East County Recycling v. Pneumatic Const.

• Jurisdiction: Oregon
• Citation: East County Recycling v. Pneumatic Const., 167 P.3d 464, 343 Or. App. 573 (Or. App. 2007)
• Docket Number: 050302879; A132002.
• Parties: EAST COUNTY RECYCLING, INC., an Oregon corporation, Plaintiff-Appellant, v. PNEUMATIC CONSTRUCTION, INC., an assumed business name of PCI Mechanical Construction; Pneumatic Construction, Inc., an assumed business name of PCI Waste and Recycling Systems and Recycling Equipment Manufacturing, Inc., a foreign corporation, Defendants, and International Baler Corporation, a foreign corporation, Defendant-Respondent.
• Court: Oregon Court of Appeals
• Decision Date: 29 August 2007

167 P.3d 464

343 Or. App. 573

EAST COUNTY RECYCLING, INC., an Oregon corporation, Plaintiff-Appellant, v.PNEUMATIC CONSTRUCTION, INC., an assumed business name of PCI Mechanical Construction; Pneumatic Construction, Inc., an assumed business name of PCI Waste and Recycling Systems and Recycling Equipment Manufacturing, Inc., a foreign corporation, Defendants, and International Baler Corporation, a foreign corporation, Defendant-Respondent.

050302879; A132002.

Court of Appeals of Oregon.

Argued and Submitted May 11, 2007.

Decided August 29, 2007.

Brooks F. Cooper argued the cause and filed the briefs for appellant.

Beth Cupani argued the cause for respondent.With her on the brief were R. Daniel Lindahl and Bullivant Houser Bailey PC.

Before WOLLHEIM, Presiding Judge, and BREWER, Chief Judge, and CARSON, Senior Judge.

BREWER, C.J.

This is an action for breach of an express warranty involving the sale of a baling machine.ORS 72.3130.Plaintiff appeals a summary judgment for defendantInternational Baler Corporation(IBC).The primary issue on appeal is whether the trial court erred in striking portions of plaintiff's representative's affidavit in opposition to summary judgment, in which the affiant asserted that an unidentified IBC representative made a warranty regarding the baler.Because plaintiff did not establish an adequate foundation to demonstrate that the stricken evidence was admissible to establish a fact that had legal significance apart from its truth, the trial court did not err in striking the evidence.Further, because plaintiff adduced no other evidence that IBC made the asserted warranty, the trial court did not err in granting IBC's motion for summary judgment.Accordingly, we affirm.

We view the record in the light most favorable to plaintiff, the nonmoving party.ORCP 47 C;Jones v. General Motors Corp.,325 Or. 404, 420, 939 P.2d 608(1997).Plaintiff is a corporation that recycles garbage and other waste.IBC manufactures baling machines that compress and form cardboard and other waste into uniformly sized bales for shipping and recycling.DefendantPneumatic Construction, Inc.(PCI), is a local sales distributor for IBC baling machines.

In late 2003, plaintiff wanted to buy a material baler for use in expanding its business.Plaintiff wanted a baler with certain characteristics, including the ability to function outdoors in Oregon weather.PCI submitted a bid to supply the baler and associated equipment.Gilbert, a principal officer and shareholder of plaintiff, negotiated with PCI for the purchase.In his affidavit in opposition to summary judgment, Gilbert stated:

"I was [plaintiff's] representative who was primarily involved in the investigation and negotiation for the purchase of the baler at issue in this lawsuit.Before [plaintiff] purchased the baler at issue, I had a conversation on the telephone with a representative of [IBC].* * * During the call, I expressed my concern that the baler needed to be able to work outside, and made it clear to the IBC representative that I would only purchase the baler if it was able to work outside effectively and at its rated capacity.The representative assured me that the baler could be operated outside in the weather with the purchase of a moisture-proofing option.In other words, I was assured that the baler was appropriate for use in an outdoor environment.I therefore purchased the moisture-proofing option and the baler.I relied upon IBC's representations when deciding to purchase the baler for [plaintiff]."

Plaintiff installed the baler and began operating it on August 5, 2004.Plaintiff was not satisfied with the operation of the baler, and it voiced its dissatisfaction to IBC and PCI.During the months following the installation of the machine, IBC, through a representative, told plaintiff that the baler was unsuitable for outdoor operation.

Plaintiff then brought this action against PCI and IBC.¹Plaintiff's claim against IBC was for breach of an express warranty based on the telephone conversation between Gilbert and the unidentified representative of IBC that Gilbert described in his affidavit.IBC filed a motion for summary judgment in which it asserted that there was no evidence that IBC ever made the alleged representation to plaintiff and that, even if it did, the alleged representation did not qualify as an actionable warranty because it was a mere "opinion or commendation of the goods."In support of the motion, IBC submitted affidavits from its vice president of sales and marketing and its regional sales manager.Both affiants averred that they were the only IBC representatives who, before the sale, had communicated with plaintiff or PCI regarding the baler and that they had not made the alleged representation to plaintiff.

