454 F.3d 1203 (11th Cir. 2006), 04-14228, Nebula Glass Intern., Inc. v. Reichhold, Inc.
|Citation:||454 F.3d 1203|
|Party Name:||NEBULA GLASS INTERNATIONAL, INC., a Florida corporation d.b.a. Glasslam N.G.I., Inc., Plaintiff-Appellee, v. REICHHOLD, INC., a foreign corporation, Defendant-Appellant.|
|Case Date:||June 30, 2006|
|Court:||United States Courts of Appeals, Court of Appeals for the Eleventh Circuit|
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Joseph H. Lang, Jr., Sylvia H. Walbolt, Lori Y. Baggett, Carlton Fields, P.A., Tampa, FL, Allison Oasis Kahn, Carlton Fields, Miami, FL, Fred J. Lotterhos, III, Holland & Knight, Lakeland, FL, for Defendant-Appellant.
Kimberly Lynn Boldt, The Boldt Law Firm, Boca Raton, FL, Louis L. Williams, Williams & Heffling, West Palm Beach, FL, for Plaintiff-Appellee.
Appeal from the United States District Court for the Southern District of Florida, D. C. Docket No. 02-60703-CV-WPD.
Before BIRCH and MARCUS, Circuit Judges, and NANGLE[*], District Judge.
MARCUS, Circuit Judge:
In this contract action, Reichhold, Inc. appeals from the entry of final judgment in the amount of $22.5 million in favor of the plaintiff, Nebula Glass International, Inc. d.b.a. Glasslam N.G.I., Inc. ("Glasslam"). A jury found that Reichhold supplied Glasslam with a defective product (resin), which constituted a breach of contract, breach of express warranty, and breach of implied warranty. On appeal, Reichhold argues that the district court erred in denying its Rule 50 motion for judgment as a matter of law on Glasslam's claims for certain future glass replacement damages and for lost profit damages. After thorough review, we are satisfied that a sufficient evidential foundation supports the jury's substantial award, and, therefore, affirm.
The essential facts are these: the appellant, Reichhold, is a chemical company that manufactures, among other products, resin for use in making laminated glass. Appellee Glasslam supplies glass laminating resin and licenses a patented process for making an impact-resistant laminated glass product called Safety Plus 1. Safety Plus 1 is manufactured essentially by sandwiching resin and a thin film between two pieces of glass. The edges of the film are anchored to the window frame. This configuration allows the glass to withstand high-velocity impact from flying objects, such as may occur during a hurricane. However, ultraviolet (UV) light causes the film and resin to degrade. To prevent this degradation a UV absorbing compound must be added to the resin.
Beginning in 1996, Glasslam contracted with Reichhold to manufacture resins containing a certain amount (.2 percent) of Tinuvin 328, a UV absorbing compound. Contrary to the agreement between the two parties, however, Reichhold included only one-half of the required Tinuvin 328 in the resin, and later replaced Tinuvin 328 altogether, using instead another UV absorber, Uvinul, which blocks less UV light than Tinuvin 328. Glasslam used some of the defective resin and sold some to its customers, who used it to manufacture Glasslam's patented Safety Plus 1 laminated glass. Reichhold supplied Glasslam with defective resin for five years.
In early 2000, Custom Glass, one of the customers Glasslam supplied with Reichhold's resin, complained that the resin was discoloring and the glass was delaminating. Then, in the summer of 2001, Norman Foxworth of Dependable Glass, another customer, reported that the Reichhold resin supplied by Glasslam did not appear to be blocking UV light properly. When Glasslam asked Reichhold whether it was using .2 percent Tinuvin 328 to manufacture the resin, Reichhold falsely replied in the affirmative. Eventually, Glasslam discovered that Reichhold was not manufacturing the glass according to the detailed specifications they had agreed upon.
Not surprisingly, Glasslam filed suit on April 5, 2002, in Broward County Circuit Court, seeking damages for the defective resin it purchased from Reichhold. Glasslam's Amended Complaint asserted five claims: breach of contract (Count I); breach of express warranty (Count II); breach of implied warranty (Count III); breach of implied warranty of fitness for a particular purpose (Count IV); and fraud (Count V). Based on diversity of citizenship (28 U.S.C. § 1332), Reichhold removed the cause to the United States District Court for the Southern District of Florida, on May 22, 2002. On December 3, 2002, the district court dismissed with prejudice Counts IV (breach of warranty of fitness for a particular purpose) and V (fraud). The remaining claims were tried to a jury.
