Envirex, Inc. v. Ecological Recovery Associates

• Decision Date: 13 October 1978
• Docket Number: Civ. No. 77-172.
• Citation: 454 F. Supp. 1329
• Parties: ENVIREX, INC., Plaintiff, v. ECOLOGICAL RECOVERY ASSOCIATES, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

454 F. Supp. 1329

ENVIREX, INC., Plaintiff, v. ECOLOGICAL RECOVERY ASSOCIATES, INC., et al., Defendants.

Civ. No. 77-172.

United States District Court, M. D. Pennsylvania.

July 20, 1978.

As Corrected October 13, 1978.

COPYRIGHT MATERIAL OMITTED

Leonard E. Price, Pittsburgh, Pa., for plaintiff.

Frank J. Kernan, Plowman & Spiegel, Pittsburgh, Pa., for defendants.

OPINION

MUIR, District Judge.

Envirex, Inc. (Envirex) filed this action against Ecological Recovery Associates, Inc. (ERA) and Maryland Casualty Company, a bonding company, seeking payment for materials which it had delivered to ERA in connection with the construction of a sewage treatment plant in Lock Haven, Pennsylvania. ERA filed a counterclaim for damages based upon Envirex's alleged failure to deliver the goods in a timely fashion and failure of the goods to meet the contract specifications. The case was tried to a jury from March 17, 1978 through March 30, 1978. The jury returned answers to two sets of special verdict questions propounded to it under F.R.Civ.P. 49(a), one relating to liability and the other relating to damages, and on April 12, 1978, the Court directed the entry of judgment on the special verdict in favor of Envirex in the amount of $92,087.75. A copy of those questions answered by the jury is attached as an appendix to this opinion. Because of the jury's answers to those questions, other numbered questions were not considered by the jury and are not reproduced here. On April 21, 1978, ERA and Maryland Casualty filed motions for judgment notwithstanding the special verdicts, to amend or alter the judgment, and for a new trial. Supporting briefs were filed on May 30, 1978. Envirex filed a brief in opposition to all of the motions on June 9, 1978. As of the date of this Order, no reply briefs have been filed.

ERA asserts the following 20 grounds in support of its motion for a new trial:

(1) That the Court erred in admitting page 18 of the Sales Contract between Envirex and ERA into evidence,

(2) That the jury's answers to special verdict questions 2, 3 and 25 are inconsistent,

(3) That the jury's answers to special verdict questions 2, 3, 29 and 25 are inconsistent,

(4) That the Court erred in ruling that ERA was bound by the conditions found on page 18 of the Sales Contract,

(5) That the Court erred in prohibiting proof of delay damages,

(6) That the Court erred in ruling that the conditions on page 18 of the Sales Contract prevented recovery for delay damages,

(7) That the Court erred in ruling that the conditions on page 18 of the Sales Contract prevented recovery for repairs not authorized by Envirex in writing,

(8) That the Court erred in refusing to instruct the jury in accordance with the Act of April 6, 1953, P.L. 3, § 2-719, reenacted October 2, 1959, P.L. 1023, § 2, 12A Pa.Stat. Ann. § 2-719(2) (hereinafter the Uniform Commercial Code, or UCC),

(9) That the Court erred in refusing to instruct the jury that Envirex could not benefit from provisions of the contract which it breached,

(10) That the Court erred in refusing to instruct the jury regarding an implied waiver of contractual provisions from the silence of Envirex,

(11) That the Court erred in instructing the jury that the burden of proof respecting the issue of waiver was on ERA by clear, precise, and unequivocal evidence,

(12) That the Court erred in its corrective instruction relating to that burden,

(13) That the Court's corrective instruction left the jurors in doubt as to the law respecting the burden of proof,

(14) That the Court erred in refusing to submit a special verdict question to the jury asking whether it was inequitable for Envirex to rely on the conditions on page 18 of the Sales Contract,

(15) That the Court erred in submitting the case to the jury by way of special verdict questions,

(16) That the submission of the case by way of special verdict questions denied ERA due process of law,

(17) That the submission of the case on special verdict questions was basic and fundamental error,

(18) That the special verdict questions do not encompass all issues of fact,

(19) That the submission of the case by way of special verdict questions rendered the jury's findings speculative, and

(20) That the Court erred in failing to credit ERA with the sum contained in the jury's answer to the special verdict question 48.

