govinfo:USCOURTS-mdd-8_19-cv-00565-0

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IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF MARYLAND 
Southern Division 
 
         
ALL WEATHER, INC.,  *        
       
 P l a i n t i f f ,   *       
v.     Case No.: GJH-19-565  
  * 
OPTICAL SCIENTIFIC, INC., 
  * 
Defendant.      
  * 
* * * * * * * * * * * * *  
  
MEMORANDUM OPINION 
 
Plaintiff All Weather, Inc. (“AWI”) brings this diversity action against Defendant Optical 
Scientific, Inc. (“OSi”) seeking damages for OSi’s alleged breach of an agreement to provide 
working equipment for AWI to integrate into weather observation systems it contracted to sell to 
the Canadian government. Pending before the Court are OSi’s Motion to Dismiss the Complaint, 
ECF No. 15, and AWI’s Motion for Leave to File Amended Complaint, ECF No. 19, which OSi 
has opposed, ECF No. 21. No hearing is necessary. See Loc. Rule 105.6. (D. Md.). For the 
following reasons, the Court will grant the Motion for Leave and accept the Amended Complaint 
as the operative pleading, though some of AWI’s claims will be dismissed.  
I. BACKGROUND 
According to the Complaint,1 AWI is a developer of weather measurement systems that it 
installs and maintains at aviation facilities across the world. ECF No. 1 ¶ 7. OSi is an 
engineering firm that designs and manufactures sensors that measure weather conditions 
including precipitation, air flow, turbulence, and visibility. Id. ¶ 8. In February 2012, the 
 
1 Unless otherwise stated, these facts are taken from AWI’s Complaint, ECF No. 1, and are presumed to be true. 
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Canadian Department of National Defense (“DND”) issued a Request for Proposals (“RFP”) 
soliciting bids for an aviation-capable weather system. Id. ¶ 10. Specifically, the DND sought to 
procure up to 52 Automated Weather Observation System (“AWOS”) units along with spare 
sensors. Id. ¶ 11. The RFP included technical requirements for the systems and provided that 
they were required to meet “Aviation Capable AWOS requirements” set by international, 
Canadian, or U.S. aviation bodies, as well as Canadian Aviation Regulations (“CARS”). Id. ¶¶ 
11–13. Certifying AWOS units under CARS involves collecting, analyzing, and comparing data 
from the units over a period of time. Id. ¶ 13. 
AWI decided to prepare a response to the RFP. Id. ¶ 14. After OSi learned of AWI’s 
interest, it published a white paper indicating that its weather and visibility sensor, the OWI-430 
DSP-WIVIS (“OWI-430”), met the technical requirements of the RFP. Id. ¶ 16. On or about 
December 9, 2011, AWI employee Bob Perrin contacted OSi about incorporating the OWI-430 
into AWI’s potential bid for the RFP. Id. ¶ 17. Wil March from OSi responded to AWI’s inquiry 
and expressly represented that the OWI-430 met the technical requirements of the RFP and that 
its performance would meet CARS standards. Id. ¶ 18. AWI proceeded to prepare a bid for the 
RFP that included the OWI-430. Id. ¶ 19. In August 2012, DND awarded the contract to AWI 
and AWI signed an agreement to provide AWOS units that met the DND specifications. Id. ¶ 20. 
AWi then began to buy OWI-430 sensors from OSi by sending OSi purchase orders. Id. ¶ 
21. Specifically, “AWI and OSi entered into multiple purchase orders whereby OSi agreed to 
provide AWI with OWI-430 sensors.” Id. The original Complaint asserts that “[e]ach purchase 
order incorporated OSi’s Terms & Conditions by reference” and that “[i]ncluded in the terms of 
each purchase order between AWI and OSi was an express warranty that the OWI-430 would 
meet the technical requirements required for AWI to fulfill its obligations to DND.” Id. ¶¶ 21–
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22. AWI built four prototype AWOS units that included the OWI-430, which it “factory 
acceptance tested in November 2012.” Id. ¶ 23. AWI was then authorized to begin field testing 
its units and installed one at a facility in Bagotville, Quebec. Id. ¶ 24. It installed the remaining 
three prototypes for testing throughout 2013. Id. ¶ 25.  
