Cambridge Plating Co. v. Napco, Inc. , 991 F.2d 20 ( 1993 )

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 92-2242
CAMBRIDGE PLATING CO., INC.,
Plaintiff, Appellant,
v.
NAPCO, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Boudin, Circuit Judge.
Thomas K. Christo with whom David B. Chaffin, Joseph M. Kaigler,
and Hare & Chaffin were on brief for appellant.
Richard L. Burpee with whom William A. McCormack was on brief for
appellee.
April 22, 1993
COFFIN, Senior Circuit Judge. Plaintiff Cambridge Plating
Company filed this lawsuit against defendant Napco seeking
damages for a defective wastewater treatment system. The
district court granted summary judgment for Napco, concluding as
a matter of law that the statutes of limitations had run on
plaintiff's claims. On appeal, Cambridge Plating argues that the
court should have let the jury decide whether Massachusetts's
"discovery" rule suspended the running of the limitations clock
long enough to preserve its claims. Because we agree with
plaintiff that material issues of fact remain, we reverse the
summary judgment.
I.
A. Factual Background
Cambridge Plating is an electroplating business that
discharges wastewater containing various metal contaminants into
municipal sewers. In an effort to meet strict environmental
regulations governing such discharges, the company commissioned
the design and installation of a wastewater treatment system from
defendant Napco. The contract price for the system was nearly
$400,000. Cambridge Plating additionally needed to make
substantial changes to its facility to accommodate the enormous
and complex array of pipes, tanks, valves, mixers, sensors,
recorders and other apparatus, pushing the total cost for the
project to $2.8 million.
The system began running on October 30, 1984, but it was not
then fully operational, and Napco continued installation and
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debugging for another year. In October 1985, Cambridge Plating
began to experience unsatisfactory results; testing revealed that
contaminant levels in the wastewater discharges sometimes
exceeded regulatory limits. Cambridge Plating's managers
believed the problems stemmed from errors by the system operators
or errors in wastewater sampling. This belief was fueled by
Napco representatives who, when contacted by Cambridge Plating on
a number of occasions between early 1986 and 1988, suggested ways
that Cambridge Plating could change its operation of the system.
Napco refused further visits to Cambridge Plating to service the
system unless it was paid $1,000 per day.
Cambridge Plating took several steps to resolve the
perceived operational or sampling problems. It replaced the
system operators and implemented the changes suggested by Napco.
In late 1986, the company asked a wastewater treatment expert,
Patrick Hunt, to evaluate the system and the company's operation
of it. Although Hunt found some minor problems with the system
itself, most of his recommendations were operational. Cambridge
Plating adopted his suggestions, but the company continued
periodicaly to exceed lawful contaminant levels.
On December 29, 1988, the Massachusetts Water Resources
Authority (MWRA), the agency responsible for effluent regulation,
assessed a penalty of $682,250 on Cambridge Plating for
violations during 1986-88. In February 1989, Cambridge Plating
commissioned another expert, Peter Moleux, to evaluate the
system. Moleux's lengthy inspection, which included a close
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comparison of Napco's written materials with the system as it
actually existed, revealed design flaws, failure to install parts
specified in the plans, and substandard engineering practices.
Most significantly, Moleux discovered that Napco had failed to
install an important component, a static mixer, inside a pipe
where system schematics provided by Napco indicated erroneously
the device had been placed. Omission of the static mixer
rendered the system incapable of adequately cleaning 80 percent
of the wastewater.
After Moleux's evaluation, Cambridge Plating installed a
static mixer at the point called for by Napco's plans. The
system thereafter worked properly, enabling Cambridge Plating
consistently to comply with the effluent limitations.
B. Procedural Background
Cambridge Plating filed this action in June 1990, alleging
causes of action for breach of contract, negligence, fraud,
negligent misrepresentation, and violation of the Massachusetts
unfair business practices act, Mass. Gen. Laws Ann. ch. 93A.
