Anthony Pools v. Sheehan

Rodowsky, J., delivered the opinion of the Court. This products liability case presents questions of implied warranty and of defense to strict liability in tort involving an inground, gunite swimming pool and its diving board. Analysis of whether there is any implied warranty and, if so, whether it can be excluded takes us into the problem of hybrid transactions and into Md. Code (1975), § 2-316.1 (1) and (2) of the Commercial Law Article (CL). 1 Plaintiffs, John B. Sheehan (Sheehan) and his wife, Pilar E. Sheehan, of Potomac Woods, Maryland, sued Anthony Pools, a division of Anthony Industries, Inc. (Anthony) in the Circuit Court for Montgomery County. Sheehan sustained bodily injuries when he fell from the side of the diving board ²⁸⁷ of the plaintiffs’ new, backyard swimming pool.

The swimming pool had been designed and built by Anthony. Anthony also designed and manufactured the diving board which it installed as part of the swimming pool transaction. The swimming pool is 16 feet by 40 feet, with a depth from 3 feet to 8 feet. Its style is "Grecian,” which means that there is a curved alcove in the center of each of the 16 foot sides.

The 6 foot long diving board in question was installed over an imaginary centerline bisecting the alcove at the deep end of the pool. Anthony had completed its work by mid-June of 1976. On August 21,1976 the plaintiffs entertained at a pool party. Sheehan testified that he had not previously used the diving board.

He said that on that evening he emerged from swimming in the pool, stepped up onto the diving board, and, while walking toward the pool end of the diving board, slipped and fell from the right side of the diving board and struck the coping of the pool. Plaintiffs advanced two theories of liability. First, skid resistant material built into the surface of the top of the diving board did not extend to the very edge of the board on each side. It stopped approximately one inch short of each edge.

This condition, it was claimed, breached an implied warranty of merchantability. Plaintiffs also presented testimony directed toward proving that use of the "defective” diving board, particularly as positioned in the alcove, was unreasonably dangerous. At the end of the plaintiffs’ case, the trial court directed a verdict for Anthony as to liability founded on warranty, because the written contract between the parties conspicuously provided that the express warranties which it contained were in lieu of any other warranties, express or implied. The case went to the jury on a strict liability in tort theory.

Verdict was in favor of the defendant, and judgment was so entered. Plaintiffs appealed to the Court of Special Appeals which reversed and remanded for a new trial. That court said that "the swimming pool package purchased by the Sheehans constitute^] 'consumer goods’” so that CL § 2-316.1 ²⁸⁸ rendered ineffective Anthony’s attempt to limit the implied warranty of merchantability. Sheehan v. Anthony Pools, 50 Md. App. 614, 619 , 440 A.2d 1085, 1088 (1982).

The granting of the directed verdict based on the contractual limitation was held to be error. Judgment based on the jury verdict was reversed because of error in the instructions. As to that issue, Judge Moore, writing for the court, concluded: In the instant case, it is our view that while the trial court was eminently correct in rejecting the defendant’s request for a contributory negligence instruction, the matter should not have ended there. On the basis of the facts involved and of the Sheehans’ specific request, an instruction should have been granted that Mr. Sheehan’s inadvertent or careless use of the diving board and the pool would not bar his recovery.

On the other hand, giving such an instruction would also have required an appropriate instruction on assumption of risk i.e., that the defendant was entitled to prevail if Mr. Sheehan had discovered the defect, was aware of the danger, and then proceeded unreasonably to use the diving board and pool. [Id. at 625-26, 440 A.2d at 1092 .] We granted Anthony’s petition for certiorari which raised three questions. In essence, the petition asks us to review (1) the implied warranty issue; (2) the inadvertent use instruction issue; and (3) whether the Court of Special Appeals erred "in holding, as dictum that contributory negligence is not a defense in a strict liability case.” (1) The warranty issue, as presented here, involves only the implied warranty of merchantability under CL § 2-314. Plaintiffs do not argue that their warranty claim is based upon any express warranty or that the diving board was to be used for other than its ordinary purpose. Anthony contends that the Sheehans’ swimming pool is not "goods,” ²⁸⁹ that exclusion of implied warranties is allowed, and that a directed verdict on the plaintiffs’ warranty count was proper.

