R.J. Meyers Company v. Reinke Manufacturing Company, Inc., and Hook's Point Irrigation , 885 N.W.2d 429 ( 2016 )

IN THE COURT OF APPEALS OF IOWA
No. 15-0311
Filed April 6, 2016
R.J. MEYERS COMPANY,
Plaintiff-Appellant,
vs.
REINKE MANUFACTURING
COMPANY, INC., and HOOK’S
POINT IRRIGATION,
Defendants-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Benton County, Christopher L.
Bruns, Judge.
The plaintiff appeals from the adverse grant of summary judgment in this
action for breach of warranty. AFFIRMED.
David J. Dutton and Erich D. Priebe of Dutton, Braun, Staack & Hellman,
P.L.C., Waterloo, for appellant.
David L. Riley of McCoy, Riley & Shea, P.L.C., Waterloo, for appellee
Hook’s Point Irrigation.
Todd W. Weidemann and Ryan A. Kehm of Woods & Aitken, L.L.P.,
Omaha, Nebraska, for appellee Reinke Manufacturing Company.
Heard by Danilson, C.J., and Mullins and McDonald, JJ.
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MCDONALD, Judge.
This case comes before the court on appeal following the grant of
summary judgment in favor of defendants Reinke Manufacturing Company, Inc.,
and Hook’s Point Irrigation and adverse to plaintiff R.J. Meyers Company. The
legal dispute arises out of an allegedly defective irrigation system Hook’s Point
sold to Meyers.
I.
Jim Meyers, age sixty five, is the sole proprietor of R.J. Meyers Company.
Meyers is in the sodding and turf business. Meyers started the company in 2010,
but he has more than four decades of experience in the industry. Reinke is a
manufacturer of irrigation systems. Hook’s Point is in the business of selling and
servicing irrigation systems, and it is a non-exclusive dealer of Reinke products.
In January 2011, Meyers had coffee with Mark Stumpenhorst to discuss
his need for an irrigation system. Stumpenhorst was a representative of Hook’s
Point.
In July of 2011, Hook’s Point sent an irrigation system proposal to Meyers.
The proposal contained an acknowledgment that “Purchase of the system
described above will be subject to the Terms and Conditions of the Irrigation
System Purchase Agreement between the Dealer and the Customer, including
but not limited to the Reinke Irrigation Systems Warranty.”
In August or September of 2011, Meyers purchased an irrigation system
from Hook’s Point for Meyers’ 154-acre sod farm. The purchase agreement was
solely between Meyers and Hook’s Point. Reinke was the manufacturer of the
irrigation system sold by Hook’s Point to Meyers. Meyers admitted he signed the
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purchase agreement, but the parties were not able to find the signed copy during
discovery in this matter. An unsigned copy of the purchase agreement was sent
to Meyers via email in September 2011. There is no genuine dispute the
unsigned purchase agreement attached to the September email is an accurate
copy of the parties’ purchase agreement. The purchase agreement contained an
acknowledgment the “dealer has provided me with a copy of the Reinke irrigation
Systems Warranty.” The form also provided, “I acknowledge receipt of the
Warranty and have read the terms contained in the Warranty.”
The purchase agreement included a copy of Reinke’s Certificate of
Warranty and the full warranty. Meyers signed a warranty certification on
October 9, 2011, stating the dealer explained the warranty to him. The
Certificate of Warranty provided the unaltered irrigation system “will be free from
defects in materials and workmanship” and identified several particulars. The
Certificate of Warranty provided any defective components “within the coverage
of this Limited Warranty,” “shall be repaired or replaced, at Reinke’s sole option.”
The terms and conditions of the warranty provided:
REINKE IS NOT LIABLE FOR ANY REPRESENTATIONS MADE
BY ANY DEALER THAT EXCEED THE TERMS OF THIS
WRITTEN LIMITED WARRANTY. Neither Reinke nor the Dealer
shall be liable for actual or consequential damages due to any
delays or defaults in making delivery occasioned by any cause.
Delivery of the components of the Irrigation System by an
approximate date is subject to the availability of such components.
It is understood that any date specified is an estimated and
projected delivery date between the Dealer and Purchaser. THE
IRRIGATION SYSTEM COVERED BY THIS WARRANTY IS
SOLD SUBJECT TO THE MANUFACTURER'S WARRANTY
ONLY. THE IRRIGATION SYSTEM MANUFACTURED BY
REINKE SHALL BE SUBJECT TO THE LIMITED WARRANTY
SET FORTH HEREIN, WHICH THE DEALER ADOPTS AND
EXTENDS TO THE PURCHASER. . . . .
