Denis Marchand and Christine E.T. Marchand v. Golden Rule Plumbing Heating & Cooling, Inc., K&E Distributing, Inc., Van's Heating & Cooling, L.L.C., and Bosch Thermotechnology Corp. ( 2017 )

IN THE COURT OF APPEALS OF IOWA
No. 16-1550
Filed November 8, 2017
DENIS MARCHAND and CHRISTINE E.T. MARCHAND,
Plaintiffs-Appellants,
vs.
GOLDEN RULE PLUMBING HEATING & COOLING, INC., K&E
DISTRIBUTING, INC., VAN’S HEATING & COOLING, L.L.C., and BOSCH
THERMOTECHNOLOGY CORP.,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Madison County, Paul R. Huscher,
Judge.
Homeowners appeal the district court’s summary judgment ruling in favor
of three of the four defendants on claims for damages associated with a
malfunctioning geothermal heating and cooling system. AFFIRMED IN PART,
REVERSED IN PART, AND REMANDED.
Timothy J. Van Vliet of Wetsch Abbott Osborn Van Vliet P.L.C., Des
Moines, for appellants.
Jason M. Zager of Shook, Hardy & Bacon, L.L.P., Kansas City, MO, and
Jason C. Palmer of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines,
for appellee Bosch Thermotechnology Corp.
2
Joseph A. Happe, Kelsey K. Crosse, and Lucas B. Draisey of Davis,
Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellee Golden Rule
Plumbing Heating & Cooling, Inc.
Considered by Vaitheswaran, P.J., and Tabor and Mullins, JJ.
3
VAITHESWARAN, Presiding Judge.
Years after building a home, the owners sued various entities for damages
associated with a malfunctioning geothermal heating and cooling system. The
district court granted summary judgment to three of the four defendants. On
appeal, the homeowners argue the statute of limitations did not preclude their
action. They also assert that genuine issues of material fact foreclosed summary
judgment.
I. Background Facts and Proceedings
Denis and Christine Marchand built a home with a geothermal heating and
cooling system. The home was completed in 2005. In 2015, the Marchands
sued K&E Distributing, Inc., Golden Rule Plumbing Heating & Cooling, Inc.,
Bosch Thermotechnology Corp., and Van’s Heating and Cooling, L.L.C. alleging
(1) “[t]he heating and cooling system did not work properly [al]most immediately
upon completion of the home”; (2) “the entire geothermal system failed”; (3) in
2009, Bosch provided them “with a new unit” but “that unit . . . also . . . failed”;
and (4) the system continued to “not work properly, . . . causing substantial
discomfort and stress to the . . . entire family.” They sought “just compensation”
against all the defendants for (I) manufacturing defect, (II) design defect,
(III) breach of express warranty, (IV) breach of implied warranty, and
(V) negligence.
Van’s Heating and Cooling participated only to the extent of filing an
answer. The remaining three defendants filed motions for summary judgment.
Meanwhile, the Marchands sought leave to amend their petition to add a breach-
of-contract claim. Golden Rule moved to dismiss this claim on statute of
4
limitations grounds. Bosch joined in Golden Rule’s motion and filed a motion for
specific statement, in which Golden Rule joined. K&E filed an affidavit
addressing the contract claim and other issues.
Following an unreported hearing on pending motions, the district court
granted all three defendants summary judgment on all the Marchands’ claims.
The court did not address the claims against Van’s Heating and Cooling or a
counterclaim filed by Golden Rule. The Marchands appealed.
II. Summary Judgment Ruling
The well-established summary-judgment standard is as follows:
Summary judgment is appropriate only when the moving party has
demonstrated there is no genuine issue as to any material fact and
the moving party is entitled to judgment as a matter of law. In
determining whether a grant of summary judgment was
appropriate, [the reviewing court] examine[s] the record in the light
most favorable to the nonmoving party, drawing all legitimate
inferences that may be drawn from the evidence in his or her favor.
Homan v. Branstad, 887 N.W.2d 153, 163-64 (Iowa 2016). At the outset, the
Marchands list several facts they contend are disputed. These facts appear to
be immaterial. Id. at 164 (“A fact is material when its determination might affect
the outcome of a suit.”). To the extent any of them could be tethered to a legal
issue, we will address them in that context.
A. Golden Rule and K&E1
1. Statute of Limitations – Manufacturing Defect, Design Defect, Implied
Warranty, Negligence
Iowa Code section 614.1(4) (2015) sets forth a limitations period of five
years for actions founded on “unwritten contracts,” “injuries to property,” fraud,
1
K&E did not file a responsive brief.
