Court Opinion

ID: 4711333
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:49.033875+00
Date Added: 2024-06-11T08:07:07.829266
License: Public Domain

Guy, J.
(dissenting) — Article 2 of the Uniform Commercial Code (U.C.C.) establishes one general law governing all commercial sales for the purpose of providing predictability and consistency for all commercial sales transactions. In my view the majority opinion is inconsistent with this purpose. By holding contract-based indemnity claims are outside the U.C.C.’s four-year statute of repose, RCW 62A.2-725, the majority leaves commercial *519retailers susceptible to indemnity claims indefinitely.17 Therefore, I dissent.
The transaction between Central and McCormack was a sale of goods. I would hold that any claim stemming from this commercial sales transaction, including one for indemnity, is governed by article 2 of the U.C.C. and its four-year statute of repose. Further, I would hold that Central’s claim for indemnity was time barred since it was raised after the four-year time period had expired.
The majority is compelled by the belief that this court must follow the lead of other jurisdictions and find that when commercial buyers have paid damages to a third party due to defective products purchased from a commercial retailer, the buyer has two avenues for compensation. The jurisdictions on which the majority relies found that such commercial buyers not only have a breach of warranty claim against the commercial retailer under article 2 but also have an implied right of indemnity against the retailer founded in common law and governed by general statutes of limitations. The majority does not thoroughly discuss why this policy decision is correct but instead places great importance on the fact that a "majority” of other jurisdictions follow it. Contrary to the majority’s conclusion, there is no majority/minority view on whether indemnity claims are independent of the U.C.C. Rather, there exists a split of authority. Four states, South Dakota, Idaho, Utah and Georgia, find that such claims fall exclusively under the U.C.C.18 Courts in six *520states, Minnesota, California, New York, Nebraska, New Hampshire and Maine, hold indemnity claims may be raised independent of the U.C.C.19 Therefore, there exists authority from other jurisdictions to support both sides of this policy debate as to whether all contract-based claims, including those of indemnity, are bound by the U.C.C. I would hold that a decision finding contract-based indemnity claims are governed by the U.C.C. is correct because it creates a policy consistent with the purpose of the U.C.C.—one of predictability and uniformity.
Although the jurisdictions cited by the majority claim fairness requires that a commercial buyer who pays out-of-pocket damages to a third party has a remedy unrestricted by a statute of repose, I believe at some point the law must recognize commercial practices and concepts, including the concept of bargained-for risk. Commercial buyers do not purchase items with the notion they are receiving an implied lifetime guarantee. They know products may not last forever. However, there does exist an implied warrantability that lasts for four years after delivery, in order to create a balance between fairness and bargained-for risk. The U.C.C. has identified this four-year period, commencing at the time of delivery, as a fair period of time for a commercial buyer to expect guaranteed *521warrantability and a commercial retailer to expect to be held liable.20
Section 2-725 was adopted to "[take] sales contracts out of the general laws limiting the time for commencing contractual actions and selects a four year period as the most appropriate to modern business practice. This is within the normal commercial record keeping period.” RCWA 62A.2-725 U.C.C. cmt. at 415 (Purposes) (1995). Section 2-725 provides "a time when [a merchant] ought to be secure in his reasonable expectation that the slate has been wiped clean of ancient obligations, and he ought not to be called on to resist a claim when 'evidence has been lost, memories have faded, and witnesses have disappeared.’ ” Paul J. Wilkinson, Comment, An Ind. Run Around the U.C.C.: The Use (or Abuse?) of Indemnity, 20 Pepp. L. Rev. 1407, 1412 (1993) (quoting Developments in the Law, Statutes of Limitations, 63 Harv. L. Rev. 1177, 1185 (1950)). These comments illustrate the U.C.C.’s goal to establish an across-the-board governing law for all commercial sales transactions that adequately addresses fairness and bargained-for risk. By allowing a common-law remedy in a commercial sale relationship, the majority contradicts this goal. In order to remain consistent with the purpose of the U.C.C., I would hold that *522Central’s action against McCormack is governed by article 2 and that section 2-725 applies.21
I would also hold that Central’s action, under article 2, is barred under section 2-725. In my view, section 2-725 is a statute of repose, not a statute of limitation. A statute of limitation bars plaintiffs from bringing an already accrued claim after a specified period of time; a statute of repose terminates a right of action after a specified time, even if the injury has not yet occurred. Rice v. Dow Chem. Co., 124 Wn.2d 205, 211, 875 P.2d 1213 (1994); Morse v. City of Toppenish, 46 Wn. App. 60, 64, 729 P.2d 638 (1986).
The language of U.C.C. § 2-725 unambiguously creates a statute of repose. Because it is unambiguous, the meaning of the statute is derived from the words of the statute. State v. McDougal, 120 Wn.2d 334, 350, 841 P.2d 1232 (1992); State v. Olson, 47 Wn. App. 514, 516, 735 P.2d 1362 (1987). The statute states a claim must be made within "four years after the cause of action has accrued.” RCW 62A.2-725(1). According to the statute "[a] cause of action accrues when the breach occurs,” and "[a] breach of warranty occurs when tender of delivery is made . . . .” RCW 62A.2-725(2). Therefore, all claims must be made no more than four years after delivery, whether or not the buyer is aware of the product’s defect. Based on this clear language, I would hold that Central’s contractual indemnity claim, *523based on the breach of an implied warranty, was barred when the action was filed in May 1992, since the coils were delivered more than four and a half years earlier—in August 1987.
Section 2-725 actually "poses few problems: it simply bars a buyer from bringing an action for breach of warranty more than four years after tender of delivery. This straight-forward rule forces buyers to sue when evidence is most readily available and allows sellers to continue with their businesses without fear of suit after a reasonable definite period.” Debra L. Goetz et al., Project, Article Two Warranties in Commercial Transactions: An Update, 72 Cornell L. Rev. 1159, 1324-29 (1987).
I would find that Central’s claim is governed by U.C.C. § 2-725, a statute of repose, and was properly dismissed by the trial court. I would affirm the decision of the Court of Appeals.
Johnson and Talmadge, JJ., concur with Guy, J.