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D. LIMITATIONS OF LIABILITY
REINKE AND PURCHASER AGREE THAT, IN CONSIDERATION
OF THE LIMITED WARRANTY EXPRESSED HEREIN, ALL
OTHER WARRANTIES OTHER THAN TITLE, EITHER EXPRESS
OR IMPLIED, WHETHER ARISING UNDER LAW OR IN EQUITY,
INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ARE EXCLUDED. . . . .
REINKE AND PURCHASER AGREE THAT THE PURCHASER’S
SOLE AND EXCLUSIVE REMEDY FOR ANY DEFECTS IN THE
IRRIGATION SYSTEM DELIVERED HEREUNDER SHALL BE
LIMITED TO THE REPAIR AND REPLACEMENT (IN REINKE’S
SOLE DISCRETION) OF DEFECTIVE PARTS AS SPECIFIED IN
THIS LIMITED WARRANTY. THIS LIMITED WARRANTY SHALL
NOT APPLY WITH RESPECT TO ANY CLAIMED DEFECT IN
THE IRRIGATION SYSTEM WHICH IN REINKE’S JUDGMENT
HAS ARISEN FROM REPAIR NOT AUTHORIZED OR
PERFORMED BY REINKE OR THE DEALER, FROM
ALTERATIONS OR MODIFICATIONS IN THE IRRIGATION
SYSTEM, OR FROM PURCHASER’S MISUSE, NELIGENCE OR
ACCIDENT.
NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS
LIMITED WARRANTY, IN NO EVENT SHALL REINKE OR ITS
DEALERS BE LIABLE, WHETHER ARISING UNDER
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY OR OTHERWISE, FOR LOSS OF USE OF THE
IRRIGATION SYSTEM; ANTICIPATED BUSINESS OR PROFITS
(INCLUDING ANTICIPATED LEASE PAYMENTS); CROP
DAMAGES; TRANSPORTATION, TOWING OR RELATED
EXPENSES DUE TO REPAIRS, NON-OPERATION, REDUCED
OPERATION OR INCREASED EXPENSE OF OPERATION;
COST OF PURCHASED OR LEASED REPLACEMENT
EQUIPMENT; COSTS DUE TO DELAYS OR DEFAULTS IN
MAKING DELIVERY OR INSTALLATION OF THE IRRIGATION
SYSTEM, REPLACEMENT EQUIPMENT OR ANY COMPONENT
THEREOF; COST OF MONEY; LOSS OF USE OF CAPITAL OR
REVENUE; LOSS OF PURCHASER'S TIME; OR FOR ANY
CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR
INCIDENTAL LOSS OR DAMAGE OF ANY NATURE ARISING
AT ANY TIME OR FROM ANY CAUSE WHATSOEVER ARISING
OUT OF OR IN CONNECTION WITH THE IRRIGATION SYSTEM
OR THE USE THEREOF OR ARISING OUT OF A BREACH OF
THE PURCHASE CONTRACT OR ANY WARRANTIES ARISING
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THEREFROM OR FOR SPECIAL OR GENERAL DAMAGES
ARISING FROM ANY ACTS OF NEGLIGENCE OF REINKE OR
DEALER, WHETHER SUCH CLAIMS ARE MADE BY
PURCHASER OR ANY SUBSEQUENT OWNER, PURCHASER,
LESSOR OR LESSEE OF THE IRRIGATION SYSTEM, OR ANY
RELATED SUCCESSOR IN INTEREST THERETO.
MANUFACTURER DISCLAIMS ALL LIABILITY FOR ANY
MODIFICATIONS MADE TO THE IRRIGATION SYSTEM FROM
THE TIME IT LEAVES MANUFACTURER'S CUSTODY. NO
CLAIM BY PURCHASER OF ANY KIND SHALL BE GREATER IN
AMOUNT THAN THE NET PURCHASE PRICE OF THE
IRRIGATION SYSTEM.