Between May 2014 and December 2016, AWI executed seven additional purchase orders 
with OSi, purchasing a total of 74 OWI-430 sensors for $457,230.60. Id. ¶ 26. In February 2016, 
however, the Canadian Department of the Environment, which had performed testing on the 
AWOS units to determine if they would meet CARS standards, informed AWI that the OWI-430 
sensors had failed its testing and did not meet the standards. Id. ¶¶ 27–28. AWI informed OSi 
that there were problems with the OWI-430 on February 29, 2016. Id. ¶ 29. In March 2016, AWI 
and DND signed an amendment to their contract that permitted AWI to continue deploying its 
AWOS units while it worked to resolve the problems with the OWI-430 but reduced DND’s 
payments to AWI by ten percent during that time. Id. ¶ 30.  
OSi worked through 2016 to solve the problems with the OWI-430, including by testing 
the devices in different locations and releasing at least three firmware or software updates. Id. ¶ 
31. AWI cooperated by retrieving sensor data and providing it to OSi, coordinating sensor swaps 
at the DND testing sites, and designing and manufacturing custom cables allowing DND 
technicians to install OSi’s updates. Id. ¶ 32. OSi continued to replace and add hardware and 
release additional firmware updates through 2017, but none of its attempted solutions solved the 
issues and the OWI-430 remained unable to meet CARS standards. Id. ¶¶ 33–35. AWI, DND, 
and OSi continued to work through 2018 to attempt to resolve the issues, but their efforts were 
unsuccessful. Id. ¶ 36. On December 13, 2018, DND sent an email to AWI stating that Canada 
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could not accept the sensors because they had failed. Id. ¶ 39. AWI was thus required to replace 
all of the sensors it had purchased from OSi. Id. ¶¶ 39–40.  
AWI filed a Complaint against OSi alleging breach of contract, breach of express 
warranty, and breach of implied warranty of merchantability on February 22, 2019. ECF No. 1. 
OSi filed a Motion to Dismiss on April 18, 2019. ECF No. 15. In its Memorandum in support of 
the Motion, OSi attempted to clarify what it saw as imprecision in the Complaint’s description of 
AWI’s equipment purchases from OSi. ECF No. 15-1. Specifically, OSi asserted that when AWI 
described purchase orders for OWI-430 devices that incorporated OSi’s Terms & Conditions by 
reference, AWI was referring to “Quotations” that OSi prepared and issued to AWI. ECF No. 15-
1 at 8 & n.1. OSi attached six such quotations to its motion, which are dated May 30, 2014, 
October 15, 2014, January 23, 2015, April 9, 2015, January 20, 2016, and December 22, 2016. 
ECF No. 15-3 at 3, 5, 7, 9, 11, 13.
2 Proceeding on the premise that those quotations constituted 
the parties’ agreement with respect to the sensor sales, OSi argued that the Complaint was 
untimely and failed to state a claim because the agreement does not contain the warranty terms 
on which the Complaint relies. ECF No. 15-1 at 11–22. 
In response, AWI filed a Motion for Leave to file an Amended Complaint on May 16, 
2019, explaining that it made “what amounts to a scrivener’s error” in the original Complaint 
that it only noticed in reviewing the Motion to Dismiss. ECF No. 19-1 at 1–2. In short, AWI had 
erroneously alleged that each purchase order “incorporated OSi’s Terms & Conditions by 
reference,” when instead AWI had meant to allege that the purchase orders incorporated “AWI’s 
Terms and Conditions, not OSi’s terms and conditions.” Id. at 2.3 The Complaint thus did not 
 
2 Pin cites to documents filed on the Court’s electronic filing system (CM/ECF) refer to the page numbers generated 
by that system. 
3 AWI attached a copy of its own terms and conditions to the Motion for Leave. ECF No. 19-3. 
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intend to refer to OSi’s quotations, as OSi’s Motion to Dismiss asserted, but rather to AWI-
generated purchase orders. Id. at 2–3. AWI attached nine such purchase orders to the Motion for 
Leave, which have dates ranging from October 24, 2012 to December 22, 2016. ECF Nos. 19-4, 
19-5, 19-8, 19-10, 19-12, 19-14, 19-15, 19-17, 19-19.  
AWI explained that it offered its proposed Amended Complaint “to make clear that when 
AWI referred to and relied upon its purchase orders as the documents controlling the parties’ 
relationship, AWI intended to allege that the AWI Terms and Conditions referenced on the face 
of those purchase orders govern the parties’ relationship, not the OSi terms and conditions.” ECF 
No. 19-1 at 3. The proposed Amended Complaint also sought to add “allegations regarding the 
process by which AWI and OSi formed a contractual relationship,” and “additional alternate 
theories of relief . . . based on the same set of operative factual allegations.” Id. AWI also 
submitted an opposition to the Motion to Dismiss that responded to its substantive arguments and 
reiterated the arguments in the Motion for Leave, including that the original Complaint “never 
referred to OSi’s quotes.” ECF No. 20-1 at 3, 8–12.  
