PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
AQUALON COMPANY,
Plaintiff-Appellant,
v.
MAC EQUIPMENT, INCORPORATED,
Defendant & Third Party No. 97-1693
Plaintiff-Appellee,
and
C.W. NOFSINGER COMPANY,
Third Party Defendant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
James R. Spencer, District Judge.
(CA-96-917-3)
Argued: March 5, 1998
Decided: July 8, 1998
Before MURNAGHAN, Circuit Judge, KEELEY,
United States District Judge for the
Northern District of West Virginia, sitting by designation, and
MOON, United States District Judge for the
Western District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Judge Keeley and Judge Moon joined.
_________________________________________________________________
COUNSEL
ARGUED: Brewster Stone Rawls, BREWSTER S. RAWLS &
ASSOCIATES, P.C., Richmond, Virginia, for Appellant. Earle Dun-
can Getchell, Jr., MCGUIRE, WOODS, BATTLE & BOOTHE,
L.L.P., Richmond, Virginia, for Appellee. ON BRIEF: John B. Nich-
olson, BREWSTER S. RAWLS & ASSOCIATES, P.C., Richmond,
Virginia, for Appellant. David H. Worrell, Jr., J. William Boland, M.
Christine Klein, MCGUIRE, WOODS, BATTLE & BOOTHE,
L.L.P., Richmond, Virginia, for Appellee.
_________________________________________________________________
OPINION
MURNAGHAN, Circuit Judge:
Aqualon Company, a chemical manufacturer, asked MAC Equip-
ment, Incorporated, to produce rotary valves, also called airlocks, for
use in a pneumatic conveying system. The system was designed by
C.W. Nofsinger Company to move a chemical, blended carboxy-
methyl cellulose. Before MAC was awarded a contract to produce the
valves, it provided estimates of how much air its valves would leak.
However, once the valves were actually constructed, they leaked
much more than expected.
After almost a year of complaints and negotiations between
Aqualon and MAC, it became apparent that the valves could not be
made to leak any less. Aqualon modified its system design so that it
would still be able to move the chemical despite the leakage. In the
spring of 1993 Aqualon reissued a purchase order for the leaky
valves; Aqualon accepted the valves in June; and Aqualon paid for
them in full as of December 19, 1993. MAC did not conceal, and
Aqualon knew, the valves' air leakage rate.
Three years thereafter Aqualon served MAC with a complaint for
breach of contract and warranty. The district court granted summary
judgment to MAC, holding that Aqualon had not given MAC notice
within a reasonable time of its claim for breach. Aqualon appeals.
2
I.
We first address our jurisdiction to hear this case in federal court.
Aqualon commenced the case in Virginia state court, but the parties
being of diverse state citizenship and the required amount being at
issue, MAC filed the necessary papers to remove it to federal district
court. About an hour after doing so, MAC in state court filed a Notice
of Removal and a Third Party Motion for Judgment against C.W.
Nofsinger. Aqualon moved to remand the case back to state court but
the district court denied Aqualon's motion and kept jurisdiction of the
case.
Aqualon maintains that MAC's removal to federal court was
improper and that the district court should have granted the motion to
remand. Aqualon asserts that by filing a Third Party Motion for Judg-
ment against C.W. Nofsinger in state court, MAC submitted to the
jurisdiction of the state court and waived its right to remove to federal
court.
The district court's decision that the defendant did not demonstrate
an intent to waive its right to remove to federal court is a factual
determination, to be reversed only if clearly erroneous. See Grubb v.
Donegal Mut. Ins. Co., 935 F.2d 57, 59 (4th Cir. 1991). In Grubb, we
held that "although a defendant may yet waive its 30-day right to
removal [under 28 U.S.C. § 1446(b), after federal jurisdiction
becomes appropriate] by demonstrating a `clear and unequivocal'
intent to remain in state court, such a waiver should only be found in
`extreme situations,'" 935 F.2d at 59. MAC, by contrast, had clearly
previously indicated its desire to seek the federal forum.
