McCarthy Well Co. v. St. Peter Creamery, Inc.

410 N.W.2d 312, 4 U.C.C. Rep. Serv. 2d (West) 424, 1987 Minn. LEXIS 800
CourtSupreme Court of Minnesota
DecidedAugust 7, 1987
DocketC6-85-1740
StatusPublished
Cited by41 cases

This text of 410 N.W.2d 312 (McCarthy Well Co. v. St. Peter Creamery, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McCarthy Well Co. v. St. Peter Creamery, Inc., 410 N.W.2d 312, 4 U.C.C. Rep. Serv. 2d (West) 424, 1987 Minn. LEXIS 800 (Mich. 1987).

Opinion

OPINION

SCOTT, Justice.

The appellant, McCarthy Well Company, Inc., was hired by St. Peter Creamery, Inc., to restore the creamery’s artesian well to its original capacity. Because McCarthy Well was not paid in full, it brought suit against the creamery seeking to recover $23,422.02 plus interest for work done on the well pursuant to the parties’ agreement. The creamery asserted counterclaims, alleging that McCarthy Well negligently performed the work, resulting in damage to the creamery’s dried milk products. A jury found that both McCarthy Well and the creamery were negligent as to the work done on the well, that the creamery had suffered $190,000 in damages, and that McCarthy Well was 75% at fault. On appeal from the trial court’s judgment and order denying McCarthy Well’s motion for a new trial, the Minnesota Court of Appeals held that the Superwood doctrine did not preclude the recovery of economic losses resulting from the negligent performance of services; that because an exculpatory clause in the McCarthy Well-St. Peter Creamery contract was unconscionable and invalid, the trial court had properly excluded McCarthy Well’s contractual defense; that the trial court’s voir dire of jurors did not constitute prejudicial error; and that the creamery’s late disclosure of an expert witness and certain acts of negligence did *314 not constitute unfair surprise and that the trial court did not abuse its discretion in allowing the creamery to proceed. McCarthy Well Co. v. St. Peter Creamery, Inc., 389 N.W.2d 514 (Minn.Ct.App.1986). We affirm in part and reverse in part.

In June 1979, shortly after McCarthy Well had made a free inspection of the creamery’s artesian well, the creamery’s general manager wrote McCarthy Well asking if it had a method of restoring the well to its original capacity. In August 1979, McCarthy Well sent the creamery an acknowledgment-of-order form, and it began on-site work two weeks later.

At the creamery, McCarthy Well pulled a copper liner out of the well casing and airlifted sand out of the bottom of the well. Because airlifting did not result in an increased flow of water, McCarthy Well televised the well and, after an unsuccessful attempt to remove a donut from the well casing, exploded dynamite at the bottom of the well; dynamiting increased the flow of water. About one month later, in late October, McCarthy Well installed a new turbine pump in the well.

In November 1979, McCarthy Well billed the creamery for $34,573.27; the bill included a charge of $8,329.45 for the new pump. The creamery made only a partial payment and McCarthy Well commenced suit on March 12, 1980, to recover the balance. On March 15, 1980, the pump’s shaft broke and was not repaired until March 25. In late March the creamery answered and counterclaimed for negligence and misrepresentation of the amount of time the job would take. The pump shaft broke again in April and was repaired by McCarthy Well. In June 1980, McCarthy Well submitted a $4,369 bill to the creamery for the March and April repairs; because the pump was under warranty, the Creamery was billed only for labor expenses. The pump shaft broke again in August, but the creamery did not contact McCarthy Well; instead it hired another company to install a new pump. In January 1981, the new pump broke; televising revealed a hole in the well casing and, in July, 1981, the creamery had a new well dug'and installed a new pump.

The two most important issues in this case are: (1) whether the rule enunciated in Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn.1981), applies so as to bar the creamery from recovering economic losses under a negligence theory; and (2) whether an exculpatory clause in the contract was enforceable. Two other issues are also raised: (3) whether the trial court’s voir dire of jurors concerning their affiliation with McCarthy Well’s insurer constituted prejudicial error; and (4) whether it was error to allow the creamery to proceed at trial under acts of negligence disclosed only five days prior to trial, and to allow the creamery to use an expert witness disclosed only five days prior to trial.

1. The jury found that McCarthy Well was negligent with respect to the work it performed at the creamery and that its negligence caused 75% of the $190,000 in damages suffered by the creamery. McCarthy Well argues that the Superwood doctrine bars the creamery from recovering, under a negligence theory, economic losses arising out of a commercial transaction.

In Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159, 162 (Minn.1981), we stated that “economic losses that arise out of commercial transactions, except those involving personal injury or damage to other property, are not recoverable under the tort theories of negligence or strict products liability.” Although we did not define “commercial transaction,” a review of our decision in Superwood shows that, as used in Superwood, a “commercial transaction” is a transaction governed by Article 2 of the Uniform Commercial Code, Minn.Stat. ch. 336 (1986).

The Superwood rule is premised on the existence of certain rights and remedies provided for in the U.C.C.: “The U.C.C. clarifies the rights and remedies of parties to commercial transactions * * *. To allow tort liability in commercial transactions would totally emasculate [the warranty and liability] provisions of the U.C.C.” Super *315 wood, 311 N.W.2d at 162. The rationale behind the Superwood rule is that a recognition of tort actions in cases under the U.C.C. would upset the remedies contained in the U.C.C.; when the rationale is not applicable, i.e., when the U.C.C. does not apply, there is no reason for the Super-wood rule to apply.

Accordingly, we hold that “commercial transaction,” as that phrase is used in Superwood, means a transaction governed by the U.C.C. When the U.C.C. does not apply, the transaction is not a “commercial transaction,” and the Superwood rule does not apply.

This holding necessarily leads to the next inquiry; namely, whether the McCarthy Well-St. Peter Creamery transaction is governed by Article 2 of the U.C.C. Our recent decision in Valley Farmers’ Elevator v. Lindsay Brothers Co., 398 N.W.2d 553 (Minn.1987), addressed the question of “whether and under what circumstances a hybrid contract involving the sale of goods and the provision of services falls within the statutory scheme of the U.C.C.” Id. at 555. We adopted the “predominant factor” test, discussed in Bonebrake v. Cox, 499 F.2d 951

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Bluebook (online)
410 N.W.2d 312, 4 U.C.C. Rep. Serv. 2d (West) 424, 1987 Minn. LEXIS 800, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mccarthy-well-co-v-st-peter-creamery-inc-minn-1987.