Breach of contract; Whether the parties’ contract involved the sale of goods & was subject to the Uniform Commercial Code (UCC); “Predominant purpose” or “predominant factor” test; Insul-Mark Midwest, Inc v Modern Materials, Inc (IN)

The court concluded the trial court erred by holding the parties’ contract was predominately for the sale of goods and subject to the UCC. It “predominately concerned service, which is governed by the common law.” Thus, it reversed the portion of the order granting plaintiff-Challenge’s motion for summary disposition and remanded. Defendant-MetoKote asserted the trial court erred by holding that the contract “involved the sale of goods to which the UCC applies because MetoKote provides a service, making the UCC inapplicable.” MetoKote maintained “the application of the e-coat was a service to which the UCC was inapplicable.” To support its position, MetoKote relied on an Indiana Supreme Court case, Insul-Mark Midwest. The court held that “Challenge entered into an agreement with MetoKote for the e-coating of its plenums to increase the part’s resistance to corrosion or rust as required by GM.” It determined that this case was analogous to Insul-Mark Midwest. “Challenge was not concerned with the ingredients used in the coating or the coating process, as long as the coatings met GM’s specifications. Instead, Challenge was predominately concerned with price and location when it investigated a coating supplier.” The court concluded although “the e-coating material itself may be characterized as constituting a good, it was incidental to the larger service MetoKote supplied, its application. Like the coating process of screws in Insul-Mark Midwest, the court determined “MetoKote’s extensive application process, with its more than 20 distinct steps, was crucial to the transformation of the raw plenums to the coated plenums with their increased resistance to rust.”