We agree with the Court of Special Appeals that the directed verdict was improper in this case, but we reach that conclusion by a somewhat different route. Title 2 of the Commercial Law Article is the Maryland Uniform Commercial Code — Sales. CL § 2-101. Unless the context otherwise requires, that title "applies to transactions in goods . ...” CL § 2-102.

For purposes of title 2, and with certain exclusions not here relevant, "goods” means "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale .. . .” CL § 2-105 (1). CL § 2-314 (1) in part provides that "[u'lnless excluded or modified (§ 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.” CL § 2-316 (2) permits the exclusion or modification of the implied warranty of merchantability by language which mentions merchantability and which, in the case of a writing, is conspicuous. The Maryland U.C.C., in § 2-316.1, then states that the "provisions of § 2-316 do not apply to sales of consumer goods, as defined by § 9-109, services, or both,” and that any "language used by a seller of consumer goods and services, which attempts to exclude or modify any implied warranties ... is unenforceable.” CL § 9-109 (1) provides that goods are " '[c]onsumer goods’ if they are used or bought for use primarily for personal, family or household purposes.” The May 25, 1976 contract between Anthony and the plaintiffs is a printed form designed for use in Anthony’s Washington, D.C. region. It is a single sheet of paper, approximately 15" by 20", with printing on both sides.

The face of the document is three columns wide. The lefthand column on the face is headed "Retail Installment Contract.” Under that column are set forth Anthony’s contractor license numbers in Virginia, Maryland and the District of Columbia, a statement of the buyer’s right to cancel a home solicitation contract, federal truth-in-lending disclosures ²⁹⁰ and a detachable notice of cancellation. The next two columns on the face are entitled "Swimming Pool Construction Agreement.” Anthony "agrees to construct for and sell to” the plaintiffs, called " 'Buyer,’ ” the "swimming pool and related equipment described below (herein collectively called the 'work’) to be installed at” the plaintiffs’ home for a fixed cash price. 2 Below this covenant, under the heading "Plans and Specifications,” are two columns listing 47 items, some of which are automatically included and some of which are optional. These items appear under the headings, "General Construction Specifications,” "Hydraulic And Filtering Specifications,” "Color-Coordinated Exclusive Deck Equip.,” "Automatic Pool Equipment” and "Other Anthony Features.” In the subject contract Anthony’s obligations included pool layout, structural engineering, obtaining construction permits, excavation, use of engineered steel reinforcing throughout the pool structure, guniting the pool structure, finishing the pool interior with hand troweled, waterproof plaster, installation both of a six inch band of water-line tile and of coping and installation of a filter, a pump, a skimmer and a specified model of six foot diving board.

The reverse side of the contract contains two columns of terms and conditions, including the implied warranty exclusion. The subject contract presents a mixed or hybrid transaction. It is in part a contract for the rendering of services and in part a contract for the sale of goods. Burton v. Artery Company, 279 Md. 94 , 367 A.2d 935 (1977) addressed the applicability vel non of the Maryland U.C.C. — Sales to hybrid contracts.

The issue presented was whether the four year statute of limitations under § 2-725(1), or the general three year statute, applied to a contract to landscape around a construction project of 13 ²⁹¹ buildings. The contract called for the furnishing and planting of hundreds of trees, of hundreds of shrubs, and of sod. We there adopted the test enunciated in Bonebrake v. Cox, 499 F.2d 951 (8th Cir. 1974), a case holding that the sale and installation of bowling lanes, with associated equipment, is a contract of sale and not of services. That test is whether "the predominant factor. .., the thrust, the purpose, reasonably stated, is a transaction of sale with labor incidentally involved,” or vice versa. 279 Md. at 114-15 , 367 A.2d at 946 .

