Court Opinion

ID: 9371973
Source: CourtListenerOpinion
Date Created: 2023-02-17 15:04:12.468819+00
Date Added: 2024-06-11T17:16:31.535011
License: Public Domain

RENDERED: FEBRUARY 10, 2023; 10:00 A.M.
                      NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                         Court of Appeals

                            NO. 2020-CA-0325-MR

SCOTTY HALSEY AND
KIMBERLY HALSEY                                                  APPELLANTS

                APPEAL FROM MENIFEE CIRCUIT COURT
v.             HONORABLE WILLIAM EVANS LANE, JUDGE
                       ACTION NO. 17-CI-90066

HOLBROOK IMPLEMENT CO., LLC                                          APPELLEE

                                   OPINION
                                  AFFIRMING

                                 ** ** ** ** **

BEFORE: CETRULO, LAMBERT, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: Scotty Halsey and Kimberly Halsey (collectively referred to

as the Halseys) bring this appeal from a December 18, 2019, order and a February

5, 2020, order of the Menifee Circuit Court dismissing by summary judgment their

claims against Holbrook Implement Company, LLC (Holbrook Implement). We

affirm.
                                     Background

             On July 25, 2015, the Halseys purchased a Massey Ferguson tractor

from Holbrook Implement. At the time of the purchase, the Halseys and Ted

Holbrook (owner of Holbrook Implement) executed a Retail Installment Contract

and Security Agreement (Retail Contract). Two days later, on July 27, 2015,

Scotty was operating the tractor at his farm when the tractor rolled over causing

Scotty to suffer serious physical injuries.

             As a result, on July 31, 2017, the Halseys filed a complaint in the

Menifee Circuit Court against Holbrook Implement. Therein, the Halseys alleged:

             7.    The AGCO Corporation (“AGCO”) tractor and/or
             Titan Tire Corporation (“Titan”) tire, which are the
             subject of this action, were marketed, sold and distributed
             by Defendant Holbrook.

             8.   On or about July 25, 2015, Mr. Halsey purchased
             an AGCO tractor with Titan tires from Defendant
             Holbrook.

             9.     On or about July 27, 2015, Mr. Halsey attempted
             use of and did use the AGCO tractor and/or Titan tire in a
             safe manner and was using the AGCO tractor and/or
             Titan tire in the manner in which they were intended to
             be used.

             10. Defendant marketed, sold and distributed the
             AGCO tractor and/or Titan tire in a defective condition
             and unreasonably dangerous for their intended or
             expected use, and it posed a risk of serious harm to Mr.
             Halsey and others.

                                          -2-
11. Defendant failed to warn Mr. Halsey about the
AGCO tractor and/or Titan tire’s defective and
unreasonably dangerous condition.

12.   The AGCO tractor and/or Titan tire failed.

13. Specifically, the Titan tire rim bent and caused the
tire to separate from it only two days after the AGCO
tractor’s purchase, which caused the tractor to rollover
during operation by Mr. Halsey.

14. Mr. Halsey purchased an AGCO Massey Ferguson
(“MF”) 4608.

15. The AGCO MF 4608 comes equipped with Titan
9.5-24 6 ply R1 tires on the front.

16. These tires have a maximum load capacity of
1,870 lbs. See http://www.titanstore.com/info/48D694.

17. The MF 4600 Operator’s Manual fails to include
this information.

18. The MF 4600 Operator’s Manual does indicate
that the maximum weight capacity for the front axle is
7,496 lbs., or 3,748 lbs. per tire. See MF 4600
Operator’s Manual, p. 218.

19. The model Mr. Halsey purchased weighs 6,944
lbs. See MF 4600 Operator’s Manual, p. 223.

20. He also purchased a MF 900X Loader Model 921.
It weighs 961 lbs. See http://www.used-massey-
tractors.com/brochures/show/brochure/52/bname/massey
-ferguson-900-series-loaders-brochure.

21. Mr. Halsey estimates the roll of hay he hauled at
the time of the rollover (4.5 ft. x 5 ft.) at 1,200 lbs.

                           -3-
22. At the time of the rollover, Mr. Halsey’s 4608
carried approximately 2,276.25 lbs. per tire ((6,944 + 961
+ 1,200) / 4)), or 406.25 lbs. (21.7%) overloaded beyond
each tire’s capacity.

23. The stated maximum weight capacity for the front
axle more than doubles the maximum load capacity of
the tires the 4608 comes equipped with by the MF 4600
Operator’s Manual’s own admission.

24. The Titan tires the 4608 come[s] equipped with are
underrated and inadequate for the loads typically carried
by them as evidenced by Mr. Halsey’s rollover.

