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W.R. Construction Consulting, Inc. v. Jeld-Wen, Inc.

United States District Court, D. Massachusetts
Sep 20, 2002
Civil Action No. 01-10098-DPW (D. Mass. Sep. 20, 2002)


explaining that an agent for a disclosed principal does not become a party to a contract that it enters on the latter's behalf

Summary of this case from Egan, Flanagan and Cohen, P.C. v. Twin City Fire Ins. Co.


Civil Action No. 01-10098-DPW

September 20, 2002


Plaintiffs Elizabeth Pratt and W.R. Construction Consulting, Inc. ("W.R. Construction") bring this action against defendant Jeld-Wen, Inc. ("Pozzi Window") to recover damages allegedly caused by defendant's defective windows and failure to repair or replace its defective product adequately. Plaintiffs allege four separate theories of liability — breach of contract, breach of warranty, common law negligence, and unfair and deceptive business practices under Massachusetts Ch. 93A. Defendant moves for summary judgment in its favor on all counts asserted by plaintiff W.R. Construction.

A. BACKGROUND 1. Parties

Plaintiff Elizabeth Pratt is a trustee of the Powder House Real Estate Trust. She, with her husband, Stuart Pratt, President of Hunneman Real Estate Corporation, reside with their children at 15 Tree Hill Road, in Essex, the home at issue in this litigation.

W.R. Construction is a privately held corporation located in Marblehead, Massachusetts, engaged in the business of land development, consulting, and construction. William Rice, Jr. is the principal, the sole shareholder and officer of W.R. Construction.

Jeld-Wen, Inc., is the parent company of Pozzi Windows. Pozzi Windows, with headquarters in Oregon, manufactures custom-designed windows and doors which are distributed through independent distributors. Pozzi Windows manufactured the windows at issue in this litigation.

2. Facts

W.R. Construction alleges the following version of events for purposes of summary judgment. In April 1997, Elizabeth Pratt and her husband Stuart Pratt contracted with W.R. Construction to oversee the construction of a new home on their property in Essex, Massachusetts. Under the terms of the Construction Management Agreement, W.R. Construction agreed to consult, source, and price the components of the design plans and to supervise the construction of the residence in exchange for payments totaling $55,000. The Pratts were responsible for all of the costs of construction.

In the course of the construction of the residence, W.R. Construction sought to purchase Pozzi windows, a brand known for high quality products and service. To this end, William Rice contacted Lynx Windows Doors, a Massachusetts distributor of Pozzi windows with a showroom in Framingham. Over the course of months, Mr. Rice had numerous conversations and meetings with representatives of Lynx, Matthew Curley and John O'Keefe, to arrange for the manufacture, sale and delivery of specially designed Pozzi windows. Curley represented to W.R. Construction that he was trained by Pozzi to assist customers purchasing Pozzi windows, that he knew individuals at Pozzi's headquarters in Oregon personally, and that Pozzi would warrant and service the windows. Curley told Rice that he would have to speak to Pozzi headquarters to determine whether Pozzi could manufacture the windows according to the architect's design, whether storm windows could be installed, and when delivery could take place. Curley received approval from Rod Clark, National Sales Manager of Pozzi windows, to sell the specific windows requested by W.R. Construction and explained to Rice that frame extenders would be required which Pozzi could provide. Curley also reported to Rice that non-Pozzi storm windows could be installed without voiding Pozzi's warranty.

In November 1997, William Rice placed an order for Pozzi windows through John O'Keefe, an independent sales agent representing Lynx. The order included "windows and doors per enclosed Pozzi schedule", white aluminum Stergis brand storm windows, and "two inch extruded aluminum frame expanders." The total price for the order was $75,000, and two checks totaling that amount paid to the order of Lynx windows were drawn on the checking account of Hunneman Real Estate Corporation, Mr. Pratt's employer.

Delivery of the windows, originally scheduled for February 1998, occurred in several installments between February and June 1998. W.R. Construction began installation of the Pozzi windows in late spring and summer of 1998. Problems soon arose. Several of the windows cracked immediately. Mr. Rice contacted Mr. O'Keefe who told him that Lynx no longer represented Pozzi. Rice eventually contacted Dolly Raymond from Pozzi headquarters who sent a Pozzi representative, Mike Kuhn, to inspect and replace the cracked windows. Rice states that Kuhn assured him that the loss of Lynx as a distributor was not significant and that Pozzi would stand behind its product.