Hook’s Point started installation of the Reinke-manufactured irrigation
system in September 2011. Hook’s Point completed installation of the irrigation
system on October 21. Meyers alleges the system “has never suitably performed
for Meyers’ sod farm.” Meyers claims the irrigation system has suffered
numerous, system-wide problems. Some of the identified problems include
leaks, automatic shutdown due to malfunction, operation at pressure levels that
exceed the system’s limits, uneven watering resulting in crop loss, excessive
rutting, the failure to start, and uncontrolled automated spraying. Meyers’ expert,
Jerry Hall, opined the irrigation system was inappropriately designed for the sod
farm and was defective. The defendants claim Meyers modified the irrigation
system and caused many of the problems. Without regard to who or what
caused problems with the irrigation system, it is not disputed that Hook’s Point
responded to numerous service calls regarding problems with the irrigation
system from the time of installation going forward. Stumpenhorst stated, “I have
never made this many service calls to one person in this amount of time.” The
first day of operation of the irrigation system was on October 21, 2011. There
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were fifty-five service calls, phone calls, or parts requests from October 22, 2011
to September 9, 2013.
Dissatisfied with the irrigation system, Meyers filed this suit against Hook’s
Point and Reinke in September 2013. In his petition, Meyers asserted claims for
“breach of the implied warranty of fitness” and “breach of the purchase contract.”
Meyers identified the purchase date as “August of 2011.” Meyers sought
damages for crop loss, damage to the sod farm, emotional distress for not being
able to rely on an adequate and constant flow of water in the irrigation system,
and other damages. The defendants moved for summary judgment, and Meyers
sought leave to file an amended petition. In the amended petition, Meyers
asserted claims for breach of contract, breach of the implied warranty of fitness
for a particular purpose, and breach of the implied warranty of merchantability.
Subsequently, the defendants filed additional summary judgment papers
addressing the impact of the proposed amended petition.
The district court granted the motion to file the amended petition and then
ruled on the defendants’ motions for summary judgment. The district court
concluded the parties entered into a purchase agreement in August of 2011, the
terms of the purchase agreement were set forth in the unsigned purchase
agreement attached to the September 2011 email, and the terms of the purchase
agreement included Reinke’s manufacturer’s warranty, warranty disclaimers, and
limitations of remedies. The district court also concluded there was no disputed
issue of fact that Meyers was provided with the warranty information and had an
opportunity to review the same prior to entering into the purchase agreement.
With respect to the breach of contract claim against Reinke, the district court
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concluded the claim failed as a matter of law because there was no privity of
contract between Reinke and Meyers. With respect to Meyers’ claims for breach
of the implied warranties of fitness for a particular purpose and merchantability,
the district court held the disclaimers of the implied warranties were conspicuous,
Meyers was provided with the disclaimers and had the opportunity to read them,
and the disclaimers were thus effective and enforceable. See Iowa Code §
554.1201(2)(j) (2013) (defining conspicuous); Iowa Code § 554.2316 (providing
for disclaimers of warranties). The district court thus granted Reinke’s and
Hook’s Point’s motions for summary judgment on these claims. The district court
denied Reinke’s motion for summary judgment with respect to Meyers’ claim for
breach of the express warranty, concluding there was a triable issue of fact on
whether Reinke honored the express warranty. The district court granted Hook’s
Point’s motion for summary judgment on the express warranty claim, holding the
claim lied solely against Reinke and not Hook’s Point.
Meyers filed a motion to reconsider, amend, or enlarge following the
district court’s ruling on summary judgment. In his motion, Meyers argued he
did not have the opportunity to respond to the defendants’ additional summary
judgment filings. The district court denied the motion. In the ruling on the motion
to reconsider, the district court concluded it should have denied Meyers’ motion
for leave to amend as futile. The district court amended its prior ruling and
denied the plaintiff’s motion for leave to amend. The district court next
addressed the merits of the motion, noting plaintiff’s counsel conceded during
hearing on the motion “that if the court finds the warranty limitation and exclusion
provisions on which the summary judgment motions are based were part of the
8
parties’ contract, then the only claims Plaintiff has that might survive are claims
for breach of the express written warranty.” The district court concluded there
was no genuine issue of fact on whether the warranty disclaimers and limitations
of remedies were part of the parties’ contract, and denied the motion. The district
court reaffirmed “the only claim that has survived the summary judgment motions
in this case is whatever claim plaintiff has for breach of Reinke’s express written
warranty.”
