Pulte Home Corp. v. Parex, Inc.

DAVIS, J. Pulte Home Corporation (Pulte), the plaintiff below and appellanVcross-appellee on appeal, is a Michigan corporation and a builder of luxury residential homes. Parex, Inc. (Parex), a defendant below and the appellee/cross-appellant in this Court, is incorporated in Georgia and was engaged in the business of manufacturing and selling a synthetic stucco product known as Barrier Exterior Insulation and Finish System, or Barrier EIFS, 1 for home exteriors. The instant appeal arises from protracted and complex litigation in the Circuit Court for Montgomery County between Pulte, Parex, and several co-defendants/cross-plaintiffs who shall be discussed further herein. The litigation concerned extensive water damage to seventy-seven homes built in Montgomery County, Maryland and Fairfax County, Virginia between 1994 and 1998.

Barrier EIFS had been applied to all of the homes. 2 From a judgment of the circuit court granting Pulte some, but not all, of the damages it sought, Pulte has filed this appeal. Parex has filed a cross-appeal. ⁶⁹⁸ FACTUAL AND PROCEDURAL BACKGROUND As indicated supra, Barrier EIFS is a synthetic stucco material applied to the exteriors of residences and other buildings. Evidence presented at trial established that most residences, including the seventy-seven luxury homes at issue in this appeal, are built with wood studs which form the structure for attaching an exterior covering, such as plywood sheathing or gypsum board, and an interior finish, such as wallboard. The space between the exterior covering and interior finish is generally filled with insulation.

A cladding, or additional covering, is attached or applied to the outside of the exterior covering. There are two primary types of cladding systems. The first type, the cavity system, requires that brick or siding be attached to the exterior covering of the home. There is a cavity, or air space, behind the veneer of the brick or siding, and it is anticipated that some water will get into that cavity.

The water will drop down and be forced out of the cladding system through a series of weeps and flashings before it can reach the exterior covering. The second type of cladding system, used in the seventy-seven homes at issue in this case, is the barrier system. Products such as Barrier EIFS are applied to the outside of the exterior covering with the expectation that no water will ever get behind the cladding. A barrier cladding system requires the installation of a fiberglass mesh against the exterior covering, followed by the attachment of an insulation board.

A cement-like mixture is then applied to the insulation board with a trowel. Finally, a fiberglass fabric is embedded into the cement-like mixture. In order to ensure that water cannot seep behind the barrier cladding, leak-proof flashing, which will immediately repel water to the outside of the cladding system, must be used in places where the cladding adjoins other materials, such as window frames and cornices. Special tapes, caulks, sealants and insulations also must be used in such places to form a bond between the barrier product, the flashing and the ⁶⁹⁹ other building materials.

If water does get behind the cladding system it can cause damage, beginning with the exterior covering and possibly extending to the interior finish. Pulte alleged that water penetrated and was retained behind the Barrier EIFS cladding on the seventy-seven homes in Montgomery County and Fairfax County, causing rot and other water-related damages. Pulte further alleged that it “expended millions of dollars in repair and replacement costs on these homes, and expects to incur additional such damages in the future.” That is, Pulte replaced the Barrier EIFS cladding on the seventy-seven homes with drainable EIFS cladding that was not manufactured by Parex. A drainable EIFS is, in essence, a hybrid of a cavity system and a barrier system.

It integrates a small space behind the outside veneer of the EIFS to allow water to drop down. The system also uses more protective material between the space and the exterior covering. On June 14, 2001, Pulte, on its own behalf and as the assignee of the individual owners of the seventy-seven homes, filed the complaint in the Circuit Court for Montgomery County that initiated this action. The suit named as defendants: Parex; Barrier EIFS suppliers/distributors American EIFS Stone & Stucco, Inc. (American EIFS) and American Stucco & Stone, Inc. (American Stucco); Barrier EIFS applicators Coronado Corporation (Coronado) and CSS, LLC (CSS), with whom Pulte had contracted to install the Barrier EIFS; and Bernard A. Franks and his son, Benjamin B. Franks, the principals, owners and/or controlling parties of American EIFS, American Stucco, Coronado, and CSS.

Pulte mistakenly titled the complaint “Amended Complaint,” apparently because it had earlier filed an initial “Complaint” that was dismissed without prejudice for lack of prosecution. Pulte subsequently filed a “Second Amended Complaint and Jury Demand.” Upon Parex’s motion to dismiss, the court dismissed with prejudice counts against Parex for breach of express warranties, unfair and deceptive trade practices under Maryland law, violation of the Virginia Consumer Protection ⁷⁰⁰ Act, common law indemnifications, contribution, and declaratory judgment. Pulte then filed its “Third Amended Complaint and Jury Demand,” which we shall at times throughout this opinion refer to as simply “the complaint.” It included the following counts: COUNT ONE — Negligence on the parts of American EIFS, American Stucco, Coronado, CSS, Bernard Franks, and Benjamin Franks. COUNT TWO — Breach of contract by Coronado, CSS, Bernard Franks, and Benjamin Franks.

COUNT THREE — Breach of express warranties by all defendants except Parex. COUNT FOUR — Breach of implied warranty of merchantability and implied warranty of fitness for a particular purpose by all defendants. COUNT SIX 3 — Negligence and/or strict liability on the part of Parex. COUNT SEVEN — Negligence and/or strict liability by way of failure to warn on the parts of all defendants.

COUNT EIGHT — Actual fraud on the part of Parex. COUNT NINE — Negligent misrepresentation on the parts of all defendants. COUNT TEN — Constructive fraud on the parts of all defendants. COUNT ELEVEN — Actual fraud on the parts of Coronado, CSS, Bernard Franks, and Benjamin Franks.

COUNT TWELVE — Negligent misrepresentation on the parts of Coronado, CSS, Bernard Franks, and Benjamin Franks. COUNT THIRTEEN — Constructive Fraud on the parts of Coronado, CSS, Bernard Franks, and Benjamin Franks. ⁷⁰¹ COUNT FOURTEEN — False advertising under Virginia law by Parex, American EIFS, American Stucco, Bernard Franks, and Benjamin Franks. COUNT FIFTEEN — Contractual indemnification against Coronado, CSS, Bernard Franks, and Benjamin Franks. COUNT SIXTEEN — Subrogation against all defendants.

American EIFS, American Stucco, Coronado, CSS, Bernard Franks, and Benjamin Franks filed cross-complaints against Parex, 4 and in some cases against each other. American EIFS made claims against Parex in its cross-complaint for indemnity or contribution based on theories of breach of contract, negligence, and breach of warranty. It also made claims for breach of contract, negligence, and breach of warranty. American Stucco made claims against Parex and CSS for indemnity and contribution based on strict liability, negligence, breach of express and/or implied warranties of fitness and merchantability, and equity. 5 CSS and Benjamin Franks alleged they were entitled to indemnity or contribution from Parex, American EIFS, and American Stucco based on theories of negligence and breach of express and/or implied warranties of fitness and merchantability.

Coronado and Bernard Franks alleged that they were entitled to indemnity or contribution from Parex based on theories of negligence and breach of express and/or implied warranties of fitness and merchantability. Various motions to dismiss and motions for summary judgment were then filed. The court entered summary judgment on all claims brought by Pulte against American Stucco on the ground that it “did not exist as a properly-formed entity until ⁷⁰² after the time that the subject Barrier EIFS homes were built.” 6 A hearing was held on the remaining motions and the court issued an order which set forth, in pertinent part, the following: UPON CONSIDERATION of the several motions of [the defendants and cross-defendants], and argument of counsel, it is, this 23rd day of August, 2004, by the Circuit Court for Montgomery County, ORDERED as follows: 1. Parex’s Motion for Summary Judgment as to the Third Amended Complaint be and hereby is GRANTED as to all Counts against Parex except Count XIV (False Advertising Under Virginia Law). 2.

