American Water Heater Company v. The Taylor Winfield Corporation

Filing 101

MEMORANDUM AND OPINION. Defendants motion for summary judgment, the Court will GRANT the motion IN PART and DENY the motion IN PART (Doc. 91). The Court will DENY the motion as to Plaintiffs breach of contract claims. The Court willGRANT the motion as to Plaintiffs breach of warranty claims. Signed by District Judge Curtis L Collier on 7/23/2019. (BDG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
at GREENEVILLE
AMERICAN WATER HEATER CO.,
and A.O. SMITH CORP.,
Plaintiffs,
v.
THE TAYLOR WINFIELD CORP.,
d/b/a TAYLOR-WINFIELD
TECHNOLOGIES,
Defendant.

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No. 2:16-CV-125

Judge Collier
Magistrate Judge Corker

MEMORANDUM

Before the Court is a motion for partial summary judgment by Defendant, The Taylor

Winfield Corporation (“Taylor-Winfield”). (Doc. 91.) Because of a subsequently filed stipulation
of dismissal (Doc. 97), the parties agree that the motion is no longer for partial judgment, but
addresses all of the remaining claims in this action. (See Docs. 98 at 1 n.1; 100 at 2 n.2.) Plaintiffs,
A.O. Smith Corporation (“A.O. Smith”) and American Water Heater Company (“AWH”), have
responded in opposition (Doc. 98), and Defendant has replied (Doc. 100).
For the reasons stated below, the Court will GRANT IN PART and DENY IN PART
Defendant’s motion for summary judgment (Doc. 91). The Court will DENY the motion as to
Plaintiffs’ breach of contract claims. The Court will GRANT the motion as to Plaintiffs’ breach
of warranty claims.
I.

BACKGROUND
This diversity action concerns an order for two long-seam welding machines capable of

welding rolled sheets of steel into cylinders, or “shells,” which can later be capped at both ends in

order to form water heater tanks. (Doc. 6 ¶ 7.) Plaintiffs, A.O. Smith and AWH, were the intended
purchasers of the long seam welding machines (the “machines”). A.O. Smith is the parent
corporation of AWH, which operates a water heater manufacturing facility in Johnson City,
Tennessee. (Doc. 98 at 5.) 
On January 27, 2014, A.O. Smith issued two written purchase orders for the machines to
Defendant Taylor-Winfield, an Ohio corporation offering welding products. (Id.; Doc. 92-1.) The
purchase orders incorporated a written proposal by Taylor-Winfield for the design and build of the
machines. (See Doc. 92-1.) Taylor-Winfield’s proposal, in turn, incorporated A.O. Smith’s
initial written specifications for its planned use of the machines. (See Doc. 92-3 at 1.) The
documents specified that Taylor-Winfield would design the machines so that they would
automatically load, roll, size, TWINLAP seam weld, trim, and unload steel sheets. (See Doc. 923 at 1.) The TWINLAP technology would use two sets of wheels during a single pass of the
equipment to weld the steel. (Doc. 98 at 2 n.4.) Plaintiffs contracted to pay $2,204,124.00 for the
first long seam welding machine (the “first machine”), and $1,928,206.00 for the second long seam
welding machine (the “second machine”). (Doc. 92-1.) Taylor-Winfield’s proposal estimated a
delivery date of twelve months for the first machine and fourteen months for the second
machine. (Doc. 92-3 at 26.)  
The documents also required Taylor-Winfield to conduct a trial run, or “factory run-off,”
of the welding machines at Taylor-Winfield’s factory in Ohio once the machines were completely
operational. (Docs. 98 at 6; 92-3 at 2, 92-4 at 5 ¶ 10.1.) Taylor-Winfield was to notify the A.O.
Smith project manager “of the date of the scheduled Trial Run at the supplier’s site at least two (2)
weeks prior to the scheduled test.” (Doc. 92-4 at 5 ¶ 10.1.) The documents required A.O. Smith