Napco moved for summary judgment, arguing that all of Cambridge
Plating's claims were barred by the applicable statutes of
limitation. The district court agreed with Napco.
The court concluded that Cambridge Plating's purchase of the
wastewater treatment system was a sale of goods, and that its
contract claim thus was governed by the four-year limitations
period under the Uniform Commercial Code, Mass. Gen. Laws Ann.
ch. 106, 2-725, rather than by the general six-year contractual
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limitations period, Mass. Gen. Laws Ann. ch. 260, 2. All of
Cambridge Plating's causes of action, therefore, were subject to
either three- or four-year statutes of limitation.1 These
claims were time-barred, the court determined, because they
accrued in late 1985, some four and one-half years before suit,
when the company learned that the system was failing to bring
effluent discharges within legal limits. The court rejected
plaintiff's argument that the limitations periods were tolled
until Moleux's evaluation, when Cambridge Plating first learned
the cause of the system's problems. The court concluded that,
with reasonable diligence, Cambridge Plating could have
discovered the defects once the system started malfunctioning.
On appeal, Cambridge Plating argues that the court
misconstrued the contract and the discovery rule, which serves to
toll certain hard-to-discern claims, and improperly usurped the
jury's role when it decided as a matter of law that the rule did
not preserve the company's claims. Our review of the district
court's grant of summary judgment is plenary, and we read the
record in the light most amicable to the party contesting summary
judgment. See, e.g., Pagano v. Frank, 983 F.2d 343, 347 (1st
Cir. 1993).
II.
1 Tort actions are subject to a three-year limitations
period, Mass. Gen. Laws Ann. ch. 260, 2A, and a four-year
statute applies to consumer protection actions brought under
Chapter 93A, Mass. Gen. Laws Ann. ch. 260, 5A.
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Cambridge Plating contends that the district court erred in
ruling as a matter of law that the contract with Napco was a sale
of goods contract within the scope of the UCC. Although
determining the type of contract at issue typically may be a jury
function, see United States v. City of Twin Falls, 806 F.2d 862,
870 (9th Cir. 1986), we believe the facts here are sufficiently
clear and undisputed that the district court was permitted to
make its finding as a matter of law. Id.Cambridge Plating asserts that the UCC is inapplicable
because the equipment it purchased does not meet the Code's
definition of goods. Under the UCC, "goods" are defined as "all
things . . . which are movable at the time of identification to
the contract for sale . . . ." See Mass. Gen. Laws Ann. ch. 106,
2-105. The company emphasizes the immense size of the
wastewater treatment system and its integration into the
electroplating facility in an effort to equate this situation
with White v. Peabody Construction Co., 386 Mass. 121, 132, 434
N.E.2d 1015 (1982), where the court ruled that the UCC does not
apply to "the sale of structures attached to realty."
But this comparison is flawed. The claims in White were
based on contracts calling for "[t]he erection of buildings" and
for the sale of a completed building -- "not contracts for the
sale of bricks or window frames or caulking material." Id. at
131, 133. In this case, the proposal specified the components of
the system as the primary subject of the sale and, indeed,
specifically described the contract as one "for goods." See App.
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at 113. The proposal separately listed eighty-eight items to be
provided by Napco, eighty-two of which involved pieces of
equipment. At the time of identification to the contract, these
were movable and therefore goods within the scope of the UCC.
Accord Twin Falls, 806 F.2d at 871 (components of wastewater
treatment system are movable goods). It was only after
installation into plaintiff's building that the items became
merged with the facility and hence unmovable -- to borrow the
district court's analogy, like cans of paint sold as goods and
then applied to a wall.2
That the contract involved the purchase of engineering and
installation services, in addition to a sale of goods, is of no
consequence. In our view, Massachusetts law is consistent with
the general trend to view such mixed contracts as governed by the
UCC. See Twin Falls, 806 F.2d at 871. In White, 386 Mass. at
131-32, the Supreme Judicial Court ruled that "[c]ontracts whose
predominant factor, thrust, or purpose is the rendition of
services" are outside the scope of the UCC. It follows
inexorably that, if the "rendition of services" is not at the
heart of a mixed contract, the UCC does govern. See USM Corp. v.
