DeGroft v. Lancaster Silo Co.

BLOOM, Judge. In March, 1983, appellant, Homer DeGroft, filed suit in the Circuit Court for Carroll County against appellee, the Lancaster Silo Co., Inc., asserting causes of action for (Count 1) breach in 1975 of a written contract to construct a silo on his property; (Count 2) negligence in constructing the silo and preparing its footings; and (Count 3) breach of a subsequent oral contract to build a new silo after it became necessary to tear down the original one because it was unsafe. Appellee moved for summary judgment as to all counts and, in September 1986, the court granted that motion. The court determined that the Uniform Commercial Code (UCC), Title 2 of the Md. Commercial Law Code Annotated, was applicable to the breach of contract claims because a sale of goods was involved.

The first count was held to be barred because it was not filed within four years of the occurrence of the breach of the contract, as required by § 2-725 of the UCC; recovery under the third count was deemed to be unavailable because the oral agreement constituted a modification to the original contract for the sale of goods and, as such, was required by § 2-209 of the UCC to be in writing. Finally, the court determined appellee was entitled to judg ¹⁵⁹ ment as a matter of law as to the second count because the only injury appellant alleged he sustained as a result of appellee’s negligence was economic and an action for pure commercial or economic loss resulting from negligence in performing a contract will not lie. We agree with appellant that the court erred in granting summary judgment against him as to the first and third counts. We shall not address the question of the propriety of the grant of summary judgment on the second count (negligence) for the simple reason that appellant did not present or argue the issue in his brief.

Rule 1046 f provides that “This Court may decline to hear or consider oral argument on any legal proposition or question of fact not presented in the briefs.” (Emphasis added.) In Pride Mark Realty, Inc. v. Mullins, 30 Md.App. 497, 510 , 352 A.2d 866 , cert. denied, 278 Md. 730 (1976), we cautioned that we would “no longer indulge litigants by considering questions tangentially raised or mentioned in passing by brief or oral argument.” (Emphasis in original.) We there held that when an issue, although raised below, is not raised on appeal, “we are as completely denied the right to review such question as if the appeal were premature or had not been taken at all.” Id. at 511, 352 A.2d 866 . See also Hyde v. State, 228 Md. 209, 218 , 179 A.2d 421 (1962), cert. denied, 372 U.S. 945 , 83 S.Ct. 938 , 9 L.Ed.2d 970 (1963); Comptroller of Treasury v. Aerial Products, Inc., 210 Md. 627, 644-45 , 124 A.2d 805 (1956). Summary Judgment—Standard for Granting A grant of summary judgment is appropriate only where a two-fold test is met. The movant for summary judgment must clearly demonstrate the absence of any genuine issue of material fact and must also demonstrate that he is entitled to judgment as a matter of law.

Md.Rule 2-501(a). See also Dietz v. Moore, 277 Md. 1, 4 , 351 A.2d 428 (1976); Castiglione v. The Johns Hopkins Hospital, 69 Md.App. 325, 332 , 517 A.2d 786 (1986); Metropolitan Mortgage Fund, Inc. v. Basiliko, 44 Md.App. 158, 162 , 407 A.2d 773 ¹⁶⁰ (1979), aff'd, 288 Md. 25 , 415 A.2d 25 (1980); Vanhook v. Merchants Mutual Insurance Co., 22 Md.App. 22, 25 , 321 A.2d 540 (1974). A fact is “material” if it somehow affects the outcome of the case. King v. Bankerd, 303 Md. 98, 111 , 492 A.2d 608 (1985); Lynx, Inc. v. Ordnance Products, Inc., 281 Md. 712, 717 , 382 A.2d 555 (1978).

The court, in ruling on a motion for summary judgment, must consider the pleadings, depositions, answers to interrogatories, admissions and affidavits submitted by the parties. Md. Rule 2—501(e). At a hearing on a motion for summary judgment, the function of the judge is “much the same as that he performs at the close of all the evidence in a jury trial when motions for directed verdict ... require him to determine whether an issue requires resolution by a jury, or is to be decided by the court as a matter of law.” Vanhook, supra, 22 Md.App. at 25 , 321 A.2d 540 (quoting Knisley v. Keller, 11 Md.App. 269, 272-73 , 273 A.2d 624 , (cert. denied, 261 Md. 726 (1971)). The court does not attempt to decide any issue of fact or credibility, but only whether such issues exist.

