Massey-Ferguson Credit Corp. v. Webber

841 F.2d 1245, 1988 WL 22228

• Court: Court of Appeals for the Fourth Circuit
• Decided: March 18, 1988
• Docket: Nos. 86-1615, 86-1624
• Status: Published

Opinions

K.K. HALL, Circuit Judge:

This is an apparently ordinary breach of warranty case brought in federal court pursuant to diversity jurisdiction that has become surprisingly convoluted as it has proceeded through the courts below. Wanda Webber, a North Carolina resident, sought damages for an allegedly defective piece of farm equipment manufactured by Massey-Ferguson, Inc. (“Massey-Ferguson”) and sold under a financing agreement between Webber and Massey-Ferguson Credit Corporation (“Massey-Ferguson Credit”). Now, after three trials before two different federal judges, the consolidated appeal and cross-appeal of Webber and Massey-Ferguson are before this Court. Webber challenges the district court orders setting aside the jury’s award of damages after the first and second trials. Webber also appeals the court’s failure to submit the issue of revocation of acceptance to the juries at any of the three trials. Massey-Ferguson cross-appeals the denial of its motions for judgment notwithstanding the verdict (“jnov”) on both the issues of liability and damages. Because we find that Webber’s damages were properly assessed in the first trial, we affirm in part, reverse in part, and remand.

I.

In September of 1982, Webber purchased a Massey-Ferguson 540 combine, with attachments, including a grain table, and a reel and reel drive from Southridge Tractor and Equipment Company in Shelby, North Carolina. In connection with the purchase, Webber entered into a retail installment contract and security agreement with Massey-Ferguson Credit. The total purchase price for all equipment was $46,027.70. After a down payment of $16,137.70, which included a $10,000 rebate, Webber financed $29,970.00 at 18.9% interest with Massey-Ferguson Credit.

It is undisputed that the combine did not at any time perform to Webber’s satisfaction. According to the trial testimony of Webber and witnesses on her behalf, the machine lost approximately twenty percent of the crops it harvested rather than the two to three percent that would normally have been expected. Webber also testified that repeated remedial efforts by the dealer’s service personnel were unavailing. Despite the difficulties, it does appear, however, that Webber utilized the combine in some fashion in three harvests on her farm.

By late 1983, Webber had begun to fall behind in the payments due under the installment purchase agreement. In December of 1983, she informed Wade Young, a representative of Massey-Ferguson Credit, that she was having problems with the machine and was not certain that she intended to pay for it. Despite Webber’s statement, no further action was taken by Massey-Ferguson Credit until September of 1984 when it commenced an action to recover the unpaid balance of the installment contract.¹ Webber counterclaimed against the Credit Corporation alleging breach of express and implied warranties and claiming damages from the breach. Webber also brought a third-party action against Massey-Ferguson, Inc., the manufacturer, and Southridge Tractor, the selling dealer.

On March 26, 1985, Massey-Ferguson Credit moved for summary judgment in its favor. The district court orally granted the motion on April 3,1985, but did not enter a written order until July 11, 1986.² Web-ber’s third-party complaints against Massey-Ferguson and Southridge Tractor then proceeded to trial. At the conclusion of Webber’s evidence, the court granted a directed verdict in favor of Southridge Tractor, but denied a similar motion by Massey-Ferguson. The question of Massey-Ferguson’s liability was thus submitted to the jury-

After deliberating, the jury found that Massey-Ferguson had breached its express warranty that the equipment sold to Web-ber would be free of “defects in material and workmanship.” The jury also determined that Webber was entitled to damages in the amount of $30,000. Massey-Ferguson promptly moved for judgment notwithstanding the verdict, or in the alternative, a new trial.

The district court denied Massey-Ferguson’s jnov motion with regard to the question of liability, concluding that the jury could reasonably infer that the combine was defective and that the defendant’s effort at repair had failed its “essential purpose.” The court found, however, that the damage award was improper because Web-ber had not properly proven the value of the equipment at the time of acceptance. A new trial on the issue of damages alone was, therefore, ordered.