2 Plaintiff also cites in support of its position Chestnut
Hill Dev. Corp. v. Otis Elevator Co., 653 F. Supp. 927, 932 (D.
Mass. 1987), which held that structures "attached to realty,"
such as the elevator system at issue there, are not "goods"
within the meaning of the UCC. Under the UCC, however, the
inquiry centers on the nature of the goods "at the time of
identification to the contract," Mass. Gen. Laws Ann. ch. 106,
2-105. It is beyond debate that the contract here listed movable
items. See Burnham v. Mark IV Homes, Inc., 387 Mass. 575, 581,
441 N.E.2d 1027 (1982) (modular homes are "goods" within coverage
of UCC).
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Arthur D. Little Systems, Inc., 28 Mass. App. 108, 119, 546
N.E.2d 888 (1989) (contract for computer system involving both
sale of goods and delivery of services governed by UCC).
The undisputed facts demonstrate that the deal between
Cambridge Plating and Napco was first, and foremost, a sale of
goods. Most of the purchase price was for the specifically
listed items of equipment. Only $68,970 of the total contract
price of $398,200 was for installation,3 and purchasing
installation from Napco was even optional. See generally
Chestnut Hill Dev. Corp. v. Otis Elevator Co., 653 F. Supp. 927,
932 (D. Mass. 1987) (a contract to supply "hundreds of
components" is not "one whose primary thrust is the rendition of
services"). Because the contract was so heavily weighted toward
goods, it must fall within the scope of the UCC.
The district court correctly applied the UCC to plaintiff's
contract claim. We thus move on to consider whether this and
Cambridge Plating's other claims were timely brought.
III.
Although the Massachusetts legislature has set statutory
limitations periods for various causes of action, see supra at 4-
5 & n.1, determining when claims accrue "``has long been the
product of judicial interpretation,'" Hoult v. Hoult, 792 F.
Supp. 143, 144 (D. Mass. 1992) (quoting Franklin v. Albert, 381
3 The cost of engineering services to assist Cambridge
Plating with preparing its local industrial discharge permit and
meeting with local officials -- a single item among a list of 83
-- also was included in the equipment subtotal.
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Mass. 611, 617, 411 N.E.2d 458 (1980)). Caselaw establishes that
the general rule for negligence claims is that the cause of
action accrues at the time of injury. Riley v. Presnell, 409
Mass. 239, 243, 565 N.E.2d 780 (1991). Similarly, a cause of
action for breach of contract usually accrues at the time of the
breach, International Mobiles Corp. v. Corroon & Black/Fairfield
& Ellis, Inc., 29 Mass. App. 215, 221, 560 N.E.2d 122 (1990), and
accrual of a chapter 93A claim typically occurs at the time
injury results from the assertedly unfair or deceptive acts. 29
Mass. App. at 220-21.
