Fiorito Bros., Inc. v. Fruehauf Corp.

Decision Date23 November 1984
Docket NumberNo. 83-3983,83-3983
Citation747 F.2d 1309
Parties39 UCC Rep.Serv. 1298 FIORITO BROS., INC., Plaintiff-Appellee, v. FRUEHAUF CORPORATION, Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

Richard M. Stanislaw, David H. Karlen, Oles, Morrison, Rinker, Stanislaw & Ashbaugh, Seattle, Wash., for plaintiff-appellee.

John A. Hackett, Hackett, Beecher, Hart, Branom, Vavrichek & Drury, Seattle, Wash., for defendant-appellant.

Appeal from the United States District Court for the Western District of Washington.

Before FERGUSON and NELSON, Circuit Judges, and JAMESON, * District Judge.

NELSON, Circuit Judge:

Defendant-appellant Fruehauf Corp., a Michigan corporation, appeals from a jury verdict of $130,000 in favor of plaintiff-appellee Fiorito Bros., Inc., a Washington corporation. Fruehauf claims that the trial court erred in drawing a number of legal conclusions concerning the nature of the warranties and disclaimers contained in the contract between the parties, and in framing its jury instructions. We affirm the district court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Fiorito, a heavy construction company, began negotiations in the Spring of 1977 with Fruehauf, a manufacturer of dump truck bodies, for the purchase of thirteen bodies to be installed on separately-purchased trucks. Fiorito uses dump trucks for, among other things, carrying wet concrete to highway construction sites. In pre-purchase negotiations, Fiorito informed Fruehauf of this contemplated use. Fruehauf admits that its representative told Fiorito that its truck bodies were suitable for carrying wet concrete. During pre-purchase negotiations Fruehauf also informed Fiorito that the bodies were covered under a five-year unconditional warranty and that the design of the bodies was unique. Fruehauf also gave Fiorito a sales brochure during this period which makes the same general claims.

On March 14, 1977, Fruehauf gave Fiorito a written price quotation stating that each body would cost $5,262, and that each was covered by a five-year warranty. Later, Fruehauf lowered the price by $400 per body, and Fiorito agreed to purchase the thirteen bodies. On April 13, 1977, Fiorito signed a Fruehauf sales order, which sets forth on the reverse side a five-year warranty and a number of disclaimers. 1 The total purchase price was $66,619.12. The disclaimers on the sales order include statements that the sole remedy for the buyer is "repair or replacement," and that consequential damages are not available.

After the bodies had been installed and the trucks began to haul wet concrete, a number of problems with the bodies developed. The two major problems were that the sides of the bodies (the "dump boxes") bulged and bowed when filled with wet concrete and that the hydraulic hoists failed. Cracks and tears also developed in the corners and welds of the bodies. All thirteen trucks were affected.

Fiorito notified Fruehauf orally of these problems but received no response. Fiorito and Fruehauf also exchanged letters in 1977. A Fruehauf service manager came to Fiorito's shop, examined the bodies, and stated that they were not covered under warranty. After another similar visit from Fruehauf managers, Fiorito began repairing the bodies itself. Several letters were exchanged between the parties but Fruehauf continued to deny coverage.

Fiorito brought suit in the United States District Court for the Western District of Washington on September 2, 1980, seeking damages. Diversity of citizenship provided the basis for the court's jurisdiction under 28 U.S.C. Sec. 1332(a). A jury trial was conducted in July, 1982, Hon. Walter T. McGovern presiding. Fiorito argued that the bodies had been improperly manufactured and that Fruehauf had failed to honor express and implied warranties. In defense, Fruehauf relied mainly on the disclaimers contained in the sales order. The jury returned a verdict for Fiorito, awarding $130,000 in damages. The court entered its judgment on July 23, 1982. Fruehauf's motion for a new trial was denied by order entered June 29, 1983.

Our jurisdiction over this appeal is based on 28 U.S.C. Sec. 1291.

ISSUES PRESENTED

I. Whether the trial court correctly ruled, as a matter of law, that (a) Fruehauf's limited "repair or replace" remedy failed of its essential purpose, and (b) under the circumstances of this case, failure of the limited remedy invalidated Fruehauf's disclaimer of consequential damages.

II. Whether the court's jury instructions, taken as a whole, allowed the jury to determine intelligently the issues presented.

DISCUSSION
I. THE TRIAL COURT'S LEGAL CONCLUSIONS WERE CORRECT.
A. Standard of review

The substantive law of Washington governs this diversity case. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). We review the district court's determination and application of state law de novo. Churchill v. F/V Fjord (In re McLinn), 739 F.2d 1395, 1399-1400 (9th Cir.1984) (en banc). "Our independent determination of state law should be based upon recognized sources that are available to the parties and that may be argued and contested before the district court as well as before the appellate court." Id. at 1400.

B. The court correctly determined that Fruehauf's limited "repair or replace" remedy failed of its essential purpose.
1. Introduction

Fruehauf argues that the trial court erred in its rulings concerning the Washington version of Uniform Commercial Code ("UCC") Sec. 2-719, Wash.Rev.Code Sec. 62A.2-719. 2 The April 13, 1977 sales order contains a limitation-of-remedies clause which purports to limit the buyer's remedies to repair or replacement. Such a clause is valid only if that remedy fulfills its "essential purpose" when the buyer seeks to enforce it. Wash.Rev.Code Sec. 62A.2-719(2). The trial court held that as a matter of law Fruehauf's limited remedy failed of its essential purpose. In its order denying a new trial, the court stated that "the facts show nothing but a callous disregard by [Fruehauf] for the purposes for which the exclusive repair-or-replacement remedy was designed--to insure that [Fiorito] would acquire defect-free trucks." Fruehauf raises two objections to the trial court's decision on this issue: first, that this was a question for the jury; and second, that the court's substantive conclusion was incorrect.

