Dillon v. Cobra Power Corp.

• Decision Date: 30 March 2009
• Docket Number: No. 07-5458.,No. 07-5459.,07-5458.,07-5459.
• Citation: 560 F.3d 591
• Parties: Tina DILLON, Plaintiff-Appellee/Cross-Appellant, v. COBRA POWER CORP., Defendant-Appellant/Cross-Appellee, Lake Cumberland Marine, L.L.C, Defendant-Appellee (No. 07-5459).
• Court: U.S. Court of Appeals — Sixth Circuit

560 F.3d 591

Tina DILLON, Plaintiff-Appellee/Cross-Appellant, v. COBRA POWER CORP., Defendant-Appellant/Cross-Appellee,

Lake Cumberland Marine, L.L.C, Defendant-Appellee (No. 07-5459).

No. 07-5458.

No. 07-5459.

United States Court of Appeals, Sixth Circuit.

Argued: July 29, 2008.

Decided and Filed: March 30, 2009.

ARGUED: John T. Pruitt, Jr., Travis, Pruitt, Powers & Yeast, Somerset, Kentucky, for Appellant. John G. Prather, Jr., Law Offices of John G. Prather, Somerset, Kentucky, Thomas Pastore, Pastore & Gooden, Indianapolis, Indiana, for Appellees. ON BRIEF: John T. Pruitt, Jr., Travis, Pruitt, Powers & Yeast, Somerset, Kentucky, for Appellant. John G. Prather, Jr., Winter R. Huff, Law Offices of John G. Prather, Somerset, Kentucky, Thomas Pastore, Pastore & Gooden, Indianapolis, Indiana, for Appellees.

Before BATCHELDER and GILMAN, Circuit Judges; ZOUHARY, District Judge.^*

OPINION

JACK ZOUHARY, District Judge.

INTRODUCTION

This diversity case arises from the sale of a high-performance speed boat by Defendant Lake Cumberland Marine ("Cumberland") to Plaintiff Tina Dillon. Dillon claims the boat was defective. Defendant Cobra Power ("Cobra") manufactured the engines and transmissions, and Cumberland installed them in the boat in May 2000. The subsequent repair history of the boat is long and tortuous (not unlike the seven-year history of this lawsuit). After several unsuccessful attempts to repair the boat engines and outdrives, Dillon, in January 2001, sued Cumberland for breach of contract and warranty, as well as a violation of the Kentucky Consumer Protection Act (KCPA); she also sued Cobra for breach of warranty.

The district court granted partial summary judgment in October 2003, dismissing the warranty claim against Cobra (and thereby dismissing it as a party), and also dismissing the warranty claims against Cumberland. In July 2004, the court held a bench trial on Dillon's remaining breach of contract claim against Cumberland. The court dismissed this remaining claim against Cumberland, but sua sponte reinstated the breach of warranty claim against Cobra, found it liable, and entered judgment on that claim in favor of Dillon. The court did so after hearing the testimony of Randy Garciga, President of Cobra, called by Cumberland to testify at the bench trial. Because Cobra had been previously dismissed from the lawsuit, counsel for Cobra was not present at the trial. The court found Garciga's testimony contradicted his earlier affidavit, which was the basis for the earlier dismissal of Cobra.

The court also granted Dillon's post-trial request to amend the complaint to add conversion and KCPA claims against Cobra, although two years earlier the court had denied a similar request by Dillon to add a claim of conversion against Cobra. In June 2006, the court entertained briefing from Cobra opposing Dillon's proposed amendments and contesting the court's post-trial finding of liability. Ultimately, and without further hearing, the court granted summary judgment in favor of Dillon and entered a verdict of $50,400 in compensatory damages against Cobra in December 2006, nearly two and a half years after the bench trial with Cumberland.

Cobra and Dillon each appeal from the adverse decisions against them, including pretrial and post-trial orders on amendment of pleadings. Cumberland defends the district court's decision to dismiss all claims against it.

For the reasons discussed below, we affirm in part and reverse in part, and, given the already lengthy history of this lawsuit, reluctantly, but properly, remand the matter for further proceedings.

FACTUAL BACKGROUND

Dillon contracted with Cumberland in November 1999 to purchase a Fountain power boat with two 800 HP engines, each with an outdrive. After some delay, Cumberland installed these engines and delivered the boat to Dillon in May 2000. A purchase agreement between Dillon and Cumberland contained an express warranty disclaimer.¹

Dillon claims that she was given only 720 HP engines, rather than the promised 800 HP, and that she experienced problems with the outdrives. Cobra subsequently repaired both outdrives, the first free of charge, and then shipped each repaired outdrive to Cumberland for re-installation on the boat. Cumberland returned the boat to Dillon in July 2000. Neither Dillon nor Cumberland paid Cobra for the second repair bill and freight charges.