These designated times are subject to some flexibility,
however, because Massachusetts courts have recognized that it
would be unfair to begin running the statute of limitations
before a plaintiff is put on notice that she has a claim. See
Bowen v. Eli Lilly & Co., 408 Mass. 204, 205, 557 N.E.2d 739(1990); Anthony's Pier Four, Inc. v. Crandall Dry Dock Engineers,
Inc., 396 Mass. 818, 824, 489 N.E.2d 172 (1986); Franklin, 381
Mass at 619. The judicially created tool for ensuring fairness
is the "discovery rule," which provides that, regardless of the
actual time of breach or injury, "a cause of action does not
accrue until a plaintiff discovers, or reasonably should have
discovered, that she may have been injured as a result of the
defendant's conduct." Hoult, 792 F. Supp. at 144. See also
Riley, 409 Mass. at 244; Bowen, 408 Mass. at 205-06; Hendrickson
v. Sears, 365 Mass. 83, 83-84, 310 N.E.2d 131 (1974). The
delayed knowledge may be either the fact of injury, such as when
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an item is not used and thus not discovered to be defective for a
substantial time after its purchase, see, e.g., Anthony's Pier
Four, Inc., 396 Mass. at 825-26,4 or the cause of the harm, such
as when an individual with a physical illness does not discover
the illness's link to particular medical treatment until years
after becoming sick, see, e.g., Bowen, 408 Mass. at 207.5
Not all contractual causes of action in Massachusetts are
governed by the judicially crafted accrual rules. Claims
alleging breach of a contract for the sale of goods instead are
subject to the detailed provisions of the UCC. Under 2-275(2),
a cause of action for breach of a sales contract generally
accrues when the breach occurs, "regardless of the aggrieved
party's lack of knowledge of the breach," and a breach of
warranty occurs when tender of delivery is made. Mass. Gen. Laws
Ann. ch. 106, 2-275(2). When a seller gives an explicit
warranty of future performance, however,
4 Anthony's Pier Four involved an action filed in 1980
against the designers of a ship mooring system that had been
completed in 1968. The plaintiff claimed that it was unaware of
the system's design deficiencies until it actually failed during
a storm in 1978. The court held that the lawsuit was timely
because "[t]he plaintiff discovered the breach when the boat
capsized in 1978 and there is no showing that it should have
known of the breach earlier." 396 Mass. at 826.
5 The plaintiff in Bowen had suffered a malignant vaginal
tumor requiring surgery in 1969 but did not file suit blaming the
cancer on a prescription drug manufactured by defendant Eli Lilly
& Co. until 1983. The court applied the discovery rule, but
nevertheless determined that the plaintiff was on notice that the
defendant may have caused her harm more than three years before
filing her action. 408 Mass. at 210.
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and discovery of the breach must await the time of such
performance the cause of action accrues when the breach
is or should have been discovered.
Id. Thus, like the tort and contract causes of action subject to
the judicial discovery rule, a cause of action for breach of a
warranty of future performance is tolled until the plaintiff has
adequate notice of the claim.
The district court found that the transaction at issue here
was a sale of goods, and that the UCC therefore governs the
contract claim. It further determined that Napco expressly had
warranted the future performance of the wastewater treatment
system, and that, consequently, the statutory discovery provision
applies. Because we have concluded that the district court
correctly ruled as a matter of law that the parties entered into
a sale of goods, and there is no challenge to its finding that
Napco gave an explicit warranty of future performance, the
timeliness of all of plaintiff's claims is linked to the
discovery rule.
IV.
Our analysis of the discovery rule's impact in this case
must begin with the parties' conflicting views on how the rule
operates. Defendant Napco asserts that the rule applies only to
"inherently unknowable" causes of action and that the question
before us is whether Cambridge Plating's claims were discoverable
through reasonably diligent efforts.6 If Cambridge Plating
6 Although the dictionary definition suggests that an
"inherently" unknowable claim is one that would be permanently
undiscoverable, see The Random House Dictionary of the English
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could have discovered its claims earlier through reasonable
diligence, Napco maintains, then they were not inherently
unknowable and the discovery rule would not apply.
Cambridge Plating counters that the applicability of the
discovery rule does not depend on whether it was possible for the
company to discover Napco's responsibility for the defects
earlier by pursuing some other reasonable course of action. The
inquiry, it asserts, must focus on the reasonableness of what the
company actually did. If the company acted diligently, but still
reasonably failed to learn of its cause of action, the discovery
rule would continue to delay the limitations clock.