2

to issue an “Acceptance to Ship” after a successful “factory run-off” test before Taylor-Winfield
would be authorized to ship the machines from Ohio to Tennessee. (Doc. 98 at 6.)  
Upon issuance of the purchase orders, Taylor-Winfield commenced work on the machines,
and A.O. Smith commenced payment of installments under the contract. (Id.) There were
numerous discussions between Taylor-Winfield and A.O. Smith related to the scheduling of runoff testing in 2015. (Docs. 18 at 3-4; 98 at 7; 98-2 at 4, 7-9.) However, the machines could not
consistently meet the requirements in A.O. Smith’s specification. (Docs. 18 at 3-4; 98 at 7.) By
spring of 2015, Taylor-Winfield abandoned the TWINLAP design, instead moving to a design
which utilized a single set of wheels and induction heating. (Doc. 98 at 7.) A.O. Smith allowed
Taylor-Winfield time to implement and test the replacement design. (Doc. 98 at 3.) The parties
planned that run-off testing could occur in late 2015, but a significant failure in a water heater shell
occurred in November 2015, which prevented the run-off from being scheduled. (Docs. 98 at 7.)
On February 2, 2016, senior leadership from both sides met at Taylor-Winfield to discuss
the status of the machines and the plan for performance of the contract going forward. (Id.) The
meeting included A.O. Smith’s Plant Manager, Carol Peters, and Taylor-Winfield President, Alex
Benyo. (Id.) The result of the meeting was a handwritten note signed by Benyo and other TaylorWinfield personnel. (Doc. 6-5.) The note stated,  
Agreement to ship Machine 1 to A.O. Smith on 03/14/16 
 Runoff based on 14”, 16”, and 18” Diameter shells listed in runoff sheet provided by
A.O. Smith 
 20” & 24” Diameter shells will have mechanical alignment completed on Machine 1 
 A.O. Smith will provide resources to help 
 Weekly calls will be setup with Taylor Winfield and A.O. Smith senior management 
 Ship Machine 2 to A.O. Smith on 06/01/16 
 Weld schedule development will be done @ Taylor Winfield on Machine 2 
[signatures] 

3

(Id.) In regard to A.O. Smith’s agreement to provide resources to help Taylor-Winfield, A.O.
Smith hired a third-party welding engineer, “Dr. Anthony,” to work with A.O. Smith’s team to
examine Taylor-Winfield’s design and make recommendations. (Docs. 98 at 4; 98-5 at 6-7.)  
The handwritten agreement was not followed. (Doc. 93 at 3.) Shortly after the meeting,
Dr. Anthony began suggesting changes to the underlying design and structure of the machines
which were already substantially completed at that point in time. (Id.) Taylor-Winfield was then
informed

by

“another

A.O.

Smith

official

that

Dr.

Anthony’s

suggestions

were

mandatory.” (Id.) Taylor-Winfield agreed to make some, but not all of the changes which Dr.
Anthony had suggested. (Id.) According to Taylor-Winfield personnel, the new work required
Defendant to “stop the finishing touch work” which was “proposed at the February 2, 2016
meeting,” and caused them to not “meet the factory ‘run-off’ schedule set at February 2, 2016
meeting for February 23 and/or 24.” (Doc. 93 at 3.) On March 3, 2016, a telephone call took place
between Benyo and Peters. (Doc. 98 at 9.) Peters instructed Benyo to move forward with
development and testing of the machines as Taylor-Winfield saw fit, and she informed A.O.
Smith’s internal team that they should support Taylor-Winfield’s plans. (Doc. 98 at 9.)  
On April 6, 2016, A.O. Smith’s technical project team met with Taylor-Winfield to
determine if the first machine was ready for a run-off. (Doc. 99 at 3.) Jim Klug, the project
manager for A.O. Smith, presented Benyo with a document entitled “Mash Seam Welder Team
Machine Analysis,” which contained some parameters for a preliminary factory run-off. (Id.)
Neither the document itself, nor the A.O. Smith team, suggested or requested a timeframe for
ultimately performing the run-off. (Id.)
No run-off plan was ever agreed upon by A.O. Smith and Taylor-Winfield. (Doc. 98 at
11.) At no time after changing from the TWINLAP system to the induction heating system did

