Agristor Leasing v. Meuli

865 F.2d 1150, 1988 WL 139524
CourtCourt of Appeals for the Tenth Circuit
DecidedDecember 7, 1988
DocketNo. 86-2775
StatusPublished
Cited by15 cases

This text of 865 F.2d 1150 (Agristor Leasing v. Meuli) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Agristor Leasing v. Meuli, 865 F.2d 1150, 1988 WL 139524 (10th Cir. 1988).

Opinion

SETH, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Cir.R. 34.1.8. The cause is therefore ordered submitted without oral argument.

This appeal in a diversity action (a third-party action) arises from the lease of a “Harvestore” silo by Gene and Rose Marie Meuli (the Meulis). The silo was manufac[1151]*1151tured by A.O. Smith Harvestore Products, Inc. (AOSHPI) and distributed through dealerships. The Meulis were approached about buying a Harvestore by Mid-America Harvestore, Inc. (Mid-America), the product’s distributor for the area where the Meulis lived. After an extensive sales pitch by Mid-America’s salesman, Robert Gattshall, the Meulis agreed to acquire a silo. Rather than buying it directly from Mid-America, they decided to enter into a lease agreement with AgriStor Leasing. AgriStor purchased the structure from Mid-America and leased it to the Meulis.

After making their initial lease payments, the Meulis did not make the subsequent lease payments. AgriStor filed suit to repossess the silo, and for money damages under the lease. The Meulis counterclaimed and filed this third-party action against AOSHPI, AOSHPI’s parent corporation, A.O. Smith Corp., Mid-America and Robert Gattshall, claiming that the silo’s implied warranty of merchantability had been breached and that they had been induced to enter into the lease agreement through the use of fraudulent misrepresentations.

A.O. Smith Corp. and AgriStor were dismissed from the suit prior to trial. The case went to trial on the Meulis’ claims of fraud and breach of the implied warranty of merchantability. Mid-America and Gattshall were dismissed at the close of the Meulis’ case. The jury returned a verdict in favor of the remaining defendant, AOSHPI.

The Meulis raise two issues on appeal. First, they claim that the trial court abused its discretion under Fed.R.Evid. 403 by excluding evidence pertaining to litigation over the performance and marketing of the Harvestore silo in California in the 1960’s. Second, they claim that the trial court’s dismissal of Mid-America was erroneous under Fed.R.Civ.Proc. 41(b) and 52(a) since the trial court failed to offer any reason for the dismissal. Each of these issues will be considered after a brief review of the facts.

In its marketing the company describes several features that it urges make its product superior to conventional silos. The witnesses’ testimony was directed to these features. The Harvestore silo was characterized as an “oxygen-limiting” or “sealed” silo. Unlike conventional silos, which are open to fresh air, the walls, floor and roof of the Harvestore silo are airtight. This feature theoretically allows for less spoilage or loss of feed, and the feed should retain a higher percentage of nutrients. Silage acids can attack conventional structures made of concrete, galvanized steel or other materials. In theory, this deterioration will not occur in a Harvestore silo since it is made of heavy steel sheets that have a protective layer of glass fused into their surfaces. This forms a shield that repels silage acids and stands up to weathering. The impermeable construction of the silo thus enhances its “oxygen-limiting” capability. There were other claimed advantages from the silo’s design.

The Meulis were told by Robert Gatts-hall, the salesman, that the added expense of the Harvestore silo would be offset by the savings that would accrue to their farming operation from the use of the silo. He estimated that the amount of money saved by the Muelis on protein supplement would more than cover the amount of their monthly rental payment. It was on the basis of these representations that the Meulis entered into the lease agreement for their Harvestore.

At trial, the Meulis claimed that the Harvestore did not produce the increase in feed quality that had been promised to them. Instead, they claimed the Harve-store silo’s design was so flawed that the alfalfa stored within the structure actually experienced more exposure to oxygen than it would have in a more conventional silo. Their witnesses testified as to the design flaws, and that the oxygen which entered the silo caused more deterioration of the contents than for an ordinary silo.

The Meulis thus claimed that this influx of oxygen led to the deterioration of the alfalfa, which in turn reduced its nutritional value and led to reductions in the amount of weight gained by the Meulis’ cattle. These allegations formed the basis [1152]*1152of the Meulis’ claim that the Harvestore silo was unmerchantable.

The Meulis also claimed that they were induced into leasing the silo through fraudulent misrepresentations made on behalf of the product. The Meulis claimed that AOSHPI represented the silo to them as “oxygen-limiting” when it had known for years that the structural defects of the silo were allowing a significant amount of oxygen to come into contact with the feed stored inside. At trial, the Meulis sought to present evidence of the poor performance of the Harvestore silos in California in the early to mid-1960s by a witness who had owned Harvestore structures in California in the late 1950s and early 1960s and later became a Harvestore dealer there. As a dealer, the witness was involved in customer relations and had the opportunity to speak with many Harvestore customers throughout the state. In an in limine hearing the Meulis represented that the witness would testify as to design defects in the silo and failures in its performance in California in the early and mid-1960s. They also stated at the hearing that the witness would testify that he informed AOSHPI of these problems, that AOSHPI ignored his warnings, and that ultimately he was forced to join with many Harve-store customers in litigation against the company. The litigation resulted in a substantial settlement for the witness and settlements and verdicts for other plaintiffs.

On the motion of AOSHPI, the trial court excluded the California evidence under Fed.R.Evid. 403, citing the dangers of unfair prejudice and confusion of the issues. It is this ruling by the trial court that the Meulis challenge on appeal. They claim that this ruling affected their substantial right to prove their case since this evidence was essential to overcome the clear and convincing standard of proof they had to meet on their fraud claim as well as to overcome the aura of legitimacy and reliability surrounding a large company like AOSHPI.

This court has evinced a strong reluctance to upset a trial court’s ruling on the admissibility of evidence under Fed.R.Evid. 403. “Challenges under Rule 403 call for balancing the probative value of and need for the evidence against the harm likely to result from its admission.” McAlester v. United Air Lines, Inc., 851 F.2d 1249, 1257 (10th Cir.).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Jackson v. Potter
587 F. Supp. 2d 1179 (D. Colorado, 2008)
Dunlap v. City of Oklahoma City
12 F. App'x 831 (Tenth Circuit, 2001)
Securities and Exchange Commission v. Don S. Peters
978 F.2d 1162 (Tenth Circuit, 1992)
Securities & Exchange Commission v. Peters
978 F.3d 1162 (Tenth Circuit, 1992)
Figures v. Board of Public Utilities
967 F.2d 357 (Tenth Circuit, 1992)
William Perry v. Trw Electronics Products, Inc.
937 F.2d 616 (Tenth Circuit, 1991)
Dugan v. EMS Helicopters, Inc.
915 F.2d 1428 (Tenth Circuit, 1990)

Cite This Page — Counsel Stack

Bluebook (online)
865 F.2d 1150, 1988 WL 139524, Counsel Stack Legal Research, https://law.counselstack.com/opinion/agristor-leasing-v-meuli-ca10-1988.