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Full Opinion
United States Court of Appeals
For the First Circuit
Nos. 05-1737, 05-1831
LOCKHEED MARTIN CORPORATION, individually, doing business as,
and acting by and through "Lockheed Martin Missiles & Space"
and "Sanders, A Lockheed Martin Company",
Plaintiff, Appellant,
v.
RFI SUPPLY, INC., formerly known as RFI Communications &
Security Systems; GRINNELL CORPORATION, doing business as
Grinnell Fire Protection Systems Company; KIDDE-FENWAL, INC.,
Defendants,
RANTEC POWER SYSTEMS, INC.,
Defendant/Third-Party Plaintiff, Appellee/Cross-Appellant,
v.
FACTORY MUTUAL RESEARCH CORPORATION;
FACTORY MUTUAL INSURANCE COMPANY,
Third-Party Defendants, Cross-Appellees,
STAR SPRINKLER, INC.; ALLENDALE MUTUAL INSURANCE COMPANY,
Third-Party Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Torruella, Circuit Judge,
Campbell, Senior Circuit Judge,
and Lipez, Circuit Judge.
Randy W. Gimple, with whom Carlson, Calladine & Peterson, LLP
were on brief, for appellant.
Patrick J. Hagan, with whom J. Cross Creason, Dillingham &
Murphy, LLP, Richard B. Kirby and Keegan, Werlin & Pabian, LLP were
on brief, for appellee/cross-appellant Rantec Power Systems, Inc.
Jonathan D. Mutch, with whom James S. Harrington and Robins,
Kaplan, Miller & Ciresi, LLP were on brief, for cross-appellees
Factory Mutual Research Corp. and Factory Mutual Insurance Company.
March 17, 2006
-2-
TORRUELLA, Circuit Judge. This case involves three
parties: Plaintiff Lockheed Martin Corporation ("Lockheed"),
Defendant Rantec Power Systems, Inc. ("Rantec"), and Third-Party
Defendants Factory Mutual Research Corporation ("FMRC") and Factory
Mutual Insurance Corporation (collectively, the "FM Entities").
Lockheed appeals the district court's grant of Rantec's motion for
summary judgment against Lockheed. Rantec, in turn, appeals the
district court's grant of the FM Entities' motion for summary
judgment against Rantec. We affirm the district court's grant of
Rantec's motion for summary judgment against Lockheed and do not
reach the district court's grant of the FM Entities' motion for
summary judgment against Rantec.1
I. Factual Background and Procedural History
A. Lockheed and Rantec
Lockheed is an advanced technology company incorporated
in Maryland that also has its principal place of business in
Maryland. Rantec is a Delaware corporation with its principal
place of business in Missouri. Rantec designs and constructs
anechoic chambers.2 On April 15, 1992, Lockheed and Rantec entered
1
At oral argument, counsel for Rantec stated that Rantec would
withdraw its appeal regarding the grant of summary judgment in
favor of the FM Entities if we affirmed the grant of summary
judgment as to Lockheed's claims. Because we affirm that portion
of the district court's opinion, we do not reach Rantec's appeal.
2
An anechoic chamber is a steel shielded room padded with foam
material to absorb light and sound. These chambers are used by
Lockheed to test antenna signals for aerospace and military
-3-
into a written contract in which Rantec agreed to design and
construct an anechoic chamber at a Lockheed facility in Merrimack,
New Hampshire. As part of the contract, Rantec was required to
"design, fabricate, and install a fire detection and sprinkler
system" in the chamber. The contract contained a warranty clause
providing that "[a]ll equipment and workmanship shall be guaranteed
to be free from defects by [Rantec] for a period of one (1) year
after final acceptance, unless a different warranty is specified."
Rantec completed construction of the chamber in late 1992, and
final acceptance occurred in 1993.
The fire detection system consisted of, inter alia, smoke
detectors, fire alarms, valves, telescoping sprinkler assemblies
("TSAs"), and sprinkler heads. The TSAs were retracted above and
outside the chamber and were designed to extend into the chamber
when the detection system identified smoke or fire but not
immediately release water. Once the temperature exceeded a certain
level, a fusible link incorporated in the sprinkler head would melt
and water would be released into the chamber.
