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HARTFORD FIRE INSURANCE COMPANY A/S/O/ FLEET TRUCKING v. ROADTEC

November 29, 2010

HARTFORD FIRE INSURANCE COMPANY A/S/O/ FLEET TRUCKING, INC.,
PLAINTIFF,
v.
ROADTEC, INC.,
DEFENDANT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.

MEMORANDUM OPINION AND ORDER

This is a subrogation action brought by Hartford Fire Insurance Company, property insurer of Fleet Trucking ("Fleet"), against Defendant Roadtec, Inc. Roadtec manufactured and sold to Fleet a pavement milling machine*fn1 that caught fire at Fleet's premises on March 26, 2008, and was completely destroyed. (Cmplt. ¶¶ 1-2) Hartford alleges that design defects in the machine caused the fire. (Id. ¶ 3) Hartford originally asserted claims for strict liability and breach of the implied warranty of merchantability, but agreed to the dismissal of the strict liability claim on October 21, 2009. (Stipulation of Dismissal, Dkt. No. 11)

Roadtec has now moved for summary judgment on Hartford's implied warranty claim, arguing that it disclaimed all implied warranties when it sold the milling machine to Fleet. Because Roadtec has not demonstrated as a matter of law that it effectively disclaimed the implied warranty of merchantability, its motion for summary judgment will be denied.

BACKGROUND

On January 2 and 3, 2007, Fleet and Roadtec signed an Equipment Proposal in which Fleet agreed to purchase from Roadtec an RX-700-3 pavement milling machine (the "Machine"). (Def. R. 56.1 Stat. ¶ 6; Smith Aff., Ex. 2) *fn2 The Equipment Proposal sets forth a detailed description of the Machine and the purchase price, and makes two references to warranties. (Def. R. 56.1 Stat. ¶ 7; Smith Aff., Ex. 2) The phrase "Full Machine Warranty" is written in the document's "Notes" section, and in response to a query asking it to accept or decline an "Extended Engine Warranty," Fleet accepted this option. (Smith Aff., Ex. 2) Roadtec shipped the Machine to Fleet on January 15, 2007, and Fleet made a $475,913 payment for the Machine on March 1, 2007. (Def. R. 56.1 Stat. ¶ 17)

When Roadtec delivered the Machine to Fleet in January 2007, it also provided an Operation, Service & Maintenance Manual and a Parts Manual. (Id. ¶¶ 9, 12-13) Each manual was "hundreds of pages long" and included a warranty statement on the last page. (Pltf. R. 56.1 Counter-Stat. ¶ 39; Def. R. 56.1 Stat. ¶ 15; Smith Aff., Ex. 3) The warranty statement ("Warranty") reads as follows:

Manufacturer (Roadtec, Inc.) warrants, commencing with the date of shipment to first end-user and for a period of 12 months thereafter or 1,000 hours of operation, whichever occurs first, all machinery and parts manufactured by Roadtec, Inc. to be free for defects in workmanship and material. Warranty remains in force for the above time period only if all Manufacturer's operational procedures are followed and recommended maintenance is performed. If, within such warranty period, any machinery or parts shall be proved to Manufacturer's satisfaction to be defective, it shall be repaired or replaced, at the Manufacturer's option, F.O.B. Manufacturer's warehouse. All failed parts or components must be returned to Manufacturer prepaid for inspection before credit will be issued for new parts or components. Manufacturer's obligation hereunder shall be confined to such repair or replacement and does not include any charges, direct or indirect, for removing or replacing defective machinery or parts.

Wear parts such as: conveyor lines, screed plates, cutter teeth, tooth holders, scraper blades, track pads, tires and conveyor belts are warranted only if found to be defective at time of shipment, but are not warranted for the warranty period as far as wear or abuse

No warranty shall apply to machinery, or parts or accessories which have been furnished, repaired or altered by others so as, in Manufacturer's judgment, to affect the same adversely or which shall have been subject to negligence, accident or improper care, installation, maintenance, storage or other than normal use or service, during or after shipment. With respect to machinery, parts or accessories to Manufacturer's products which are furnished but not manufactured by Manufacturer, Manufacturer's warranty obligation shall in all respects conform and be limited to the warranty extended to Manufacturer by its supplier or, if none, to the warranties expressed herein.

The foregoing warranties are in lieu of all other warranties expressed or implied including, but not limited to any warranty or merchantability of fitness for a particular purpose, and Manufacturer shall not be subject to any other obligations or liabilities whatsoever with respect to machinery, parts, accessories or services manufactured or furnished by it or any undertakings, acts or omissions relating thereto. Under no circumstances shall Manufacturer be liable for any consequential or other damages, expenses, losses of delays howsoever caused. There are no warranties that extend beyond the description on the face hereof. (Smith Aff., Ex. 3)(emphasis in original)The Warranty appears only in the manuals provided to Fleet at the time the Machine was delivered, and is not set forth in the "Equipment Proposal" that Fleet and Roadtec signed. (Pltf. R. 56.1 Stat. ¶ 20)

After delivery, Fleet made three warranty claims concerning the Machine, all of which Roadtec honored.*fn3 (Def. R. 56.1 Stat. ¶¶ 24-29) On March 26, 2008, however, the Machine caught fire and was destroyed. (Id. ¶ 30) Hartford claims that the fire was caused by a burst hydraulic hose, which sprayed hydraulic fluid on the exposed exhaust manifold of the engine. The fluid ignited, causing a fire that consumed the Machine. (Cmplt. ¶¶ 14-15) Hartford further alleges that the engine should have been protected by a guard that would have prevented the hydraulic fluid from spraying onto the exhaust manifold. (Id. ¶¶ 16-18) According to Hartford, the failure to install such a guard was a design defect, and in selling a defective machine, Roadtec breached the implied warranty of merchantability and is liable for damages. (Id. ¶¶ 23-24)

Roadtec has moved for summary judgment on the ground that it "disclaimed the implied warranty of merchantability upon which Hartford bases its claim." (Def. Br. 5)

DISCUSSION

Roadtec argues that it is entitled to summary judgment because: (1) the Warranty expressly disclaims any implied warranties, including the implied warranty of merchantability; and (2) Fleet "accepted and acquiesced to the Warranty's terms and exclusions in its course of dealing and performance." In particular, Roadtec notes that Fleet paid for the Machine after receiving the manuals that set forth the Warranty (and its exclusion of the implied ...


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