As to CSS’s and Ben Franks’ joinder in Parex’s Motion for Summary Judgment, joinder is permitted, and the motion be and hereby is GRANTED as to Counts IV (Breach of Implied Warranties), Count VII (Negligence and/or Strict Liability), and Count XVI (Subrogation) against CSS and Ben Franks, and Count XIV (False Advertising Under Virginia Law). 3. As to American EIFS’s Joinder in Parex’s Motion for Summary Judgment, joinder is permitted, and the motion be and hereby is GRANTED as to Counts IV (Breach of Implied Warranties), Count VII (Negligence and/or Strict Liability) and Count XVI (Subrogation) against American EIFS, and Count XIV (False Advertising Under Virginia Law). 4. The Court applies the same rulings referenced in Paragraphs 2 and 3 above to defendants Coronado Corporation and Bernard Franks, such that Counts IV (Breach of Implied Warranties), Count VII (Negligence and/or Strict Liability) and Count XVI (Subrogation) are hereby DISMISSED as to those defendants. ⁷⁰³ At that point, the only count from Pulte’s Third Amended Complaint that remained against Parex was Count Fourteen. Counts one, three, nine and ten, remained against American EIFS; Counts one, two, three, nine, ten, eleven, twelve, thirteen and fifteen remained against CSS, Coronado, Bernard Franks, and Benjamin Franks.

Trial on the remaining claims and on the cross-claims was scheduled to begin on April 25, 2005. That morning, however, Pulte and all of the defendants except Parex reached and signed a “Settlement and Release Agreement.” 7 The agreement provided: WHEREAS, Pulte and Defendants and Defendants’ Insurers, have reached an agreement to resolve Pulte’s pending claims against Defendants ... whereby Defendants agree to the entry of a consent judgment against Coronado and CSS in the amount of $5,667,500.08 plus costs and reasonable attorneys’ fees, and against American EIFS in the amount of $5,229,300.22 plus costs and reasonable attorneys’ fees, and an assignment of all Defendants’ claims, rights, and causes of action stemming from this Lawsuit to Pulte, and Pulte agrees not to execute on these consent judgments against Coronado, CSS, American EIFS or Defendants’ Insurers, and Pulte agrees to Dismiss With Prejudice the Defendants Bernard Franks and Benjamin Franks from the Lawsuit, and to Dismiss With Prejudice Counts Eleven, Twelve, and Thirteen (alleging fraud, constructive fraud and negligent misrepresentation) against all Defendants named in those counts; and Defendants’ Insurers agree to pay Pulte $725,000.00.... ⁷⁰⁴ NOW, THEREFORE, in consideration of the Defendants Coronado, CSS, and American EIFS’s agreement to enter the Consent Judgments with Pulte as herein after provided, the transfer to Pulte of Defendants’ claims, rights and causes of actions related to the Lawsuit, assistance given to Pulte -with respect to proceeding on the claims, rights, and causes of action of Defendants and any Claims they have or may have, the payment of Defendants’ Insurers to Pulte, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1.7. “CSS/Coronado Consent Judgment” means the agreement of Pulte, Coronado and CSS that Judgment be entered by the Court against Coronado and CSS on Pulte’s Third Amended Complaint____The parties ... agree for purposes of this CSS/Coronado Consent Judgment that Pulte’s Barrier EIFS claims, including those claims sounding in contract, consist primarily of allegations or product defectiveness. 1.75. “American EIFS Consent Judgment” means the agreement of Pulte, CSS and American EIFS that Judgment be entered by the Court against American EIFS on Pulte’s Third Amended Complaint and on CSS’s Cross-claim [ against American EIFS] ... [ 3.](d) Pulte agrees not to execute on the CSS/Coronado Consent Judgment or the American EIFS Consent Judgment against Coronado, CSS, and American EIFS or the Defendants’ Insurers.... (e) The Defendant’s Insurers shall promptly pay Pulte $725,000.00 in exchange for the full and complete release set forth ... herein. ⁷⁰⁵ (f) Defendants do hereby transfer and assign to Pulte all claims, rights, and Causes of Action they may have against third-parties which arise from or are related to the facts set forth in the Lawsuit, including without limitation, all contractual, breach of warranty and other claims, rights and causes of action [they] may have against Parex, Inc.... The settlement agreement and the contemplated dismissals were filed with the court that same day.

The contemplated consent judgments were entered subsequently. The consent judgments were set forth in a single document and included (1) a judgment against CSS and Coronado and in favor of Pulte for $5,667,500.08 plus costs and reasonable attorneys’ fees, (2) a judgment against American EIFS and in favor of Pulte for $5,229,300.22, and (3) a judgment in favor of CSS in its cross-claim against American EIFS for $5,229,300.22. Thus, when the trial began on April 25, 2005, the only count remaining from Pulte’s Third Amended Complaint was Count fourteen, which set forth the claim against Parex for false advertising under Virginia Law. Pulte also pursued against Parex the claims for indemnity and/or contribution that were assigned to it by CSS, Coronado, American EIFS, and American Stucco pursuant to the settlement agreement.

Trial proceeded and, at the close of Pulte’s case, Parex moved for judgment as to Pulte’s direct claim against it for false advertising under Virginia law, and as to the assigned cross-claims. The court granted Parex’s motion as to the false advertising count, holding that Pulte had failed to present sufficient evidence to support the allegation. It further granted Parex’s motion as to all of the assigned cross-claims, with the exception of breach of implied warranty claims purportedly assigned by Coronado and CSS to Pulte. Parex presented its defense, and the case went to the jury.

In rendering its decision, the jury completed special interrogatories as follows: 1. Do you find by a preponderance of evidence that Pulte Home Corporation has proven that Parex, Inc.’s prod ⁷⁰⁶ uct was unfit for the ordinary purposes for which such goods are used? Yes_NoZ 2. Do you find by a preponderance of the evidence that Pulte Home Corporation has proven that the Parex product was unfit for the particular purpose for which it was intended?

Yes Z No_ 3. Do you find by a preponderance of the evidence that Plaintiff, Pulte Home Corporation, has proven that the product of the Defendant, Parex, Inc., used in the Pulte home construction was defective? Yes Z No_ 4. Do you find by a preponderance of the evidence that Pulte Home Corporation has proven that it gave timely, reasonable notice of the breach of warranty of Parex, Inc’s product?

Yes Z No_ 5. Do you find by a preponderance of the evidence that Plaintiff, Pulte Home Corporation, has established that a sale of Parex’s products existed between Parex and American EIFS Stone & Stucco Supply, Inc.? Yes Z No_ 6. Do you find by a preponderance of the evidence that Plaintiff, Pulte Home Corporation, has established that a sale of Parex’s products existed between Parex and American Stucco & Stone, LLC?

Yes Z No_ 7. In what amount do you find Pulte Homes Corporation has proven by a preponderance of the evidence as damages suffered by CSS, LLC, or Coronado because of breach of implied warranties by Parex? $ 3.8 million 8. Do you find by a preponderance of the evidence that Parex, Inc. has proven that a contract existed between ⁷⁰⁷ Parex and American EIFS Stone & Stucco Supply, Inc., as represented by Parex Exhibit #41? Yes X No_ 9.

Do you find for any home in question that Parex, Inc. has proven by a preponderance of the evidence that its products were delivered to the purchaser prior to June 14, 1997? 8 Yes X No_ 10. Identify separately each house incorporating Parex[’s] product upon which there was delivery after June 14, 1997, and for which there was a breach of implied warranty.... [ 23 houses identified] 11. For each house upon which there was delivery after June 14, 1997, in what amount do you find Pulte Home Corporation has proven by a preponderance of the evidence as damage suffered by CSS, LLC or Coronado because of a breach of implied warranties? $ 50,000 per house 12. For each house upon which there was a delivery of goods after June 14, 1997, in what amount do you find that Pulte Home Corporation has proven by a preponderance of the evidence that Coronado paid for the product of Parex, Inc. delivered to it? $0 13.