The present case stems from two incidents involving
flooding of Lockheed anechoic chambers. In December 1996, an
anechoic chamber at a Lockheed facility in California suffered
water damage when three of the TSAs broke and water flooded the
chamber. On March 27, 1997, the sprinkler system at the anechoic
applications.
-4-
chamber in New Hampshire malfunctioned. The fire suppression
system activated due to a defect in an electronic panel sold and
installed by another contractor not party to this suit. The TSAs
extended and some of the sprinkler heads broke and released a large
amount of water into the chamber. The foam and sub-flooring of the
chamber suffered $400,000 of damage. According to Lockheed, also
damaged by the flood were a pedestal and positioning system costing
over $160,000. These items were not provided under the contract
with Rantec. Lockheed did not include these items in its complaint
and did not amend its complaint to add these items.3
On December 20, 1999, Lockheed brought suit against
Rantec in the United States District Court for the Northern
District of California,4 alleging claims stemming from the
incidents in California and New Hampshire. On August 29, 2000, the
district court in California severed Lockheed's New Hampshire
claims, and the parties then stipulated to transfer the New
Hampshire claims to the United States District Court for the
District of Massachusetts. Lockheed raised the following claims
regarding the New Hampshire events: (1) negligence, (2) strict
liability, and (3) implied warranties.
3
A reading of Lockheed's complaint shows that it claimed damages
only to the anechoic foam and sub-flooring in the chamber, as well
as to the sprinkler assemblies.
4
The court had diversity jurisdiction under 28 U.S.C. § 1332.
All of Lockheed's claims involved state law.
-5-
B. Rantec and the FM Entities
FMRC performs testing, issues product standards, and
publishes a directory of "FM Approved" products for use in fire
suppression systems. Rantec's claims against the FM Entities
stemmed from FMRC's approval of Rantec's TSAs on the condition that
they be equipped with certain sprinkler heads -- the sprinkler
heads that broke when the TSAs extended into Lockheed's anechoic
chamber. After Lockheed sued Rantec, Rantec moved to add the FM
Entities as Third-Party Defendants pursuant to Rule 14(a) of the
Federal Rules of Civil Procedure. In their briefs, Rantec and the
FM Entities dispute when Rantec filed its Third-Party complaint
against the FM Entities. Because we are not reaching Rantec's
appeal regarding the grant of summary judgment in favor of the FM
Entities, we do not address this issue.
C. Proceedings Below
On April 12, 2001, Rantec moved for summary judgment
against Lockheed. The district court denied this motion on June 6,
2001. On September 30, 2003, the court stayed all further
proceedings pending resolution of the California litigation. The
district court reopened litigation on December 9, 2004. Rantec re-
filed its motion for summary judgment against Lockheed, and the FM
Entities moved for summary judgment against Rantec. On April 20,
2005, the district court granted Rantec's motion for summary
judgment against Lockheed and granted the FM Entities' motion for
-6-
summary judgment against Rantec. Regarding Lockheed's claims
against Rantec, the district court found that the economic loss
doctrine barred Lockheed's tort claims and that the implied
warranties' claims were barred by the statute of limitations.
Lockheed appealed on May 17, 2005. Rantec appealed on May 31,
2005.
II. Discussion
A. Standard of Review
"We review a district court's grant of summary judgment
de novo, viewing the facts in the light most favorable to the
nonmovant." Uncle Henry's, Inc. v. Plaut Consulting Co., 399 F.3d
33, 41 (1st Cir. 2005). Summary judgment is appropriate "if the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c). We may affirm a district court's grant of summary judgment
on any basis apparent in the record. Uncle Henry's, 399 F.3d at
41.
B. Lockheed's Tort Claims
The parties agree that New Hampshire law governs this
case. The district court found that, under New Hampshire law,
Lockheed's tort claims were barred by what is known as the economic
loss rule. Under the economic loss rule, a party generally may not
-7-
recover in tort for "economic loss." We begin by discussing how
the New Hampshire courts have defined "economic loss" and applied
the economic loss rule.