After the district court denied the plaintiff’s motion to reconsider, amend, or
enlarge, the plaintiff sought permission to voluntarily dismiss his remaining claim
for breach of the express warranty. The district court granted the motion and
dismissed the claim. Meyers timely filed this appeal.1
II.
“This court reviews a district court decision to grant or deny a motion for
summary judgment for correction of errors at law.” Griffin Pipe Prods. Co.. v. Bd.
of Review, 789 N.W.2d 769, 772 (Iowa 2010). “Summary judgment is
appropriate where there is no genuine issue of material fact and the moving party
is entitled to a judgment as a matter of law.” Id. The party resisting the motion
“cannot rely on the mere assertions in his pleadings but must come forward with
evidence to demonstrate that a genuine issue of fact is presented.” Stevens v.
1
Hook’s Point contends the voluntary dismissal of the express warranty claim divests
this court of appellate jurisdiction because there is no pending litigation. The claim is
without merit and need not be addressed any further. See Estate of Countryman v.
Farmers Coop. Ass’n, 679 N.W.2d 598, 601-02 (Iowa 2004) (concluding there was
pragmatic finality and the court had jurisdiction over appeal where several claims were
resolved on summary judgment and others subsequently voluntarily dismissed following
settlement).
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Iowa Newspapers, Inc., 728 N.W.2d 823, 827 (Iowa 2007). “The court reviews
the evidence in the light most favorable to the nonmoving party.” Griffin Pipe
Prods. Co., 789 N.W.2d at 772. The court indulges in every legitimate inference
the evidence will bear in an effort to ascertain the existence of a genuine issue of
material fact. See Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa
2000). “A fact is material if it will affect the outcome of the suit, given the
applicable law.” Parish v. Jumpking, Inc., 719 N.W.2d 540, 543 (Iowa 2006). An
issue of fact is “genuine” if the evidence would allow a reasonable jury to return a
verdict for the nonmoving party. See Fees v. Mut. Fire & Auto. Ins. Co., 490
N.W.2d 55, 57 (Iowa 1992).
If the summary judgment record shows that the “resisting party has no
evidence to factually support an outcome determinative element of that party's
claim, the moving party will prevail on summary judgment.” Wilson v. Darr, 553
N.W.2d 579, 582 (Iowa 1996); see also Iowa R. Civ. P. 1.981(3). In addition,
summary judgment is correctly granted where the only issue to be decided is
what legal consequences follow from otherwise undisputed facts. See Emmet
Cnty. State Bank v. Reutter, 439 N.W.2d 651, 653 (Iowa 1989).
III.
A.
Meyers first argues there is a disputed issue of fact regarding the terms of
the purchase agreement. Specifically, Meyers argues the parties entered into an
oral purchase agreement in January 2011 and the oral agreement did not contain
any warranty, warranty disclaimers, or limitations of remedies. Meyers also
argues, in the alternative, the scope of the warranty, warranty disclaimers, or
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limitations of remedies arising out of the purported January 2011 oral agreement
are ambiguous. Meyers further argues that the written purchase agreement
entered into in August or September of 2011 was merely an attempt to modify
the prior oral agreement. The arguments are without merit.
An issue of fact is “genuine” if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party. See Fees, 490 N.W.2d at 57. There
is no evidence in this summary judgment record supporting Meyers’ argument.
Meyers had an initial meeting with Hook’s Point in January 2011 to discuss
Meyers’ need for an irrigation system. Following that discussion, Hook’s Point
sent to Meyers a proposal in July of 2011. The design and pricing were finalized
subsequent to the proposal, and Hook’s Point and Meyers entered into the
purchase agreement in August or September of 2011. In his pleadings, Meyers
admitted this to be true. In his petition and amended petition, Meyers averred the
parties entered into the purchase agreement in August 2011. The defendants
each admitted this to be correct. Meyers also admitted in his deposition that he
had been provided with the warranty information prior to entering into the
purchase agreement. Meyers’ contention there was some other oral agreement
not containing the warranty, warranty disclaimers, and limitations on remedies is
delusory and unsupported by evidence. See Phillips v. Covenant Clinic, 625
N.W.2d 714, 718 (Iowa 2001) (stating an inference is not legitimate if it is based
on speculation or conjecture unsupported by evidence). Further, Meyers’
contention he also had some undisclosed contract with Reinke is equally
delusory and unsupported by evidence. Meyers never met with or had
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communication with Reinke prior to entering into the purchase agreement with
Hook’s Point.
