Kenworth of Indianapolis, Inc., et al., Appellants (Defendants),
Seventy-Seven Limited, et al., Appellees (Plaintiffs).
Argued: February 14, 2019
Interlocutory Appeal from Marion Superior Court, No.
49D04-1010-PL-43362 The Honorable Cynthia Ayers, Judge
Petition to Transfer from the Indiana Court of Appeals, No.
ATTORNEYS FOR APPELLANTS David T. Schaefer Anthony M. Zelli
Dinsmore & Shohl LLP Louisville, KY David J. Jurkiewicz
Bose McKinney & Evans LLP Indianapolis, IN
ATTORNEYS FOR APPELLEES Scott A. Benkie Benkie & Crawford
Indianapolis, IN Rodney V. Taylor Hilary A. Barnes
Christopher & Taylor Indianapolis, IN
litigation arises from the sale of forty dump trucks-a
transaction in goods governed by the Uniform Commercial Code
(UCC). The agreement governing this sale contained a warranty
and a one-year limitations period for filing a
breach-of-contract suit. Mechanical problems plagued the
trucks soon after delivery. Several years later, following
sellers' unsuccessful attempts at repair, buyers sued for
breach of warranty.
the UCC, a party's cause of action accrues (thus
triggering the limitations period) upon delivery of goods.
However, if a warranty explicitly guarantees the quality or
performance standards of the goods for a specific future time
period, the cause of action accrues when the aggrieved party
discovers (or should have discovered) the breach. This is
known as the future-performance exception.
of the larger issue of whether buyers' complaint was
untimely, this case presents two novel issues for our
consideration: (1) whether these parties' bargained-for
warranty falls under the future-performance exception within
Indiana's version of the UCC; and (2) whether the
sellers' conduct-including their efforts at repairing the
trucks-could toll the one-year limitations period under the
doctrine of equitable estoppel.
that, under the express terms of their agreement, the parties
here contracted for a future-performance warranty and any
breach-of-warranty claims did not accrue until the buyers
knew (or should have known) of the breach. We also hold that,
under the equitable estoppel doctrine, a party's
conduct-even relating to the repair of goods-may toll a
contractually agreed-upon limitations period when that
conduct is of a sufficient affirmative character to prevent
inquiry, elude investigation, or mislead the other party into
because there remain genuine issues of material fact relating
to both issues, we hold that summary judgment is not
appropriate now. We, therefore, affirm the trial court order
denying summary judgment and remand for proceedings
consistent with this opinion.
Factual and Procedural History
Limited and six other trucking companies (collectively,
the Buyers) purchased forty customizable
Kenworth T800 dump trucks manufactured by PACCAR and Kenworth
Truck Company and sold by Kenworth of Indianapolis
(collectively, the Sellers). For each truck
sold, Buyers and Sellers executed a Warranty
Agreement that provided, in relevant part, as
Kenworth Truck Company warrants directly to you that the
Kenworth vehicle . . . will be free from defects in materials
and workmanship during the time and mileage periods set forth
in the Warranty Schedule and appearing under normal use and
Your sole and exclusive remedy against Kenworth Truck Company
and the selling Kenworth Dealer arising from your purchase
and use of the vehicle is limited to the repair and
replacement of defective materials or workmanship . . . to
the extent of Kenworth Truck Company's obligations under
the Warranty Schedule on the reverse side of this Agreement.
Ex. A; Appellants' App. Vol. III, pp. 13, 152-70. Sellers
disclaimed all other warranties (express or implied) and
liability for incidental or consequential damages. The
Warranty Agreement imposed the following limitations period
for filing a lawsuit:
It is agreed that you have one year from the accrual
of the cause of action to commence any legal action arising
from the purchase or use of the vehicle, or be barred
November 2005, Jeary Smith, of Seventy-Seven Limited, took
delivery of the first truck. On his drive from Chillicothe,
Ohio, to Greenfield, Indiana, he noticed the truck vibrating
excessively. Smith reported the vibration immediately to
Sellers, instructing them to remedy the problem before
delivering the remaining trucks. Smith received assurances
from Sellers that the vibration problem "would fall
under warranty, it'll be fixed and it will all go
away." Appellees' App. Vol. II, p. 118.