5
and “all other actions not otherwise provided for.” Iowa Code section
614.1(2A)(a) sets forth a statute of repose of fifteen years for claims
founded on . . . injuries to the person or property brought against
the manufacturer, assembler, designer, supplier of specifications,
seller, lessor, or distributor of a product based upon an alleged
defect in the design, inspection, testing, manufacturing, formulation,
marketing, packaging, warning, labeling of the product, or any other
alleged defect or failure of whatever nature or kind, based on the
theories of strict liability in tort, negligence, or breach of an implied
warranty.
See Albrecht v. General Motors Corp., 648 N.W.2d 87, 92 (Iowa 2002) (“Unlike a
statute of limitations, the period established in section 614.1(2A)(a) does not run
from the accrual of the plaintiff’s claim; rather, it runs from the date the product
was first purchased or installed for use.”); see also Estate of Ryan v. Heritage
Trails Assocs., Inc., 745 N.W.2d 724, 729 (Iowa 2008) (“In a products liability
action brought in Iowa, the statute of repose begins to run ‘after the product was
first purchased, leased, bailed, or installed for use or consumption unless
expressly warranted for a longer period of time by the manufacturer, assembler,
designer, supplier of specifications, seller, lessor, or distributor of the product.’”
(quoting Iowa Code § 614.1(2A)(a))).
The Marchands argued for application of the fifteen-year statute of repose,
but the district court applied the five-year limitations period to the Marchands’
claims against Golden Rule and K&E for manufacturing defect, design defect,
implied warranty, and negligence. The court concluded these claims were time-
barred. Contrary to the Marchands’ assertion, the court did not rely on this
6
defense with respect to their express-warranty claim against Golden Rule and
K&E or any of their claims against Bosch.2
(a) Five-Year Limitations Period
The Marchands argue they “generated a genuine issue of material fact on
the discovery of the injury and its cause which would determine when the statute
of limitations period began and [they] should have the opportunity to present
such evidence to a jury of their peers.”3 The discovery rule, when applicable,
provides that a cause of action does not accrue until the plaintiff “has in fact
discovered” an injury or “by the exercise of reasonable diligence should have
discovered” the injury. Franzen v. Deere & Co., 334 N.W.2d 730, 732 (Iowa
1983) (citation omitted) (applying discovery rule to a products liability case
involving allegation of defective manufacture and design); see also Speight v.
Walters Dev. Co., 744 N.W.2d 108, 116 (Iowa 2008) (applying the discovery rule
to case arising from implied warranties); Brown v. Ellison, 304 N.W.2d 197, 201
(Iowa 1981) (applying the discovery rule to an action based on oral contract for
breach of express warranty and breach of implied warranty), overruled on other
grounds by Franzen, 334 N.W.2d at 732.
The Marchands pled that they learned of the nonfunctioning geothermal
system “[al]most immediately upon completion of the home” in 2005. While they
2
Bosch contends it never raised a statute-of-limitations defense. To the contrary,
Bosch’s answer to the original petition raised the affirmative defense of statute of
limitations, and Bosch joined in Golden Rule’s motion to dismiss the breach-of-contract
claim on statute-of-limitations grounds. Be that as it may, the district court did not grant
Bosch summary judgment on statute-of-limitations grounds.
3
Section 554.2725(2) applies to contracts for the sale of goods. The provision states: “A
cause of action accrues when the breach occurs, regardless of the aggrieved party’s
lack of knowledge of the breach.” Iowa Code § 554.2725(2). If this provision were
invoked, it would disallow reliance on a discovery rule.
7
assert they did not discover the extent of the problem until 2011, they hired Van’s
Heating in 2008 to “come in and correct the heating and cooling system.” They
also alleged “the entire geothermal system failed” in 2009. We conclude the
Marchands discovered or could have discovered the injury in 2005 and certainly
no later than 2009. See Franzen, 377 N.W.2d at 663 (“Plaintiffs knew the
instrumentality that caused the injury at the time it occurred. . . . The information
they possessed on the date of the accident was plainly sufficient to put them on
inquiry notice concerning possible defects.”). They did not file their petition until
2015. Because the claims accrued outside the five-year limitations period, we
conclude the district court did not err in granting summary judgment in favor of
Golden Rule and K&E on the Marchands’ manufacturing-defect, design-defect,
implied-warranty, and negligence claims.
