Rorick et al v. Hardi North America Inc

Filing 57

OPINION AND ORDER GRANTING IN PART and DENYING IN PART 52 MOTION for Partial Summary Judgment by Plaintiffs Mid-State Farmers Mutual Insurance Company, Deanna Rorick, Timothy Rorick. The Motion is GRANTED as to the issue of an implied warranty of m erchantability. The Motion is DENIED as to the issue of implied warranty of fitness for a particular purpose. This ruling pertains only to those claims asserted against Defendant HARDI in Count VII of the Plaintiffs' Second Amended Complaint; all other claims asserted against either Defendant are unaffected by this Opinion and Order. Signed by Judge William C Lee on 2/29/16. (cer)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
TIMOTHY RORICK
and DEANNA RORICK, and
MID-STATE FARMERS MUTUAL
INSURANCE COMPANY,
Plaintiffs,
v.
HARDI NORTH AMERICA INC.,
and FINE POINTS, LLC d/b/a
NORTHFIELD INDUSTRIES, LLC
Defendants.

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Cause No.: 1:14-CV-204

OPINION AND ORDER
This matter is before the court on the Plaintiffs’ Motion for Partial Summary Judgment
and memorandum in support (Docket Entries 52 and 53). Defendant HARDI North America,
Inc., filed a response in opposition to the motion and a supporting memorandum (DE 54 and 55),
and the Plaintiffs filed a reply brief (DE 56). For the reasons discussed below, the motion is
GRANTED in part and DENIED in part. The motion is granted as to the issue of an implied
warranty of merchantability and denied as to the issue of implied warranty of fitness for a
particular purpose. This ruling pertains only those claims asserted against Defendant HARDI in
Count VII of the Plaintiffs’ Second Amended Complaint; all other claims asserted against either
Defendant are unaffected by this order.

FACTUAL BACKGROUND1
In the first week in May of 2013, Plaintiffs Timothy and Deanna Rorick purchased an
agricultural sprayer known as a HARDI Navigator 4000. Complaint, p. 2. The machine was
manufactured by Defendant HARDI. Id. Defendant Fine Points, d/b/a Northfield Industries,
“manufactures component parts for the Sprayer, including but not limited to the wheel
assemblies.” Id. On July 13, 2013, Timothy Rorick was pulling the Sprayer behind a farm tractor
when “the rear wheel axle and wheel assembly broke, causing the right rear wheel to fall off.”
Id., pp. 2-3. This caused the unit to overturn and it “sustained significant damage as a result[.]”
Id., p. 3. The Plaintiffs allege that “[i]t was subsequently determined that, as a result of a
manufacturing and/or design defect, the Sprayer had insufficient grease in the right rear wheel
hub and/or bearing assemblies[]” and that this defect caused the machine to overturn. Id. MidState is a plaintiff because the company “was the property insurer for [the Roricks] and made
payments to the Roricks to compensate them for damages to the Sprayer.” Id.2 The Plaintiffs
allege that “[b]ecause of the defective condition of the Sprayer manufactured by HARDI,
Plaintiffs suffered significant property damage and incurred other recoverable expenses.” Id. The
Plaintiffs assert seven claims in their Complaint, four against HARDI and three against
Northfield (including claims for “strict liability for manufacturing defect,” “design defect,” and
“negligence”). Id., pp. 3-9. For purposes of the present motion, however, the only claim at issue