4

Taylor-Winfield inform A.O. Smith that it was prepared for run-off testing at its facility. (Doc. 98
at 13.)  
On May 13, 2016, A.O. Smith advised Taylor-Winfield that it was cancelling the
contract. (Id.) A.O. Smith issued a “notice of breach” letter to Taylor-Winfield, as well as a copy
of the original complaint filed in this case on May 12, 2016. (See Doc. 1.) The letter noted that
Plaintiffs had “no reason to believe that Taylor Winfield [was] close to completing a machine”
that would meet their requirements, in fact they came “to the opposite conclusion” about the status
of the contract. (Doc. 94-3.) The letter offered a ten-day option to cure by supplying the machines
Plaintiffs had ordered. (See id.) When the ten-day cure period expired without delivery of the
machines, Plaintiffs formally served process of the complaint on Taylor-Winfield. (Doc. 98 at
12.)
The complaint, as amended, asserts three counts of breach of contract, two counts of breach
of the implied warranty of fitness for a particular purpose, and two counts of breach of express
warranty. (Doc. 6 at 7-10.)  
Defendant Taylor-Winfield now moves for summary judgment in its favor. (Doc. 91.) In
support of the motion, Defendant states that Plaintiffs waived a definite time for performing the
sales contract, and, thus, it had a “reasonable time” to perform its duty of delivering the
machines. (Doc. 95 at 7.) Defendant argues that the “reasonable time” requirement is not
breached until a party communicates to the other some suggestion, request, or demand for a
definite time limit on performance, which Defendant states did not occur in this case. (Id. at
8.) Last, Defendant argues that Plaintiffs’ claims for breach of warranty must fail, as there was no
tender of delivery of the machines. (Id. at 11.) In response, Plaintiffs state that there are disputed
factual issues regarding waiver of the time for performance. (Doc. 98 at 14-19.) And even if a

5

waiver of the time for performance did occur, Plaintiffs argue that whether Defendant breached
a “reasonable time” for performance presents a question of fact for a jury to decide. (Id. at 1921.) Plaintiffs also believe their breach of warranty claims should survive because Defendant cites
a section of the UCC which only relates to statute of limitations, and not the issue presented
here. (Id. at 22.)
After addressing a dispute concerning choice of law, the Court concludes (1) there is a
genuine issue of material fact regarding waiver of the time for delivery of the machines, and
(2) that Plaintiffs cannot maintain claims for breach of warranty as a matter of law, as no tender of
delivery of the machines occurred.
II.

STANDARD OF REVIEW
Summary judgment is proper when “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). The moving party bears the burden of demonstrating no genuine issue of material fact
exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Leary v. Daeschner, 349 F.3d 888, 897
(6th Cir. 2003). The Court should view the evidence, including all reasonable inferences, in the
light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986); Nat’l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th
Cir. 2001).
To survive a motion for summary judgment, “the non-moving party must go beyond the
pleadings and come forward with specific facts to demonstrate that there is a genuine issue for
trial.” Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). Indeed, a “[plaintiff] is
not entitled to a trial on the basis of mere allegations.” Smith v. City of Chattanooga, No. 1:08cv-63, 2009 WL 3762961, at *2-3 (E.D. Tenn. Nov. 4, 2009) (explaining the court must determine

6

whether “the record contains sufficient facts and admissible evidence from which a rational jury
could reasonably find in favor of [the] plaintiff”). In addition, should the non-moving party fail to
provide evidence to support an essential element of its case, the movant can meet its burden of
demonstrating no genuine issue of material fact exists by pointing out such failure to the court.
Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989).
At summary judgment, the Court’s role is limited to determining whether the case contains
sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). If the Court concludes a fair-minded jury could
not return a verdict in favor of the non-movant based on the record, the Court should grant
summary judgment. Id. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).
III.

ANALYSIS 
A.