For each house upon which there was delivery of goods after June 14, 1997, in what amount do you find that Pulte Home Corporation has proven by a preponderance of ⁷⁰⁸ the evidence that CSS, LLC paid for the product of Parex, Inc. delivered to it? $0 14. In the event you have found that any damages are due Pulte Home Corporation, do you find that Pulte Homes has proven by a preponderance of the evidence that it should be awarded further damages for pre-trial interest? Yes X No_ Ultimately, the court entered judgment in favor of Pulte and against Parex for $1,429,380.16, representing $1,150,000.00 in damages for the 23 homes for which Barrier EIFS was delivered after June 14, 1997, and $279,380.16 in prejudgment interest. ISSUES Pulte’s primary contention on appeal, in essence, is: I. The trial court erred by applying the Uniform Commercial Code (UCC) statute of limitations to the indemnity claims assigned to Pulte by Coronado and CSS as part of the settlement agreement.

Pulte presents additional arguments to be considered by this Court “in the event that judgment is not directed in [its] favor in the full amount.” We re-phrase the additional arguments as follows: II. The trial court erred by granting Parex’s motion for judgment as to the indemnity claims assigned to Pulte by American EIFS and American Stucco, III. The trial court erred by granting Parex’s motion to dismiss Pulte’s breach of express warranties claim, IV. The trial court erred by granting summary judgment in Parex’s favor on the breach of implied warranty claims brought by Pulte in its own capacity, V. The trial court erred by granting summary judgment in Parex’s favor on the tort claims brought by Pulte in its own capacity and as assignee of the homeowners, and ⁷⁰⁹ VI.

The trial court erred by granting summary judgment in Parex’s favor on Pulte’s legal subrogation claim. In its cross-appeal, Parex disputes Pulte’s contentions and argues, in essence, as follows: I. The trial court erred by permitting the breach of implied warranty claims assigned by Coronado and CSS to go to the jury, in that Pulte failed to prove: that either Coronado or CSS suffered any damages; the specific amount of damages suffered by Coronado as opposed to CSS; or whether the Barrier EIFS was sold by American EIFS or American Stucco, and whether it was sold to Coronado or CSS, II. The trial court erred by failing to rule as a matter of law that Pulte could not recover on the implied warranty of fitness claim assigned to it by Coronado and CSS because there was no privity of contract, or equivalent relationship, between Coronado and CSS, on the one hand, and Parex on the other, III. Assuming arguendo that the UCC statute of limitations was applicable, the jury erred in determining that Pulte was entitled to recover as to four of the homes, where the evidence showed that delivery of the Parex product for those homes necessarily occurred more than four years before Pulte filed the suit that initiated this case, TV.

The trial court erred by permitting Pulte to recover anything from Parex on the assigned cross-claims because Coronado and CSS admitted fault, or, in the alternative, by permitting Pulte to recover more than the amount Coronado and CSS paid Pulte to settle Pulte’s claims against them, V. The trial court erred by failing to rule as a matter of law that Parex excluded any implied warranties of merchantability or fitness, VI. The trial court abused its discretion by failing to grant a mistrial when counsel for Pulte repeatedly referred to subsequent remedial measures and subsequent building code changes, and ⁷¹⁰ VII. The trial court erred by accepting the jury’s determination that pre-judgment interest was warranted, and in calculating the amount of that interest. We find merit in Pulte’s second argument, as well as the fourth and seventh arguments raised in Parex’s cross-appeal.

We shall therefore vacate the judgment entered by the trial court in favor of Parex on the implied indemnity claims brought by Pulte as assignee of American EIFS. We shall also vacate the award of damages to Pulte and remand the case to the trial court with instructions. STANDARDS OF REVIEW We are called upon to review a plethora of legal rulings by the trial court. In the third issue it raises in its cross-appeal, Parex asks us to review one factual determination made by the jury. ‘We review de novo a trial judge’s decision involving a purely legal question.” Ehrlich v. Perez, 394 Md. 691, 708 , 908 A.2d 1220 (2006).

Specifically, as to motions to dismiss, we recently summarized the standard of review as follows: “The proper standard for reviewing the grant of a motion to dismiss is whether the trial court was legally correct. In reviewing the grant of a motion to dismiss, we must determine whether the complaint, on its face, discloses a legally sufficient cause of action.” In reviewing the complaint, we must “presume the truth of all well-pleaded facts in the complaint, along with any reasonable inferences derived therefrom.” “Dismissal is proper only if the facts and allegations, so viewed, would nevertheless fail to afford plaintiff relief if proven.” Higginbotham v. Pub. Serv. Comm’n, 171 Md.App. 254, 264 , 909 A.2d 1087 (2006) (citations omitted).

Similarly, “[t]he standard of review for a grant of summary judgment is whether the trial court was legally correct.” Goodwich v. Sinai Hosp. of Balt., Inc., 343 Md. 185, 204 , 680 A.2d 1067 (1996). “When reviewing a grant of summary judgment, we first determine whether a genuine dispute ⁷¹¹ of material fact exists ‘and only where such dispute is absent will we proceed to review determinations of law.’ ” Law Offices of Taiwo Agbaje v. JLH Props., II, LLC., 169 Md.App. 355, 367, 901 A.2d 249 (2006) (citation omitted). “In doing so, we construe the facts properly before the court, and any reasonable inferences that may be drawn from them, in the light most favorable to the non-moving party.” Remsburg v. Montgomery, 376 Md. 568, 579-80, 831 A.2d 18 (2003). “[W]e evaluate ‘the same material from the record and decide [ ] the same legal issues as the circuit court.’ ” Campbell v. Lake Hallowell Homeowners Ass’n, 157 Md.App. 504, 518-19 , 852 A.2d 1029 (2004) (citation and quotations omitted). “We ‘uphold the grant of a summary judgment only on the grounds relied on by the trial court.’ ” Law Offices of Taiwo Agbaje, 169 Md.App. at 368 , 901 A.2d 249 (citation omitted). As to the single challenge to a factual finding by the jury, we observe that “Credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions.... ” Darcars Motors of Silver Spring, Inc. v. Borzym, 379 Md. 249, 272 , 841 A.2d 828 (2004). “Our first order of business is to reiterate longstanding Maryland law that it is not the province of an appellate court to express an opinion regarding the weight of the evidence when reviewing a judgment on a jury verdict.” Owens-Corning Fiberglas Corp. v. Garrett, 343 Md. 500, 521 , 682 A.2d 1143 (1996). “ ‘When properly reserved, we pass upon the sufficiency of evidence to take a case to the jury, but we do not review the weight of the evidence after it has been passed upon by a jury.’ ” Id. (citation omitted). DISCUSSION Pulte’s Appeal I. Statute of Limitations on Assigned Claims of Coronado and CSS Pulte’s first issue reaches this Court in a curious posture.

As we have indicated, the cross-claims of Coronado and CSS ⁷¹² against Parex sought indemnity and/or contribution. Each of their cross-complaints set forth the roles of the various parties in the construction of the homes in issue, then: reiterated that Pulte alleged that the Barrier EIFS was defective; asserted that Parex expressly and impliedly warranted that the product was free of defects; and asserted that, if Pulte was entitled to recover from the cross-plaintiffs because the product was defective or because Parex was negligent or breached an express or implied warranty, then the cross-plaintiffs were entitled to indemnity and/or contribution from Parex. Both Coronado and CSS “pray[ed] for judgment, by way of indemnity [and/or] contribution for a pro rata sum” in their favor against Parex. At the close of Pulte’s case, the trial court granted Parex’s motion for judgment as to all of the assigned indemnity and contribution claims.

Specifically, as to the assigned claims of Coronado and CSS, the court stated: There are two viable theories upon which Pulte, as ... assignee of the homeowners and as a direct party itself through the ownership of the claims of Coronado [and] CSS ... can assert liability against Parex. The first of these is an indemnification style of action. The second is through implied warranty. There is no ability for a jury to determine what an indemnification claim would be, and that distinction is heightened by two factors.