Aqualon cites, in support of a finding of waiver, two district court
cases, Baldwin v. Perdue, Inc., 451 F. Supp. 373 (E.D. Va. 1978), and
Sood v. Advanced Computer Techniques Corp., 308 F. Supp. 239
(E.D. Va. 1969). In both cases, the defendants moved to remove to
federal court after they filed permissive substantive defenses in state
court (a cross-claim in Baldwin and counterclaims in Sood). The dis-
trict courts found waiver in both cases and granted motions to
remand. See Baldwin, 451 F. Supp. at 375-76; Sood, 308 F. Supp. at
242.
3
A defendant may waive the right to remove by taking some such
substantial defensive action in the state court before petitioning for
removal. However, waiver by conduct does not exist when removal,
as here, precedes any state court action. Federal jurisdiction attached
as soon as MAC filed a Notice of Removal in Federal Court, an hour
before MAC filed any pleadings in state court. See Berberian v.
Gibney, 514 F.2d 790, 792 (1st Cir. 1975); Burroughs v. Palumbo,
871 F. Supp. 870, 872 (E.D. Va. 1994). It could not waive a right that
it had already exercised.
Furthermore, even if remand would have been proper, once an
improperly removed case has proceeded to final judgment in federal
court that judgment should not be disturbed so long as the federal
court had jurisdiction over the claim at the time it rendered its deci-
sion. In Caterpillar Inc. v. Lewis, 117 S. Ct. 467 (1996), the Supreme
Court held that "a district court's error in failing to remand a case
improperly removed is not fatal to the ensuing adjudication if federal
jurisdictional requirements are met at the time judgment is entered,"
id. at 471. "To wipe out the adjudication post-judgment, and return to
state court a case now satisfying all federal jurisdictional require-
ments, would impose an exorbitant cost on our dual court system, a
cost incompatible with the fair and unprotracted administration of jus-
tice." Id. at 477. The Fourth Circuit has recognized these "consider-
ations of finality, efficiency, and economy," id. at 476, as well:
Where a matter has proceeded to judgment on the merits and
principles of federal jurisdiction and fairness to parties
remain uncompromised, to disturb the judgment on the basis
of a defect in the initial removal would be a waste of judicial
resources. Although the interest in judicial economy is most
pressing where an action has proceeded to trial, we feel that
the same considerations are applicable to summary judg-
ment.
Able v. Upjohn Co., 829 F.2d 1330, 1334 (4th Cir. 1987) (citation
omitted), overruled on other grounds, Caterpillar, Inc., 117 S. Ct. at
475 n.11.
There is no dispute that diversity jurisdiction existed both at the
time of removal and at the time summary judgment was granted for
4
MAC. And Aqualon has not argued that it was prejudiced in some
way by the federal forum. We conclude that the district court properly
exercised jurisdiction over this case.
II.
As this appeal arises from a grant of summary judgment, we view
the facts in the light most favorable to the non-moving party, deciding
matters of law de novo. See Halperin v. Abacus Technology Corp.,
128 F.3d 191, 196 (4th Cir. 1997). Here the relevant facts are essen-
tially agreed upon. Aqualon, after repeatedly stressing its right to
reject nonconforming valves, reissued purchase orders for the valves
knowing full well that they leaked more than MAC had estimated,
accepted delivery and paid for the valves in full, all without notifying
MAC that it found the transaction still troublesome. The first such
notice Aqualon gave MAC that it intended to pursue a claim of breach
was the complaint served on MAC three years after acceptance. The
district court dismissed Aqualon's breach of contract and breach of
warranty claims on the ground that such notice was not given within
a reasonable time after acceptance, as section 2-607(3) of the Uniform
Commercial Code requires.1 We are asked to review the application
of the U.C.C. section 2-607(3) as a matter of law.
Section 2-607(3) provides:
(3) Where a tender has been accepted
(a) the buyer must within a reasonable time after he dis-
covers or should have discovered any breach notify the
seller of breach or be barred from any remedy . . . .
_________________________________________________________________
1 The purchase orders for the rotary airlock valves each contain a
choice of law provision specifying that disputes over the items addressed
therein shall be governed by Delaware law. The district court applied
Delaware law to Aqualon's breach of contract and breach of warranty
claims. Because Delaware (and Virginia, site of the Aqualon production
facility) has adopted Uniform Commercial Code section 2-607(3) with-
out modification, see Del. Code Ann. tit. 6, § 2-607; see also Va. Code
Ann. § 8.2-607 (Michie), we refer to the U.C.C. directly instead of any
provision of state law.