OSi responded on May 30, 2019 with a brief in opposition to the Motion for Leave, 
asserting that AWI’s proposed amendment is made in bad faith and should be rejected on that 
ground, or alternatively that the Motion should be denied and the case should be dismissed 
because the amendment is futile and AWI’s claims are untimely. ECF No. 21. OSi also filed a 
Reply in support of its Motion to Dismiss reiterating or expanding on the arguments from its 
opposition to the Motion for Leave. ECF No. 22. AWI filed a Reply in support of its Motion for 
Leave on June 13, 2019. ECF No. 23.  
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II. STANDARD OF REVIEW 
Federal Rule of Civil Procedure 15(a)(2) provides that courts “should freely give leave” 
to parties to amend pleadings “when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This liberal 
rule gives effect to the federal policy in favor of resolving cases on their merits instead of 
disposing of them on technicalities.” Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006). The 
Fourth Circuit has “interpreted Rule 15(a) to provide that ‘leave to amend a pleading should be 
denied only when the amendment would be prejudicial to the opposing party, there has been bad 
faith on the part of the moving party, or the amendment would have been futile.’” Id. (quoting 
Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)); see also Mayfield v. Nat’l 
Ass’n for Stock Car Auto Racing, Inc., 674 F.3d 369, 379 (4th Cir. 2012). “Futility is apparent if 
the proposed amended complaint fails to state a claim under the applicable rules and 
accompanying standards.” Davison v. Randall, 912 F.3d 666, 690 (4th Cir. 2019) (quoting 
Katyle v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011)) (explaining that the 
plaintiff’s proposed amendment was futile if the new claim it added would not have survived a 
Rule 12(b)(6) motion to dismiss). 
To state a claim that survives a Rule 12(b)(6) motion, “a complaint must contain 
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 
570 (2007)). The “mere recital of elements of a cause of action, supported only by conclusory 
statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. 
McMahen, 684 F.3d 435, 439 (4th Cir. 2012). The Court accepts “all well-pled facts as true and 
construes these facts in the light most favorable to the plaintiff in weighing the legal sufficiency 
of the complaint.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th 
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Cir. 2009). The Court must also “draw all reasonable inferences in favor of the plaintiff.” Id. at 
253 (citing Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999)). “[B]ut [the Court] 
need not accept the legal conclusions drawn from the facts, and . . . need not accept as true 
unwarranted inferences, unreasonable conclusions or arguments.” Id. (first alteration in original) 
(quoting Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)). 
“Under limited circumstances, when resolving a Rule 12(b)(6) motion, a court may 
consider exhibits, without converting the motion to dismiss to one for summary judgment.” 
Brennan v. Deluxe Corp., 361 F. Supp. 3d 494, 501 (D. Md. 2019) (citing Goldfarb v. Mayor & 
City Council of Balt., 791 F.3d 500, 508 (4th Cir. 2015)). “In particular, a court may consider 
documents that are ‘explicitly incorporated into the complaint by reference and those attached to 
the complaint as exhibits . . . .’” Id. (quoting Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 
166 (4th Cir. 2016)). The Court may also “consider a document submitted by the movant that 
was not attached to or expressly incorporated in a complaint, so long as the document was 
integral to the complaint and there is no dispute about the document’s authenticity.” Goines, 822 
F.3d at 166. “To be ‘integral,’ a document must be one ‘that by its very existence, and not the 
mere information it contains, gives rise to the legal rights asserted.’” Brennan, 361 F. Supp. 3d at 
502 (quoting Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F. Supp. 2d 
602, 611 (D. Md. 2011)).  
III. DISCUSSION 
The parties’ overlapping briefing on OSi’s Motion to Dismiss and AWI’s Motion for 
Leave essentially presents three related questions: (1) was AWI’s Motion for Leave to file an 
amended pleading made in bad faith and is it prejudicial to OSi; (2) is the motion futile because 
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the proposed Amended Complaint fails to state a claim; and (3) does the statute of limitations bar 
AWI from obtaining relief. The Court considers each of these questions in turn.  
A. OSi’s Allegation of Bad Faith and Prejudice 
In its Opposition to the Motion for Leave, OSi first argues that amendment should be 
denied because AWI has proceeded in bad faith. OSi claims that the proposed Amended 
Complaint is “based on a completely different and contradictory theory to that set forth in the 
Complaint” and that AWI waited to change course “until the eve of its opposition filing” and 
only after it had “reviewed OSi’s motion to dismiss and ostensibly realized that it could not win 
on the facts it had pled.” ECF No. 21 at 9. OSi also expresses indignation that AWI sent OSi’s 
counsel a draft of its proposed Amended Complaint and then shared a further modified draft the 
following day without providing a comparison copy showing the changes. Id. at 6–7.  
