Court Opinion

ID: 4454940
Source: CourtListenerOpinion
Date Created: 2019-11-12 17:04:12.867449+00
Date Added: 2024-06-11T14:01:33.258257
License: Public Domain

FILED
                                                               Nov 12 2019, 10:37 am

                                                                       CLERK
                                                                   Indiana Supreme Court
                                                                      Court of Appeals
                                                                        and Tax Court

                         IN THE

Indiana Supreme Court
            Supreme Court Case No. 19S-PL-37

    Kenworth of Indianapolis, Inc., et al.,
                   Appellants (Defendants),

                             –v–

          Seventy-Seven Limited, et al.,
                    Appellees (Plaintiffs).

  Argued: February 14, 2019 | Decided: November 12, 2019

      Interlocutory Appeal from Marion Superior Court,
                  No. 49D04-1010-PL-43362
             The Honorable Cynthia Ayers, Judge

 On Petition to Transfer from the Indiana Court of Appeals,
                   No. 49A02-1710-PL-2502

                   Opinion by Justice Goff
   Chief Justice Rush and Justices David and Massa concur.
Justice Slaughter concurs in Parts I and II and in the judgment.
Goff, Justice.

   This litigation arises from the sale of forty dump trucks—a transaction
in goods governed by the Uniform Commercial Code (UCC). The
agreement governing this sale contained a warranty and a one-year
limitations period for filing a breach-of-contract suit. Mechanical problems
plagued the trucks soon after delivery. Several years later, following
sellers’ unsuccessful attempts at repair, buyers sued for breach of
warranty.

   Under the UCC, a party’s cause of action accrues (thus triggering the
limitations period) upon delivery of goods. However, if a warranty
explicitly guarantees the quality or performance standards of the goods
for a specific future time period, the cause of action accrues when the
aggrieved party discovers (or should have discovered) the breach. This is
known as the future-performance exception.

   As part of the larger issue of whether buyers’ complaint was untimely,
this case presents two novel issues for our consideration: (1) whether these
parties’ bargained-for warranty falls under the future-performance
exception within Indiana’s version of the UCC; and (2) whether the
sellers’ conduct—including their efforts at repairing the trucks—could toll
the one-year limitations period under the doctrine of equitable estoppel.

   We hold that, under the express terms of their agreement, the parties
here contracted for a future-performance warranty and any breach-of-
warranty claims did not accrue until the buyers knew (or should have
known) of the breach. We also hold that, under the equitable estoppel
doctrine, a party’s conduct—even relating to the repair of goods—may toll
a contractually agreed-upon limitations period when that conduct is of a
sufficient affirmative character to prevent inquiry, elude investigation, or
mislead the other party into inaction.

   However, because there remain genuine issues of material fact relating
to both issues, we hold that summary judgment is not appropriate now.
We, therefore, affirm the trial court order denying summary judgment
and remand for proceedings consistent with this opinion.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019    Page 2 of 23
Factual and Procedural History
   Seventy-Seven Limited and six other trucking companies1 (collectively,
the Buyers) purchased forty customizable Kenworth T800 dump trucks
manufactured by PACCAR and Kenworth Truck Company and sold by
Kenworth of Indianapolis (collectively, the Sellers). For each truck sold,
Buyers and Sellers executed a Warranty Agreement that provided, in
relevant part, as follows:

      Kenworth Truck Company warrants directly to you that the
      Kenworth vehicle . . . will be free from defects in materials and
      workmanship during the time and mileage periods set forth in
      the Warranty Schedule and appearing under normal use and
      service.

      Your sole and exclusive remedy against Kenworth Truck
      Company and the selling Kenworth Dealer arising from your
      purchase and use of the vehicle is limited to the repair and
      replacement of defective materials or workmanship . . . to the
      extent of Kenworth Truck Company’s obligations under the
      Warranty Schedule on the reverse side of this Agreement.

Ex. A; Appellants’ App. Vol. III, pp. 13, 152–70. Sellers disclaimed all other
warranties (express or implied) and liability for incidental or
consequential damages. The Warranty Agreement imposed the following
limitations period for filing a lawsuit:

      It is agreed that you have one year from the accrual of the
      cause of action to commence any legal action arising from
      the purchase or use of the vehicle, or be barred forever.

1Convey All, LLC; Keller Trucking, Inc.; K&K Aggregate, Inc.; Huber Transport, LLC; Triple
H Trucking, LLC; Custom Hauling, Inc.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                  Page 3 of 23
Ex. A.

   In November 2005, Jeary Smith, of Seventy-Seven Limited, took
delivery of the first truck. On his drive from Chillicothe, Ohio, to
Greenfield, Indiana, he noticed the truck vibrating excessively. Smith
reported the vibration immediately to Sellers, instructing them to remedy
the problem before delivering the remaining trucks. Smith received
assurances from Sellers that the vibration problem “would fall under
warranty, it’ll be fixed and it will all go away.” Appellees’ App. Vol. II, p.
118.

