Sullivan v. Vernay Products, Inc
Procedural entryThis page is a short order in Sullivan v. Vernay Products, Inc. Read the opinion of the Court — 91 F.3d 242 →
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 95-1876
RODNEY A. SULLIVAN,
Plaintiff - Appellee,
v.
YOUNG BROTHERS & COMPANY, INC.,
Defendant - Appellee.
____________________
VERNAY PRODUCTS, INC.,
Defendant - Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Cyr, Circuit Judge, _____________
and Skinner,* Senior District Judge. _____________________
_____________________
Richard L. Suter, with whom Preti, Flaherty, Beliveau & _________________ _____________________________
Pachios was on brief for appellant. _______
John R. Bass II, with whom Thompson, McNaboe, Ashley & Bull _______________ ________________________________
was on brief for appellee Rodney A. Sullivan; Barry K. Mills, _______________
with whom Hale & Hamlin was on brief for appellee Young Brothers _____________
& Company, Inc.
____________________
August 1, 1996
____________________
____________________
* Of the District of Massachusetts, sitting by designation.
TORRUELLA, Chief Judge. This products liability action TORRUELLA, Chief Judge. ___________
arose out of the sinking of the lobster vessel, the SEA FEVER.
The vessel's owner and operator, Rodney Sullivan ("Sullivan"), by
his insurer, brought this suit to recover for damages sustained
due to the SEA FEVER's sinking. Sullivan brought suit against
Vernay Products, Inc. ("Vernay") and Young Brothers and Company
Inc. ("Young Brothers") under theories of strict liability,
negligence, and breach of implied and express warranties. Young
Brothers crossclaimed against Vernay for indemnification and
contribution, and Vernay similarly crossclaimed against Young
Brothers for indemnification and contribution. The district
court found only Vernay to be liable for the damages caused by
the SEA FEVER's sinking and awarded damages to Sullivan in the
amount of $54,318.68. On the crossclaim, it entered judgment in
favor of Young Brothers. Before us is Vernay's appeal of the
district court's judgment, damage award, and denial of its motion
for summary judgment and motions for judgment as a matter of law.
Also before us is Sullivan's cross-appeal of the district court's
finding that Young Brothers was not liable. For the reasons
stated below, we affirm, in part, and reverse, in part, the
judgment below.
I. BACKGROUND I. BACKGROUND __________
We take the facts, particularly the more technical
aspects, almost verbatim from the district court's detailed
opinion.
-2-
The SEA FEVER is a forty-foot, fiberglass hull lobster
boat built by Young Brothers in 1989, which Sullivan purchased
new from Young Brothers in February 1990 for $122,000. Sullivan
added various items of gear and furnishings at a cost of
approximately $10,000. Young Brothers built the SEA FEVER with a
wet exhaust system, which was composed, in part, of six-inch
diameter Vernatube fiberglass marine wet exhaust tubing
manufactured by Vernay Products (the "Vernatube"), which is a
manufacturer of various fiberglass components of marine wet
exhaust systems. H & H Propeller Shop ("H & H Propeller" or "H &
H"),1 Vernay's distributor in Maine, was the parts supplier from
which Young Brothers purchased the Vernatube installed aboard the
SEA FEVER.
The SEA FEVER's wet exhaust system was constructed with
a fifteen-foot length of Vernatube. Because Vernatube is sold in
ten-foot lengths, Young Brothers fiberglassed together a ten-foot
and a five-foot length of Vernatube, making, in effect, a single
length of tube. This span of Vernatube was connected to the
engine at the exhaust manifold by a flexible rubber hose and
rigidly installed in the hull of the vessel by fiberglass where
the Vernatube passed through the fish hold bulkhead, the
lazarette bulkhead, and the transom. Aft of the manifold, it was
also fiberglassed to each of the two bulkheads and the transom
____________________
1 Sullivan's complaint included claims against H & H Propeller
under theories of strict liability and breach of express and
implied warranties. Before trial began, those claims, along with
crossclaims and third-party claims brought by and against H & H
Propeller, were dismissed by stipulation of the parties.
-3-
and the Vernatube exhaust was supported by a 3/4-inch marine
plywood bracket lined with urethane rubber at about the midway
point of the fish hold. The district court found that the SEA
FEVER's Vernatube wet exhaust system was installed in conformity
with generally accepted methods of installation among builders of
similar vessels in Maine. The SEA FEVER was also equipped with a
Rule 1500 gallon automatic bilge pump. This pump, which was
capable of discharging up to 1500 gallons of water per hour,
could be operated manually or automatically.
Sullivan operated the SEA FEVER as a commercial lobster
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USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 95-1876
RODNEY A. SULLIVAN,
Plaintiff - Appellee,
v.
YOUNG BROTHERS & COMPANY, INC.,
Defendant - Appellee.
____________________
VERNAY PRODUCTS, INC.,
Defendant - Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Cyr, Circuit Judge, _____________
and Skinner,* Senior District Judge. _____________________
_____________________
Richard L. Suter, with whom Preti, Flaherty, Beliveau & _________________ _____________________________
Pachios was on brief for appellant. _______
John R. Bass II, with whom Thompson, McNaboe, Ashley & Bull _______________ ________________________________
was on brief for appellee Rodney A. Sullivan; Barry K. Mills, _______________
with whom Hale & Hamlin was on brief for appellee Young Brothers _____________
& Company, Inc.
____________________
August 1, 1996
____________________
____________________
* Of the District of Massachusetts, sitting by designation.
TORRUELLA, Chief Judge. This products liability action TORRUELLA, Chief Judge. ___________
arose out of the sinking of the lobster vessel, the SEA FEVER.
The vessel's owner and operator, Rodney Sullivan ("Sullivan"), by
his insurer, brought this suit to recover for damages sustained
due to the SEA FEVER's sinking. Sullivan brought suit against
Vernay Products, Inc. ("Vernay") and Young Brothers and Company
Inc. ("Young Brothers") under theories of strict liability,
negligence, and breach of implied and express warranties. Young
Brothers crossclaimed against Vernay for indemnification and
contribution, and Vernay similarly crossclaimed against Young
Brothers for indemnification and contribution. The district
court found only Vernay to be liable for the damages caused by
the SEA FEVER's sinking and awarded damages to Sullivan in the
amount of $54,318.68. On the crossclaim, it entered judgment in
favor of Young Brothers. Before us is Vernay's appeal of the
district court's judgment, damage award, and denial of its motion
for summary judgment and motions for judgment as a matter of law.