The Court sees no conduct by AWI that approaches the level of bad faith. While it is 
undoubtedly a substantial “scrivener’s error” to repeatedly use the wrong party’s name in a 
pleading’s critical allegations, there is no reason for the Court to find that it was the result of 
deliberate malfeasance and not carelessness. That AWI only noticed the issue when its counsel 
turned to OSi’s motion is unremarkable, and AWI had no obligation to share any drafts of its 
proposed amendment with OSi before filing, let alone a comparison copy in the style OSi’s 
counsel would prefer. Thus, AWI’s Motion for Leave is not prohibited by bad faith. Cf. 
Mondragon v. Scott Farms, Inc., 329 F.R.D. 533, 540 (E.D.N.C. 2019) (granting a motion to 
amend the defendant’s answer, though defense counsel’s actions were “not a model of 
diligence,” because there was no evidence of bad faith).   
Nor would allowing the amendment unfairly prejudice OSi. “Whether an amendment is 
prejudicial will often be determined by the nature of the amendment and its timing.” Laber, 438 
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F.3d at 427. “An amendment is not prejudicial . . . if it merely adds an additional theory of 
recovery to the facts already pled and is offered before any discovery has occurred.” Id. (citing 
Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir. 1980)). OSi claims it “expended 
substantial resources in response to the Complaint,” but can point to no other prejudice from 
allowing the amendment, which comes before discovery and only purports to add new theories 
and correct and clarify the facts already alleged. ECF No. 9 at 21. Instead, OSi points to two 
Tenth Circuit cases affirming denials of leave to amend. Review of those cases, however, shows 
that they both had substantially different circumstances.  
In Viernow v. Euripedes Development Corporation, the plaintiff sought leave to amend 
nineteen months after filing his original complaint and after the trial judge orally granted 
summary judgment for the defendants, effectively closing the case. 157 F.3d 785, 800–01 (10th 
Cir. 1998). In Hayes v. Whitman, the court cited Viernow and affirmed a denial of leave to 
amend where the plaintiffs waited two years after the complaint and moved for leave only after a 
magistrate judge recommended that summary judgment be granted for the defendants. 264 F.3d 
1017, 1022, 1026–27 (10th Cir. 2001). Here, AWI filed its motion less than four months after the 
original Complaint, and there has been no scheduling order in the case, let alone discovery or 
summary judgment briefing. Thus, even if the decisions in Viernow and Hayes controlled here, 
and they do not, they are plainly distinguishable. The Court will not deny the Motion for Leave 
on the ground of prejudice. 
B. Failure to State a Claim 
OSi next argues that the Motion for Leave should be denied because the Amended 
Complaint fails to state a claim and would therefore be futile. This argument centers on the claim 
that OSi’s terms and conditions of sale, which are referenced in the “Quotation” documents that 
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OSi attached to its Motion to Dismiss, govern AWI’s purchases of the OWI-430 devices and bar 
the remedies that AWI seeks in this action. ECF No. 21 at 10. In short, OSi asks the Court to find 
as a matter of law that its quotations are offers, that the purchase orders AWI attached to its 
Motion for Leave are acceptances, and OSi’s terms and conditions therefore control AWI’s 
remedies here. Id. at 10–11. However, the documents OSi has provided are insufficient to negate 
the allegations in the proposed Amended Complaint that AWI’s terms, which are referenced in 
AWI’s purchase orders, controlled the transactions. 
As described previously, the quotations that OSi attached to its Motion to Dismiss are 
dated May 30, 2014, October 15, 2014, January 23, 2015, April 9, 2015, January 20, 2016, and 
December 22, 2016. ECF No. 15-3 at 3, 5, 7, 9, 11, 13. These dates correspond to the dates of 
some of the purchase orders that AWI attached to its Motion for Leave. ECF Nos. 19-8, 19-10, 
19-12, 19-14, 19-17, 19-19.
4 But the proposed Amended Complaint alleges that the parties’ first 
transaction for OWI-430 sensors was in 2012, not in 2014. Specifically, AWI alleges that it 
issued a purchase order numbered 21506-1 to OSi on October 24, 2012. ECF No. 19-2 ¶ 30. 