2. The court correctly answered the question as a matter of law.

Fruehauf baldly asserts that "failure of essential purpose is a question of fact for the jury." Under Washington law, however, a court commits error if it submits an issue to the jury without substantial evidence to support it. See Hughey v. Winthrop Motor Co., 61 Wash.2d 227, 377 P.2d 640 (1963); Shipp v. Curtis, 318 F.2d 797 (9th Cir.1963) (applying Washington

law); Bean v. Stephens, 13 Wash.App. 364, 534 P.2d 1047 (1975). The testimony here showed that Fruehauf failed completely to honor its own repair or replace remedy, which represents a failure of essential purpose. The absence of substantial evidence to support Fruehauf's position meant that there was no issue of failure of essential purpose for the jury to decide. Therefore, the trial court was correct in not sending the question to the jury.

3. The court's decision was correct on the merits.

Fruehauf also makes the related argument that the court incorrectly decided, on the merits, that Fruehauf's limited remedy failed of its essential purpose. However, under any standard of review, the court's conclusion was correct. Denial of responsibility to repair is a failure of a limited remedy in the most basic sense.

In Lidstrand v. Silvercrest Industries, 28 Wash.App. 359, 365, 623 P.2d 710, 714 (1981), a Washington appeals court said that "[u]nreasonable delays in repairing or inability to repair a product where the manufacturer has promised such repairs causes a limited remedy to 'fail of its essential purpose' [within the meaning of Sec. 62A.2-719(2) ]." See also Marr Enterprises, Inc. v. Lewis Refrigeration Co., 556 F.2d 951, 955 (9th Cir.1977) (citing with approval cases which hold that a remedy fails of its essential purpose where "the seller fail[s] to replace or repair in a reasonably prompt and non-negligent manner").

Here, the court found that Fruehauf "arbitrarily decline[d] to made necessary repairs," and thus "arbitrarily and unreasonably declined to live up to its contractual promises." The court compared this case to Soo Line Railroad Co. v. Fruehauf Corp., 547 F.2d 1365 (8th Cir.1977), which held that under the Minnesota version of the UCC (which contains language identical to Sec. 62A.2-719(2)), "a limited remedy fails of its purpose whenever the seller fails to repair goods within a reasonable time." Soo Line, 547 F.2d at 1371 n. 7.

The evidence in the record overwhelmingly supports the trial court's conclusion. Fiorito first notified Fruehauf of problems with the dump bodies orally, shortly after delivery, but received no response. Fiorito wrote Fruehauf in October, 1977, setting out a "list of problems in the hydraulic, mechanical, and electrical systems." Fruehauf responded by letter on Nov. 4, 1977, stating that some of the complaints had to be inspected, that some had already been inspected, and suggesting ways in which the other problems could be corrected. When Fruehauf's service manager came to Fiorito's shop to inspect the bodies, he denied that the bodies were covered under warranty. This service manager admitted at trial that he is not an engineer, has no knowledge of the effects of hauling wet cement, and did not seek to gain any such knowledge.

In April, 1980, Fiorito again wrote to Fruehauf, stating that Fiorito had had to repair the bodies itself since Fruehauf had refused to do so. Fruehauf responded by letter dated May 27, 1980, stating that "we have lived up to our warranty obligations as stated on the reverse side of our sales order." In ...

To continue reading

Request your trial
47 cases
  • Madrigal v. Allstate Ins. Co.
    • United States
    • U.S. District Court — Central District of California
    • May 19, 2016
    ...an instruction is proper if it adequately allows the party to argue its theory of the case to the jury." Fiorito Bros . , Inc. v. Fruehauf Corp. , 747 F.2d 1309, 1316 (9th Cir. 1984). Instructional errors that are harmless do not require reversal. Dang , 422 F.3d at 805. In a diversity case......
  • American Nursery Products, Inc. v. Indian Wells Orchards
    • United States
    • Washington Supreme Court
    • September 20, 1990
    ...damage limitation enforced even where a limited remedy fails of its essential purpose) with, e.g., Fiorito Bros., Inc. v. Fruehauf Corp., 747 F.2d 1309 (9th Cir.1984) (failure of exclusive remedy clause rendered consequential damage clause unenforceable). This court has not yet addressed th......
  • Canal Elec. Co. v. Westinghouse Elec. Corp.
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • January 9, 1990
    ...41, 396 N.E.2d 761 (1979); Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 265 N.W.2d 513 (1978).6 See, e.g., Fiorito Bros. v. Fruehauf Corp., 747 F.2d 1309 (9th Cir.1984); Soo Line R.R. v. Fruehauf Corp., 547 F.2d 1365 (8th Cir.1977); Jones & McKnight Corp. v. Birdsboro Corp., 320 F.Supp. ......
  • Cooley v. Big Horn Harvestore Systems, Inc.
    • United States
    • Colorado Supreme Court
    • June 24, 1991
    ...See, e.g., Milgard Tempering, Inc. v. Selas Corp., 902 F.2d 703 (9th Cir.1990) (applying Washington law); Fiorito Bros. v. Fruehauf Corp., 747 F.2d 1309 (9th Cir.1984); Soo Line R.R. v. Fruehauf Corp., 547 F.2d 1365 (8th Cir.1977); Beal v. General Motors Corp., 354 F.Supp. 423 (D.Del.1973);......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT