issue of fact remained in that case as to when the seller meant to tender delivery. For purposes of the H. Sand contract, the court construed tender of delivery to mean the date when the seller intended to put the goods at the buyer's disposition. See 934 F.2d at 455.
Defendant relies on dictum in H. Sand that cites Cincinnati v. Dorr-Oliver, Inc., 659 F. Supp. 259 (D. Conn. 1986), and Raymond-Dravo-Langenfelder v. Microdot, Inc., 425 F. Supp. 614, 617 (D. Del. 1976), as establishing that "where a contract simply provides for delivery to be followed by testing, the pre-testing delivery constitutes 'tender of delivery' within the meaning of N.Y.U.C.C. § 2-725(2)." 934 F.2d at 455. However, this dictum does not resolve the question at hand -- namely, when tender of delivery occurs under a contract that provides for post-physical delivery adjustment of the goods without which the goods are useless to the buyer. Nor does H. Sand suggest that tender of delivery occurs when the goods are physically delivered to the buyer regardless of any express terms contained in the contract to the contrary. Moreover, the H. Sand dictum cited by defendant is not the type of dictum intended to provide guidance to lower courts; H. Sand does nothing more than distinguish the cases cited by defendant from the question there, which was when the parties intended the seller to put the goods at the buyer's disposition. Cf. United States v. Oshatz, 912 F.2d 534, 540-41 (2d Cir. 1990) (finding that government and lower court should have followed dictum in prior opinion specifically stating that certain types of questions "should not be asked" in a criminal proceeding), cert. denied, 114 L. Ed. 2d 89, 111 S. Ct. 1695 (1991).
In addition, neither of the two cases cited by H. Sand in support of the pre-delivery/post-delivery testing distinction logically determines the result in the case at hand. For reasons set out fully in the March 9 opinion, I decline to follow Dorr-Oliver, which would compel an absurd result in this case: the statute of limitations would start to run before a breach had occurred and before plaintiff could sue. Moreover, Microdot is inapposite here. In Microdot, the court rejected the buyer's argument that its action was not time-barred because the buyer had "reserved the right to conduct later inspections and to reject the goods if they did not conform to the specifications of the contract." 425 F. Supp. at 617. The Microdot court correctly found that the statute of limitations began to run when the goods in question were physically delivered because U.C.C. § 2-725 barred a holding that the statute of limitations did not begin to run until the buyer accepted the goods. Microdot, therefore, stands for the principle that an inspection provision cannot be used to circumvent § 2-275's provision that the statute of limitations begins to run regardless of the buyer's knowledge of a breach of warranty.
However, in the case at hand, plaintiff is not claiming that the statute of limitations did not begin to run until plaintiff had inspected or had accepted the system. Rather, plaintiff is claiming that the statute of limitations did not begin to run until a breach had occurred. By the express terms of the Contract, there was no breach until TESI/defendant either had satisfied the performance warranty or repudiated its obligation to satisfy the performance warranty. Before then, the system could not have been termed non-conforming because it was not yet expected to conform to the Contract specifications.
Second, defendant's claim that the warranty provisions of the Contract were remedial is a contrivance. In its memoranda and documents in support of the summary judgment motion, defendant contended that the reason it (and TESI before it) strove "for over seven years to make the Scrubber work to St. Anne's satisfaction is [its] belief that it is simply good business to keep a customer happy." (Teller Rep. Aff. P59 ; see also Def. Rep. Mem. at 6 (stating that "defendant never admitted that the Scrubber did not operate properly or that defendant was responsible for any deficiencies in its performance"); Teller Rep. Aff. P61) Defendant now reverses field and argues that the warranty provision of the Contract placed on defendant/TESI an obligation to correct the system if that was the remedy plaintiff chose to pursue. This groping, improvisational reading of the Contract itself betrays a weak argument.
Moreover, defendant's newly minted claim regarding the remedial nature of the performance warranty ignores that the Contract had not yet been breached at the time the system was installed. The Contract contains terms written with the obvious assumption that the system would not meet the Contract's performance specifications at the time of installation; those terms would be made meaningless if I were to find that the system's failure to meet performance specifications at the time of installation rendered the system non-conforming. When the system failed to meet the Contract specifications during the first two official tests, the parties continued to perform as the Contract anticipated they would: i.e., defendant/TESI continued to attempt to bring the system into conformity. So long as defendant/TESI attempted to correct the system, and neither party asserted that these efforts were anything but in conformity with contract requirements, there had been no breach requiring a remedy.
Section 1292(b) of Title 28 permits an immediate appeal when an interlocutory order "involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal . . . may materially advance the ultimate termination of the litigation."
In the case at hand, a controlling question of law is presented by whether installation of the system, as the Contract defined that event, was sufficient, without more, to trigger the statute of limitations. Moreover, deciding this question in defendant's favor would terminate the underlying suit. Second, although I find Dorr-Oliver to compel an illogical result, it does support defendant's claim that the statute of limitations began to run when the system was installed. Therefore, defendant has satisfied the criteria for certification pursuant to § 1292(b). Accordingly, defendant's motion for certification is granted.
Dated: New York, New York
April 21, 1992
Michael B. Mukasey,
U.S. District Judge
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