AWI has attached that purchase order to the Motion for Leave. ECF No. 19-4 at 2. A typed note 
on the document states that “AWI terms and conditions for all purchase orders are defined within 
AWI’s ISO9001 document M-02-2002” and directs recipients who “require a copy” to “contact 
the buyer who issued this purchase order.” ECF No. 19-4 at 2. Those terms and conditions are 
also attached to the Motion for Leave. ECF No. 19-3. 
To be clear, each of OSi’s quotations states that it is “Subject To OSi Terms & 
Conditions,” see, e.g., ECF No. 15-3 at 3, a copy of which OSi has provided as well, ECF No. 
 
4 The Court considers both OSi’s quotations and AWI’s purchase orders at this stage because, as the parties agree, 
they are integral to AWI’s pleadings. ECF No. 15-1 at 8; ECF No. 20-1 at 2 n.1, 9 n.4; see Brennan, 361 F. Supp. 3d 
at 501–02. 
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15-4. Notably, the quotations contain price, quantity, and other terms that could perhaps render 
them sufficiently specific to constitute offers, though price quotations “generally . . . are not 
offers that can be accepted to form binding contracts.” Audio Visual Assocs., Inc. v. Sharp Elecs. 
Corp., 210 F.3d 254, 259 (4th Cir. 2000) (“In determining whether a proposal by one party 
amounts to an offer, we must ask whether it can be accepted to create an enforceable 
arrangement.”). But critically, OSi has not provided quotations that correspond to AWI’s 
purchase orders from October 24, 2012 or September 30, 2013. ECF Nos. 19-4, 19-6. Lacking 
those documents, the Court has no means of determining at the pleading stage what terms may 
have controlled those transactions, which began the parties’ business relationship. 
In the absence of such documentary evidence, the Court must rely on the well pleaded 
allegations in the proposed Amended Complaint and construe them in the light most favorable to 
AWI. Nemet Chevrolet, 591 F.3d at 255. AWI alleges that its purchases of OWI-430 sensors 
from OSi “all followed the same process,” in which “AWI solicited quotes from OSi, Defendant 
OSi provided quotes,” the parties “communicated and/or negotiated regarding the quantity of 
OWI-430 sensors and the delivery date,” and then “AWI issued a Purchase Order to OSi for a 
specific number of OWI-430 sensors,” each of which “notified OSi that AWI’s terms and 
conditions . . . applied to all purchase orders.” ECF No. 19-2 ¶¶ 24–27. “OSi never disclaimed 
the AWI Terms and Conditions after receiving an AWI Purchase Order,” and “AWI fulfilled its 
obligations under the Purchase Orders and AWI Terms and Conditions by remitting payment to 
OSi for the OWI-430 sensors.” Id. ¶¶ 57–58.  
 To be sure, the Amended Complaint allege s that even the October 2012 and September 
2013 orders were preceded by quotations from OSi that AWI solicited. But without those 
documents, the Court has no basis to find that those quotations contained references to OSi’s 
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terms and conditions, let alone that those terms controlled the 2012 and 2013 transactions. 
Importantly, OSi’s insistence in its briefing that a copy of its terms was included with all of its 
quotations – unlike AWI’s terms, of which OSi claims it had no awareness – does not disturb this 
conclusion. ECF No. 21 at 12–14. At the pleading stage, the Court may not consider new 
allegations of fact that are neither within the scope of the well pleaded allegations in the 
proposed Amended Complaint nor supported by the documents OSi has provided. See Nemet 
Chevrolet, 591 F.3d at 255. 
 The Court thus turns to wh ether the proposed Amended Complaint states a claim based 
on an alleged agreement to AWI’s terms and conditions, from which the pleading quotes at 
length. Paragraph 5 of the terms states that “Acceptance of the Contract Products by Buyer shall 
not relieve Seller of its liability for Contract Products which do not conform to the requirements 
of this Order.” ECF No. 19-3 at 3. Paragraph 8, titled “Warranty,” provides in part that “Seller 
warrants for a period of 15 months after acceptance by Buyer or 12 months after final acceptance 
by Buyer’s customer under any applicable prime contract of Buyer, all Contract Products 
furnished: (1) Are free from defects in material and workmanship and conform to the 
specifications, drawings, or other requirements of this Order; (2) Are free from defects in design; 
. . . [and] (4) Are fit for the intended purpose for which the Contract Products will be used.” Id. 
In an indemnification clause, the terms state that “Seller shall indemnify and hold harmless at its 
own expense[] Buyer . . . from any and all liability, claims, actions and expenses, including 
reasonable attorney’s fees based upon, connected with or arising out of in whole or part Seller’s 
performance of this Order.” Id. at 5.  