Among others, Glasslam presented expert testimony from Dr. George Frederick Willard, Jr., an organic chemist the plaintiff retained to analyze the Reichhold resin. Based on his review and analysis, Dr. Willard testified that the resin Reichhold supplied to Glasslam "is basically bad resin" that suffered from two fundamental defects: first, it was "undercooked," meaning "the chemical reaction in the reactor ha[dn't] been . . . cooked to completion"; and, second, it contained either too little Tinuvin or a different UV absorber altogether. He testified that glass constructed with the defective resin will fail in the following ways: the resin will yellow; the edges of glass panes will deteriorate; the glass will become less resistant to impact from wind-blown projectiles; and the two
pieces of glass will separate (delaminate) when the resin, which binds the glass together, begins to break down.
Dr. Willard also testified on direct examination as to the time frame within which all of the defective resin would fail:
Q: In your opinion, because of the photochemical reactions [caused by Reichhold's non-conforming UV-absorbing additive] and because of the fact that the resin was undercooked . . . how long will it take this resin to fail, to become degraded, destroyed or discolored?
A: Well, if you are talking about a clear glass and you are talking about maybe a beachfront property in the Bahamas, I would estimate about a year.... If you are talking about a colored glass like a brown or a gray, and it was on a north facing building somewhere not on the beach, maybe under a canopy, it could go much longer, maybe five years before you would notice it.
The problem is you can--you have to define what a "failure" is. What is a "failure"? To some people the appearance of a yellow color is a failure because you can see it.
My concern is, though, long before you maybe see some real manifestation of the problem like the yellowness and the deterioration, that resin is in there changing. It's changing every day. It's trying to separate. If you can imagine, these small molecules are migrating, believe it or not, through that matrix of higher molecular weight materials. They are collecting at the glass surface and at the PET surface, the film surface. So I can't guarantee you how long that impact performance is going to last.
Q: What do you think is the parameters--because there are so many different things like dryness and latitude and sun and whether its shaded--what do you think the--you said one year. What do you think the outside parameter is?
A: About five years.
The jury returned a verdict in Glasslam's favor on all claims, and awarded Glasslam the following damages:
Out-of-pocket damages $1,271,379.00 Unpaid customer claims $14,665,621.00 Lost Profits $6,563,000.00 ------------------ TOTAL DAMAGES $22,500,000.00
On appeal, Reichhold does not challenge the jury's finding of liability, but instead asserts that some of the damages--$12.3 million of the unpaid customer claims damages attributable to replacement costs for glass installed in Pensacola Christian College and all lost profit damages--were speculative and therefore unrecoverable. B. Costs for Replacing Pensacola Christian College's Glass Before trial, Reichhold moved for partial summary judgment as to Glasslam's claims for future glass-replacement damages. Because Glasslam's initial disclosures made pursuant to Fed.R.Civ.P. 26 and its answers to interrogatories identified only nine customers that had actually experienced resin-related glass problems, Reichhold argued that any damages derived from future claims made by any other customers would be speculative and, therefore, not compensable. The district court partially granted Reichhold's motion as to speculative damages, which it defined as any future replacement claims unrelated to any of the specific customer complaints Glasslam identified in its answers. Notably, in its answers, Glasslam identified Page 1208 "Norman Foxworth, Dependable Glass Works, Covington, LA 70434" as a complaining customer, and explained that "Dependable Glass Works experienced problems with resin sold by Glasslam and manufactured by Reichhold." Glasslam's answer also explained that "there are unknown damages at a college in Pensacola in which $5.9 million was spent on laminated glass and installation." At trial, Glasslam called Foxworth of Dependable Glass, who testified that he installed Safety Plus 1 glass in two Pensacola Christian College buildings. He explained that the glass had already begun to fail: "It had been installed about four or five months and we had a--small amount of pieces--three or four--maybe ten--I am not sure of the number of the pieces of glass we needed to replace. And we provided the glass and replaced them." Foxworth also said that, six months later, Pensacola Christian College "call[ed] and said . . . they had some more glass that was going bad." Then, two weeks before the trial, Foxworth received yet another complaint from the college regarding defects in "nine [additional] pieces of glass in Furman Dining Hall . . . scattered all over the building . . . like a checkerboard." According to Foxworth...
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