5
U.C.C. § 2-607(3). The notice required by section 2-607(3) "need
merely be sufficient to let the seller know that the transaction is still
troublesome and must be watched." U.C.C. § 2-607, cmt. 4.
Aqualon makes four related arguments: 1) section 2-607(3) does
not apply to the circumstance presented here; 2) Aqualon's pre-
acceptance complaints that the valves leaked more than it had esti-
mated constituted reasonable notice of the breach; 3) MAC's actual
knowledge that the valves leaked more than MAC had estimated ful-
filled the purposes of the U.C.C. notice requirement; and
4) Aqualon's serving MAC with a complaint three years after accep-
tance constituted notice within a reasonable time. We address each
contention in turn.
A. U.C.C. Section 2-607(3) Does Apply
By its terms, U.C.C. section 2-607(3) applies to this case because
this is a situation "[w]here a tender [of goods, i.e., the valves] has
been accepted." Section 2-607(3) bars a breach of contract claim by
a buyer, such as Aqualon, who has accepted the seller's, such as
MAC's, tender of goods unless Aqualon gave MAC notice of the
alleged breach within a reasonable time.
Section 2-607(3) is based on section 49 of the Uniform Sales Act.
See U.C.C. § 2-607, cmt. (Prior Uniform Statutory Provision). Profes-
sor Williston, the author of the Uniform Sales Act, has explained that
section 49 ameliorated the harsh rule that acceptance of a tender of
goods acted as a release by the buyer of any claim that the goods did
not conform to the contract. See 5 Williston on Contracts § 714 (3d
ed. 1961). But the Uniform Sales Act did not go entirely to the other
extreme by allowing the buyer to accept goods without objection and
then assert claims for breach of contract at any time within the statute
of limitations period. See id. Instead, the Act "allow[ed] the buyer to
accept the offer without waiving any claims, provided the buyer gave
the seller prompt notice of any claimed breach." Southeastern Steel
Co. v. W.A. Hunt Constr. Co., 390 S.E.2d 475, 478 (Ct. App. S.C.
1990). Courts have held that the same understanding applies to sec-
tion 2-607(3) of the U.C.C. See, e.g., id.; Eastern Air Lines, Inc. v.
McDonnell Douglas Corp., 532 F.2d 957, 971 (5th Cir. 1976).
6
Aqualon has argued that the U.C.C. provision does not apply to this
case because MAC had actual knowledge that its valves were inade-
quate long before Aqualon's acceptance. Requiring further notice
after acceptance would be pointless, Aqualon argues. In support,
Aqualon cites Jay V. Zimmerman Co. v. General Mills, Inc., 327 F.
Supp. 1198 (E.D. Mo. 1971). In Jay V. Zimmerman Co., the seller
was unable to deliver the goods by the date specified in the contract.
The seller clearly knew that it was in breach of the contract when it
delivered the goods late, and the buyer did not formally notify the
seller of its intent to sue for breach after accepting the late goods. The
court found that section 2-607(3) did not apply in the situation where
the seller had actual knowledge of the breach at the time of delivery,
holding that "[i]t would be an unreasonable, if not absurd, construc-
tion of the statute to require a renewed notice of breach after accep-
tance of the goods" in those circumstances. Id. at 1204.
Both previous and subsequent cases have rejected the reasoning of
Jay V. Zimmerman Co. Under the Uniform Sales Act predecessor to
section 2-607(3) "it was irrelevant whether a seller had actual knowl-
edge of a nonconforming tender. Instead, the critical question was
whether the seller had been informed that the buyer considered him
to be in breach." Eastern Air Lines, Inc., 532 F.2d at 972 (rejecting
Jay V. Zimmerman Co.); see also 5 Williston on Contracts § 714, at
409-10 (3d ed. 1961) ("It might be urged that the seller needs no
notice in case of delivery delayed beyond a date expressly fixed in the
contract, for he must be aware that he is violating the provisions of
the contract, but though he knows this he does not know whether the
buyer is willing to accept deferred delivery as full satisfaction, and in
any event the words of the Statute seem plain."). As the Southeastern
Steel Co. court noted, Judge Learned Hand "eloquently disposed of
this imaginative, but fallacious, argument," 390 S.E.2d at 480, that a
seller's knowledge of a defective tender was sufficient notice of
breach:
The plaintiff replies that the buyer is not required to give
notice of what the seller already knows, but this confuses
two quite different things. The notice "of the breach"
required is not of the facts, which the seller presumably
knows quite as well as, if not better than, the buyer, but of
buyer's claim that they constitute a breach. The purpose of
7
the notice is to advise the seller that he must meet a claim
for damages, as to which, rightly or wrongly, the law
requires that he shall have early warning.
