Opinion
C.A. No. 07C-05-217 PLA.
Submitted: August 23, 2007.
Decided: October 17, 2007.
ON DEFENDANT'S MOTION TO DISMISS GRANTED.
This 17th day of October, 2007, upon consideration of the Motion to Dismiss filed by Defendants University of Delaware and University of Delaware Physical Therapy Clinic, it appears to the Court that:
1. On May 21, 2007, Lori M. Spaeder ("Lori") filed suit against the University of Delaware and the University of Delaware Physical Therapy Clinic University ("University Defendants"). Lori also filed suit against Encore Medical, L.P., Chattecx Corporation, Chattanooga Corporation, Chattanooga Group, Inc., Biodex Medical Systems, Inc., and Isokinetic International ("Manufacturing Defendants"). The Court granted Plaintiffs' motion to consolidate on October 15, 2007.
2. In this suit, Lori alleges, inter alia, that the University Defendants breached the implied warranty of merchantability and the implied warranty of fitness for a particular purpose when, during a physical therapy session, they injured Lori's right knee through their use of an allegedly defective KINCOM instrument (an electrical stimulation device). Cletus J. Spaeder ("Cletus") also asserts a claim for loss of consortium arising from Lori's injuries against the University Defendants.
Docket 1 (Complaint).
Id.
3. The complaint does not allege that the University Defendants sold or manufactured the KINCOM but only alleges that the Clinic used the KINCOM to perform physical therapy on Lori's leg.
Id.
4. University Defendants have filed a Motion to Dismiss with prejudice pursuant to Superior Court Rule 12(b)(6). University Defendants argue that the implied warranty theories, which Lori asserts under the Delaware Uniform Commercial Code ("DUCC"), do not apply to service providers and, therefore, there is no basis for a claim against them. They also submit that Cletus's claim must be dismissed because his claim for loss of consortium is dependent on Lori's claim.
Plaintiffs admit that Cletus's loss of consortium claim must be dismissed if Lori cannot maintain suit against the University Defendants for breaches of the implied warranties. Docket 21, ¶ 8.
5. In response, Lori and Cletus Spaeder ("Plaintiffs") argue that the DUCC implied warranties apply to the University Defendants because Lori is a third-party beneficiary of the warranty that runs from the manufacturer-seller to the purchaser. Though Plaintiffs concede that the implied warranties do not apply to service contracts, Plaintiffs submit that, since this transaction involves a mix of goods and services, the implied warranties do apply. Plaintiffs acknowledge that the Delaware Supreme Court has not yet addressed whether a patient who purchases a service and is injured via a defective product may maintain a breach of an implied warranty claim against both the service provider and the product's manufacturer. Plaintiffs therefore urge this Court to permit implied warranty claims against both parties as a preferable rule of law.
6. Superior Court Civil Rule 12(b)(6) states, in pertinent part: "[T]he following defenses may at the option of the pleader be made by motion: (6) failure to state a claim upon which relief can be granted. . . ." When judging a motion to dismiss a complaint for failure to state a claim, the Court must accept all well-pleaded allegations as true. The Court must determine "whether a plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof under the complaint." Where a plaintiff may recover, the Court must deny the motion to dismiss.
Super. Ct. Civ. R. 12(b)(6).
Spence v. Funk, 396 A.2d 967, 968 (Del. 1978).
Id.
Id.
7. To maintain a claim for a breach of the implied warranty of merchantability or for a breach of the implied warranty of fitness for a particular purpose, the party providing the good must be a "seller." A seller is "a person who sells or contracts to sell goods." The implied warranty of merchantability establishes a warranty made by the seller that the goods he sells are fit for the ordinary purposes for which they are sold or used. Similarly, the implied warranty of fitness for a particular purpose creates a warranty by the seller that the goods sold are fit for the buyer's particular purposes where "the seller had a reason to know of the buyer's particular purpose at the time of contracting and . . . the buyer was specifically relying on the seller's expertise."
