City of Marshall, Tex. v. Bryant Air Conditioning Co.

• Decision Date: 16 July 1981
• Docket Number: No. 79-3531,79-3531
• Parties: 31 UCC Rep.Serv. 1329 CITY OF MARSHALL, TEXAS and Entex, Inc., Plaintiffs-Appellees, v. BRYANT AIR CONDITIONING CO., a Division of Carrier Corporation, Defendant- Appellant. WILEY COLLEGE and Entex, Inc., Plaintiffs-Appellees, v. BRYANT AIR CONDITIONING CO., a Division of Carrier Corporation, Defendants- Appellants. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 724

650 F.2d 724

31 UCC Rep.Serv. 1329

CITY OF MARSHALL, TEXAS and Entex, Inc., Plaintiffs-Appellees, v. BRYANT AIR CONDITIONING CO., a Division of Carrier

Corporation, Defendant- Appellant.

WILEY COLLEGE and Entex, Inc., Plaintiffs-Appellees, v. BRYANT AIR CONDITIONING CO., a Division of Carrier

Corporation, Defendants- Appellants.

No. 79-3531.

United States Court of Appeals, Fifth Circuit.

Unit A

July 16, 1981.

Robin P. Hartmann, William R. Allensworth, Nina Cortell, Dallas, Tex., for Bryant Air Cond. Co.

Abney & Baldwin, Gaines Baldwin, Marshall, Tex., for City of Marshall, Texas and Wiley College.

Larry Starr, John Ward, Longview, Tex., for Entex, Inc.

Appeal from the United States District Court for the Eastern District of Texas.

Before GOLDBERG, AINSWORTH and RUBIN, Circuit Judges.

GOLDBERG, Circuit Judge:

One short year after the now legendary heat wave of 1980 burned its way through the South, we are forced to consider the paradoxically chilling thought of a Texas summer without air conditioning. Plaintiff-appellees claim that they were forced to simmer through several summers due to defendant- appellant's deceptive trade practices and breach of warranty with regard to the sale and maintenance of air conditioning equipment. While we can certainly sympathize with appellees' frustration and perspiration, we are required by Texas law to reverse the judgment in their favor and remand the case to the trial court.

I. "Summer In The City"

In 1973 defendant-appellant Carrier Corporation ("Carrier"), through its Bryant Air Conditioning Company division, manufactured six air conditioner units which were sold for use in the City of Marshall, Texas ("Marshall") public library. In 1974 Carrier, again through its Bryant division, manufactured ten air conditioner units which were sold for use in the Wiley College men's dormitory. Each of these units was sold by Carrier pursuant to an express warranty which provided that (1) Carrier warranted the components and parts of the air conditioning equipment to be free from defects in material or workmanship for a period of one year after installation, (2) Carrier agreed to "repair or replace, at its option" certain components or parts which were found to be defective during the one year period, and (3) for an additional four year period, Carrier agreed to "repair or replace, at its option, certain parts or components in the 'Refrigeration System' found to be defective." Record at 49.

According to plaintiff-appellees, the equipment never worked properly and required considerable maintenance and repair by Entex Corporation ("Entex"), a gas utility company. Plaintiff-appellees claim that the problems were due to the unavailability of replacement parts and hence the failure of the Carrier warranty. In 1977 the sweltering situation allegedly reached near-crisis proportions, and in October of that year Carrier sent the late Ralph Kemp ("Kemp") to look into the matter. During his visits to Marshall and Wiley College, Kemp apparently stated that the air conditioning equipment could be repaired and adjusted to give satisfactory performance, that Carrier would supply necessary replacement parts, and that Carrier would provide factory trained personnel to work on the units. However, shortly after Kemp examined the allegedly defective air conditioning equipment, Wiley College and Marshall entered into an agreement with Entex which provided that Entex would replace the Carrier air conditioners with new equipment at its own cost in return for Marshall's and Wiley College's legal rights against Carrier. Pursuant to this agreement, new air conditioning equipment was installed at the Marshall library and Wiley College dormitory.

Both Marshall and Wiley College brought state court suits against Carrier seeking damages for breach of warranty and violations of the Texas Deceptive Trade Practices-Consumer Protection Act ("Deceptive Trade Practices Act"), Tex. Bus. & Com. Code Ann. tit. 2, §§ 17.41-17.62. (Vernon Supp. 1980). Carrier removed the actions to federal court based on diversity of citizenship, and the federal district court granted Entex's motions to intervene as assignee of Marshall's and Wiley College's claims. The actions were then consolidated and tried before a jury. After a four day trial, the jury returned a verdict in favor of plaintiffs on both the breach of warranty and deceptive trade practices issues. Because the two claims represented alternative grounds of recovery, the trial court entered judgment pursuant only to the greater of the two verdict amounts, awarding treble damages and attorney's fees under the Texas Deceptive Trade Practices Act. Carrier appeals from the trial court's judgment.

