## Facts

- A housing cooperative contracted with a roofing installer to sell and install roofing systems using a manufacturer’s polyurethane roof coatings on two roof areas.
- The manufacturer inspected the work and issued written warranties: a ten-year warranty for one coating and a five-year warranty for another.
- The warranties disclaimed the implied warranty of merchantability, disclaimed liability for damages arising from leaks, and limited the buyer’s remedies to repair or recoating as an exclusive remedy.
- After about three years, the coatings deteriorated and the roofs allegedly cracked and leaked, causing water intrusion.
- The cooperative notified the manufacturer; the manufacturer inspected and offered to respray/recoat under the warranties, but the cooperative rejected that remedy and replaced the entire roof system.
- The cooperative sued the manufacturer for breach of implied warranty of merchantability, breach of contract, negligence based on contract-related duties, and strict products liability, seeking compensatory and consequential damages.
- Expert testimony conflicted on whether respraying would have cured the problem or worsened the roofing system.

## Issues

1. Whether post-installation written warranties effectively became part of the parties’ agreement so as to disclaim the implied warranty of merchantability and limit remedies as a matter of law.
2. Whether a contractual limitation of remedy to repair/recoating was enforceable on summary judgment or could be disregarded for failure of essential purpose under U.C.C. principles.
3. Whether negligence claims based solely on duties arising from a commercial contract are barred by the District of Columbia economic-loss doctrine.
4. Whether strict products liability is barred for purely economic loss to the product itself, and whether it remains available for alleged physical damage to “other property.”

## Decision

- Summary judgment was denied on the implied-warranty and breach-of-contract claims.
- Summary judgment was granted on the negligence claim under the economic-loss doctrine.
- Summary judgment on strict liability was granted in part and denied in part:
  - Granted as to damages for loss of value or use of the polyurethane coatings themselves.
  - Denied as to alleged physical damage to the remainder of the roofing system and building structure.

## Legal Principles

- Post-sale or post-installation warranty terms, including disclaimers and remedy limitations, may present fact questions as to contract formation and assent when offered as part of the parties’ bargain.
- Under U.C.C. § 2-719, an exclusive repair/replace remedy may be set aside if it fails of its essential purpose; whether it fails can be fact-intensive, especially where evidence conflicts on the adequacy of the proposed repair.
- District of Columbia’s economic-loss doctrine generally bars negligence recovery for purely economic loss in commercial transactions where the alleged duties are contractual and there is no personal injury or damage to property other than the product.
- Strict products liability does not allow recovery for purely economic loss to the product itself (loss of value or use), but may allow recovery for physical damage to “other property” caused by a defective product.

## Conclusion

The court allowed the cooperative’s contract and implied-warranty claims to proceed because disputed facts existed about whether the warranty disclaimers and exclusive repair remedy bound the parties and whether the remedy failed of its essential purpose, but it barred negligence as an improper attempt to recover economic losses in tort and limited strict liability to claims alleging physical damage beyond the coatings themselves.


Potomac Plaza Terraces, Inc. v. QSC Prods., Inc., 868 F. Supp. 346 (D.D.C. 1994)