   With these assurances, Buyers took delivery of the remaining trucks
from late 2005 through 2006. But these trucks also vibrated excessively at
idle and at certain RPMs. Buyers again reported the problem to Sellers.
Unable to identify the source of the vibration, Sellers installed modified
engine mounts as an alternative fix. But the problem returned in 2007. See
Kenworth of Indpls, Inc. v. Seventy-Seven Ltd., No. 49A02-1504-PL-249, 2016
WL 1158460 (Ind. Ct. App. Mar. 24, 2016). Sellers installed new, different
engine mounts the following year, but, after a temporary reduction in
vibration, the problem persisted. Id.

   Having failed to resolve the issue to Buyers’ satisfaction, Sellers agreed,
in March 2008, to extend the base vehicle warranty to four years/250,000
miles. Sellers also promised to replace the engine mounts for as long as
Buyers owned the trucks. Despite these attempts to cure, several Buyers
returned the trucks and stopped making payments in late 2008.

   By November of that year, Sellers, seeking to limit their liability
exposure, debated whether to recall the trucks or to simply maintain the
status quo. The latter option, according to one Kenworth employee, would
“likely lead to litigation” because continually changing engine mounts
would “probably not be acceptable to the customer.” Appellees’ App. Vol.
III, pp. 39, 61. He was right.

   In September 2010, Kenworth of Indianapolis (d/b/a ITC Acceptance
Company) filed a replevin action against two Buyers based on their loan
defaults. The following month—on October 4, 2010—Buyers filed this
action, alleging breach of contract, constructive fraud, and rescission of

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019       Page 4 of 23
contract claims. Buyers later amended that complaint, adding claims of
breach of express and implied warranties, estoppel, and non-conforming
goods as defined under Indiana Code section 26-1-2-106. Buyers’ second
amended complaint invoked the UCC’s provision allowing for suit when
an exclusive, limited remedy fails its essential purpose. See Ind. Code § 26-
1-2-719(2) (1995). The trial court eventually consolidated these actions into
one case.

  Sellers moved for summary judgment, contending that, because Buyers
did not file their complaint until October 2010, their claims were time
barred. “The causes of action for all of these trucks accrued upon tender of
delivery” in late 2005 and early 2006, Sellers argued, “the same time when
[Buyers] first discovered the excessive vibration.” Appellees’ App. Vol. II,
pp. 7–8. Thus, Sellers insisted, the one-year limitation period specified in
the Warranty Agreement ended in January 2007 “at the latest.” Id. at 9.

   Buyers responded by arguing that the cause of action accrued not upon
delivery but when the four-year warranty period ends. What’s more, they
argued, the doctrine of equitable estoppel tolled the limitations period
here.

   In denying summary judgment, the trial court found that Sellers’
“promise to work on a permanent fix to the excessive vibration problem
throughout the modified warranty period” was an implied promise of
future performance under the UCC. Appellants’ App. Vol. II, p. 63. See
I.C. § 26-1-2-725(2). Based on this finding, the court concluded that the
cause of action accrued not on the date of delivery but on the date the
extended warranty expired—that is, “four years from the date of in-
service for each vehicle.” Appellants’ App. Vol. II, p. 64.

   Beyond this conclusion, the trial court—finding “substantial reasons”
to toll the limitations period—deemed Buyers’ complaints timely. Id. at
64–65. In particular, the court cited Sellers’ (1) extension and modification
of the original warranty period, (2) promise to change the engine mounts
as long as Buyers owned the trucks, (3) assurances of providing a
permanent repair, (4) failure to include a limitations period in the
modified warranty, and (5) continued assurances and failures to remedy
the excessive vibration which prevented Buyers from filing suit.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019      Page 5 of 23
      Sellers appealed, arguing that Buyers’ causes of action accrued upon
delivery. What’s more, they insisted, under Ludwig v. Ford Motor Co., 510
N.E.2d 691 (Ind. Ct. App. 1987), “Indiana law is clear that promises or
attempts to repair defects do not toll the limitations period.” Appellants’
Br. at 29.

   In a divided opinion, the Court of Appeals affirmed, with the majority
rejecting Sellers’ Ludwig argument. Kenworth of Indpls. Inc. v. Seventy-Seven
Ltd., 112 N.E.3d 1106, 1111–12 (Ind. Ct. App. 2018). We granted Sellers’
petition to transfer, thus vacating the Court of Appeals opinion. Ind.
Appellate Rule 58(A).

Standard of Review
   This Court reviews summary judgments de novo, “applying the same
standard as the trial court.” Hughley v. State, 15 N.E.3d 1000, 1003 (Ind.
2014). Under this well-settled standard, “summary judgment is proper if
the designated evidence shows there is no genuine issue as to any fact
material to a claim or issue, and the movant is entitled to judgment as a
matter of law.” Town of Ellettsville v. DeSpirito, 111 N.E.3d 987, 990 (Ind.
2018).

   We likewise apply a de novo standard of review to issues of statutory
construction, which encompasses the meaning and scope of the UCC.2 See
State v. Reinhart, 112 N.E.3d 705, 710 (Ind. 2018).

Discussion and Decision
   The parties pose the same two questions on transfer: (1) When did
Buyers’ causes of action accrue, thus triggering the one-year limitations
period? And (2) did Sellers’ conduct toll the limitations period once that
limitations period commenced? In resolving this case, we must consider
first whether the breach-of-warranty claim accrued on delivery or

2   Indiana adopted and codified the UCC at Indiana Code chapter 26-1-2.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019             Page 6 of 23
sometime afterwards. We then discuss whether the limitations period
could be tolled once it began.

