Please ensure Javascript is enabled for purposes of website accessibility
Home / Opinion Digests / Improper installation suit goes forward

Improper installation suit goes forward

Where the installer of a grain elevator that was sued for improper installation argued the suit was barred by the statute of limitations, but a longer statute of limitations applied to written contracts for services, and it was possible to construe the agreement here as a signed contract for services, its summary judgment motion was denied.

Background

Plaintiff’s 115-foot grain elevator collapsed on a windy day in April of 2017, causing more than half a million dollars of property damage. Plaintiff sued defendant, who sold and assembled the elevator just six months prior to its failure. According to plaintiff, defendant breached his implied duty of care by improperly installing two stabilizing systems that would have prevented the elevator from falling.

Defendant has moved for summary judgment, contending that the statute of limitations has run on plaintiff’s claim. The question comes down to which of Virginia’s statutory periods applies: (1) that relating to the sale of goods, (2) that relating to unsigned contracts for services or (3) that relating to signed contracts for services. Plaintiff’s claim is time-barred if governed by the first two provisions. But it is timely under the third.

Services

Title 8.2 of the Virginia Code is intended to apply to transactions for goods. The term “goods” includes things “which are movable at the time of identification to the contract for sale” and cannot include fixtures to reality unless intended “to be severed from realty.” That definition would appear necessarily to exclude the contract at issue here, which is for the construction of a grain handling and storage facility consisting of a 115-foot elevator and three large silos capable of holding an aggregate of nearly 200,000 bushels of grain.

Even if the transaction were thought to involve both goods and services, a factfinder could reasonably conclude that the UCC statute is inapplicable. Where hybrid contracts are at issue, the applicability of UCC provisions depends on whether the predominant purpose of the transaction is the rendition of services (with goods incidentally involved) or the sale of goods (with labor incidentally involved).

The following three factors are considered helpful in determining the primary purpose of a contract: “(1) the language of the contract; (2) the nature of the business of the supplier; and (3) the intrinsic worth of the materials.” Following these guideposts, and viewing the facts in the light most favorable to plaintiff, a factfinder could reasonably conclude that the underlying transaction primarily concerned services.

First, although it is certainly true that more text in the “Estimate/Contract” documents is devoted to describing the materials necessary to complete plaintiff’s project, the text also reflects that the assembly of those materials was a major aspect of what was bargained for. The contract quoted tens of thousands of dollars for labor.

Second, the record shows that the nature of defendant’s business required the expert judgment of engineers, heavy machinery, custom components and the skill of on-site welders. It is also significant that defendant was not the manufacturer or retailer of the raw materials involved. The only value added by defendant was in delivery and assembly.

And third, while the cost of materials predominated over the cost of defendant’s labor, that is genuinely true of construction contracts, which are nevertheless almost uniformly considered contracts for services. As with a contract with an artist for a painting, where the buyer’s purchase of canvas and paints is incidental to the artist’s provision of services, it would not be unreasonable to conclude that plaintiff’s purchase of premanufactured elevator parts was incidental to the provision of defendant’s services in assembling the elevator.

Signature

Defendant sent “Contract/Estimate” documents to plaintiff as email attachments, with the body of defendant’s emails containing a cost summary and defendant’s electronic signature, and the first email in each exchange also containing an instruction in the body of the email that plaintiff “return with your written approval and a 10% deposit to order.”

Virginia’s Uniform Electronic Transactions Act provides that an “electronic signature” is any “symbol … attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” Given the relevant context, and the plain language of the statute, the court concludes that a rational jury could find that defendant’s name in the signature line was “attached to or logically associated” with plaintiff’s offers “with the intent to sign.” If so, defendant’s electronic signature has the same legal effect as any pen-and-ink signature.

Defendant’s motion for summary judgment denied.

Herren Farms LLC v. Martin, Case No. 3:21-cv-00025, July 18, 2022. WDVA at Charlottesville (Moon). VLW 022-3-301. 9 pp.

VLW 022-3-301