25. As a direct and proximate result of Defendant’s
failures and the failure of the AGCO tractor and/or Titan
tire, Mr. Halsey sustained injuries resulting in multiple
harms and losses.

....

                       COUNT I

            Breach of Express Warranties

....

31. Defendant, acting by and through its agents,
servants and employees, knew or should have reasonably
known of the particular purpose for which their AGCO
tractor and/or Titan tires would be used, including the
safe farming of land.

32. At all times herein mentioned, Defendant
expressly warranted to consumers, including Mr. Halsey,
by and through statements made by Defendant or its
principals, authorized agents, sales representatives or
retailers, orally and in publications and other written
materials intended for consumers and the general public,

                           -4-
that the AGCO tractor and/or Titan tire was safe and fit
for the particular purpose and use for which it was
intended, and the uses that were reasonably foreseeable.

33. Defendant specifically expressly warranted to the
general public, and Mr. Halsey in particular, that the
AGCO tractor and/or Titan tire were designed,
constructed, manufactured, assembled and inspected in
such a manner as to be free from defects and reasonably
fit for purposes and use for which it was intended, and
the uses that were reasonably foreseeable.

34. In acquiring the AGCO tractor and/or Titan tire,
Mr. Halsey reasonably relied on the skill, judgment,
representations and foregoing express warranties of
Defendant.

35. The warranties and representations were false in
that the AGCO tractor and/or Titan tire were not safe and
were unfit for the uses for which they were intended, and
the uses that were reasonably foreseeable.

36. Contrary to the express warranties, Defendant
designed, constructed, manufactured, assembled,
inspected and placed on the market and into the stream of
commerce the AGCO tractor and/or Titan tire in a
defective and unsafe condition.

37.    Defendant breached its express warranties.

38. As a direct and proximate result of Defendant’s
breach of warranty and the failure of the AGCO tractor
and/or Titan tire, Mr. Halsey sustained injuries resulting
in multiple harms and losses.

....

                            -5-
                                     COUNT II

              Breach of Implied Warranties of Merchantability and
                         Fitness for Particular Purpose

             ....

             42. Prior to the time that Mr. Halsey acquired and used
             the AGCO tractor and/or Titan tire, Defendant knew, or
             had reason to know, of the use to which the products
             would be put and impliedly warranted to Mr. Halsey that
             they were safe and fit for both the ordinary and particular
             purposes for which they were used and/or required.

             43. Defendant knew, or had reason to know, that Mr.
             Halsey would rely on its judgment and skill in providing
             AGCO tractor and/or Titan tires for their particular
             purpose.

             44. Mr. Halsey reasonably relied entirely on the skill,
             judgment and implied warranties of Defendant in
             purchasing and using the AGCO tractor and/or Titan tire.

             45. The AGCO tractor and/or Titan tire were neither
             safe or fit for their particular purpose required, nor safe
             or fit for the ordinary purpose for which they were used,
             as warranted by Defendant, in that they had dangerous
             propensities when put to the intended use and could
             cause severe injuries to the user.

             46.    Defendant breached its implied warranties.

             47. As a direct and proximate result of Defendant’s
             breach of warranty and the failure of the AGCO tractor
             and/or Titan tire, Mr. Halsey sustained injuries resulting
             in multiple harms and losses.

July 31, 2017, Complaint at 2-7. Kimberly also claimed loss of consortium as a

result of Scotty’s injuries.

                                         -6-
             Holbrook Implement filed an Answer and, thereafter, filed a Motion

for Summary Judgment. In the motion, Holbrook Implement argued that the

Halseys waived various warranties including the implied warranty of

merchantability, the implied warranty of fitness for a particular purpose, and any

express warranty in the Retail Contract. Additionally, Holbrook Implement

maintained that the Retail Contract provided for a thirteen-month limitation period

to file claims based upon either breach of express or implied warranties. Holbrook

Implement pointed out that the Retail Contract specifically provided that the

thirteen-month limitation period was triggered by delivery of the tractor. Holbrook

Implement maintained that the thirteen-month limitation period expired before the

Halseys filed the complaint.

             In response, the Halseys argued that the Retail Contract was fully

assigned by Holbrook Implement to AGCO Finance LLC (AGCO Finance);

therefore, Holbrook Implement could not rely upon the terms of the Retail

Contract.

