Judricks Enterprises Ltd. v. Caterpillar, Inc., s. 97-2073
| Citation | 165 F.3d 32 |
| Decision Date | 19 August 1998 |
| Docket Number | 97-2149,Nos. 97-2073,s. 97-2073 |
| Parties | NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit. JUDRICKS ENTERPRISES LIMITED, an Ontario corporation, Plaintiff-Appellant, v. CATERPILLAR, INCORPORATED, a Delaware corporation, Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Appeal from the United States District Court for the Central District of Illinois, Peoria Div. No. 92 C 1277. Joe B. McDade, Judge.
Before Hon. MICHAEL S. KANNE, Hon. ILANA DIAMOND ROVNER, Hon. TERENCE T. EVANS, Circuit Judges.
Judricks Enterprises, Ltd. ("Judricks") and Caterpillar, Inc. ("Caterpillar") entered into an agreement for Judricks to supply connecting rods for Caterpillar engines. 1 Eventually, a number of problems arose in the relationship. The first batch of rods that Judricks sent to Caterpillar was defective, but Caterpillar did not discover the flaw until a rod installed by a customer tore up an engine. Caterpillar then determined that the center distance measurement on the rods was not within the specifications it supplied to Judricks. Caterpillar returned the rods to Judricks and refused to pay for them. In its complaint, Judricks asserted that Caterpillar should pay for the nonconforming rods because it should have discovered the defect much earlier, in a sample batch of 30 rods sent to Caterpillar at the start of the production. Caterpillar's quality control department received those sample rods, but they claim that they never conducted their own measurements of the center distance. Judricks sent its own center distance measurements to quality control with the sample rods, and those numbers were within the specifications. The problem, it turned out, was that Judricks positioned the rods incorrectly in taking the measurement, so those numbers did not accurately reflect the center distance measurement. Eventually, the problem was corrected and Judricks began producing conforming rods for Caterpillar. Even that production, however, did not fulfill the parties' expectations. Judricks had problems meeting the production goals, which was attributable to a number of causes including problems with machines, some of which came from Caterpillar. In any case, Caterpillar ultimately decided to take its business elsewhere, and ceased ordering rods from Judricks. In its complaint, Judricks claimed that Caterpillar contracted to purchase those connecting rods exclusively from Judricks for five years. Judricks also complained that Caterpillar refused to pay for 226 rods that were delivered in a torqued condition, because Caterpillar wanted them untorqued. 2 Finally, Judricks asserted that a price increase granted by Caterpillar should have taken effect on March 1, 1990, rather than May 15 of that same year. The district court granted summary judgment to Caterpillar on a number of claims, and a jury returned a verdict for Caterpillar on the remaining counts. Judricks now challenges the grant of summary judgment, the exclusion of evidence and the imposition of time limitations at trial, and certain jury instructions.
I.
A number of the challenges raised by Judricks were never presented to the district court, and are therefore waived. First, Judricks complains that the court erred in granting summary judgment on Count III, which sought payment for the rods that Caterpillar rejected because the center distance was non-conforming. Judricks argues that the UCC, as adopted in Illinois, holds a buyer liable for payment for non-conforming goods where the non-conformity was or should have been discovered by the buyer. See 815 ILCS 5/2-606 & 5/2-607(3)(a). That argument was not presented to the district court. In its motion for summary judgment on Count III, Caterpillar argued that it had the right to reject the defective goods without payment pursuant to the warranty provision in the purchase order. Under that provision, Judricks warranted that all goods conformed to the specifications regardless of the buyer's acceptance of the goods. Judricks responded that Caterpillar waived the warranty because it accepted the rods after its quality control department had an opportunity to inspect them. The district court rejected Judricks' waiver argument and granted summary judgment in favor of Caterpillar because Judricks presented no evidence that Caterpillar was either aware of the defect or had an obligation to inspect the rods in order to preserve its warranty rights.
