The Lawletter Vol. 41, No. 2
The New Mexico Supreme Court has resolved an issue of first impression in that state: When a product causes personal injury and suit is filed for breach of warranty, what statute of limitations applies? In Badilla v. Wal-Mart Stores East, 2015-NMSC-029, 357 P.3d 936, the plaintiff bought a pair of work boots at a Wal-Mart store. More than three years after he was injured while wearing the boots, he filed a personal injury suit, alleging that the soles of the boots became unglued and caused him to trip on debris.
In New Mexico, tort claims are generally subject to a three-year statute of limitations, N.M. Stat. Ann. § 37-1-8, while claims for breach of warranty under the Uniform Commercial Code ("U.C.C.") are generally subject to a four-year statute of limitations, id. § 55-2-725(1). The plaintiff based his claim on breaches of an express warranty and the implied warranties of merchantability and fitness for a particular purpose. The trial court and court of appeals ruled that the claims were time-barred under the three-year statute of limitations.
On appeal, the Badilla court noted that courts in other states have reached different conclusions as to which statute of limitations should apply. The court outlined the two approaches taken by other courts, as follows: To start with, "[t]he majority [approach holds] that the UCC limitations period applies to all actions for breach of warranties, regardless of whether the plaintiff seeks personal injury damages or economic and contractual damages." Id. This approach essentially looks to the nature of the right asserted; if the right is based in contract, it is subject to the UCC. The minority approach "holds that the type of damages sought in an action determines whether the statute of limitations in [UCC] § 2-725 applies," thus, "[a]ctions for personal injury damages or tortious injury to personal property are governed by general, non-[UCC] limitations periods, while actions for economic or breach of contract damages are governed by § 2-725." Davidson Lumber Sales, Inc. v. Bonneville Inv., Inc., 794 P.2d 11, 16 (Utah 1990). The minority approach focuses upon the remedy sought: if the remedy sought is economic damages, the claim is subject to the UCC; if the remedy sought is personal injury damages, the claim is not subject to the UCC.
2015-NMSC-029, ¶ 19, 357 P.3d at 940-41.
The Badilla court concluded that New Mexico's four-year U.C.C. statute of limitations clearly applied because (1) a seller's breach of express or implied warranties creates in the buyer a cause of action; (2) consequential damages, including those for personal injuries, are available pursuant to such cause of action; and (3) the statute of limitations applicable to that cause of action is four years. The four-year deadline for filing suit under the U.C.C. for breach of warranty of goods sold in New Mexico is clearly and unambiguously set forth in the statute. Buttressing its opinion, the court adopted the reasoning of the court in Reid v. Volkswagen of America, Inc., 512 F.2d 1294 (6th Cir. 1975), noting that courts generally favor application of the longer of two statutes of limitations. The Badilla court also agreed with the reasoning of the Kansas Court of Appeals, which rejected the minority approach, in Golden v. Den-Mat Corp., 276 P.3d 773 (Kan. Ct. App. 2012).