Also before us is Sullivan's cross-appeal of the district court's
finding that Young Brothers was not liable. For the reasons
stated below, we affirm, in part, and reverse, in part, the
judgment below.
I. BACKGROUND I. BACKGROUND __________
We take the facts, particularly the more technical
aspects, almost verbatim from the district court's detailed
opinion.
-2-
The SEA FEVER is a forty-foot, fiberglass hull lobster
boat built by Young Brothers in 1989, which Sullivan purchased
new from Young Brothers in February 1990 for $122,000. Sullivan
added various items of gear and furnishings at a cost of
approximately $10,000. Young Brothers built the SEA FEVER with a
wet exhaust system, which was composed, in part, of six-inch
diameter Vernatube fiberglass marine wet exhaust tubing
manufactured by Vernay Products (the "Vernatube"), which is a
manufacturer of various fiberglass components of marine wet
exhaust systems. H & H Propeller Shop ("H & H Propeller" or "H &
H"),1 Vernay's distributor in Maine, was the parts supplier from
which Young Brothers purchased the Vernatube installed aboard the
SEA FEVER.
The SEA FEVER's wet exhaust system was constructed with
a fifteen-foot length of Vernatube. Because Vernatube is sold in
ten-foot lengths, Young Brothers fiberglassed together a ten-foot
and a five-foot length of Vernatube, making, in effect, a single
length of tube. This span of Vernatube was connected to the
engine at the exhaust manifold by a flexible rubber hose and
rigidly installed in the hull of the vessel by fiberglass where
the Vernatube passed through the fish hold bulkhead, the
lazarette bulkhead, and the transom. Aft of the manifold, it was
also fiberglassed to each of the two bulkheads and the transom
____________________
1 Sullivan's complaint included claims against H & H Propeller
under theories of strict liability and breach of express and
implied warranties. Before trial began, those claims, along with
crossclaims and third-party claims brought by and against H & H
Propeller, were dismissed by stipulation of the parties.
-3-
and the Vernatube exhaust was supported by a 3/4-inch marine
plywood bracket lined with urethane rubber at about the midway
point of the fish hold. The district court found that the SEA
FEVER's Vernatube wet exhaust system was installed in conformity
with generally accepted methods of installation among builders of
similar vessels in Maine. The SEA FEVER was also equipped with a
Rule 1500 gallon automatic bilge pump. This pump, which was
capable of discharging up to 1500 gallons of water per hour,
could be operated manually or automatically.
Sullivan operated the SEA FEVER as a commercial lobster
vessel during the 1990 fishing season without significant
problems. In early 1991, Sullivan discovered a crack (the "1991
crack") in the portion of the Vernatube exhaust located in the
lazarette, which permitted water to enter the vessel to the point
of near sinking. Sullivan discovered the crack because the bilge
pump was running more than usual. At the time, the boat was tied
to the dock and fully loaded with 90-100 lobster traps, such that
the wet exhaust tubing was completely submerged. Sullivan
notified Young Brothers of this crack, and Young Brothers
repaired it by fiberglassing over the break. Young Brothers also
notified H & H Propeller of the crack. Neither of these
companies notified Vernay of this crack, and there was no
evidence that Sullivan did. The cause of this crack was never
investigated or discovered.
After this repair, the SEA FEVER operated without
further problems and Sullivan fished the 1991 season until
-4-
January 1992. Thereafter, the SEA FEVER remained at her slip
until March 1992, when it was hauled for routine maintenance.
While the SEA FEVER was out of the water, Sullivan did not
specifically inspect the exhaust system. The record shows that
the last time he inspected it was at the end of the summer of
1991. On March 17, 1992, Edward S. Blackmore, a marine surveyor
appointed by Sullivan's marine hull insurance company, surveyed
the SEA FEVER. Blackmore found the vessel to be in "A-1"
condition with a fair market value of $130,000. Blackmore's
inspection included observation of the Vernatube exhaust, which
did not have any water in it at the time of the inspection as the
SEA FEVER was not loaded. Nothing unusual was noted about the
condition of the Vernatube and Blackmore observed no fractures,
no discoloration, and no staining or other evidence of failure in
the Vernatube.
After the March maintenance and inspection, the SEA
FEVER was not operated and remained at her slip until April 4,
1992. On that day, Sullivan and his sternman made an
eight-to-ten-mile trip aboard the SEA FEVER, picking up
approximately eighty lobster traps. After returning, they tied
the SEA FEVER to the dock at about 1:00 p.m. and went home for
the day. Due to the weight of the lobster traps, the end of the
exhaust discharge port was several inches under water and, as a
result, the Vernatube had water in it. The SEA FEVER was left
with the automatic bilge pump switch in the "off" position rather
than the "automatic" one. Later that day, at approximately 7:30
-5-
p.m., Sullivan was notified that the SEA FEVER had sunk at the
dock. Sullivan retained Wayne Godfrey, a salvage diver from D &
G Diving Services, to raise the vessel, which was approximately
90% to 95% submerged. The SEA FEVER was surveyed by Werner
Splettstoesser of Marine Safety Consultants on behalf of
Sullivan's insurer, who determined that the SEA FEVER sank due to ,
a crack in the wet exhaust tubing which was visible from the
access hatch to the fish hold compartment. This suit followed.
On July 26, 1995, after a four-day bench trial, the
district court issued its written decision and order, in which it
found that the cause of the SEA FEVER's sinking was a full
circumference crack in the Vernatube located a few inches forward
of the bulkhead between the lazarette and fish hold (the "1992
crack"). The district court further found that this crack was a
fatigue failure caused by tension stresses over time exceeding
the axial length of the tube. As there was no other known
instance prior to the lawsuit in which a Vernatube had cracked
under similar circumstances, much of the trial testimony was
directed at the question of whether the 1992 crack had been
caused by a defective section of Vernatube or by improper
installation of the exhaust system by Young Brothers.