The first of which is that Coronado and CSS, as applicators, were sued in their own right, upon which settlement was had, for negligence in the application of the product, and it thereby becomes incumbent upon Pulte to demonstrate in an indemnification action that the product defect was the cause of the loss and not the application____ The second theory by which Pulte Homes Builders can make claim against Parex is under an implied warranty. And [it] has been, I think, correctly stated, as a matter of ⁷¹³ law, this does not require privity of contract. Privity of contract is no longer, well, a common law, and in non-UCC transactions is still a necessity, it is not under the circumstances of the facts of this case. A defense to the damages, which must be proven by a preponderance of the evidence under this theory, might well be that others caused the damages.

In other words, the right to point to an empty chair, and assert that there’s nothing wrong with the product, that Coronado or CSS are the wrongdoers, and, ... the amount that’s claimed is wrong because the product’s not defective, and because others were responsible.... So the Court believes that the only remaining claims[s] that exists [are] a claim[s] by Coronado or CSS for breach of implied warranty of fitness for purpose and use [and breach of implied warranty of merchantability], and the Court will allow the case to proceed forward on that basis.... Subsequently, after Parex presented its defense, Pulte requested that the court vacate its decision to enter judgment in Parex’s favor on the indemnity claims. The court heard lengthy argument from counsel, then stated, [I]t is my view that my original ruling on the dismissal of the indemnity claims was correct.

And as a result, the Court declines the motion to vacate and they will remain out of the case. We have scoured the record and we find no pleading by which Coronado or CSS, or Pulte as assignee of Coronado or CSS, initiated a specific action against Parex for breach of the implied warranties of fitness or merchantability. The cross-complaints make clear that both Coronado and CSS filed cross-claims for indemnity or contribution based, inter alia, on breach of the implied warranties. It is beyond cavil that “[ a] n indemnity action is of a separate and distinct nature from the tort or contract action which underlies it.” 42 C.J.S. ⁷¹⁴ Indemnity § 3 at 75-76 (1991) (footnote omitted).

Thus, it would appear that once the trial court granted judgment in Parex’s favor as to the assigned indemnity claims of Coronado and CSS, no assigned claims remained for Pulte to pursue. The trial court nevertheless expressly concluded that breach of implied warranty claims, purportedly assigned by Coronado and CSS, remained in the case. In reaching this conclusion, the court implicitly read the cross-complaints against Parex of both Coronado and CSS to include breach of implied warranty claims in addition to indemnity claims based on implied warranties. Parex never suggested to the court that the cross-complaints could not be read so broadly and, thus, tacitly conceded that it was on notice as to any breach of implied warranty claims by Coronado and CSS.

Under Md. Rule 2-303(a), “[e]ach cause of action [in a complaint] shall be set forth in a separately numbered count.” As we have indicated, the cross-complaints of both Coronado and CSS clearly requested indemnity and/or contribution, identifying the implied warranties as one of three bases on which such indemnity and/or contribution could rest. Neither complaint set forth a separate, identifiable count for breach of the implied warranties. Nevertheless, “All pleadings shall be so construed as to do substantial justice.” Md. Rule 2-303(e). As the Court of Appeals has summarized: Although Maryland abandoned the formalities of common law pleading long ago, it is still a fair comment to say that pleading plays four distinct roles in our system of jurisprudence.

It (1) provides notice to the parties as to the nature of the claim or defense; (2) states the facts upon which the claim or defense allegedly exists; (3) defines the boundaries of litigation; and (4) provides for the speedy resolution of frivolous claims and defenses____ Of these four, notice, is paramount. Scott v. Jenkins, 345 Md. 21, 28 , 690 A.2d 1000 (1997) (citations omitted). Here, the cross-complaints clearly apprized Parex of the breach of implied warranty claims, albeit in the ⁷¹⁵ guise of requesting damages or contribution based on the alleged breaches. It is well established, moreover, that a defendant may waive any objection to a defect in pleading by failing to object to it.

See Kirchner v. Allied Contractors, Inc., 213 Md. 31, 36 , 131 A.2d 251 (1957)(defendant’s responses to both contract and tort claims in plaintiffs complaint, despite plaintiffs failure to delineate separate counts, amounted to waiver of objection to defect). Here, Parex did not object, on the ground that the cross-complaints did not set forth counts for breach of implied warranty, to the court’s decision to allow the breach of implied warranty claims to proceed. Its extensive argument in the trial court, and its extensive argument on appeal to this Court, to the effect that the UCC statute of limitations rather than the statute of limitations for indemnity claims should apply suggests “acceptance” of the trial court’s decision. See id.

It is thus of no consequence that the cross-complaints of Coronado and CSS did not include separate, specific counts for breach of the implied warranties. The cross-complaints sufficiently apprized Parex that it would be required to defend against breach of implied warranty claims, at least to the extent that they formed the basis of the indemnity claims by Coronado and CSS. Moreover, Parex’s actions once the court ruled that the breach of implied warranty claims would go to the jury amounted to a waiver of any challenge to the claims based on the state of the cross-complaints. Given the trial court’s decision at the close of Pulte’s case to grant judgment in favor of Parex on the assigned indemnity claims, but to allow assigned breach of implied warranty claims to proceed, it is readily apparent that Pulte’s first argument on appeal, that the trial court erred by applying the UCC statute of limitations instead of the statute of limitations for indemnity, is without basis.

To reiterate, the trial court ruled that the applicable statute of limitations was the statute of limitations set forth by the UCC for the sale of goods. The court further ruled that ⁷¹⁶ the event that triggered the running of the statute was the delivery of the Barrier EIFS product to the construction sites. 9 See Md.Code Ann., Com. Law Art. § 2-725(1) and (2); 10 Va.Code Ann. § 8.2-725(1) and (2) (2001 Repl. Vol. 2006 Supp.). 11 Thus, the court concluded that Pulte could not recover from Parex on any breach of implied warranty claim assigned to Pulte by Coronado or CSS if the Barrier EIFS for the houses to which the claims related was delivered prior to June 14, 1997, or more than four years before Pulte filed the complaint that initiated this case.

June 14, 1997 was exactly four years before the date that Pulte filed the complaint that initiated this case. Coronado and CSS did not file their cross-complaints for indemnification against Parex until July 11, 2002. Arguably, under a proper application of the relevant statute, Pulte should have been permitted to recover only on those assigned claims for homes for which deliveries of Barrier EIFS were made on or after July 11,1998. The jury was not asked to specify which, if any, deliveries were made on or after that date, however.

In any event, Parex has never argued that, even if the UCC statute of limitations was properly applied, the date selected by the court was erroneous. It has argued only that the applicable statute of limitations was the statute for indemnity claims. Any challenge to the date on which the statute began to run ⁷¹⁷ has therefore been waived. See Md. Rule 8-131(a).

See also Kim v. Comptroller of the Treasury, 350 Md. 527, 536 , 714 A.2d 176 (1998) (“Statutes of limitations are not ordinarily jurisdictional, and are generally waivable ... ”).

II

Assigned Indemnity Claims of American EIFS and American Stucco Pulte pursued against Parex the assigned cross-claims of American EIFS and American Stucco, which sought indemnity and/or contribution based on various tort and contract theories. The trial court granted judgment in favor of Parex on those assigned claims at the close of Pulte’s case. Pulte now challenges the trial court’s decision as to the assigned indemnity cross-claims. It posits that “the Court’s reasoning in [granting judgment in Parex’s favor] was that, although specific evidence of monetary damage[s] had been presented ..., the jury had no way of determining how to apportion damage[s] between American EIFS and American Stucco.” According to Pulte, apportionment of the damages was of no consequence since “it was undisputed that all of the EIFS was supplied by American EIFS or American Stucco,” which “had each assigned their indemnity claims to Pulte.” Pulte adds that, in any event, it presented evidence from which the jury could have concluded that all of the Barrier EIFS in question was supplied by American EIFS, in that, at the relevant times, American Stucco had not yet been formed.

