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Hydronic Energy, Inc. v. Rentzel Pump Manufacturing, LP

Court of Appeals of Nebraska

October 29, 2013

Hydronic Energy, Inc., appellee,
v.
Rentzel Pump Manufacturing, LP, appellant

NOT DESIGNATED FOR PERMANENT PUBLICATION

Appeal from the District Court for Douglas County: Leigh Ann Retelsdorf, Judge.

James B Luers and Krista M. Carlson, of Wolfe, Snowden, Hurd, Luers & Ahl, L.L.P., for appellant.

E.J. Kelly and Patrick T. Vint, of Hopkins & Huebner, P.C., for appellee.

Inbody, Chief Judge, and Irwin and Riedmann, Judges.

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

Riedmann, Judge.

I.INTRODUCTION

Rentzel Pump Manufacturing, LP (Rentzel), appeals from an order of the district court for Douglas County. After a bench trial, the district court found that Rentzel had breached the warranty it provided to Hydronic Energy, Inc. (Hydronic), that Hydronic had provided timely and sufficient notice of defective products, that there was a failure of the essential purpose of the warranty, and that Hydronic was entitled to damages. Because we find there was competent evidence to support the district court's findings, we affirm.

II.BACKGROUND

In 2007, Hydronic purchased a vertical turbine pump assembly from Rentzel to be installed in a new addition at a hospital in Omaha, Nebraska. The pump was to be used as part of the air conditioning system in order to cool the surgical rooms at the hospital. The pumps were designed to pump water from a pit to the cooling towers which then cool the chilled water so the chillers can create air conditioning for the surgical rooms. When the external temperature reaches 40 degrees, the pumps need to be working so that the chillers can be turned on. The pump was delivered and installed without incident.

In April 2008, Hydronic purchased two more identical pumps from Rentzel, referred to as "CTP-2" and "CTP-3." These two pumps were shipped on May 16, 2008. They were shipped partially assembled so that they would fit inside the building. In order for the pumps to be operational, they had to be put into the ground, reassembled, have a motor attached, and be wired to electricity. The pumps were assembled between May 27 and June 4, 2008, and started on May 21, 2009. CTP-2 "went online" on June 1, and CTP-3 "went online" on August 8.

Rentzel sold the pumps to Hydronic subject to a limited warranty, which provided:

[Rentzel] warrants to [Hydronic] on that products, materials and supplies ("Products") manufactured by [Rentzel] when properly installed, used and maintained, shall be free from defect in material and workmanship ("Defects["]). [Rentzel's] obligation under this warranty shall be limited to replacing or repairing the part or parts ("Warranty Service"), at [Rentzel's] option, which prove to contain Defects within twelve (12) months from the date of installation or fifteen (15) months from the date of shipment, whichever occurs first, provided that [Hydronic] gives [Rentzel] notice as hereinafter provided of any Defects and satisfactory proof thereof ("Warranty Claims"). Warranty Claims by [Hydronic] must be submitted to [Rentzel] or [Rentzel's] authorized representative, in writing, within thirty (30) days after the later of the pulling date or failure date of Products. Any defective part or parts, except for surface electronics, will be performed at the site of installation [sic]. Parts for which Seller provides replacement under this warranty shall become the property of Seller.

The agreement also included a limitation of liability, which provided, "In no event shall [Rentzel] be liable, either directly or indirectly, for any special, incidental or consequential damages including, but not limited to . . . costs and expenses incurred in connection with labor, overhead, transportation or substitute facilities or supply sources."

On August 12, 2009, Clint Kmoch, a salesman for Hydronic, e-mailed Tom Hogan, a product manager at Rentzel, notifying him that the motors in CTP-2 and CTP-3 were "running hot" and "over amping." Kmoch asked Hogan what the normal temperature and maximum temperature for the motors should be. Hogan responded the same day. The following month, Hogan e-mailed Jack Trisler, a sales manager for Hydronic, with the specifications for the pumps. In December, Kmoch contacted Hogan again about the motors in CTP-2 and CTP-3 running hot and over amping. Kmoch suggested that perhaps the impellers were trimmed to a size other than what was specified. The parties then continued to exchange e-mails in an attempt to diagnose the problem with the pumps.

In late January 2010, Trisler asked Ray Martin Company (Ray Martin), the mechanical engineer on the hospital project, for an estimate of the cost to remove and disassemble the pumps, replace the impellers, and reassemble the pumps. Trisler testified at trial that he requested this estimate because of the urgency of getting the pumps repaired before the external temperature reached 40 degrees, the baseline outdoor temperature at which the chillers were needed. At this time, the engineer and plant manager from the hospital continued to express concern over the temperature nearing 40 degrees.

Trisler sent Ray Martin's estimate to Hogan, and Hogan responded on February 1, 2010. Hogan stated that it was Rentzel's position that the problems with the pumps were not covered by the limited warranty due to lack of timely notice. At this point, Hydronic and Ray Martin believed the problem with the pumps was the result of improperly trimmed impellers. On February 5, Hogan again contacted Trisler and iterated Rentzel's position that the warranty had expired; however, Rentzel made the following offer:

If, after all other possible causes of the problems are eliminated, it is found necessary to remove the units, we strongly recommend a teardown inspection of the pumps at our facility. Should any pump assembly or manufacturing problems be discovered, those problems will be corrected, without waiver of the terms and conditions of our warranty, in an expeditious manner at no charge.

After another month of troubleshooting with Rentzel, Hydronic finally asked Ray Martin to remove the pumps for inspection. Ray Martin disassembled the pumps, removed the impellers, and took the impellers to America Machine Works, which discovered the impellers had been trimmed to 10.41 inches instead of 9.41 inches. American Machine Works trimmed the impellers to the proper size, and Ray Martin reassembled ...


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