Wolfe v. Lamar & Wallace, Inc., 261 Md. 174, 178 , 274 A.2d 121 (1971); White v. Friel, 210 Md. 274 , 285-86 123 A.2d 303 (1956). In ruling on a motion for summary judgment, all disputed facts and inferences therefrom should be viewed in the light most favorable to the party against whom the motion is made. DiGrazia v. County Executive for Montgomery County, 288 Md. 437, 445 , 418 A.2d 1191 (1980); Berkey v. Delia, 287 Md. 302, 306 , 413 A.2d 170 (1980); Barb v. Wallace, 45 Md.App. 271, 275 , 412 A.2d 1314 (1980). Facts The facts, viewed in the light most favorable to appellant, are as follows: On June 5,1975, the parties executed a one page, two-sided printed form contract labeled “Silo Construction Order.” On the front of the form, the parties are referred to as ¹⁶¹ Lancaster Silo Co., Inc. and “landowner.” Appellee was “authorized to construct a standard Lancaster silo” 30 feet by 80 feet in size on appellant’s farm.

Several of various boxes were checked off to indicate the “standard Lancaster silo accessories” with which the silo was “to be equipped,” among them a distributor, chute, ladder and 31 redwood hinged doors. The silo was to be “delivered anytime” and “erected as soon as the [silo’s] footing is in.” The contract further specified that the “landowner agrees to pay [appellee] for such construction” a “total” of $17,256.00. No allocation between the cost of labor and materials is included. Spaces were provided to list the cost of the silo and other “items,” but they were left blank.

The parties’ signatures appeared at the bottom of the front side of the form, beneath a paragraph indicating the agreement constituted their “full and entire contract.” The other side of the form contract is headed “General Provisions.” In several numbered paragraphs the parties are referred to as “Buyer” and “Seller.” Paragraph 6 states in part that the “Seller assures the Buyer that the silo will be built within the average field practices of the National Silo Association and stands behind the materials and workmanship of the silo and associated equipment manufactured by [appellee] or its manufacturing agents.” Other paragraphs refer to the “construction” or “erection” of the silo {e.g., Buyer’s responsibility for “any unsafe condition on the construction site”) and “materials” or “goods” {e.g., “any sales tax upon the sale of goods ... shall be paid by the Buyer”). Attached to the contract, which was filed with the complaint as appellant’s “Exhibit A,” was a May 21, 1975, document prepared by W. Roger Roop on “Patz Material Handling Equipment” stationery entitled, “Estimate for Homer DeGroft.” The cover page of that document contained the following: ¹⁶² Estimate for Homer DeGroft 30 ft. by 80 ft. silo with aluminized steel roof, silo ladder, fill platform, multi flo silage spreader & 9 inch galvanized fill pile $18,000.00 70 ft. stave chute @ $2.00 extra per ft.............................. 140.00 31-hinged redwood doors @ $5.00 each .............................. 155.00 60 ft. safety cage @ $3.25 per ft....................................... 195.00 Freight ............................................................................ 350.00 Room & Board ................................................................. 280.00 $19,120.00 5% discount, early order.................................................... 956.00 $18,164.00 5% discount with $15,000.00 with order .............................. 908.00 $17,256.00 If you furnish two men for ground crew deduct $380.00. If you also furnish room & board deduct $280.00. I come & lay out the lines for the footing, you dig the trench for footer.

You furnish concrete for footer. Call me at the time concrete will be delivered and I will come and level it and smooth it. About 22 yds. of cement will be needed. The rest of the May 21 document is immaterial; it merely referred to items of equipment not purchased by appellant.

