tire defect.24 The court said that had causation been entitled, plaintiff would have been allowed to recover in tort for damage to the truck.25
The majority’s reliance on East River is also misplaced.26 The plaintiff there sought to recover in tort for damage to the purchased product, a steamship turbine, arising from product defect— *548damage to other property was not alleged. In rejecting tort recovery, the United States Supreme Court observed that "[i]n this case, there was no damage to 'other’ property.”27 The Court went on to adopt the view expressed in the Seely line of authority that permits recovery where there is damage to other property.28
c
In Superwood Corp v Siempelkamp Corp29 cited by the majority,30 the Minnesota Supreme Court held that a person may recover in tort where damage to other property arises out of a product defect.31
In Clark v Int’l Harvester Co,32 cited by the majority,33 the Supreme Court of Idaho observed, in refusing to allow recovery in tort, that plaintiff sought "recovery only of lost profits . . . and the costs of repairing and replacing allegedly defective parts.”34 The court went on to adopt the Seely view allowing tort recovery where there is damage to other property arising from product defect.35
III
It does not appear whether, absent express con*549tractual provision, the damages recoverable for breach of warranty in a case such as this could differ significantly from the damages that would be recoverable in a tort action under either the Seely/East River or Santor lines of authority.36
The principal significance of the Court’s decision today may be to establish, absent personal injury, a four-year statute of limitations for commencement of an action claiming loss of property arising out of the sale of defective goods or products, at least where the loss is deemed to be within the commercial or economic expectation of the parties.
Cavanagh. C.J., and Boyle, J., concurred with Levin, J.

 There is no record concerning the nature of plaintiffs’ damages. It does appear that some cows died.

 Ante, pp 533, 520.

 The ucc provides:
*539(1) An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued. By the original agreement the parties'may reduce the period of limitation to not less than 1 year but may not extend it.
(2) 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 warrant 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. [MCL 440.2725; MSA 19.2725.]

 In Warner v A O Smith Corp, the plaintiffs obtained a jury verdict based on failure to warn, for damage to the herd resulting from defective feed-storage system. The Court of Appeals affirmed in an unpublished opinion. This Court granted leave to appeal, limited to the issue whether the economic loss doctrine applies in the case, 437 Mich 928 (1991), and, after the case was argued together with the instant cases in October, 1991, the order granting leave was dismissed as improvidently granted, 439 Mich 945 (1992).

 Most courts that have considered the question have held that the ucc statute of limitations runs without regard to the time of discovery of a cause of action. See Schmitt & Hanko, For whom the bell tolls — An interpretation of the ucc’s exception as to accrual of a cause of action for future performance warranties, 28 Ark L R 311, 314-319 (1974).
In Parish v B F Goodrich Co, 395 Mich 271, 282; 235 NW2d 570 (1975), this Court said that the purpose of the statute was "to commence the running of the four-year limitational period, applicable to ucc contract of sale actions, instanter upon tender of delivery.” (Emphasis in original.) See also Allen v Todd, 6 NY Lans 222 (1872); Bogardus v Wellington, 27 Ont App Rep 530 (1900); E O Painter Fertilizer Co v Kil-Tone Co, 105 NJL 109; 143 A 332 (1928); Rockwell Co v Lundquist Hardware Co, 143 Conn 684; 125 A2d 173 (1956); Citizens Utilities Co v American Locomotive Co, 11 NY2d 409; 230 NYS2d 194; 184 NE2d 171 (1962); Liberty Mut Ins Co v Sheila-Lynn Inc, 185 Misc 689; 57 NYS2d 707 (1945), aff’d 270 AD 835; 61 NYS2d 373 (1946); Matlack, Inc v Butler Mfg Co, 253 F Supp 972 (ED Pa, 1966).
There is, however, authority to the contrary. See Schmitt & Hanko, supra, pp 319-323; Romano v Westinghouse Electric Co, 114 RI 451; 336 A2d 555 (1975); Mittasch v Seal Lock Burial Vault, Inc, 42 AD2d 573; 344 NYS2d 101 (1973); Sewall Paint & Glass Co of Texas v Booth Lumber & Loan Co, 34 SW2d 650 (Tex Civ App, 1930); Ingalls v *540Angell, 137 P 309 (Wash, 1913); Firth v Richter, 49 Cal App 545; 196 P 277 (1920); Wilkinson v Harrington, 104 RI 224; 243 A2d 745 (1968); Dincher v Marlin Firearms Co, 198 F2d 821, 823 (CA 2, 1952) (Frank, J., dissenting).
Because these actions were dismissed by summary disposition, the circumstances that might explain the delay in discovery or assertion of the claims against the defendant manufacturers/representatives do not fully appear. In another case, it might appear that the damage to other property justifies tolling of the statute of limitations, or permitting an action to be maintained in tort. The focus in the majority opinion on whether the loss was economic obscures the underlying statute of limitations issue.