After evaluation of expert testimony offered by all
three parties, review of the largely technical evidence, and
inspection and analysis of the SEA FEVER's Vernatube, the
district court found that the ten-foot section of the Vernatube,
which developed at least two cracks during a two-year period, was
-6-
defective. The district court specifically found that the
evidence regarding the Vernatube's porosity, wall thickness, and
longitudinal strength "clearly proves that the section of
Vernatube was defective" and that its defect contributed to the
Vernatube's failure in the SEA FEVER. In particular, the
district court found that with respect to these physical
measures, the Vernatube did not live up to the specifications
described in the Vernay Products Information Sheet (the "VPIS").
In making its finding, the district court noted that inspection
of the Vernatube revealed several cracks, delamination, and areas
of prospective failure, all located in the ten-foot section as
well as one area of debonding (i.e., where strands of fiber had
come loose). The district court explicitly ruled out other
claimed reasons for the Vernatube's failure, noting that there
was no evidence of owner misuse and no indication of Vernatube
failures in boats similarly constructed. Noting that the trial
testimony "clearly established that hundreds of boats of similar
design have been constructed with this type of rigid exhaust
system without one known failure," the district court found that
the rigid installation of SEA FEVER's exhaust system was not a
cause of the Vernatube's failure and that, therefore, Young
Brothers was not strictly liable for its installation of the wet
exhaust system. In making this finding, the district court noted
that "the existence of multiple failures and imperfections within
the single ten-foot section of Vernatube, notwithstanding the
product's known track record of problem-free similar
-7-
installations in hundreds of other vessels, supports the
conclusion that the SEA FEVER sank because this particular length
of tube, rather than its installation, was defective."
In addition, the district court held that (i) Vernay's
warning against rigid installation, while insufficient, did not
give rise to recovery -- but Vernay was nonetheless liable under
theories of negligence and strict liability based on defects in
tubing; (ii) Sullivan was partially responsible for damage due to
his failure to leave his boat's bilge pump in automatic position
despite knowing of another crack in the Vernatube exhaust that
needed repair; (iii) Vernay was also liable for breach of express
and implied warranties; (iv) Sullivan's notice to Young Brothers
was sufficient to allow recovery for breach of warranty by
Vernay; and (v) Sullivan's recovery would be reduced by 40% to
reflect his comparative fault.
The district court entered an amended judgment on
July 28, 1995, based on its earlier decision and order. The
district court had subject matter jurisdiction based on diversity
of citizenship and satisfaction of the jurisdictional amount.
See 28 U.S.C. 1332(a). We have jurisdiction pursuant to 29 ___
U.S.C. 1291 (appeals from a district court's final judgment).
II. DISCUSSION II. DISCUSSION __________
After a bench trial, we review the trier's factual
determinations for clear error, see Smith v. F.W. Morse & Co., 76 ___ _____ ________________
F.3d 413, 420 (1st Cir. 1996); Cumpiano v. Banco Santander P.R., ________ _____________________
902 F.2d 148, 152 (1st Cir. 1990); Fed. R. Civ. P. 52(a), but
-8-
afford plenary review to the trier's formulation of applicable
legal rules, see Smith, 76 F.3d at 420; Johnson v. Watts ___ _____ _______ _____
Regulator Co., 63 F.3d 1129, 1132 (1st Cir. 1995). The ______________
jurisprudence of clear error prevents us from ruling anew on
factual issues. See, e.g., Jackson v. Harvard Univ., 900 F.2d ___ ____ _______ _____________
464, 466 (1st Cir.), cert. denied, 498 U.S. 848 (1990); Keyes v. ____________ _____
Secretary of the Navy, 853 F.2d 1016, 1019 (1st Cir. 1988). _____________________
This case comprises interrelated issues of liability
involving three players. The basic outline of the flurry of
claims is as follows. Vernay contests the district court's
ruling that it was liable under theories of warranty, both
express and implied, as well as strict liability for product
defects and negligence. Furthermore, Vernay argues that the
district court erred in rejecting the argument that Young
Brothers' negligence constitutes a defense to Vernay's liability.
Additionally, Vernay argues that the district court erred in
failing to conclude that Sullivan's own conduct should have
operated to bar Vernay's liability, rather than occasion a 40%
reduction. Finally, Vernay argues that the district court erred
in finding Young Brothers to be without liability under any of
Sullivan's theories.
Sullivan rejects Vernay's arguments that we should
reverse the district court's conclusions with respect to Vernay's
liability to him. Moreover, Sullivan contends that the district
court correctly did not bar his recovery due to his own conduct.
Sullivan also argues that the district court erred in finding
-9-
that Young Brothers was not liable under theories of breach of
warranty and strict liability for product defects, although
Sullivan contends that the district court correctly concluded
that Young Brothers was not liable under a negligence theory.
For its part, Young Brothers argues that the district court
correctly decided that it was not liable and that Vernay was.
We address first Vernay's liability, then Young
Brothers' liability. Issues of Sullivan's conduct are discussed
as they apply to the other two parties' liability. Following our
liability discussions, we turn to issues of damages.
A. Vernay's Liability A. Vernay's Liability
The district court found that Vernay breached certain
express and implied warranties in the sale of the Vernatube to
Young Brothers, all in violation of Me. Rev. Stat. Ann. tit. 11,
2-313 (express warranty), 2-314 (implied warranty of
merchantability), and 2-315 (implied warranty of fitness for a
particular purpose), and that Vernay was also liable under
theories of strict liability for product defects and negligence.
The district court arrived at its conclusions after making
extensive findings regarding the Vernatube and the VPIS which
were based both on trial testimony, exhibits entered into
evidence and the parties' joint stipulations, dated June 1, 1994
("Joint Stipulations"). On appeal, Vernay challenges, for a
number of reasons, the district court's conclusions that Vernay
is liable for breach of express warranties, breach of implied
warranties, and strict liability for product defects.
-10-
Breach of Express Warranty Breach of Express Warranty __________________________
Pursuant to the Maine Uniform Commercial Code, express
warranties by the seller are created by "[a]ny affirmation of
fact or promise made by the seller to the buyer which relates to
the goods and becomes part of the basis of the bargain." Me.