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These facts are taken from the Plaintiffs’ Second Amended Complaint (DE 46), which is
the controlling Complaint in this case.
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Mid-State has a subrogation claim for the amount it paid to the Roricks (assuming, of
course, that the defendants are ultimately deemed liable for any damages) and was joined as a
party plaintiff on August 21, 2015, after the court granted the Roricks’ motion for joinder. See
DE 45.
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is Plaintiffs’ Count VII, which is asserted against HARDI only and alleges “breach of express
warranty and implied warrantys [sic] of merchantability and fitness for a particular purpose.” Id.,
pp. 8-9. The Plaintiffs argue that as a result of these allege warranty breaches, HARDI is liable to
them for damages pursuant to “Article II of the Uniform Commercial Code[,]” specifically
Indiana Code Sections 26-1-2-714 and 715. Id., pp. 9-10. HARDI contends that it disclaimed any
implied warranties and so the Plaintiffs are not entitled to judgment as a matter of law on this
issue and their motion should be denied. Defendant’s Response, pp. 4-7.
STANDARD OF REVIEW
Summary judgment must be granted “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In evaluating summary judgment motions, courts must
view the facts and draw reasonable inferences in the light most favorable to the non-moving
party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The Court
may not weigh conflicting evidence or make credibility determinations, Omnicare, Inc. v.
UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must consider only evidence that
can “be presented in a form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). The
party seeking summary judgment has the initial burden of showing that there is no genuine
dispute and that they are entitled to judgment as a matter of law. Carmichael v. Vill. of Palatine,
605 F.3d 451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this
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burden is met, the adverse party must then “set forth specific facts showing that there is a genuine
issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505.
DISCUSSION
The Plaintiffs argue “that the undisputed facts of this case demonstrate that Defendant
[HARDI’s] attempt to disclaim implied warranties, and specifically the warranties of
merchantability and fitness for a particular purpose, was deficient.” Plaintiffs’ Memorandum, p.
1. “Accordingly, Plaintiffs request partial summary judgment from this Court determining that
HARDI failed to properly disclaim implied warranties, and determining that those implied
warranties are and were available to Plaintiffs.” Id. HARDI responds by arguing that it properly
disclaimed any implied warranties and, in any event, that the Roricks had actual knowledge of
HARDI’s warranties (and, by implication, the limitations thereto). Defendant’s Response, pp. 47.3 So the issue before the court is whether the warranty disclaimer language contained in the
HARDI Sprayer’s Instruction Book (essentially an owner’s manual) was deficient as a matter of
law, as the Plaintiffs contend, so as to support the claims asserted in Count VII of the Plaintiffs’
Complaint (and, consequently, permit the Plaintiffs to invoke the remedies and damages
provisions contained in I.C. §§ 26-1-2-714 and 715).
The disclaimer language at issue appears on the last page of the HARDI Navigator
Instruction Book. Plaintiffs’ Exhibits, DE 52-2, p. 107; Defendant’s Exhibits, DE 54-2, p. 106.4

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HARDI also raises three other arguments, which the Plaintiffs contend are red herrings,
and those will be addressed below.
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The page numbers cited by the court are the numbers assigned by the court’s electronic
docketing system, which appear in the top right corner of each referenced document (and which
may or may not correspond to the page numbers appearing on the original document).
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That language reads in its entirety as follows:
DISCLAIMER OF FURTHER WARRANTY
THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, EXCEPT AS
SET FORTH ABOVE. THERE ARE NO WARRANTIES WHICH EXTEND
BEYOND THE DESCRIPTION OF THE PRODUCT CONTAINED HEREIN.
IN NO EVENT SHALL THE COMPANY BE LIABLE FOR INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES (SUCH AS LOSS OF
ANTICIPATED PROFITS) IN CONNECTION WITH THE RETAIL
PURCHASER’S USE OF THE PRODUCT.
Id. (capitalization in original). The Plaintiffs argue that this disclaimer is inadequate under
applicable law because it lacks the degree of conspicuousness and specificity required under Ind.
Code § 26-1-2-316(2) and Iowa Code § 554.2316. Plaintiffs’ Memorandum, pp. 4-5.5 Indiana
Code Section 26-1-2-316(2) states, in relevant part, as follows:
[T]o exclude or modify the implied warranty of merchantability or any part of it
the language must mention merchantability and in case of a writing must be
conspicuous, and to exclude or modify any implied warranty of fitness the
exclusion must be by a writing and conspicuous. Language to exclude all implied
warranties of fitness is sufficient if it states, for example, that “There are no
warranties which extend beyond the description on the face hereof.”
The Plaintiffs argue that HARDI’s disclaimer fails to meet the requirements set forth in the
statute and, consequently, is ineffective as to both the warranty of merchantability and the
warranty for fitness for a particular purpose.
I. Implied Warranty of Merchantability.
As the Plaintiffs correctly point out, a warranty of merchantability “is implied in all sales