             By order entered December 18, 2019, the circuit court rendered

summary judgment. Therein, the circuit court concluded:

             According to the record before the Court there is not a
             completed assignment and that the contract, which has
             not been attacked substantively by the [P]laintiffs,
             continues to protect the seller and assignee and binds the
             Plaintiffs to their obligations and particularly a 13 month
             time limitation for suit to commence. Secondly the

                                         -7-
              Plaintiffs argue that Ms. Halsey’s claim is entitled to a
              five-year statute of limitations for actions created by
              statute. The Kentucky Supreme Court has clearly made
              consortium claims subject to a one-year statute of
              limitations by [Kentucky Revised Statutes] KRS
              413.140(a). Floyd v. Gray, 657 S.W.2d 936 (Ky. 1983).
              This would be regardless of the contract which arguably
              would have extended the limitations period by one
              month.

                     The Court finds that all claims are at least subject
              to a 13 month claim limitation period and the
              Defendant’s Motion for Summary Judgment is granted
              and all claims are dismissed as time limited.

Order at 2.

              The Halseys then filed a Motion to Vacate the December 18, 2019,

order. The Halseys pointed out that they received a letter dated July 31, 2015,

from AGCO Finance and were informed that the Retail Contract had been assigned

to AGCO Finance. The Halseys attached the letter to their motion. The Halseys

argued that the letter demonstrated that the Retail Contract was, in fact, assigned to

AGCO Finance and that Holbrook Implement assigned all its “rights, title, and

interest in and to” the Retail Contract to AGCO Finance. As a result, the Halseys

asserted that Holbrook Implement could not rely upon the terms of the Retail

Contract, including the thirteen-month limitation period. The Halseys later filed a

copy of the Retail Contract, which was signed by an AGCO Finance’s

representative on July 30, 2015, accepting the assignment by Holbrook Implement.

                                           -8-
               By order entered February 5, 2020, the circuit court denied the

Halseys’ motion to vacate. Nonetheless, the circuit court noted that “[t]he

assignment was not completed on the date of the accident thus under that argument

the Summary Judgment stands.” Order at 2. This appeal follows.1

                                     Standard of Review

               To begin, summary judgment is proper where there exists no genuine

issue as to any material fact and movant is entitled to judgment as a matter of law.

Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991);

Kentucky Rules of Civil Procedure (CR) 56.03. All facts and inferences therefrom

are to be viewed in a light most favorable to the nonmoving party. Steelvest, Inc.,

807 S.W.2d 476. If there are no factual issues, summary judgment looks only to

questions of law and our review thereon is de novo. Blackstone Mining Co. v.

Travelers Ins. Co., 351 S.W.3d 193, 198 (Ky. 2010). Our review proceeds

accordingly.

                                            Analysis

               The Halseys contend that the circuit court erroneously rendered

summary judgment dismissing their breach of warranty claims as time-barred

1
  By Order entered August 28, 2020, this Court instructed Scotty Halsey and Kimberly Halsey
(collectively referred to as the Halseys) to demonstrate in their appellants’ brief how complete
relief can be obtained in this appeal in the absence of Titan Tire Corporation as a party thereto.
Titan Tire manufactured the tires equipped on the Halseys’ tractor. Upon review of the parties’
briefs and circuit court record, we do not believe that Titan Tire Corporation is an indispensable
party.

                                                -9-
under the thirteen-month limitation period found in the Retail Contract.

Specifically, the Halseys point out that under Kentucky’s Uniform Commercial

Code (KRS 355.2-210), the rights of a seller or buyer may be fully assigned by

agreement. The Halseys maintain that Holbrook Implement, as seller of the

tractor, assigned to AGCO Finance all of its rights under the Retail Contract. The

Halseys assert that AGCO Finance undisputedly accepted the assignment, and as a

result, Holbrook Implement may not rely upon the terms of the Retail Contract, as

to waiver of warranties and the limitation period of thirteen months.

             The relevant Uniform Commercial Code (U.C.C.) provisions are

found in KRS 355.2-210 and KRS 355.2-725. KRS 355.2-210 reads, in pertinent

part:

             (2) Except as otherwise provided in KRS 355.9-406,
                unless otherwise agreed, all rights of either seller or
                buyer can be assigned except where the assignment
                would materially change the duty of the other party,
                or increase materially the burden or risk imposed on
                him by his contract, or impair materially his chance of
                obtaining return performance. A right to damages for
                breach of the whole contract or a right arising out of
                the assignor’s due performance of his entire obligation
                can be assigned despite agreement otherwise.

                ....

             (5) An assignment of “the contract” or of “all my rights
                under the contract” or an assignment in similar
                general terms is an assignment of rights and unless the
                language or the circumstances (as in an assignment
                for security) indicate the contrary, it is a delegation of

                                         -10-
                performance of the duties of the assignor and its
                acceptance by the assignee constitutes a promise by
                him to perform those duties. This promise is
                enforceable by either the assignor or the other party to
                the original contract.