The New Hampshire Supreme Court has defined "economic
loss" as "the diminution in the value of a product because it is
inferior in quality," Ellis v. Robert C. Morris, Inc., 513 A.2d
951, 954 (N.H. 1986)(internal quotation marks omitted), overruled
on other grounds by Lempke v. Dagenais, 547 A.2d 290, 297-98 (N.H.
1988), and "that loss resulting from the failure of the product to
perform to the level expected by the buyer[, which] is commonly
measured by the cost of repairing or replacing the product,"
Lempke, 547 A.2d at 296. The New Hampshire Supreme Court has also
stated that "[w]hen a defective product accidentally causes harm to
persons or property, the resulting harm is treated as personal
injury or property damage. But when damage occurs to the inferior
product itself . . . the harm is characterized as economic loss."
Ellis, 513 A.2d at 954.5 The New Hampshire Supreme Court has also
noted that "[i]t is clear that the majority of courts do not allow
economic loss recovery in tort, but that economic loss is
recoverable in contract," Lempke, 547 A.2d at 296, and that a
party usually may not recover damages for economic loss via a tort
claim. See Border Brook Terrace Condo. Ass'n v. Gladstone, 622
5
As we will discuss below, the New Hampshire Supreme Court has
recently clarified this statement in Kelleher v. Marvin Lumber and
Cedar Co., -- A.2d --, 2005 WL 3429739 (N.H. Dec. 15, 2005).
-8-
A.2d 1248, 1253 (N.H. 1993). The district court found that the
flooding was caused by a malfunction of the anechoic chamber and
that the only thing damaged was the chamber itself. The district
court therefore concluded that Lockheed suffered only economic loss
and could not recover on its negligence or strict liability claims.
Lockheed argues that, under New Hampshire law, the
economic loss rule does not bar tort actions where a defect
"actually poses an affirmative risk of harm to persons or
property." Lockheed would have us look to how the damage occurred
and, if we find that the defect or accident posed an affirmative
risk to persons or property, find that its tort claims are not
barred by the economic loss rule.6 However, we see nothing in the
New Hampshire cases dealing with economic loss indicating that,
when determining whether or not loss is economic, the New Hampshire
courts would inquire into the risk posed by an accident or defect
in a product. Instead, the New Hampshire cases are clear that when
a product harms only itself, the loss is economic and may not be
recovered in tort. For example, in a recent New Hampshire Supreme
Court case, the court stated that "'[w]hen a defective product
6
In making this argument, Lockheed states that its view is
consistent with "that of the overwhelming majority of courts around
the country." We disagree. As the United States Supreme Court
noted in East River Steamship Corp. v. Transamerica Delaval, Inc.,
476 U.S. 858, 868 (1986), the majority of courts have held that a
party may not recover in tort when a product's malfunction damages
only the product itself, regardless of the manner in which the
damage occurred or the risk posed by the defect.
-9-
accidentally causes harm to persons or property [other than the
defective product itself], the resulting harm is treated as
personal injury or property damage.'" Kelleher v. Lumber --- A.2d
---, 2005 WL 3429739 at *12 (N.H. Dec. 15, 2005) (quoting Ellis,
513 A.2d at 954)(alteration in original)(emphasis added). The
court went out of its way to add the phrase "other than the
defective product itself," which was not present in Ellis. The
implication of this statement is that, when a defective product
accidentally causes harm to itself, that harm is not treated as
personal injury or property damage but is instead treated as
economic loss, which is not recoverable in tort. The New Hampshire
Supreme Court has therefore clearly rejected the logic behind
Lockheed's argument.
We also think that this approach comports with the
policies behind several fundamental tenets of contract and tort
law. Lockheed argues that the purpose of the economic loss
doctrine is to distinguish between a product that fails to perform
as promised and a product whose defect poses an actual risk of
injury or damage, and that the dividing line between tort and
contract should not hinge on the fortuity of what happened to be
damaged. To our knowledge, the New Hampshire courts have not
explicitly addressed these arguments. However, the United States
Supreme Court has done so in East River S.S. Corp. v. Transamerica
Delaval, Inc., 476 U.S. 858 (1986). In East River, an admiralty
-10-
case, the Court discussed the merits of the majority view of the
economic loss doctrine -- that damage to a product caused by that
product is economic loss and not recoverable in tort -- as well as
the view argued by Lockheed -- that the economic loss doctrine
should turn on the affirmative risk posed by the defective product.