Later, Rice experienced difficulties opening the windows caused by defective window sashes. In spring 1999, Pozzi sent a mechanic, Scott Fletcher, to repair and replace the sashes, a project that required multiple visits and took approximately sixteen months to complete.

In late 1999, plaintiffs discovered that the windows leaked water during severe rain storms, causing water damage inside the house, including damage to approximately $2,000 of equipment belonging to W.R. Construction. Rice again notified Pozzi representatives who visited the home on several occasions but were unable to remedy the problem. In June 2000, Dudley Ruppel from Jeld-Wen was sent to examine the leaking windows. He initially promised to pay for W.R. Construction to repair the problem, but later told Rice that the problem lay in the frame expanders which Pozzi did not manufacture and were not covered by the limited warranty. Rice invested approximately 500 uncompensated hours trying to remedy the problems created by the defective windows and frame extenders.

B. THE CLAIMS 1. Count I — Breach of Contract

A contract for the sale of goods is governed by Article 2 of the UCC. Mass. Gen. Laws ch. 106 § 2-102. The UCC defines goods as "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale." Mass. Gen. Laws ch. 106, § 2-105. The sale of large components or systems to be installed in buildings are included within the scope of Article 2, notwithstanding the fact that they are eventually attached to realty, as long as they are movable at the time of identification. See Cambridge Plating Co., Inc. v. NAPCO, Inc., 991 F.2d 21, 24 (1st Cir. 1993) (commercial wastewater treatment system is a "good"). The windows, window extenders, and doors in question were movable at the time of identification and therefore their sale falls squarely within the scope of Article 2 of the UCC.

Defendant contends that no contract existed between itself and defendant W.R. Construction. The seller, defendant urges, was Lynx Windows, not defendant, and the Pratts were the buyer. W.R. Construction contends that Pozzi's extensive involvement in the transaction made it a seller, or alternatively that Lynx was an agent of Pozzi, and Pozzi was thereby the party-seller. W.R. Construction further contends that it was actually a party to the transaction, not merely an agent to a disclosed principal.

The U.C.C. provides straightforward, albeit not entirely helpful, definitions of buyer and seller. A buyer is one who "buys or contracts to buy goods"; a seller is one "who sells or contracts to sell goods." Mass. Gen. Laws ch. 106, § 2-105(1)(3). "A 'sale' consists in the passing of title from the seller to the buyer for a price." Mass. Gen. Laws ch. 106, § 2-106(1).

a. Was Pozzi Windows a Seller?

I turn first to the question of whether Pozzi was a party to the particular transaction involving plaintiffs. W.R. Construction appears to argue two separate theories as to why Pozzi Windows should be treated as a seller. First, it cites Pozzi's involvement throughout the history of the transaction as evidence that it, presumably in combination with Lynx, acted as seller. Specifically, W.R. Construction points to Pozzi's reservation of the right to approve the sale, its custom manufacture of the windows, its handling of repairs and warranty issues, and its receipt of payment from W.R. Construction for materials involved in the repair of leaking windows as evidence of its position as seller.

W.R. Construction does not offer a standard for determining when a manufacturer should be treated as a seller based on its level of involvement in the transaction. In the normal course of commerce, manufacturers sell their wares to retailers who in turn sell the goods to consumers. As described, two separate sales occur, the first between manufacturer and retailer, the second between retailer and consumer. In both transactions, title passes from the seller to the buyer, in exchange for a price. There is, however, neither a contract nor a sale between manufacturer and consumer. A manufacturer may warranty the product, may service a product under that warranty, may produce a product to certain specifications, or may engage in a subsequent transaction directly with the consumer. However, none of those occurrences changes the economic reality that Pozzi as the manufacturer sold the windows to Lynx who turned around and sold them to the Pratts/W.R. Construction.

The evidence in the record generally supports a finding that Lynx was the seller in the transaction in question. The November 13, 1997 Order, the primary written sales contract, appears on a form bearing the name Lynx Window and Door, Inc. at the head. Attached to the order is a form titled "Terms and Conditions of Sale" that also bears Lynx's name, signed by Rice that lays out the conditions imposed on Lynx and the buyer without mention of any obligations, rights or duties on the part of Pozzi. Moreover, the critical elements of sale — payment and transfer of title — apparently took place between Lynx Windows and the buyer.