B.
Meyers argues there is a triable issue of fact as to whether Meyers
received the warranty, warranty disclaimers, and limitations on remedies prior to
entering into the purchase agreement.
As with Meyers’ prior argument, we conclude there is no “genuine” issue
of fact. See Fees, 490 N.W.2d at 57. The summary judgment record allows only
one reasonable inference: Meyers was aware of the warranty, warranty
disclaimers, and limitations on remedies. The irrigation system proposal sent to
Meyers in July 2011 contained the following language: “Purchase of the system
described above will be subject to the Terms and Conditions of the Irrigation
System Purchase Agreement between the Dealer and the Customer, including
but not limited to the Reinke Irrigation Systems Warranty.” The purchase
agreement included Reinke’s Certificate of Warranty and all warranty information.
Meyers admitted he received the warranty information prior to purchase of the
irrigation system and was provided an opportunity to read it:
Q. Were you provided a copy of the warranty before you
purchased the machine? A. Somewhere in the exchange of
information I’m sure I received – must have received a copy, yes. I
would think so.
Q. Did you understand what that warranty covered? Or you
didn’t read it at all, just thought it was a warranty? A. I assumed it
was as most warranties are, that the product would be – that I
would be taken care of.
Q. Okay. Did you understand that the warranty covered
replacement of defective parts of the irrigation system? A. I
assume that. I – I’ve read your warranty.
Q. Okay. A. But I don’t recall exactly what’s in it. It’s been
several years now since I’ve read it.
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Q. Okay. But you were provided it, and you had an
opportunity to read it? A. Yes.
Meyers’ admission is supported by the available documentation. On October 9,
2011, Meyers signed the customer certification, stating “I certify that I have read
the owner’s/operator’s manual and that my dealer has explained the operation,
safety features and warranty of the system to me.”
No reasonable jury could conclude Meyers did not receive the warranty
information and have the opportunity to read the same prior to entering into the
purchase agreement. See, e.g., All-Iowa Contracting Co. v. Linear Dynamics,
Inc., 296 F. Supp. 2d 969, 979 (N.D. Iowa 2003) (holding warranty disclaimer
was enforceable where received after purchase but price quotation provided prior
to purchase provided notice of the warranty).
C.
Meyers next contends the district court erred in granting summary
judgment on the warranty claims because “the limited ‘repair or replace’ remedy
in Reinke’s Warranty ‘failed of its essential purpose.’” Meyers argues the limited
remedy failed because Hook’s Point repeatedly and unsuccessfully serviced the
irrigation system. Meyers’ claim fails because he fails to correctly identify the
claims at issue in this appeal, fails to distinguish between express and implied
warranties, and fails to distinguish between limitations on remedies and
disclaimers of warranties.
Reinke provided an express warranty. With respect to the sale of goods,
an express warranty is created by:
a. Any affirmation of fact or promise made by the seller to the buyer
which relates to the goods and becomes part of the basis of the
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bargain creates an express warranty that the goods shall conform
to the affirmation or promise.
b. Any description of the goods which is made part of the basis of
the bargain creates an express warranty that the goods shall
conform to the description.
c. Any sample or model which is made part of the basis of the
bargain creates an express warranty that the whole of the goods
shall conform to the sample or model.
Iowa Code § 554.2313(1).
Reinke limited the remedy for breach of the express warranty to repair and
replacement of the goods sold. The Iowa Code allows this limited remedy under
certain circumstances. See Iowa Code § 554.2719(1)(a). However, “[w]here
circumstances cause an exclusive or limited remedy to fail of its essential
purpose, remedy may be had as provided in this chapter.” Iowa Code
§ 554.2719(2). “A remedy’s essential purpose ‘is to give to a buyer what the
seller promised him.’” Midwest Hatchery & Poultry Farms, Inc. v. Doorenbos
Poultry, Inc., 783 N.W.2d 56, 62 (Iowa Ct. App. 2010) (citation omitted). “Where
repair or replacement can give the buyer what is bargained for, a limitation of
remedies does not fail of its essential purpose.” Id. at 63. Conversely, “[w]here
the seller is given a reasonable chance to correct defects and the equipment still
fails to function properly, the limited remedy of repair or replacement of defective
parts fails of its essential purpose.” John Deere Co. v. Hand, 319 N.W.2d 434,
437 (Neb. 1982). In other words, where the limited remedy fails, then the buyer
may avail itself of other remedies set forth in the UCC, including damages.