The district court adopted Napco's view, finding that
Cambridge Plating could have discovered the system's defects once
the company learned that the water treatment equipment was
failing to bring effluent discharges within legal limits. The
court pointed to expert Moleux's affidavit as evidence that "the
defects were manifestly knowable to someone with an appropriately
trained eye," Opinion at 10 (emphasis in original). It did not
matter, the court ruled, whether Cambridge Plating had exercised
reasonable diligence in hiring the first expert, who did not
discover the defects: "[w]hether a defect is inherently
unknowable turns not upon an inquiry into whether the injured
Language (2d ed. 1987) at 982, the phrase has been used to
describe a cause of action that was incapable of detection for
some prolonged period of time even with the exercise of
reasonable diligence. See, e.g., Tagliente v. Himmer, 949 F.2d
1, 5 (1st Cir. 1991); White v. Peabody Construction Co., 386
Mass. 121, 129 (1982); International Mobiles Corp. v. Corroon &
Black/Fairfield & Ellis, Inc., 29 Mass. App. 215, 222 (1990).
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party did in fact exercise reasonable diligence, but instead upon
an inquiry into whether reasonable diligence could have led to
discovery of the defects," id. at 11 n.5 (emphasis in original).
This implies that at least two courses of action would meet a
standard of reasonable diligence -- one pursued by the injured
party and another that could have been pursued.
We are persuaded that Cambridge Plating's statement of the
discovery rule is the one consistent with prevailing
Massachusetts law. The rule is designed to protect plaintiffs,
to assure that "``a plaintiff [] be put on notice before his claim
is barred,'" Anthony's Pier Four, Inc., 396 Mass. at 824 (quoting
Franklin, 381 Mass. at 619). This protection would be frustrated
if a plaintiff who remained unaware of his claim even after
conducting reasonable inquiry was time-barred from pursuing it.
Fairness dictates that the discovery rule not be deemed
inapplicable simply because reasonable actions other than those
taken by the plaintiff could have uncovered the injury or cause
of harm. See generally Franklin, 381 Mass. at 618 (limitations
statutes are intended, inter alia, to "``stimulate [plaintiffs] to
activity'" and "punish[] negligent delay") (quoting Wood v.
Carpenter, 101 U.S. 135, 139 (1879)).
Indeed, the contrary conclusion would require something more
than reasonableness on the part of the plaintiff; Cambridge
Plating complains that nothing less than omniscience would do.
Whenever more than one reasonable option for pursuing a claim
existed -- when, for example, two or three qualified experts were
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available to investigate a non-performing piece of equipment --
the plaintiff would be penalized if the first expert chosen
reasonably failed to discover a problem the second expert managed
to detect. That the plaintiff had been diligent in hiring the
first expert would be irrelevant, even though the very point of
the rule was to protect plaintiffs whose reasonable efforts would
fail to put them on notice of their claims. This, certainly,
cannot be the intent of the Massachusetts courts.
The formulation that we believe reflects prevailing
Massachusetts law was particularly well articulated in Bowen, one
of the Supreme Judicial Court's more recent discovery rule cases:
This rule prescribes as crucial the date when a
plaintiff discovers, or any earlier date when she
should reasonably have discovered, that she has been
harmed or may have been harmed by the defendant's
conduct.
. . .
[T]he statute of limitations starts to run when an
event or events have occurred that were reasonably
likely to put the plaintiff on notice that someone may
have caused her injury.
408 Mass. at 205-206, 207. See also, e.g., Riley, 409 Mass. at
243; Franklin, 381 Mass. at 619. Bowen makes it clear that the
steps taken by a plaintiff to discover her cause of action play a
role in the decision whether to apply the discovery rule: "the
decision whether any [injury] should reasonably have been
uncovered ha[s] to be made in light of what reasonable inquiry
would have disclosed." Id. at 206 (citing Friedman, 371 Mass. at
485-86). Accrual of the plaintiff's cause of action is tested,
therefore, "by what a reasonable person in her position would
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have known or on inquiry would have discovered at the various
relevant times," Bowen, 408 Mass. at 210.