Choice of Law 

In diversity actions, state substantive law governs. See Erie R.R. Co. v. Tomkins, 304 U.S.
64, 73 (1938). Plaintiffs contend in their amended complaint that Wisconsin law applies to this
dispute due to a choice-of-law clause contained in the parties’ contract. (Doc. 6 at 5.) Plaintiffs
claim the choice-of-law clause was contained in a “term sheet” which appeared on the reverse side
of each of the purchase orders it issued to Defendant. (Doc. 95 at 6.) Defendant argues that the
referenced choice-of-law clause never made it into the parties’ final contract, as the purchase
orders were emailed to Defendant, and did not contain a term sheet or any reverse sides of those
documents. (See id. at 7.) Defendant states that, absent any choice-of-law clause, Tennessee law
governs. (Id. at 6-7.) In response, Plaintiffs state that they disagree that Tennessee law applies,
but also continue by commenting, “there is little difference in Tennessee and Wisconsin case law
related to the various provisions of the Uniform Commercial Code relied upon by Taylor-

7

Winfield.” (Doc. 98 at 14.) Thus, for purposes of the motion for summary judgment only,
Plaintiffs cite Tennessee law. (See Doc. 98.)
The Court need only conduct a choice-of-law analysis if a conflict exists between two
states’ laws. Pogue v. Principal Life Ins. Co., No. 3:14-CV-00599-GNS, 2015 WL 5680464, at
*4 (W.D. Ky. Sept. 25, 2015) (citing Williams v. Toys “R” Us, 138 F. App’x 798, 803 (6th Cir.
2005)); see also CenTra, Inc. v. Estrin, 538 F.3d 402, 409 (6th Cir. 2008) (foregoing a choice of
law analysis because the possible sources of law governing the issue at hand were consistent with
one another “making any asserted conflict of laws a false conflict”). Plaintiffs, who advocate for
application of Wisconsin law, have stated that there is little difference between Tennessee and
Wisconsin case law regarding various provisions of the Uniform Commercial Code (“UCC”).
Thus, both parties have applied Tennessee law. Because Plaintiffs have conceded that there is no
true “conflict” between the states’ laws, the Court will similarly apply Tennessee law without
resolving the factual dispute regarding the choice-of-law clause. In addition, the Court agrees with
Defendant’s conclusion that, absent the dispute over the choice-of-law clause, application of
Tennessee law would be appropriate as compared to the application of law from any other state.1
B.

Waiver of Time for Performance

Plaintiffs’ “Notice of Breach” letter stated that Taylor-Winfield had failed to deliver the
machines “on time.” (Doc. 99 at 9.) Defendant argues this was an erroneous conclusion by
Plaintiffs because Plaintiffs waived any definite time for performance. (Doc. 95 at 7.)

1

“To determine the applicable substantive law in a diversity-jurisdiction case, federal
courts apply the choice-of-law rules of the forum state: here, Tennessee.” JNJ Logistics, LLC v.
Scottsdale Ins. Co., 617 F. App’x 464, 467-68 (6th Cir. 2015); see also Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487, 496 (1941). Tennessee’s choice-of-law rules provide that claims based
on a contract are presumed to be governed by the law of the jurisdiction in which the contract was
executed, absent contrary indications. Id.
8

“Waiver has long been defined under Tennessee law as the ‘voluntary relinquishment of a
known right.’” Freeman Mgmt. Corp. v. Shurgard Storage Ctrs., Inc., No. 3:06CV0736, 2007
WL 1556604, at *10 (M.D. Tenn. May 24, 2007) (quoting Dallas Glass of Hendersonville, Inc. v.
Bituminous Fire & Marine Ins. Co., 544 S.W.2d 351, 354 (Tenn. 1976)). Waiver is never
presumed, and the party claiming a waiver has the burden of proving it by a preponderance of the
evidence. Id.
Waiver may be proved by: (1) express declaration; (2) acts and declarations manifesting
an intent and purpose not to claim a supposed advantage; or (3) a course of conduct. See Baptist
Physician Hosp. Org., Inc. v. Humana Military Healthcare Servs., Inc., 481 F.3d 337, 352 (6th
Cir. 2007). “Where a party seeks to prove waiver by course of conduct, ‘there must be clear,
unequivocal and decisive acts of the party or an act which shows determination not to have the
benefit intended in order to constitute a waiver.’” Id. (quoting Gitter v. Tenn. Farmers Mut. Ins.
Co., 450 S.W.2d 780, 784 (Tenn. Ct. App. 1969); see also Song v. Chung, No.
E201800114COAR3CV, 2018 WL 5618114, at *9 (Tenn. Ct. App. Oct. 30, 2018). The proof
must show absolute action or inaction inconsistent with the claim or right waived. Freeman, 2007
WL 1556604, at *10. “Specifically, the record must show conduct on the part of [the party against
whom waiver is sought] which is . . . clearly inconsistent with an intention to insist upon a strict
compliance with the [contractual] provision at issue.” Ky. Nat’l Ins. Co. v. Gardner, 6 S.W.3d
493, 499 (Tenn. Ct. App. 1999) (alterations in original). “Generally, whether a waiver of a
contractual provision has occurred in a given factual setting is a question of fact for
trial.” GuestHouse Int’l, LLC v. Shoney’s N. Am. Corp., 330 S.W.3d 166, 202 (Tenn. Ct. App.
2010) (citing Gaston v. Tenn. Farmers Mut. Ins. Co., 120 S.W.3d 815, 819 (Tenn. 2003)).