In rejecting the position advocated by Lockheed, the Court stated
that such a position, "which essentially turn[s] on the degree of
risk, [is] too indeterminate to enable manufacturers easily to
structure their business behavior." Id. at 870. The Court also
stated that
[t]he distinction that the law has drawn
between tort recovery for physical injuries
and warranty recovery for economic loss is not
arbitrary and does not rest on the "luck" of
one plaintiff in having an accident causing
physical injury. The distinction rests,
rather, on an understanding of the nature of
the responsibility a manufacturer must
undertake in distributing his products. When
a product injures only itself the reasons for
imposing tort duty are weak and those for
leaving the party to its contractual remedies
are strong.
Id. at 871 (citation and internal quotation marks omitted).7 As
the Court noted, "[e]ven when the harm to the product itself occurs
through an abrupt, accident-like event, the resulting loss due to
repair costs, decreased value, and lost profits is essentially the
7
While the Court was not speaking about New Hampshire law, and
its decision is therefore not controlling in this case, we think
that its policy rationale applies in full force, especially
considering our finding that New Hampshire has adopted the majority
view of the economic loss doctrine.
-11-
failure of the purchaser to receive the benefit of its bargain --
traditionally the core concern of contract law."8 Id. at 870.
Further, Lockheed's position would eviscerate the line
between tort and contract and would allow tort, in many ways, to
swallow up contract law. As the Supreme Court noted in East River,
"[p]roducts liability grew out of a public policy judgment that
people need more protection from dangerous products than is
afforded by the law of warranty. It is clear, however, that if
this development were allowed to progress too far, contract law
would drown in a sea of tort." Id. at 866 (citation omitted).
Lockheed's view would lead to just that result. It would allow any
party who suffered damage as a result of a product's malfunction to
bring a tort claim by asserting that the malfunction occurred in a
8
Lockheed admits that if there had been a fire in the chamber but
the sprinkler system failed to extinguish it, or if the sprinkler
system had interfered with the chamber's ability to send or receive
signals, then it would likely be barred by the economic loss
doctrine because these situations would have involved a failure of
the chamber to perform. Lockheed attempts to distinguish these
situations from the flooding of the chamber, arguing that the
flooding had nothing to do with the chamber's ability to perform.
However, we see no difference between the situations. Part of the
chamber's ability to perform was the fire suppression system's
ability to extend the TSAs into the chamber if there was a fire but
not release water until a certain temperature was reached. Here,
there were two failures to perform: (1) the sprinklers descended
into the chamber when there was not a fire, and (2) the sprinklers
released water into the chamber even though there was no fire.
This latter occurrence was, in many ways, a failure of the
sprinkler system to perform one of its most basic functions -- to
not release water into the chamber simply because the TSAs had been
deployed. We therefore reject Lockheed's attempts to distinguish
the present situation from other situations where it admits that
there would be a failure of performance.
-12-
way that might have harmed another person or property, regardless
of whether any other person or property was actually harmed. We
think the better approach is to look at what in fact happened, not
what could have happened.
In sum, it is clear from the New Hampshire cases,
especially Kelleher, the New Hampshire Supreme Court's most recent
case regarding the economic loss rule, that New Hampshire has
adopted the majority view of the economic loss rule which the
Supreme Court discussed in East River. Therefore, if the flooding
caused by the allegedly defective sprinkler systems damaged only
the product itself, then the economic loss rule prohibits Lockheed
from recovery on its tort claims.
We turn now to address whether the flooding damaged only
the product itself. Lockheed makes two arguments regarding this
issue. First, it argues that the fire suppression system and the
anechoic chamber were different products, and that the defect in
the fire suppression therefore damaged another product -- the
anechoic chamber. However, as Rantec points out, the parties'
contract for the anechoic chamber included the fire suppression
system as a component part of the chamber, not a separate product.
