Plas-Tex, Inc. v. U.S. Steel Corp.
32 Tex. Sup. Ct. J. 329, 772 S.W.2d 442, 8 U.C.C. Rep. Serv. 2d (West) 991 (1989)
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Rule of Law:
To recover for a breach of the implied warranty of merchantability under the Texas U.C.C., a plaintiff must prove that the goods were defective when they left the seller's possession. A 'defect' in this context is a condition rendering the goods unfit for their ordinary purpose due to a lack of something necessary for adequacy.
Facts:
- Fiberex, Inc. was a manufacturer of fiberglass swimming pools.
- During 1980 and 1981, Fiberex purchased polyester resins from Plas-Tex, Inc., a distributor.
- Most of these resins were manufactured by U.S. Steel Corporation.
- Fiberex used these resins in the manufacturing process for its pools.
- Beginning in late 1980, approximately thirty-four pools manufactured by Fiberex began to delaminate, which is a separation of the fiberglass layers.
- Fiberex did not keep records identifying which specific batches or types of resins were used in the particular pools that delaminated.
Procedural Posture:
- Fiberex, Inc. sued U.S. Steel Corporation and Plas-Tex, Inc. in a Texas trial court for breach of implied warranty and violations of the Deceptive Trade Practices Act (DTPA).
- Plas-Tex filed a cross-claim against U.S. Steel seeking indemnity.
- The trial court entered judgment in favor of Fiberex against U.S. Steel but ruled that Fiberex take nothing from Plas-Tex.
- The trial court also ordered U.S. Steel to indemnify Plas-Tex for its attorney's fees.
- U.S. Steel, as appellant, appealed to the Texas Court of Appeals, an intermediate appellate court.
- The Court of Appeals reversed the trial court's judgment against U.S. Steel, finding the evidence factually insufficient, and remanded the entire case for a new trial.
- Fiberex and Plas-Tex each petitioned the Supreme Court of Texas, the state's highest court for civil matters, for a writ of error to review the Court of Appeals' decision.
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Issue:
Does a claim for breach of the implied warranty of merchantability under Texas Business & Commerce Code § 2.314 require a plaintiff to prove that the goods were defective?
Opinions:
Majority - Cook, Justice.
Yes, a claim for breach of the implied warranty of merchantability requires a plaintiff to prove that the goods were defective. To establish that goods were not fit for their ordinary purpose, the plaintiff must show that a defect existed at the time the goods left the manufacturer's or seller's possession. The court defines a 'defect' in this warranty context as 'a condition of the goods that renders them unfit for the ordinary purposes for which they are used because of a lack of something necessary for adequacy,' which is distinct from the 'unreasonably dangerous' standard for defects in strict products liability. A plaintiff can meet this burden of proof with either direct evidence or circumstantial evidence, such as showing that the goods malfunctioned despite proper use.
Analysis:
This decision clarifies and solidifies Texas law on implied warranty of merchantability claims by explicitly requiring proof of a defect, resolving a split among lower Texas appellate courts. It aligns Texas with the majority of U.S. jurisdictions on this issue. By carefully distinguishing the definition of 'defect' in warranty law from the definition in strict liability law, the court provides a clearer framework for practitioners and prevents the two distinct legal theories from being improperly conflated. The ruling confirms that while the burden of proof is on the plaintiff, it can be met with circumstantial evidence, which is crucial in cases where a product's internal flaw is not easily demonstrable.
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