American Bumper & Manufacturing Co. v. TransTechnology Corp.

American Bumper & Manufacturing Co. (American) (plaintiff) agreed to manufacture the front bumpers for certain Ford pickup trucks. Ford controlled the material specifications for the bumpers and provided American with a list of approved vendors of fasteners. American agreed to purchase U-nut fasteners from an approved vendor, Palnut Company (defendant), a division of other companies (defendants) (collectively, Palnut). For two years, Palnut provided U-nuts to American. Initially, the U-nuts had a phosphate-based coating. In response to Ford’s requirements, Palnut changed the coating to a zinc coating, but American expressed concerns with slow delivery. Palnut suggested a different zinc coating called Dacromet. In 1993, American and Ford approved Dacromet as the coating for U-nuts. Later in 1993, Ford received reports that the U-nuts were failing, causing bumpers to detach. Ford informed American, which notified Palnut. In December 1993, American canceled its contract with Palnut. Ford incurred over $9 million in recalling and replacing the defective U-nuts. In February 1994, Ford issued a report regarding the U-nut failure, faulting American and Palnut but concluding that American should be liable as the end-item supplier. The cause of the U-nut failure was stress corrosion cracking, due to exposure of the zinc coating on the U-nuts’ steel to a saltwater environment, such as salted roads. American denied its and Palnut’s fault and blamed Ford for requiring the use of Dacromet. Eventually, American and Ford reached a settlement without Palnut’s knowledge. In 1997, American sued Palnut, alleging various contract-based theories of liability, such as breach of express warranty. Palnut moved for summary disposition, arguing that American failed to give timely notice of a breach under the Uniform Commercial Code (UCC). The trial court ruled in Palnut’s favor, and American appealed.