The second theory, that Lynx was not an independent seller, but rather acted as an agent for Pozzi Windows, presents a more demanding issue. This argument is grounded in the laws of both agency and the UCC. Agency is the fiduciary relationship whereby one consents to act on behalf of — and subject to the control of — a principal. See Restatement (Second) of Agency, § 1(1) (1958); Work-A-Day of Fitchburg, Inc. v. Commissioner, 412 Mass. 578, 580 (1992). Formation of a principal-agent relationship does not require a formal written agreement, so long as there is the requisite manifestation of consent by the parties that the agent be subject to the principal's control. Restatement (Second) of Agency, § 26. Whether one is acting as another's agent is a question of fact. Pedersen v. Leahy, 397 Mass. 689, 691 (1986).

In determining whether a distributor of goods qualifies as an independent seller or as an agent of the manufacturer, courts examine the intent of the parties and the facts and circumstances of the transaction. Staco Energy Products Co. v. Driver-Harris Co., 578 F. Supp. 700, 702 (S.D.Ohio, 1983). Courts "have looked to, inter alia, the manufacturer's relationship with the agent/seller and ultimate consumer, which party(ies) have received compensation, possessed the goods, and effected the transfer of goods, and which party guaranteed the quality of the goods." Id. at 703.

In Gaha v. Taylor-Johnson Dodge, Inc., 53 Or. App. 471 (1981), the Oregon appellate court upheld a finding that the manufacturer of a motor home was the seller and the dealer was his agent, notwithstanding the fact that the contract of sale was between the plaintiff and the dealer. In support of an inference of agency, the court cited evidence that the customer had contacted the manufacturer directly to request a product built to his specifications and that the manufacturer, due to heavy demand, had arranged for the dealer to install equipment on its behalf. Id. at 476.

The record before me includes sufficient evidence to raise a material issue of fact as to whether Lynx was acting as an agent of Pozzi Windows. Starting with the parties' intent, W.R. Construction originally approached Lynx in order to purchase Pozzi windows. Mr. Pratt and Rice made clear that they were interested in Pozzi windows, rather than other brands carried by Lynx. Similarly, Lynx presented itself to customers as a Pozzi distributor, featuring Pozzi's insignia on its order form. Lynx employed Curley as a Pozzi-trained expert who would work directly with the manufacturer to facilitate the sale of custom-made Pozzi windows. Lynx also represented that Pozzi would be involved throughout the transaction, from approving the design through providing all service and warranty coverage for the windows.

Several factors identified in Staco Energy Products support treating Pozzi as a seller and Lynx as its agent. First, Pozzi was closely involved in the process leading up to the sale of the windows, and had repeated contact with the consumer. Since Pozzi windows are custom made, distributors such as Lynx do not stock standard products. Instead, the customer's proposed window design must be approved by Pozzi headquarters. This process was mediated by Curley who regularly dealt directly with Pozzi headquarters on orders. On several different occasions Curley was required to consult Pozzi headquarters to ensure that the Pratts' windows could be manufactured to design and to address concerns regarding delivery dates, compatibility with storm windows and warranties. Second, Pozzi warrantied the windows and provided service when problems appeared. In the terms of sale, Lynx's limited warranty consists solely of supplying copies of the Manufacturer's warranty to the buyer after completion of payment.

To be sure, other factors, though less clear from the record, appear to favor treating Lynx as an independent seller. First, the total price for the order was apparently set by Lynx and covered the Pozzi products as well as the non-Pozzi storm windows and extenders. The payment was made directly to Lynx, and the record does not reveal how this total price was set nor how much of the total amount Pozzi received. Second, the terms and conditions form indicates that Lynx was responsible for delivering the product to the buyer, and therefore that Lynx possessed the goods prior to delivery and effected the transfer of the goods to the buyer.

W.R. Construction presents limited evidence of Pozzi's control over Lynx. Its chief argument is that Pozzi exhibited control over the transaction through Curley and the approval process leading up to the transaction. Curley, though apparently a Lynx employee, was trained by Pozzi Windows to handle Pozzi sales on the distributors' end. Curley testified that no sale of Pozzi windows could occur without approval by Pozzi headquarters. There were additional matters specific to this transaction that had to be brought directly to Pozzi through Curley. The fact that Curley began to work for Horner Millwork when Lynx ceased to be a Pozzi distributor supports the argument that Curley served as an agent for Pozzi at the site of its distributors. While plaintiff's evidence in favor of agency is by no means conclusive, it is sufficient to raise a genuine issue of fact on summary judgment.

b. Was W.R. Construction a Party to the Contract?