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The parties do not dispute that Indiana law applies in this case. The Plaintiffs reference
the Iowa statute only to point out that “Uniform Commercial Code Section 2-316 . . . has been
codified in both Iowa (where the Sprayer was manufactured) and Indiana (where the Sprayer was
purchased) . . .” [and] “sets forth the necessary procedure for disclaiming implied warranties.”
Plaintiffs’ Memorandum, p. 4.
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contracts if the seller is a merchant with respect to goods of that kind.” Id., p. 4 (citing I.C. § 261-2-314(1)). It is well established that “[t]he implied warranty of merchantability provides a
warranty that goods will be merchantable, and it is implied in a contract for sale if the seller is a
merchant with respect to goods of that kind. Irmscher Suppliers, Inc. v. Schuler, 909 N.E.2d
1040, 1048 (Ind.Ct.App. 2009). . . . Indiana Code § 26–1–2–314(2) requires that, for the goods to
be merchantable, they must be fit for the ordinary purposes for which such goods are used. The
‘implied warranty of merchantability is imposed by operation of law for the protection of the
buyer and must be liberally construed in favor of the buyer.’” Chesaco Motors, Inc. v. Gulf
Stream Coach, Inc., 2013 WL 1281827, at *3 (N.D.Ind. March 26, 2013) (quoting Frantz v.
Cantrell, 711 N.E.2d 856, 859 (Ind.Ct.App. 1999)). The Plaintiffs argue that “HARDI’s failure to
properly disclaim the implied warranty of merchantability is obvious from the face of the statute.
In order to disclaim the implied warranty of merchantability, the disclaimer language ‘must
mention merchantability.’ . . . The word ‘merchantability’ is completely absent from HARDI’s
purported disclaimer. . . . Accordingly, the purported disclaimer . . . is ineffective as a matter of
law.” Plaintiffs’ Memorandum, p. 5 (citing Jones v. Abriani, 350 N.E.2d 635, 645 (Ind.App.
1976)) (attempted disclaimer of implied warranty of merchantability was ineffective where it did
not mention the word “merchantability”); see also, Travel Craft, Inc. v. Wilhelm Mende GmbH &
Co., 552 N.E.2d 443, 444 (Ind. 1990) (“Indiana Code § 26-1-2-316(2) requires using the actual
word ‘merchantability’ in order to protect the buyer from surprise. The warranty of
merchantability is so frequently implied in a sale that to exclude it one must exercise special
care.”) (citations omitted).

