## Facts

- The Commonwealth undertook a program to identify and remove asbestos-containing materials from state buildings after asbestos was recognized as posing serious health hazards, even at low exposure levels.
- To recover abatement costs, the Commonwealth sued multiple entities involved in asbestos-containing materials used in state buildings, alleging breach of the implied warranty of merchantability and seeking additional relief under G.L. c. 93A.
- Johnson Insulation supplied and installed asbestos-containing thermal insulation (including pipe and boiler insulation) in several Massachusetts public buildings.
- The Commonwealth alleged the insulation was defective and unreasonably dangerous for ordinary use in occupied buildings, creating an unreasonable risk to occupants and necessitating removal and remediation.
- A jury found the asbestos-containing insulation unfit for its ordinary purposes and awarded damages for removal and related costs for 20 of 22 buildings.
- Post-verdict, the trial judge granted Johnson judgment notwithstanding the verdict, ruling Johnson had not “sold” goods to the Commonwealth under U.C.C. Article 2, dismissed the complaint, and declined to proceed on the pending c. 93A claim.

## Issues

1. Whether Johnson’s supply-and-installation transactions constituted a “sale of goods” subjecting it to the implied warranty of merchantability under Mass. G.L. c. 106, § 2-314.
2. Whether the Commonwealth was improperly prevented from pursuing its G.L. c. 93A claim after the jury’s warranty verdict.

## Decision

- The Supreme Judicial Court reversed the judgment notwithstanding the verdict for Johnson.
- The Court held the evidence permitted a finding that Johnson was a merchant seller of asbestos-containing insulation and thus subject to the implied warranty of merchantability.
- The Court reinstated the jury’s verdict and damages awards against Johnson on the implied-warranty claim.
- The Court ruled the c. 93A claim was not terminated by the post-verdict dismissal and remanded for further proceedings on that claim.

## Legal Principles

- A contractor that supplies and installs products may be treated as a U.C.C. Article 2 seller when the transaction’s predominant thrust includes the furnishing of goods as a substantial component.
- The implied warranty of merchantability applies to merchant sellers and is not avoided merely because the seller also provides installation or related services.
- Goods can be unmerchantable if foreseeable health hazards make ordinary use in occupied settings unsafe, even if the goods perform their mechanical function.
- Reasonably necessary costs of removal and remediation of hazardous defective materials may be recoverable as breach-of-warranty damages when those costs are a foreseeable result of the defect.
- A breach of implied warranty may support a claim under G.L. c. 93A, permitting further statutory remedies where the conduct constitutes an unfair or deceptive act or practice in trade or commerce.

## Conclusion

The court held that a contractor that supplied and installed asbestos-containing insulation could be liable as a U.C.C. seller for breach of the implied warranty of merchantability, reinstated the jury’s abatement-cost damages, and remanded for further proceedings on the Commonwealth’s c. 93A claim.


Commonwealth v. Johnson Insulation, 425 Mass. 650, 682 N.E.2d 1323 (Mass. 1997)