See 6 Del. C. § 2-314 ("[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.") (emphasis added); 6 Del. C. § 2-315 ("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 or 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.") (emphasis added).
6 Del. C. § 2-103.
Id. § 2-314.
See Flowers v. Huang, 1997 Del. Super. LEXIS 387, at *4 (Aug. 20, 1997) (citing 6 Del. C. § 2-315).
8. To determine whether the defendant is a seller of a good or service, Delaware Courts have used the "essence of the relationship" test. Under the "essence of the relationship" test, the Court must determine whether the relationship of the plaintiff and defendant was that of a buyer-seller or a buyer-service provider. For example, the Delaware Superior Court, in Flowers v. Huang, held that the plaintiff could not maintain breach of implied warranty claims against a doctor who implanted a defective screw into plaintiff during surgery because the essence of the relationship was that of a buyer-service provider. Because there was no Delaware case law directly on point, the Flowers Court relied on cases from other jurisdictions that addressed the same issue under their respective versions of the Uniform Commercial Code ("UCC"). For example, the Flowers Court cited Magrine v. Krasnica, a New Jersey Supreme Court case that barred strict liability claims against a dentist whose defective drill injured the plaintiff. The Magrine Court found the essence of a patient/dentist relationship to be that of a buyer-service provider:
Id. at *6.
Id. at *9-10.
Flowers, 1997 Del. Super. LEXIS 387 at * 4-5.
Of . . . meaningful significance is a recognition that the essence of the transaction between the retail seller and the consumer relates to the article sold. The seller is in the business of supplying the product to the consumer. It is that, and that alone, for which he is paid. A dentist or a physician offers, and is paid for, his professional services and skill. That is the essence of the relationship between him and his patient.
Id. at *6 (quoting Magrine v. Krasnica, 227 A.2d 539, 543 (Hudson County Ct. Law Div. 1967), aff'd, 241 A.2d 637 (N.J.Super.Ct. App. Div. 1968), aff'd, 250 A.2d 129 (N.J. 1969)).
9. Similarly, the Flowers Court cited Hector v. Cedars-Sinai Medical Center, a California Court of Appeals decision, in which the court refused to impose strict liability upon a hospital that implanted a defective pacemaker in the patient because the "essence of the relationship" was that of medical services and not that of a sale of the pacemaker. The Hector Court also noted that permitting a plaintiff to sue the hospital as a seller would result in higher health care costs for the public because a hospital would have to insure itself against further liability. Applying the reasoning of the foregoing cases to the DUCC, the Flowers Court concluded that a plaintiff could not assert implied warranty claims against a doctor who provided professional services, noting that "plaintiffs still have a cause of action against the manufacturers of the alleged defective product."
Id. (citing Hector v. Cedars-Sinai Med. Ctr., 225 Cal. Rptr. 595, 599 (Cal.Ct.App. 1986)).
Hector, 225 Cal. Rptr. at 600.
Flowers, 1997 Del. Super. LEXIS 387 at *11.
10. The issue in this case is whether the University Defendants are "sellers" within the meaning of the DUCC and, as such, may be liable for alleged breaches of the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. After examining cases from Delaware and other jurisdictions, the Court is persuaded that the University Defendants are not "sellers" within the meaning of the DUCC and cannot be liable for breaches of any implied warranties. Like the service providers in Magrine, Hector, and Flowers, Lori entered into a contract with the University Defendants to provide the service of physical therapy. She did not enter into a contract with them to sell her or to permit her use of a KINCOM machine. Rather, the University Defendants' use of the KINCOM machine was incidental to the professional therapy service for which Lori hired them. Moreover, like the hospitals in Magrine and Hector and the dentist in Flowers, the University Defendants are not in the business of supplying the KINCOM to the public. Thus, the Court concludes that the "essence of the relationship" between Lori and the University Defendants was one of a buyer-service provider and not one of a buyer-seller.
