Warranty claims seeking personal injury damages are governed by 4-year UCC statute of limitations, says NM Supreme Court

If a plaintiff asserts a breach of warranty claim under the Uniform Commercial Code, and seeks damages for personal injuries, that claim is governed by the 4-year UCC statute of limitations, not the 3-year statute of limitations for tort claims.

So held the New Mexico Supreme Court in Badilla v. Wal-Mart Stores, Inc., in which the plaintiff, Kenneth Badilla, claims that he was injured when the sole on a pair of boots he was wearing came unglued while he was moving a 150-lb. log at work.

Badilla filed suit against Wal-Mart three years and two months later. Wal-Mart moved for summary judgment, arguing that the 3-year statute of limitations for tort claims applied because Badilla was seeking damages for personal injuries. In other words, although Badilla asserted breach of warranty claims, his real claim sounded in tort because he was seeking personal injury damages. The district court and Court of Appeals agreed with Wal-Mart.

The Supreme Court reversed. Chief Justice Vigil’s opinion explains that the plain language of the UCC allows a plaintiff to obtain damages for “injury to person or property proximately resulting from any breach of warranty,” and said it makes sense for a UCC breach of warranty claim should be governed by the UCC statute of limitations. This is the majority rule in the jurisdictions that have adopted the UCC, and the opinion stresses that it is important to maintain uniformity with other states that have adopted the UCC.

The opinion further rejects the notion (which finds expression in some other New Mexico cases) that the nature of the damages sought determines the nature of the claim for purposes of deciding with statute of limitations applies to a claim.

In response to this decision, businesses should consider, where appropriate, including a provision in contractual agreements for the sale of goods reducing the statute of limitations for warranty claims to one year, which is allowed by NMSA 1978, Section 55-2-715(2).

In addition, if a business is sued for personal injuries arising from breach of warranty claims, and the lawsuit is filed over three years after the alleged breach occurred, then the plaintiff is limited to the breach of warranty claims. Defense counsel should be vigilant and not allow plaintiffs to import evidence into such a case that may only be relevant to tort claims.

And if the plaintiff is seeking punitive damages for the breach of warranty, defense counsel should investigate the extent to which other states have limited the availability of punitive damages in UCC breach of warranty cases. After all, if uniformity across states is important when it comes to statute of limitation issues, it should be equally important where punitive damages are sought under the UCC.

 

 

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