I. These parties contracted for a one-year limitation
   period that started when a cause of action accrued.
  By default, the UCC allows parties four years to bring a lawsuit once a
cause of action arises from a sales contract. I.C. § 26-1-2-725(1). While the
parties may not extend this limitations period beyond four years, they
may reduce the period to one year. Id. It is undisputed that the Warranty
Agreement amended the limitations period to one year. What’s disputed
is when Buyers’ breach-of-warranty causes of actions accrued, thus
triggering the limitations period.

   The UCC instructs that “[a] cause of action accrues when the breach
occurs, regardless of the aggrieved party’s lack of knowledge of the
breach.” I.C. § 26-1-2-725(2). Along the same lines, a cause of action for
breach of warranty accrues “when tender of delivery is made,”
irrespective of whether the buyer knows of the breach. Id. This default
delivery rule is subject to the future-performance exception. Under that
exception, a cause of action for breach of warranty does not accrue on
delivery if the “warranty explicitly extends to future performance of the
goods and discovery of the breach must await the time of such
performance.” Id. Instead, “the cause of action accrues when the breach is
or should have been discovered.” Id. In other words, if the express
warranty guarantees the future performance of the goods, then the
delivery rule changes to a discovery rule.

   Here, the parties dispute whether the Warranty Agreement invoked the
future-performance exception and its discovery-of-the-breach rule for
determining when Buyers’ breach-of-warranty claims accrued.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019       Page 7 of 23
II. Because these parties contracted for an express
    future-performance warranty under the UCC,
    Buyers’ breach-of-warranty cause of action accrued
    when they discovered the breach.
   Because the future-performance exception applies in only narrow
circumstances, courts interpret and apply the exception strictly. See
Controlled Env’ts. Const., Inc. v. Key Indus. Refrigeration Co., 670 N.W.2d 771,
778–79 (Neb. 2003) (citing Joswick v. Chesapeake Mobile Homes, Inc., 362 Md.
261, 765 A.2d 90 (2001)). For example, since the statute requires that a
warranty must “explicitly extend[] to future performance of the goods,”
I.C. § 26-1-2-725(2) (emphasis added), most courts “have held that implied
warranties by definition cannot explicitly extend to future performance,”
Stumler v. Ferry-Morse Seed Co., 644 F.2d 667, 671 (7th Cir. 1981). See also 2
William D. Hawkland, Linda J. Rusch & Larry T. Garvin, Uniform
Commercial Code Series § 2-725:2 (“Almost all courts find that implied
warranties do not explicitly extend to future performance.”); id. at n.16
(collecting cases from various jurisdictions). Consequently, courts will
generally apply the future-performance exception to breach of express
warranties only.

   A. The parties here bargained for an express warranty.

   The UCC provides that when a seller makes “any affirmation of fact or
promise . . . to the buyer which relates to the goods and becomes part of
the basis of the bargain,” then the seller “creates an express warranty that
the goods shall conform to the affirmation or promise.” I.C. § 26-1-2-
313(1)(a). Similarly, when a seller provides “any description of the goods
which is made part of the basis of the bargain,” then the seller “creates an
express warranty that the goods shall conform to the description.” I.C. §
26-1-2-313(1)(b). Sellers need not “use formal words such as ‘warrant’ or
‘guarantee’” or even “have specific intention to make a warranty.” I.C. §
26-1-2-313(2).

   Here, we find the Warranty Agreement contained a promise relating to
the goods: “Kenworth Truck Company warrants directly to [Seller] that

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019        Page 8 of 23
the Kenworth vehicle . . . will be free from defects.” And that promise
became a basis of the parties’ bargain. While unnecessary, Sellers even
used formal language (“warrants”) to evince their intent to create an
express warranty.

  Having found this Warranty Agreement contains an express warranty,
we must now consider whether that warranty constitutes a future-
performance warranty. For the reasons below, we conclude that it does.

   B. The UCC case law and commentary specify three
      requirements for a future-performance warranty.
   Courts and commentators generally agree that, “in order to constitute a
warranty of future performance under [UCC] section 725(2), the terms of
the warranty must unambiguously indicate that the [seller] is warranting
the future performance of the goods for a specific period of time.” R.W.
Murray Co. v. Shatterproof Glass Corp., 697 F.2d 818, 823 (6th Cir. 1983).
Accord Grand Island Exp. v. Timpte Indus., Inc., 28 F.3d 73, 75 (8th Cir. 1994)
(finding a future-performance warranty in a contract specifying “that the
trailers would be ‘free from defects in materials and workmanship for a
period of five years from the date-of-delivery to the First Purchaser’”);
Stumler, 644 F.2d at 671 (stating that a future-performance warranty must
“specifically” refer “to future time”); Standard All. Indus., Inc. v. Black
Clawson Co., 587 F.2d 813, 820–21 (6th Cir. 1978) (“If a seller expressly
warrants a product for a specified number of years, it is clear that, by this
action alone, he is explicitly warranting the future performance of the
product or goods for that period of time.”); LTL Acres Ltd. P’ship v. Butler
Mfg. Co., 136 A.3d 682, 687 (Del. 2016) (“The language of the warranty
must be examined to determine if it explicitly, that is, plainly, warrants
future performance.”); Controlled Env’ts Const. Inc., 670 N.W.2d at 779
(stating that courts will not infer a future-performance warranty from
warranty terms that are not clear); Cosman v. Ford Motor Co., 674 N.E.2d 61,
66 (Ill. Ct. App. 1996) (“Illinois courts . . . require an explicit statement that
the goods, not the warrantor, will perform in a certain way in the
future.”). See generally 2 Hawkland, Rusch & Garvin, Uniform Commercial
Code Series § 2-725:2 n.19 (collecting cases).