KRS 355.2-725 provides, in relevant part:

             (1) An action for breach of any contract for sale must be
                commenced within four (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 one (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
                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.

Under KRS 355.2-210(2) and (5), a seller or buyer may generally assign a contract

or all rights under the contract, and upon acceptance by the assignee, the assignee

is to perform the duties of the assignor. And, pursuant to KRS 355.2-725, the

statutory four-year limitation period for breach of a sale’s contract may be

shortened to not less than one year by the parties’ agreement.

             In this case, the material provisions of the Retail Contract read:

             Following assignment of this Contract, all references to
             “Seller” in this Contract shall be deemed references to
             “Assignee.” Buyer acknowledges that Seller is not the
             agent of Assignee, that any representations or warranties
             made by Seller are not binding on Assignee, and that

                                         -11-
              Seller does not have the authority to modify any term or
              provision of this Contract subsequent to assignment of
              this Contract by Seller.

              ....

              Disclaimer of Warranties (Except Residents of Kansas):
              BUYER AGREES TO ACCEPT THE MACHINERY IN
              ITS AS IS, WHERE IS CONDITION WHEN
              DELIVERED AND ACKNOWLEDGES THAT NO
              WARRANTY, EITHER EXPRESS OR IMPLIED,
              INCLUDING WITHOUT LIMITATION THE IMPLIED
              WARRANTY OF MERCHANTABILITY OR FITNESS
              FOR A PARTICULAR PURPOSE, IS PROVIDED BY
              SELLER OR ASSIGNEE TO BE APPLICABLE TO
              THIS CONTRACT OR THE MACHINERY, ANY
              ACTION FOR BREACH OF WARRANTY MUST BE
              COMMENCED WITHIN THIRTEEN (13) MONTHS
              FOLLOWING DELIVERY.

              ....

              For value received, the Seller hereby sells, assigns, and
              transfers to AGCO Finance LLC (Assignee) all of the
              Seller’s right, title and interest in and to the within
              Contract and all rights thereunder, together with all the
              Seller’s right, title and interest in and to the property
              therein described, subject to the terms accepted by the
              Assignee only at its office in Johnston, Iowa.

Retail Contract at 1-3.

              The material terms of the Retail Contract are clear and unambiguous.2

Thereunder, Holbrook Implement (Seller) agreed to assign all its rights under the

2
 It is well settled that an unambiguous contract will be enforced according to its terms.
Smithfield Farms, LLC v. Riverside Developers, LLC, 566 S.W.3d 566, 570 (Ky. App. 2018).

                                            -12-
Retail Contract to AGCO Finance. However, the Retail Contract clearly sets forth

that such assignment was only effectuated upon the acceptance of same by AGCO

Finance at its office in Johnston, Iowa.

             The undisputed facts indicate that AGCO Finance accepted the

assignment under the Retail Contract on July 30, 2015, some three days after the

tractor accident on July 27, 2015. At the time of the accident and after delivery of

the tractor to the Halseys, the assignment of Holbrook Implement’s rights under

the Retail Contract to AGCO Finance had not yet taken place.

             Under KRS 355.2-725(2), an action for breach of warranty accrues

when tender of delivery is made; likewise, under the Retail Contract, an action for

breach of warranty accrues when the machinery was delivered. So, under both

KRS 355.2-725(2) and the Retail Contract, the Halseys’ action for breach of

express or implied warranties accrued at the time the tractor was delivered. And, it

is uncontroverted that at the time the tractor was delivered to the Halseys, the

assignment of Holbrook Implement’s rights under the Retail Contract to AGCO

Finance had not yet taken place. Thus, the Retail Contract is applicable.

             As previously pointed out, the Halseys purchased the tractor on July

25, 2015, and the accident took place on July 27, 2015. The Halseys filed the

complaint alleging breach of express and implied warranties against Holbrook

Implement on July 31, 2017. Under the Retail Contract, the Halseys had thirteen

                                           -13-
months from the date of delivery of the tractor to commence an action for breach

of express and/or implied warranties. However, the Halseys filed their complaint

some twenty-four months after the accident and delivery of the tractor. As a result,

we conclude that the Halseys’ action for breach of express and implied warranties

was time-barred under the thirteen-month limitation period found in the Retail

Contract.