As part of the contract, the parties included a document entitled
"Tapered Anechoic Chamber, Compact Range Chamber Technical
Specification." Paragraph 1.0 of this document, entitled
"Introduction," stated that "[t]his document provides specification
-13-
information for a tapered anechoic chamber . . . ." Paragraph 2.0,
entitled "Tapered Anechoic Chamber and Control Room," stated that
"[t]he specification is for a tapered anechoic chamber to be used
as a general purpose facility for RCS test and antenna pattern
measurements . . . . The contractor will design, fabricate, and
test the chamber, including all HVAC, fire detection and
suppression" utilities. From these provisions, it is clear that
the fire suppression system was a component part of the anechoic
chamber according to the technical specifications for the chamber
agreed upon by the parties. The anechoic chamber and fire
suppression system are therefore properly regarded as a single
unit. As the Supreme Court noted in East River, "[s]ince all but
the very simplest of machines have component parts, [a contrary]
holding would require a finding of property damage in virtually
every case where a product damages itself." 476 F.3d at 867
(internal quotation marks and citation omitted).
Lockheed's second argument is that there were in fact
other items in the chamber when it was flooded: a pedestal and
positioning system. However, as Rantec points out, Lockheed never
mentioned these items in its complaint and never amended its
complaint to include these items.9 Lockheed attempts to get around
9
The district court rejected Lockheed's argument on the basis
that Lockheed had failed to point to any evidence that the damage
to this property exceeded $75,000. Because we think the fact that
Lockheed never mentioned this other property in its complaint is
sufficient to dispose of its argument, we do not address this point
-14-
this issue by arguing that, under the Federal Rules of Civil
Procedure's notice pleading standard, it was not required to
itemize its damages in the complaint. Lockheed also argues that
the complaint, fairly read, gave notice to Rantec that these other
items were in the chamber. We disagree for several reasons.
First, while the Federal Rules of Civil Procedure require only
notice pleading, there is nothing in the complaint that would put
Rantec on notice that Lockheed was claiming anything other than
damage to the chamber itself. A review of the complaint reveals no
mention of other items in the chamber. Instead, the complaint
repeats several times that "plaintiff's anechoic chambers were
doused with water and severely damaged." Lockheed also specified
that the "anechoic foam and sub-flooring in the chamber" was
damaged. Nothing in the complaint provides the slightest
indication that there were other items in the chamber or that
Lockheed suffered damage to anything other than the chamber itself.
We see no reason to allow Lockheed to claim damage to other items
when it never bothered to mention or even hint toward damage to
anything beyond the anechoic chamber itself in the complaint.
Second, in reviewing the New Hampshire cases dealing with
the economic loss doctrine, it is clear that the New Hampshire
courts have looked to the complaint to determine whether the
damages claimed by a plaintiff were economic loss. See Border
made by the district court.
-15-
Brook Terrace Condo. Ass'n, 622 A.2d at 1253 (looking to the
"plaintiffs' writ" in determining whether plaintiffs suffered only
economic loss); Ellis, 513 A.2d at 954 ("The plaintiffs' claim does
not involve property damage per se. Rather, the writ alleges
economic loss resulting from the defendant's failure to properly
perform a contractual obligation.")(emphasis added).10 Although it
is not controlling under the Federal Rules of Civil Procedure, we
find the approach of the New Hampshire courts instructive. Because
Lockheed failed to give any indication in its complaint that it was
alleging damage to anything other than the anechoic chamber, we
will not consider alleged damage to the pedestal and positioning
system in this appeal.
C. Lockheed's Implied Warranties Claims
Lockheed also brought claims for breach of implied
warranties under New Hampshire's Uniform Commercial Code ("UCC").11
The district court assumed, arguendo, that the contract was
10
It is clear from the New Hampshire cases that a "writ" used in
this context is synonymous with "complaint." See, e.g., Buckingham
v. R.J. Reynolds Tobacco Co., 713 A.2d 381, 383 (N.H. 1998)("With
regard to count I of the plaintiff's writ, we hold that the
plaintiff has failed to state a claim upon which relief may be
granted because the complaint does not allege that the product was
'defective' and 'unreasonably dangerous' as separate elements.")