American Mfg. Co. v. United States Shipping Bd. Emergency Fleet
Corp., 7 F.2d 565, 566 (2d Cir. 1925); see also Oxford Boatyard Co.
v. Warman, 192 F.2d 638, 639 (4th Cir. 1951) ("It is not enough that
the defendant knew of the defect . . . since it did not know that plain-
tiff was claiming breach of warranty on that account.").
Aqualon responds to this argument by pointing out that Judge Hand
was interpreting the predecessor to U.C.C. section 2-607(3). Aqualon
admits that U.C.C. section 2-607(3) was patterned on the statute inter-
preted by Judge Hand, but claims that the U.C.C. provision was
drafted "with an eye towards achieving less harsh results where the
buyer is a `retail consumer.'"
But numerous courts have applied Judge Hand's reasoning to cases
involving U.C.C. section 2-607(3). See, e.g., Standard Alliance Indus.
v. Black Clawson Co., 587 F.2d 813, 825 (6th Cir. 1978); Eastern Air
Lines, Inc., 532 F.2d at 972-73. The reasoning is persuasive, and it
produces no "harsh results" in this case. Aqualon was required by sec-
tion 2-607(3) to give formal notice to MAC, after accepting the
valves, that it still found the transaction troublesome. Only then
would MAC know not to assume a position of repose, but that it
should attempt either to cure the defect, negotiate a settlement or pre-
pare for litigation.
Aqualon cites Arcor, Inc. v. Textron, Inc., 960 F.2d 710 (7th Cir.
1992), for the proposition that we should reject the"cramped" con-
struction of section 2-607(3) adopted by the district court in favor of
a "more practical construction." In Arcor, Inc., Aqualon argues, the
Seventh Circuit recognized that the notice requirement was fulfilled
where the "seller has actual knowledge of the product's failure based
on the seller's own observations." Id. at 715. Aqualon asserts that the
Seventh Circuit has recognized that it would be absurd to require buy-
ers to notify sellers of a breach of which they were already aware.
Arcor, Inc. is easily distinguishable from the instant case, however.
The buyer in Arcor, Inc. notified the seller that the product would not
8
perform as required shortly after the buyer accepted it. During the fol-
lowing two years, the seller visited the buyer approximately thirty
times on service calls, attempting to correct the problem with the
machine. When these attempts were unsuccessful, the buyer sued for
breach of warranties. See id. at 711.
The Seventh Circuit was right to hold that in that case the seller
had actual knowledge of its breach and further notice would be point-
less. The seller clearly knew that the buyer found the transaction "still
troublesome." But that holding does not apply to the present situation,
in which the buyer made no complaints after accepting the seller's
tender. Here, after Aqualon accepted and paid in full, MAC had no
way to know that Aqualon found the transaction "still troublesome."
MAC admits it knew when it delivered the valves that they leaked
more than it had estimated, but it was not aware that Aqualon would
consider this to be a "breach" of anything. Although it had estimated
maximum leakage amounts before being awarded the contract, MAC
had made it clear that any performance warranty would be contingent
upon MAC's approval in writing of the final equipment-installation
and convey-route line drawings. The drawings were never approved
by MAC. MAC and Aqualon later discussed a specific performance
guarantee that Aqualon was supposed to draft, but Aqualon never
drafted one. Furthermore, after Aqualon's original purchase order was
sent, MAC executed an Order Acknowledgment that expressly dis-
claimed both express and implied warranties. MAC did not know,
therefore, that Aqualon would claim that the valves' excessive leak-
age rates constituted a breach of contract or breach of warranty.
