Jones v. Clark , 36 N.C. App. 327 ( 1978 )

244 S.E.2d 183 (1978) 36 N.C. App. 327

Robert Louis JONES and Brenda A. Porter, Plaintiffs,
v.
Richard D. CLARK, t/a Richard D. Clark Associates, and wife, Toni B. Clark, Defendants and Third-Party Plaintiffs,
v.
LESCO HOMES, INCORPORATED of North Carolina and Pittsburgh Testing Laboratory, Third-Party Defendants.

No. 7721DC453.

Court of Appeals of North Carolina.

May 16, 1978.

Westmoreland & Sawyer by Barbara C. Westmoreland and Gregory W. Schiro, Winston-Salem, for defendants/third-party plaintiffs-appellants.

Deal, Hutchins & Minor by William Kearns Davis, Winston-Salem, for third-party defendants-appellees.

MORRIS, Judge.

In this case, the first question presented is whether the appeal should be dismissed as is urged by the appellee (third-party defendant). PTL asserts that the appeal does not meet the requirements of Rule 54(b) for an interlocutory appeal where final judgment is entered "as to one or more but fewer than all of the claims or parties" because the trial judge did not determine that "there is no just reason for delay". Our Supreme Court has addressed the same issue on two occasions and has held that there is a right of appeal under G.S. 1-277 from an order granting summary judgment, notwithstanding the failure to meet the requirements for a Rule 54(b) appeal where a substantial right is affected. Nasco Equipment Co. v. Mason, 291 N.C. 145, 229 S.E.2d 278 (1976); Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797 (1976). Here the summary judgment determined the claim of defendants Clark against PTL. The possibility of PTL's having to indemnify defendants Clark is remote. Should the summary judgment be upheld, Lesco is still a party and is obligated to indemnify PTL. We, nevertheless, choose to discuss and decide the matter on its merits.

Defendants/third-party plaintiffs have alleged a breach of both express and implied warranties by PTL. The cause of action is based upon a warranty claim growing out of a contract and not upon a tort. We will examine separately the alleged breach of express and implied warranty.

As to the allegations of breach, the complaint does not reveal the nature of the alleged implied warranties, nor does the record suggest their nature. We do not believe that an implied warranty of workmanlike construction such as the one the Court discussed in Hartley v. Ballou, 286 N.C. 51, 209 S.E.2d 776 (1974), can properly be imputed to one who simply allows its seal of inspection to be placed on a product manufactured by someone else. Additionally, we do not believe that the provisions of the Uniform Commercial Code, specifically G.S. 25-2-314 and G.S. 25-2-315, are properly applicable. Article 2 of the Uniform Commercial Code applies to transactions in goods. G.S. 25-2-102. In this case, any implied warranty of PTL would concern the quality of its inspection services rather than the quality of goods. Thus, Article 2 does not apply.

If some other type of implied warranty were arguably applicable, we believe that such an implied warranty could not meet the privity requirements. Our courts, as a general rule, have continued to require that one seeking to recover on an implied warranty prove privity of contract. Wyatt v. Equipment Co., 253 N.C. 355, 117 S.E.2d 21 (1960). This privity requirement has been relaxed in cases involving the sale of goods. See G.S. 25-2-318. However, this relaxation of the privity requirement has not yet been extended to services. Thus, assuming that the doctrine of implied warranty were applicable to inspection services, third-party plaintiffs would have to prove that they were in privity of contract with PTL in order to recover. The record before us does not suggest in any manner that PTL and the Clarks had direct dealings sufficient to establish privity of contract. The Clerks purchased the unit from Lesco. Only Lesco dealt directly with PTL. Thus, we find no cause of action for breach of an implied warranty.

Next, we must determine whether there is any express warranty running from PTL to the Clarks. With respect to express warranties, the privity requirement does not present the same problem as is present with respect to implied warranties. Indeed, in some cases our Courts have held that an express warranty existed while simultaneously holding that the plaintiff had not established privity of contract to base his recovery on an implied warranty. See Corprew v. Chemical Corp., 271 N.C. 485, 157 S.E.2d 98 (1967). Therefore, if the defendants/third-party plaintiffs can establish that there was an express warranty running from PTL to them and that the warranty has been breached, they are entitled to recover on that warranty.

The only evidence of the existence of an express warranty is the fact that the seal of PTL was affixed to the unit in the living room closet. There is no evidence of the precise wording of the seal or the exact appearance of the seal. The third-party complaint, verified by both Richard D. Clark and Toni B. Clark, says that the seal certified that the unit was "approved for use and occupancy". The record presents no other evidence of any other possible contact between the Clarks and PTL. The whole claim must, therefore, rest upon the presence of the seal. There is evidence that the reason Lesco used PTL's services and the reason for placing the seal on the unit was to avoid the necessity of certain state and local building inspections and to qualify the completed unit for Federal Housing Administration mortgage insurance and Low Rent Public Housing projects. Indeed, the seal was placed on the unit on a living room closet door rather than in a conspicuous place on the exterior or on a large wall. This evidence strongly suggests that the parties did not intend, by the placing of the seal on the unit, to induce the reliance of the consuming public. Additionally, the Clarks were builders and would know the underlying reasons for the presence of the PTL seal. Even more revealing is the fact that no written warranty was given by the Clarks to the ultimate purchasers. This fact casts grave doubt upon the Clarks' contention that they relied upon the representations of the seal. We do not believe that these facts are sufficient to establish the existence of a warranty.

The ultimate flaw in the Clarks' complaint, however, is revealed by an examination of the sequence of events. The third-party complaint alleges that "the defendants/third-party plaintiffs entered into a contract for the construction of a modular home by . . . Lesco. . . ." (Emphasis added.) The Clarks base their allegation of an express warranty on the presence of the seal. The seal, of necessity, was placed on the unit only after construction. Therefore, at the time of entering into the contract, there was no seal present and no representation of PTL upon which the Clarks could rely. The record is devoid of any evidence whatsoever that PTL made any representation to the Clarks other than the representations found in the seal itself. Thus, the Clarks could not have detrimentally relied on the representations in the PTL seal. Without reliance on the warranty by the Clarks, PTL cannot be bound by an express warranty. See Hollenbeck v. Fasteners Co., 267 N.C. 401, 148 S.E.2d 287 (1966). The third-party complaint plainly establishes the lack of reliance.

The action of the trial court in granting summary judgment in favor of third-party defendant PTL is

Affirmed.

MARTIN and ARNOLD, JJ., concur.