these assurances, Buyers took delivery of the remaining
trucks from late 2005 through 2006. But these trucks also
vibrated excessively at idle and at certain RPMs. Buyers
again reported the problem to Sellers. Unable to identify the
source of the vibration, Sellers installed modified engine
mounts as an alternative fix. But the problem returned in
2007. See Kenworth of Indpls, Inc. v. Seventy-Seven
Ltd., No. 49A02-1504-PL-249, 2016 WL 1158460
(Ind.Ct.App. Mar. 24, 2016). Sellers installed new, different
engine mounts the following year, but, after a temporary
reduction in vibration, the problem persisted. Id.
failed to resolve the issue to Buyers' satisfaction,
Sellers agreed, in March 2008, to extend the base vehicle
warranty to four years/250, 000 miles. Sellers also promised
to replace the engine mounts for as long as Buyers owned the
trucks. Despite these attempts to cure, several Buyers
returned the trucks and stopped making payments in late 2008.
November of that year, Sellers, seeking to limit their
liability exposure, debated whether to recall the trucks or
to simply maintain the status quo. The latter option,
according to one Kenworth employee, would "likely lead
to litigation" because continually changing engine
mounts would "probably not be acceptable to the
customer." Appellees' App. Vol. III, pp. 39, 61. He
September 2010, Kenworth of Indianapolis (d/b/a ITC
Acceptance Company) filed a replevin action against two
Buyers based on their loan defaults. The following month-on
October 4, 2010-Buyers filed this action, alleging breach of
contract, constructive fraud, and rescission of contract
claims. Buyers later amended that complaint, adding claims of
breach of express and implied warranties, estoppel, and
non-conforming goods as defined under Indiana Code section
26-1-2-106. Buyers' second amended complaint invoked the
UCC's provision allowing for suit when an exclusive,
limited remedy fails its essential purpose. See Ind.
Code § 26-1-2-719(2) (1995). The trial court eventually
consolidated these actions into one case.
moved for summary judgment, contending that, because Buyers
did not file their complaint until October 2010, their claims
were time barred. "The causes of action for all of these
trucks accrued upon tender of delivery" in late 2005 and
early 2006, Sellers argued, "the same time when [Buyers]
first discovered the excessive vibration."
Appellees' App. Vol. II, pp. 7-8. Thus, Sellers insisted,
the one-year limitation period specified in the Warranty
Agreement ended in January 2007 "at the latest."
Id. at 9.
responded by arguing that the cause of action accrued not
upon delivery but when the four-year warranty period ends.
What's more, they argued, the doctrine of equitable
estoppel tolled the limitations period here.
denying summary judgment, the trial court found that
Sellers' "promise to work on a permanent fix to the
excessive vibration problem throughout the modified warranty
period" was an implied promise of future performance
under the UCC. Appellants' App. Vol. II, p. 63.
See I.C. § 26-1-2-725(2). Based on this
finding, the court concluded that the cause of action accrued
not on the date of delivery but on the date the extended
warranty expired-that is, "four years from the date of
in-service for each vehicle." Appellants' App. Vol.
II, p. 64.
this conclusion, the trial court-finding "substantial
reasons" to toll the limitations period-deemed
Buyers' complaints timely. Id. at 64-65. In
particular, the court cited Sellers' (1) extension and
modification of the original warranty period, (2) promise to
change the engine mounts as long as Buyers owned the trucks,
(3) assurances of providing a permanent repair, (4) failure
to include a limitations period in the modified warranty, and
(5) continued assurances and failures to remedy the excessive
vibration which prevented Buyers from filing suit.
appealed, arguing that Buyers' causes of action accrued
upon delivery. What's more, they insisted, under
Ludwig v. Ford Motor Co., 510 N.E.2d 691
(Ind.Ct.App. 1987), "Indiana law is clear that promises
or attempts to repair defects do not toll the limitations
period." Appellants' Br. at 29.
divided opinion, the Court of Appeals affirmed, with the
majority rejecting Sellers' Ludwig argument.
Kenworth of Indpls. Inc. v. Seventy-Seven Ltd., 112
N.E.3d 1106, 1111-12 (Ind.Ct.App. 2018). We granted
Sellers' petition to transfer, thus vacating the Court of
Appeals opinion. Ind. Appellate Rule 58(A).