(b) Fifteen-Year Period of Repose
The Marchands alternatively argue the fifteen-year repose period applies
to the “products liability” claims against Golden Rule and K&E. As noted, the
Marchands referred to this provision in their summary judgment memorandum,
but the district court did not apply it, and the Marchands did not seek enlarged
findings and conclusions. See Meier v. Senecaut, 641 N.W.2d 532, 539 (Iowa
2002) (stating a party must “request a ruling from the district court to preserve
error for appeal on an issue presented but not decided”).
Assuming without deciding error was preserved, there is scant if any
indication in the summary judgment record that Golden Rule was a
“manufacturer, assembler, designer, supplier of specifications, seller, lessor, or
distributor of a product.” Iowa Code § 614.1(2A)(a); see Estate of Ryan, 745
8
N.W.2d at 729 (“The time limit in which a party may bring a products liability
action against ‘the manufacturer, assembler, designer, supplier of specifications,
seller, lessor, or distributor of a product’ is fifteen years.” (quoting Iowa Code §
614.1(2A)(a))). We conclude the fifteen-year repose period is inapplicable to the
manufacturing defect, design defect, implied warranty, and negligence claims
against Golden Rule.
As for K&E, the company attested it was a wholesale distributor of
materials, which it sold to the predecessor of Golden Rule. The Marchands, in
turn, pled K&E was the designer of their heating and cooling system. Either the
“distributor” characterization or the “designer” characterization might have
triggered the fifteen-year repose period set forth in section 614.1(2A)(a). But, as
discussed, the Marchands did not ask the district court to reconsider its ruling in
light of the potential applicability of this provision. Because error was not
preserved, we affirm the district court’s application of the five-year limitations
period and the grant of summary judgment in favor of K&E on the
manufacturing-defect, design-defect, implied-warranty, and negligence claims.
2. Failure to State a Claim – Express Warranty
(a) Golden Rule
The Marchands made a general allegation against all the defendants that
they “sold, designed, and installed the heating and cooling system for [their]
home and expressly warranted that the system and its components would work
properly.” In moving for summary judgment on this claim, Golden Rule asserted
it “did not make any express warranties regarding the manufacture or design of
the heating and cooling system” but did provide “a one year warranty to [the
9
Marchands] for its labor relating to the installation of the heating and cooling
system.” Golden Rule stated the system was installed “at the end of 2004 to
2005.” In its resistance to Golden Rule’s summary judgment motion, the
Marchands acknowledged Golden Rule’s role was to “complete[] the installation
of the heating and cooling system.”
The district court granted Golden Rule’s summary judgment motion on this
claim. The court concluded:
[The Marchands] have not proven the existence of an express
warranty from Golden Rule still in effect. Golden Rule asserts it is
standard practice to issue a one year warranty on services
performed. Golden Rule’s services were performed in 2005. The
warranty has since expired. Plaintiffs have not provided facts to
indicate that a different warranty is still in effect or that they
attempted to benefit from the original warranty.
Believing the district court dismissed their express warranty claim against Golden
Rule on statute-of-limitations grounds, the Marchands do not challenge the
court’s rejection of this claim on the merits. Accordingly, we could deem the
issue waived. See State v. Short, 851 N.W.2d 474, 479 (Iowa 2014) (stating
arguments not advanced on appeal were waived). Assuming without deciding
the Marchands’ discussion of the express warranty claim as it relates to
defendant Bosch also applies to Golden Rule, we conclude their reliance on a
sale-of-goods provision in the Uniform Commercial Code is misplaced. See Iowa
Code § 554.2313(1).
“[T]he Uniform Commercial Code does not apply to services.” Moore v.
Vanderloo, 386 N.W.2d 108, 112 (Iowa 1986). The Marchands concede that
Golden Rule only provided services. They also do not argue Golden Rule
created an express warranty for goods through their words or actions. See, e.g.,
10
Flom v. Stahly, 569 N.W.2d 135, 140 (Iowa 1997) (noting “distinct assertion of
quality concerning thing to be sold” could create an express warranty). As the
court found, the only warranty was the one-year labor warranty, which had long-
since expired. We conclude the district court did not err in granting Golden Rule
summary judgment on the merits of the Marchands’ express-warranty claim.
(b) K&E
The district court concluded the Marchands failed to prove “the existence
of an express warranty” as to K&E. The court stated K&E’s standard practice
was to “issue a five year warranty on products such as the heat pump provided
to” the Marchands, “K&E sold products to” the Marchands “in 2005,” and “[a]ny
warranty expired in 2010.” The Marchands do not take issue with this aspect of
the court’s ruling. Instead, they challenge the ruling exclusively on statute-of-
limitations grounds. We conclude error was waived.
