anthony pools v. sheehan and implied warranty of merchantability and denny and hybrid transactions

The purpose of this essay is to explain some of the issues that might not be so clear on first reading of Anthony because it is assigned during the first week of the course and deals with complex issues of warranty (covered later in the course) as well as hybrid transactions.* The casebook editor provides this

[*For a brief overview of hybrid transactions, read this essay.]

case because Anthony Pools adopted his view (Hawkland's) of hybrid transactions. This essay will present three background issues and then close with a comment about a topic that still is confusing.

(1) Procedural Issues

The case has to do with claims brought by the Sheehan's for injuries suffered by Mr. Sheehan when he fell off his diving board and injured himself in the fall.** Plaintiffs brought a two-count action:

[**Do you think he had been drinking? Would this matter? It was, after all, a "pool party," and more than one host (because he won't be caught drunk driving) has been known to consume too much alcohol at such a party. Another question. Is it clear to you from the judge's description what the pool looked like? I have tried to draw it several times, but came up empty each time. Why do legal cases make it so difficult for us to understand such simple things? Why not just provide a chart in the case? Law seems to delight in making life difficult for us, when actually, if you take things slowly, it is pretty easy to understand.]

one based in breach of implied warranty of merchantability and one in strict products liability. Only the former concerns us at this point. At trial the court dismissed the warranty claim because it concluded that the warranty provided for the pool installation was only an express warranty, and the express one had disclaimed (a technical term in warranty law) implied warranties. Thus, since implied warranties were successfully disclaimed, no claim could survive based on that theory. This was the trial court's reasoning. Apparently the trial court didn't therefore have to reach the question of whether the transaction at issue was for goods or services. On appeal, the Court of Special Appeals (how is this different from the Court of Appeals?) concluded that the transaction consisted of "goods," and so the MD UCC applied to it. And, when looking at the MD statute, we see that "CL sec. 2.316.1 rendered ineffective Anthony's attempt to limit the implied warranty of merchantability" (p. 13). What might that mean?

(2) The Maryland Statute

Article 2, as a uniform statute, needs to be adopted by the states, one jurisdiction at a time, in order to be effective. Each state will "tweak" Article 2 based on its own interests. MD did so with respect to the final section on warranty. Article 2 has four important sections on warranty (2-313 through 2-316), with 2-316 providing ways that warranties given in 2-313 through 2-315 might be "disclaimed"--i.e., rendered ineffective. MD's version of 2-316 provides additional consumer protections to those provided in Article 2. In fn. 1 of the case, the MD statute is given in relevant part. Note subsection (1): "The provisions of 2-316 do not apply to sales of consumer goods, as defined by 9-109, services, or both." This is a significant addition to the MD statute, for it says that merchants cannot get rid of warranties (especially implied warranties--see subsection (2)) if it is a consumer transaction. It implies, however, that in merchant to merchant transactions warranties may be disclaimed. The point is this. If a MD court concludes that a transaction is for the sale of consumer goods, then the three warranties of 2-313 through 2-315 apply and cannot be eliminated.

The upshot of this discussion is that the first appellate decision in the Anthony case (1982) decided that the pool package was "consumer goods." This would, as a matter of law, have "solved" the issue, because the transaction, as goods, would bring it within the protection of Article 2. Because the writing was on the wall, Anthony immediately appealed to the MD Court of Appeals. Though it had three issues on which it based its appeal, the only one excerpted in the casebook concerned the implied warranty issue.

And, oh, one other other minor point. The long quotation on p. 13, dealing with the other ground for reversal, is irrelevant. I don't know why the editors didn't lop it off, since it related to the tort claim brought by the Anthony's. You just have to keep alert, both to what courts as well as casebook editors are doing.

(3) The Warranty Argument

I can be briefer here because once you have sorted through (1) and (2) carefully, the case falls fairly nicely into place. The Court of Appeals concluded that the trial court's directed verdict on the warranty issue was improper, but it used a different analysis than the Court of Special Appeals in getting to the issue. It would look at the nature of the hybrid transaction (after all, the Sheehan's bought a pool "package" which was not only manufactured but also installed by Anthony. There were, so to speak, parts and labor.) Rather than concluding right away that the transacation was "goods," the court decided that what it had was a hybrid transaction--in part a contract for the rendering of services and in part a contrat for the sale of goods. The rest of the case, then, (pp. 14-18), is the court's laying out of the two tests used by courts in hybrid cases. Most of the analysis is pretty clear, though a paragraph or two wasn't absolutely convincing to me. Pay attention to the way that the court uses each of the cases it cites in order to reach its conclusion. I may raise a question or two about the court's analysis in class.

One Concluding Thought

When a person is injured through the use of a product, that person normally brings counts both in warranty and strict products liability law. The latter, of course, is a tort claim and is not covered specifically in this class. But the contours or boundaries between the two causes of action are anything but clear. It would be a good additional paper topic to study cases that deal with both causes of action and see if you can discern how to distinguish which cause of action is more appropriate or how they relate to each other. The Denny case in our text (pp. 280-294) presents the issue clearly. Indeed, the issue became so important that a very long note to the 2003 version of Article 2 was added to deal with the Denny problem (see 2-314, Cmt. 7). So, this would get you started on a paper if you decide to choose that topic.

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