In 1994, David and Corrine Bako signed a contract with Don Walter Kitchen Distributors, Inc. (DW), for the purchase and installation of cabinets in their new home. DW ordered the cabinets from a manufacturer Crystal Cabinet Works, Inc. Crystal shipped the cabinets to DW, which installed them in the Bakos' residence. Soon after the installation, Corrine Bako contacted a DW employee, Neil Mann, and asked whether DW could provide a stain to match the kitchen cabinets. She informed Mann that the stain would be applied to the wood trim primarily on the first floor of the house. Mann ordered two one-gallon cans of stain from Crystal, which shipped the stain to DW in unmarked cans. There were no labels, instructions, or warnings regarding improper use or application of the stain. The cans arrived at DW's store in unmarked cardboard boxes and were delivered to the Bakos in this manner. The stain in the cans turned out to be lacquer-based. Shortly thereafter, Corrine Bako again contacted Mann about purchasing additional stain in a slightly different color to apply to a hardwood fl oor. At Mann's suggestion, she contacted Crystal's paint lab and spoke with a Crystal employee.
The Crystal employee shipped the Bakos a series of samples from which Corrine ordered two gallons of stain. This stain was also a lacquer-based stain and was shipped directly from Crystal to the Bakos in unmarked cans. Once again, there were no instructions for use, no warning regarding improper use or application of the product, no label indicating that it was a lacquer-based stain, and no label indicating that a special topcoat was required because it was a lacquerbased stain. The Bakos applied the stain to their fl oor.
The Bakos then obtained a polyurethane topcoat sealant and applied it to the wood surfaces they had stained with the stain purchased from DW and Crystal.
Following this application of the sealant, all of the stained and sealed areas suffered severe and permanent damage as a result of the nonadherence of the polyurethane sealant to the lacquer-based stain. Evidence adduced at the trial of the case referred to below established that lacquer-based stains are incompatible with the polyurethane topcoat that the Bakos applied to their home's wood surfaces. In October 1996, the Bakos filed suit against Crystal and DW for breach of the implied warranty of merchantability and breach of the implied warranty of fitness for a particular purpose.
They also claimed that the defendants had been negligent. An Ohio trial court found for the Bakos and held the defendants liable for approximately $25,000 in compensatory damages. Contending that the Bakos should not have prevailed on any of their claims, Crystal appealed to the Court of Appeals of Ohio. How did the appellate court rule on the Bakos' two breach of implied warranty claims?