                The Halseys next maintain that the express and implied warranties

disclaimer and shortened limitations period found in the Retail Contract are

inconspicuous and unenforceable.3 The Halseys cite to KRS 355.1-201(2)(j),

which provides the definition of “conspicuous.” The Halseys argue that the

warranty disclaimer in the Retail Contract lacks a heading of all capital letters and

of contrasting type, font, or colors. The Halseys also maintain that the warranty

disclaimer appears on a page with other provisions in fine print and on single-

spaced lines.

                We initially note that this issue was not brought before the circuit

court. We generally only review issues that are presented to and decided by the

circuit court. Reg’l Jail Auth. v. Tackett, 770 S.W.2d 225, 228 (Ky. 1989).

3
 The Halseys initially argue that the limitation provision found in the Retail Contract was not
conspicuous and thus invalid. However, their argument thereafter centers upon the warranty
disclaimer, and as an appellate court, it is not our function to construct and articulate a party’s
arguments on appeal. Nonetheless, we perceive no merit in this argument.

                                                -14-
Nonetheless, we conclude that the warranty disclaimer found in the Retail Contract

is conspicuous within the meaning of KRS 355.2-316 and enforceable.

            Under the U.C.C., KRS 355.2-316(2) and (3) provide:

            (2) Subject to subsection (3), to exclude or modify the
               implied warranty of merchantability or any part of it
               the language must mention merchantability and in
               case of a writing must be conspicuous, and to exclude
               or modify any implied warranty of fitness the
               exclusion must be by a writing and conspicuous.
               Language to exclude all implied warranties of fitness
               is sufficient if it states, for example, that “There are
               no warranties which extend beyond the description on
               the face hereof.”

            (3) Notwithstanding subsection (2)

               (a) unless the circumstances indicate otherwise, all
                   implied warranties are excluded by expressions
                   like “as is,” “with all faults” or other language
                   which in common understanding calls the buyer’s
                   attention to the exclusion of warranties and makes
                   plain that there is no implied warranty; and

               (b) when the buyer before entering into the contract
                  has examined the goods or the sample or model as
                  fully as he desired or has refused to examine the
                  goods there is no implied warranty with regard to
                  defects which an examination ought in the
                  circumstances to have revealed to him; and

               (c) an implied warranty can also be excluded or
                   modified by course of dealing or course of
                   performance or usage of trade; and

               (d) with respect to the sale of bovine, porcine, ovine,
                  and equine animals, or poultry there shall be no
                  implied warranty that the animals are free from

                                       -15-
                    disease or sickness. This exemption shall not apply
                    when the seller knowingly sells animals which are
                    diseased or sick.

             And, the definition of “conspicuous” is found in KRS 355.1-201,

which provides:

             (2) Subject to definitions contained in other articles of the
                Uniform Commercial Code that apply to particular
                articles or parts thereof:

             ....

                (j) “Conspicuous,” with reference to a term, means so
                     written, displayed, or presented that a reasonable
                     person against which it is to operate ought to have
                     noticed it. Whether a term is “conspicuous” or not
                     is a decision for the court. Conspicuous terms
                     include the following:

                    1. A heading in capitals equal to or greater in size
                       than the surrounding text, or in contrasting type,
                       font, or color to the surrounding text of the same
                       or lesser size; and

                    2. Language in the body of a record or display in
                       larger type than the surrounding text, or in
                       contrasting type, font, or color to the
                       surrounding text of the same size, or set off from
                       surrounding text of the same size by symbols or
                       other marks that call attention to the language[.]

             In the Retail Contract, the warranty exclusion is found on page two

and appears in capital letters. It states that sellers agree that no warranty, express

or implied, covers the machinery. In particular, the warranty exclusion mentions

the implied warranty of merchantability and implied warranty of fitness for a

                                          -16-
particular purpose. Additionally, the Retail Contract states in all capital letters that

the machinery is sold “as is.” Taken together, we hold that a reasonable person

would have noticed the warranty disclaimer in the Retail Contract; therefore, the

warranty disclaimer is conspicuous under KRS 355.1-201(2)(j) and valid per KRS

355.2-316.

             We view the Halseys’ remaining contentions of error as moot.

             In sum, we are of the opinion that the circuit court properly rendered

summary judgment dismissing the Halseys’ claims against Holbrook Implement.

             For the foregoing reasons, the December 18, 2019, order and February

5, 2020, order of the Menifee Circuit Court are affirmed.

             ALL CONCUR.

 BRIEFS FOR APPELLANTS:                     BRIEF FOR APPELLEE:

 William D. Nefzger                         Kenneth L. Finley
 Louisville, Kentucky                       Anthony M. Pernice
                                            Lexington, Kentucky

                                          -17-