Judricks now argues for the first time that §§ 2-606 & 2-607(3)(a) of the UCC prohibit Caterpillar from rejecting the goods and refusing payment. See 810 ILCS 5/2-606 & 5/2-607(3)(a). Section 2-606 defines acceptance as occurring where a buyer, after a reasonable opportunity to inspect, signifies that goods are conforming. Once goods are accepted, section 2-607(3)(a) bars a buyer from any remedy unless the buyer notifies the seller of a breach within a reasonable time after the buyer discovered or should have discovered the breach. This UCC-based argument is fundamentally different from the warranty-waiver argument Judricks raised below, and involves distinct legal theories. We have long held that a party opposing a summary judgment motion must present its legal and factual defenses to the trial judge, and that any defenses not so presented cannot be raised on appeal of an adverse summary judgment decision. Liberles v. County of Cook, 709 F.2d 1122, 1126 (7th Cir.1983). It is not enough that both defenses relate generally to the buyer's ability to reject non-conforming goods. The district court is entitled to be presented with the legal theories underlying the defenses. Id. In the district court, Judricks raised only a common law argument that Caterpillar waived its written warranty provision, and never argued that the UCC provisions limited Caterpillar's right to reject the goods. Therefore, the UCC argument was waived and cannot form a basis for reversing the grant of summary judgment regarding Count III. Judricks does not repeat its common law warranty-waiver argument to this court, and therefore has presented no argument which would require reversal of summary judgment regarding Count III.
Judricks also challenges certain jury instructions, arguing that they erroneously presented the jury with the common law concepts of offer and acceptance rather than the more expansive understanding of contract formation found in the UCC. We need not address the propriety of the challenged instructions because we find that argument was waived as well. 3
In a memorandum to the district court, Judricks opposed Caterpillar's proffered instructions that defined contract formation in terms of offer and acceptance. Judricks argued that the terms "offer" and "acceptance" were common law concepts that no longer were required for contract formation under the UCC. Judricks submitted its own jury instruction, which drew its definition of contract formation from the UCC. In a telephone conference on the record, the district court stated that it was inclined to give Judricks' instruction, but also to give Caterpillar's proposed instructions because the concepts of offer and acceptance were "still part of the UCC law in this area" and because the jury required a definition of rejection as well. Transcript (Tr.) of Conference Call, January 24, 1997, at 26. Neither party objected to this ruling by the court. A number of times in the conference call, the court stated that its rulings were tentative and that either side should "make its record" and have the court rule on its tendered instructions. The court also invited the parties to submit new instructions and to work on mutually acceptable instructions. Judricks did not submit any new instructions to address the court's concerns with offer and acceptance under the UCC, or with the definition of rejection. Later in the trial, the court again raised the issue of jury instructions. At that point, Judricks declined to present its objections again, stating that it had presented its position on the record at the telephone conference.
Of course, no objection had been made at the telephone conference to the court's ruling regarding Caterpillar's proposed instructions, but we will assume that Judricks meant by that comment to include the objections set forth in the written memorandum. Even under that interpretation, however, Judricks' argument against waiver must fail. Judricks' argument to the district court that the common law concepts of offer and acceptance are inapplicable in the context of the UCC is simply incorrect. We have recently recognized that "the UCC retains the basic common law requirements of offer, acceptance, and consideration." Echo, Inc. v. Whitson Co., Inc., 121 F.3d 1099, 1103 (7th Cir.1997)(applying Illinois law); Architectural Metal, Inc. v. Consolidated Inc., 58 F.3d 1227, 1230 (7th Cir.1995). Therefore, the district court properly rejected Judricks' argument that the instructions were defective because of the focus on the terms offer and acceptance. Moreover, the facts in the case gave rise to a question of whether the offer was rejected, and the court properly held that the jury should receive some definition of "rejection." In other words, Judricks' only objection to the instructions was based upon its belief that the UCC had abandoned the common law concepts of offer and acceptance. The district court properly held that those concepts retained viability. Judricks did not avail itself of the multiple opportunities presented by the court to object to the specific definitions of offer, acceptance and rejection used in those instructions, nor did Judricks provide an alternative instruction defining those terms. Judricks cannot, therefore, argue that the definition of those terms is improper,...
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