DANIEL L WILLIAMS V JAMA INC
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STATE OF MICHIGAN
COURT OF APPEALS
DANIEL L. WILLIAMS,
UNPUBLISHED
March 17, 1998
Plaintiff-Appellant,
v
JAMA, INC., a Michigan corporation, and J & M
DAIRY COMPANY, a division of JAMA, INC.,
No. 201293
Hillsdale Circuit
LC No. 95-025519-NZ
Defendants-Appellees.
Before: Markey, P.J., and Bandstra and Markman, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court's February 4, 1997 order granting defendants' motion
for summary disposition pursuant to MCR 2.116(C)(7). We reverse.
Plaintiff, a dairy farmer, purchased milking equipment from defendants in an effort to modernize
the equipment on his dairy farm and improve the productivity of his dairy herd. Defendants installed the
equipment in December 1987. At the time of installation, defendants orally agreed to service the
equipment annually for the price of labor and materials, which defendants did from 1987 through 1991.
Plaintiff first experienced problems with the new equipment within thirty days after installation. On
October 6, 1992, in an effort to determine the source of the problems he was experiencing with the
production and reproduction of his dairy herd, plaintiff disassembled a portion of the milking equipment
and discovered a washer that had become lodged in the "trap" of the milking system.
On September 29, 1995 plaintiff filed a complaint against defendants, alleging that the displaced
washer caused the milking equipment to function erratically and less efficiently when used to milk
plaintiff's dairy cows. Plaintiff claims that, based on the parties’ oral service agreement, defendants
breached their duty to exercise reasonable care in inspecting, servicing and maintaining the milking
equipment by failing to locate and correct the displaced washer. Defendants contend that the service
agreement was incidental to the sale of goods and that plaintiff's suit is barred by the four-year statute of
limitations imposed by the Uniform Commercial Code (UCC). The trial court found that the agreement
between plaintiff and defendants was governed by the UCC and that plaintiff had failed to file his
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complaint within the four-year statute of limitations. Therefore, the trial court granted defendants'
motion for summary disposition.
I.
Plaintiff contends that the trial court erred in granting defendants' motion for summary disposition
because a question of fact exists as to whether the oral service agreement between plaintiff and
defendants was (a) incidental to a contract for the sale of goods, and, therefore, was governed by the
statute of limitations set forth in the UCC, or (b) a separate contract for services involving a different
limitations period.
Article 2 of the UCC applies to transactions in goods. MCL 440.2102; MSA 19.2102. A
contract that calls merely for the rendition of services is not subject to the sales provision of the UCC.
Wells v 10-X Mfg Co, 609 F2d 248, 254 (CA 6, 1979). The trial court found that plaintiff's tort claim
is based on a contract for the sale of goods and is therefore barred by the UCC's four-year period of
limitation found in MCL 440.2725(1); MSA 19.2725(1). An action to recover for breach of warranty
under the UCC must be commenced within four years of tender of delivery of the goods, regardless of
when the breach was discovered. Neibarger v Universal Cooperatives, Inc, 439 Mich 512, 520;
486 NW2d 612 (1992); MCL 440.2725(2); MSA 19.2725(2).
Defendants installed plaintiff's milking system in December 1987, and plaintiff filed this action
against defendants on September 29, 1995. Therefore, if this action were governed by the UCC,
plaintiff's claim is barred by the four-year statute of limitations. Plaintiff argues, however, that his tort
action should survive because his negligence claim stems from a contract for services outside the scope
of the UCC and is therefore subject to the three-year statute of limitations for product liability actions
set forth in the Revised Judicature Act, MCL 600.5805(9); MSA 27A.5805(9). Moreover, this
limitations period does not begin to run until the cause of action was discovered or reasonably should
have been discovered.
In Neibarger, supra, our Supreme Court considered the applicability of the UCC and its four
year statute of limitations in two consolidated cases involving actions by dairy farmers against the sellers
and installers of milking equipment. In both cases, the plaintiffs argued that the UCC did not apply to
their cases because they were seeking to recover for injuries caused by the services that the defendants
provided rather than for any defect in the products provided. Id. at 533. The Court found that
plaintiffs' claims were not timely filed within the four-year statute of limitations under the UCC because
although the plaintiffs alleged negligent service by the defendants, such service was merely incidental to
the contract for the sale of goods. Id. at 535. The Court reasoned that "the purchase agreements
included no mention of installation or service, nor was any separate price stated for installation or
service." Id. Thus, the services were incidental to the contract for purchasing the milking system. Id.
This case is distinguishable from Neibarger because a separate oral contract was entered into
between plaintiff and defendants regarding service and payment for service of the milking equipment.