Rev. Stat. Ann. tit. 11, 2-313. Furthermore, "[i]t is not
necessary to the creation of an express warranty that the seller
use formal words such as 'warrant' or 'guarantee' or that he have
a specific intention to make a warranty, but an affirmation
merely of the value of the goods or a statement purporting to be
merely the seller's opinion or commendation of the goods does not
create a warranty." Id. In general, the question whether __
certain language creates an express warranty is reserved for the
trier of fact. See Cuthbertson v. Clark Equip. Co., 448 A.2d ___ ___________ _________________
315, 320 (Me. 1982). Below, Sullivan contended that: the
Vernatube had insufficient nominal wall thickness; the Vernatube
was porous on the inner surface, affecting the tube's overall
integrity; and the longitudinal strength was insufficient for the
application and could have been increased through changes in the
tube's manufacture. Based on an extensive review of the
technical evidence presented, the district court agreed, finding
that the deficiency in the nominal wall thickness and the
substandard longitudinal strength were not what Vernay expressly
warranted in its VPIS, and that the porous nature of the inner
surface of the Vernatube contributed to the weakening of the
fibers and the fatigue crack which caused the vessel to sink.
-11-
The district court ultimately concluded that the "breach of these
express warranties was collectively the cause of the failure of
this section of Vernatube." Vernay challenges the district
court's conclusion that it breached an express warranty arising
from the VPIS on several grounds. We reject all of them.
First, Vernay points out that neither Sullivan nor
Young Brothers pled any violation of an express warranty arising
from the VPIS. Sullivan only pled a violation of the express and
implied warranties of merchantability and fitness for a
particular purpose, and Young Brothers only pled a breach of an
implied warranty of merchantability. Accordingly, Vernay argues,
the district court erred when it held Vernay breached certain
express warranties made in the VPIS. We do not agree.
Under Fed. R. Civ. P. 15(b),2 we find that the express
warranty arising from the VPIS was tried by implied, if not
express, consent of the parties and, thus, we "treat[] [it] in
all respects as if [it] had been raised in the pleadings." Id.; ___
see Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal ___ _______
____________________
2 Fed. R. Civ. P. 15(b) provides, in pertinent part:
When issues not raised by the pleadings
are tried by express or implied consent
of the parties, they shall be treated in
all respects as if they had been raised
in the pleadings. Such amendment of the
pleadings as may be necessary to cause
them to conform to the evidence and to
raise these issues may be made upon
motion of any party at any time, even
after judgment; but failure so to amend
does not affect the result of the trial
of these issues.
-12-
Practice and Procedure: Civil 2d 1493 (1990) ("Rule 15(b) does ________________________________
not require that a conforming amendment be made and there is no
penalty for failing to do so."). In his pretrial memorandum,
Sullivan argues that Vernay Products breached certain express
warranties in connection with the sale of the Vernatube, citing
to Me. Rev. Stat. Ann. tit. 11, 2-313 and referring to the
statements made in the VPIS. Although in its pretrial memorandum
Vernay did point out, albeit somewhat in passing and without
reference to any legal rule, that Sullivan had not originally
pled breach of an express warranty arising from the VPIS, we find
that, because issues relating to both express and implied
warranties arising from the VPIS were tried interchangeably and
without further objection, the breach of an express warranty
arising from the VPIS was tried by implied, if not express,
consent under Fed. R. Civ. P. 15(b). The record shows that
Vernay did not object to the presentation of evidence regarding
express warranties made in the VPIS, and that Vernay itself
introduced considerable testimony regarding its interpretation of
the VPIS.
Furthermore, we are unpersuaded by Vernay's
counterargument that, because the VPIS was only admitted and
discussed for purposes of the strict liability claim's failure to
warn issue, its failure to object to the admission of the VPIS or
to related testimony cannot be deemed an implied consent to amend
the pleadings. Not only was the evidence and testimony regarding
the VPIS related directly to the breach of warranties claims that
-13-
Sullivan and Young Brothers had pled, but Vernay failed to raise
any sort of objection or state for the record that it was not
consenting to Sullivan's claim of a breach of an express warranty
claim arising from the VPIS. In addition, Vernay's counsel
explicitly admitted to the breach of warranties claims, without
reference to the fact that an express warranty arising from the
VPIS had not been pled: In support of defendants' motion for
judgment as a matter of law, Vernay's counsel stated that
"[w]ell, we have a breach of contract account here, but I would
say there is [an] absolute defense to Vernay under [Me. Rev.
Stat. Ann. tit. 11, ] 2-607(3)" given that Vernay was not given
notice of the defect. (6/21/94 Tr. p. 223). In any event, even
assuming, arguendo, that Vernay had not consented to the ________
amendment of the pleadings, it does not affect the outcome of the
appeal as we nonetheless affirm the district court's findings
that Vernay breached the express and implied warranties which had
originally been pled.
Second, Vernay argues that, even if a breach of express
warranty is deemed to have been pled, there was no evidence
proffered at trial to show that either Young Brothers or Sullivan
relied on the representations made in the VPIS. In support of
his argument, Vernay cites Phillips v. Ripley & Fletcher Co., 541 ________ _____________________
A.2d 946, 950 (Me. 1988), and cases from other jurisdictions for
the proposition that reliance is an element of a breach of
express warranty claim in Maine. As Phillips notes, comments to ________
Me. Rev. Stat. Ann. tit. 11, 2-313 suggest that "the
-14-
requirement that the affirmation become part of the 'basis of the
bargain' is meant to continue the uniform sales act requirement
that the purchaser must show reliance on the affirmation in order
to make out a cause of action for breach of warranty." Phillips, ________
541 A.2d at 950 (internal citations omitted).
Although the district court did not explicitly discuss
reliance as an element of the breach of express warranty claim in
its memorandum, testimony was given that Young Brothers relied on
the VPIS. The following colloquy ensued between counsel for
Sullivan and Colby Young, part owner and vice president of Young
Brothers:
Q. Is it fair to state that you made the
decision to change your installation
practice and use vernatubing for your wet
exhaust tube based upon the
representations set forth in the [VPIS]?
A. Yes, sir.
. . .
Q. So [sic] in other words, your decision to
use the vernatube was based upon the
content of the information set forth in
[the VPIS]?
A. That's correct.
. . .
Q. If Vernay in its brochure had told you
that a rigid installation was improper,
you wouldn't have done it?
A. Certainly not. It never would have been
done.
(6/21/94 Tr. T. at 199, 203). Following up on this and other
testimony by Young, counsel for Vernay engaged in this exchange
with Young:
Q. Mr. Young, you said that you relied on
this document to decide whether or not to
install Vernay in your first boat; isn't
that right?