Preliminarily, although neither party presses the matter on appeal, it is apparent that the trial court acted inconsistently in permitting the assigned cross-claim of American Stucco against Parex to proceed to trial via the assignment to Pulte. To reiterate, prior to trial the court granted American Stucco’s motion for summary judgment on all claims against it by Pulte, on the ground that American Stucco “did not exist as a properly-formed entity until after the time that the subject Barrier EIFS homes were built ....” That is, the trial court determined that American Stucco as a corporate entity could ⁷¹⁸ not be liable to Pulte because American Stucco was not a corporate entity at the relevant times. For the same reason that American Stucco, as a corporate entity, could not be held liable to Pulte, American Stucco as a corporate entity could have had no viable cross-claim against Parex. Pulte’s pursuit of such an assigned cross-claim would have been nonsensical.

The only viable, assigned cross-claim by a Barrier EIFS supplier against Parex would have been that of American EIFS. The trial court permitted the assigned cross-claims of both American EIFS and American Stucco to proceed to trial but, at the close of Pulte’s case, granted Parex’s motion for judgment as to both claims. The court stated: Now, my analysis of the indemnification action, as it related to American Stone and Stucco, is that, undoubtedly, Pulte contracted with an entity known as ... CSS, LLC, and that CSS, LLC dealt with an entity known as American Stone and Stucco, sometimes referred to as American Stone and Stucco Limited Liability Corporation.

As the history of this ease will show, American Stone and Stucco was dismissed, because they were not incorporated until after the events of the dispute between the parties. Consequently, the corporate entity is out of the case. The question then becomes with what entity was CSS dealing, and it was, in turn, dealing with, apparently, an entity calling itself American Stone and Stucco probably intending to become incorporated, and probably operated by one of the Franks, and it would only be upon the claim of that individual doing business as American Stone and Stucco that any further indemnification could be made. So, notwithstanding the argument that some of these corporations are successors to one another, the Court finds the proof insufficient, as a matter of law, to demonstrate the continuity of the legal entity so as to permit an indemnification either from American ÉIFS or American Stone and Stucco, and, because we can’t segregate out from the dam ⁷¹⁹ ages that have been proven up that which is solely American EIFS, the claim fails.

We reject Pulte’s assertion that, because it was the assignee of both American EIFS and American Stucco, it was entitled to recover the cumulative damages of each of the cross-plaintiffs against Parex and thus was not required to specify the precise amount of damages suffered by either. As we have explained, the trial court determined that American Stucco was not a legally-formed entity; American Stone & Stucco, Inc., as an entity, simply could not be held liable to Pulte or the homeowners for damages and, thus, could not suffer loss. That is not to say that some entity holding itself out as American Stucco could not incur liability and damages — we state only that that entity could not be American Stone & Stucco, Inc. Nevertheless, there was evidence, as Pulte contends, from which the jury could have inferred that all of the Barrier EIFS in question was supplied by American EIFS alone. The homes were built between 1994 and 1998.

Peter Harrison, who was responsible for Parex’s “technical services and the technical development of its products,” testified that from 1994 until 1999, American EIFS was the exclusive distributor for Parex in the Maryland and Virginia territory. There was also evidence that vaguely suggested that, prior to the formation of American Stucco in 2000, American EIFS sometimes operated under the name American Stucco. Thus, although we perceive an inconsistency in the trial court’s decision to allow the assigned indemnity cross-claim of American Stucco to proceed to trial, we also conclude that the court erred by granting Parex’s Motion for Judgment, at the close of Pulte’s case, as to the assigned, indemnity cross-claim of American EIFS. Whether all of the Barrier EIFS was distributed by American EIFS, and if so, the amount of damages incurred by American EIFS, were questions for the jury to resolve.

We find no merit in Parex’s argument that Pulte could not recover on the assigned cross-claim because Ameri ⁷²⁰ can EIFS admitted to negligence. 12 To be sure, a document titled “Stipulation Regarding Consent Judgment Against Defendants CSS, L.L.C., Coronado Corporation, and American EIFS Stone & Stucco Supply, Inc.” was filed in the trial court along with the settlement agreement. In that document, American EIFS admitted “to the allegations included in Pulte’s remaining counts against it in the Third Amended Complaint,” as well as “to the allegations contained in CSS’s Cross-Claim against American EIFS,” both of which included counts for negligence. Although not clearly characterized in the cross-complaint, the parties agree that American EIFS’s indemnity claim against Parex was an implied indemnity claim based on allegations that Parex was negligent and breached its contract with American EIFS as well as its attendant warranties. We shall assume, without deciding, that an admission of negligence could negatively impact upon an implied indemnity claim based on breach of contract.

We are nevertheless satisfied that the extent of the impact would be a question for the trier of fact and could not be resolved as a matter of law. In Max’s of Camden Yards v. A.C. Beverage, 172 Md.App. 139, 152 , 913 A.2d 654 (2006), we made clear that, even when an implied indemnity claim is based on an allegation of negligence, negligence on the part of the party seeking indemnification will not necessarily bar his or her recovery. We explained, “Generally, if more than one tortfeasor is found liable to a plaintiff, and one of them is found to be passively negligent, the passively negligent tortfeasor has a right of ⁷²¹ implied indemnity against an actively negligent tortfeasor.” Id. at 142 , 913 A.2d 654 . The basis for implied indemnity is the concept “that one person is unjustly enriched at the expense of another when the other discharges liability that it should be his responsibility to pay....” Generally, implied indemnity is dependent on the relationship between the alleged tortfeasors or the nature of their respective acts.

Frequently occurring situations in which a right to implied indemnity between tortfeasors has been recognized include a tortfeasor liable (1) vicariously for the conduct of another, (2) for failing to discover a defect in a chattel supplied by another, (3) for failing to discover a defect in work performed by another, and (4) for failing to discover a dangerous condition on land created by another. ... [The] right to implied indemnity exists[, inter alia,] when there is disparity between the levels of fault of each tortfeasor that produces an unjust result, and the less culpable tortfeasor, said to be passively or secondarily negligent, pays or is held liable for damages which are properly attributable to the conduct of the more culpable co-defendant, who is primarily or actively negligent. Id. at 148 , 913 A.2d 654 (citations omitted). See also Franklin v. Morrison, 350 Md. 144, 154-58 , 711 A.2d 177 (1998). See also Pulte Home Corp. v. Parex, Inc., 265 Va. 518 , 579 S.E.2d 188, 193 (2003) (an unrelated case between the parties to the instant appeal which demonstrates that, under Virginia law, a claim for implied or equitable indemnification is cognizable when one party is responsible for damages caused by the negligence of another).

At the same time, “ ‘[i]t is well established under Maryland law that one who is guilty of active negligence cannot obtain tort indemnification,’ regardless of whether the alleged tortfeasor from whom indemnity is being sought was actively negligent.” Max’s of Camden Yards, 172 Md.App. at 149 , 913 A.2d 654 (quoting Franklin, 350 Md. at 149 , 711 A.2d 177 ). ⁷²² Here, it was for the jury to determine whether Parex was primarily responsible for the damages ascribed to American EIFS via the settlement agreement.

III

Pulte’s Breach of Express Warranties Claim Against Parex In its second amended complaint, Pulte included a count against Parex for breach of express warranties. In pertinent part, the complaint alleged: 50. Parex expressly warranted, inter alia, that the EIFS it manufactured was free from defects and could be properly installed on homes built by [Pulte]. Upon information and belief, Parex issued both written and oral warranties to American EIFS, American Stucco, Coronado, CSS or a similar such entity, under which [Pulte] and the Homeowners are entitled to recover as a direct or intended beneficiary, as well as to some o[r] all of the Homeowners.

Parex’s express warranties included warranties of future performance. 54. [Pulte’s] approval that Barrier EIFS be used on the Homeowners’ houses was based, at least in substantial part, upon the affirmations of fact, promises, descriptions, and/or use of samples and/or models regarding the appearance, durability, and/or resistance of the Barrier EIFS product by Parex, Coronado, CSS and Bernard Franks, which constitute express warranties, including warranties of future performance, within the meaning of the Maryland and Virginia commercial codes. These warranties were untrue, and were breached as such. (Emphasis added.) The trial court dismissed the breach of express warranties count with prejudice, explaining that “there [was] no showing of a representation or warranty made by Parex to ⁷²³ Pulte or the homeowners” and, in any event, “there was no privity between Parex and Pulte or the homeowners.... ” Pulte now argues that the court erred in requiring a “showing of a representation or warranty” prior to trial. It further argues that the court’s dismissal on the ground that there was no privity of contract reflects an application of the economic loss rule, which does not properly apply to breach of warranty claims. 13 The parties tacitly agree on appeal that Maryland or Virginia law would be applicable to Pulte’s breach of express warranties claim, depending upon where the particular home that required repair was located.