B. Aqualon's Pre-Acceptance Complaints Did Not Satisfy the
Requirements of U.C.C. Section 2-607(3)
Aqualon next argues that its complaints to MAC before the March,
1993, reissuance of the purchase order for the valves satisfied the
requirements of section 2-607(3). Aqualon sent a letter to MAC on
August 3, 1992, in which it asserted that the valve leakage rates were
"outside the performance requirements of our purchase order" and
that Aqualon "cannot accept valves that will not perform." That letter
was followed by continuous correspondence "for the next six months
regarding recommendations on how to correct and solutions to the
9
deficiency of the valves." During the six months Aqualon commis-
sioned more tests of MAC's valves and tested the valves of one of
MAC's competitors for a comparison. There is some evidence that no
valve then on the market had low enough leakage rates to perform in
the system which C.W. Nofsinger had designed. Aqualon was forced
to redesign parts of its system. Aqualon again asserted its right to
reject valves that did not meet its performance requirements in a letter
of September 22, 1992. By March of 1993, Aqualon explains, both it
and MAC knew that the excess leakage could not be remedied.
However, Aqualon's acceptance of the valves without comment
after the six months of letters dissipated the effect of its earlier com-
plaints. See Eastern Air Lines, Inc., 532 F.2d at 978. Knowing the
leakage rates, Aqualon nevertheless reissued its purchase order for the
valves in March of 1993 and amended it in April of 1993. In June of
1993 MAC's tender of the valves was accepted, and in December
Aqualon paid for the valves in full. Finally, in the winter of 1993
Aqualon told MAC that its system was working well, and the only
problem it mentioned was blower noise, which MAC fixed.
In short, MAC probably knew that Aqualon was not happy with the
leakage rates, but it could reasonably have believed that Aqualon was
satisfied with the valves. Because Aqualon did not inform MAC after
accepting the tender that the transaction was " still troublesome,"
MAC had no way to know that there was any remaining problem to
be cured, or any controversy to be negotiated about or settled, or any
impending litigation with which to be concerned, after Aqualon reis-
sued the purchase order for, accepted and paid for the valves. Without
any post-acceptance notice otherwise, MAC deserved to be able to
rely on the certainty of its contractual arrangement and to believe that
a way had been found to make the valves satisfactory.
Aqualon argues that the above argument is "disingenuous" because
"MAC was clearly aware, after working with Aqualon for over six
months, that Aqualon had no choice but to accept the valves and
make changes to their own system in order to make them work."
MAC contests this assertion, but even if it is perfectly true, once
Aqualon made those changes MAC could not be expected to know
that Aqualon would still find the deal troublesome. MAC's knowl-
edge that changes to the system were required and were costly did not
10
notify MAC that Aqualon would blame MAC as opposed to C.W.
Nofsinger, who designed the system.
Aqualon further argues that to require post-acceptance notice is
"unjust" because time pressure forced it to accept the valves built by
MAC despite their inadequacy. This is irrelevant to the question
whether MAC was given reasonable notice in which to try to cure the
problem, settle the claim, or prepare for litigation. Aqualon asserts
that "to find lack of notice because [Aqualon] chose to accept the
valves despite deficiencies which were known by all parties, punishes
Aqualon for attempting to minimize damages." But nothing prevented
Aqualon from accepting the valves to minimize damages while also
notifying MAC that it should prepare for future litigation.
Aqualon also argues that formally notifying MAC of the claim of
breach was impractical because it would have interfered with the
business relationship between the two companies. However, the
desire to preserve a good business relationship does not justify
Aqualon's springing this lawsuit on MAC without the reasonable
notice required by the U.C.C. Furthermore, Aqualon's assertion that
it did not formally complain because it wanted to preserve its business
relationship undermines its claims that MAC had notice of the likeli-
hood of litigation.
C. The Purposes of the Notice Requirement
Were Not Met
Acknowledging that it gave no additional notice after it accepted
the valves that the transaction was "still troublesome," Aqualon
asserts that the purposes of the notice requirement were met by
MAC's actual knowledge that its valves were inadequate. Aqualon
argues that where those purposes have been satisfied, its failure to
comply with the technical requirements of the U.C.C. should not bar
it from litigating the case on the merits. See Prutch v. Ford Motor
Co., 618 P.2d 657, 661 (Colo. 1980) (en banc ) ("When, as here, the
purposes of the notice requirement have been fully served by actual
notice, the notice provision should not operate as a technical proce-
dural barrier to deny claimants the opportunity to litigate the case on
the merits.").