-15-
A. That and the representation from the rep
[from H & H Propeller], yes.
Q. Okay. So you relied on things that [the
representative] from H & H Propeller
Shop, Inc. told you?
A. In fact, he brought it to us and asked us
to try it, yes.
Q. You say that [the VPIS] is the only thing
that Vernay gave you?
A. Yes.
(6/21/94 Tr. T. at 207).
Based on Young's testimony, including cross-examination
by Vernay's counsel, we conclude that the district court could
have reasonably inferred reliance. Thus, although the district
court did not explicitly address reliance, we nonetheless affirm
the breach of an express warranty claim based on the record
evidence and the failure of Vernay's counsel to object to it,
finding that the district court's failure amounts to harmless
error in this case, since the failure to make findings of fact
and conclusions of law dealt here with an issue on which most
relevant facts are undisputed and the law can be applied without
the district court's assistance. See Conservation Law Found. v. ___ ________________________
Busey, 79 F.3d 1250, 1271 (1st Cir. 1996); Associated Elec. _____ _________________
Coop., Inc. v. Mid-America Transp. Co., 931 F.2d 1266, 1272 (8th ___________ ________________________
Cir. 1991).
Lack of Privity Lack of Privity _______________
We dismiss as meritless Vernay's next claim that
Sullivan may not enforce the express warranty because there was
no evidence proffered that Sullivan "ever saw" the VPIS prior to
litigation, let alone relied on its representations. In Maine,
"[l]ack of privity between plaintiff and defendant shall be no
-16-
defense in any action brought against the manufacturer, seller or
supplier of goods for breach of warranty, express or implied,
although the plaintiff did not purchase the goods from the
defendant, if the plaintiff was a person whom the manufacturer,
seller or supplier might reasonably have expected to use, consume
or be affected by the goods." Me. Rev. Stat. Ann. tit. 11, 2-
318 (1995); see Stanley v. Schiavi Mobile Homes, Inc., 462 A.2d ___ _______ ___________________________
1144, 1147 n.4 (Me. 1983) (noting that lack of privity is no
defense in breach of implied warranty actions). Although there
is a lack of privity between Sullivan and Vernay in that Sullivan
did not purchase the Vernatube directly from Vernay, Sullivan was
certainly a person whom Vernay might reasonably have expected to
use, or be affected by, the Vernatube. Indeed, Vernay itself
stipulated to this very fact. See Joint Stipulations, No. 6. ___
Even without the stipulation, the record supports this finding.
As Vernay points out in its brief, approximately 70-75% of its
products are sold directly to boat builders and the rest are sold
to wholesale distributors and engine dealerships. H & H
Propeller Shop was Vernay's distributor in Maine and the parts
supplier from which Young Brothers purchased the Vernatube
installed aboard the SEA FEVER. As a purchaser of a new vessel
from a Maine boat building company which purchased goods from
Vernay's Maine distributor, Sullivan was certainly a person whom
Vernay might reasonably expect to use, or be affected by, its
product.
Notice Requirement Notice Requirement __________________
-17-
Vernay contends that the district court erred in
holding it liable under a breach of warranty theory, arguing that
it cannot be held responsible for the damages because Sullivan
failed to comply with the notice requirements set forth in Me.
Rev. Stat. Ann. tit. 11, 2-607(3). That section requires that,
where the tender has been accepted, the buyer must notify the
seller of any breach within a reasonable time after he or she
discovered or should have discovered any breach or be barred from
any remedy. Id., 2-607(3). The "seller" is defined as "a ___
person who sells or contracts to sell goods." Me. Rev. Stat.
Ann. tit. 11, 2-103(d). The district court found that Sullivan
satisfied the notice requirement, because he notified Young
Brothers, his immediate seller, of the 1991 crack.
On appeal Vernay contends -- as it did below -- that
Sullivan is barred from any remedy because he failed to notify
Vernay of the undisputed 1991 crack which caused water to enter
the SEA FEVER's holds. Vernay argues as follows: If the 1992
crack is considered to be a breach of any warranty then the
similar 1991 crack must also be considered a breach and, because
it is undisputed that neither Sullivan nor Young Brothers
provided Vernay with any notice of the 1991 crack,3 Sullivan is
barred from any remedy. For support, Vernay argues that "the
majority of courts" have held that for claims of economic loss,
remote manufacturers must be notified, and that notice to the
____________________
3 As the district court noted, although Young Brothers did
notify H & H Propeller of the 1991 crack, H & H did not notify
Vernay.
-18-
seller of the product alone is insufficient for purposes of
Section 2-607(3). The consequence of not receiving notice of the
first crack, Vernay explains, is that it never had an opportunity
to offer a cure. See Me. Rev. Stat. Ann. tit. 11, 2-605. The ___
district court rejected Vernay's argument, concluding that the
majority of courts in fact have held that buyers need only notify
their immediate sellers. Sullivan, 893 F. Supp. at 1159 ________
(collecting cases). However, Vernay disputes the cases that the
district court cited, and argues that a majority of courts hold
the opposite.
However, even accepting, arguendo, Vernay's argument, ________
the record supports the conclusion that Vernay had constructive
notice and knowledge of the 1991 crack. As the district court
noted when denying defendants' motion for judgment as a matter of
law, viewing the evidence in the light most favorable to the
plaintiff -- as the verdict here requires us to -- a fact finder
could conclude that Vernay was effectively notified via
communication to H & H Propeller, Vernay's representative in
Maine. The district court concluded, and we agree, that a fact
finder could reasonably infer that the representative had the
apparent authority to accept reports for Vernay and that notice
given to that agent was effectively constructive knowledge to
Vernay, who retained that representative and that company as its
exclusive representative in Maine.
Finally, Vernay raises an additional argument based on
the district court's finding that Sullivan was aware of a new
-19-
crack in 1992 which he "had been meaning to repair." Vernay now
contends that because there is no evidence that Sullivan provided
anyone with notice of the 1992 crack prior to the sinking,
Sullivan is barred from any remedy. Vernay further contends that
on the facts of this case (namely, that the 1991 crack almost
resulted in the sinking of the SEA FEVER and the new crack had
the potential to do the same), reasonable notice of this new
crack could be nothing less than immediate notice.
