Nationwide Insurance v. General Motors Corp.
625 A.2d 1172, 533 Pa. 423, 21 U.C.C. Rep. Serv. 2d (West) 276 (1993)
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Rule of Law:
An express new car limited warranty that promises "repairs and needed adjustments" to correct manufacturing defects for a specific duration, such as 12 months or 12,000 miles, "explicitly extends to future performance of the goods" for purposes of the Uniform Commercial Code's statute of limitations under 13 Pa.C.S. § 2725(b), meaning the cause of action accrues upon discovery of the breach; however, implied warranties of merchantability and fitness for a particular purpose do not so extend.
Facts:
- On January 5, 1982, Michael Joseph Villi purchased and accepted delivery of a 1982 Chevrolet Corvette manufactured by General Motors Corporation.
- The Corvette came with a "1982 Chevrolet New Car Limited Warranty" which covered "repairs and needed adjustments to correct defects in material or workmanship" for "12 months or 12,000 miles, whichever comes first."
- The warranty stated that the warranty period began on the date the car was first delivered or put in use.
- The warranty also specified that "ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE APPLICABLE TO THIS CAR IS LIMITED IN DURATION TO THE DURATION OF THIS WRITTEN WARRANTY."
- On November 22, 1982, the car "malfunctioned and/or exhibited a defect, caught fire and was destroyed."
- Nationwide Insurance Company, as Mr. Villi's insurance carrier, paid him $18,473.00 for the damage to the vehicle.
Procedural Posture:
- On June 20, 1986, Nationwide Insurance Company instituted an action against General Motors Corporation/Chevrolet Motor Division and Durbiano Chevrolet Company in the Court of Common Pleas of Allegheny County by way of a Writ of Summons.
- Nationwide's complaint alleged breach of the 12 month/12,000 mile express warranty, breach of an implied warranty of merchantability, and breach of an implied warranty of fitness for a particular purpose.
- Durbiano Chevrolet Company was later removed as a party via a Consent Order of Discontinuance.
- General Motors Corporation filed a motion for summary judgment, which the Court of Common Pleas initially denied.
- Upon reargument, the Court of Common Pleas granted General Motors Corporation's motion for summary judgment, finding the action barred by the four-year statute of limitations, concluding that the express warranty did not "explicitly extend to future performance of the goods."
- The Superior Court of Pennsylvania affirmed the trial court's decision in an unpublished opinion, with Judge Brosky dissenting.
- Nationwide Insurance Company filed a Petition for Allowance of Appeal to the Supreme Court of Pennsylvania.
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Issue:
Does an express "New Car Limited Warranty" promising "repairs and needed adjustments" for 12 months or 12,000 miles explicitly extend to future performance of the goods, thereby delaying the accrual of a cause of action for breach of warranty under 13 Pa.C.S. § 2725(b) until discovery of the breach, and do implied warranties of merchantability and fitness for a particular purpose also so extend?
Opinions:
Majority - Cappy
Yes, the express 12 month/12,000 mile new car limited warranty explicitly extends to future performance of the goods, but no, the implied warranties of merchantability and fitness for a particular purpose do not so extend. The court reversed the Superior Court's decision regarding the express warranty claim (Count One) and affirmed as to the implied warranty claims (Counts Two and Three). The court reasoned that the focus of 13 Pa.C.S. § 2725(b) is on the duration of the promise, not merely what is promised. A warranty for a specific period, such as 12 months or 12,000 miles, explicitly extends to future performance because a breach (the need for repair or adjustment due to a defect) cannot logically be discovered until the vehicle performs or requires service during that future period. Any ambiguity in the warranty, which was drafted by General Motors and explicitly labeled a "warranty," must be resolved against the drafter. The court acknowledged that such "repair or replace" warranties, while not fitting strictly within the traditional UCC definition, align with modern concepts of warranty, such as under the Magnuson-Moss Warranty Act. This interpretation serves consumer expectations, as buyers consider warranty length, and does not undermine the purposes of the statute of limitations, as sellers can factor warranty duration into record-keeping. However, implied warranties do not explicitly extend to future performance. The language limiting their duration to that of the express warranty does not create an explicit extension of their terms but merely restricts their potential statutory duration. The great weight of authority also holds that implied warranties, by their nature, cannot explicitly extend to future performance.
Dissenting - Larsen
Yes, the implied warranties of merchantability and fitness for a particular purpose should also extend to the future performance of the vehicle. Justice Larsen argued that because the express warranty explicitly stated that any implied warranties were "LIMITED IN DURATION TO THE DURATION OF THIS WRITTEN WARRANTY," they were temporally linked to the express warranty. Therefore, if the express warranty was found to extend to future performance, the implied warranties should logically follow suit.
Dissenting - Zappala
No, the express warranty in this case, which promised only to repair or adjust defective parts for 12 months or 12,000 miles, does not "explicitly extend to future performance of the goods" under 13 Pa.C.S. § 2725(b). Justice Zappala contended that the majority's grammatical analysis was flawed, as the word "extends" in the statute refers to the scope or application of the warranty, not merely its temporal duration. The warranty at issue was a promise to repair, which relates to the seller's obligations, not a promise that the car itself would perform without defects for a specific period, which would constitute a true "future performance" warranty under the UCC's definition of warranty (13 Pa.C.S. § 2313). He argued it was unjust to apply the rule of construction against the drafter in these circumstances, given the plaintiff's mischaracterization of the warranty to fit the statute's exception and the confusion arising from different definitions of "warranty" under the UCC and federal law (Magnuson-Moss Act). If the claim was based on a breach of the promise to repair, the cause of action would accrue upon the refusal to repair, not at delivery, and would have been timely if properly pleaded.
Analysis:
This case significantly clarifies the interpretation of the "explicitly extends to future performance" exception in UCC § 2-725(b) for express warranties in Pennsylvania, particularly for common "repair or replace" warranties. By focusing on the duration of the promise rather than its specific performance guarantee, the court expanded the scope of this exception, potentially extending the statute of limitations for many consumer product warranties. However, the ruling concurrently affirmed the traditional view that implied warranties, by their nature, do not explicitly extend to future performance, limiting their claims to the tender of delivery accrual rule even when linked to an express warranty's duration. This creates a dichotomy where express repair warranties are treated more favorably regarding the statute of limitations than implied warranties, potentially influencing how consumers and manufacturers frame future warranty disputes.