 [A] warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. [MCL 440.2314(1); MSA 19.2314(1).]

 See Prosser & Keeton, Torts (5th ed), § 98, p 693, White. & *541Summers, Uniform Commercial Code (2d ed), § 11-3, p 401, Pennsylvania Glass Sand Corp v Caterpillar Tractor Co, 652 F2d 1165, 1168 (CA 3, 1981), East River Steamship Corp v Transamerica Delaval Inc, 476 US 858, 866; 106 S Ct 2295; 90 L Ed 2d 865 (1986), Santor v A & M Karagheusian, Inc, 44 NJ 52, 59; 207 A2d 305 (1965), Seely v White Motor Co, 63 Cal 2d 9, 18; 403 P2d 145 (1965), and 2 Restatement Torts, 2d, §402A(1).

 See, e.g., Miehle Co v Smith-Brooks Printing Co, 303 F Supp 501 (D Colo, 1969); Hagert v Hatton Commodities, Inc, 350 NW2d 591 (ND, 1984); Nebraska Innkeepers, Inc v Pittsburgh-Des Moines Corp, 345 NW2d 124 (Iowa, 1984); Clark v Int’l Harvester Co, 99 Idaho 326; 581 P2d 784 (1978); Morrow v New Moon Homes, Inc, 548 P2d 279 (Alas, 1976); Signal Oil & Gas Co v Universal Oil Products, 572 SW2d 320 (Tex, 1978).

 See, e.g., Pennsylvania Glass Sand Corp, n 7 supra, where the buyer of front-end loader was permitted to recover in tort for fire damage to the purchased product, the loader, resulting from design defect.
Those courts thus do not distinguish between an action for personal injury or for property damage, taking the view that the ucc provides an additional remedy for product defect that is not exclusive of other remedies.
The Restatement provides:
One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property .... [2 Restatement Torts, 2d, § 402A(1), pp 347-348. Emphasis added.]
Although warranty was in its origin a matter of tort liability, and it is generally agreed that a tort action will still lie for its breach, it has become so identified in practice with a contract of sale between the plaintiff and the defendant that the warranty theory has become something of an obstacle to the recognition of the strict liability where there is no such contract. There is nothing in this Section which would prevent any court from treating the rule stated as a matter of "warranty” to the user or consumer. But if this is done, it should be recognized and understood that the "warranty” is a very different kind of warranty from those usually found in the sale of goods, and that it is not subject to the various contract rules which have grown up to surround such sales. [Id., comment m, p 355.]

 There is thus no need to choose, in a dissenting opinion, between the two lines of authority.

 One justice dissented on the basis that plaintiffs had suffered damage to "other property,” and should have been allowed to recover in tort pursuant to Seely/East River. Hapka, supra, p 688 (Yetka, J., dissenting).

 Finally, it is relevant to note that the majority of jurisdictions that have considered this issue have followed the California Supreme Court’s holding in Seely v White Motor Company. [Agristor, supra, p 656.]
Among the cases cited with apparent approval in Agristor, supra, p 657, is Signal Oil & Gas Co, n 8 supra, where recovery in tort was permitted for destruction of a significant portion of an oil refinery resulting from a fire caused by the explosion of a defective heater.

 The court noted that "the South Dakota legislature broadly views privity under the Uniform Commercial Code,” and it is consequently “unnecessary for South Dakota courts to expand strict liability theories to cover economic losses.” Agristor, supra, p 656.

 Hapka, supra, p 688.

 Generally speaking, a consumer has neither the skill nor the bargaining power to negotiate either warranties or remedies. If a defective coffee pot causes a fire which destroys a consumer’s home, the panoply of liability theory should be available to the consumer — strict products liability and negligence as well as breach of warranty — whether or not personal injuries accompany the property damage. [Id. Emphasis added.]

 Id.

 Minnesota, like South Dakota, had adopted a liberal privity alternative of the ucc:
Minnesota, on the other hand, has adopted the most liberal privity alternative of the Uniform Commercial Code, so it is unnecessary for Minnesota courts to "stretch” strict liability to cover economic losses. Such losses are recoverable under warranty theories. [Agristor, supra, p 656.]
The Minnesota Legislature has, as the majority points out, amended its statute following Hapka. Ante, p 532, n 28. Under the *545modified statute, a purchaser like the dairy farmers in the instant cases would be able to recover in tort for economic loss because the damage is to tangible property other than the goods sold, and the dairy farmers are not "merchants in goods of the kind.”