Vernay has failed to adduce legal authority for the
proposition that, under Maine's version of Article 2 of the UCC,
Sullivan's failure to give immediate notice voids his claim. In
contrast, an applicable comment to the UCC states that:
"[a] reasonable time" for notification
from a retail consumer is to be judged by
different standards [than notice from a
merchant buyer], . . . for the rule of
requiring notification is designed to
defeat commercial bad faith, not to
deprive a good faith consumer of his
remedy.
Uniform Commercial Code, 2-607.4 cmt. In this case, where the
1992 crack had given Sullivan no indication of trouble, we must
reject Vernay's "immediate notice" gloss on what constitutes "a
reasonable time." To adopt Vernay's reading would require
consumers to give notice of problems that amount to little more
than a nuisance, and would tend to defeat worthy claims with
little off-setting benefit to anyone. Even if consumers were to
comply with this burden, manufacturers would be deluged with
notices about harmless defects. In light of the UCC comment's
-20-
apt caution regarding the notice requirement and retail
consumers, we think that it would be unwise to shift the balance
in this flow of information in the manner that Vernay urges.
As a result, we uphold the district court's conclusion
that Vernay was liable for breach of its express warranties
regarding the Vernatube's nominal wall thickness, porosity of its
inner surface, and longitudinal strength. Furthermore, given the
expert testimony heard by the district court, its finding of
causation cannot be clear error. See Clement v. United States, ___ _______ _____________
980 F.2d 48, 53 (1st. Cir. 1992) (stating that, under Maine law,
causation-in-fact is a factual inquiry); Greenstreet v. Brown, ___________ _____
623 A.2d 1270, 1271 (Me. 1993) (stating that "[p]roximate cause
is a question of fact" and "[w]e will not disturb the trial
court's finding of fact unless there is no competent evidence in
the record to support it"); LaFerriere v. Paradis, 293 A.2d 526, __________ _______
528-29 (Me. 1972). Because we uphold the district court's
finding of Vernay's liability based on a breach of its express
warranty, we need not consider Vernay's liability with respect to
theories of implied warranty, or with respect to negligence or
strict liability for product defects.4 See Dudley v. Bungee ___ ______ ______
____________________
4 We taken no position, however, on the question of whether
Sullivan's loss constitutes purely "economic loss" under
Oceanside. We note in passing that, with respect to Vernay's _________
liability under theories of negligence or strict liability, we
express no opinion as to the district court's assertion that "the
[Maine] Law Court has not decided th[e] issue" of the economic
loss doctrine's applicability to recoveries under such theories,
Sullivan v. Young Bros. & Co., 893 F. Supp. 1148, 1153 (D. Me. ________ __________________
1995), in light of Oceanside at Pine Point Condo. Ass'n v. _______________________________________
Peachtree Doors, Inc., 659 A.2d 267, 270-71 (Me. 1995) (decided _____________________
two months prior to Sullivan) (stating that "plaintiffs may not ________
-21-
Int'l Mfg., 76 F.3d 372, 1996 WL 36977, *2, (4th Cir. 1996) (per __________
curiam) (finding it "unnecessary to address the question of
whether labelling on the [product] created any express
warranties," since the court had affirmed claim for compensatory
damages on a negligence count); Compton v. Wyle Laboratories, 674 _______ _________________
F.2d 206, 208 n.1 (4th Cir. 1982) (declining to address alternate
theory of breach of warranty on which plaintiff had prevailed
below, since the court of appeals affirmed district court's
finding of liability based on negligence); Drayton v. Jiffee _______ ______
Chem. Corp., 591 F.2d 352, 358 (6th Cir. 1978) (upholding ____________
district court's conclusion of liability solely on breach of
express warranty grounds, without ruling with respect to court of
appeals' concerns regarding district court's conclusions of
liability on bases of breach of implied warranty, strict
liability and negligent design).5
____________________
recover for [economic] damages in tort").
5 Vernay also contends that the district court's judgment should
be reversed because Sullivan's insurers made payments to Sullivan
as "volunteers" and were under no contractual obligation to do
so, but we think this argument is without merit. As Vernay
itself states in its brief, an insurer is a "volunteer" and
without rights to subrogation only if it pays its insureds when
it clearly has no obligation to do so under its policy. See, _______ ___
e.g., Allstate Ins. Co. v. Quinn Constr. Co., 713 F. Supp. 35, 38 ____ _________________ _________________
(D. Mass. 1989) (stating that an insurer "could be characterized
as a volunteer only if it paid [insured] when it clearly had no
obligation to do so," and any "doubt . . . is construed in favor
of the insurer and the nonexistence of a volunteer status"). The
purpose of this rule is "to encourage insurers to settle promptly
claims that appear to be valid." Id. To be sure, Vernay asserts ___
that because Sullivan's policy states that recovery shall be made
"provided such loss or damage has not resulted from want of due
diligence by the assured," the insurer acted as a volunteer in
paying Sullivan despite his negligent conduct. However, we
conclude that the district court did not err in concluding that
-22-
Sullivan's Conduct Sullivan's Conduct __________________
Vernay also appeals the district court's finding that
its acts were the proximate cause of Sullivan's injuries. Vernay
contends that Sullivan's own actions were an intervening and
superseding cause of his loss. Because proximate cause is a
factual inquiry, the district court's determination must stand
unless it is clearly erroneous. See Clement, 980 F.2d at 53 ___ _______
("[c]ausation-in-fact is, by definition a factual inquiry" under
Maine law); Greenstreet, 623 A.2d at 1271 ("[p]roximate cause is ___________
a question of fact").
The district court ruled that the breach of the express
warranties was collectively the cause of the failure of the
Vernatube, which in turn caused the complained-of harm.
Sullivan, 893 F. Supp. at 1159. Vernay correctly identifies ________
evidence that Sullivan's own actions could have contributed to
the SEA FEVER's sinking. However, the district court also
considered expert testimony regarding the Vernatube's physical
defects and their role in the SEA FEVER's sinking. Furthermore,
the district court reduced Sullivan's recovery accordingly.
