Case Study:
Dunleavey v. Paris Ceramics USA, Inc., 57 U.C.C. Rep. Serv. 2d (Callaghan) 653 (Super. Ct. Conn. 2005)
On three separate occasions during the year of 2001, the plaintiff, Anne Dunleavey d/b/a Unique Interiors, an interior designer, ordered a combined total of 3,280 square feet of French Antique Bourgogne stone from the Bourgogne region of France from the defendant, Paris Ceramics USA, Inc., a stone retailer, at a cost of $124,693.33. The stone was needed to renovate the deck area around the outdoor pool of Dunleavey’s client, Terrance McClinch. Paris Ceramics’ agent represented to Dunleavey that the stone was suitable for exterior use in Fairfield, Connecticut. Dunleavey resold the stone to McClinch at a markup of $50,900. The stone was installed by C.A. Sanzaro, Inc., the contractor hired by John Desmond Builders, Inc., McClinch’s general contractor. The installation of the stone was completed around September 2001. Between November 2001 and January 23, 2002, approximately 40–50% of the stone had flaked and broken off rendering the entire deck area unsuitable for use. On January 23, 2002, a meeting was held between Dunleavey, Richard Abbot (Paris Ceramics’ vice-president of operations), McClinch, Desmond, and Caesar Sanzaro (C.A. Sanzaro, Inc.’s principal), in which all agreed that the stone had to be completely replaced. Abbott stated that Paris Ceramics would do whatever was necessary to correct the situation at its own cost. Following the meeting, Dunleavey asked Paris Ceramics for a refund of $124,693.33. Paris Ceramics requested for an opportunity to remedy the situation by supplying the replacement stone. During the Spring of 2002, however, the patio stone was replaced at the McClinch residence with stones supplied by another stone retailer. Subsequently, Dunleavey was informed that McClinch would no longer be using her services. On August 26, 2002, Dunleavey filed a complaint against Paris Ceramics alleging … breach of warranty .… *** II. Breach of Warranty Dunleavey … claims that Paris Ceramics breached (1) an implied warranty for a particular purpose, (2) an implied warranty of merchantability, and (3) an express warranty created by a description of the goods, by a sample or by a model. “Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under [UCC § 2-316] an implied warranty that the goods shall be fit for such purpose.” “To establish a cause of action for breach of the implied warranty of fitness for a particular purpose [therefore], a party must establish (1) that the seller had reason to know of the intended purpose and (2) that the buyer actually relied on the seller.” “A warranty of merchantability is implied in any sale of goods by a merchant seller; the statutory standards for merchantability include, under [UCC § 2-314(2)(c)], that the goods be fit for the ordinary purpose for which such goods are used.” “[UCC] § 2-314 imposes warranty liability for the protection of buyers. The purpose behind … § 2-314 is to hold a merchant seller responsible when inferior goods are passed along to an unsuspecting buyer. Thus, whether or not the defects could, or should, have been discovered by the merchant seller, the merchant seller is liable to the buyer whenever the goods are not, at the time of delivery, of a merchantable quality …. The Uniform Commercial Code is designed to protect the buyer from bearing the burden of loss where merchandise does not live up to normal commercial expectations ….” “In the case of the implied warranty of merchantability, there is liability without fault. Although the goods must be nonconforming [for a breach to occur], no distinction is made in terms of the fault of the defendant. The implied warranty of merchantability is breached whether or not the seller could have prevented the nonconformity…. The only practical and logical conclusion is that the warrantor is made liable, although free from moral or personal fault, because society for one reason or another wants to place the burden of harm resulting from nonconforming products upon the warrantor rather than upon the buyer….” [UCC § 2-313] provides that “(1) express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.” It is an uncontested fact that Paris Ceramics knew that Dunleavey ordered French Antique Bourgogne stone to be installed on the exterior patio of the McClinches’ residence. The evidence also shows that Dunleavey relied on the expertise of Paris Ceramics’ agent in making her decision to use French Antique stone for the project, and that the stone failed for its particular purpose within a few months of its installation. Dunleavey … has established that Paris Ceramics knew of her intent to use the stone for an exterior patio, and that she relied on Paris Ceramics’ agent in choosing an appropriate stone for the job. Dunleavey has, therefore, established that Paris Ceramics breached an implied warranty for a particular purpose as to Dunleavey’s purchase of the French Antique Bourgogne stone. The court also finds that Paris Ceramics breached an implied warranty of merchantability and an express warranty when it sold the French Antique stone to Dunleavey. Dunleavey ordered the stone to be used on the exterior of the McClinches’ residence. As mentioned above, the evidence shows that the stone was not fit for exterior use. It is also an uncontested fact that Paris Ceramics is a stone retailer that has been in the business for more than ten years. Whether or not the defect of the stone could have been discovered by Paris Ceramics is irrelevant as to whether or not it should be held responsible for breaching an implied warranty of merchantability. In addition, the evidence shows that Paris Ceramics’ agent explicitly told Dunleavey that the stone would be suitable for exterior use. The court, therefore, finds that Paris Ceramics breached an implied warranty of merchantability and an express warranty. 1. Mitigation of Damages The Supreme Court has often held that “in the contracts and torts contexts … the party receiving a damage award has a duty to make reasonable efforts to mitigate damages…. What constitutes a reasonable effort under the circumstances of a particular case is a question of fact for the trier…. Furthermore, [the court has] concluded that the breaching party bears the burden of proving that the nonbreaching party has failed to mitigate damages.” Paris Ceramics claims that Dunleavey failed to mitigate her damages. In her defense, Dunleavey claims that she had no control or authority over the McClinches’ residence. The court finds that although Paris Ceramics was willing to replace the stone at its own expense, the decision to allow Paris Ceramics to replace the stone was not Dunleavey’s decision to make, but rather McClinch’s decision. Although Dunleavey may not have done her best in order to try to convince McClinch to take up Paris Ceramics’ offer to replace the patio stone, the evidence shows that McClinch was aware that Paris Ceramics was willing to replace the failed stone. Because McClinch did not accept Paris Ceramics’ offer and decided to use another stone supplier, the court finds that Dunleavey should not be held responsible for McClinch’s decision. Accordingly, the court finds that Dunleavey did not fail to mitigate her damages. *** IV. Damages “The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.” [UCC § 2-714.] “In a proper case any incidental and consequential damages under the next section [UCC § 2-715] may also be recovered.” “The UCC provides remedies to one who purchases defective goods, including incidental and consequential damages caused by a seller’s breach. Such remedies are defined in [UCC § 2-715.”] 8 Dunleavey paid Paris Ceramics $114,636 for the stone and $10,327.33 for shipping. As evidenced by her invoice, she charged McClinch $50 per square foot, which yields $49,364 in profit. She also charged McClinch $9,840 in taxes. As per Dunleavey and McClinch’s mediation agreement, she also had to pay him back $74,536 for the installation of the patio and McClinch’s general contractor’s overhead cost and profit. In addition, the cost of removing the damaged patio was $11,543.40. Wherefore, Dunleavey is owed $270,246.73 for Paris Ceramics’ breach of warranty.10 ***
Q1. What types of warranties were formed here? What behavior on the part of the defendant led to the creation of each of those types of warranties?
Q2. The defendant’s argument that the plaintiff failed to meet her duty to mitigate her damages failed. Why? Do you think this outcome was fair to the defendant?
Q3. How does the court calculate the damages owing to the plaintiff? Do you feel the plaintiff was fully compensated for her losses? Why or why not?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.