UCC Applied to Equipment Design and Manufacture Contract

Miami-Dade County, Florida, owns a resource recovery plant operated by Montenay Power Corp. As part of a retrofit of this plant, Montenay and Birwelco-Montenay, an affiliate, contracted with Infilco Degremont, Inc. to design and manufacture well water treatment system equipment for the retrofit. Infilco was to ship the equipment to Miami to be installed by another contractor. Infilco's system caused delays to the project, causing the County to pay delay damages.

The County and the Montenay companies sued Infilco for $1.6 million in delay damages under various theories, including professional negligence. Infilco moved for summary judgment, asserting that the contract was for provision of goods, not for services, and was governed by the Uniform Commercial Code. In support of this motion Infilco filed an affidavit stating that the cost of the equipment, spare parts and attendant manuals constituted 81% of the total contract price. Infilco also asserted that the economic loss rule barred the professional negligence claim.

The County and Montenay filed affidavits in opposition to the summary judgment motion, stating that, in accepting Infilco's bid, they had relied on Infilco's industry reputation and technical expertise to provide an operating system that met all of the contract's performance specifications and conditions. The affidavit further stated that design services were the primary purpose of the underlying contract and were a critical factor in choosing Infilco to provide professional design services for erection of the well water treatment system at the resource recovery facility. The County and Montenay pointed out that Infilco's scope of work included design of the well water system.

The trial court granted Infilco's motion for summary judgment. The Florida Third District Court of Appeal reversed the summary judgment, holding that, "The question of whether a contract is predominantly for goods or...