## Facts

- Central Washington Refrigeration, Inc. contracted to install cold-storage rooms for Les Barbee d/b/a Barbee Orchards.
- Central purchased specially manufactured refrigeration coils from McCormack Engineering, which delivered the coils in August 1987; Central installed them.
- The cold-storage system experienced operational problems from the beginning.
- After repair efforts and Barbee’s bankruptcy, Barbee defaulted on payments owed to Central.
- Central sued Barbee for the unpaid contract price; Barbee counterclaimed alleging misdesign, poor workmanship, improper components, and failure to repair.
- On May 22, 1992, Central filed a third-party complaint against McCormack alleging defective coils and seeking contribution and/or indemnity for any liability to Barbee.

## Issues

1. Whether a buyer may maintain an implied indemnity action against a seller based on breach of UCC warranties when the buyer incurs liability to a third party due to allegedly defective goods.
2. If such an indemnity action exists, whether the statute of limitations accrues at tender of delivery under the UCC warranty accrual rule or when the buyer’s third-party liability is fixed by payment or judgment.

## Decision

- The Washington Supreme Court held that a buyer may assert implied indemnity against a seller based on breach of UCC warranties for third-party liability caused by defective goods.
- The court held that the limitations period for this warranty-based indemnity claim begins when the buyer pays damages to the third party or when the third party obtains judgment against the buyer, whichever occurs first.
- The court reversed summary judgment for McCormack to the extent it dismissed Central’s warranty-based indemnity claim as time-barred, allowing that claim to proceed.
- The court treated tort-style contribution as not viable under the asserted theory, but preserved the contractual indemnity claim grounded in warranties.

## Legal Principles

- A buyer–seller relationship governed by Article 2 of the UCC, including implied warranties, can support an implied contractual indemnity claim when the buyer’s liability to a third party results from the seller’s breach of warranty.
- Warranty-based indemnity is distinct from a direct breach-of-warranty damages action for nonconforming goods; indemnity shifts the loss arising from the buyer’s third-party liability.
- For warranty-based indemnity, the claim accrues when the buyer’s liability becomes fixed by payment or judgment, not at tender of delivery.
- A limitations rule tied to payment or judgment prevents expiration of an indemnity remedy before the indemnitee suffers an actual loss.

## Conclusion

The court recognized implied indemnity grounded in UCC warranties for a buyer facing third-party liability from defective goods and held that the statute of limitations for such indemnity runs from payment or judgment fixing that liability, not from delivery.


Cent. Wash. Refrigeration, Inc. v. Barbee, 133 Wash. 2d 509, 946 P.2d 760 (Wash. 1997)