The second trial was held on October 7, 1985. In her effort to establish her damages, Webber presented witness testimony that was substantially similar to that offered at the first trial. The jury returned a verdict for Webber in the amount of $35,-000. Massey-Ferguson again moved for either jnov or a new trial.

For the second time, the district court set aside the award of damages. The court concluded that although Webber’s evidence sufficiently established the fair market value of the combine at $35,000, a damage award in that amount assumed that the defective combine had no value at all. The court reasoned that it was “contrary to common sense” to hold that a new combine never used was utterly worthless. Accordingly, the court ordered a third trial on the issue of damages.

At this juncture, the case was assigned to a different judge and set for trial on June 3, 1986. Webber again relied upon essentially the same evidence as had been presented in the two previous trials. The jury returned a verdict for Webber in the amount of $15,000. Post-trial motions on behalf of both Webber and Massey-Ferguson were denied and a judgment order entered on June 4, 1986.

On June 16, 1986, Webber filed a notice of appeal. On July 14, 1986, the presiding judge at the first two trials entered a written order formalizing the grant of summary judgment to Massey-Ferguson Credit which had been announced in April, 1985. This appeal and cross-appeal followed.

II.

This case was first before this Court in April of 1987. At that time we questioned whether appellate jurisdiction was proper in light of Webber’s apparently premature notice of appeal. Concluding that the notice filed before the final order of July 14, 1986, was invalid, we dismissed the appeal for want of jurisdiction. We subsequently reconsidered that determination in connection with Webber’s petition for rehearing and concluded that the appeal filed after the announcement of summary judgment in favor of Massey-Ferguson Credit, but before the formal entry of a written order was adequate under Fed.R.App.P. 4(a)(2) to convey appellate jurisdiction.³ We, therefore, granted the petition for rehearing and now turn to the merits of the appeal.

The focus in this appeal is on the related issues of liability and damages. The cross-appellant, Massey-Ferguson, argues that the evidence presented below failed to establish either a breach of warranty or an appropriate measure of damages. Appellant Webber contends that her damages were thoroughly established at both the first and second trials and that the district court erred in setting aside the award in each trial.⁴ Webber also argues that both trial judges improperly denied her an opportunity to seek a broader recovery under the revocation of acceptance provision of the North Carolina Commercial Code § 25-2-608.⁵

The majority of the issues in this appeal are amenable to a prompt disposition. As a threshold matter, we reject Massey-Ferguson’s suggestion that the evidence below was insufficient to establish a breach of its express warranty that the combine sold to Webber would be “free of defects in material or workmanship.” We recognize that under North Carolina law, a mere malfunction does not prove the existence of defective material or workmanship, Eg. Cockerham v. Ward, 44 N.C.App. 615, 267 S.E.2d 651, cert. denied, 300 N.C. 195, 269 N.E.2d 622 (1980). In this instance, however, the evidence demonstrated far more than a simple isolated breakdown. Monroe Sherrill, an experienced mechanic employed by the selling dealer, Southridge Tractor, testified that the combine would not operate satisfactorily despite his numerous efforts at repair. He also testified that the only additional remedy offered by Massey-Ferguson’s area representative involved the expensive adjustment of a non-warranted part that Sherrill believed to be unrelated to the combine’s malfunction. From the evidence presented, the jury could have reasonably and soundly inferred that the combine’s inadequate performance was caused by an inherent defect in its manufacture. We, therefore, see no error in the district court’s denial of Massey-Ferguson’s motion for jnov on the issue of liability.⁶

We likewise see no error in the district court’s failure to submit Webber’s assertion that she revoked her acceptance of the combine pursuant to the North Carolina Uniform Commercial Code to the jury. Although North Carolina law permits an aggrieved buyer to pursue recovery simultaneously for breach of warranty and revocation of acceptance, our review of the record convinces us that Webber failed to assert the latter theory in a proper and timely fashion.