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019          Page 9 of 23
   Parsing through these authorities, we understand that a future-
performance warranty is a seller’s explicit promise or guarantee to a buyer
that the goods will perform (or will be of certain quality) during a specific,
future period of time.

      1. A good’s quality and performance go hand in hand.

  A promise that the trucks “will be free from defects,” Sellers insist, does
not explicitly relate to the trucks’ performance, but only their condition or
quality. Oral Argument at 7:40–9:25. We disagree, and consider it
imprudent, if not impossible, to separate the two because “the quality of
the goods . . . underlies an expected performance.” See Joswick, 765 A.2d at
96. See also id. 96–97 (observing that “the quality of the goods, either by
positive attribute or by negation of defects, necessarily relates to their
performance. If the goods do not have the stated quality or develop a
defect warranted against, they likely will not perform in the manner of
goods that conform to the promise”); cf. Cosman, 674 N.E.2d at 67
(rejecting a seller’s promise to repair defects as a future-performance
warranty because that promise does not “warrant the quality of the
vehicle or its performance”). What’s more, Sellers’ warranty against future
defects “under normal use and service” highlights the link between
quality and performance.

      2. A limited, exclusive repair-and-replacement remedy
         does not constitute a future-performance warranty
         under the UCC because it relates to a seller’s
         performance.

   Buyers, on the other hand, would have us conflate performance of
goods and performance of Sellers. In other words, Buyers argue that the
Sellers’ promise to repair and replace a good covered by an express
warranty is itself a future-performance warranty under the UCC.
Otherwise, Buyers contend, the warranty would prove illusory. The trial
court accepted this argument. See Appellants’ App. Vol. II, p. 64 (tolling
the statute of limitations based on, among other things, “the future

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019     Page 10 of 23
performance exception set out in [section] 725(2)”). But we reject the
premise that Sellers’ duty to repair and replace defective goods alone
constitutes a future-performance warranty under the UCC. The promise
must explicitly extend to the goods’ performance, not the sellers’
performance, for a specific future time period. Cosman, 674 N.E.2d at 66
(noting that Illinois courts have long “required an explicit statement that
the goods, not the warrantor, will perform in a certain way in the future”).
Sellers’ obligations to repair and replace defective materials and
workmanship are better understood as a limited remedy under the
Warranty Agreement, not as a separate future-performance warranty and
not as a separate promise.

      3. Under Indiana’s commercial law, an exclusive repair-
         and-replace remedy must give the parties the benefit
         of their bargain.
   We are not unsympathetic, however, to Buyers’ argument that their
repair-and-replace remedy, if unenforceable, could be illusory. The UCC
permits parties, as part of their arms-length bargain, to limit remedies
available under a sales contract. I.C. § 26-1-2-719(1)(a) (permitting the
agreement to “limit the buyer’s remedies to return of the goods and
repayment of the price or to repair and replacement of nonconforming
goods or parts”). What’s more, the UCC allows parties to bargain for a
limited remedy to serve as an exclusive remedy. I.C. § 26-1-2-719(1)(b)
(instructing that “resort to a remedy is optional unless the remedy is
expressly agreed to be exclusive, in which case it is the sole remedy”). The
UCC, however, will not leave aggrieved parties without recourse to enjoy
and to enforce the benefit of their bargains. Indeed, when “circumstances
cause an exclusive or limited remedy to fail of its essential purpose,” a
party may seek a remedy under other provisions of the UCC. I.C. § 26-1-2-
719(2).

  Indiana law disfavors “limitations of remedy” and so we strictly
construe a contract’s limiting provisions “against the seller on the basis of
public policy.” Perry v. Gulf Stream Coach, Inc., 814 N.E.2d 634, 643 (Ind. Ct.
App. 2004) (citing Martin Rispens & Son v. Hall Farms, Inc., 621 N.E.2d

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019      Page 11 of 23
1078, 1085 (Ind. 1993), abrogated on other grounds by Hyundai Motor Am., Inc.
v. Goodin, 822 N.E.2d 947 (Ind. 2005)). Because the UCC gives parties
freedom to shape their own remedies to suit their particular contract,
Indiana courts will enforce reasonable agreements limiting or modifying
remedies in a sales contract. Still, Indiana requires at least minimally
adequate remedies to the contracting parties. I.C. Ann. § 26-1-2-719 UCC
cmt. (West 2015) (“[I]t is of the very essence of a sales contract that at least
minimum adequate remedies be available.”).3

    C. These parties bargained for a future-performance
       warranty.
   Turning our attention back to the future-performance exception, we
observe that a warranty must contain three components to qualify as a
future-performance warranty: (1) it must be an explicit promise or
guarantee, (2) it must concern the characteristics of the goods themselves,
and (3) it must identify a specific future time period during which the
goods will conform to that guarantee. These three components are present
in this Warranty Agreement:

       Kenworth Truck Company warrants directly to you that the
       Kenworth vehicle identified below . . . will be free from defects
       in materials and workmanship during the time and mileage

3 For example, if a seller limits a buyer’s exclusive remedy to repair or replacement and then
incompetently repairs or replaces the defective good (effectively resulting in a failure to
perform), then the UCC gives the buyer a different remedy enforceable at law. See I.C. § 26-1-
1-106(1) (providing that UCC “remedies . . . shall be liberally administered to the end that the
aggrieved party may be put in as good a position as if the other party had fully performed”);
I.C. § 26-1-1-106(2) (“Any right or obligation declared by I.C. 26-1 is enforceable by action
unless the provision declaring it specifies a different and limited effect.”). See also Perry, 814
N.E.2d at 643. Since a buyer in this example should be able to enjoy the benefit of a bargained-
for remedy, we envision the buyer vindicating that right through a breach-of-contract cause of
action that alleges the remedy failed its essential purpose. Such a cause of action would accrue
when the breach occurred, that is, when the seller’s repair and replacement remedy failed its
essential purpose.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                       Page 12 of 23
       periods set forth in the Warranty Schedule and appearing
       under normal use and service.

Appellants’ App. Vol. III, p. 13 (emphases added). A close analysis of this
contractual language, along with the attached Warranty Schedule,
reinforces our view that the Warranty Agreement contains the necessary
criteria for a future-performance warranty. First, the phrase “Kenworth
Truck Company warrants directly to you” clearly qualifies as an explicit
promise. See Warrant, Webster’s Third New Int’l Dictionary 2577–78 (2002)
(defining the term as “something that serves as a pledge, guarantee, or
insurance” or “to guarantee (as a fact or a statement of fact) to be at
present or at a future time as represented” or “to guarantee (as goods
sold) especially in respect to the quality or quantity specified”); Warrant,
Black’s Law Dictionary (10th ed. 2014) (“To guarantee the security of
(realty or personalty, or a person)” or simply to “promise or guarantee”).
While there are no magic words for creating a future-performance
warranty, saying “warrants” in this context plainly connotes a promise or
guarantee. Second, the promise relates to the quality or performance
standards of the goods alone—the defect-free Kenworth truck. Third, the
parties identified a specific future time period for performance by using
future-tense language (“will be free from defects” for 12-months/100,000-
miles),4 rather than past-tense (“were free from defects”) or present-tense
language (“are free from defects”).

  We stress that every word and phrase matters in these future-
performance warranties. Adding, omitting, or changing a single word
potentially alters the warranty’s meaning and breadth. Had Sellers not
used future-tense language, for example, or had they omitted a specific

4Notably, other courts have recognized that similarly worded warranties constitute future-
performance warranties under UCC section 2-725(2). See, e.g., Grand Island Exp., 28 F.3d at 74;
R.W. Murray Co., 697 F.2d at 821–24; LTL Acres Ltd. P’ship, 136 A.3d at 685, 687–88; Joswick, 765
A.2d at 96–97; Grosse Pointe Law Firm, PC v. Jaguar Land Rover N. Am., LLC, 894 N.W.2d 700,
703–04 (Mich. Ct. App. 2016) (citing Executone Bus. Sys. Corp. v. IPC Commc’ns, Inc., 442
N.W.2d 755 (Mich. Ct. App. 1989)); Wienberg v. Independence Lincoln-Mercury, Inc., 948 S.W.2d
685, 689–90 (Mo. Ct. App. 1997); Controlled Env’ts. Const., Inc., 670 N.W.2d at 778–781.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                      Page 13 of 23
future time period for the trucks’ quality and performance, or had they
promised only to repair and replace defects rather than warrant against
future defects, then this warranty would fall outside the limited future-
performance exception. But as written, this bargained-for warranty
constitutes a future-performance warranty, and the courts must apply the
discovery rule to determine when the breach-of-warranty cause of action
accrued.

III. Precisely when Buyers discovered or should have
     discovered the breach of warranty remains a
     genuine issue of material fact.
   Determining when a breach-of-future-performance-warranty cause of
action accrued using the discovery rule requires a court to discern when
Buyers knew (or should have known) of the breach. Neither the UCC nor
the Warranty Agreement define the term “breach.” And without statutory
or contractual guidelines for determining when a party knows or should
have known of a breach, we turn to the common law.

   Under Indiana’s discovery rule, “a cause of action accrues when a party
knows or in the exercise of ordinary diligence could discover, that the
contract has been breached.” Perryman v. Motorist Mut. Ins. Co., 846 N.E.2d
683, 687 (Ind. Ct. App. 2006). Since even the most basic contracts involve
at least two parties, each with rights and obligations, it is essential, then,
under Indiana law for the injured party to know who breached what
obligation. See generally Horn v. A.O. Smith Corp., 50 F.3d 1365, 1369 (7th
Cir. 1995) (observing that in the tort context “Indiana’s rule thus has two
components—the discovery of the injury, as well as its cause.”).

