Western Recreational Vehicles, Inc. v. Swift Adhesives, Inc.

23 F.3d 1547, 1994 WL 176740
CourtCourt of Appeals for the Ninth Circuit
DecidedMay 11, 1994
DocketNos. 92-36879, 92-36899
StatusPublished
Cited by14 cases

This text of 23 F.3d 1547 (Western Recreational Vehicles, Inc. v. Swift Adhesives, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Western Recreational Vehicles, Inc. v. Swift Adhesives, Inc., 23 F.3d 1547, 1994 WL 176740 (9th Cir. 1994).

Opinion

Opinion by Judge Hall.

CYNTHIA HOLCOMB HALL, Circuit Judge:

In this diversity action for breach of warranty, defendant Swift Adhesives, Inc. appeals the district court’s judgment and plaintiff Western Recreational Vehicles, Inc. cross-appeals the district court’s damage award. We conclude the district court erred by not applying the relevant statute of limitations and by not requiring Swift to demonstrate how much, if any, of Western’s lost-profit damages to allocate to the limitations period. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

I.

Western Recreational Vehicles, Inc. manufactures travel trailers, truck campers, and fifth-wheel trailers (“RVs”), the production of which requires bonding exterior sidewalls to interior RV components. In 1979, Western began to use a roll-coater lamination process, through which it could bond sidewalls with adhesive instead of staples. At that time, Western asked Swift Adhesives, Inc. to recommend a glue for the lamination process. [1549]*1549After testing various products with the roll-coater machinery and aluminum sidewalls, Swift advised Western to use Adhesive #47344 (“Adhesive”). Western agreed and soon became a regular customer, using Adhesive on thousands of RVs over the next eight years. Ultimately, the product worked quite well, producing a minuscule .5% rate of exterior skin delamination on aluminum-sided vehicles.

In 1984, Western decided to produce RVs with reinforced fiberglass (“Filón”) instead of aluminum sidewalls. Western asked Swift to recommend a glue that would be compatible with the new material and, after conducting tests on Filón samples, Swift advised the RV manufacturer that Adhesive would work satisfactorily on the fiberglass. Relying on this advice, Western commenced production of Filon-sided RVs laminated with Adhesive.

Within a year-and-a-half, Western began to receive customer complaints regarding de-lamination of Filón siding. Upon inspection of the damaged RVs, Western discovered that the glue line was discolored and had lost tack, particularly in panels exposed to natural elements. From this inspection, Western concluded that Adhesive had caused the dela-mination problems.1

As a result, Western filed suit in state court against Swift for breach of express and implied warranties. Swift removed the action to federal court, defending primarily on the grounds that the statute of limitations had run and that the sales invoices and product data sheets disclaimed all warranties. After a bench trial, the district court found that, because fiberglass contracted and expanded more than aluminum, Adhesive did not bond properly with Filón and proximately caused the delamination problems. The court further determined that Swift had assured Western that “You can go ahead and use [Adhesive] just like you have on the aluminum” and concluded that Western was protected by an express warranty that extended to future performance, thereby tolling the statute of limitations. Finally, the court held Swift’s disclaimers invalid and awarded Western more than $3 million in damages.

Swift filed a timely appeal, arguing that the statute of limitations bars Western’s claims, that the disclaimers are valid, that the district court erred by admitting certain evidence at trial, and that the alleged breach of warranty did not proximately cause Western’s damages. Western cross-appealed, contending that if the statute of limitations does apply, the district court erred by not requiring Swift to demonstrate how much, if any, of the lost-profit damages are attributable to the limitations period.

II.

We first address the related statute of limitations and damages issues. The transactions between Swift and Western constituted a sale of goods sufficient to trigger application of Washington’s version of the Uniform Commercial Code. See Wash.Rev. Code Ann. §§ 62A.2-103, 2-105.2 As a result, UCC § 2-725’s four-year statute of limitations applies to Western’s action:

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued _
(2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. 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 must await the time of such performance the cause of action accrues when the breach is or should have been discovered.

Id. § 2-725 (emphasis added). Western discovered the Filón problems in 1987 and filed suit against Swift on January 17, 1990. As a result, § 2-725 bars all claims arising from [1550]*1550Adhesive delivered prior to January 17, 1986 unless Swift made a warranty of future performance within the meaning of the statute, in which case all of Western’s claims survive.

The district court held that Swift had in fact warranted the future performance of Adhesive. In so holding, the court refused to apply the majority rule requiring future performance warranties to refer explicitly to specific temporal periods:

This Court doesn’t read or feel the need to read “explicit” to require a temporal fix of months or years. The word means to the Court the clear and unequivocal understanding by the parties — and it seems to the Court that all of the attendant circumstances which are repleat [sic] in the record and which this Court has alluded to on a number of occasions — are such that without a word being said, just a silent thumbs up from Swift — would have been sufficient — sufficiently clear and unequivocal to advise [Western] that [it] should go ahead and use this in the future and that it would be all right for future use....
This Court doesn’t see certainty as a goal more important in the law than justice. To substitute in this, or any other contract, a requirement of a certain period of months in place of the natural and normal meaning of an explicit reference does, in the view of this Court — and would in this case — foster injustice.

The court also held that, alternatively, Swift had in fact referred to a specific time period by promising that Adhesive would work as well on Filón as on aluminum siding: “The aluminum had been bonded by this glue for five years. It had provided absolutely satisfactory suitability for a period of five years. So if a warranty of explicit reference to the future requires a fix in time, it seems to this Court that [Western] was given it.”

A.

Swift does not challenge the district court’s factual finding that it expressly warranted Adhesive to work as well on Filón as on aluminum. Instead, Swift contends the court erred by concluding that the warranty “explicitly extends to future performance” within the meaning of § 2-725. The issue we must resolve is, therefore, a mixed question of fact and law. See United States v. McConney, 728 F.2d 1195, 1200 (9th Cir.) (en banc) (mixed questions are those “in which the historical facts are ... established, the rule of law is undisputed, and the issue is whether the facts satisfy the relevant statutory ... standard”) (internal quotation omitted), cert. denied, 469 U.S. 824, 105 S.Ct.

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23 F.3d 1547, 1994 WL 176740, Counsel Stack Legal Research, https://law.counselstack.com/opinion/western-recreational-vehicles-inc-v-swift-adhesives-inc-ca9-1994.