 Unless displaced by the particular provisions of this act, the principles of law and equity . . . supplement its provisions. [MCL 440.1103; MSA 19.1103.]
[N]or does this article impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers. [MCL 440.2102; MSA 19.2102.]
Of particular interest is the following commentary:
Do these [Article 2] provisions not only provide for recovery under Article 2 but also imply that this recovery has become the sole available remedy, supplanting any action in tort? It is well to recall that these two provisions are not new but are merely declaratory of the common law and the corresponding provisions of the Uniform Sales Act. At common law, the action for breach of implied warranty — awarding recovery for physical injury on the basis of consequential damages — existed side by side with the tort action for putting a dangerous product on the market, with recovery for physical damages as the principal basis of the action. The same is true of the relationship between the two causes of action under the Uniform Sales Act. If the Code made no ostensible change in this aspect of the law in other respects, why should it be held abruptly to preempt the tort action? [Wade, Tort liability for products causing physical injury and Article 2 of the UCC, 48 Mo L R 1, 6 (1983).]

 See ns 7 and 8 and accompanying text.

 Ante, p 530. See Nat’l Union Fire Ins Co of Pittsburgh v Pratt & Whitney Canada, Inc, 107 Nev 535; 815 P2d 601, 603 (1991), recognizing that damage to an apartment complex caused by defective construction materials was recoverable in tort; Kershaw Co Bd of Ed v United States Gypsum Co, 302 SC 390; 396 SE2d 369 (1990), recovery in both contract and tort was allowed where damage to school building was caused by acoustical ceiling plasters.

 Ante, pp 523-527.

 In McGhee v General Motors Corp, 98 Mich App 495; 296 NW2d 286 (1980), the injury claimed was damage to the purchased goods themselves and the costs of repair of such damage. In A C Hoyle Co v Sperry Band Corp, 128 Mich App 557, 559; 340 NW2d 326 (1983), the Court did not address a factual situation involving damage to other property resulting from a product defect — "Plaintiff did not allege that the motors were themselves damaged by virtue of their defect, *547nor did plaintiff allege that the motors caused physical injury to persons or other property.” In Great American Ins Co v Paty’s, Inc, 154 Mich App 634, 636; 397 NW2d 853 (1986), the damage alleged was destruction of the purchased product, a farmer’s combine — "The complaint did not allege any injury to person or property other than the combine itself.”
Similarly, in Sylla v Massey-Ferguson, Inc, 660 F Supp 1044 (ED Mich, 1984), and Consumers Power Co v Mississippi Valley Structural Steel Co, 636 F Supp 1100 (ED Mich, 1986), the courts were not addressing claims of damage to other property arising from a product defect, but rather claims seeking recovery for damage only to the purchased product.
In Frey Dairy v A O Smith Harvestore Products, Inc, 680 F Supp 253 (ED Mich, 1988), aff’d on other grounds 886 F2d 128 (CA 6, 1989), the court addressed a claim of economic loss arising out of defective silos causing reduced milk production and lost profits. Damage to other property or personal injury was not alleged.

 Ante, p 527.

 Seely, supra, p 19.

 Plaintiff contends that, even though the law of warranty governs the economic relations between the parties, the doctrine of strict liability in tort should be extended to govern physical injury to plaintiff’s property, as well as personal injury. We agree with this contention. Physical injury to property is so akin to personal injury that there is no reason to distinguish them. [Id.]

 Ante, p 527.

 East River, supra, p 867.

 East River, supra, p 871.

 311 NW2d 159 (Minn, 1981), overruled by Hapka v Paquin Farms, supra.

 Ante, p 528, n 23.

 Superwood Corp, n 29 supra, p 162.

 Clark, n 8 supra.

 Ante, p 529, n 24.

 Clark, n 8 supra, p 332.

 We believe the rule advanced by the majority of the jurisdictions and by the Restatement is sound for the reasons articulated by Justice Traynor in Seely. [Clark, n 8 supra, p 334.]

 It appears that recovery in contract for consequential economic loss — including loss of profits, loss of good will or business reputation and other loss proximately resulting from a defective product beyond direct economic loss (loss of bargain, cost of repair, replacement cost, and the like) — is neither authorized nor barred by the ucc. See White & Summers, Uniform Commercial Code (2d ed), § 11-6, p 409. This text reports that the vast majority of courts do not allow nonprivity consumer purchasers to recover for consequential economic loss. Id.
Federal courts that have applied Michigan law have, however, concluded that consequential damages, including lost profits, are recoverable for breach of implied warranty. See Martin v Joseph Harris Co, 767 F2d 296 (CA 6, 1985), holding that farmers whose potential profits were reduced as a result of defective cabbage seeds supplied by a corporate seed producer could recover for breach of an implied warranty of merchantability; Upjohn Co v Rachelle Laboratories, Inc, 661 F2d 1105 (CA 6, 1981), holding that a marketer of pharmaceuticals was clearly entitled to recover on the basis of breach of implied warranty for lost profits from future sales of a prescription drug that was defective.
See also Henszey, Application of UCC Section 2-725 (statute of limitations) to products liability cases — Does it make sense?, 9 UCC LJ 379, 382 (1977), implying that consequential damages can be recovered under the ucc.