Kaplan v. RCA Corp.
| Decision Date | 13 February 1986 |
| Docket Number | No. 85-1536,85-1536 |
| Parties | 42 UCC Rep.Serv. 1312 Bernard A. KAPLAN; James J. Shipley; Norma Kaplan; Edward Englander, Appellants, v. RCA CORPORATION, a Delaware corporation, Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Thomas P. Mains, Jr., Alexandria, Va., for appellants.
William L. Auten, Charlotte, N.C. (J.W. Alexander, Jr., Blakeney, Alexander & Machen, Charlotte, N.C., on brief), for appellee.
Before WINTER and PHILLIPS, Circuit Judges, and MOTZ, United States District Judge for the District of Maryland, sitting by designation.
This action arises from the purchase by Metrolina Communications Corporation, a company controlled by appellants Bernard Kaplan and James J. Shipley, of an FM radio transmitting antenna from RCA. 1 After conducting a jury trial on one issue and holding an evidentiary hearing on the others, the district court entered a judgment in favor of RCA. Appellants raise three substantive issues on this appeal: (1) whether RCA's standard Terms and Conditions of Sale were part of the contract between the parties; (2) whether one of those terms and conditions, limiting RCA's warranty responsibilities to repairing or replacing defective parts, failed of its essential purpose; and (3) whether another of the terms and conditions, disclaiming liability for consequential damages, is unconscionable and void. Intertwined among appellants' arguments on the first two issues is a contention that the district court improperly resolved certain factual disputes instead of submitting them to the jury.
In 1979 Kaplan and Shipley purchased radio station WOOO-FM in Statesville, North Carolina. Before making the purchase and deciding on the site on which to build their antenna tower, they hired a professional radio engineer to study whether they could obtain adequate signal coverage in the areas in which they wished to broadcast. In response to a request from this engineer, RCA submitted to Shipley a proposal for a study of the signal pattern likely to be achieved by an antenna constructed by RCA. Shipley accepted RCA's proposal on behalf of Metrolina.
By letter dated November 26, 1979, after completing its pattern study, RCA wrote to Shipley quoting the current price for an antenna and indicating that "we will be pleased to issue a formal proposal at your request." Kaplan and Shipley, who had in the meantime consummated their purchase of the station and the tower site, were awaiting FCC approval of the modifications to the station, including change of the location, height of the tower and an increase in the output, before ordering the antenna. When this approval was obtained, Shipley called Mr. Strubel at RCA with whom he had been dealing and advised him that "we can now go ahead and do this thing." Strubel replied that he would expedite the transaction but Mr. Huffman had to approve it. By letter dated July 31, 1980, Huffman sent Shipley a proposal for the purchase and sale of the antenna.
The cover folder to the proposal stated that RCA proposed "to furnish the equipment and services described on Schedule A of this proposal, subject to the terms and conditions of sale contained herein." Among the materials contained in the folder was one entitled "Terms and Conditions of Sale, Broadcast and Teleproduction Equipment BC-08444." The Terms and Conditions limited RCA's warranty to repair or replacement of the antenna and disclaimed liability for consequential damages. They also provided that "this agreement expresses the entire intent and understanding of the parties with reference to the subject matter hereof." Substantially the same document had been part of the proposal for the pattern study which Shipley had earlier signed and accepted.
After receiving the antenna proposal Shipley called Huffman and requested that the price--which had increased from the quotation in the November 26, 1979 letter--be reduced to the original figure. Huffman indicated that he did not have the authority to make this decision but that he would try to "sell" the idea to his superiors. Shipley then directed Metrolina's secretary/treasurer, LaVelle, to sign the acceptance of proposal form, modifying only the price term. The acceptance form stated that "we accept your proposal to furnish equipment and services described on Schedule A of BC 08444 dated July 30, 1980, subject to the terms and conditions of sale contained therein." By letter dated September 26, 1980, RCA accepted the reduced price.
RCA constructed and delivered the antenna, and it went into operation at the beginning of February, 1981. A transmission problem immediately developed and Shipley complained to RCA. In April RCA investigated the problem and concluded that there was a defect in the antenna adversely affecting the transmission of signals toward Statesville. Eventually, RCA provided a replacement antenna. However, RCA never admitted that there was any defect in the antenna affecting signal transmission toward Charlotte. It attributed the poor coverage of WOOO-FM in Charlotte to other factors, including the site which Kaplan and Shipley had purchased (at substantial savings in cost) for the placement of the antenna tower.