See 1997 Del. Super. LEXIS 387 at * 6; Atamian v. Bahar, 2005 Del. Super. LEXIS 156, at *12 (Mar. 30, 2005) (determining that Delaware precedent and other jurisdictional case law support the finding that Article 2 of the UCC does not apply to a buyer-service provider relationship); Atamian v. Ryan, 2006 WL 1816936, *3 (Del.Super.Ct. June 9, 2006) (holding that an implant of allegedly defective crowns in the plaintiff's mouth was "merely incidental to the services [the dentist] rendered" and thus did not constitute a sale for purposes of claims of breaches of the implied warranties); Lamb v. Newark Emergency Room, Inc., 1983 Del. Super. LEXIS 753, at *6-7 (Dec. 1, 1983) (citing Batiste v. Am. Home Prod. Corp., 231 S.E.2d 269 (N.C.Ct.App. 1977) (finding that the Uniform Commercial Code only applies to buyer-seller transactions and does not apply to physician-patient relationships because the patient is purchasing a physician's skill and services rather than a good); Grotto Pizza, Inc. v. Endecon, Inc., 1997 WL 366904, at *5 (Del.Super.Ct. Mar. 26, 1997) (finding that Delaware Supreme Court decision in Castaldo v. Pittsburgh-Des Moines Steel Co., Inc., 376 A.2d 88 (Del. 1977) supports the position that a professional providing only services and no goods may not be liable for a breach of an implied warranty).
11. Furthermore, the Court is persuaded that the agreement between Lori and the University Defendants did not create a mixed contract for goods and services. Plaintiffs rely on a number of cases from other jurisdictions.
See Skelton v. Druid City Hosp. Bd., 459 So. 2d 818 (Ala. 1984) (holding that a hospital could be liable for a breach of the implied warranties where a plaintiff was injured after a suturing needle broke off in the patient's body); Berry v. G. D. Searle Co., 309 N.E.2d 550 (Ill. 1974) (finding that a provider of birth control pills could be liable under a breach of implied warranty theory because the seller was not merely providing a service but was engaged in selling pills); Mauran v. Mary Fletcher Hosp., 318 F. Supp. 297 (D. Vt. 1970) (permitting an injured patient to recover under an implied warranty where a hospital administered insulin, instead of preoperative medicine, because there could be a sale of anesthesia, even if it was a minimal element in the medical services provided); Butler v. Nw. Hosp. of Minneapolis, 278 N.W. 37 (Minn. 1937) (permitting a plaintiff to recover against a hospital for damage resulting from a defective surgical clamp that was manufactured by a third-party).
The Court finds the other cases cited by Plaintiffs unpersuasive. Unlike the defendants in most of the cases cited by Plaintiffs, the University Defendants never provided a product or good to Lori. To the extent that those cases suggest that a provider of services who uses a defective instrumentality may be liable under implied warranty theories, the Court rejects their rationale.
Compare Skelton, 459 So. 2d at 821 (Ala. 1984) (defendants provided a suturing needle to the plaintiffs); Berry, 309 N.E.2d at 554-55 (defendants provided birth control pills to the plaintiff); Mauran, 318 F. Supp. at 300 (defendants provided insulin to the plaintiff). The sole exception in the cases cited by Plaintiffs is Butler v. Nw. Hosp. of Minneapolis, in which the Court held that the plaintiff could recover damages against a hospital that used a faulty clamp on a hose that sprayed scalding water on the plaintiff before surgery. Butler, 278 N.W. at 38. In that case, the Court held that clamp selected by the defendant "had to be reasonably fit [for surgery on the plaintiff]." Id. This Court notes that the Butler Court did not discuss the UCC. Moreover, the clamp at issue in Butler was visibly broken, and there is no allegation in Plaintiffs' complaint that the KINCOM machine was visibly damaged. Id. at 39; Docket 21, Ex. A. In any event, this Court finds that the holding in Butler is not in accord with existing Delaware precedent, and therefore the Court declines to adopt Butler. Moreover, the Court notes that Plaintiffs still have a cause of action under the DUCC against the Manufacturing Defendants and a claim for negligence against the University Defendants.