Both Maryland and Virginia have adopted the following UCC provision regarding express warranties: (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. (2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” ⁷²⁴ or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

Md.Code Ann., Com Law I § 2-313; Va.Code Ann. § 8.2-313. Both states have also adopted an exception to the contractual privity requirement that is generally applicable to breach of express or implied warranty actions. See generally Frericks v. GMC, 278 Md. 304, 309-10 , 363 A.2d 460 (1976) (discussing contractual privity requirement in breach of warranty cases and statutory changes thereto). Under Maryland law: A seller’s warranty whether express or implied extends to any natural person who is in the family or household of his buyer or who is a guest in his home or any other ultimate consumer or user of the goods or person affected thereby if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty.

A seller may not exclude or limit the operation of this section. Md.Code Ann., Com Law I § 2-318. As the Court of Appeals explained in Morris v. Osmose Wood Preserving, 340 Md. 519, 546 , 667 A.2d 624 (1995), in addressing a claim for breach of an implied warranty of merchantability, § 2-318 abrogates “horizontal privity” for “foreseeable consumers or users of the product” who are “ ‘injured in person.’ ” 14 Virginia law provides: ⁷²⁵ Lack of privity between plaintiff and defendant shall be no defense in any action brought against the manufacturer or seller of goods to recover damages for breach of warranty, express or implied, or for negligence, although the plaintiff did not purchase the goods from the defendant, if the plaintiff was a person whom the manufacturer or seller might reasonably have expected to use, consume, or be affected by the goods; ... Va.Code Ann. § 8.2-318.

(emphasis added). Although the Virginia provision does not specifically state that a plaintiff who is not in privity with the manufacturer or seller must suffer personal injury in order to recover, it has nevertheless been established that that is the case. The Supreme Court of Virginia has explained that § 8.2-318 blocks “the ability to raise the common law requirement of privity as a defense.” Beard Plumbing & Heating, Inc. v. Thompson Plastics, Inc., 254 Va. 240 , 491 S.E.2d 731, 734 (1997). The court pointed out that a more specific provision, § 8.2-715(2)(a), “requires a contract between the parties for recovery of consequential economic loss damages” in a breach of warranty claim. 491 S.E.2d at 734 .

Indeed, in another case between Pulte and Parex arising from the use of Barrier EIFS on homes in Virginia, the Supreme Court of Virginia relied on Beard Plumbing & Heating, Inc. in determining that damages to homes resulting from the use of Barrier EIFS were consequential damages as to Pulte, and that privity was required for Pulte to recover those damages from Parex. See Pulte Home Corp., 579 S.E.2d at 191-92 . Pulte was not, at the pleading stage, required to make an evidentiary “showing” that there was an express warranty. Pulte was, however, required to set forth an “averment” that was “simple, concise, and direct,” and that ⁷²⁶ contained “such statements of fact as may [have been] necessary to show the pleader’s entitlement to relief____” Md. Rule 2-303(b).

It was required to include in its complaint “a clear statement of the facts necessary to constitute a cause of action” for breach of express warranty. Md. Rule 2-305. In a breach of express warranty action, a plaintiff must set forth the “terms and conditions of the warranty....” Thomas v. Ford Motor Credit Co., 48 Md.App. 617, 624 , 429 A.2d 277 (1981). “To establish an express warranty by affirmation, promise, description or sample,” the plaintiff must set forth allegations that would establish that “the representation ... form[ed] the basis of the bargain.” Id. Pulte did not allege in paragraph fifty of its Second Amended Complaint that Parex made any written representation directly to it that constituted an express warranty.

Without an allegation of personal injury, it could not recover on the claims governed by Maryland law or the claims governed by Virginia law based on any “written and oral warranties to American EIFS, American Stucco, Coronado, CSS or a similar such entity.” Pulte did allege in paragraph fifty-four of the complaint that it approved the use of Parex’s Barrier EIFS based on “affirmations of fact, promises, descriptions, and/or use of samples and/or models regarding the appearance, durability, and/or resistance of the Barrier EIFS product by Parex” and the other defendants. The language used did not reveal any facts that would support the claim, however, but merely set forth a legal conclusion. See Pulte Home Corp., 579 S.E.2d at 190 (in other Virginia case involving same parties, dismissal of Pulte’s cross-claim for breach of express warranty was proper in that Pulte’s allegation, that it approved the use of Barrier EIFS based on express warranties of Parex given “by way of affirmations of fact, promises, descriptions, and/or use of samples and/or models regarding the appearance, durability, and or water-resistance of [EIFS],” merely “parroted the language of Code § 8.2-313” and set forth legal conclusions but did not identify any supporting facts). ⁷²⁷ A trial court has discretion to dismiss a claim with prejudice if it fails to state a claim that could afford relief. See Md. Rule 2-322(b)(2).

See, e.g., Porterfield v. Mascari II, Inc., 374 Md. 402, 414 , 823 A.2d 590 (2003); Heist v. E. Sav. Bank, FSB, 165 Md.App. 144, 148 , 884 A.2d 1224 (2005). In light of the extensive history of litigation between the parties and, given that the dismissed count was from the Second Amended Complaint in this case and that the complaint that initiated the case was filed nearly five months earlier, we believe that the court properly exercised its discretion by dismissing the breach of express warranties claim with prejudice.

IV

Pulte’s Breach of Implied Warranties Claim In Count four of its Third Amended Complaint, Pulte set forth a claim for breach of implied warranties against all of the defendants, including Parex. Pulte alleged in pertinent part: 76. Parex, American EIFS, American Stucco, Coronado and CSS, at various points in the chain of distribution, sold to [Pulte] the Barrier EIFS product used in the construction of the Homeowners’ houses built by [Pulte]----Each of these Defendants impliedly warranted that the Barrier EIFS was merchantable in all respects. 77. In fact, the Barrier EIFS system was not merchantable at the time of the sale.

Rather, the Barrier EIFS system traps moisture on the underlying surfaces of the structure of the homes, resulting in wood rot and other property damage. This defect, in addition to those encompassed within and reflected by Paragraph 26, constitutes a breach of the implied warranty of merchantability within the meaning of the Maryland and Virginia codes. 80. Parex, American EIFS, American Stucco, Coronado and CSS, at various points in the chain of distribution, sold to [Pulte] the Barrier EIFS product used in the construe ⁷²⁸ tion of the Homeowners’ houses built by [Pulte] at the subdivisions----Each of these Defendants impliedly warranted that the Barrier EIFS was fit for a particular purpose, to wit, for use in residential construction, and specifically on the homes to be constructed in these subdivisions, including the Homeowners’ homes. 81. Each of these Defendants knew or should have known of the purpose for which the Barrier EIFS product was to be used.

Additionally, Coronado and CSS knew or should have known that [Pulte] was relying on their skill and judgment in selecting and furnishing the particular Parex Barrier EIFS product. 82. In fact, the Barrier EIFS system was not fit for this particular purpose at the time of sale. Rather, the Barrier EIFS system traps moisture on the underlying surfaces of the structure of the homes, resulting in wood rot and other property damage. This defect, in addition to those encompassed within ..., constitutes a breach of implied warranty of fitness for a particular purpose within the meaning of the Maryland and Virginia commercial codes.