Because of the poor coverage in Charlotte, Metrolina's advertising revenues shrank and its financial difficulties became insurmountable, prompting the sale of the station in 1982. This action, in which appellants claim 3.75 million dollars in compensatory damages and 7.5 million dollars in punitive damages, ensued.
Appellants first argue that the parties entered into a binding agreement for the purchase and sale of the antenna before RCA submitted its formal proposal on July 31, 1980, and that the "Terms and Conditions of Sale," which were contained in the formal proposal did not become part of the parties' contract because they materially altered the prior agreement. Alternatively, they contend that the Terms and Conditions did not become part of the contract because the acceptance of proposal form signed by Metrolina did not refer to them.
As a preliminary matter, we note that New Jersey law is applicable to this case. The Terms and Conditions provide that "this Agreement shall be construed and enforced under the law of the State of New Jersey." North Carolina, whose conflict of law rules we must apply, see Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941), permits the parties to a contract to stipulate the state whose law is to govern a contract if that state has a reasonable relationship to the transaction. N.C.Gen.Stat. Section 25-1-105 (1966); cf. Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405 (1982); see also Tanglewood Land Co. v. Byrd, 299 N.C. 260, 261 S.E.2d 655, 656 (1980); Richard W. Cooper Agency, Inc. v. Irwin Yacht and Marine Corp., 46 N.C.App. 248, 264 S.E.2d 768, 772 (1980). There is such a relationship here. RCA maintains its principal offices in New Jersey, the contract documents were prepared (and finally accepted) in New Jersey and the antenna was designed, engineered and tested there.
On the merits it is clear that there was no contract between the parties before RCA sent out its formal proposal. Prior to that time no terms or conditions of sale had been agreed to by the parties either orally or in writing. Indeed, the price of the antenna was not agreed to until after Metrolina had signed the acceptance of proposal.
It is equally clear that the Terms and Conditions were part of the parties' contract. Appellants' primary thrust below was that the Terms and Conditions had not been included among the materials in the proposal. Shipley denied having received them. However, the jury--on the basis of overwhelming evidence--disbelieved him and, in response to a special interrogatory, found that RCA's terms and conditions were included in the package sent to him. Appellants now rely upon more technical grounds. They point to the language in the acceptance of proposal that "we accept your proposal to furnish equipment and services described on Schedule A of BC 08444 dated July 30, 1980 subject to the terms and conditions of sale contained therein." They argue that Schedule A itself does not contain the terms and conditions limiting RCA's warranty and excluding its liability for...
To continue reading
Request your trial
-
Gries v. Zimmer, Inc., C-C-87-0576-P
...rules, Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-497, 61 S.Ct. 1020, 1021-1022, 85 L.Ed. 1477 (1941); Kaplan v. RCA Corp., 783 F.2d 463, 465 (4th Cir. 1986); Boone v. Aeronca, 669 F.Supp. 1353, 1359 (W.D.N.C.1987) (Potter, C.J.). Therefore, this Court must apply North Carolina......
-
Cooley v. Big Horn Harvestore Systems, Inc.
... ... See Balistreri Greenhouses v. Roper Corp., 767 P.2d 736 (Colo.App.1988); Leprino v. Intermountain Brick Co., 759 P.2d 835 (Colo.App.1988) ... AOSHPI initially asserts ... See Kaplan v. RCA Corp., 783 F.2d 463, 467 (4th Cir.1986); Lewis Refrigeration Co. v. Sawyer Fruit, Vegetable and Cold Storage Co., 709 F.2d 427, 434-35 (6th ... ...
-
Myrtle Beach Pipeline Corp. v. Emerson Elec. Co., No. 3:86-1796-21.
... ... Limitation clauses providing that the remedy of repair or replacement shall be exclusive are likewise sustained, see, e.g., Smith v. Navistar International Transportation Corp., 957 F.2d 1439, 1441-45 (7th Cir. 1992), Kaplan v. RCA Corp., 783 F.2d 463, 464-67 (4th Cir.1986), particularly where, as here, both parties to the contract are commercially sophisticated entities, see, e.g., McDermott, Inc., 979 F.2d at 1072-73; Chatlos Sys., 635 F.2d at 1087. Commentators have noted that "the more explicit the ... ...
-
Luna v. Household Finance Corp. III
...inquiry. See M.A. Mortenson Co., Inc. v. Timberline Software Corp., 140 Wash.2d 568, 587, 998 P.2d 305 (2000); see also Kaplan v. RCA Corp., 783 F.2d 463 (4th Cir.1986) ("factors determining unconscionability [include] whether the plaintiff is a substantial business Phrases such as "shocks ......