Pozzi argues that W.R. Construction cannot recover for breach of contract because it was merely an agent for a disclosed principal, the Pratts, and therefore not an independent party to the sale. W.R. Construction contends that as an agent to an undisclosed principal it was a party to the contract.

An agent acts on behalf of a disclosed principal if, at the time of a transaction, the other party knows that the agent is acting on behalf of the principal and knows the principal's identity. See Restatement (Second) of Agency, § 4(1). Absent an agreement to the contrary, an agent for a disclosed principal does not become a party to a contract that it enters into on behalf of the principal within the scope of agency. Colonial Securities Inc. v. Merrill Lynch, Inc., 461 F. Supp. 1159, 1165 (S.D.N.Y. 1978) (citing Restatement (Second) of Agency §§ 363, 372 (1958)). However, if the other party to the contract has no notice that the agent is acting for a principal, the agent is said to act for an undisclosed principal. Restatement (Second) of Agency, § 4(3). An agent of an undisclosed principal is a party to the contract it enters into on behalf of the principal and therefore can be held liable to the third party. Restatement (Second) of Agency, § 322. And an agent who makes a contract on behalf of an undisclosed principal may also maintain an action for breach in his own name against the other party. See Buffington v. McNally, 192 Mass. 198, 202 (1906).

W.R. Construction contends that it did not contract to purchase the windows on behalf of a disclosed principal. Though Lynx was aware that the windows were to be used in the Pratt's house, plaintiff contends, it was never told that W.R. Construction was contracting as the Pratt's agent. Cf. Atlantic Salmon A/S v. Curran, 32 Mass. App. Ct. 488, 492 (1992) ("It is the duty of the agent, if he would avoid personal liability on a contract entered into by him on behalf of his principal, to disclose not only that he is acting in a representational capacity, but also the identity of his principal.").

W.R. Construction offers barely sufficient evidence to raise a genuine issue of material fact as to whether, at the time of the contract, Lynx, which was at a minimum an agent of Pozzi, was notified of the fact that W.R. Construction was contracting as the Pratts' agent. The contract of sale contains only Rice's signature, though the signature line indicates that the person is either the buyer or the buyer's agent. The order does indicate that the windows are for the Pratt residence and Mr. Pratt attended at least one of the meetings at the Lynx showroom. However, Rice never informed anyone at Lynx or Pozzi of the nature of his contractual relationship with the Pratts. Under the circumstances, I find that there exists a genuine issue as to whether W.R. Construction was an agent of a disclosed principal.

Accordingly, for purposes of summary judgment, having found that there are genuine issues of material fact regarding who was a party to the contract, I will deny defendant's motion for summary judgment on Count I.

2. Count II — Breach of Warranty

Pozzi contends that W.R. Construction cannot recover for its economic losses under its breach of warranty claim because there is no privity of contract between W.R. Construction and Pozzi. Having found above that there exists a genuine issue of material fact as to the existence of a contract between the parties, Pozzi's principal argument fails for purposes of summary judgment. However, for purposes of guidance in trial preparation, I will consider W.R. Construction's other contentions, assuming arguendo that no privity of contract is established between W.R. Construction and Pozzi.

For this reason, Matsushita Electric Corp. of America v. Sonus Corp., 362 Mass. 246 (1972) and Delano Growers' Cooperative Winery v. Supreme Wine Co., Inc., 393 Mass. 666 (1985), which the plaintiff referenced in a post-hearing memorandum, are inapposite. The plaintiff is correct that these cases allow for the recovery of economic losses stemming from the breach of an express warranty, Matsushita, or an implied warranty, Delano. Nonetheless, Matsushita and Delano are inapplicable here because the parties in both cases were in privity of contract.