Thus, if Cambridge Plating acted reasonably diligently when
it hired the first expert, the fact that that expert failed to
discover the system's defects must be sufficient to toll the
statute of limitations.7 This is so because, if reasonable
inquiry failed to disclose the problem, it cannot be said that
the problem "should reasonably have been uncovered," Bowen, 408
Mass. at 206.8
We recognize that the district court's interpretation finds
literal support in the language of a number of cases, which
describe the discovery rule as applicable only to "inherently
unknowable" claims or refer to the time when a plaintiff "could"
have known of his claim. See, e.g., Melrose Hous. Auth. v. New
Hampshire Ins. Co., 402 Mass. 27, 34, 520 N.E.2d 493 (1988);
Anthony's Pier Four, Inc., 396 Mass. at 825-26 n.9; White, 386
Mass. at 129-30; International Mobiles Corp., 29 Mass. App. at
7 We presume here that the expert performed competently.
See infra p.17.
8 The district court's decision may reflect an implicit
finding that the first expert's efforts were inadequate. If
Moleux's exhaustive study of the system would have met but not
surpassed the threshold standard of reasonableness even if done
two years earlier, then Hunt's apparently less thorough review
would not have been sufficient inquiry under the discovery rule.
On the other hand, if Cambridge Plating exercised reasonable
diligence in hiring Hunt, and his performance was competent, then
Moleux's efforts beyond the reasonableness threshold should not
furnish a basis for denying discovery rule protection. On this
record, we do not think that the district court could determine
as a matter of law that the first evaluation was incompetent.
See Section V infra.
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222; Melrose Hous. Auth. v. New Hampshire Ins. Co., 24 Mass. App.
207, 212, 507 N.E.2d 787 (1987). But this support erodes on
analysis.
The two cases cited by the district court as precedent for
the standard it applied also refer to the "reasonably should have
known" formulation, see White, 386 Mass. at 129 & 130; Melrose
Hous. Auth., 24 Mass. App. at 212, as do other cases cited by
Napco, see, e.g., Anthony's Pier Four, Inc., 396 Mass. at 825-26
& n.9; International Mobiles, 29 Mass. App. at 218 & 222.
Moreover, none of these cases involved a plaintiff in the
position Cambridge Plating claims to be in here, i.e., one who
acted diligently, yet still failed to learn of a cause of action.
These cases, instead, uniformly involve plaintiffs who were
not diligent, and that circumstance, we believe, has led the
courts to describe the rule imprecisely. When a plaintiff has
made no reasonable efforts to discover the harm or its cause,
considering whether a plaintiff reasonably should have discovered
his claim will produce the same result as considering whether he
reasonably could have discovered it. For example, if a court
found that a claim could not be discovered through reasonable
diligence, it would be precluding as well a finding that he
reasonably should have discovered it. See, e.g., White, 386
Mass. at 130 (in cases cited, "the nature of the defendant's
wrong was such that the plaintiff did not discover and could not
reasonably have discovered that he or she had been injured until
[a later time]").
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Similarly, a court might find that, if the plaintiff had
been diligent, she could have discovered her claim. From this
conclusion, lacking contrary information, it also is logical to
presume that the plaintiff should have discovered her claim.
Having failed to act, the plaintiff has no basis for disputing
the court's sensible presumption that reasonable actions would
have produced results. See, e.g., Friedman v. Jablonski, 371
Mass. 482, 486, 358 N.E.2d 994 (1976); Melrose, 24 Mass. App. at
212-215; Graveline v. BayBank Valley Trust Co., 19 Mass. App.
253, 254-55, 473 N.E.2d 700 (1985). "Could" and "should"
effectively are interchangeable in this context, and the courts'
particular usage is of no significance.
Only when a plaintiff has done what he is supposed to do,
and still comes up empty, is a court faced with a possible
disjunction between what he theoretically could have known if he
had chosen a different reasonable path, and what he should have
known based on the reasonable inquiry he did make. Because none
of the cases cited to us present that situation, and because
construing the rule as the district court applied it effectively
would take away the protection the discovery rule is designed to
provide, we are confident that Cambridge Plating's view of the
discovery rule is correct.