In neither her counterclaim against Massey-Ferguson Credit nor her third-party complaint filed against Massey-Ferguson did Webber specifically allege that she had revoked her acceptance of the combine. The issue was apparently raised and rejected in connection with Massey-Ferguson Credit’s successful motion for summary judgment — a ruling that Webber has not appealed. We find nothing, however, in the record of the first trial to indicate that Webber ever attempted to assert the theory of revocation of acceptance against Massey-Ferguson.

Not until the third trial does the record reveal a belated effort by Webber to claim a revocation of acceptance. At that juncture, however, the allegation represented an ill-conceived attempt to reopen the entire question of liability. We conclude that the district court’s rejection of what must be construed as a motion for a new trial on all issues was well within the bounds of judicial discretion. Virginian Railway Co. v. Armentrout, 166 F.2d 400 (4th Cir.1948). Simply stated, Webber was not denied an opportunity to claim revocation of acceptance. Rather, the claim was forfeited through her own miscalculation.

III.

The remaining issues in this appeal and cross-appeal are intertwined with the question of appropriate damages for Massey-Ferguson’s breach of warranty. It is Web-ber’s central contention on appeal that the district court erred in setting aside the first two damage awards. Not surprisingly, Massey-Ferguson contends that there was no competent evidence to support any finding of damage but that, in any event, it was within the district court’s discretion to twice order new trials on that issue. Although we are mindful that the district court normally enjoys broad discretion when deciding to set aside a jury verdict as excessive, Aetna Casualty & Surety Co. v. Yeatts, 122 F.2d 350 (4th Cir.1941), we are persuaded in this instance that the verdict of the first jury to hear this matter must be reinstated.

Clearly, it is within the trial court’s authority to set aside successive verdicts as excessive or against the weight of the evidence. However, “it is equally clear that it is a power to be exercised only in the most exceptional cases. When two juries have reached substantially the same result the possibility of a miscarriage of justice is very slight.” 11 C. Wright & A. Miller, Federal Practice and Procedure Civil § 2803 (1973) discussing Frank v. Atlantic Greyhound Corp., 177 F.Supp. 922 (D.D.C.1959) and the additional cases cited therein. We see no exceptional circumstances in the present case that would require multiple trials on the issue of damages.

Under North Carolina law, the measure of damages for breach of warranty is the difference between the value of the goods accepted and the value they would have had if they had been as warranted. Stutts v. Green Ford, Inc., 47 N.C.App. 503, 267 S.E.2d 919 (1980). In all three trials, Web-ber sought to show that while a combine conforming to the warranty would have been worth the approximately $35,000 that she agreed to pay, the equipment delivered to her had only minimal value. Monroe Sherrill testified at all three trials that a combine that would not perform properly was worth nothing. Wayne Yarboro, a neighboring farmer, testified at the first and third trials that the defective machine had only a salvage value of approximately $5,000. Both trial judges allowed that testimony as competent evidence on the issue of the combine’s value.

After the first trial, the court found that “the jury was left to speculate as to what the combine was worth at the time of acceptance.” After the second trial, the court held that “it was contrary to common sense to hold that a new combine ... had no value.” We find both conclusions questionable.

Clearly, the jury was not merely speculating blindly at the first trial with regard to the value of the defective combine. The testimony of Sherrill and Yarboro, if credited, provided a substantial basis for a reasonable jury to assess damages. The evidence offered at all three trials was certainly sufficient to defeat Massey-Ferguson’s jnov motion on the damages issue. Moreover, the similar verdict at the second trial strongly refutes any suggestion that the damage award was a product of passion or prejudice. See Frank, supra at 924.

Similarly, we do not find “common sense” offended by a jury’s determination that a defective piece of specialized equipment is essentially worthless. A machine manufactured and purchased solely for use in commercial farming has little more than scrap value if it cannot be operated economically. We have no doubt that a combine that wastes twenty percent of the harvested crop falls within that category.