Based on our review of this evidence, we conclude that there was
sufficient evidence to render the district court's conclusion
reasonable. As a result, we cannot conclude that the district
court's finding that Vernay proximately caused the complained-of
____________________
any consequent argument that the insurer was not necessarily
required to pay Sullivan was not sufficiently compelling to meet
the legal standard that the insurer clearly had no obligation to _______
pay.
-23-
harm was clearly erroneous. Accordingly, we affirm the district
court's conclusion that Vernay is liable to Sullivan for breach
of its express warranty.
We note in passing that we do not opine on whether
Sullivan's recovery under a breach of express warranty theory
could appropriately be reduced under comparative negligence
principles, since Sullivan does not cross-appeal the reduction.
As the district court properly noted, whether such a reduction is
permissible regarding a breach-of-warranty theory is an "open
question under Maine law." Sullivan, 893 F. Supp. at 1161 ________
(citing Dongo v. Banks, 448 A.2d 885, 891 (Me. 1982) (expressly _____ _____
declining to decide the issue of whether plaintiff's negligence
is or should be a defense to an action for breach of implied
warranty)). The district court reduced Sullivan's recovery under
both express warranty and implied warranty theories on the basis
of trends in case law applying comparative negligence principles
to actions for breach of implied warranties. Id. We neither _______ ___
adopt nor reject the principle that express warranties implicate
the same interests as implied warranties with respect to this
question.6 Rather, we uphold the reduction of Sullivan's award
____________________
6 Some courts have apparently extended comparative negligence
principles to actions for breach of express warranties. See, ___
e.g., Haysville U.S.D. No. 261 v. GAF Corp., 233 Kan. 635, 644, ____ _________________________ _________
666 P.2d 192, 201 (1983); Interwest Constr. v. Palmer, 886 P.2d _________________ ______
92, 99-100 (Ct. App. Utah 1994); see also Merritt Logan, Inc. v. ________ ___________________
Fleming Cos., 901 F.2d 349, 365 (3d Cir. 1990) (construing New ____________
Jersey statutes to authorize consideration of comparative
negligence in assessing damages for breach of warranty, without
stating whether holding applies to express warranties). But see _______
Shaffer v. Debbas, 21 Cal. Rptr. 2d 110, 114 (Cal. Ct. App. 1993) _______ ______
(stating that "comparative negligence is not a defense to a
-24-
because of his waiver by failing to cross-appeal. As a result,
we caution that our decision to allow a reduction under an
express warranty theory for comparative negligence does not stand
for an endorsement of comparative negligence's applicability to
express warranty theory-based claims.
B. Young Brothers' Liability B. Young Brothers' Liability
Vernay argues that the district court erred in finding
no liability on the part of Young Brothers on theories of
negligence, implied warranty and strict liability. Sullivan also
argues that the district court correctly found no liability on
Young Brothers' part under a negligence theory, but that the
district court erred in finding Young Brothers not liable for
breach of implied warranty. We address Young Brothers' liability
on each of these theories in turn.
Negligence Negligence __________
Vernay argues that the district court erred in finding
no liability on Young Brothers' part under a negligence theory.
Vernay makes a two-part argument. First, Vernay argues that
Young Brothers was negligent in its design and building of the
SEA FEVER. Second, Vernay contends that Young Brothers was
negligent in its conduct after the SEA FEVER had been delivered
to Sullivan.
With respect to Vernay's first argument, we affirm the
district court's conclusion that Young Brothers was not negligent
in designing and building the SEA FEVER. Vernay points out that
____________________
breach of express warranty action").
-25-
Young Brothers used a rigid installation of the Vernatube,
disregarding written boat building standards, and that the
district court heard testimony disapproving of such installation
methods. But the district court also heard testimony of others
in the industry to the effect that the installation of Vernatube
in the SEA FEVER was typical of customary installation practices
in Maine7 -- and custom within the boat building profession is a
factor relevant to the standard of care owed by Young Brothers.
See Restatement (Second) of Torts 294A (1965). The district ___
court also heard testimony as to the relatively trouble-free
operation of Vernatube generally with rigid installation. While
Vernay may wish it otherwise, ours is not the task of crediting
witnesses, see Coastal Fuels of Puerto Rico, Inc. v. Caribbean ___ ____________________________________ _________
Petroleum Corp., 79 F.3d 182, 195 (1st Cir. 1996); Wytrwal v. _______________ _______
Saco Sch. Bd., 70 F.3d 165, 171 (1st Cir. 1995), and the _______________
testimony of these witnesses, we conclude, justified the district
court's conclusion that Young Brothers acted without negligence,
see The T.J. Hooper, 60 F.2d 737, 740 (2d Cir.) (L. Hand, J.) ___ ________________
(stating that the court should not find that the "whole [boat
building] calling may have unduly lagged" without good reason),
cert. denied, 287 U.S. 662 (1932). ____________
____________________
7 In fact, another boat builder testified that he had been "in
every boatyard up and down the Maine coast" and he had "never
seen it done differently." See Sullivan, 893 F. Supp. at 1157. ___ ________
Additionally, Vernay's distributor in Maine testified that 90% of
boat builders install Vernatube in the same way as it was
installed in SEA FEVER. Id. ___
-26-
Vernay also contends that Young Brothers was negligent
in failing to notify Vernay regarding the 1991 crack. We dismiss
this argument for the same reason that we dismissed Vernay's
claim that Vernay is not liable because it was not notified of
the 1991 crack. In fact, Sullivan notified Young Brothers, and
Young Brothers in turn notified H & H Propellers, Vernay's Maine
distributor and the supplier from whom Young Brothers purchased
the Vernatube. In light of this notice to Vernay's distributor,
we cannot accept the contention that Young Brothers was somehow
negligent in its handling of the 1991 crack. Vernay also argues
that Young Brothers was negligent in not finding the cause of
this crack; however, one must possess a duty before one can
breach it, and as Vernay has not pointed to authority showing
that Young Brothers owed a duty beyond notifying its supplier, we
reject this contention. As a result, we conclude that Young
Brothers cannot be held liable under a negligence theory.
Implied Warranty and Strict Liability Implied Warranty and Strict Liability _____________________________________
Vernay argues that the district court erred in finding
Vernay liable and Young Brothers not liable under theories of
implied warranty and strict liability. Vernay argues that the
district court erred by concluding that Vernay was liable under a
theory of implied warranty, while Young Brothers did not breach
its implied warranty that the vessel would be fit for its
ordinary use. Additionally, according to Vernay, both of these
parties participated in the sale of the allegedly defective
Vernatube, and therefore, it is impossible for Vernay to be held
-27-
strictly liable and Young Brothers not to be held strictly
liable.