(emphasis added).
11
Lockheed could not bring any express warranty claims because the
warranty in the contract was for one year and had long expired.
-16-
governed by the UCC.12 The court then found that the UCC's statute
of limitations -- codified as N.H. Rev. Stat. § 382-A:2-725
("Section 2-725") -- applied to Lockheed's claims. Section 2-725
provides for a four-year statute of limitations commencing at the
time the cause of action accrues. N.H. Rev. Stat. Ann. § 382-A:2-
725(1). The statute also provides
A cause of action accrues when the breach
occurs, regardless of the aggrieved party's
lack of knowledge of the breach. A breach of
warranty occurs when tender of delivery is
made, except that where a warranty explicitly
extends to future performance of the goods and
discovery of the breach must await the time of
such performance the cause of action accrues
when the breach is or should have been
discovered.
Id. § 382-A:2-725(2).
The district court found that Lockheed accepted the
chamber in 1993 and did not file its complaint until 1999. The
court therefore found that Lockheed's claims were barred by the
statute of limitations. The court, moreover, found no reason for
equitable tolling.
On appeal, Lockheed makes two arguments. First, it
argues that the statute of limitations in Section 2-725 does not
apply to its case. Alternatively, it argues that equitable tolling
12
Below, Rantec argued that the UCC did not apply to the contract
and that Lockheed could therefore not bring any claims under the
UCC. The district court did not address this argument. Rantec has
also made this argument before us, but we need not address it given
our disposition of Lockheed's implied warranties claims. Like the
district court, we will assume, arguendo, that the UCC applies.
-17-
applies. We address each argument in turn. According to Lockheed,
the substance of its action "is not a malfunctioning of the
anechoic chamber, but rather, sudden flooding and resulting
property damage." As a result, Lockheed argues, the substance of
this action is a tort claim for property damage and therefore the
applicable statute of limitations is found in N.H. Rev. Stat. Ann.
§ 508:4 ("Section 508:4"), which provides a three-year statute of
limitations for "personal actions." Section 508:4 also explicitly
contains a discovery rule exception to the statute of limitations,
which is why Lockheed is attempting to persuade us that Section
508:4 applies.13
We reject Lockheed's argument for two reasons. First, in
its complaint, Lockheed brought tort claims and contract claims.
We have already disposed of Lockheed's tort claims, leaving only
the contract claim for implied warranties, and both the form and
substance of this claim appear to us to be a contract claim.
13
Section 508:4 states, in relevant part, that
Except as otherwise provided by law, all personal
actions, except actions for slander or libel, may be
brought only within 3 years of the act or omission
complained of, except that when the injury and its causal
relationship to the act or omission were not discovered
and could not reasonably have been discovered at the time
of the act or omission, the action shall be commenced
within 3 years of the time the plaintiff discovers, or in
the exercise of reasonable diligence should have
discovered, the injury and its causal relationship to the
act or omission complained of.
N.H. Rev. Stat. Ann. § 508:4.
-18-
Further, given our discussion of the economic loss rule, it is
clear that the damage Lockheed suffered was "the failure of the
product to function properly[, which] is the essence of a warranty
action . . . ." East River, 476 U.S. at 868. In other words, the
substance of this action is a malfunctioning anechoic chamber, not
"sudden flooding and resulting property damage" as Lockheed claims.
Given this, we see no reason to allow Lockheed to convert its
contract claim for implied warranty into a tort claim. Second, all
of the cases involving a warranty claim brought under New
Hampshire's UCC have used Section 2-725's statute of limitations.
See Gagnon v. G.D. Searle & Co., 889 F.2d 340, 343 (1st Cir. 1989)
("The statute of limitations applicable to [appellant's] breach of
warranty claim requires that an action be commenced 'within four
years after the cause of action has accrued.'")(quoting N.H. Rev.
Stat. Ann. § 382-A:2-725(1)); Pub. Serv. Co. of New Hampshire v.