We think it worth emphasizing that, so construed, the rule
does not permit a plaintiff to buy time by engaging an
incompetent "expert." Hiring an individual who is poorly suited
to investigate the type of injury suffered by the plaintiff is
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unlikely to be deemed "reasonable" inquiry sufficient to suspend
the limitations period. Moreover, even if the plaintiff
reasonably hires a professional he believes to be competent, but
who fails to discover a defect that a qualified expert easily
should have found, the plaintiff's only recourse is likely to be
against the deficient professional. The discovery rule would not
save the overlooked claim because reasonable inquiry should have
put the plaintiff on notice of it. See Friedman, 371 Mass. at
486 & n.4 (a competent lawyer would have done title search and
should have discovered defect).
The discovery rule's protection is limited in another way as
well. The rule does not suspend the running of the limitations
period pending confirmation of the plaintiff's injury or its
cause, but simply stops the clock until the occurrence of "an
event or events . . . that were reasonably likely to put the
plaintiff on notice that someone may have caused her injury,"
Bowen, 408 Mass. at 207 (emphasis added). Thus, a plaintiff who
in the 1970s was told that her injury may have been caused by her
mother's ingestion of DES was unable to invoke the discovery rule
to save the lawsuit she filed a decade later, when she felt more
certain of the causal connection. See id. at 209-10.
Applying these principles to the case at hand, Cambridge
Plating's ability to invoke the discovery rule -- and thus the
timeliness of its claims -- turns on when the company should have
known that Napco might be responsible for the water treatment
system's failing performance. In Section V, we discuss our
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conclusion that this question must be answered by the trier of
fact. See Riley, 409 Mass. at 247-48 (jury should decide
disputed issues relating to statute of limitations).
V.
To survive Napco's motion for summary judgment based on the
statute of limitations, Cambridge Plating must show a genuine
issue of material fact as to whether it knew or should have known
of its claims before June 22, 1987.9 See Fidler v. Eastman
Kodak Co., 714 F.2d 192, 197-98 (1st Cir. 1983); Hoult, 792 F.
Supp. at 145; Riley, 409 Mass. at 244, 247. No one suggests that
Cambridge Plating in fact knew the source of the system's
problems before early 1989, and the issue therefore is whether
there is a factual dispute over whether the company should have
realized Napco's possible responsibility before that date.
A careful analysis of the record persuades us that such a
dispute exists. In finding that Cambridge Plating was on notice
of its claims in late 1985, the district court relied heavily on
the company's having learned at that time that the system was
failing to bring effluent discharges down to acceptable levels.
The court felt that Cambridge Plating's knowledge of the
deficiencies meant that it knew that the performance warranty was
being breached. Additionally, consistent with its understanding
9 The lawsuit was filed on June 22, 1990. As discussed in
Section III, supra, certain of the claims have four-year, rather
than three-year, statutes of limitation, and those claims would
be timely even if Cambridge Plating learned of them a year
earlier, in 1986. For the sake of simplicity, because it makes
no difference in the result, we discuss the claims as if all
needed to be filed within three years of their discovery.
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of the discovery rule, see Section IV supra, the court ruled that
Cambridge Plating was then on notice of the other claims as well.
The system's inadequate performance in late 1985 strikes us
as far less portentous. Beyond doubt, when the system first was
installed, and throughout Napco's debugging process, Cambridge
Plating had no reason to suspect the serious flaws. Omission of
the static mixer was virtually impossible for anyone but a
wastewater treatment expert to discover, both because the device
was supposed to be located inside a pipe and because Napco's
diagrams indicated that it had been installed. Moreover, any
deficiencies presumably were to be resolved once Napco finished
its finetuning.
When the problems persisted despite Napco's announcement
that debugging was complete, two explanations theoretically were
available. Either the system itself was defective, or it was
being operated improperly. At this point, however, the two
possibilities were not equally weighted. Cambridge Plating knew
that the system was technically complex and required sensitive
operation. And Napco's only response to Cambridge Plating's
inquiries was to suggest ways to improve operation.