   But knowing or discovering who breached what contractual obligation
is not a demanding standard. Indeed, Indiana’s discovery rule “does not
require a smoking gun in order for the [period] of limitations to
commence.” Perryman, 846 N.E.2d at 689. Rather, a cause of action accrues
and the limitations period begins, when the circumstances involving
contractual rights and obligations “put a person of common knowledge
and experience on notice that some right of his has been invaded or that

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019      Page 14 of 23
some claim against another party might exist.” Id. (quoting Mitchell v.
Holler, 429 S.E.2d 793, 795 (S.C. 1993)).

   The parties here dispute when Buyers knew (or should have known)
that a breach of warranty occurred. Sellers argue that Buyers “discovered
the vibration problem almost simultaneously with the delivery of the
trucks in late 2005 and early 2006.” Appellants’ Br. at 27. Buyers don’t
dispute that the trucks vibrated excessively soon after delivery. Rather,
they contend they did not know (and should not have known) that the
vibration amounted to a breaching defect because Sellers couldn’t identify
the cause of the problem and were still testing the trucks in 2008.
Appellees’ Br. at 7–10, 16–18, 24–26; Oral Argument at 29:30–30:30, 33:50–
35:10.

   Weighing these arguments, we must look to what the parties bargained
for in the Warranty Agreement. This particular future-performance
warranty explicitly excluded the truck’s “engine, engine brake, automatic
transmission, tires, wheels, and/or rims and fifth wheel,” all of which were
“warranted directly to [Seller] by their respective manufacturers.”
Appellants’ App. Vol. III, p. 13. Given these exclusions and separate
warranties, we cannot conclude as a matter of law that—by knowing the
trucks vibrated excessively on or shortly after delivery—Buyers knew or
should have known at that time who breached what warranty. What’s
more, Sellers fail to identify where precisely in the record Buyers knew or

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019    Page 15 of 23
should have known that the vibration resulted from parts of the trucks
subject to this warranty.5

   On the other hand, we cannot endorse Buyers’ view that they could not
have discovered this breach of warranty while Sellers were testing the
trucks. Buyers needed no “smoking gun” to discover the breach; they
needed only to realize that “some claim” against Buyers might have
existed. See Perryman, 846 N.E.2d at 689.

   Based on this particular future-performance warranty and the disputed
facts before us, we conclude that the point at which Buyers discovered (or
should have discovered) that Sellers breached the warranty represents a
genuine issue of material fact precluding summary judgment.

IV. Indiana law allows for tolling a limitations period
    once it begins.
   Our conclusion on the breach-of-future-performance-warranty claim
alone supports our decision to affirm the trial court’s denial of summary
judgment. However, we elect to address the tolling issue here because any
subsequent determination that Buyers failed to discover Sellers’ breach

5Sellers stated that Cummins, the truck engine manufacturer, tested the trucks in March and
April 2006. Appellants’ Br. at 15–16 (citing Appellants’ App. Vol. III, p. 27). But that record
citation provides no dates for testing. Notably, that citation also indicates that Sellers initially
believed the engine caused the excessive vibration. Appellants’ App. Vol. III, pp. 27, 34.
Sellers’ brief likewise says the decision was made in July 2006 to replace the mounts, but it
provides no record citation for that fact. See Appellants’ Br. at 16. Sellers then claim the engine
mounts were replaced in September 2006. Id. (citing Appellants’ App. Vol. III, p. 81). But that
record citation—to an e-mail giving instructions on how to replace the engine mounts—did
not establish when the engine mounts were replaced (or when Buyers learned of the breach).
What’s more, neither the e-mail nor Sellers’ brief identifies the parties to the e-mail to show
what Buyers knew. We echo the Court of Appeals’ admonition to Sellers that their
designation of two depositions (totaling over 400 pages) is “insufficiently specific for
purposes of Indiana Trial Rule 56(C).” Kenworth, 112 N.E.3d at 1118 n.17. See Filip v. Block, 879
N.E.2d 1076, 1081 (Ind. 2008) (noting that “the designation of an entire deposition is
inadequate” to satisfy the requirements of Trial Rule 56(C), which compels parties to
specifically “identify the ‘parts’ of any document upon which they rely”).

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                         Page 16 of 23
within the limitations period may not be dispositive if Sellers’ actions
tolled the limitation period.

   The UCC allows for tolling (or pausing) the limitations period once the
claim has accrued. I.C. § 26-1-2-725(4). Though the UCC imposes uniform
limitation periods, it does not intrude upon state laws governing when
that limitations period may be tolled. I.C. Ann. § 26-1-2-725(4) UCC cmt.
(“Subsection (4) makes it clear that this Article does not purport to alter or
modify in any respect the law on tolling of the Statute of Limitations as it
now prevails in the various jurisdictions.”). Indiana law contemplates
tolling a limitations period governing a sales contract, either by
contractual agreement or by equity.