9

The contract at issue here initially provided an “estimate” for shipment of the first machine
in January 2015, and the second machine in May 2015.2 (See Docs. 92-3 at 26 (twelve- and
fourteen-month shipment estimates); 92-1 (purchase orders made in January 2014).) Those dates
were extended by the parties because the machines could not consistently meet the requirements
in A.O. Smith’s specification. (Doc. 98 at 7.) On February 2, 2016, more definitive dates were
supplied by a signed handwritten agreement which was intended to govern performance of the
contract. (Doc. 6-5.) The first machine was to be shipped to A.O. Smith on March 14, 2016, and
the second machine was to be shipped to A.O. Smith on June 1, 2016. (See id.) The handwritten
agreement did not modify terms in the contract which required Taylor-Winfield to notify the A.O.
Smith project manager of the date of a test run-off “at the supplier’s site at least two (2) weeks
prior to the scheduled test.” (Doc. 92-4 at 5 ¶ 10.1.)
In support of its argument that the 2016 shipment dates were waived by Plaintiffs,
Defendant states that (1) after the February 2, 2016 meeting, A.O. Smith demanded and got
“upgrades” in the machines that “necessarily postponed” a factory run-off test, and (2) express
conditions to delivery, such as a run-off test and acceptance to ship by A.O. Smith, never
occurred. (Doc. 95 at 7-8.) The Court finds, however, that A.O. Smith’s conduct was not so “clear,
unequivocal and decisive” that the Court can determine that the 2016 deadlines were waived as a
matter of law. Baptist Physician, 481 F.3d at 352.

2

The Court refers to Plaintiffs’ purchase orders (Doc. 91-1), the Taylor-Winfield formal
proposal (Doc. 92-3), and Plaintiffs’ long seam welder specification (Doc. 92-4) as “the contract.”
See Springfield Tobacco Redryers Corp. v. City of Springfield, 293 S.W.2d 189, 197 (1956) (“It is
not necessary that the contract be contained in a single document. Any number of papers may be
taken together to make out the written expression of the contract of the parties, provided there is
sufficient connection between the papers.”).
10

First, the facts regarding the requested upgrades after the February 2, 2016 meeting are not
clear or undisputed, in and of themselves. Christopher Marrone, a project manager for TaylorWinfield, attests that Dr. Anthony, a consultant from A.O. Smith, began suggesting significant
changes in the underlying design and structure of the machines after the February 2, 2016 meeting.
(Doc. 93 at 3.) After that, Marrone attests that some other, unidentified, A.O. Smith “official”
stated that the suggestions were mandatory. (Doc. 93 at 3.) However, there is no evidence that
the unidentified A.O. Smith official had authority to waive contract provisions. In addition,
Taylor-Winfield did not agree to all of the suggested changes, which indicates that the company
believed it still had discretion as to how to proceed under the contract. (Id.) If Dr. Anthony’s
suggested changes were not mandatory, Defendant had no reason to conclude it was excused from
proceeding along agreed-upon timeframes. Plaintiff has also presented evidence that A.O. Smith’s
Plant Manager, Carol Peters, instructed Benyo to move forward with development and testing of
the machines as Taylor-Winfield saw fit. (Doc. 98 at 9.) Peters informed A.O. Smith’s internal
team that they should support Taylor-Winfield’s plans. (Id.)
More importantly, none of this evidence directly addresses the dates for shipment of the
machines as agreed upon by the parties following the February 2, 2016 meeting. Plaintiffs could
have requested design changes while fully expecting Defendant to still comply with agreed-upon
shipment dates. In the face of Plaintiffs’ silence about the dates, Defendant never informed
Plaintiffs that it was prepared for run-off testing—as required by the contract in order for a run-off
to be set—and never asked Plaintiffs for a new or “reasonable” time period in which to deliver the
machines. (Doc. 98-3 at 7-8.) Defendant states that Peters “implicitly” acknowledged that A.O.
Smith’s suggestions would necessarily postpone run-off dates (Doc. 100 at 7), but the Court finds
that an implicit acknowledgment is not “so clearly inconsistent with an intention to insist upon a