II. "We Can Work It Out": The Deceptive Trade Practices Act Claim

It is undisputed that the basis of plaintiff-appellees' Deceptive Trade Practices Act claim in this case centers around statements made by Carrier's representative Ralph Kemp during his visits to Wiley College and the Marshall public library in the autumn of 1977. As noted above, after examining the allegedly defective air conditioning equipment, the late Mr. Kemp apparently stated that the units could be repaired and adjusted to give satisfactory performance, that Carrier would provide factory trained personnel to work on the units, and that Carrier would supply necessary replacement parts. Plaintiff-appellees argued at trial that had these representations been fulfilled, there would have been no need to replace the allegedly defective air conditioning equipment. Plaintiff-appellees then reasoned that they were entitled to the cost of replacing the Carrier air conditioners with new units. The jury apparently agreed, and the trial court entered judgment trebling the $77,000 replacement cost verdict for plaintiffs.

On appeal, Carrier raises a number of issues which it claims preclude a Deceptive Trade Practices Act judgment in the case at bar. However, we need go no further than a consideration of one of the basic elements of a Texas Deceptive Trade Practices Act claim: the requirement that a plaintiff recover only for damages actually caused by the allegedly deceptive trade practice. Because there is no proof in the record of this case of any damages caused by any allegedly deceptive trade practice, the trial court should have directed a verdict in favor of defendant on the Deceptive Trade Practices Act claim. ¹ We therefore must reverse the trial court's judgment and order dismissal of the Deceptive Trade Practices Act claim in this case.

It is clear that under the Texas Deceptive Trade Practices Act, the allegedly deceptive trade practices must cause the plaintiff to be actually damaged before he can recover. See Tex. Bus. & Com. Code Ann. tit. 2, § 17.50 (Vernon Supp. 1980); Yates v. Medrano, 580 S.W.2d 49 (Tex.Civ.App. 1979); Reiger v. DeWylf, 566 S.W.2d 47 (Tex.Civ.App. 1978 writ ref. n.r.e.); Woo v. Great Southwestern Acceptance Corp., 565 S.W.2d 290 (Tex.Civ.App. 1978 writ ref. n.r.e.); Woods v. Littleton, 554 S.W.2d 662 (Tex.1977). In the case at bar, plaintiff-appellees' damages, if any, were caused solely by the failure of the air conditioning equipment and alleged breach of warranty. There is no evidence that Kemp's allegedly deceptive trade practices caused any actual damages whatsoever. While it is true that if Kemp's alleged representations were fulfilled by Carrier, plaintiff-appellees would not have incurred the replacement cost of new air conditioning equipment, the statements themselves in no way caused this cost or additional costs. The allegedly defective equipment had been purchased years before Kemp's statements were made, and so this is not a case in which an allegedly deceptive trade practice caused a plaintiff to buy defective equipment. Moreover, shortly after Kemp's visit, plaintiff-appellees purchased new air conditioning equipment, and so this is not a case in which an allegedly deceptive trade practice caused a plaintiff to enter into a detrimental transaction, or to refrain from entering into a beneficial transaction. Rather, it is a case in which the allegedly deceptive trade practice did not cause plaintiffs to alter their plans or behavior, and did not cause them any harm whatsoever. The only damage in the case at bar if any was the result of an equipment failure beginning some time before the allegedly deceptive statements were made. Plaintiff-appellees may have suffered through several summers because of the air conditioning equipment failure and alleged breach of warranty, but they did not suffer any more due to Kemp's statements made in the autumn of 1977. ²

Because "reasonable men could not reach a contrary verdict," Murphy, supra, 628 F.2d at 867; see note 1 supra, the trial court should have directed a verdict in defendant's favor. We therefore reverse the judgment of the trial court and order dismissal of plaintiff-appellees' Deceptive Trade Practices Act claim. ³

III. "Promises, Promises": The Breach of Warranty Issues

As an alternative ground of recovery, the jury awarded plaintiffs breach of warranty damages in the amount of $49,000. Appellants argue that this verdict cannot be sustained due to a number of errors below. We agree with appellants that the jury was not properly instructed on the issue of reasonable notice under Texas warranty law, and we therefore reverse the jury verdict and remand for a new trial on this issue. ⁴

Texas law "requires notification by the buyer to the seller that a breach of warranty has occurred," so that the seller has an opportunity to cure the breach. See Import Motors, Inc. v. Matthews, 557 S.W.2d 807, 809 (Tex.Civ.App. 1977 writ ref. n.r.e.); Vintage Homes, Inc. v. Coldiron, 585 S.W.2d 886 (Tex.Civ.App. 1979); Southwest Lincoln-Mercury, Inc. v. Ross, 580 S.W.2d 2 (Tex.Civ.App. 1979); Melody Home Manufacturing Co....