    A. Contracting parties may agree to toll a limitations
       period, but the parties here did not.
  Indiana’s commercial law “favor[s] the parties’ freedom of contract”
and “enable[es] contracting parties to control their own relationships.”
Rheem Mfg. Co. v. Phelps Heating & Air Conditioning, Inc., 746 N.E.2d 941,
950 (Ind. 2001). That freedom permits parties to curb the UCC’s control
over their agreements. I.C. § 26-1-1-102(3) (stating that the UCC’s effect
“may be varied by agreement” unless specified otherwise by the UCC);
I.C. Ann. § 26-1-1-102(3) UCC cmt. 2 (acknowledging “that freedom of
contract is a principle of the [UCC]”). As masters of their deal, parties may
bargain for their respective contractual rights and obligations, and they
may include in their contracts specific tolling limitations. See generally
Carlson v. Sweeney, Dabagia, Donohue, Thorne, Janes & Pagos, 872 N.E.2d 626,
627 (Ind. Ct. App. 2007) (acknowledging that parties may enter into “pre-
suit agreements tolling the statute of limitations”).6 The parties here,
however, did not contract for a tolling agreement. See Appellants’ App.
Vol. III, p. 13; Oral Argument at 5:00–6:00, 16:00–17:40, 35:00–37:00.

6For example, parties could agree that the limitations period will stop running while a seller
attempts to repair defective goods and resume when repairs are completed.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                     Page 17 of 23
    B. Courts may toll a limitations period under the doctrine
       of equitable estoppel.
    Indiana law allows for tolling a period of limitations under the
doctrine of equitable estoppel. See Perryman, 846 N.E.2d at 690–91; Ludwig,
510 N.E.2d at 696–98. This doctrine provides that if a party’s actions
prevent another party from obtaining the requisite knowledge to pursue a
claim, then “equity will toll the statute of limitations until the equitable
grounds cease to operate as a reason for delay.” Perryman, 846 N.E.2d at
690. Equitable estoppel is typically linked to claims of fraudulent
concealment, but the doctrine also applies to other conduct that “lull[s] [a
party] into inaction.” Paramo v. Edwards, 563 N.E.2d 595, 599 (Ind. 1990).
The Paramo Court, citing a long line of precedent, stated that, to establish
equitable estoppel, a party’s conduct “must be of a sufficient affirmative
character to prevent inquiry or to elude investigation or to mislead and
hinder.” Id. at 599 (emphases added). As we discuss below, a party’s
efforts at repairing or replacing goods might toll a limitations period
under the equitable estoppel doctrine, but whether a limitations period is
tolled will depend on the circumstances of the case, not a bright-line rule.

    1. Ludwig v. Ford Motor Company did not toll the statute
       of limitations based on that seller’s repair efforts.

   In Ludwig, our Court of Appeals rejected application of the estoppel
doctrine to a seller’s attempts to repair or replace defective goods, holding
that such efforts “did not toll the statute of limitations.” 510 N.E.2d at 699.
In denying summary judgment here, the trial court distinguished Ludwig,
citing factual differences between that case and this one. Appellants’ App.
Vol. II, p. 62. The Ludwig opinion then divided the Court of Appeals
below, with the dissent deeming it controlling and the majority rebuffing
it as non-binding horizontal authority that was wrongly decided.
Kenworth, 112 N.E.3d at 1112, 1121. In weighing Ludwig’s value here, we
look to the rationale supporting the decision in that case. We then assess
how other courts have treated it through the years.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019       Page 18 of 23
   In deciding whether a seller’s repair efforts could toll the statute of
limitations, the Ludwig court first took a broad view, looking to how other
jurisdictions settled the issue. Noting the split in authority, the court sided
with those courts holding that a seller’s promises or efforts to repair
defective goods “do not toll the statute of limitations applicable to an
action for breach of warranty.” 510 N.E.2d at 698. Like those other courts,
the Ludwig court based that conclusion in part on its reluctance to “read
into statutes of limitations an exception which has not been embodied
therein.” Id. at 699. The court found persuasive the fact that, by adopting
the UCC, Indiana’s General Assembly provided a four-year statute of
limitations for a sales contract and the court did not want to allow simple
performance under the contract to extend that statutory period. Id.

    The Ludwig court then took a narrow view of the tolling issue, focusing
its attention on the specific facts before it. The court observed that the
parties “provided explicit, written warranties” that outlined the seller’s
obligations to repair and replace defective or malfunctioning parts for two
years. Id. The court also noted the parties were aware of their rights and
obligations under the warranties when the trucks were delivered. Id. And
in observing that the sellers completed the repairs “more than 39 months
before [the buyer] filed suit,” the court concluded that those repairs could
not have “lulled him into inaction and delayed his filing of this suit.” Id.
“Given the facts of th[at] case,” the Ludwig court refused to alter the
parties’ bargained-for warranty to extend the seller’s obligations. Id.
Accordingly, the court held that “[t]he efforts to repair the engines did not
toll the statute of limitations.” Id.

      2. Although still good law, Ludwig has limited reach
         since it was tailored to the facts of that case.
   Though thirty years removed from Ludwig, we think the Court of
Appeals rightly decided that case. Indeed, we are loath to read into a
contract something that would subvert both the parties’ and the
legislature’s expressed intentions for their bargain. See WellPoint, Inc. v.
Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 29 N.E.3d 716, 724 (Ind. 2015). By
repairing or replacing defective truck engines within the warranty period,

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019       Page 19 of 23
Ludwig’s sellers were merely fulfilling their bargained-for contractual
obligations. Absent evidence of fraud or conduct intended to mislead or
lull a party to inaction, it would have been inequitable to toll the
limitations period and thereby lengthen the time exposing the seller to
legal action for work it was contractually required to perform.