Prior to trial, the court granted summary judgment in favor of the defendants as to the breach of implied warranty claims. 15 Pulte now contends that the court erred in granting summary judgment as to Parex “[f]or largely the same reasons” that it erred, in Pulte’s view, in dismissing with prejudice the breach of express warranties count. Implied warranties of merchantability are set forth in § 2-314 of Commercial Law Article of this State and § 8.2-314 of the Virginia Code. Section 2-314 of the Commercial Law Article provides: ⁷²⁹ (1) Unless 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. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

Notwithstanding any other provision of this title (a) In §§ 2-314 through 2-318 of this title, “seller” includes the manufacturer, distributor, dealer, wholesaler or other middleman or the retailer; and (b) Any previous requirement of privity is abolished as between the buyer and the seller in any action brought by the buyer. (2) Goods to be merchantable must be at least such as (a) Pass without objection in the trade under the contract description; and (b) In the case of fungible goods, are of fair average quality within the description; and (e) Are fit for the ordinary purposes for which such goods are used; and (d) Run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved; and (e) Are adequately contained, packaged and labeled as the agreement may require; and (f) Conform to the promises or affirmations of fact made on the container or label if any. Md.Code Ann., Com. Law I § 2-314 (emphasis added).

The corresponding Virginia provision states: (1) Unless excluded or modified (§ 8.2-316), 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. Under this section the serving for value of food or drink to be consumed whether on the premises or elsewhere is a sale. (2) Goods to be merchantable must be at least such as ⁷³⁰ (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved; and (e) are adequately contained, packaged and labeled as the agreement may require; and (f) conform to the promises or affirmations of fact made on the container or label if any. Va.Code Ann. § 8.2-314.

Implied warranties of fitness for a particular purpose that are identical to each other are set forth in § 2-315(1) of Maryland’s Commercial Law Article and § 8.2-315 of the Virginia Code, which provide: 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 of furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose. Md.Code Ann., Com. Law I § 2-315(1); Va.Code Ann. § 8.2-315. In urging this Court to affirm the award of summary judgment, Parex, arguing that the issue must be resolved using Virginia law, asserts: CSS and Coronado, both Virginia entities, purchased from American EIFS or American Stone & Stucco in Virginia— Pulte contracted with CSS and Coronado.

There was a chain of contractual relationships, but none directly between Parex and Pulte. Because all of the elements capable of supporting the implied warranty occurred in Virginia, Virginia law applies. ⁷³¹ Parex thus hopes to avoid application of § 2-314(l)(b) of Maryland’s Commercial Law Article which, as we explained in footnote 14, abolishes the privity requirement for purposes of the implied warranty of merchantability. We need not and shall not determine, at this juncture, which State’s law is applicable because, as we shall explain, affirmance is required under the laws of both States. Parex also urges this Court to accept that the American EIFS product was not a “good” within the meaning of the UCC by the time it reached Pulte or the homeowners because, at that point, it had been incorporated into the homes.

We shall accept Pulte’s contention that it intended that its breach of implied warranty claims spring from the sales of the synthetic stucco product when it was still movable, before it was incorporated into the homes. We shall thus assume, without deciding, and assessing no detriment to Parex, that at the relevant times, the product was a good as defined by Md.Code Ann., Com. Law I § 2-105(1), and Va.Code Ann. § 8.2-105(1). Paragraphs seventy-six and seventy-seven of Count Four set forth the pertinent allegations regarding the breach of implied warranty of merchantability claim.

In paragraph seventy-six, Pulte asserted, in essence, that an implied warranty of merchantability accompanied the “Barrier EIFS product” and the implied warranty extended through the “chain of distribution” from Parex to Pulte. In paragraph seventy-seven, Pulte asserted that the “Barrier EIFS system” was not in fact merchantable and that the implied warranty of merchantability had, thus, been breached because the “Barrier EIFS system traps moisture on the underlying surfaces of the structure of the homes, resulting in wood rot and other property damage.” Pulte’s allegations as to merchantability clearly relate to the product as incorporated into the homes and not to the product as it existed at the time of the relevant sales. As we have indicated, in arguing that the product was a “good” at the relevant times, Pulte itself insists that the relevant times were ⁷³² the sales of Barrier EIFS product, prior to its incorporation into the homes. Pulte’s complaint included no allegation that the product itself was unmerchantable.

Rather, paragraph seventy-seven suggested only that, once the product was installed in the homes it became unmerchantable. On these allegations, the trial court correctly determined that, as a matter of law, Parex was entitled to judgment on the breach of implied warranty of merchantability claim. In truth, paragraphs seventy-six and seventy-seven suggested only that the Barrier EIFS product was not fit for the particular purpose for which it was used. Pulte set forth more specific allegations' as to breach of the implied warranty of fitness for a particular purpose in paragraph eighty through eighty-two of Count Four, also quoted above.

Unfortunately for Pulte, however, neither Maryland nor Virginia has expressly waived the vertical privity requirement for a claim of breach of the implied warranty of fitness for a particular purpose, as Maryland has done with § 2 — 314(l)(b) for a claim for breach of the implied warranty of merchantability. See Md.Code Ann., Com. Law I § 2-318; Va.Code Ann. § 8.2-318. Cf.

Copiers Typewriters Calculators, 576 F.Supp. at 323. The Court of Appeals has suggested that “privity itself is not a required element [of a breach of the implied warranty of fitness for a particular purpose] that must be shown independently,” and that in order to establish such a breach a plaintiff need only prove that “the buyer had a particular purpose known to seller[.]” Ford Motor Co. v. General Accident Ins. Co., 365 Md. 321, 345 , 779 A.2d 362 (2001). Pulte offered nothing more than bald allegations in its complaint that Parex and the other defendants “impliedly warranted that the Barrier EIFS was fit for a particular purpose, to wit, for use in residential construction, and specifically on the homes to be constructed in these subdivisions, including the Homeowners’ home,” and that the defendants “knew or should have known of the purpose for which the Barrier EIFS product was to be used.” Pulte directs this Court to no specific portion of the record extract that would establish that Pulte proffered evi ⁷³³ dence to the trial court, in support of its opposition to Parex’s motion for summary judgment, that indicated that at the time of the relevant sales Parex was aware of the particular purpose for which the Barrier EIFS in question would be used.

Y. Tort Claims In the factual allegations in its Third Amended Complaint, Pulte alleged in pertinent part: Beginning in late 1998, certain Homeowners learned that moisture had penetrated and become trapped behind their homes’ exterior cladding. Because of the design of the Parex Barrier EIFS system which provided no means of egress for water that penetrates the system, the trapped moisture caused damage to the homes, including parts of the homes apart from the Barrier EIFS itself, most frequently the substrate to which the Barrier EIFS system was attached. Pulte thereafter set forth various tort counts, in its own capacity and as assignee of the homeowners. Count Six alleged that Parex negligently designed the Barrier EIFS and was liable to Pulte and the homeowners based on a negligence theory and/or was strictly liable because the Barrier EIFS “contained an inherently defective condition.” Count Seven alleged that Parex and the other defendants negligently failed to warn Pulte and the homeowners of “the defects and deficiencies of the Barrier EIFS” and, again, was liable on a theory of negligence and/or strict liability.

In Count Nine, Pulte alleged that Parex and the other defendants made negligent misrepresentations to Pulte and the homeowners regarding the Barrier EIFS. Prior to trial, the court granted summary judgment in Parex’s favor as to, inter alia, Counts Six, Seven, and Nine. The parties agree that the trial court’s decision was based on its application of the economic loss rule. As we explained supra, the economic loss rule “prohibits a plaintiff from recov ⁷³⁴ ering in tort for purely economic losses — losses that involve neither a clear danger or physical injury or death, nor damage to property other than the product itself.” Morris, 340 Md. at 529 , 667 A.2d 624 .