AWI bases six claims on these terms, beginning with a breach of contract claim alleging 
that OSi breached Paragraphs 5 and 8 of the AWI terms because the OWI-430 sensors did not 
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meet AWI’s specifications and were not free from defects or fit for their intended purpose. ECF 
No. 19-2 ¶¶ 101–03. “To state a claim for breach of contract, the plaintiff must show that the 
defendant owed him a contractual obligation and that the defendant breached that obligation.” 
Thaler v. Donald J. Trump for President, Inc., 304 F. Supp. 3d 473, 477 (D. Md. 2018). Taking 
as true the allegations in the proposed Amended Complaint, AWI has stated a plausible claim 
that OSi breached its contractual duties to deliver OWI-430 sensors that were functional and 
would allow AWI to fulfill its contract with DND for AWOS units. 
Accordingly, because the proposed Amended Complaint alleges at least one claim 
sufficient to defeat a motion to dismiss, the amendment is not futile for failure to state a claim.5 
Two claims warrant additional consideration, however. First, OSi’s arguments challenging 
AWI’s claim of breach of the implied warranty of merchantability are not mooted by the 
Amended Complaint because they did not rely entirely on AWI’s mistaken citation to OSi’s 
terms. See Due Forni LLC v. Euro Rest. Sols., Inc., No. PWG-13-3861, 2014 WL 5797785, at *2 
(D. Md. Nov. 6, 2014) (noting that an amended complaint does not necessarily moot a pending 
motion to dismiss the original complaint).  
“To assert a claim for breach of implied warranty of merchantability, ‘a plaintiff must 
establish that a product is not of merchantable quality and that he suffered an injury as a result. A 
product is not of merchantable quality when it is not fit for the ordinary purposes for which it is 
used.’” Montgomery v. CSX Transp., No. SAG-14-1520, 2015 WL 770470, at *4 (D. Md. Feb. 
20, 2015) (quoting Pinney v. Nokia, Inc., 402 F.3d 440, 444 (4th Cir. 2005)). “To recover on a 
claim for breach of implied warranty of merchantability, as with a strict liability or negligence 
 
5 The Court will not discuss each of AWI’s additional claims because OSi has not directly attacked their merits since 
the arguments it made in its original Motion to Dismiss, arguments which are mooted by the corrections in the 
Amended Complaint. 
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claim, a plaintiff must prove the existence of a defect at the time the product leaves the 
manufacturer.” Id. (quoting Grinage v. Mylan Pharm., Inc., 840 F. Supp. 2d 862, 871 (D. Md. 
2011)).  
In its Motion to Dismiss, OSi persuasively argued that AWI had failed to state a 
merchantability claim because it did not allege that the OWI-430 sensors were defective or 
unusable for their ordinary purpose, but merely that they were insufficient for the “extremely 
specific purpose of inclusion in AWI’s RFP to Canada.” ECF No. 15-1 at 17. The proposed 
Amended Complaint fails to remedy this issue. While the new pleading repeatedly asserts that 
the sensors had a defect, it makes no allegations about the type of defect beyond that it prevented 
the sensors from working properly. Nowhere does AWI explain what functionality the sensors 
lacked that caused the DND to reject them. Nor does AWI identify an ordinary purpose for 
which the sensors were unfit. Notably, AWI alleges at one point that “[t]he OWI-430 sensors are 
not free from defects in design because they do not meet CARS standards.” ECF No. 19-2 ¶ 92 
(emphasis added). Similarly, the merchantability count directly links the alleged breach to OSi’s 
inability to “meet DND’s technical requirements,” rather than an inability to serve an “ordinary 
purpose.” Id. ¶ 123. For these reasons, the implied warranty of merchantability count will be 
dismissed from the proposed Amended Complaint. 
The Court will also dismiss AWI’s new claim for unjust enrichment. Id. ¶¶ 137–42. “It is 
settled law in Maryland, and elsewhere, that a claim for unjust enrichment may not be brought 
where the subject matter of the claim is covered by an express contract between the parties.” J.E. 
Dunn. Constr. Co. v. S.R.P. Dev. Ltd. P’ship, 115 F. Supp. 3d 593, 608 (D. Md. 2015) (quoting 
FLF, Inc. v. World Publ’ns, Inc., 999 F. Supp. 640, 642 (D. Md. 1998)). There is no dispute in 
this case that a contract governed the parties’ transactions; the parties only disagree over which 
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terms and conditions applied. “Although a plaintiff may plead in the alternative by asserting 
claims for unjust enrichment and breach of contract, when doing so the ‘plaintiff’s claim for 
unjust enrichment must include an allegation of fraud or bad faith in the formation of the 
contract.’” Id. (quoting Jones v. Pohanka Auto N., Inc., 43 F. Supp. 3d 554, 573 (D. Md. 2014)). 
