Flintkote Co. v. W. W. Wilkinson, Inc.

Citations: 260 S.E.2d 229; 220 Va. 564; 27 U.C.C. Rep. Serv. (West) 982; 1979 Va. LEXIS 298Docket: Record 771518

Court: Supreme Court of Virginia; November 21, 1979; Virginia; State Supreme Court

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The Supreme Court of Virginia reviewed an appeal by The Flintkote Company concerning judgments against it in favor of W. W. Wilkinson, Inc., Richard L. F. Kidwell, and Woody Distributors, Inc. The case arose from claims of breach of an implied warranty of merchantability related to Flintkote's products. The key issue was whether Flintkote's attempt to limit the remedy for breach of warranty was conspicuous and therefore enforceable.

Wilkinson had contracted with the federal government for renovation work, which included installing specific types of floor tile. When seeking product specifications from Woody, a flooring distributor, Wilkinson received general information rather than the detailed specifications requested. Consequently, Kidwell, who was awarded the tile subcontract, similarly requested specifications and received a publication titled "Architect's Guide Specifications for Flintkote Floors." This document contained a warranty statement indicating that Flintkote's products were of merchantable quality but did not warrant fitness for any particular use. It stated that Flintkote's liability was limited to replacing defective products or refunding the purchase price, and that Flintkote assumed no responsibility for the design or construction of any structure using its products.

Kidwell claimed to have delivered this guide to Wilkinson's president, who denied receiving the complete document, including the warranty language. The trial court found Flintkote's warranty disclaimer ineffective due to lack of conspicuousness, leading to the appeal.

Kidwell provided Wilkinson with a single page from a guide indicating that the tile met government specifications, along with tile samples for government approval. Following approval, Kidwell purchased 156 boxes of Flintkote tile and began installation at Fort Monroe. After most of the tile was laid, a government inspector deemed it unacceptable due to "drifting," a defect in tile alignment, leading Kidwell to cease work on the project. A Flintkote representative inspected the tiles and attributed the issue to the subcontractor's poor subfloor preparation, asserting the tiles themselves were square. Consequently, Flintkote maintained its position on the merchantability of its product and did not provide refunds or replacements under its warranty. The government mandated that the general contractor install an "overlay" of new tile over the rejected ones, resulting in significant costs for Wilkinson, who was also assessed liquidated damages for project delays.

Wilkinson filed a lawsuit against Kidwell for improper installation and against Woody and Flintkote for breach of warranty. Kidwell and Woody counterclaimed for indemnity, including legal fees, and Kidwell also cross-claimed against Flintkote for warranty breach. The trial court separated the cross-claims from Wilkinson's claims, which went to jury trial alongside Kidwell's claim against Flintkote. The jury ruled in favor of Kidwell and Woody against Wilkinson, while awarding Wilkinson $10,784.82 from Flintkote and $1,631.42 to Kidwell from Flintkote. Flintkote repeatedly asserted a limitation of remedy claim, which was denied by the trial court at multiple stages. The court ultimately ruled that there was no evidence of an agreement to limit remedy for warranty breach and concluded that Flintkote's limitation provisions did not meet the Virginia U.C.C. requirements, referencing a potentially flawed interpretation of precedent. The appeal raised the question of whether such provisions must be "conspicuous" to be effective under the U.C.C., a matter that had not been previously addressed in Virginia, with differing conclusions reached in other jurisdictions.

Conspicuous language is not necessary to establish a valid limitation of remedy in a contract. Unlike Code 8.2-316(2), which requires conspicuous terms for modifying implied warranties, Code 8.2-719 allows for negotiated limitations of remedies without such a requirement. The distinction between modifying warranty terms and limiting remedies for breach is emphasized in the UCC provisions, where limiting or avoiding consequential damages is treated as a remedy limitation, separate from warranty liability. The parties previously contended that a remedy limitation was ineffective unless all parties agreed to it, which became the law of the case. However, testimony from involved parties introduced a factual issue regarding whether the remedy limitation was part of their agreement, leading to a ruling that the trial court should have submitted this issue to a jury. Consequently, the judgment against Flintkote for breach of warranty claims is reversed, and those claims are remanded for a new trial. Additionally, Flintkote's challenge regarding the trial court's award of attorney's fees to co-defendants Kidwell and Woody is affirmed, as Flintkote waived a jury trial on this matter. Overall, the decision is affirmed in part and reversed in part, with remand instructions.