ERA has not briefed all of the grounds set forth in its motion for a new trial and the Court will not deal with grounds not briefed, namely those relating to the Court's treatment of the burden of proof on the issue of waiver. In its motion for judgment notwithstanding the special verdict, ERA and Maryland Casualty assert that because Envirex willfully refused to complete its performance under the contract, the Court erred in entering judgment in favor of Envirex in any amount and that the Court erred in not crediting ERA with the amount of $3,618.68 which was the jury's answer to special verdict question 48. The Court will deal with these three motions and the contentions contained therein seriatim.

ERA first contends that the Court erred in admitting page 18 of the Contract entered into between Envirex and ERA into evidence. At the trial, it was ERA's contention that it was not bound by the conditions on page 18 because that page was not attached to the contract when it was sent from Envirex to ERA for approval. Mr. Schibelka, an officer of Envirex, testified at the trial that as part of its routine business practice, Envirex would have sent a complete proposal, including page 18 to all general contractors with which it contracted. ERA, citing Pennsylvania case law, contends that custom or usage of an organization is not admissible to establish a fact in its favor but may be received as corroborative of facts already proved.

The question of whether evidence is admissible in a proceeding in federal court is decided by reference to the Federal Rules of Evidence. Rule 406 states that evidence of the routine practice of an organization, whether corroborated or not, is relevant to prove that the conduct of the organization in a particular occasion was in conformity with the routine practice. Therefore, the Court did not err in admitting page 18 into evidence.

ERA also contends that the Court's ruling that ERA was bound by the conditions on page 18 was erroneous because even assuming that ERA received page 18 of the contract, Envirex did not prove that ERA intended to be bound by the conditions contained therein. ERA contended at trial, however, not that it did not intend to agree to the conditions on page 18 but that page 18 was never received by it. The copy of the agreement between the parties introduced by ERA did not contain page 18. Special verdict question No. 1 submitted to the jury read as follows: "Was page 18 attached to the Envirex proposal of August 22, 1973 when the proposal was sent to Ecological Recovery Associates?" The jury responded in the affirmative. ERA's counsel did not suggest to the Court at that time that an "important issue of fact," namely whether ERA intended to be bound by the conditions on page 18 assuming that it received that page along with the remainder of Envirex's proposal, had not been sent to the jury. F.R.Civ.P. 49(a) states that if in submitting special verdict questions to a jury the Court omits any issue of fact raised by the pleadings or by the evidence, each party waives his right to a trial by jury of the issues so omitted unless before the jury retires he demands that submission to the jury. No demand was made in this case. In such a situation, the rule permits the Court to make a finding on the omitted fact issue or deems the Court to have made a finding in accord with the judgment on the special verdict. The judgment on the special verdict was in favor of the Plaintiff, Envirex, so that the Court's finding in this case is deemed to have been made in accord with that judgment. Therefore, both because it is the view of the Court that the only factual issue raised by ERA at trial was whether it received page 18 of the proposal and because ERA failed to object to any purported omission of a factual question relating to whether it intended to be bound by the proposal, the Court finds that no error was committed as contended by ERA.

ERA's next two contentions are that the jury's answer to special verdict question No. 25 was inconsistent with its answer to special verdict questions 2, 3, and 29. For purposes of clarity, the Court will set out in full the text of each question and the jury's response: Question 2 asked: "Did Morse-McCormack a sales representative employed by Envirex agree with Ecological Recovery Associates on November 2, 1973 that the equipment would be shipped so as to permit compliance with the completion date set forth in Hill & Hill's engineering specifications?" The jury answered in the affirmative. Question 3 inquires "If your answer to the previous question is yes, was Morse-McCormack authorized by Envirex to make such an agreement on behalf of Envirex, or would a reasonable person have concluded based upon Morse-McCormack's actual authority and Envirex's actions that Morse-McCormack was authorized by Envirex to make that agreement?" The jury also answered question 3 in the affirmative. Simply stated, questions 2 and 3 relate to whether an agency relationship existed between Envirex and its sales representative, Morse-McCormack, and whether the latter reached an agreement with ERA concerning the delivery of the equipment which Envirex promised to supply to ERA for construction of the Lock Haven Sewage Treatment Plant. The jury's answers to those two questions indicate that Morse-McCormack had either actual or apparent authority to enter into a contract on behalf of Envirex and that Morse-McCormack did agree with ERA that the equipment would be shipped so as to permit compliance with the completion dates set forth in the engineering specifications...