AWI makes no such allegation here. Accordingly, the unjust enrichment claim will be dismissed.  
C. Statute of Limitations 
Finally, OSi asserts that the proposed Amended Complaint is also futile because it is 
barred by the applicable statute of limitations. Under Maryland’s codification of the UCC, “[a]n 
action for breach of any contract for sale must be commenced within four years after the cause of 
action has accrued.” Md. Code Ann., Com. Law § 2-725(1). “A cause of action accrues when the 
breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.” Id. § 2-
725(2). The statute further provides, however, that “[a] breach of warranty occurs when tender of 
delivery is made, except that where a warranty explicitly extends to future performance of the 
goods and discovery of the breach must await the time of such performance the cause of action 
accrues when the breach is or should have been discovered.” Id. Much of OSi’s argument applies 
these provisions on the assumption that OSi’s terms apply to the transactions at issue, which the 
Court has already rejected for purposes of the pending motions and thus will not discuss further. 
OSi alternatively maintains that the action is untimely even under AWI’s terms. OSi 
focuses on the terms’ warranty provision, which provides that the “[s]eller warrants for a period 
of 15 months after acceptance by Buyer or 12 months after final acceptance by Buyer’s customer 
under any applicable prime contract of Buyer [that] all Contract Products furnished” shall be free 
from defects, conform to the requirements of the order, and be fit for their intended purpose, 
among other requirements. ECF No. 21 at 17 (quoting ECF No. 19-3 at 4). According to OSi, 
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because the terms do not define “acceptance” or “final acceptance,” the Court should apply the 
statutory definition of acceptance of goods, Md. Code Ann., Com. Law § 2-606, and conclude 
that the statute of limitations began in 2012 when AWI received and began testing the OWI-430 
sensors that it ordered to make prototypes, or at least in 2014 when it received the first set that it 
intended to use for the DND contract. Id. at 17–18 (citing Md. Code Ann., Com. Law § 2-606).  
OSi claims that by receiving and not rejecting these shipments of sensors, AWI not only 
accepted them, but accepted all of the sensors that it ultimately purchased from OSi because they 
were part of a single commercial unit to be used to fulfill the DND contract. Id. at 18. OSi points 
to the Maryland UCC’s definition of “commercial unit” as “such a unit of goods as by 
commercial usage is a single whole for purposes of sale and division of which materially impairs 
its character or value on the market or in use.” Md. Code Ann., Com. Law § 2-105(6). “A 
commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture 
or an assortment of sizes) or a quantity (as a bale, gross, or carload) or any other unit treated in 
use or in the relevant market as a single whole.” Id.  
While Maryland case law on these provisions is limited, authority applying identical 
UCC provisions in other states shows the lack of merit to OSi’s argument. Notably, the Fourth 
Circuit has held, applying Virginia’s UCC, that an order of twenty sheets of an aircraft sidewall 
material was not an order for a single unit, even though they were “priced as a batch of twenty.” 
Hanwha Azdel, Inc. v. C & D Zodiac, Inc., 617 F. App’x 227, 242 (4th Cir. 2015). Further, the 
Ninth Circuit has explained that the purpose of the UCC’s commercial unit provisions is “to 
protect a seller from having a buyer return less than a commercial unit” and thereby “leave the 
seller with only components of a commercial unit, which would have severely reduced market 
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value.” S & R Metals, Inc. v. C. Itoh & Co. (Am.), Inc., 859 F.2d 814, 817 (9th Cir. 1988); see 
also Casazza v. Kiser, 313 F.3d 414, 419 (8th Cir. 2002) (citing S & R Metals).  
OSi makes no argument that each individual OWI-430 has reduced market value as 
compared to the entire quantity that it sold AWI for the DND contract over a period of several 
years. Indeed, taking AWI’s description of the sensors in the proposed Amended Complaint as 
true, it would strain credulity to find that each of the sensors is only a “component[] of a 
commercial unit” given that OSi sold them to AWI in varying quantities. S & R Metals, 859 F.3d 
at 817. OSi also cites no authority or market usage for the proposition that a buyer’s series of 
product orders to fulfill a contract with a third party comprises a single commercial unit under 
the relevant UCC provisions. Because OSi’s arguments are unpersuasive, the Court will decline 
to treat AWI’s sensor purchases as acquisition of a single commercial unit. 