Massachusetts law recognizes two different breach of warranty theories — one that derives from contract law, the other from strict liability in tort. An action that seeks only recovery of economic loss is grounded in contract law, whereas an action for personal injuries caused by a defective product proceeds in tort. Bay State Spray Provincetown Steamship, Inc. v. Caterpillar Tractor, Co., 404 Mass. 103, 107 (1989); Sebago Inc. v. Beazer East, Inc., 18 F. Supp.2d 70, 98 (D.Mass. 1998). Economic loss refers to "damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits without any claim of personal injury or damage to other property." Marcil v. John Deere Indus. Equip. Co., 9 Mass. App. Ct. 625, 630 n. 3 (1980) (quoting Alfred N. Koplin Co. v. Chrysler Corp., 49 Ill. App.3d 194, 199 (1977)).

Section 2-318 of the Massachusetts UCC eliminates lack of privity of contract as a defense to breach of warranty claims under certain conditions. Interpretation of § 2-318 has evolved since it was amended to eliminate privity of contract in 1971. See Sebago, 18 F. Supp.2d at 97-99. The Massachusetts Supreme Judicial Court ("SJC") in 1989 held in Bay State-Spray that § 2-318 applied only to tort-based actions. Id. at 98. However, in 1995, the SJC extended the scope of § 2-318 to cover contract-based breach of warranty actions involving buyers of consumer goods. See Jacobs v. Yamaha Motor Corp., 420 Mass. 323, 330-31 (1995); Sebago, 18 F. Supp.2d at 98. Jacobs limited its holding to consumer transactions, noting that "contract based warranty claims involving commercial transactions may generally call for different treatment than tort-based warranty claims." Jacobs, 420 Mass. at 330. Thus, it appears a contract-based breach of warranty claim involving a commercial transaction still requires privity of contract.

Mass. Gen. Laws ch. 106, § 2-318 states in relevant part: "Lack of privity between plaintiff and defendant shall be no defense in any action brought against the manufacturer, seller, lessor or supplier 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, seller, lessor or supplier might reasonably have expected to use, consume or be affected by the goods. The manufacturer, seller, lessor or supplier may not exclude or limit the operation of this section."

W.R. Construction urges extension of § 2-318 to completely eliminate the privity requirement for all breach of warranty claims. Through the early 1980s, the Massachusetts courts appeared to treat § 2-318 as covering all breach of warranty claims. See Sebago, 18 F. Supp.2d at 98. However, as Judge Wolf demonstrated in Sebago, later decisions by the SJC and the federal courts brought Massachusetts law in line with other states with respect to privity of contract by restricting its application as a defense solely concerned with economic damages involving commercial entities. Id.; Bay State-Spray, 404 Mass. at 107. Although Jacobs once again expanded the reach of § 2-318 to allow recovery of purely economic loss, its holding was premised on the "special legislative treatment" given to buyers of consumer goods by § 2-316A and § 2-318. 420 Mass. at 330-331. Commercial transactions receive different treatment so as not to interfere with the distribution of risks reached by commercial entities in their dealings with one another. See Bay State-Spray, 404 Mass. at 109.

W.R. Construction contends that its breach of warranty claim sounds in tort rather than contract because it alleges $2,000 in damage to its property and equipment located in the Pratts home. There is no question that the vast majority of W.R. Construction's loss is due not to property damage suffered, but rather from the time spent repairing the defective product, which involves classic economic loss. The question is whether a nominal amount of damages is sufficient for a breach of warranty claim to sound in tort.

The distinction between contract- and tort-based warranty claims rests on the presence or absence of personal injury or property damage. See Sebago, 18 F. Supp.2d at 89-90; Berish v. Bornstein, 437 Mass. 252, 267 (2002); Bay State-Spray, 404 Mass. at 107. "[T]he economic loss doctrine, which forms the basis for the breach of warranty classifications, draws the distinction between the situation where the injury suffered is merely the 'failure of the product to function properly,' and the situation, traditionally within the purview of tort law, where the plaintiff has been exposed, through a hazardous product, to an unreasonable risk of injury to his person or property." Sebago, 18 F. Supp.2d at 89-90 (quoting East River Steamship Corp. v. Transamerica Delaval, 476 U.S. 858, 868 (1986)). The purpose of the doctrine is to preserve the "respective societal goals" of contract and tort law. Rich Products Corp. v. Kemutec, Inc., 66 F. Supp.2d 937, 968 (E.D.Wis. 1999). In contract law, society "seeks to divine and enforce" the justifiable expectations of the parties as determined from the language of their contract," whereas in tort law "the overriding concern is to provide a level of compensation" for victims of "unreasonable dangers" sufficient to make the victim whole and to discourage "the development of harmful products and conduct." Id. at 968-69.

