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Ach Enterprises 1 LLC v. Viking Yacht Company

2011 WL 4638791 (U.S. Dist. Ct. D. N.J. 2011) (Unpublished)

UCC; WARRANTIES — Under the Uniform Commercial Code, if a specific warranty period is stated, any alleged defect must be discovered during that period and because the Magnuson-Moss Act does not contain a statute of limitations, the court will look to the UCC warranty to see if the claim under that Act will be time-barred.

In February 2008, a buyer bought a yacht. Two months later, a defect manifested itself. It resulted in extensive gel-coat cracking on the hull. The buyer demanded a warranty repair and the seller allegedly agreed to make repairs. However, in November 2009, the buyer cancelled the scheduled repair. He then sued, asserting claims for violation of the Magnuson-Moss Warranty Act, breach of express warranty, and breach of the implied warranties of merchantability and fitness for a particular purpose pursuant to New Jersey’s Uniform Commercial Code (UCC). The seller moved to dismiss all the claims as time barred.

The seller argued that the breach of express warranty claim was barred under the general accrual rule. Under the general accrual rule, a breach of warranty occurs when tender of delivery is made. Under the “future performance” exception, where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance, the cause of action accrues when the breach is or should have been discovered. Here, the Court found that the warranty was a future performance warranty. A warranty that promises a future condition, that the goods will be free from defect, and subsequently contemplates an obligation to repair should the goods not perform is a future performance warranty. Such a warranty promises that the goods will act in a certain way, not merely that the seller will act in a certain way. However, the defect must be discovered during the period for which the product was warranted. In this case, the buyer did not discover the defect within the one year warranty period and therefore the Court dismissed the breach of express warranty claim as time barred.

The implied warranties of merchantability and fitness for a particular purpose do not explicitly extend to the future performance of the goods. Thus, claims under those warranties accrue when tender of delivery is made. Therefore those actions were also time-barred.

Lastly, the Magnuson-Moss Act does not contain its own statute of limitations. Therefore courts look to the most analogous state law cause of action and use the corresponding statute of limitations. Because the Court held that the UCC breach of warranty claims are time-barred, the Magnuson-Moss Act claim was also time-barred. For all of those reasons, the seller’s motion to dismiss was granted.


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