S&R Associates, L.P. v. Shell Oil Co.

725 A.2d 431, 38 U.C.C. Rep. Serv. 2d (West) 1197, 1998 Del. Super. LEXIS 346, 1998 WL 737990
CourtSuperior Court of Delaware
DecidedSeptember 30, 1998
Docket94C-06-189-WTQ
StatusPublished
Cited by30 cases

This text of 725 A.2d 431 (S&R Associates, L.P. v. Shell Oil Co.) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
S&R Associates, L.P. v. Shell Oil Co., 725 A.2d 431, 38 U.C.C. Rep. Serv. 2d (West) 1197, 1998 Del. Super. LEXIS 346, 1998 WL 737990 (Del. Ct. App. 1998).

Opinion

QUILLEN, J.

This is the Court’s opinion on Defendant Shell Oil Company’s two Motions for Summary Judgment pursuant to Superior Court *434 Civil Rule 56. 1 For the reasons given herein, Defendant’s Motions for Summary Judgment on the claims of implied warranty of merchantability, implied warranty of fitness for a particular purpose, express warranty, civil conspiracy and deceptive trade practices are GRANTED. Motions for Summary Judgment as to the negligence claims, consumer fraud and the allocation of damages are DENIED.

I. FACTS

This action involves a dispute between the owner of residential housing units and the manufacturer of raw materials utilized in the production of polybutylene pipes. The central issue is whether the Defendant, as a supplier of the resin used to manufacture polybutylene pipes, is liable for the damages caused by the failure of the unit’s plumbing system.

Plaintiff, S&R Associates, L.P., III (“S&R”), is the owner of The Arbor Pointe Apartment Complex, located at 4000 Dawn-brook Drive, in Wilmington, Delaware. The Arbor Pointe complex was constructed in 1985 and consists of 264 rental units. The plumbing system installed at the complex utilized “polybutylene” pipes, a material chosen for its relatively low cost and light weight.

Defendant, Shell Oil Company (“Shell”), manufactures polybutylene, a resin used in the manufacture of polybutylene pipes. Shell did not, however, manufacture the products used in the Arbor Point Apartment Complex. Shell produced and sold polybu-tylene resin to certain customers, who in turn used the resin to manufacture polybutylene pipes. These pipes were connected with ace-tal fittings and metal crimp rings to form the “polybutylene plumbing system.”

While Shell did not directly sell the poly-butylene pipes, it actively participated in the promotion of polybutylene plumbing systems and used its corporate symbol on promotional literature. This promotional material included representations that polybutylene pipe was lighter, more freeze resistant and less expensive than copper pipe. S&R also asserts that the literature represented that polybutylene pipe “would last as long as copper pipe,” although no documentation presented explicitly supports this proposition. 2

Arbor Pointe experienced serious and systematic problems with the plumbing system from its inception. These failures continued for years and included a break in October of 1989 that flooded three units. Apparently, a defect in the polybutylene system caused the pipes and fittings to crack when exposed to chlorinated water. Plaintiff asserts that, despite the severity and frequency of the leaks, S&R did not realize these leaks were attributed to a defect in the polybutylene system until 1993, when one of S&R’s agents had conversations with others in the property management business. S&R also asserts that Shell was aware of this inherent defect in the system as far back as 1980 and actively concealed this fact from the public. 3

In 1994, S&R filed suit alleging that the polybutylene plumbing system, including the polybutylene pipes, was defective and would continue to fail. S&R’s complaint has asserted eleven separate counts, the majority sounding in either contract, fraud or negligence. Subsequently, Shell moved for summary judgment with respect to eight claims, including those for breach of the warranty, civil conspiracy, consumer fraud and certain negligence claims.

*435 II. STANDARD OF REVIEW

When considering a motion for summary judgment, the Court’s function is to examine the record to determine whether genuine issues of material fact exist. Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., Del.Super., 312 A.2d 322, 325 (1973). If after viewing the record in a light most favorable to the non-moving party, the Court finds that there are no genuine issues of material fact, summary judgment will be appropriate. Id. Summary judgment will not be granted if the record indicates that a material fact is in dispute or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances. Ebersole v. Lowengrub, Del.Supr., 180 A.2d 467 (1962).

III. DISCUSSION

A. BREACH OF CONTRACT

Counts one through three of S&R’s complaint allege breach of both express and implied warranties. Shell counters by asserting that S&R did not file its complaint before the statute of limitations had expired and that there is no reason the statute should be tolled. They also contend that S&R, as a limited partnership, is not the type of entity entitled to breach of warranty protection under 6 Del. C. § 2-318.

The Court is persuaded by Shell’s arguments and all counts sounding in contract are dismissed because: 1) S&R has failed to file an action before the statute of limitations had expired; 2) Shell, as an entity supplier of raw materials, was not in direct contractual privity with S&R; and 3) S&R, as a limited partnership, lacks standing as a third party beneficiary of a contractual warranty under 6 Del. C. § 2-318.

1. Statute of Limitations

S&R’s contract claims are barred by the statute of limitations. Causes of action based on a breach of warranty under the Delaware Commercial Code have a four-year statute of limitations period. 6 Del. C. § 2-725. The statute indicates that a “breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance.... ” Id. (emphasis supplied). 4 Unlike the judicial gloss applicable to other statutes in tort law, the clock by express statutory provision ticks in warranty actions when the breach occurs even though the buyer does not know the goods are defective. Lecates v. Hertrich Pontiac Buick Co., Del.Super., 515 A.2d 163, 175 (1986). 5 The “time of discovery rule,” recognized in other contexts, has not been extended to warranty actions. Elmer v. Tenneco Resins, Inc., D.Del., 698 F.Supp. 535, 539 (1988). Thus, the date of the purchase is key. Harvey v. Sears, Roebuck & Co., Del.Super., 315 A.2d 599, 601 (1973). Nor do the warranty claims here survive on the grounds of equitable estoppel or fraudulent concealment. Again the Lecates

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725 A.2d 431, 38 U.C.C. Rep. Serv. 2d (West) 1197, 1998 Del. Super. LEXIS 346, 1998 WL 737990, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sr-associates-lp-v-shell-oil-co-delsuperct-1998.