Applying that test, the Court held the contract in Burton to be predominately a transaction in goods. See also Snyder v. Herbert Greenbaum & Associates, 38 Md. App. 144 , 380 A.2d 618 (1977) (contract to furnish and install over 17,000 yards of carpet in 228 apartments was predominately a sale of goods). G. Wallach, The Law of Sales Under the Uniform Commercial Code (1981), § 11.05[3] at 11-28 describes the current state of the law concerning implied warranties in hybrid transactions to be as follows: The general pre-Code approach to this issue was to examine the transaction to see whether the goods aspect or the service aspect of the transaction predominated. If the service aspect predominated, no warranties of quality were imposed in the transaction, not even if the defect or complaint related to the goods that were involved rather than to the services.

This mechanical approach remains the most popular method of resolving the issue. [Footnote omitted.] [ 3 ] ²⁹² The few reported holdings concerning whether Article 2 of the U.C.C. applies to swimming pool installations have involved a variety of types of pools and are not uniform. A Connecticut trial court decision dealt with the alleged breach of the implied warranty of merchantability in the installation of an aboveground swimming pool. Its sides were plywood panels, braced by 2" x 4" supports. A vinyl liner was laid within the sides.

That court applied the predominant purpose test. It held that the owners did not offer any adequate evidence on the apportionment between labor and material and equipment, and so they failed to meet the burden of establishing the existence of a warranty under the U.C.C. Gulash v. Stylarama, Inc., 33 Conn. Supp. 108 , 364 A.2d 1221 (1975). A vinyl liner pool was also involved in Riffe v. Black, 548 S.W.2d 175 (Ky.

App. 1977). The walls of that pool consisted of prefabricated steel which was set into an excavated site. Sand was troweled for the bottom of the pool. Leaking had resulted from the contractor’s failure both to reseat the liner after a wrinkle had developed during installation and to repair the hole which developed later.

The Kentucky court applied a predominant purpose test and necessarily classified the contract as one for the sale of goods. It was held that the warranty provisions of that state’s U.C.C. "apply to services when the sale is primarily one of goods and the services are necessary to insure that those goods are merchantable and fit for the ordinary purpose.” Id. at 177 . Judgment for the pool owners was affirmed.

Ben Construction Corp. v. Ventre, 23 A.D.2d 44 , 257 N.Y.S.2d 988 (1965) is not a U.C.C. case, but it is analogous. It presented the claim of the pool owners for return of moneys paid, based on a section of the New York Personal Property Law. The pool is described in the opinion only as "installed.” Judgment for the defendant contractor was affirmed, 3-2. In the majority’s view, the contract was for work, labor and services and was not a sale, while the dissent viewed the transaction as primarily a sale of a swimming pool with an incidental agreement to install. ²⁹³ The Court of Special Appeals has recently held that CL § 2-601’s "perfect tender” provisions do not apply to a contract for the installation of an inground, concrete swimming pool.

There was no transaction in goods because the pool was not movable. Chian v. KDI Sylvan Pools, Inc., 53 Md. App. 236 , 452 A.2d 1259 (1982). 4 Here, Anthony undertook the construction of an inground, steel reinforced, gunite swimming pool with hand finished plaster surfacing, tile trim and coping. The Sheehans were not buying steel rods, or gunite, or plaster or tiles. The predominant factor, the thrust, the purpose of the contract was the furnishing of labor and service by Anthony, while the sale of the diving board was incidental to the construction of the pool itself.

The question thus resolves itself into whether the predominant purpose test, which we applied in Burton for the purpose of determining whether the U.C.C. statute of limitations governed that transaction, should be applied to determine whether the sale of the diving board, included in the Anthony-Sheehans transaction, carries an implied warranty of merchantability under § 2-314. Were the predominant purpose test mechanically to