   But while we approve of Ludwig’s resolution for those parties, we
decline Sellers’ invitation to adopt Ludwig’s holding as a broad rule.
Ludwig did not speak in comprehensive terms. Rather, the opinion in that
case couched its conclusion in qualifying phrases like “under the present
circumstances” and “given the facts of this case.” 510 N.E.2d at 699. Based
on this language, it does not appear that the Ludwig court intended its rule
to cast a long, enveloping shadow. In support of this conclusion, we find
no subsequent Indiana cases (and Sellers point us to none) citing Ludwig
for the proposition that repair efforts do not toll the limitations period for
breach of warranty claims.7

   Balancing these Ludwig perspectives, we still see it as good law, only
limited in scope to the facts of that case. Indeed, for our purposes here,
Ludwig’s value lies in its instruction that decisions about whether repair
efforts can provide equitable reasons for tolling depend on the particular
facts and circumstances in each case. Given the equitable estoppel
doctrine’s malleable contours, coupled with Ludwig’s limited reach, we
recognize that when a seller’s repair actions fall outside the bounds of the
original contract (or are fraudulent), that conduct could be of “sufficient
affirmative character to prevent inquiry or to elude investigation or to
mislead and hinder,” thereby lulling a buyer into inaction and tolling the
limitations period. See Paramo, 563 N.E.2d at 599. But like any other
decision invoking the equitable estoppel doctrine, deciding whether to toll
a limitations period based on a seller’s promises or efforts to repair
defective goods will depend on the facts and circumstances of that case.

7The cases cited by Seller agree with Ludwig that a breach-of-warranty cause of action accrues
at delivery but do not hold that repair efforts toll the limitations period. See Pet. to Trans. at
14; Appellants’ Br. at 23–24.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019                       Page 20 of 23
      3. Ludwig is distinguishable from this case and does not
         control.
   Sellers liken their case to Ludwig, urging us to apply it here by
concluding, as a matter of law, that their repair efforts could not toll the
limitations period. We disagree and find several distinguishing facts that
diminish Ludwig’s precedential pull here.

   Unlike in this case, the Ludwig warranty did not warrant against defects
but served only as a remedial measure if defects arose. 510 N.E.2d at 694
(“[Seller] warrants to the owner that it will repair any defective or
malfunctioning parts of each . . . engine . . . in accordance with the
following schedule.”). In other words, those sellers did not guarantee that
the truck engines would be defect-free; rather, they promised to repair or
replace any defective or malfunctioning part. By guaranteeing their
performance, and not the goods’ performance, those sellers put their
conduct as the warranty’s centerpiece.

  Ludwig further differs from this case in that, while those trucks were
defective “[f]rom the start,” there is no indication that those buyers relied
on the seller’s promises to repair the trucks before accepting them. Id. at
693. Here, by contrast, Jeary Smith testified that, after noticing the
excessive vibration in one truck, he informed Sellers that Buyers would
not take delivery of the remaining trucks. According to Smith, only when
Sellers assured him that they would fix the vibration did he agree to
accept the trucks.

  Moreover, unlike the Ludwig sellers, Sellers here extended the warranty
period, continued repairing the trucks past their original contractual
obligations, and even promised to continue repairing the trucks as long as
Buyers owned them. Sellers characterize this as a “goodwill warranty,”
Appellants’ Br. at 33, but there is designated evidence suggesting that they
chose this route to buy time in the trade cycle and to limit their financial
exposure. Appellees’ App. Vol. III, pp. 37–38, 38. No matter Sellers’
motives for modifying their contractual obligations, the fact that they did
modify their obligations (as the trial court noted) removes this case
beyond Ludwig’s orbit. The Ludwig parties always knew their rights and

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019      Page 21 of 23
obligations under the warranty. On this record, we’re not prepared to say
the same of the parties here.

   Recall, the trial court found “substantial reasons to toll the statute of
limitations in this case.” Appellants’ App. Vol. II, p. 64. While we need not
agree with all these reasons, we can affirm the trial court’s order denying
summary judgment on any basis sustainable in the record. See Markey v.
Estate of Markey, 38 N.E.3d 1003, 1006–07 (Ind. 2015). Since we find this
case distinguishable from Ludwig, we cannot say, on this record, that
Sellers’ repair efforts did not toll the statute of limitations as a matter of
law. In the end, whether Sellers’ conduct—related or unrelated to repair
efforts—tolled the limitations period under the equitable estoppel
doctrine depends on factual issues best left to the trial court.

Conclusion
   For these reasons, we affirm the trial court’s order denying summary
judgment and remand for proceedings consistent with this opinion.

Rush, C.J., and David and Massa, JJ., concur.
Slaughter, J., concurs in Parts I and II and in the judgment.

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019      Page 22 of 23
ATTORNEYS FOR APPELLANTS
David T. Schaefer
Anthony M. Zelli
Dinsmore & Shohl LLP
Louisville, KY

David J. Jurkiewicz
Bose McKinney & Evans LLP
Indianapolis, IN

ATTORNEYS FOR APPELLEES
Scott A. Benkie
Benkie & Crawford
Indianapolis, IN

Rodney V. Taylor
Hilary A. Barnes
Christopher & Taylor
Indianapolis, IN

Indiana Supreme Court | Case No. 19S-PL-37 | November 12, 2019   Page 23 of 23