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In its brief in opposition to the Plaintiffs’ motion, HARDI does not address the fact that
the word “merchantability” does not appear in the disclaimer provision. Instead, HARDI’s
opposing brief addresses only the issue of conspicuousness. The statute is unambiguous: in order
to disclaim an implied warranty of merchantability, a merchant’s disclaimer provision must
include language that comports with the mandates of § 316(2), which expressly states that the
disclaimer “must mention merchantability.” Since it is undisputed that HARDI’s disclaimer
provision does not do that, the disclaimer is ineffective as a matter of law with regard to the
implied warranty of merchantability.
II. Implied Warranty of Fitness for a Particular Purpose.
Next, the Plaintiffs contend that “[w]hile HARDI’s purported disclaimer contains the
necessary language to disclaim a warranty of fitness [for a particular purpose], that language is
far from conspicuous.” Plaintiffs’ Memorandum, p. 5. (The Plaintiffs also state that the issue of
“conspicuity . . . applies equally to the warranty of merchantability.” Id., n. 1.) The Indiana Code
defines “conspicuous” as follows:
A term or clause is conspicuous when it is so written that a reasonable person
against whom it is to operate ought to have noticed it. A printed heading in
capitals (as: NONNEGOTIABLE BILL OF LADING) is conspicuous. Language
in the body of a form is conspicuous if it is in larger or other contrasting type or
color. . . . Whether a term or clause is conspicuous or not is for decision by the
court.
I.C. § 26-1-1-201(10).
In support of their argument that HARDI’s disclaimer provision lacks the requisite
conspicuousness, the Plaintiffs argue as follows:
The purported disclaimer is at the bottom of the last page of a one hundred (100)
page Instruction Book. There is no place for the purchaser to sign on that page,
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and no signature is contemplated. The language is not in a larger font, nor in a
contrasting color. While the language is capitalized, it represents only 34%
(twenty-six out of seventy-seven) of the capitalized words on [the] page[.] . . .
Indeed, the disclaimer is not even the most conspicuous language on the page; six
additional words on [the] page . . . are both capitalized and underlined. The
disclaimer language is inconspicuous as a matter of law, and this Court should
find so.
Plaintiffs’ Memorandum, p. 6. HARDI maintains that the Plaintiffs’ conspicuity argument fails
since “HARDI’s disclaimer was conspicuous because it was on the very last page of the
Instruction Book, under a large font, bold title that said “Warranty” and a printed heading in
capitals, which read “DISCLAIMER OF FURTHER WARRANTY. Page five of the Table of
Contents even directs users to the Warranty pages. The disclaimer was also set apart from the
previous list of warranty conditions . . .” and consequently “the disclaimer was adequately
conspicuous.” Defendant’s Response, p. 6.
HARDI’s argument on this point is well taken. The Plaintiffs description of the
disclaimer language as being at the very end of a “one hundred page Instruction Book,”
constituting only a third of the capitalized words on the page, and not placed in a larger or
colored typeface, implies that the disclaimer is somehow buried at the end of a 100-page
document and therefore the Roricks had no reason to notice it, making it insufficiently
conspicuous as a matter of law. But the Plaintiffs’ characterization is inaccurate. For one thing,
the Plaintiffs’ contention that the capitalized letters of the disclaimer are “only 34% (twenty-six
out of seventy-seven) of the capitalized words on [the page]” appears to be incorrect or at least
misleading. The disclaimer provision consists of a total of 60 words, including the title, all of
which are capitalized. Plaintiffs’ Exhibits, DE 52-2, p. 107. This would mean that the disclaimer
provision alone constitutes 76% of all the capitalized words on that same page. Apparently the
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Plaintiffs are referring only to the first sentence of the disclaimer, which does indeed consist of
26 words. In any event, the Plaintiffs contend that the disclaimer language is not conspicuous
enough since there are so many other capitalized words on the same page. But while there are 19
other capitalized words, all of which are part of a previous section discussing HARDI’s express,
limited warranty rather than any implied warranties, eleven of those are the name “HARDI,”
which appears in all capital letters throughout the Instruction Book. So, according to the court’s
calculation, the disclaimer actually contains 60 capitalized words out of a total of 68 on the page
(excepting the 11 references to “HARDI”), which would amount to 88% of the total capitalized
words on the page. But this mathematical quibbling is not the point. The disclaimer provision is
set out in all capital letters and, while it appears on the very last page of the 100-page long
Instruction Book, it is set apart from the section preceding it, is separated from that preceding
section by extra line spacing, and no other provisions or text appear below it. In short, while the
disclaimer provision might not “jump off the page” as it were, the court concludes that it is
sufficiently conspicuous as that term is defined in § 201(10). The language appears on a page of
the Instruction Book that carries the title “Warranty,” (which itself appears in a large, bold
typeface), it contains all capital letters, is set apart from other text on the page, and, of course,
includes its own title of “Disclaimer of Further Warranty.”