Westinghouse Elec. Corp., 685 F. Supp. 1281, 1284 (D.N.H. 1988)
("Actions for breach of implied warranties are also subject to the
UCC four-year statute of limitations . . . ."); Morrissette v.
Sears, Roebuck & Co., 322 A.2d 7, 11-12 (N.H. 1974).14 We therefore
14
We do not find Lockheed's attempts to distinguish these cases
persuasive. For example, Lockheed argues that in Gagnon, we held
that "both the then-six year statute of limitations under N.H. Rev.
Stat. Ann. § 508:4 and the four year statute of limitations under
N.H. Rev. Stat. Ann. 382-A:2-725 had expired" before the suit was
brought, and we therefore did not consider which limitations period
applied. However, this argument ignores the fact that in Gagnon,
we explicitly divided the plaintiff's claims into tort claims and
warranty claims. For the tort claims, we stated that Section 508:4
-19-
find that Lockheed's implied warranties claims brought under the
UCC are subject to the UCC's statute of limitations.
Lockheed's second argument is that, even if we apply
Section 2-725's limitations period, equitable tolling should apply.
The district court rejected this argument, finding no evidence
sufficient to create a genuine issue as to whether equitable
tolling should apply. We agree. Lockheed notes that Section 382-
A:725(4) states that the UCC statute of limitations "does not alter
the law on tolling of the statute of limitations . . . ." It also
notes that the New Hampshire Supreme Court has recently recognized
equitable tolling in other contexts and that equitable tolling
should apply here.15 See Portsmouth Country Club v. Town of
Greenland, 883 A.2d 298, 304 (N.H. 2005). However, Portsmouth
Country Club involved a tax abatement proceeding with a different
statute of limitations, not an implied warranty claim governed by
Section 2-725's statute of limitations. Given the fact that the
applied, Gagnon, 889 F.2d at 342, and for the warranty claims, we
specifically stated that Section 2-725 applied, id. at 343.
15
Lockheed's argument is somewhat confusing in that it sometimes
appears to conflate equitable tolling and the discovery rule. For
example, in arguing for equitable tolling, Lockheed states that
"the New Hampshire legislature has specifically endorsed and
codified the discovery rule, a form of equitable tolling, for
appropriate actions." While related, equitable tolling and the
discovery rule are distinct doctrines. Further, while New
Hampshire has adopted the discovery rule for tort actions covered
by Section 508:4, it has recently rejected a discovery rule
exception for implied warranty claims governed by Section 2-725.
See Kelleher, 2005 WL 3429739, at *27.
-20-
New Hampshire Supreme Court has recently stated that the discovery
rule is not applicable in implied warranties claims governed by
Section 2-725, it is likely that court would also find that
equitable tolling is inapplicable, especially considering Section
2-725's statement that "[a] cause of action accrues when the breach
occurs, regardless of the aggrieved party's lack of knowledge of
the breach." N.H. Rev. Stat. Ann. § 382-A:2-725(2). Morever, even
if the New Hampshire Supreme Court were to allow equitable tolling
for certain claims governed by Section 2-725, such relief is
unavailable here. Portsmouth Country Club noted that equitable
tolling "is typically available only if the claimant was prevented
in some extraordinary way from exercising his or her rights . . . .
It applies principally if the plaintiff is actively misled by the
defendant about the cause of action." 883 A.2d at 304 (emphasis
added)(citation and internal quotation marks omitted). Here,
Lockheed has not even attempted to argue that it was actively
misled by Rantec about its cause of action. Further, we see
nothing extraordinary about what happened. This is a case of a
party who received a product that malfunctioned several years after
purchase. Such cases occur all the time, and we see no reason to
apply the rarely used doctrine of equitable tolling to Lockheed's
case. We therefore find that Lockheed's implied warranties' claims
are barred by the four-year statute of limitations period in
Section 2-725.
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III. Conclusion
For the foregoing reasons, we affirm the district court's
grant of summary judgment in favor of Rantec as to Lockheed's
claims. Rantec's appeal regarding the district court's grant of
summary judgment in favor of the FM Entities is withdrawn.
Affirmed.
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