Court Opinion

ID: 9615195
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:32:27.658094+00
Date Added: 2024-06-11T18:03:43.187821
License: Public Domain

HOWE, Associate Chief Justice
(Concurring and Dissenting):
The issue in this case was presented and decided by this court in 1981 in Devore v. Bostrom, 632 P.2d 832 (Utah 1981). The majority opinion in this case attempts to distinguish it “because the contract in De-vore did not expressly exclude recovery of incidental and consequential damages.” It is true that in the opinion of this court in Devore, it does not appear whether the written limited warranty given the buyer *1116expressly excluded incidental and consequential damages. However, the Utah U.C.C. does not require that they be “expressly” excluded. All that is required is that the limited warranty be agreed upon as exclusive. Utah Code Ann. § 70A-2-719(l)(b) provides:
(b) [R]esort to a [limited] remedy as provided is optional unless the [limited] remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
When a limited remedy is agreed upon, incidental and consequential damages are necessarily excluded. In Devore, the limited warranty given the buyer stated, “NOTICE TO BUYER: RECOVERY HEREUNDER BY THE DEBTOR SHALL BE LIMITED TO AMOUNTS PAID BY THE DEBTOR HEREUNDER.” That language certainly cannot be construed to mean anything other than that the buyer’s sole remedy was to recover the amounts he or she had paid. The words “shall be limited to amounts paid” mean no other amounts. We so regarded it and wrote the opinion on that premise. Otherwise, the case could have been disposed of summarily in favor of the buyer. The majority, however, finds Devore not controlling because the limited warranty was not followed by superfluous language also excluding incidental and consequential damages. This additional requirement makes no sense in my opinion. Section 70A-2-719(l)(b) provides that when a remedy is agreed upon to be exclusive, “it is the sole remedy.” The buyer agreed to an exclusive remedy, and we correctly regarded it as his sole remedy even though all other remedies may not have been expressly excluded. Devore controls the instant case, and the summary judgment against the buyer must be reversed.
Utah Code Ann. § 70A-2-719(l)(a) provides in part:
(a) The agreement may ... limit or alter the measure of damages recoverable under this chapter, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts....
That subsection allows a seller to give only a limited warranty consisting of (1) return of goods and repayment of the price, as was the case in Devore, or (2) repair and replacement of nonconforming goods or parts as in the instant case. In both cases, the limited warranty is intended to be exclusive. In Devore, the automobile dealer failed to repay the purchase price of the automobile when the buyer offered to return the damaged automobile. In the instant case, the automobile dealer has allegedly failed to replace the nonconforming automobile. Because of the failure of the automobile dealer in Devore to honor the limited warranty of repayment of the purchase price to the buyer, we held that subsection (2) of section 70A-2-719 came into opération. That subsection provides: “Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this act.” In Devore, we held:
The purpose of section 70A-2-719(2) as reflected in the Official Comments to the Uniform Commercial Code is to make available to an aggrieved party all remedies provided in our statutory scheme where the limited remedy provided for in the contract fails of its essential pujóse. These additional remedies include the incidental and consequential damages as provided in section 70A-2-715.
Devore, 632 P.2d at 832 (emphasis added). Essentially, we held in Devore that the automobile dealer could not use the very provision of a warranty which it failed to honor as a reason for limiting the trial court’s award of incidental and consequential damages. We relied in part on Adams v. J.I. Case Co., 125 Ill.App.2d 388, 261 N.E.2d 1 (1970) (a case cited but rejected by the majority opinion in the instant case), where the manufacturer and a dealer of a tractor had limited their liability for repair or replacement. We quoted with approval the following statement from that court’s opinion:
The manufacturer and the dealer have agreed in their warranty to repair or replace defective parts while also limiting their liability to that extent. Had they reasonably complied with their agree*1117ment contained in the warranty they would be in a position to claim the benefits of their stated limited liability and to restrict plaintiff to his stated remedy. The limitations of remedy and of liability are not separable from the obligations of the warranty. Repudiation of the obligations of the warranty destroy its benefits .... It should be obvious that they cannot at once repudiate their obligation under their warranty and assert its provisions beneficial to them.
125 Ill.App.2d at 402, 261 N.E.2d at 9.
It is therefore clear to me that in Devore we held that when an exclusive or limited remedy fails of its essential purpose, “remedy may be had as provided in this act,” which includes incidental and consequential damages as provided for in section 70A-2-715. That right should not be limited or curtailed by subsection (3) of 70A-2-719, which provides that consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. That subsection does not address the problem when the exclusive or limited remedy has failed of its essential purpose. Subsection (3) should be interpreted to mean that where there is an exclusive or limited remedy that does not fail of its essential purpose, consequential and incidental damages may not also be recovered unless denying recovery would be unconscionable, such as is suggested in subsection (3), where the buyer has sustained personal injuries as a result of the breach of warranty. By so interpreting subsection (3), we do not “read it out” of the statute as feared by the majority opinion.
In summary, Devore and the instant case cannot be distinguished despite the majority’s attempt. It therefore follows that the buyer in the instant case is entitled to reversal of the summary judgment against him and to a remand of this case to the trial court for a factual determination as to whether the limited warranty failed of its essential purpose. If the buyer prevails on that issue, he then, under Devore, is entitled to incidental and consequential damages. Devore settled that question, and I submit that case should remain the law since it is predicated on the perfectly sound premise that a seller who fails to honor his own limited warranty is in no position to resist the award of incidental and consequential damages afforded to buyers under section 70A-2-715. When a limited warranty fails of its essential purpose (which is usually because the seller will not honor it), what remedy does the buyer have if he fails to prove (as required by the majority) that the limitation on recovery of incidental and consequential damages is unconscionable? Neither the majority opinion nor Justice Stewart’s opinion provides an answer. This denial would seem to fly in the face of the official comment to section 2-719, which reads:
[I]t is of the very essence of a sales contract that at least minimum adequate remedies be available. If the parties intend to conclude a contract for sale within this Article they must accept the legal consequence that there be at least a fair quantum of remedy for breach of the obligations or duties outlined in the contract.
U.C.C. § 2-719 comment (1990) (emphasis added).
The bench and bar will be confused by the majority opinion and Devore standing side by side, each reaching a different result on similar facts. We should not have a different rule for a case where incidental and consequential damages are necessarily excluded by the existence of a limited warranty which is made the buyer’s sole and exclusive remedy, such as Devore, and the instant case where incidental and consequential damages are expressly excluded.