3. Breach of Contract
As noted, Golden Rule moved to dismiss the breach-of-contract claim on
statute-of-limitations grounds and joined in Bosch’s motion for more specific
statement as to this claim. See Iowa R. Civ. P. 1.433 (“A party may move for a
more specific statement of any matter not pleaded with sufficient definiteness to
enable the party to plead to it and for no other purpose. It shall point out the
insufficiency claimed and particulars desired.”). The district court ordered the
Marchands to file a more specific statement “as to each claim referring to a
contract, specifying the defendant or defendants to which the claim applies, and
whether the contract or contracts are written or oral.” The court also ordered
Golden Rule’s motion to dismiss to be “submitted with pending motions.” In its
11
“ruling on pending motions,” the court dismissed “all claims against” Golden Rule
and K&E without expressly addressing the breach-of-contract claim.
On appeal, the Marchands contend they “have not yet had an opportunity
to amend their petition pursuant to the court’s order . . . regarding Bosch’s motion
for more specific statement,” and accordingly, their “breach-of-contract claim
against Bosch should still be pending but the court’s ruling did not make that
clear.” The problem with this argument is that the Marchands were obligated to
file their more specific statement within ten days of the court’s order. See Iowa
R. Civ. P. 1.444. They failed to do so. The district court ruled on all pending
motions and granted summary judgment in favor of the three defendants on all
the claims. The ruling disposed of the Marchands’ breach-of-contract claims
against Golden Rule and K&E.
B. Bosch
1. Manufacturing Defect, Design Defect, Negligence – Failure to State a
Claim
The district court concluded the Marchands “have not generated any fact
that demonstrates the Bosch condensing section they received departed from its
original design,” there was “any defect in the Bosch product,” or that “a defect in
the Bosch condensing section caused the failure of the system.” The court
granted Bosch summary judgment on the Marchands’ manufacturing defect,
design defect, and negligence claims.
On appeal, the Marchands do not address the merits of the court’s ruling
on these claims as to Bosch. We conclude error was waived. Short, 851 N.W.2d
at 479.
12
2. Breach of Express Warranty
The Marchands alleged the “Defendants . . . expressly warranted that the
[heating and cooling] system and its components would work properly.” The
district court granted Bosch summary judgment on this claim, reasoning as
follows:
Plaintiffs have not provided any evidence of a defect in the Bosch
condensing section. There is no evidence the Bosch condensing
section was nonconforming to what was ordered or that it
performed differently than it purported to. There is no evidence that
the same Bosch condensing section would not have performed
perfectly in a properly configured system. Without evidence of a
breach of express warranty, Plaintiffs cannot support this claim.
On appeal, the Marchands contend, “Bosch expressly warranted that the
second geothermal unit would be suitable for use with [their] HVAC System.”
They assert they “relied on Bosch’s warranty that the second unit provided in
2011 would correct the HVAC issues” and the “second unit ultimately failed
similar to the first unit.”
Bosch responds that the Marchands failed to preserve error on their
express warranty claim as to the second unit. To the contrary, Denis Marchand
attested “the second unit failed” and the second unit was “still under warranty.”
He also attested, “The current geothermal unit provided by Bosch circa 2011 in
our home is no longer operational and is still under warranty.” We conclude the
Marchands preserved error on their present contention.
Turning to the merits, the parties cite Iowa Code section 554.2313
governing “express warranties by affirmation, promise, description, sample.”
That provision states:
Express warranties by the seller are created as follows:
13
a. Any affirmation of fact or promise made by the seller to
the buyer which relates to the goods and becomes part of the basis
of the bargain creates an express warranty that the goods shall
conform to the affirmation or promise.
b. Any description of the goods which is made part of the
basis of the bargain creates an express warranty that the goods
shall conform to the description.
c. Any sample or model which is made part of the basis of
the bargain creates an express warranty that the whole of the
goods shall conform to the sample or model.
Iowa Code § 554.2313(1).
Bosch does not dispute that the second unit remained under express
warranty. Whether that warranty was breached is a fact question precluding
summary judgment.
Bosch nonetheless asserts we should affirm the summary judgment ruling
because no one identified a defect in its product. This is not the key to an
express warranty claim for the sale of goods under the Uniform Commercial
Code. Section 554.2313(1)(b), for example, states “description of the goods
which is made part of the basis of the bargain creates an express warranty that
the goods shall conform to the description.”
Bosch’s own expert stated:
The Bosch Unit label and literature indicates pairing with specific
Air Handling Units and these have been tested and certified per
industry standards, Hi-Velocity is not listed in the Bosch literature
as a tested pairing. These certifications are typically required in
order for the system to meet requirements for Federal, State and
local utility incentives and/or rebates.
