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Greco v. Haarlander Associates, Inc.

MON-L-2268-02 (N.J. Super. Law Div. 2004) (Unpublished)

WARRANTIES—A manufacturer’s warranty is not enforceable against others in the chain of distribution.

A homeowner filed suit for damages arising from defective roof slates on his home. The slate manufacturer filed for bankruptcy, barring the owner from pursuing his claim in state court. The slate installer moved for summary judgment, which was unopposed because there was no evidence that the slates were negligently installed. The owner then sued other defendants based on their being in the “chain of distribution.” Specifically, he alleged that the roofing slates were not reasonably fit for their intended use; were not as advertised or as warranted; and failed to conform with specifications.

Prior to the purchase, the owner and a contractor discussed the difference between real and imitation slate. The contractor highly recommended the imitation slate and provided the owner with product literature. Based on that, the owner chose the imitation slates. The contractor then purchased the imitation slates from various providers.

Three years after the slate was installed, the owner noticed discoloration but failed to take pictures. He notified the contractor, who promised to send the manufacturer to make an inspection, but no inspection took place. Even though the owner claimed the roof continued to deteriorate, he never took any pictures. About seven years later, the owner, experiencing serious roof leaks and consequential water damage, replaced the roof. That is when he brought suit seeking to recover the costs of repairs.

The lower court first held that the slate manufacturer’s warranty was not enforceable against suppliers in the “chain of distribution” because such a warranty allocates the risk of a product defect to the manufacturer, not to its distributors or dealers. A manufacturer is in the best position to spread the cost of defective products among a broad base of buyers because manufacturers are often larger firms than dealerships, and are likely to have greater expertise about their product. In terms of public policy, holding a distributor or a retail dealer liable under a manufacturer’s warranty for a product defect would cause the dealer to raise its prices. Furthermore, retail dealers may decide not to carry products with extensive warranties which could lead to more conservative product warranties.

Warranty cases are governed by the Uniform Commercial Code, which sets a four-year statute of limitations from the delivery of the goods. Here, the owner filed the complaint six years after the four-year statute of limitations had run out. Therefore, even if suit could have been brought against the retail dealers, time had run out.

As to the claim against the contractor, the lower court held that recommending, acquiring, and contracting to have the roof installed did not make him an insurer or guarantor of the roof or its materials unless the contractor adopted the manufacturer’s warranty, which he did not. In addition, the contractor sought summary judgment based upon a claim of “spoliation” of evidence, because the owner failed to retain the imitation slate shingles. The owner did not even take pictures of the alleged defective conditions. The Court agreed, holding that the contractor had been irreparably harmed because he was not given an opportunity to have his own experts inspect the roof or conduct tests on the imitation slates. At the time the roof was replaced, the owner should have known that litigation was probable and a reasonable person could foresee that destruction of the roof and its materials would prejudice the defendants. As a consequence, the Court awarded summary judgment to the contractor and all of those “in the chain of distribution.”

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