12. Plaintiffs also rely on Neilson Business Equipment Center, Inc. v. Italo Monteleone, M.D., P.A. to support their argument that this contract was a mixed contract of goods and services. The Neilson case is distinguishable, however. In Neilson, the plaintiffs contracted to purchase a computer system and consulting services from the defendant whose company was in the business of selling computer systems. The Delaware Supreme Court found that the consulting services "were ancillary to the contract" to purchase the computer system. As a result, the DUCC implied warranties applied to both the computer system and consulting services components of the contract. In contrast, Lori hired the University Defendants to provide her only with the service of physical therapy. The University Defendants never contracted to use or sell the KINCOM machine. The device used by the University Defendants was ancillary to the overall goal of providing therapy services for which both parties contracted. Therefore, the Court finds that, to the extent this transaction implicates the "sale" of goods, the service component of providing professional physical therapy to Lori predominates, precluding a finding that the DUCC implied warranties apply to this contract.
Neilson Bus. Equip. Ctr., Inc. v. Italo Monteleone, M.D., P.A., 524 A.2d 1172, 1175-76 (Del. 1987).
Id. at 1174-75.
13. Finally, Plaintiffs submit that, because the Delaware Supreme Court has not explicitly barred implied warranty claims by a patient against a service provider who has used a defective good, this Court should permit such claims. In support of this argument, Plaintiffs cite Hyatt v. Toys "R" Us. In Hyatt, the Delaware Supreme Court permitted Hyatt, the plaintiff, to assert a breach of implied warranty claim against Toys "R" Us ("TRU") after it sold him a defective bicycle manufactured by another company. Plaintiffs argue that this case suggests that Delaware Courts would permit a buyer (Hyatt) to maintain a breach of implied warranty claim against a service provider (TRU).
2007 WL 1970075 (Del.Supr. Jul. 9, 2007) (Table).
13. The Court is not persuaded that the Hyatt case stands for the proposition that a service provider who uses a defective good and injures a patient is necessarily liable under implied warranty theories. In Hyatt, both sides agreed that TRU was a merchant who sold the bicycle. Like the seller in Neilson, who primarily contracted to sell a computer system and provided ancillary services in connection with these sales, TRU primarily contracted to sell the bicycle and also provided the additional service of assembling it. For that reason, the Court in Hyatt case was merely applying the same rule that it applied in Neilson to a mixed contract of goods and services, rather than broadening the applicability of the DUCC implied warranties to all service providers.
Hyatt, 2007 WL 1970075 at *1.
14. Even assuming, arguendo, that Hyatt does support the plaintiff's position, the Court still finds Hyatt distinguishable. In Hyatt, TRU sold a bicycle to Hyatt, ancillary to which TRU offered the service of assembling the bicycle. Like Neilson, Hyatt predominantly sought to purchase a bicycle (a good), creating a buyer-seller relationship. Here, the University Defendants are not merchants with respect to the KINCOM machine. At no time did the University Defendants sell or offer to sell the KINCOM machine to Lori. The University Defendants solely provided physical therapy services, incidental to which the employees of the University Defendants used the KINCOM machine, establishing a buyer-service provider relationship. Hence, the holding in Hyatt is inapplicable to this case.
15. Based on the foregoing, the Court finds that the essence of the relationship between the University Defendants and the Plaintiffs was that of a service provider and a buyer, rather than that of a seller and a buyer. As a result, the Court finds that the DUCC does not apply. Furthermore, because the plaintiffs have only asserted breach of implied warranty claims under the DUCC against the University Defendants, Plaintiffs cannot recover under any set of conceivable circumstances. Likewise, because Lori may not maintain a cause of action under the implied warranties of the DUCC against the University Defendants, Cletus may not maintain a loss of consortium claim. Accordingly, the University of Delaware's and the University of Delaware Physical Therapy Clinic's Motion to Dismiss all implied warranty claims under the DUCC is GRANTED. IT IS SO ORDERED.