The claim at issue in this appeal is not the express warranty. As set forth
above, the district court held the express warranty claim against Hook’s Point
failed as a matter of law because the express warranty was inapplicable to
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Hook’s Point. Meyers does not argue the district court’s ruling was erroneous,
and the issue is not properly before us. Also, as set forth above, the district court
denied Reinke’s motion for summary judgment with respect to Meyers’ claim for
breach of express warranty, concluding the matter must proceed to trial.
However, Meyers voluntarily dismissed his express warranty claim against
Reinke and that claim is not properly before us. The only claims presented in
this appeal are the implied warranty claims.
The UCC allows for the disclaimer of the implied warranties of
merchantability and fitness so long as the disclaimers are in writing and
conspicuous. See Iowa Code § 554.2316(2). A term or clause is conspicuous
when it is so written “that a reasonable person against which it is to operate
ought to have noticed it.” Iowa Code § 554.1201(2)(j). Language is considered
conspicuous if it is in larger type, in a different color, in bold letters, or in capital
letters. See Sharp v. Tamko Roofing Prods., Inc., No. 02-0728, 2004 WL
2579638, at *4 (Iowa Ct. App. Nov. 15, 2004). Whether a clause is conspicuous
is a question of law for the court to decide. See id. “If a disclaimer is
conspicuous, it is effective so long as the buyer receives the disclaimer and has
a reasonable opportunity to read it.” Bruce v. ICI Ams., Inc., 933 F. Supp. 781,
791 (S.D. Iowa 1996).
Here, the disclaimers of the implied warranties were capitalized in bold
print and clearly distinct from the surrounding text. The disclaimers were
conspicuous. Meyers admitted he was provided with the warranty disclaimers
and had the opportunity to read them prior to the contract. Like the district court,
we conclude the disclaimers were thus effective and bar any action for implied
15
warranties. See, e.g., Bruce, 933 F. Supp. at 791 (“However, even if Plaintiffs
did not actually read the disclaimer, they are still bound by its terms. If a
disclaimer is conspicuous, it is effective so long as the buyer receives the
disclaimer and has a reasonable opportunity to read it.”).
The disclaimer of the implied warranties is not overcome by showing the
limited remedy for a breach of the express warranty failed of its essential
purpose. The concepts are separate and distinct. As one court explained:
In advancing its initial legal premise—that is, that Alstom's
disclaimer of the implied warranties is invalidated by an
ineffectiveness of the express warranties, IDI's “apparent
impression of the law is that when a limited remedy fails of its
essential purpose the disclaimed warranties are revived.” Ritchie
Enters. v. Honeywell Bull, Inc., 730 F. Supp. 1041, 1047 (D. Kan.
1990). This perspective confuses the distinction made in the UCC
between disclaimers of warranties and limitations of remedies. . . .
“[T]hese two devices in theory constitute two separate mechanisms
for eliminating responsibility for produce quality.” Hahn v. Ford
Motor Co., 434 N.E.2d 943, 952-53 (Ind. Ct. App. 1982). “A
disclaimer or modification of warranty eliminates the quality
commitment. It limits the circumstances in which the seller or
manufacturer may be deemed to be in breach of warranty.” Id. “A
limitation of remedy, on the other hand, acknowledges the quality
commitment but restricts the remedy available once a breach has
been established.” Id.; see also F.C. Finance Corp. v. Murphies,
632 F.2d 413, 420 (5th Cir. 1980) (“Warranty disclaimer is a
defense to the existence of a cause of action, while the
consequential damage limitation merely restricts remedies once the
breach has been established.”).
Iron Dynamics v. Alstom Power, Inc., No. 1:06-CV-357, 2007 WL 3046430, at *4
(N.D. Ind. Oct. 15, 2007) (footnote and citations omitted).
The same problem recognized in the Iron Dynamics case—the failure to
distinguish between promises and remedies—is present here. If the repair and
replace remedy for breach of the express warranty failed of its essential purpose,
then the code would allow Meyers to seek other remedies for breach of the
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express warranty. However, the failure of the repair and replace remedy for
breach of the express warranty does not revive otherwise disclaimed implied
warranties. See, e.g., Patterson Oil Co., Inc v. Verifone, Inc., No. 2:15-CV-4089,
2015 WL 6149594, at *6 (W.D. Mo. Oct. 19, 2015) (“Although Missouri courts
have not interpreted this clause, other jurisdictions have read its language to
distinguish between a remedy limitation, which can fail of its essential purpose,
and a valid warranty disclaimer, which cannot.”); Yorktown Urology, P.C. v.