We recognize, of course, that a sizable piece of machinery, even if totally inoperable, must have at least a minimal salvage value. Webber conceded as much in the first and third trials when she elicited testimony from Wayne Yarboro on that issue. It was apparently the absence of testimony on possible salvage at the second trial that led to the $5,000 variation between the first and second verdicts. Although the trial court might soundly have imposed a remit-titur to remedy the plaintiff’s evidentiary omission on this point, we conclude that it was improper to set aside the entire award. Two juries having heard the same evidence had reached almost identical conclusions. Substantial justice had been done. Some things must come to an end. Clerk v. Udall, 2 Salk. 649, 91 Eng.Rep. 552 (1702).

Ordinarily, the proper remedy at this juncture would be to reverse the court’s order requiring a second new trial and remand the case for a reinstatement of the second jury verdict. We need not, however, ignore the undisputed fact, conceded anew by the parties at oral argument, that the combine sold to Webber did have a salvage value near that figure estimated by Yarboro. To restore the second verdict would give Webber an undeserved windfall in the amount of $5,000. We therefore conclude that the judicial policy disfavoring multiple retrials absent “exceptional” circumstances can best be applied in this instance by reinstating the first jury verdict below.

V.

For the foregoing reasons, the district court’s June 5,1985, order setting aside the award of damages and granting a new trial is reversed and this matter remanded to the district court with instructions that the verdict in favor of Wanda Webber in the amount of $30,000 be reinstated. On all other contentions asserted by the appellant and cross-appellant, the determinations of the district court are affirmed.

REVERSED in part, AFFIRMED in part; and REMANDED.

1 . Massey-Ferguson Credit also brought an ancillary proceeding seeking immediate possession of the equipment which was subject to a security interest. Webber waived her right to a hearing and the Credit Corporation took possession of the equipment in October of 1984.

2 . The district court's delay in entering its written order contributed to a portion of the unfortunate confusion that has surrounded this case.

3 . Fed.R.App.P. 4(a)(2) provides that:

(2) Except as provided in (a)(4) of this Rule 4, a notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the day thereof.

4 . Contrary to the view expressed in the dissenting opinion, we can discern absolutely no conflict between our decision today and this Court's opinion in Foster v. Tandy Corp., 828 F.2d 1052 (4th Cir.1987). In Foster, supra, the appellant noted an appeal from a "judgment and order of ... [the district court] dated October 29, 1987.” It is well established that an appeal may be filed from a "part" of a judgment or order. Fed.R. App.P. 3(c). Moreover, when an appellant chooses to designate a specific part of the judgment in a notice of appeal, the jurisdiction of the appellate court is limited to those issues on which a request for review can be reasonably inferred. 9 Moore’s Federal Practice, ¶ 203.18. The panel in Foster simply decided that when the notice of appeal was examined in conjunction with the specific lower court order to which it referred, appellant had sought review only with regard to the granting of judgment notwithstanding the verdict. Accordingly, this Court was left without jurisdiction to consider appellant’s belated objections to a partial directed verdict.

In the instant case, Webber sought to challenge the awarding of new trials. Although reviewable orders granting or denying motions for new trials are not separately appealable, appellate review may be obtained only by filing a notice of appeal from the entry of final judgment. 11 Wright and Miller, Federal Practice and Procedure, § 2818. Webber duly noted her appeal from "final judgment" and thus presented her contention to this Court in the only proper fashion. The procedural default addressed in Foster has no relevance in this context.

5 .North Carolina Commercial Code § 25-2-608 provides that:

(1) The buyer may revoke his acceptance of a lot or commercial unit whose nonconformity substantially impairs its value to him if he has accepted it

(a) on the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured; or

(b) without discovery of such nonconformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them. (1965, c. 700, s. 1.)

6 . Although we are not persuaded by Massey-Ferguson’s argument or cross-appeal, the position asserted is far from frivolous. Accordingly, appellant Webber’s motion for sanctions against Massey-Ferguson which accompanied this appeal is denied.