The Plaintiffs cite several cases they claim support their position on the issue of
conspicuousness, including Jones v. Abriani, supra, Jerry Alderman Ford Sales, Inc. v. Bailey,
291 N.E.2d 92 (Ind.Ct.App. 1972), and Woodruff v. Clark County Farm Bureau Coop. Ass’n,
286 N.E.2d 188 (Ind.Ct.App. 1972). But while all of these cases held that a warranty disclaimer
provision was invalid for lack of conspicuousness, the facts of those cases are readily
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distinguishable. Since they are factually distinguishable, the court will dispense with an analysis
of each case. But just by way of example, the Plaintiffs properly assert that the disclaimer
provision at issue in Jones was deemed invalid for lack of conspicuousness even though it was
part of a document that was only two pages long, a holding that would ostensibly support the
Plaintiffs’ contention that HARDI’s disclaimer provision, appearing as it does at the end of a
100-page booklet, is perforce ineffective. However, what the court determined in the case was
that the disclaimer’s “placement on the reverse side of the form buried in a whole page of fine
print, made such disclaimer inconspicuous, rather than conspicuous, and thus ineffective as a
matter of law.” Jones, 350 N.E.2d at 645. The operative phrase in that holding is “buried in a
whole page of fine print.” That is not the case with the HARDI disclaimer, for reasons already
explained. Again, the other cases cited by the Plaintiffs are equally distinguishable or otherwise
unavailing. The court concludes that the disclaimer provision as it appears in the HARDI
Instruction Book is sufficiently conspicuous, as that word is defined in I.C. § 26-1-1-201(10), and
therefore effectively disclaims any implied warranty of fitness for a particular purpose. (Recall
that the Plaintiffs challenged only the conspicuousness of the disclaimer, having conceded that
“the disclaimer contains the necessary language to disclaim an implied warranty of fitness[.]”
Plaintiffs’ Memorandum, p. 5.)
A few final matters. HARDI argues, essentially, that the issue of conspicuity is moot,
because Timothy Rorick’s deposition testimony indicates that he had knowledge of the warranty
provisions in the Instruction Book. Defendant’s Response, pp. 6-7. The Plaintiffs contend that
this argument is a red herring and the court agrees. As the Plaintiffs point out, the deposition
excerpts to which HARDI refers clearly reveal that Mr. Rorick testified that he had at least some
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familiarity with the general terms of HARDI’s limited warranty, but mention nothing regarding
any implied warranties. The Plaintiffs note that “Rorick was never asked about the disclaimer,
never testified that he read the disclaimer, and never so much as testified [sic] that he was aware
that HARDI’s warranty was limited or otherwise disclaimed. Simply put, HARDI is attempting
to make Rorick’s testimony do far more than it does.” Plaintiffs’ Reply, pp. 7-8. The court agrees
that HARDI’s argument misinterprets or mischaracterizes Mr. Rorick’s testimony. But in light of
the court’s conclusion that the disclaimer was sufficiently conspicuous, this debate about Mr.
Rorick’s alleged personal knowledge need not be addressed further.
Next, HARDI also argues that “[t]he wheel hub on Plaintiffs’ sprayer is not covered by
HARDI’s limited warranty[]” since HARDI’s express warranty excepts any “[p]arts of the
machine not manufactured by HARDI[.]” Defendant’s Response, p. 7. This argument adds
nothing to the calculus, though, for two reasons. First, the language HARDI refers to excepts the
wheel hub assembly, which undisputedly was manufactured by Defendant Northfield, from
HARDI’s express limited warranty. It is not at all clear, however, nor does HARDI expressly
state, that this exception applies to implied warranties that arise out of operation of law. Second,
as the Plaintiffs point out, “HARDI’s argument is neither here nor there for the purposes of
Plaintiffs’ Motion for [Partial] Summary Judgment, which solely addresses the implied
warranties of merchantability and fitness for particular purpose.” Plaintiffs’ Reply, p. 9. The
court agrees that while this might be an issue going forward in this case (say, for example, on the
issue of assessment of damages between the Defendants), it is not relevant to the issues presented
by the present motion.
Finally, HARDI states that the Plaintiffs “have already been reimbursed by their
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insurance company for their loss. . . . While that may be a collateral issue in this context, a result
in Plaintiffs’ favor would amount to a double recovery. [Mid-State Farmers Insurance] was not in
privity of contract with HARDI (the manufacturer), so it would, arguably, not be entitled to the
benefit of the implied warranties.” Defendant’s Response, p. 7. HARDI is correct–this is a
collateral matter and not relevant to the issues presently before the court.
CONCLUSION
For the reasons set forth above, the Motion for Partial Summary Judgment filed by the
Plaintiffs (DE 52) is GRANTED in part and DENIED in part. The motion is granted as to the
issue of an implied warranty of merchantability and denied as to the issue of implied warranty of
fitness for a particular purpose. This ruling pertains only to those claims asserted against
Defendant HARDI in Count VII of the Plaintiffs’ Second Amended Complaint; all other claims
asserted against either Defendant are unaffected by this Opinion and Order.
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Date: February 29, 2016.
/s/ William C. Lee
William C. Lee, Judge
U.S. District Court
Northern District of Indiana

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