The district court correctly concluded that Young
Brothers could not be found liable for breach of an implied
warranty of merchantability. Maine's version of Article 2 of the
UCC provides that "a warranty that the goods shall be
merchantable is implied in a contract for their sale if the
seller is a merchant with respect to goods of that kind." Me. ___________________________________
Rev. Stat. Ann. tit. 11, 2-314(1) (emphasis added). In Suminski ________
v. Maine Appliance Warehouse, 602 A.2d 1173 (Me. 1992), the Maine _________________________
Law Court interpreted the phrase "goods of that kind." Id. at ___
1175 (discussing section 2-314(1)). The Law Court concluded that
a defective switch that did not affect use of a television for
more than a year did not render a seller of televisions liable
for breach of an implied warranty. In particular, the Law Court
stated that
the sale of a major appliance with a
switch that fails more than a year later
cannot support a finding that the entire
appliance was unmerchantable when sold.
To use an automotive example, an
unmerchantable battery may not render an
entire vehicle unmerchantable.
Suminski, 602 A.2d at 1175. We conclude, similarly, that in the ________
instant case, where the Vernatube did not impede use of the SEA
FEVER for more than one year, and Young Brothers sells boats, not
Vernatube, Young Brothers cannot be held liable for breach of an
implied warranty of fitness for ordinary purposes.
-28-
However, we cannot agree with the district court's
conclusion that Young Brothers was not strictly liable to
Sullivan. Maine's strict liability statute provides that
[o]ne who sells any goods or products in
a defective condition unreasonably
dangerous to the user or consumer or his
property is subject to liability for
physical harm thereby caused to a person
whom the manufacturer, seller or supplier
might reasonably have expected to use,
consume or be affected by the goods, or
to his property . . . . This section
applies although the seller has exercised
all possible care in the preparation and
sale of his product and the user or
consumer has not bought the product from
or entered into any contractual relation
with the seller.
Me. Rev. Stat. Ann. tit. 14, 221. The district court concluded
that Young Brothers was not strictly liable because "the rigid
installation of SEA FEVER's exhaust system was not a cause of the ___________
failure in the Vernatube." Sullivan, 893 F. Supp. at 1155. This ________
conclusion cannot be reconciled with the statute's explicit
direction that a seller's liability attaches notwithstanding the
seller's exercise of "all possible care." If the Vernatube
section was "defective" and "unreasonably dangerous," as the
district court suggests in its opinion, it would be immaterial
that Young Brothers' own actions did not cause Sullivan's
injuries. As a result, we must vacate the district court's
judgment that Young Brothers was not liable to Sullivan under a
strict liability theory.
Young Brothers' sole apparent argument to rebut the
conclusion that it is strictly liable to Sullivan is that, based
-29-
on Suminski, Young Brothers' should be considered a seller of ________
boats, not the Vernatube in the boats. As discussed above,
Suminski applies on its face to allegations that an implied ________
warranty of merchantability has been violated, not to theories of
strict liability. Suminski, 602 A.2d at 1175. We decline to so ________
greatly extend Suminski's reach, and as a result we must grant ________
judgment to Sullivan against Young Brothers under a theory of
strict liability. As the parties have neither briefed nor argued
Maine indemnification law among tortfeasors, we remand to the
district court for further proceedings regarding Young Brothers'
rights to indemnity from Sullivan.
C. Damages C. Damages
Vernay also challenges the district court's computation
of Sullivan's damages. In particular, Vernay takes issue with
the district court's choice of the cost of repair rather than
diminution in the value of the damaged property. Under Maine
law, both measures may be used to prove the amount of damages.
See Paine v. Spottiswoode, 612 A.2d 235, 240 (Me. 1992). ___ _____ ____________
"Generally, we will not substitute our judgment for
that of the [factfinder] in assessing damages and will not
disturb the [factfinder's] damage award unless that award is a
product of bias, prejudice, improper influence, or was reached
under a mistake of law or in disregard of the facts." Bradford ________
v. Dumond, ___ A.2d ___, ___, 1996 WL 242615, at *5 (Me. 1996); ______
Currier v. Cyr, 570 A.2d 1205, 1210 (Me. 1990). The district _______ ___
court "is entitled to act upon probable and inferential as well
-30-
as direct and positive proof in determining damages." Bradford, ________
1996 WL 242615, at *5; Cyr, 570 A.2d at 1210. In the present ___
case, we think that the district court was justified in relying
on the undisputed costs of Plaintiff's initial loss
investigation, the cost of a salvor to raise the SEA FEVER,
Plaintiff's repair costs for the vessel's machinery, and the
insurer's estimate of water damage to the deck and superstructure
of the vessel. As a result, we do not think that the district
court's estimate of Plaintiff's loss, reduced for Plaintiff's own
comparative negligence,8 of $54,318.68 can be said to have been
made in disregard of the facts. And certainly, no contention has
been made that the award was the product of bias, prejudice or
improper influence.
However, we conclude that a mistake of law compels
reduction of the award by $5,000 -- the amount of the settlement
between H & H Propellers and Sullivan. Under Maine Law, when a
person seeks recovery for property damage caused by two or more
parties, if a settlement or release is made with one party, "the
trial judge shall reduce the verdict [against the non-settling or
non-releasing party or parties] by an amount equal to the
settlement with or the consideration for the release of the other
[party or parties]." Emery Waterhouse Co. v. Lea, 467 A.2d 986, ____________________ ___
995 (Me. 1983). The district court neglected to take the
settlement with H & H Propellers into account in fixing the
____________________
8 See, supra n.6. ___ _____
-31-
verdict. As a result, the verdict against Vernay must be reduced
to $49.318.68.
CONCLUSION CONCLUSION __________
For the foregoing reasons, the district court's
decision is affirmed in part and reversed in part. No costs to affirmed in part reversed in part. ________________ ________________
any party.
-32-
Sullivan v. Vernay Products, Inc, (1st Cir. 1996).
Sullivan v. Vernay Products, Inc (Sullivan v. Vernay Products, Inc) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.
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