11

strict compliance” with the agreed upon time for performance such that it constitutes an implied
waiver of that contract term. Gardner, 6 S.W.3d at 499.
Defendant next argues that a wavier of the deadline for shipment of the machines occurred
because express conditions to delivery, such as a run-off test and acceptance to ship by A.O. Smith,
never occurred. (Docs. 95 at 7-8; 100 at 9.) This argument, however, only ignores the fact that it
was Taylor-Winfield’s burden to “notify” the A.O. Smith project manager “of the date of the
scheduled Trial Run at the supplier’s site at least two (2) weeks prior to the scheduled test” once
the machines were operational. (Doc. 92-4 at 5 ¶ 10.1.) A.O. Smith never issued a timely
acceptance to ship because Taylor-Winfield never provided a sufficiently operational machine,
notification of the date for a run-off, or a successful run-off. Thus, Plaintiffs’ inaction can be
attributed to the fault of Defendant, and not any intent to waive the benefit of the agreed-upon
shipment deadlines. Defendant argues it had Plaintiffs’ “full acquiescence” in not scheduling a
timely run-off (Doc. 100 at 9), but for reasons above, the Court finds there to be a genuine dispute
of material fact regarding any acquiescence by Plaintiffs.
The Court acknowledges that the parties’ relationship in this matter, up until the filing of
the instant lawsuit, was one marked by cooperation. Plaintiffs did engage in a pattern of repeatedly
modifying their agreement without written amendment as Defendant struggled to deliver on the
contract as formed, such as by allowing Taylor-Winfield to move from the TWINLAP long seam
welding system to an entirely different system. (Doc. 98 at 12.) Indeed, Plaintiffs do not dispute
that on April 6, 2016—after the date for delivery of the first machine had passed—A.O. Smith’s
technical project team met with Taylor-Winfield to try to determine a plan for preparing the first

12

machine to perform a run-off. (Docs. 98 at 11; 99 at 3.)3 However, Defendant presents no
evidence showing that the A.O. Smith project team condoned the delay which had already occurred
during that meeting, nor did the parties agree to later shipment dates. While the acceptance of
benefits under a contract with knowledge of a breach amounts to a waiver of the breach, Madden
Phillips Const., Inc. v. GGAT Dev. Corp., 315 S.W.3d 800, 815-16 (Tenn. Ct. App. 2009),
Plaintiffs did not receive any benefits under the contract by continuing to attempt to help TaylorWinfield produce a workable first machine. While there was some further cooperation between
the parties, it appears that the meeting may have only amounted to an “unsuccessful attempt to
convince the breaching party to honor its agreement” which does “not amount to waiver.”
Madden, 315 S.W.3d at 815-16. Mindful both that “whether a waiver of a contractual provision
has occurred in a given factual setting is a question of fact for trial” and that Defendant bears the
burden of proving a waiver, the Court cannot determine a waiver occurred on the basis of the April
6, 2016 meeting as a matter of law under the facts as developed. GuestHouse, 330 S.W.3d at 202.
The Court will DENY Defendant’s motion for summary judgment (Doc. 91) on Plaintiffs’
breach of contract claims (Doc. 6, counts 1-3).
C.