When the first unit failed, Denis Marchand attested he spoke to Bosch
representatives and they agreed to provide a replacement geothermal unit at a
reduced price. According to Marchand, Bosch supplied “an identical geothermal
unit to the one that had failed when it now acknowledges that such geothermal
14
unit should never have been paired to our system.” In light of the pairing
specifications in Bosch’s literature, we are persuaded the Marchands generated
an issue of material fact on the question of whether Bosch breached an express
warranty. We reverse the summary judgment ruling as to the Marchands’
express-warranty claim against Bosch relating to the replacement unit.
3. Implied Warranty Claims
The Marchands alleged Bosch “impliedly warranted that the heating and
cooling system would be fit for its intended purpose.”4 The district court rejected
this claim, reasoning as follows:
To defeat summary judgment on the claim of implied
warranty for a particular purpose, [the Marchands] must assert that
Bosch knew of a particular purpose, other than the general purpose
of providing heating and cooling, for the condensing section. [The
Marchands] have not provided any material facts to support this
claim.
On appeal, the Marchands assert they “relied on Bosch’s skill and expertise in
the industry when addressing the first failed unit with Bosch. They maintain,
“Bosch had the knowledge of the unique design of [their] HVAC System and
knew its unit should not be paired with that system.”
The Uniform Commercial Code provides the following implied warranty on
fitness for a particular purpose:
Where the seller at the time of contracting has reason to know any
particular purpose for which the goods are required and that the
buyer is relying on the seller’s skill or judgment to select or furnish
suitable goods, there is unless excluded or modified under section
554.2316 an implied warranty that the goods shall be fit for such
purpose.
4
We are not persuaded by Bosch’s argument that the Marchands waived error on this
contention.
15
Iowa Code § 554.2315. The editor’s notes state, “Whether or not this warranty
arises in any individual case is basically a question of fact to be determined by the
circumstances of the contracting.” Id. cmt. 1.; see also Midwest Dredging Co. v.
McAninch Corp., 424 N.W.2d 216, 222 (Iowa 1988).
Bosch asserts Denis Marchand’s affidavit failed to “provide sufficient
factual detail and foundation to support this claim.” We disagree. Denis
Marchand attested to discussing the failure of the first unit with Bosch
representatives. He was informed “that this was not the first such identical unit to
have this issue.” His affidavit generated a genuine issue of material fact on
whether an implied warranty of fitness for a particular purpose arose and whether
the warranty was breached. We reverse the grant of summary judgment in favor
of Bosch and remand for further proceedings on this implied-warranty claim.
The Uniform Commercial Code also sets forth an implied warranty of
merchantability. “Unless excluded or modified (section 554.2316), a warranty
that the goods shall be merchantable is implied in a contract for their sale if the
seller is a merchant with respect to goods of that kind.” Iowa Code § 554.2314.
The district court addressed and rejected this claim as follows:
Expert reports from both the Plaintiffs and Defendants show that
the problem with the heating and cooling system is the pairing of
various components within the system, not the Bosch condensing
section on its own. [The Marchands] have not asserted any
material facts to prove a claim of implied warranty of
merchantability against defendant Bosch.
On appeal, the Marchands assert, “Bosch knew of the system
configuration in [their] home, was aware of prior issues with the pairing of that
Bosch unit with a hi-velocity air handling system and despite such knowledge
16
provided [them] with a second identical unit.” Bosch responds that the
Marchands failed to assert “the Bosch condensing section was defective or
would not perform properly if paired with an appropriate air handler unit.” To the
contrary, Denis Marchand attested, “Bosch had every opportunity to provide . . .
information to us [that its units could not be paired with the high velocity system]
when providing a second geothermal unit subsequent to the first one blowing up
yet Bosch simply provided a new unit.” We conclude the Marchands generated a
fact question on the implied-warranty-of-merchantability claim. We reverse the
grant of summary judgment in favor of Bosch and remand for further
proceedings.
III. Disposition
We affirm the grant of summary judgment in favor of Golden Rule and
K&E on all the Marchands’ claims against them.5 We affirm the grant of
summary judgment in favor of Bosch on the Marchands’ manufacturing defect,
design defect, and negligence claims; we reverse the grant of summary judgment
in favor of Bosch on the express- and implied-warranty claims and remand for
further proceedings.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
5
Golden Rule’s counterclaim for failure to pay the last two invoices totaling $6160.41
was not resolved by the court.