11
Aqualon contends that three purposes of the notice requirement
were met in this case. The three purposes that Aqualon identifies for
the U.C.C.'s notice requirement are:
(1) to prevent surprise and allow the seller the opportunity
to make recommendations on how to cure the nonconfor-
mance;
(2) to permit the seller the fair opportunity to investigate
and prepare for litigation; and
(3) to open the way for normal settlement of claims
through negotiation.
Aqualon, however, neglects to include a further purpose identified by
the district court:
(4) to protect the seller from stale claims and provide cer-
tainty in contractual arrangements.
Cf. 1 James J. White & Robert S. Summers, Uniform Commercial
Code § 11-10, at 612-13 (4th ed. 1995) (listing these purposes, as well
as the purpose of recognizing a general disbelief of tardy claims).
Assuming, without deciding, that satisfaction of these four purposes
would obviate the need to comply with the terms of the statute,
Aqualon cannot demonstrate that the purposes were satisfied.
First, the notice requirement provides an opportunity for the seller
to cure the defect. See, e.g., Hebron v. American Isuzu Motors, Inc.,
60 F.3d 1095, 1099 n.2 (4th Cir. 1995). MAC knew in August of
1992 that its valves would leak far more than stated in its original pro-
posal. Both MAC and Aqualon worked together for the next six
months to try to modify Aqualon's system design to use those valves,
because both parties knew that nothing more could be done to
improve the performance of the valves. Because MAC had in excess
of six months to effect a cure2 and was unable to do so, Aqualon con-
tends that the first purpose of the notice requirement was satisfied.
_________________________________________________________________
2 Aqualon unknowingly admits much by its repeated assertions that
MAC had "full notice for over six months" that its valves were noncon-
12
Second, the notice requirement is intended to give the seller a fair
chance to prepare for litigation, for example by gathering documents
and taking depositions while the evidence is still available and memo-
ries are still fresh. See, e.g., Cole v. Keller Indus., 872 F. Supp. 1470,
1474 (E.D. Va. 1994), vacated on other grounds , 132 F.3d 1044,
1047-48 (4th Cir. 1998). Aqualon asserts that this purpose was ful-
filled because MAC knew of the possibility of litigation by virtue of
its knowledge that the system as originally designed did not work
with the leaky valves. However, as explained above, the aforemen-
tioned knowledge demonstrates that MAC knew the facts, but not that
MAC knew that Aqualon would consider these facts to constitute a
breach of warranty. Aqualon's acceptance of and full payment for the
valves without further complaint, knowing their leakage rates, com-
municated to MAC that the valves were acceptable.
Third, the notice requirement prompts negotiation and settlement
of claims. See, e.g., Hebron, 60 F.3d at 1098-99. If MAC had been
notified more promptly after Aqualon's acceptance of the valves that
Aqualon intended to sue MAC (specifically, before Aqualon filed its
complaint), it might have settled the underlying claim. Because MAC
would not have had to undertake the expenses of litigation that arose
when it had to respond to Aqualon's complaint, MAC would likely
have offered more money in settlement of the claim. And because
Aqualon would not yet have invested in litigation by paying lawyers
to prepare and file the complaint, Aqualon would presumably have
_________________________________________________________________
forming. Aqualon's six month figure presumably is measured from
MAC's letter of August 3, 1992, acknowledging that the valves would
not meet the estimated leakage values, to Aqualon's March 1993 reissu-
ance of the purchase order. The important point is that Aqualon stops
counting the time that MAC knew its valves were unacceptable at the
date when Aqualon reissued the purchase order; Aqualon implicitly rec-
ognizes that MAC did not know its valves were still unacceptable after
Aqualon reissued the purchase order.