In August 2000, Dillon noticed smoke from the engine compartment and shipped one of the engines back to Cobra for inspection and repair. Cobra built a new engine and shipped it to Cumberland for installation. Cobra sent Cumberland an invoice for half the cost of the new engine ($14,500), but it too was never paid. Nonetheless, the new engine was installed by Cumberland, and the boat was delivered back to Dillon. The next month, during a race, the same engine suffered an oil line break and also lost an outdrive. Dillon disassembled and attempted, unsuccessfully, to repair the outdrive; the engine was repaired by a Cumberland mechanic at the dock. Dillon sent the repaired engine back to Cobra for inspection, but Cobra found nothing wrong and retained possession of the engine while the parties attempted to negotiate responsibility for unpaid charges.

Dillon attempted to revoke acceptance of the boat by way of two letters, dated October 27, 2000 and November 2, 2000, respectively. Cumberland refused to accept either a return of the boat (it was then missing the engine still being held by Cobra and an outdrive remained unrepaired) or a refund of the purchase price. This lawsuit followed in January 2001.

PROCEDURAL BACKGROUND

Upon completion of discovery, all parties filed motions for summary judgment. In October 2003, the district court dismissed Dillon's breach of express warranty claim against Cobra. This was the only claim against Cobra, and therefore it was dismissed as a party to the lawsuit. The litigation continued between Dillon and Cumberland. A two-day bench trial took place in July 2004. Following the bench trial, the court invited Dillon to address in her post-trial briefing whether the court had authority to reinstate the lawsuit against Cobra; at that time, the court did not invite briefing from Cobra. It was not until Cobra's counsel received a court order in August 2005 that Cobra learned the court was not only vacating its earlier dismissal of Cobra, but, even further, was holding Cobra liable for a breach of warranty that entitled Dillon to recover damages from Cobra.

Following the court's August 2005 order, Dillon and Cobra filed numerous post-trial memoranda and motions, and the district court issued several orders. The district court orders, both before and after the bench trial, which have been appealed, are as follows:

• January 10, 2003 (JA 75): The court denied Dillon's motion to amend her complaint to assert conversion against Cobra.

• October 27, 2003 (JA 24): The court granted partial summary judgment, dismissing Cobra as a party.

• August 5, 2005 (JA 110): The court set forth findings of fact and conclusions of law from the July 2004 bench trial, ruling in favor of Dillon, in part, and in favor of Cumberland, in part.

• June 14, 2006 (JA 36): The court ordered Cobra to file a pleading to contest its liability and granted Dillon's motion for leave to assert conversion and KCPA claims.

• December 14, 2006 (JA 225): The court terminated the case, finding Cobra liable for breach of warranty and conversion, but denying Dillon's attempted amendment of a KCPA claim, and awarding Dillon $50,400 (difference in value between the two engines purchased from Cobra and the value of the single engine still in Dillon's possession).

Each of these rulings is reviewed below.

DISCUSSION

The district court erred in reversing its prior grant of summary judgment in favor of Cobra and later entering judgment in favor of Dillon.

This Court reviews the grant or denial of summary judgment de novo. Le-Ax Water Dist. v. City of Athens, 346 F.3d 701, 704 (6th Cir.2003).

After its order granting summary judgment to Cobra and dismissing Cobra as a party (JA 24), the court conducted a bench trial on Dillon's remaining claims against Cumberland. At this trial, Randy Garciga, President of Cobra, testified that Cobra intended to warrant the engines for six months, apparently contradicting Cobra's argument in its summary judgment motion that it had extended no warranty to Dillon. In its findings of fact and conclusions of law following the bench trial, the court ruled that Cobra had warranted the engines and breached the warranty. The court reaffirmed this ruling twice, in its June 2006 and December 2006 orders, respectively.

Cobra argues that reversing summary judgment and simultaneously imposing liability against a party previously dismissed from the litigation violates due process. In particular, Cobra notes it was dismissed as a party in October 2003 and was no longer on the docket for service of pleadings or for any court orders. Moreover, Cobra did not participate in the July 2004 bench trial.

It was not until two years later, in June 2006, that the court invited Cobra to "show cause" why, in light of Garciga's sworn testimony at the bench trial, the court should not alter its summary judgment order of three years earlier to find Cobra breached the warranty to Dillon (JA 46). This invitation was limited to briefing, with a review of the bench trial transcript, but no opportunity for discovery.

Dillon cites no legal authority supporting reinstatement of previously dismissed and absent parties based upon testimony offered at a later trial. Instead, Dillon cites the interlocutory nature of partial summary judgment orders and argues Cobra had a duty either to attend trial voluntarily—though Dillon does not explain what Cobra could have done beyond acting as a spectator—or to seek entry of final judgment pursuant to Federal Civil Rule 54(b). We conclude that the district...