Although a third party’s claim against a commercial buyer for breach of warranty continues to be bound by the four-year time period, under the majority opinion there is no predictability as to how long a commercial retailer will be held liable for indemnity. Because accrual of an indemnity claim against a commercial retailer does not occur until a judgment is entered against a commercial buyer or when a commercial buyer pays damages to a third party, a commercial retailer cannot predict on what date an action for indemnity will accrue against it.

Sheehan v. Morris Irrigation, Inc., 460 N.W.2d 413 (S.D. 1990); Farmers Nat’l Bank v. Wickham Pipeline Constr., 114 Idaho 565, 759 P.2d 71 (1988); Perry v. Pioneer Wholesale Supply Co., 681 P.2d 214 (Utah 1984); PPG Indus., Inc. v. Genson, 135 Ga. App. 248, 217 S.E.2d 479 (1975).

City of Willmar v. Short-Elliott-Hendrickson, Inc., 512 N.W.2d 872, 49 A.L.R.5th 801 (Minn. 1994); Carrier Corp. v. Detrex Corp., 4 Cal. App. 4th 1522, 6 Cal. Rptr. 2d 565 (1992); Bellevue S. Assocs. v. HRH Constr. Corp., 78 N.Y.2d 282, 579 N.E.2d 195, 574 N.Y.S.2d 165 (1991); City of Wood River v. Geer-Melkus Constr. Co., 233 Neb. 179, 444 N.W.2d 305 (1989); Jaswell Drill Corp. v. General Motors Corp., 129 N.H. 341, 529 A.2d 875 (1987); Cyr v. Michaud, 454 A.2d 1376 (Me. 1983). The other five courts identified by the majority are actually four federal trial courts and a Fourth Circuit Court of Appeals: Ameron, Inc. v. Chemische Werke Huls AG, 760 F. Supp. 1234 (E.D. Mich. 1991); City of Clayton v. Grumman Emergency Prods., Inc., 576 F. Supp. 1122 (E.D. Mo. 1983); Walker Mfg. Co. v. Dickerson, Inc., 619 F.2d 305 (4th Cir. 1980) (applying N.C. law); Thermo King Corp. v. Strick Corp., 467 F. Supp. 75 (W.D. Pa.), aff'd, 609 F.2d 503 (3d Cir. 1979); In re FELA Asbestos Litig., 638 F. Supp. 107 (W.D. Va. 1986), rev’d on other grounds sub nom. Wingo v. Celotex Corp., 834 F.2d 375 (4th Cir. 1987).

Problems witb the four-year statute of repose have been recognized by groups dedicated to evaluating the U.C.C. The Permanent Editorial Board for the U.C.C. recognized the limitation period may be too short, especially in breach of warranty cases, and suggests a revised limitation period of two years from knowledge of a breach, tempered by an eight-year statute establishing repose. Permanent Editorial Bd., Am. Law Inst. & Nat’l Conference of Comm’rs on Uniform State Laws, PEB Study Group Uniform Commercial Code Article 2, pt. 7, § 3, at 54 (Preliminary Report 1990). A task force analyzing the report also recommended a limitation running two years from discovery, with no statute of repose. A.B.A. Task Group, An Appraisal of the March 1, 1990, Preliminary Report of the Uniform Commercial Code Article 2 Study Group, 16 Del. J. Corp. L. 981, 1249 (1991). Although these comments voice the concern that some claims are not discovered before an individual’s right to bring an action expires, the time period has not been revised.

The majority assumes, without evaluative analysis, that a cause of action for implied contractual indemnity exists under Washington law. In 1981 the Washington Legislature expressly abolished implied indemnity in the tort context when it enacted the product liability and tort reform act. Laws of 1981, ch. 27, § 12 (codified at RCW 4.22.040(3)). This policy decision of the Legislature was applied in the context of implied contractual indemnity in Lopez v. Johns Manville, 649 F. Supp. 149 (W.D. Wash. 1986), aff’d, 858 F.2d 712 (1988), cert. denied sub nom. Eagle-Picher Indus., Inc. v. United States, 491 U.S. 904 (1989), but is ignored by the majority in the present case. In effect, the majority writes a contract for the commercial parties that the parties themselves did not agree to. Honey v. Davis, 131 Wn.2d 212, 225, 930 P.2d 908, 937 P.2d 1052 (1997) (Talmadge, J., concurring). The commercial parties in the present case had not entered into a written indemnification agreement and there is no evidence that these commercial parties intended to provide for indemnification. The majority holds that the mere existence of a contractual relationship between a buyer and seller under the Uniform Commercial Code is sufficient to give rise to an implied right of indemnity in this state.