Reference no: EM133843978

Assignment:

Sacramento Regional Transit District v. Grumman Flxible, 158 Cal.App. 3d 289 (3rd Dist. 1984)

FACTS:

Plaintiff, Sacramento Regional Transit District, operates a fleet of buses in Sacramento for the purpose of public mass transportation. Defendant, Grumman Flxible, is the successor of the original bus manufacturer. In October of 1975, defendant sold and delivered 103 new buses, which were accompanied by defendant manufacturer's standard written warranty containing certain terms, conditions, and limitations not here applicable.

On April 17, 1980, plaintiff discovered 26 out of the 103 buses had cracked fuel tank supports. Inspections revealed the probability that all the buses would eventually suffer the same damage unless certain remedial repairs were undertaken. The 26 disabled buses were repaired and prophylactic repairs were made to the remainder of the buses manufactured by defendant. Plaintiff eventually restored all 103 buses to service. Plaintiff filed this action for damages, and the court sustained the defendant's demurrer, contending plaintiff failed to state a cause of action. Plaintiff appeals because the complaint states a cause of action in tort for products liability and negligence. Plaintiff concedes the contractual warranty had long expired when the defects were discovered.

[The appellate court's decision turns on whether or not the plaintiff is a merchant. If the appellate court determines the plaintiff to be a merchant under California's Uniform Commercial Code, the trial court's ruling will be upheld. If the appellate court determines the plaintiff to not be a merchant, then the trial court's ruling will be overturned.]

DECISION: SIMS, JUSTICE

Here, the facts pleaded in the complaint demonstrate that, as a transit district, plaintiff had knowledge and skill peculiar to the goods (buses) involved in the transaction. Plaintiff, like defendant, was therefore clearly a merchant as defined by section 2104. The Uniform Commercial Code regulated the various aspects of plaintiff's purchase of buses from defendant, including liability for defects based on express and implied warranties. We see no reason why we should apply tort law to govern plaintiff's commercial relations with another merchant.

Here, the facts pleaded in the complaint demonstrate that, as a transit district, plaintiff had knowledge and skill peculiar to the goods (buses) involved in the transaction. Plaintiff, like defendant, was therefore clearly a merchant as defined by section 2104. The Uniform Commercial Code regulated the various aspects of plaintiff's purchase of buses from defendant, including liability for defects based on express and implied warranties. We see no reason why we should apply tort law to govern plaintiff's commercial relations with another merchant.

Here, where merchants are involved, we conclude that the Uniform Commercial Code, and not tort law, should govern their commercial affairs, including any economic loss caused by a defective product. The trial court properly sustained the demurrer. The judgment is affirmed.

1. What factor(s) caused the court to determine that the Sacramento Regional Transit District was a merchant?

2. Should merchants always be held to a different standard than non-merchants?