If Aqualon truly believed MAC still knew its valves were unacceptable
and might trigger a lawsuit after reissuance of the purchase order,
Aqualon would have claimed that MAC had 10 months notice (until June
1993 when the valves were shipped), over a year's notice (until they
were paid for in full), or more than 5 years notice (from the time of its
letter until today) to try to cure the defect.
13
agreed to receive less money in settlement of its claim. In this way,
earlier notice would have led to a greater chance of settlement.
Aqualon's bare assertion that "MAC has suffered no detriment with
respect to the options of settlement," just because settlement efforts
were unsuccessful, is mistaken.
Finally, the notice requirement is intended to protect the seller from
stale claims and provide certainty in contractual arrangements. See id.
Aqualon argues that using a notice requirement to give peace of mind
to a defendant and to protect against stale claims is inappropriate and
unnecessary because that purpose is served by a statute of limitations.
It is true that a state may decide to serve these policies through a strict
statute of limitations. But a state may also choose to enact a notice
requirement in addition to a longer statute of limitations. Such a two-
part scheme preserves claims of which the defendant has not been
notified for only a short period of time, but if the defendant has been
notified, it preserves those claims for a longer period. The Delaware
equivalent of U.C.C. section 2-607(3) combines with Delaware's stat-
ute of limitations to create just such a scheme. Because Aqualon made
no complaints to MAC for three years after accepting the valves,
MAC was entitled to assume a position of repose.
D. Aqualon's Delay of Three Years Was Not
Notification Within a Reasonable Time
Finally, Aqualon argues that even if its pre-acceptance complaints
did not serve to notify MAC that it found the transaction "still trou-
blesome," Aqualon's service of a civil complaint on MAC approxi-
mately three years after accepting the valves was notification within
a "reasonable time," satisfying U.C.C. section 2-607(3).3 The district
_________________________________________________________________
3 MAC urges that we should follow the "majority" of courts to address
the issue and hold that notice-via-lawsuit is insufficient as a matter of
law, citing cases such as Chemtrol Adhesives, Inc. v. American Mfrs.
Mut. Ins. Co., 537 N.E.2d 624, 638 (Ohio 1989), and Lynx, Inc. v. Ord-
nance Prods., Inc., 327 A.2d 502, 514 (Md. 1974). But MAC's assertion
that this is the "majority" position recognizes that courts in other jurisdic-
tions disagree. In fact, the Chemtrol Adhesives, Inc. court declined to
adopt such a per se rule. See 537 N.E.2d at 638. We decline to resolve
this issue of first impression under Delaware law.
14
court found that such a delay was unreasonable, relying on our state-
ment in Hebron that "[i]n the circumstances of this case, we hold that
a two-year delay in giving notice under [the Virginia equivalent of
U.C.C. section 2-607(3)] is unreasonable as a matter of law where no
explanation for the delay is provided and actual prejudice is sus-
tained." 60 F.3d at 1098.
Aqualon asserts that, unlike the plaintiff in Hebron, it had good
reasons for delay. The reasons it provides boil down to simply that
Aqualon was slow in figuring out that it wanted to blame MAC for
the cost over-run in designing its system.4 Furthermore, Aqualon
offers no explanation whatsoever for the delay of a year after filing
its complaint against MAC before Aqualon served MAC with the
complaint.
Aqualon also asserts that the delay was not unreasonable because
MAC has not suffered any prejudice from the delay. MAC claims that
there was prejudice to its case because of faded memories and lost
documents, and gives an example of a lost document. Aqualon argues
in rebuttal that the named document would have been irrelevant to
MAC's case. We cannot tell whether the document would have been
helpful because, it being lost, we cannot know exactly what informa-
tion it contained. Furthermore, we cannot tell whether there may have
been other pertinent documents available three years before MAC
was served that were lost and have been forgotten during its period
of repose. These considerations demonstrate why, although prejudice
is relevant to whether a delay was reasonable, no showing of preju-
dice is required to make section 2-607(3) applicable.
III.
The district court correctly denied Aqualon's motion to remand the
case and correctly dismissed Aqualon's contract and warranty claims
because of Aqualon's failure to notify MAC of those claims within
a reasonable time after accepting tender of the valves. The district
court's judgment is
AFFIRMED.
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4 MAC points out that Aqualon at first chose to blame C.W. Nofsinger,
and prepared to file suit against it.
15