Thus, under the economic loss doctrine, a plaintiff may not seek to redress economic loss in tort on account of "minimal" property damage or personal injury. Id. at 968-69 (citing Miller v. United States Steel Corp., 902 F.2d 573, 576 (7th Cir. 1990)). Rather, whether such a tort-based claim may be brought depends on "a direct and continuous causal chain" between the property damage and the economic loss. Queen City Terminals, Inc. v. General American Transportation, 73 Ohio St.3d 609, 615-16 (1995) (holding that "in order to recover indirect economic damages in a negligence action, the plaintiff must prove that the indirect economic damages arose from tangible physical injury to persons or from tangible property damage"); see Icelandic Coast Guard v. United Technologies Corp., 722 F. Supp. 942 (D.Conn. 1989) (recovery in tort for economic losses permitted where losses were "attributable to and are inextricably tied to" injuries).

In Berish v. Bornstein, the SJC held that the economic loss doctrine did not bar suit to recover "the substantial expense" plaintiffs would incur in correcting alleged "defects and deficiencies" in the construction of a condominium development. Id. at 267-68 (emphasis supplied). The court found that a negligence action could be brought because the "defects and deficiencies," which included "poor construction of retaining walls, improper installation of sky lights" and "improper construction of foundations," caused property damage "beyond the defects" in the condominium units. Id. at 268. Importantly, in Berish, the plaintiffs sought damages for economic losses that would be incurred in "correcting" the property damage. Thus, there was a causal connection between the damage and the resulting economic loss.

In the present case, there is no sufficient causal connection between the damage to the property of W.R. Construction and its economic loss. The damage to the approximately $2,000 worth of W.R. Construction's equipment did not cause W.R. Construction's uncompensated efforts. As a result, plaintiff may not bring a tort-based action for breach of warranty under § 2-318 of the Massachusetts UCC.

Alternatively, W.R. Construction contends that the property damage suffered by the Pratts should suffice to make W.R. Construction's claim tort-based as well. I do not find this proposition compelling. W.R. Construction and the Pratts are separate interests seeking distinct damages. Plaintiff provides no authority for allowing one plaintiff to proceed in tort strict-liability based solely on property damage suffered by a co-plaintiff.

W.R. Construction also contends that, as a buyer of consumer goods, it can bring suit against Pozzi for its economic losses under a contract-based breach of warranty theory. See Jacobs, 420 Mass. at 330-31; see also Sebago, 18 F. Supp.2d at 99 (noting that "[t]he Jacobs decision has been read as creating an exception to the requirement of privity in suits against remote manufacturers only for plaintiffs who purchase consumer goods"). W.R. Construction argues that the definition of consumer goods looks to the ultimate use of the product rather than the use to which the particular party puts it. It contends that the windows are consumer goods because they are ultimately used for a household purpose.

Here I assume arguendo that W.R. Construction is a buyer, but that Pozzi is merely the manufacturer, not the seller, and therefore there is no privity of contract.

Consumer goods are defined by statute in Mass. Gen. Laws ch. 106, § 9-109 as those goods "used or bought for use primarily for personal, family or household purposes." Sebago, 18 F. Supp.2d at 99. The term "consumer goods" has been held to include a variety of products installed as part of the structure of a home when purchased by the consumer. See, e.g., Reynolds v. Preferred Mutual Ins. Co., 49 Mass. App. Dec. 97 (1972) (installation of gutters is "consumer goods"); R. Bauer Sons Roofing v. Kinderman, 613 N.E.2d 1083, 1089 (Ohio App.2d District, 1992) (consumer goods includes "roofing material, replacement windows and doors, aluminum siding and the like"). Residential windows to be installed in a home are no different from gutters, roofing material or other components of a home, and therefore constitute consumer goods when purchased by the homeowner.

In this case, W.R. Construction was acting for contract purposes as the agent, whether disclosed or undisclosed, of the Pratts when it purchased the residential windows to be installed in the Pratts' home. Although it did not purchase the windows for its own personal, family or household use, W.R. Construction purchased the windows on behalf of and under control of the Pratts for installation in their home. The instant case does not involve a situation in which a home builder or contractor purchased the windows for resale to a homeowner. Nor is it a situation where a large supply of windows were purchased for use in a number of different homes to be built by a contractor. In this case, W.R. Construction acted as the Pratts' agent in purchasing these custom windows for the exclusive use in the Pratts' home. Thus, the windows are consumer, not commercial goods, within the meaning of Massachusetts law. Of course, the damages recoverable on this theory are merely coincident with those which the Pratt's may recover. W.R. Construction has no separate or additional damage as a result of contract-based warranty claims.