Plaintiff filed a response to the summary judgment motion in which it asserted that, based on Gilbert's accompanying affidavit, a material fact question existed concerning whether IBC made an actionable warranty.In reply to plaintiff's response, IBC filed a motion to strike the portions of Gilbert's affidavit that referred to his conversation with the unidentified IBC representative.In support of the motion to strike, IBC argued that, because Gilbert's affidavit did "not identify the name of the alleged declarant, the job title or alleged responsibilities of that individual, or the dates on which the alleged calls occurred," the challenged statements constituted inadmissible hearsay not subject to OEC 801(4)(b)(D).²

The trial court granted IBC's motion to strike on the ground that the challenged portions of Gilbert's affidavit were "inadmissible hearsay not subject to the exception set forth in OEC 801(4)(b)(D), or any other hearsay exception."In addition, the court granted IBC's summary judgment motion on the ground that plaintiff had "presented no admissible evidence supporting the creation of an express warranty between the parties to this motion."Plaintiff appeals from the ensuing limited judgment in favor of IBC.

In a nutshell, plaintiff argues that the trial court erred in analyzing the issue on summary judgment as a hearsay problem that implicated OEC 801(4)(b)(D).According to plaintiff, Gilbert's recital of the conversation with the IBC representative constituted evidence of IBC's "verbal act," namely, the creation of an express warranty, that was not hearsay and, accordingly, need not qualify as an admission under OEC 801(4)(b)(D) in order to be admissible.

Before we address the merits of that argument, we must consider IBC's assertion that plaintiff has failed to demonstrate that its argument was preserved, because plaintiff failed to designate the oral argument on IBC's summary judgment motion as part of the record on appeal, and plaintiff failed to file a written response to IBC's motion to strike.IBC relies on our decision in Russell v. Nikon, Inc.,207 Or.App. 266, 140 P.3d 1179, adh'd to as clarified on recons.,208 Or.App 606, 145 P.3d 312(2006), rev. den.,342 Or. 299, 152 P.3d 902(2007), where we dismissed an appeal on the ground that, in the absence of a transcript of an attorney fee hearing, we were unable to adequately review the appellant's assignment of error concerning the sufficiency of the evidence to support the trial court's decision.

The Supreme Court has explained that, in order to preserve an assignment of error for appeal, "it is essential to raise the relevant issue at trial, but less important to make a specific argument or identify a specific legal source with respect to the issue raised."State v. Stevens,328 Or. 116, 122, 970 P.2d 215(1998);see alsoState v. Hitz,307 Or. 183, 188, 766 P.2d 373(1988)(setting forth the issue-source-argument preservation hierarchy).In determining whether an assignment of error is preserved, the most significant question is whether the trial court had a realistic opportunity to make the right decision.SeeState v. Wyatt,331 Or. 335, 343, 15 P.3d 22(2000)("[A]party must provide the trial court with an explanation of his or her objection that is specific enough to ensure that the court can identify its alleged error with enough clarity to permit it to consider and correct the error immediately, if correction is warranted.").

We conclude from the record before us that plaintiff's assignment of error was adequately preserved.In order to explain our conclusion, it is necessary to discuss some of the substantive legal principles that govern the merits of the parties' arguments on appeal; that is, to some extent the preservation analysis is bound up with the merits of the case.In its written response to the summary judgment motion, plaintiff relied on Gilbert's affidavit, arguing that IBC's representative had made the representation described in the affidavit.In the context of Gilbert's affidavit, plaintiff then discussed this court's decision in Larrison v. Moving Floors, Inc.,127 Or.App. 720, 873 P.2d 1092(1994), where we set out the requirements for a claim for breach of an express warranty under ORS 72.3130.³Those requirements— which plaintiff set out in its written response—are that there must be an affirmation of fact that relates to the goods or a description of the goods by the seller, and the factual affirmation or description must be the basis of the parties' bargain.See, e.g., Autzen v. Taylor Lumber Sales, Inc.,280 Or. 783, 788, 572 P.2d 1322(1977).

From that discussion, it is readily apparent that plaintiff contended that the representation made by IBC's representative qualified as an actionable express warranty because it was an affirmation relating to the baler that constituted a basis of the parties' bargain.Even though plaintiff did not expressly say so in its written response, and there was no reason to do so at that time, that argument was sufficient to meet IBC's later argument that the statement was inadmissible hearsay.

Some statements are themselves evidence of...