In these circumstances, we do not believe Massachusetts law
requires a finding that Cambridge Plating was on notice of the
system's defects. A plaintiff is sufficiently aware of her cause
of action, and thus should have discovered it, once she has
received "notice of likely cause," Fidler, 714 F.2d at 199(quoted in Bowen, 408 Mass. at 207-08). Accordingly, as we
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understand the requisite notice, the statute of limitations will
begin to run once the plaintiff has enough information to target
the defendant as a suspect, though not necessarily to identify
the defendant as the culprit. See Bowen, 408 Mass. at 207-08.
We think it within a factfinder's province to conclude that, in
late 1985, Cambridge Plating had no basis for suspecting Napco's
workmanship and reasonably attributed the system's problems
solely to its own deficient operation. If so, the statute of
limitations would not yet have begun to run.10
Cambridge Plating hired new operators, but the problems
persisted. So, in late 1986, the company engaged its first
expert evaluation of the system. This, too, resulted in only
operational suggestions. Should this expert have discovered the
defects? Again, we believe this is a question properly answered
by the trier of fact. The record contains little information
about the first expert, describing him only as an assistant
instructor for a wastewater treatment course at a community
college who "worked on waste treatment for Hewlett Packard." See
Affidavit of Edward Marullo, at 2. Was he competent to evaluate
the system? Would even a well qualified expert necessarily have
uncovered the problem based on what he knew about the system at
10 The facts here contrast with those in White v. Peabody
Construction Co., 386 Mass. 121 (1982), where plaintiffs sought
to recover damages resulting from widespread window and roof
leaks allegedly caused by defendants' improper design and
construction of a housing project. The court rejected
application of the discovery rule there because the plaintiffs
"reasonably should have known that widespread water leaks in a
newly constructed building are almost certainly the result of
design or construction defects." Id. at 130.
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that point? Was it reasonable to rely on the schematics provided
by Napco showing that a static mixer had been installed? Perhaps
the second expert discovered the defects only because, in light
of the earlier expert's reasonable work, a more exhaustive study
now appeared necessary.11
Because the record leaves these subsidiary issues
unresolved, factual questions remain as to whether Cambridge
Plating should have known even by the end of 1986 of Napco's
possible responsibility for the system's failings. If the
expert's failure to discover the defects was reasonable, a jury
could find that Cambridge Plating continued to deserve protection
from the discovery rule beyond that time.12
Whether the rule's impact, assuming it reached this far,
continued on through the time of actual discovery is also a
matter for jury deliberation. Was it reasonable for the company
to wait another two years before seeking additional advice? Was
there a point in time after Cambridge Plating had complied with
all of the first expert's suggestions, still without any change
in the system's performance, that the company reasonably should
have realized that Napco's work may have been to blame?
11 An affidavit from the second expert, Peter Moleux, states
that, in his opinion, "the defects in the system could have been
discovered only by someone with expertise and training in the
field similar to mine and only after a lengthy and thorough
inspection and analysis." See App. at 179 33. Moleux reported
that he spent "many days" identifying the system's problems.
12 Of course, claims subject to four-year limitations
periods would be timely even if the discovery rule only tolled
the running of the clock through the end of 1986.
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In short, many questions remain. To determine when
Cambridge Plating "reasonably should have discovered" that it
might have claims against Napco requires a review of specific
circumstances about which the record presently contains sketchy
information. Consequently, the district court's grant of summary
judgment must be set aside.13
Reversed and remanded. No costs.
13 We are unpersuaded by Cambridge Plating's alternative
theories that the statutes were tolled because (1) Napco
concealed omission of the static mixer and (2) Napco had a
fiduciary duty to disclose the omission but failed to do so. See
generally White v. Peabody Construction Co., Inc., 386 Mass. 121,
133-34 (1982).
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