Deerskin Trading Post, Inc. v. Spencer Press, Inc.

• Decision Date: 22 July 1986
• Citation: 495 N.E.2d 303,398 Mass. 118
• Parties: DEERSKIN TRADING POST, INC. v. SPENCER PRESS, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 303

495 N.E.2d 303

398 Mass. 118

DEERSKIN TRADING POST, INC. v. SPENCER PRESS, INC.

Supreme Judicial Court of Massachusetts Essex.

Argued Feb. 5, 1986.

Decided July 22, 1986.

Jared Specthrie, (Zachary Starr, New York City, and Stephen Moulton, Boston, with him), for plaintiff.

M. Frederick Pritzker and Walter R. May, Jr., Boston, for defendant.

Before LIACOS, NOLAN, LYNCH and O'CONNOR, JJ.

O'CONNOR, Justice.

The dispute in this case arises out of contracts entered into by Deerskin Trading Post, Inc. (Deerskin), and Spencer Press, Inc. (Spencer), whereby Spencer separately agreed to print Deerskin's fall, 1980, sales catalogs and accompanying order forms. After experiencing difficulties with improperly glued order forms, Deerskin instituted this action alleging breach of contract, breach of warranty, and negligence. Deerskin sought to recover the profits it allegedly lost due to the decline in orders caused by the defective order forms and a refund of the purchase price. Spencer filed a counterclaim against Deerskin for the amount owed by Deerskin under the contracts. The case was tried before a jury in the Superior Court. The jury awarded $175,000 to Deerskin on its claim and $358,000 to Spencer on its counterclaim. ¹ Deerskin appealed from both judgments entered on the jury verdicts, and Spencer appealed from the judgment on its counterclaim. We transferred the case here on our motion, and we now affirm.

The background of this case can be stated briefly. In early 1980, Deerskin, a retail company engaged in the sale of leather goods, invited Spencer, a commercial printer, to submit price quotations for the printing of approximately four million sales catalogs and enclosed order forms. Spencer submitted separate quotations for the printing of the catalogs and the order forms, and Deerskin accepted both of Spencer's bids. Spencer printed the order forms and catalogs in separate batches and then inserted the order forms in the catalogs during the binding process. It is undisputed that some of the order forms had undetected spots of glue on the edge of the form, causing the form to stick to the opposite page in the catalog. Deerskin alleges that these improperly glued order forms caused a decrease in the number of orders it received from the fall, 1980, catalogs it circulated, resulting in lost profits of more than $900,000.

At trial, neither party introduced formally executed contracts for the printing work at issue. Although there was evidence that Spencer's quotations had been signed by Deerskin, signed quotations were not available at trial. However, photocopies of quotations identified as Spencer's final quotations to Deerskin were introduced in evidence. Those quotations described in detail the terms of Spencer's offer to perform the printing of the catalogs and order forms, and the evidence was that the catalogs and order forms were shipped, and payments were made, that corresponded to those quotations. Included in those quotations were identical limitation of damages provisions, which we have reproduced in full in the margin. ² At the conclusion of the evidence, the judge refused Deerskin's request to instruct the jury with respect to lost profits. The judge decided that any recovery by Deerskin was limited under the terms of the limitation of damages provision in the quotations to a refund of the amount it had paid Spencer for the printing. The judge instructed the jury that, in the event they found that Spencer had breached its warranty with respect to the order forms, Deerskin's damages were limited to a refund and were measured by the difference between the value of the goods as they should have been and the value of the goods in the condition received by Deerskin. Under that instruction, the jury found for Deerskin in the amount of $175,000. As to Spencer's counterclaim, the judge instructed the jury that, if they found that Deerskin accepted the catalogs and order forms, Spencer was entitled to be paid the amount due under the contracts. The jury awarded Spencer $358,000 on the counterclaim, and that amount subsequently was reduced to $310,504.93.

On appeal, Deerskin makes a number of arguments with respect to the judge's refusal to instruct the jury on lost profits. Deerskin also challenges the jury verdict for Spencer on the counterclaim. Spencer appeals from the denial of its motion for partial summary judgment with respect to its counterclaim and from the judge's refusal to find that December 1, 1980, was the established date of demand for the purposes of computing prejudgment interest.

1. Judgment on Deerskin's claim. Deerskin's principal challenge to the judgment entered on its claim concerns the judge's refusal to instruct the jury on lost profits. Deerskin correctly notes that, under the Massachusetts version of the Uniform Commercial Code, consequential damages are sometimes recoverable for a breach of warranty. G.L. c. 106, § 2-714 (1984 ed.). However, it is also clear that, under that statute, the recovery of consequential damages may be limited by agreement of the parties. G.L. c. 106, § 2-719(3) (1984 ed.). Thus, questions concerning the applicability and interpretation of the limitation of damages provision contained in the quotations introduced in evidence are crucial in deciding whether the judge correctly refused to instruct the jury on lost profits. Deerskin argues first that, by deciding himself that the limitation of damages provision was included in the parties' agreement, the judge improperly withdrew that question of fact from the jury. Because our review of the evidence leads us to conclude that it is highly improbable that the jury would have resolved that question differently from the judge, Deerskin has failed to demonstrate that it was harmed by any error in this regard. In the absence of such a showing, reversal on that basis is not appropriate. Pina v. McGill Dev. Corp., 388 Mass. 159, 164, 445 N.E.2d 1059 (1983). H.E. Fletcher Co. v. Commonwealth, 350 Mass. 316, 322, 214 N.E.2d 721 (1966). Bendett v. Bendett, 315 Mass. 59, 65, 52 N.E.2d 2 (1943).

The only witnesses whose testimony related to the limitation of damages provision were John Spenlinhauer, vice president in charge of manufacturing for Spencer, Edmond Nugent, Deerskin's president at the time of the transactions, and Nancy Berman, marketing manager of Deerskin in the fall of 1980. ³ Edmond Nugent identified the quotations introduced in evidence as proposals for the printing of the fall, 1980, catalogs and order forms. Although he did not recognize the quotations as the final proposals, Nugent stated that the limitation of damages provision contained in the exhibits would not have changed between the original proposal and the final proposal. Nugent testified further that similar provisions were included in all the previous contracts between Deerskin and Spencer. Nugent's testimony was consistent with that of Nancy Berman, who testified that the quotations in evidence were proposals for the printing of the fall, 1980, catalogs and order forms, and that those proposals contained a limitation of damages provision. Finally, John Spenlinhauer testified that the quotations introduced in evidence were the final proposals for the printing of the catalogs and the order forms. Spenlinhauer was able to verify his opinion that these quotations were the final proposals by comparing the prices charged on the invoices for the printing work with the prices offered in the quotations. There was no testimony that the agreement of the parties did not include the limitation of damages provision contained in the quotations introduced in evidence. In light of the evidence presented at trial on the subject, it seems highly unlikely that the jury would have concluded, differently from the judge, that the limitation of damages provision was not part of the parties' agreement. Therefore, if it was error for the judge to decide this question himself, a matter we need not decide, such error was harmless. Deerskin argues next that, even if the limitation of damages provision was included in the operative quotations, the judge erroneously concluded that, under the circumstances of this case, that provision limited Deerskin's recovery for breach of warranty to a refund of amounts paid to Spencer. The limitation of damages provision states in pertinent part: "It is...