Also attached as a part of “Exhibit A” was an invoice listing at $17,256.00 the price of “30x80 Silo, Pipe and Dist.” Roop, allegedly an agent of appellee, did subsequently advise appellant on the size and type of footing needed for the silo, the amount of concrete required, and the pouring of the concrete. Additionally, he supervised the installation of the footing and leveled and smoothed the concrete. Appellee then erected the silo in the fall of 1975. A few days after the silo was built, appellant noticed that several of the silo’s hoops had ruptured.

Appellee promptly, and to appellant’s satisfaction, made repairs to the hoops. Sometime in 1977, appellant’s neighbors mentioned to him that the silo appeared to be off-center and “wasn’t standing true.” ¹⁶³ During the next three or four years appellant contacted appellee’s representatives on several occasions regarding the leaning of the silo. Representatives of appellee made several trips to view the silo. They assured appellant that there was nothing wrong with the silo and that it was sound.

They further stated that “they would continue to watch it.” In late 1981 or early 1982, the leaning became more pronounced. An agent of appellee who observed the silo in August, 1982, noted that it was leaning dangerously. He orally promised appellant that Lancaster would build a new silo without cost to appellant if appellant would empty the existing silo and arrange to make a crane available to take the silo down. Appellee was to supervise the tearing down of the silo.

Appellant, in reliance on this representation, emptied the silo. Appellee later refused to reconstruct the silo, alleging that its employee had only promised to repair the silo and that a windstorm which occurred that same month made it unsafe to attempt to repair the silo. The silo was ultimately dismantled by appellant under the supervision of appellee’s employees. After the silo was taken down, appellant was able to see cracks in the concrete footing and observe that the silo had not been properly centered on the footing.

Appellant claimed that he suffered damages in the amount of $75,000. Additional facts relevant to the legal issues presented herein will be incorporated below. The Written Contract The initial question presented is whether the trial court erred in ruling that the Uniform Commercial Code was applicable to appellant’s claim for breach of the 1975 written contract. If the UCC governs, appellant’s claim would be barred under § 2-725(1), which requires that an action for “breach of any contract for sale must be commenced within four years after the cause of action has accrued.” Section 2-725(2) provides that “[a] cause of action accrues when the breach occurs, regardless of the aggrieved party’s ¹⁶⁴ lack of knowledge of the breach.” 1 In the instant case, any breach of the written contract had to have occurred in 1975, some eight years before the action was filed.

On the other hand, if the UCC is inapplicable, the three-year statute of limitations in § 5-101 of the Md. Courts and Judicial Proceedings Code Annotated would govern. Whether appellant’s claim for breach of the 1975 contract would be barred by § 5-101 would then depend on when appellant had sufficient knowledge of the wrong to trigger the running of the statute under the “discovery rule" announced in Poffenberger v. Risser, 290 Md. 631, 637-38 , 431 A.2d 677 (1981). Section 2-102 of the UCC provides that “[u]nless the context otherwise requires,” the UCC applies to “transactions in goods,” a term which has been said to be broader than the sale of goods. Burton v. Artery Co., Inc., 279 Md. 94, 113 , 367 A.2d 935 (1977).

For purposes of the UCC, 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____” § 2-105(1); Burton, supra, 279 Md. at 97 , 367 A.2d 935 . In the absence of an explicit agreement, “identification” of goods occurs “when the contract is made if it is for sale of goods already existing and identified.” § 2-501(l)(a). If the contract is for the sale of future goods, that is, goods which are not both existing and identified, § 2-105(2), identification occurs when the “goods are shipped, marked or otherwise designated by the seller as goods to which the contract refers.” § 2-501(l)(b). ¹⁶⁵ The UCC does not apply to service contracts or to materials used or supplied in connection with the performance of such contracts. Burton, supra, 279 Md. at 102 , 367 A.2d 935 ; R. Anderson, Uniform Commercial Code, § 2-105:34 (1981 & 1986 Supp.).

Between the contract for the sale of goods and the service contract is the “hybrid” or mixed sales and service contract. The test to determine whether the UCC applies to mixed sales and service contracts is not whether they are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved (e.g., contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g., installation of a water heater in a bathroom). Burton, 279 Md. at 108-09 , 367 A.2d 935 (quoting Bonebrake v. Cox, 499 F.2d 951, 960 (8th Cir.1974)). See also Snyder v. Herbert Greenbaum and Associates, Inc., 38 Md.App. 144, 147 , 380 A.2d 618 (1977).