The rule prevents tort recovery when a product defect has resulted in the loss of the value or use of the thing sold or has caused the buyer to incur the cost of repair, and thus acts as a shorthand means of determining whether a plaintiff is suing for injuries arising from the breach of a contractual duty to produce a product that conforms, in terms of quality of performance, to the parties’ expectations, or whether the plaintiff seeks to recover for injuries resulting from the breach of a duty, arising independently of the contract, to produce a nonhazardous product that does not pose an unreasonable risk of injury to persons or property. Accordingly, the rule is an attempt to define the contours of duty. 63B Am.Jur.2d Products Liability § 1912 at 458 (1997) (footnotes omitted). Pulte argues that the trial court’s application of the economic loss rule was erroneous, and urges this Court to reverse the trial court’s decision as to the three tort counts against Parex. In Pulte’s view, “there was clear evidence that other property [in the affected homes] had been damaged by a defect in the product sold by Parex____” The history of the economic loss rule has been summarized as follows: The responsibility of a contracting party to a third person with whom he has made no contract for physical injuries and physical harm to tangible things resulting from dangerous conditions of things supplied, repaired, or constructed has a long history[ 16 ] ...

There is no problem about tort ⁷³⁵ liability to third parties for the mismanagement of things such as driving a car or flying an airplane. The mere fact that the defendant may be engaged in performing a service pursuant to a contract and transaction is completely irrelevant on his duty toward those in the vicinity of danger of his activity. Moreover, it is clear that parties to a contract cannot alter or modify any preexisting duty owed to third parties as regards the management of dangerous forces. But when defendant was acting, pursuant to a contract, in building, supplying or repairing things, it was not perceived at first that there could be a duty other than to the person with whom he was dealing.

The first obstacle which arises is the fact that there has been no direct transaction between the plaintiff and the defendant, which usually is expressed by saying that they are not in “privity” of contract. There is thus no logical basis upon which the one may be required to perform the contract for the other unless the contract has been made expressly for the benefit of the plaintiff, or it has been assigned to him. In other words, the absence of “privity” between the parties makes it difficult to impose any duty to the plaintiff upon the contract itself. But by entering into a contract with A, the defendant may place himself in such a relation toward B that the law will impose upon him an obligation, sounding in tort and not in contract, to act in such a way that B will not be injured.

The incidental fact of the existence of the contract with A does not negative the responsibility of the actor when he enters upon a course of affirmative conduct which may be expected to affect the interests of another person. ... The requirement of privity of contract has been abandoned as a basis for recovery by third parties for physical harm to themselves and tangible things against those who negligently supply, repair, or construct things so as to leave them in an unreasonably dangerous condition. Moreover, strict liability has been extended to those who ⁷³⁶ sell or lease houses with defects of a kind that subject users and others to an unreasonable risk of harm. Such strict liability has not, however, been extended generally against contractors who build houses on land owned by others and who repair products or buildings pursuant to contracts made with the owner or possessor of things.

W. Page Keeton, Prosser & Keeton on the Law of Torts § 93 at 667-68 (5th ed.1984) (footnotes omitted). In Maryland: Losses related to product liability claims may be categorized generally as (1) personal injuries, (2) physical harm to tangible things, and (3) intangible economic loss resulting from the inferior quality or unfitness of the product to serve adequately the purpose for which it was purchased____ Historically, a purchaser suffering only economic loss has ordinarily been unable to bring a tort action for negligence or in strict liability; such purchasers have been limited to contract actions for breach of warranty or, in the case of fraud, a tort action for deceit.... However, purchasers claiming physical injury or harm to tangible things generally may recover under negligence or strict liability in tort and breach of warranty theories. A.J. Decoster Co. v. Westinghouse Elec.

Corp., 333 Md. 245, 249-50 , 634 A.2d 1330 (1994) (citing Prosser & Keeton on the Law of Torts § 101 at 707-08). “[T]ort liability is limited to situations in which the negligence causes physical harm to person or property----” A.J. Decoster Co., 333 Md. at 251 , 634 A.2d 1330 . Generally, plaintiffs cannot recover in tort for losses in the third category — purely economic losses. Such losses are often the result of some breach of contract and ordinarily should be recovered in contract actions, including actions based on breach of implied or express warranties. Morris, 340 Md. at 531 , 667 A.2d 624 (citations omitted).

The law of Virginia is identical. In construction cases in that state, a plaintiff may recover, from a defendant with which it is not in privity of contract, damages for injuries to person or ⁷³⁷ property, but not purely economic damages. See Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419 , 374 S.E.2d 55, 57 (1988) (citing § 8.01-223 of the Virginia Code). There is no suggestion that physical injury occurred in this case or could have occurred as the result of the allegedly defective product.

The difficulty lies in determining whether an injury constitutes physical harm to property for which tort liability will lie, or mere economic loss. As a general rule, “[e]conomic losses include such things as the loss of value or use of the product itself, the cost to repair or replace the product, or the lost profits resulting from the loss of use of the product.” A.J. Decoster Co., 333 Md. at 250 , 634 A.2d 1330 . Thus, the question in this case is whether the alleged injury affected only the Barrier EIFS itself or affected other property belonging to Pulte or the homeowners. See, e.g., id. at 251-52, 634 A.2d 1330 (defective switch for ventilation system in chicken houses led to deaths of 140,000 chickens and, thus, caused damage to property — the chickens — and not merely economic loss).

Compare Morris, 340 Md. at 536 , 667 A.2d 624 (where plaintiff homeowners in class action against defendant manufacturer of roofing plywood argued that case came within exception to economic loss rule in that allegedly defective plywood created unreasonable risk of death or personal injury, but plaintiff homeowners did not argue that defect caused damage to property other than plywood itself, Court of Appeals held that alleged risk of personal injury was not sufficiently severe to bring the case within the exception); Council of Co-Owners Atlantis Condo., Inc. v. Whiting-Turner Contracting Co., 308 Md. 18, 32 , 517 A.2d 336 (1986) (where condominium association sued architect and builders for negligence in design, inspection, and construction of building and alleged creation of unreasonable risk of death or personal injury that brought the case within exception to economic loss rule, Court of Appeals agreed but stated, “[W]e are not required to, and do not reach the question of whether a risk of property damage alone will support the recognition of ⁷³⁸ a tort duty” under the circumstances). See generally Lloyd v. GMC, 397 Md. 108, 121-131 , 916 A.2d 257, 265-270 (2007). To reiterate, the economic loss rule prevents recovery for damage to property that consists only of the product itself. See Morris, 340 Md. at 529 , 667 A.2d 624 .

Pulte contends that the allegedly defective Barrier EIFS caused damage not just to itself but also to the “substrate,” to which it was attached, which consisted of “sheathing and framing.” In response to Parex’s Motion for Summary Judgment, Pulte submitted transcripts of deposition testimony suggesting that the Barrier EIFS caused rot to the structures to which it was attached. What constitutes harm to other property rather than harm to the product itself may be difficult to determine. A product that nondangerously fails to function due to a product defect has clearly caused harm only to itself. A product that fails to function and causes harm to surrounding property has clearly caused harm to other property.

However, when a component part of a machine or a system destroys the rest of the machine or system, the characterization process becomes more difficult. When the product or system is deemed to be an integrated whole, courts treat such damage as harm to the product itself. When so characterized, the damage [cannot be recovered in tort]. A contrary holding would require a finding of property damage in virtually every case in which a product harms itself and would prevent contractual rules from serving their legitimate function in governing commercial transactions.

Restatement (Third) of the Law of Torts, Products Liability § 21 cmt. e, at 295-96 (1998) (defining harm to persons or property). Where a component part “causes damage to the assembled product and other consequential damages, such liability as is imposed on the immediate or remote seller to the purchaser has ordinarily been based on warranty theories.” Prosser & Keeton on Torts § 101(4) at 709. That is because “[t]he risk that a component part of the product is not suitable for use in the ... assembly of another product is a risk that sophistieat ⁷³⁹ ed parties ... should be free to allocate by contract.” Id. As we indicated in Parts III and IV of our Discussion, the trial court properly granted Parex’s motion to dismiss the breach of express warranties count against it and properly granted summary judgment in Parex’s favor as to the breach of implied warranties count.

Significantly, Pulte pursued claims for breach of express and implied warranties against all of the defendants. Although the trial court granted summary judgment in favor of all defendants on the breach of implied warranties count, Pulte did not appeal the ruling as to any of the defendants except