S. M. Wilson & Company v. Smith International, Inc.

587 F.2d 1363 25 UCC Rep.Serv. 1066 S. M. WILSON & COMPANY, Plaintiff-Appellant, v. SMITH INTERNATIONAL, INC., Defendant-Appellee. No. 75-2936. United States Court of Appeals, Ninth Circuit. Dec. 19, 1978. Robert B. Flaig, Thelen, Marrin, Johnson & Bridges, Los Angeles, Cal., for plaintiff-appellant. Richard F. Oetting, Gilbert D. Jensen, Voegelin & Barton, Los Angeles, Cal., for defendant-appellee. Appeal From the United States District Court for the Central District of California. Before WALLACE and SNEED, Circuit Judges, and ENRIGHT, * District Judge. SNEED, Circuit Judge: 1 This case presents the familiar question of the circumstances under which a seller in a commercial sale can limit its liability through contractual exclusions of warranty and remedy. 2 The district court found that the contract involved here was effective in excluding the buyer's recovery of consequential damages and granted summary or final judgment for defendant Smith International, Inc., on all claims. Our jurisdiction is based on 28 U.S.C. §§ 1291 and 1294. For reasons set out hereafter we affirm. I. 3 Facts. 4 To understand this case it is necessary to set out the facts, including…

This case presents the familiar question of the circumstances under which a seller in a commercial sale can limit its liability through contractual exclusions of warranty and remedy.

The district court found that the contract involved here was effective in excluding the buyer’s recovery of consequential damages and granted summary or final judgment for defendant Smith International, Inc., on all claims. Our jurisdiction is based on 28 U.S.C. §§ 1291 and 1294. For reasons set out hereafter we affirm.

I.

Facts.

To understand this case it is necessary to set out the facts, including a description of the contract between the seller and buyer, and to describe in some detail the procedural state in which this case reaches us. We begin by characterizing the sales contract as one between parties who dealt in a commercial setting from positions of relatively *1366 equal bargaining strength and who bargained and negotiated concerning the specifications of the product being sold and the risks of loss arising from any of its defects. Cf. Kaiser Steel Corp. v. Westinghouse Electric Corp., 55 Cal.App.3d 737, 748 , 127 Cal.Rptr. 838, 845 (1976) (doctrine of products liability inapplicable on…

sitting by designation, dissenting:

I respectfully dissent. The threshold question presented in this case is whether the parties intended the limited express warranty, with its disclaimer of liability for consequential damages, to govern Smith’s obligation to provide “one competent tunnel *1377 boring machine specialist ... to supervise installation.” 1 The view adhered to by the majority is that the limited express warranty, with its accompanying disclaimer of liability for consequential damages, nullifies any right to recover consequential damages which Wilson might have absent this provision. My view is that the contract, when read as a whole, fails to manifest any intention of the parties to subject the “Installation Personnel” provision to the burdens, benefits and limitations of the limited express warranty. Accordingly, I conclude that the warranty’s exclusion of consequential damages does not apply to the covenant to provide a competent tunnel boring machine specialist and that the remedy of consequential damages, pursuant to California Commercial Code section 2715, is available to redress Smith’s breach of this covenant.

Under the terms of the contract at issue here,…