In its memorandum in support of its motion for summary judgment, appellee contended that the UCC was applicable because the 1975 contract was one to “purchase a silo.” The items or accessories for the silo, it contended, were “movable at the time of identification which occurs before the equipment is installed.” It also urged the silo proper was “identified long before its installation in the fall of 1975, and, therefore, was movable at the time of the contract for its purchase and at the time of identification.” In later pleadings, appellee contended that the silo was “completely pre-fabricated and all parts readily identifiable from what Lancaster Silo sold as a ‘kit.’ ” The “pre-fabricated parts were identifiable as a silo before construction as well as after construction,” it asserted. In opposing the motion, appellant contended that the UCC was inapplicable in that a “service” contract for “construction” was clearly involved. Moreover, appellant argued, the ¹⁶⁶ silo did not fall within the statutory definition for “goods” because it did not come into existence until fully constructed. In granting summary judgment, the trial court found that the parties’ contract was a mixed sales and service contract, but did not specify which of the materials provided in connection with the contract were goods and at what point they could be considered to have been identified.

The court also accepted appellee’s characterization of the transaction involving the silo as the “sale of a kit” with the construction incidentally involved. We note initially that it was error, on either of two grounds, for the court to base summary judgment in any part on appellee’s averments in unverified pleadings that it sold appellant a silo “kit” or to assume the truth of appellee’s assertions that the component parts and accessories were movable, existing and identified at the time of execution of the contract. Under Md. Rule 2-501, whenever a motion for summary judgment is based on facts not contained in the record or papers on file it must be supported by an affidavit properly executed in accordance with Rule 2-501(c). See P. Niemeyer & L. Richards, Maryland Rules Commentary, Rule 2-501 (1984).

See also Md. Rule 2-311(d). At the time of appellee’s motion, none of the materials of record indicated the silo was sold as a kit or that it was comprised of pre-fabricated components which were movable and identified at the time of the contract. Appellee, therefore, was required to submit an affidavit attesting to those facts but failed to do so. If the court did not properly have before it the facts necessary to determine whether and when any of the subject matter of the contract could be considered “goods,” it could hardly determine, as a matter of law, that the UCC was applicable to the 1975 contract.

Moreover, appellant disputed the assertion that a “kit” was sold; in his pleadings he noted that it would be ¹⁶⁷ “absurd to say that Lancaster sold staves and hoops to [him] and just merely put them up as an afterthought.” In that respect alone, there was a genuine dispute as to a material fact precluding summary judgment. Even if the contract were, as contended by appellee, one for the sale of a silo “kit” to be assembled by the vendor, 2 summary judgment would have been inappropriate because, in such case, the 1975 contract would have been a “hybrid” contract involving goods and services. Applicability of the UCC, then, would hinge on the main purpose or primary thrust of the parties’ agreement. See Chlan v. KDI Sylvan Pools, Inc., 53 Md.App. 236, 240 , 452 A.2d 1259 (1982), and cases cited therein.

See also KLSA-TV, Inc. v. Radio Corporation of America, 501 F.Supp. 891, 893-94 (D.La.1980), aff'd, 732 F.2d 441 (5th Cir.1984). There is a relative paucity of law in Maryland involving application of the “predominant purpose” test. See e.g. Burton, supra, 279 Md. at 114-15 , 367 A.2d 935 (UCC applicable to contract for sale and installation of a substantial number of trees and shrubs); Chlan, supra, 53 Md.App. at 240-41 , 452 A.2d 1259 (contract for sale and installa ¹⁶⁸ tion of a cement pool not governed by UCC); Snyder, supra, 38 Md.App. at 147-48 , 380 A.2d 618 (contract to furnish and install over 17,000 yards of carpet in 228 apartments was predominantly a sale of goods, and UCC governed).

But cf. Anthony Pools, Inc. v. Sheehan, 295 Md. 285 , 297-98 455 A.2d 434 (1983) (UCC warranties may apply to consumer goods