Court Opinion

ID: 9465302
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:42:03.648456+00
Date Added: 2024-06-11T17:39:05.921302
License: Public Domain

ENRIGHT, District Judge,
sitting by designation, dissenting:
I respectfully dissent. The threshold question presented in this case is whether the parties intended the limited express warranty, with its disclaimer of liability for consequential damages, to govern Smith’s obligation to provide “one competent tunnel *1377boring machine specialist ... to supervise installation.”1 The view adhered to by the majority is that the limited express warranty, with its accompanying disclaimer of liability for consequential damages, nullifies any right to recover consequential damages which Wilson might have absent this provision. My view is that the contract, when read as a whole, fails to manifest any intention of the parties to subject the “Installation Personnel” provision to the burdens, benefits and limitations of the limited express warranty. Accordingly, I conclude that the warranty’s exclusion of consequential damages does not apply to the covenant to provide a competent tunnel boring machine specialist and that the remedy of consequential damages, pursuant to California Commercial Code section 2715, is available to redress Smith’s breach of this covenant.
Under the terms of the contract at issue here, Smith delivered a disassembled tunnel boring machine to Wilson, free on board Smith’s plant, at a purchase price of $550,-000. Shipment from Smith’s plant to the jobsite was at the risk of Wilson; labor and use of equipment to “install” 2 the machine was provided by Wilson. However, Smith’s covenant to furnish “one competent tunnel boring machine specialist free of charge, to supervise installation . . .” makes it clear that Smith bore the responsibility of properly installing the machine.
The specialist furnished by Smith proved to be incompetent. Under his supervision and guidance the thrust rollers of the machine were installed backward. Additionally, one of the machine’s ten Staffa motors was installed in such a manner that it rotated backward (while the other nine motors rotated forward). A considerable period of time elapsed before these defects were discovered and rectified. As a result of these incorrect orientations the machine performed inefficiently and inadequately, resulting in large-scale consequential damages to Wilson.
It has long been recognized that all rules of interpretation of contracts are subordinate to the leading principle that the intention of the parties must prevail, unless inconsistent with some rule of law. Chesapeake & Ohio Canal Co. v. Hill, 82 U.S. (15 Wall.) 94, 100, 21 L.Ed. 64, 67 (1872); General Casualty Co. v. Azteca Films, Inc., 278 F.2d 161, 167 (9th Cir.), cert. denied, 364 U.S. 863, 81 S.Ct. 103, 5 L.Ed.2d 85 (1960); Lipsky v. Commonwealth United Corp., 551 F.2d 887, 896 (2d Cir. 1976). In determining the intention of the parties, a court must survey the contract as a whole and not merely focus on a specific provision or a fragmentary part. California Pacific Bank v. Small Business Administration, 557 F.2d 218, 223 (9th Cir. 1977); General Casualty Co. v. Azteca Films, Inc., supra, 278 F.2d at 167; Makofsky v. Cunningham, 576 F.2d 1223, 1230 (5th Cir. 1978); AMP, Inc. v. United States, 389 F.2d 448, 182 Ct.Cl. 86 (1968), cert. denied, 391 U.S. 964, 88 S.Ct. 2033, 20 L.Ed.2d 878 (1968).
Viewing the contract as a whole, it cannot be said that the parties intended the terms of the limited express warranty to apply to and control Smith’s obligation to provide a competent tunnel boring machine specialist to supervise installation. The warranty given by Smith extends to all defects in “material” and “workmanship.” Giving these words their natural and ordinary trade meanings, Hanley v. James McHugh Constr. Co., 444 F.2d 1006, 1009 (7th Cir. 1971), it would appear that Smith’s failure to provide a competent machine specialist cannot be characterized as either a defect in “material” or a defect in “workmanship.”3 In rebuttal it may perhaps be *1378urged that since the specialist’s performance was defective, a defect in “workmanship” resulted. Should such an interpretation of the contract provision be accepted, however, a contradictory result follows. The machine is warranted to be free from “defects in material and workmanship . if, but only if, it has been properly installed ..” Assuming arguendo that the specialist’s performance in installing the machine may be characterized as “workmanship,” Smith would be warranting the machine free from a defect in installation “if, but only if,” it had been properly installed. The law does not require an interpretation which renders the “if, but only if” caveat meaningless. An interpretation which gives a reasonable meaning to all parts of a contract will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, meaningless or achieves a whimsical result. State of Arizona v. United States, 575 F.2d 855, 863 (Ct.Cl.1978); Texaco, Inc. v. Holsinger, 336 F.2d 230, 235 (10th Cir. 1964), cert. denied, 379 U.S. 970, 85 S.Ct. 669, 13 L.Ed.2d 563 (1965). The untenable result which follows from a construction which places installation within the ambit of “workmanship” can best be avoided through a recognition that installation and “workmanship” are entirely distinct and mutually exclusive. This conclusion is buttressed by the juxtaposition of these terms in the body of the warranty. Their proximity to each other leads one to suppose that the draftsman meant one thing by installation and another by “workmanship.”
The contract is clearly ambiguous with respect to whether the term “workmanship” comprehends the specialist’s services in supervising installation. Under California law, all ambiguities in a contract are to be resolved against the draftsman. California Civil Code § 1654; Nixdorf Computer, Inc. v. Jet Forwarding, Inc., 579 F.2d 1175, 1178 (9th Cir. 1978). Since Smith drafted the contract, the ambiguity surrounding the term “workmanship” should be resolved against it through a finding that “workmanship” does not embrace Smith’s obligation to provide a competent tunnel boring machine specialist.
Wilson bargained for a tunnel boring machine in proper working order. It received a defectively assembled and poorly-working machine. According to the trial court’s interpretation of the contract, Wilson’s remedy for breach was limited by the terms of the limited express warranty to repair or replacement of defective parts. Since no part of the machine was defective (the malfunctioning being attributable to misassem-bly), the trial court’s construction leaves Wilson remediless. Smith might just as well have provided no assembly specialist at all, furnishing merely a pile of unassembled parts. In that case Wilson would have been relegated to the completely ineffectual remedy of replacement and repair. Such a result would seem anomalous at best and is, in my opinion, in no way compelled by established principles of contract interpretation.
I concur in the majority’s finding that recovery is precluded under the negligence counts in Wilson’s complaint but would reverse the judgment of the trial court with respect to the contract counts.

. See the “Installation Personnel” provision of the contract, set forth at footnote 3, majority opinion.

. The contract characterizes assembly of the machine as “installation.”

. The meanings of the terms “material” and “workmanship” would appear to be relative, being dependent upon the stage of the production process at which a warranty is given. For example, a building construction company would regard a warped steel beam as a defect in “material,” whereas the steel company which fabricated the beam would regard the defect as one of “workmanship.”