Breach of Warranty Claims

Defendant next argues that summary judgment is appropriate as to Plaintiff’s breach of
warranty claims. (Doc. 95 at 11-13.) In their amended complaint, Plaintiffs have asserted two
counts of breach of the implied warranty of fitness for a particular purpose (counts 4, 5), and two

3

Plaintiffs’ only dispute regarding this point is that an exhibit to Benyo’s affidavit, A.O.
Smith’s analysis of the project on April 6, 2016, is not referenced in Benyo’s affidavit, no
foundation is provided for it, and it constitutes hearsay. (Doc. 98 at 10.) The Court only relies on
Benyo’s affidavit and not the substance of the exhibit in its analysis.
13

counts of breach of express warranty (counts 6, 7), in addition to breach of contract claims. (Doc.
6 at 8-10.)
Tennessee law provides,
An action for breach of any contract for sale must be commenced within four (4)
years after the cause of action has accrued . . . A cause of action accrues when the
breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.
A breach of warranty occurs when tender of delivery is made, except that 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.
Tenn. Code Ann. § 47-2-725. Defendant reasons that this provision precludes Plaintiffs’ breach
of warranty claims because “tender of delivery” of the machines has not been made. (Doc. 95 at
11.) The statute notes that an action “must be commenced . . . after the cause of action has
accrued[,]” that “a cause of action accrues when the breach occurs[,]” and that “a breach of
warranty occurs when tender of delivery is made.” Tenn. Code Ann. § 47-2-725 (emphasis added).
Plaintiffs argue this statute does not preclude their claims because it only discusses the statute of
limitations for bringing a breach of warranty claim. (Doc. 98 at 22.) Plaintiffs note that there is
no discussion of tender of delivery within other UCC provisions governing express warranty and
implied warranty of fitness for a particular purpose. (Id.) Plaintiffs do not, however, cite any case
involving a breach of warranty claim where goods have not been delivered.
Defendant’s argument is well-taken. “In an action based on breach of warranty, it is of
course necessary to show not only the existence of the warranty but the fact that the warranty was
broken and that the breach of the warranty was the proximate cause of the loss sustained.” Tenn.
Code Ann. § 47-2-314, cmt. 13. Breach of warranty claims concern the quality of goods, and as
such, presuppose that there has been a delivery of goods which do not conform to the seller’s
express or implied promises. See Leach v. Wiles, 429 S.W.2d 823, 832 (Tenn. Ct. App. 1968)

14

(“there can be no recovery . . . unless it is shown that the goods purchased did not measure up to
the requirements of such implied warranty at the time such goods passed from the seller to the
purchaser”); Hollingsworth v. Queen Carpet, Inc., 827 S.W.2d 306, 309 (Tenn. Ct. App. 1991)
(compliance with warranties assessed “at the time the goods passed from the seller to the
purchaser”);

Dan

Stern

Homes,

Inc.

v.

Designer

Floors

&

Homes,

Inc.,

No.

M200800065COAR3CV, 2009 WL 1910955, at *4 (Tenn. Ct. App. June 30, 2009) (“In order to
recover under this warranty, the purchaser must show that the goods did not measure up to the
requirements of the warranty at the time they were delivered”). Moreover, a cause of action may
not commence until it accrues. Accrual of cause of action, 1 Tenn. Cir. Ct. Prac. § 1:2; Gibson v.
Swanson Plating & Mach. of Kentucky, Inc., 819 S.W.2d 796, 797 (Tenn. 1991) (“a cause of action
does not accrue until a suit can be maintained.”); Hodge v. Serv. Mach. Co., 438 F.2d 347, 349
(6th Cir. 1971) (same); see also Knott v. Stewart Cty., 207 S.W.2d 337, 339 (Tenn. 1948) (“This
court cannot settle abstract questions, however important, or however simple they may be, upon
the supposition that they may hereafter arise.”). By statute, Plaintiffs’ breach of warranty actions
have not accrued because no tender of delivery has been made. See Tenn. Code Ann. § 47-2-725.
Accordingly, the Court will GRANT Defendant’s motion for summary judgment (Doc.
91) on Plaintiffs’ breach of warranty claims (Doc. 6, counts 4-7).
III.

CONCLUSION

Having assessed all of the arguments presented in Defendant’s motion for summary
judgment, the Court will GRANT the motion IN PART and DENY the motion IN PART (Doc.
91). The Court will DENY the motion as to Plaintiffs’ breach of contract claims. The Court will
GRANT the motion as to Plaintiffs’ breach of warranty claims.

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An Order Will Enter.

/s/
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE

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