American Aerial Services, Inc. v. Terex USA, LLC
39 F. Supp. 3d 95, 84 U.C.C. Rep. Serv. 2d (West) 384, 2014 WL 4060241 (2014)
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Rule of Law:
Under Maine's Uniform Commercial Code (§ 2-316), a seller's attempt to disclaim the implied warranty of merchantability is ineffective unless the written language either (1) explicitly mentions 'merchantability' and is conspicuous, or (2) uses expressions like 'as is' or other language that in common understanding calls the buyer's attention to the exclusion of warranties.
Facts:
- In late 2011, American Aerial Services, Inc. sought to purchase a new crane for its business.
- James Read, president of American Aerial, contacted Chet Zerrillo, a salesman for Empire Crane Company, an authorized dealer for Terex USA, LLC.
- On December 14, 2011, Zerrillo emailed Read stating a Terex T-780 crane was available that 'just come off the line' at the factory, which was untrue; the crane was five months old and stored in an outdoor lot.
- Zerrillo attached a Terex promotional 'Data Sheet' to the email, which contained technical specifications and load charts.
- Each page of the Data Sheet with load charts contained a small-print disclaimer stating the data was a 'guide only'. A separate disclaimer on the back page stated Terex 'makes no other warranty, express or implied.'
- On December 16, 2011, American Aerial signed a one-page contract with Empire to purchase the crane for $615,000. The contract did not contain any warranty language.
- Upon delivery and inspection in early January 2012, American Aerial discovered numerous defects, including low coolant, a shredded engine belt, leaks, and a faulty boom.
- An independent inspection in August 2012 revealed defective welds and determined the crane could only lift 60% of its rated capacity before becoming dangerously unstable.
Procedural Posture:
- American Aerial Services, Inc. filed a lawsuit against Terex USA, LLC and The Empire Crane Company, LLC in the Cumberland County Superior Court (a state trial court) on October 25, 2012.
- On November 27, 2012, the defendants removed the case to the U.S. District Court for the District of Maine.
- Both defendants, Terex and Empire, filed separate motions for summary judgment, asking the court to dismiss American Aerial's claims before a trial.
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Issue:
Does a warranty disclaimer in a product's promotional data sheet, which states the manufacturer 'makes no other warranty, express or implied' but does not use the word 'merchantability' or appear in a conspicuous format, effectively exclude the implied warranty of merchantability under Maine's Uniform Commercial Code?
Opinions:
Majority - Levy, J.
No. A disclaimer of the implied warranty of merchantability is not effective if it fails to comply with the strict requirements of the Uniform Commercial Code. The court reasoned that under Maine's UCC § 2-316, a seller has two paths to disclaim this warranty. The first path, under § 2-316(2), requires the disclaimer to mention the word 'merchantability' and be 'conspicuous'—meaning presented in a way a reasonable person would notice, such as through capitalization, larger font, or contrasting color. The disclaimer in the Terex Data Sheet failed this test because it did not mention 'merchantability' and was not conspicuous. The second path, under § 2-316(3)(a), allows for an exclusion using phrases like 'as is,' 'with all faults,' or 'other language which in common understanding calls the buyer’s attention to the exclusion.' The court found that the general phrase 'Terex makes no other warranty, express or implied' was not equivalent to well-understood terms like 'as is' and did not adequately call the buyer's attention to the waiver. Therefore, the attempted disclaimer was ineffective, and the defendants' motion for summary judgment on the implied warranty of merchantability claim was denied.
Analysis:
This decision reaffirms the stringent formal requirements for disclaiming implied warranties under the Uniform Commercial Code, particularly the implied warranty of merchantability. The court's analysis demonstrates that general, non-conspicuous disclaimers are insufficient to waive this fundamental protection, even in a commercial transaction between sophisticated parties. This holding serves as a strong precedent in Maine, cautioning manufacturers and sellers that they must use the UCC's specific 'magic words' (like 'merchantability' or 'as is') and formatting rules to ensure their disclaimers are enforceable. The case also illustrates how courts distinguish between tort claims (like fraud) and contract/warranty claims, applying the economic loss doctrine to bar fraud claims that merely allege the product did not meet its promised quality, thereby directing plaintiffs to their UCC remedies.