Nor is the Court persuaded that AWI accepted any of the sensors in a manner that would 
start the statute of limitations period, assuming that AWI’s terms apply. In short, OSi’s argument 
cannot overcome the provision of the terms providing a warranty that extended for “12 months 
after final acceptance by [AWI’s] customer under any applicable prime contract of [AWI].” ECF 
No. 19-3 at 3. On its face, that provision is “a warranty [that] explicitly extends to future 
performance of the goods” such that “discovery of the breach must await the time of such 
performance” and for which a “cause of action [for breach] accrues when the breach is or should 
have been discovered.” Md. Code Ann., Com. Law § 2-725(2)); see In re Lone Star Indus., Inc., 
Concrete R.R. Cross Ties Litig., 776 F. Supp. 206, 219 (D. Md. 1991).  
Review of the allegations in the proposed Amended Complaint demonstrates that these 
provisions render AWI’s breach and express warranty claims timely. Most importantly, AWI 
asserts that its contract with DND was a “prime contract” in which DND was AWI’s customer, 
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thus bringing the agreement within the 12-month warranty provision. ECF No. 19-2 ¶ 22. 
Further, as AWI correctly notes, OSi does not dispute that DND never finally accepted AWI’s 
AWOS units, and in fact rejected them in December 2018, after AWI, OSi, and DND had 
worked for more than two years to resolve the sensors’ technical issues. Id. ¶¶ 83, 86. Prior to 
that point, it was not clear that OSi had breached because the parties had been collaborating in an 
effort to remedy the issues with the sensors. Therefore, only when DND finally rejected the 
AWOS units equipped with the sensors was OSi in breach of the agreement, giving rise to 
AWI’s cause of action. See Shailendra Kumar, P.A. v. Dhanda, 43 A.3d 1029, 1035 (Md. 2012) 
(“In breach of contract cases, a cause of action typically accrues at the time of the breach.”).  
Accordingly, under § 2-725(2), AWI’s initial Complaint for breach of contract and 
breach of express warranty in February 2019 was timely, as are the breach and express warranty 
claims in the proposed Amended Complaint. AWI’s new claim for breach of the implied 
warranty of fitness for a particular purpose, however, is untimely as to sensors delivered more 
than four years before the initial Complaint was filed.6 As OSi notes, “an alleged breach of 
implied warranty cannot explicitly extend to future performance.” Virtual Physical Ctr. 
Rockville, LLC v. Phillips Med. Sys. N. Am., Inc., 478 F. Supp. 2d 840, 849 (D. Md. 2007). “The 
Maryland Court of Appeals has held that ‘an implied warranty is not explicit’ for purposes of 
§ 2–725 and, thus, ‘the statute of limitations will always start to run against claims based on 
implied warranty from the time when delivery of the goods is tendered.’” Id. (quoting Wash. 
Freightliner, Inc. v. Shantytown Pier, Inc., 719 A.2d 541, 545 (Md. 1998)). The Court will not 
dismiss AWI’s fitness for particular purpose claim entirely because some of the sensors that it 
 
6 OSi does not argue that the Amended Complaint does not relate back to the date of the original Complaint under 
Rule 15(c). 
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purchased were tendered within four years of the filing of the Complaint, but the scope of the 
claim is limited to those units.7 
IV. CONCLUSION 
For the foregoing reasons, OSi’s Motion to Dismiss, ECF No. 15, will be granted in part 
and denied in part, and AWI’s Motion for Leave to File Amended Complaint, ECF No. 19, will 
be granted. AWI’s claims of breach of implied warranty of merchantability and unjust 
enrichment are dismissed, as is its claim of breach of implied warranty of fitness for a particular 
purpose with respect to sensors tendered more than four years before the initial Complaint was 
filed. AWI’s claims for breach of contract, breach of express warranty, and indemnification may 
proceed. OSi shall file an Answer within 14 days. A separate Order shall issue. 
 
Date: March    9, 2020                _/s/_________________________              
GEORGE J. HAZEL 
United States District Judge   
 
7 The Court does not address the timeliness of the new claim in the proposed Amended Complaint for 
indemnification. OSi has not raised the timeliness of the claim in its briefing, and “[g]enerally, a defendant waives 
the statute of limitations by failing to raise that defense in its answer or a pre-answer motion.” Goyal v. Thermage, 
Inc., No. WDQ-08-0020, 2010 WL 2651185, at *2 (D. Md. July 1, 2010) (citing Eriline Co. S.A. v. Johnson, 440 
F.3d 648, 653–54 (4th Cir. 2006)).  
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