Neuisys, LLC, No. 1:CV-10-0644, 2010 WL 4054178, at *1-2 (M.D. Pa. Oct. 14,
2010) (holding failure of limited remedy does not revive disclaimed implied
warranties but only allows for additional remedies on the claim for breach of the
express warranty); Precision Aggregate Prods., L.L.C. v. CMI Terex Corp., No.
CIV-06-1146-L, 2007 WL 3232187, at *5 (W.D. Okla. Oct. 31, 2007) (“The
implied warranties of merchantability and fitness for a particular purpose are
warranties-that is, promises-not remedies under the Code. The implied
warranties were properly disclaimed under the Code and cannot be revived
based on the alleged failure of the limited remedy.”); Ritchie Enters. v. Honeywell
Bull, Inc., 730 F. Supp. 1041, 1047-48 (D. Kan. 1990) (“Despite any argument
that the limited remedy failed of its essential purpose, plaintiff is bound by the
written exclusion of the express and implied warranties, and its only warranty
claim is based on the express warranty in the Basic Agreement against defects in
material and workmanship.”).
D.
Meyers argues the warranty disclaimers are substantially and procedurally
unconscionable. “A contract is unconscionable where no person in his or her
17
right senses would make it on the one hand, and no honest and fair person
would accept it on the other hand.” Bartlett Grain Co. v. Sheeder, 829 N.W.2d
18, 27 (Iowa 2013) (quoting C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65,
80 (Iowa 2011)). The doctrine of unconscionability encompasses substantive
unconscionability and procedural unconscionability. Substantive
unconscionability “includes ‘harsh, oppressive, and one-sided terms.’” Id.
(citation omitted). While, procedural unconscionability “includes the existence of
factors such as ‘sharp practices[,] the use of fine print and convoluted language,
as well as a lack of understanding and inequality of bargaining power.’” Id.
(alterations in original) (quoting In re Marriage of Shanks, 758 N.W.2d 506, 515
(Iowa 2008)).
The unconscionability of a contract or clause is “determined at the time it
was made.” Id. (citing Iowa Code § 554.2302(1); C & J Vantage Leasing Co.,
795 N.W.2d at 81.). “In determining whether a contract is unconscionable, we
examine factors of ‘assent, unfair surprise, notice, disparity of bargaining power,
and substantive unfairness.’” Id. (citation omitted). Under Iowa Code section
554.2302(1),
[i]f the court as a matter of law finds the contract or any clause of
the contract to have been unconscionable at the time it was made
the court may refuse to enforce the contract, or it may enforce the
remainder of the contract without the unconscionable clause, or it
may so limit the application of any unconscionable clause as to
avoid any unconscionable result.
The doctrine of unconscionability, however, does not rescue people from bad
bargains. Bartlett Grain Co., 829 N.W.2d at 27. See, e.g., C & J Vantage
Leasing Co., 795 N.W.2d at 81 (holding there was no procedural
18
unconscionability or substantive unconscionability when an intelligent business
entity had an opportunity to read the agreement, no unequal bargaining power
existed, and contract was not overly oppressive).
Here, the disclaimers in the warranty are not substantively or procedurally
unconscionable. Jim Meyers is an experienced businessman with more than
four decades of experience in the industry. There is no evidence of inequality of
bargaining power. The disclaimers do not supply harsh, oppressive, or one-
sided terms. Further, the disclaimers are written in bold capital letters. There is
no fine print or convoluted language. Meyers acknowledged receipt of the
warranties and the opportunity to read them. Therefore, the disclaimers of the
warranty are not substantially or procedurally unconscionable. See, e.g.,
Brunsman v. DeKalb Swine Breeders, Inc., 952 F. Supp. 628, 634 (N.D. Iowa
1996) (holding warranty limitations were not unconscionable where there was no
showing of pressure to sign contract or evidence of unfair bargaining); Bruce,
933 F. Supp. at 792 (holding limitation not unconscionable where the parties
were experienced and sophisticated in the industry).
IV.
For the foregoing reasons, we affirm the judgment of the district court.
AFFIRMED.