Ferragamo v. Massachusetts Bay Transportation Authority
395 Mass. 581, 481 N.E.2d 477 (1985)
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Rule of Law:
An entity that regularly sells used goods about which it has specialized knowledge or skill is a 'merchant' under the Uniform Commercial Code (UCC) for those goods, even if selling is not its primary business. A contractual 'as is' disclaimer of warranty does not bind a buyer's employee who suffers personal injury from a product defect.
Facts:
- In July 1975, Massachusetts Bay Transportation Authority (MBTA) trolley Car No. 3298 was involved in a fire that resulted in exposure to polyvinyl chloride (PVC) fumes and left the car coated in melted plastic.
- In June 1976, the MBTA invited bids for eight scrap trolley cars, including Car No. 3298.
- Paul Ferragamo purchased the eight cars under a contract that described them as 'As is, Where is' and disclaimed all warranties.
- Paul Ferragamo hired his 20-year-old brother, Michael Ferragamo, to help dismantle the cars.
- During the week of August 8, 1976, Michael Ferragamo used an acetylene torch to cut apart Car No. 3298, which was covered in plastic drippings.
- While working, Michael developed a hoarse voice, shortness of breath, and a sore throat.
- On August 16, 1976, Michael Ferragamo died of acute respiratory failure.
- The day after Michael's death, an MBTA foreman informed Paul Ferragamo for the first time that 'there was something wrong with that car, that there had been PVC near it or in it.'
Procedural Posture:
- Paul Ferragamo, on behalf of the decedent's estate, filed a four-count complaint against the Massachusetts Bay Transportation Authority (MBTA) in the Superior Court (trial court) for negligence and breach of warranty.
- A jury returned verdicts for the plaintiff on all four counts.
- The jury also found that the decedent, Michael Ferragamo, was 35% contributorily negligent.
- The MBTA filed a motion for judgment notwithstanding the verdict (JNOV).
- The trial judge allowed the JNOV motion on the two breach of warranty counts, ruling the MBTA was not a 'merchant', but denied the motion on the two negligence counts.
- Both the plaintiff and the defendant appealed the judge's rulings on the JNOV motion to an intermediate appellate court.
- The Supreme Judicial Court of Massachusetts transferred the case to itself on its own motion before the intermediate appellate court could hear it.
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Issue:
Does a public transit authority that regularly sells its used trolley cars for scrap, and possesses specialized knowledge of those cars, qualify as a 'merchant' under the UCC, such that it provides an implied warranty of merchantability that extends to the buyer's employee?
Opinions:
Majority - Abrams, J.
Yes, a public transit authority that regularly sells its used trolley cars and possesses specialized knowledge of them qualifies as a 'merchant' under the UCC. The determination of merchant status is highly factual. The jury could find the MBTA was a merchant because it regularly sold its old trolley cars, had designed the cars, and had operated and maintained them for twenty-five years, giving it specialized knowledge. The fact that selling scrap is not its primary business is not dispositive; its expertise in its transportation system implies expertise in the vehicles it uses. Furthermore, the 'as is' disclaimer in the sales contract does not bar a breach of warranty claim by the buyer's employee, who was not a party to the contract. A claim for personal injury based on breach of warranty is analogous to strict tort liability, and a seller cannot contractually limit its liability to an innocent third-party user. Finally, the decedent's contributory negligence does not bar or reduce recovery because he did not discover the product's defect (the unseen chemical) and then unreasonably proceed to use it.
Analysis:
This decision broadens the definition of a 'merchant' under the UCC to include entities selling used goods outside their primary business, provided they possess specialized knowledge and the sales are not isolated. It solidifies the principle that warranty law, when applied to personal injury cases, functions like strict products liability. By preventing contractual disclaimers from binding non-signatory third parties like employees, the ruling prioritizes public policy of protecting individuals from defective products over freedom of contract between the original buyer and seller.