Unlike Neibarger, supra at 535, the services that defendants provided were not incidental to the sale of
the equipment but were governed by a separate oral agreement. Indeed, as opposed to service
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contracts where a flat fee is paid in advance to ensure that the equipment will be maintained for an
extended period of time, the oral agreements at issue here only required defendants to inspect the
milking equipment every year. Each visit was treated as a separate event, and the cost of these visits
varied according to the amount and type of work defendants’ service personnel had to perform.
Further, plaintiff does not claim faulty design or installation but he does allege negligent service in failing
to detect the dislodged washer. Accordingly, we do not believe that plaintiff’s claim is governed by the
UCC or its statute of limitations because it does not involve a contract for the sale of goods and the
service agreements at issue were not merely incidental to the purchase of the goods. Cf. Neibarger,
supra at 535.
Therefore, an issue of material fact remains regarding whether defendants owed plaintiff a duty
of care in the servicing of the milking system, and whether defendants breached that duty. Home Ins
Co v Detroit Fire Extinguisher Co, Inc, 212 Mich App 522, 528-529; 538 NW2d 424 (1995).
Plaintiff alleges he was relying on defendants to maintain the system after installation and make the
system operable after servicing. Id. Defendants, through their representative, acknowledged that their
annual maintenance program should have discovered the dislodged washer. Plaintiff further alleges that
defendants knew or should have known that plaintiff was relying on defendants’ service after installation
to make the milking system operable. Accordingly, defendants were not entitled to judgment as a
matter of law and the trial court's order granting defendants’ motion for summary disposition should be
reversed.
II.
Next, plaintiff argues that the trial court erred in ruling that even if plaintiff's claim were not
barred by the UCC's four-year statute of limitations, plaintiff's claim was barred because it was not filed
within three years of the time plaintiff discovered, or should have discovered, that he had a possible
cause of action.
Michigan's discovery rule states that "the period of limitation does not begin to run until the
plaintiff discovers, or through the exercise of reasonable diligence should have discovered, that he had a
possible cause of action." Brown v Drake-Willock Int'l, Ltd, 209 Mich App 136, 142; 530 NW2d
510 (1995), citing Thomas v Process Equipment Corp, 154 Mich App 78, 88; 397 NW2d 224
(1986). Once a plaintiff is aware of an injury and its possible cause, the plaintiff is aware of a possible
cause of action. Moll v Abbott Laboratories, 444 Mich 1, 24; 506 NW2d 816 (1993).
We addressed a case similar to this in Cartmell v The Slavik Co, 68 Mich App 202, 203
204; 242 NW2d 66 (1976). In Cartmell, supra, the plaintiffs brought an action against the installer of
the roof on their home after observing damage to their home caused by leaks in the roof. In holding that
the trial court properly submitted to the jury the issue of when plaintiffs' cause of action accrued, we
stated:
But for there to have been sufficient knowledge for the cause of action to accrue the
plaintiffs would have had to have known or should have known that there were leaks
that were caused by a failure of the tile or its installation. Knowing that there are leaks
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and knowing that there are leaks caused by faulty material or workmanship in the roof
are two different things. Plaintiffs may have suspected that the leaks were the fault of
the defendant, but they did not know this until 1974. [Id. at 206; emphasis in original.]
In this case, the trial court stated that although plaintiff did not discover the dislodged washer
until 1992, plaintiff "was well aware of defects within thirty days of purchase of this particular product
[and] that he continued to have problems throughout his use of this product and these products from
1987 up to and including 1992 when he found this stuck washer." Therefore, the trial court concluded
that even if the three-year statute of limitations applied, plaintiff failed to file his claim within three years
of the time that he "should have known or discovered the defect."
Plaintiff testified during his deposition that he began having problems "with not getting vacuum to
the milkers" within the first thirty days after the milking system was installed by defendant. Plaintiff
temporarily fixed this problem by removing the "trap" himself. Plaintiff stated that he did not have
problems with the system again until December 1988 after defendants performed their annual
maintenance service. Plaintiff then testified that sometime after the December 1988 servicing call, he
began experiencing "sentinel problems." Plaintiff could not recall the date on which these problems
began. On October 6, 1992, plaintiff discovered a dislodged washer in the "trap" of the milking system.
Defendants' agent testified that the loose washer could result in a slowdown of the washing action of the
water in the pipeline, which would increase the chances of bacteria building up in the pipe line.
A factual question exists regarding when plaintiff discovered or should have discovered a
potential negligence claim against defendants. As in Cartmell, it is one thing for plaintiff to know that he
is having problems with the milking system and another to know that the problems persisted because of
negligent service by defendants. It was not until plaintiff discovered the dislodged washer that he knew
the source of the problems. Because a factual question exists as to when plaintiff discovered or should
have discovered that he had a possible cause of action against defendants, defendants were not entitled
to judgment as a matter of law and the trial court's order granting defendant's motion for summary
disposition is reversed.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Jane E. Markey
/s/ Richard A. Bandstra
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