In conclusion, plaintiff W.R. Construction has presented issues of fact such that it may be able to recover for a contractual breach of warranty claim under § 2-318. Accordingly, I will allow defendants motion for summary judgment on Count II only as to tort-based warranty claims by W.R. Construction.

3. Count III — Negligence

Defendant contends that W.R. Construction's negligence count is also barred by the economic loss doctrine. The economic loss doctrine bars recovery of economic losses in negligence actions absent personal injury or damage to property other than the product itself. Berish v. Bornstein, 437 Mass. at 267 (2002); Sebago, 18 F. Supp.2d at 89; FMR Corp. v. Boston Edison Co., 415 Mass. 393 (1993).

Having found in Section B.2, supra, that the economic loss doctrine bars recovery for plaintiff's tort based warranty economic losses, I will grant summary judgment on the tort of negligence count as well, to the extent that economic loss damages are sought in addition to property damages.

4. Count IV — Massachusetts General Laws Ch. 93A

Plaintiff contends that defendant's conduct, including its repeated failure to abide by its service guarantees and warranty, constituted an unfair commercial practice under Massachusetts General laws ch. 93A.

Defendant again turns to the economic loss rule, at this point, to contest recovery under Chapter 93A. In Canal Elec. Co. v. Westinghouse Elec. Corp., 973 F.2d at 988, 998 (1st Cir. 1992), the economic loss doctrine barred the 93A claims of third party plaintiffs who were customers of the plaintiff power company, Canal Electric Co., and suffered economic loss — extra costs and lost profits — caused by defendant's negligent failure to repair Canal's turbine properly. The First Circuit noted that the third party plaintiff's theory of recovery flowed either from tort or contract law. The Court reasoned that the economic loss doctrine was equally applicable to ch. 93A, citing the potentially enormous liability if any third party adversely affected by negligent activity were allowed to collect for resulting damages based on economic loss. Id. at 999. Similarly, as discussed in Section B.2, supra, I hold that the plaintiff cannot recover for its economic loss to the extent that the doctrine applies to Chapter 93A.

That the plaintiff cannot recover under Chapter 93A on the basis of tort law does not completely foreclose a Chapter 93A action. For example, in Jacobs, the SJC stated that, if the defendant manufacturer "properly may be held liable for a breach of an implied warranty of merchantability, the circumstances clearly justify the judge's finding of a violation of G.L.c. 93A and his determination of damages." Id. at 327. The court then concluded that a manufacturer of consumer goods "may be held liable to a consumer-buyer" for breach of the implied warranty of merchantability. Jacobs, 420 Mass. at 327. Furthermore, "a practice or act is unfair within the meaning of ch. 93A if it is 'within the penumbra of a common law, statutory or other established concept of unfairness.'" Sebago, 18 F. Supp.2d at 104 (quoting Heller Financial v. Ins. Co. of North America, 410 Mass. 400, 408 (1991)). Given the fact that I have denied defendant's motion for summary judgment on the contract based claims in Counts I and II, I will deny defendant's motion for summary judgment on this count as well.


For the reasons set forth more fully above, I hereby DENY the defendant's motion for summary judgment except to the extent that I conclude the plaintiff W.R. Construction may not recover economic loss damages under Counts II, III, and IV.

Summaries of

W.R. Construction Consulting, Inc. v. Jeld-Wen, Inc.

United States District Court, D. Massachusetts
Sep 20, 2002
Civil Action No. 01-10098-DPW (D. Mass. Sep. 20, 2002)

explaining that an agent for a disclosed principal does not become a party to a contract that it enters on the latter's behalf

Summary of this case from Egan, Flanagan and Cohen, P.C. v. Twin City Fire Ins. Co.
Case details for

W.R. Construction Consulting, Inc. v. Jeld-Wen, Inc.

Case Details


Court:United States District Court, D. Massachusetts

Date published: Sep 20, 2002


Civil Action No. 01-10098-DPW (D. Mass. Sep. 20, 2002)

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