Jetero Const. Co., Inc. v. South Memphis Lumber Co., Inc., s. 75--1566

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Citation531 F.2d 1348
Docket NumberNos. 75--1566,75--1567,s. 75--1566
Parties19 UCC Rep.Serv. 478 JETERO CONSTRUCTION COMPANY, INC., Plaintiff-Appellee, v. SOUTH MEMPHIS LUMBER COMPANY, INC., Defendant-Appellant.
Decision Date29 March 1976

Page 1348

531 F.2d 1348
19 UCC Rep.Serv. 478
Nos. 75--1566, 75--1567.
United States Court of Appeals,
Sixth Circuit.
Argued Dec. 11, 1975.
Decided March 2, 1976.
As Amended March 29, 1976.

Page 1349

Scott F. May, Arnoult, Hill & May, Memphis, Tenn., for defendant-appellant.

Kemper B. Durand, Rosenfield, Borod, Bogatin & Kremer, Memphis, Tenn., for plaintiff-appellee.

Before CELEBREZZE, PECK and ENGEL, Circuit Judges.

CELEBREZZE, Circuit Judge.

In April of 1973 South Memphis Lumber Co. (SML) contracted to supply Jetero Construction Co. (Jetero) with 60,000 '2' $ 4' $ 92 5/8$ $2 spruce studs' to be used in the construction of the Audubon Square condominium project in Memphis, Tennessee. Delivery of the studs began on May 4, 1973 and ended on May 23, 1973. A total of 64,412 studs were delivered, the quality of the first 16,000 studs delivered which had ends painted with red paint is not in dispute. The dispute giving rise to this action centers on whether the remainder of the studs which SML delivered, which had ends painted with green paint or which were unpainted, were of the same general quality as the '$2 spruce studs' specified in Jetero's purchase order.

Jetero filed suit against SML in District Court alleging that the studs supplied by SML which had green or unpainted ends were of a quality inferior to that specified in the purchase order. SML responded and admitted that a contract had been made but denied that the studs supplied were defective. Two separate civil actions filed by SML in state court to enforce materialmen's liens and to secure other relief from Jetero's refusal to pay sums due under the contracts involved were removed and consolidated with Jetero's action. The District Court deferred resolution of these two cases until the Jetero action had been resolved.

In the spring of 1973, Dick Whittington, project manager for Jetero, and Gene Lamb, regional construction manager for Jetero, met with Jack Vann, a representative of SML, to discuss SML supplying Jetero with studs and other lumber. One of these discussions took place at the SML yard where Vann showed Lamb various samples of lumber which Jetero would need for the Audubon project. One of the samples shown Lamb was a stack of 'red end' 2' $ 4' building studs. Either during this visit or on a separate visit, Dick Whittington was also shown the 'red end' type studs. The ends of studs are painted to retard splitting and to identify the mill which cut them. Vann had reviewed summary sheets of Jetero's lumber needs for the Audubon project, the summary

Page 1350

had been prepared by Jetero's architects and specified 139,000 'yellow pine Kd studs.' Vann provided Lamb with an itemized bid on the Audubon project on behalf of SML. While one of the Jetero representatives was at the SML yard, Vann described the 'red end' type studs as '$2 spruce studs.' Lamb asked Vann if the 'red end' studs which he saw in the SML yard were equivalent to the studs required in the specifications for Audubon. Vann assured Lamb that spruce 'stud grade' lumber was equivalent to the studs specified. Vann also told Lamb that he had enough 'red end' studs to meet Jetero's needs, as he had 20,000 'red end' studs on hand and had access to 40,000 more. Lamb was not an expert on lumber grading and relying on Vann's expertise, ordered 60,000 '2' $ 4' $ 92 5/8' $2 spruce studs' at a total price of $68,880.86. Lamb believed that the studs to be delivered would be like the 'red end' studs which he saw at the SML yard. Lamb also believed, based on Vann's representations, that these studs were reasonably equivalent to the 'yellow pine Kd studs' specified by the architect.

Ron Rolen, Jetero's field clerk, was charged with inspecting and keeping track of supplies at the Audubon job site. Rolen inspected the SML shipments as they arrived. The studs were stacked in a separate area of the jobsite. The first 16,000 studs delivered were of the 'red end' variety. After the initial shipments, Rolen noticed that the studs delivered by SML had either green or unpainted ends. Rolen noticed that the later shipments of studs did not appear to be of as high a quality as the earlier shipments. Rolen noted that when bundles from the later shipments were opened the studs would warp or bow. Rolen alerted Whittington and he called Vann. Vann assured Whittington that the studs were all right and conformed to Lamb's order. Jetero continued to accept delivery on that basis.

Since 139,000 2' $ 4' studs would be needed on the Audubon project, Jetero ordered 80,000 'black diamond stressed Kd studs' from a supplier other than SML. This lumber was delivered shortly after SML had completed delivery of the studs which it supplied. The 'black diamond' studs were supplied by Luther Johnson, a Georgia lumber broker.

Near the end of May of 1973, Jetero began using the SML studs to construct the frames of the Audubon condominiums. In mid-June of 1973, the first frame was erected and others were begun. Shortly thereafter Jetero employees noticed that the SML studs used in the frames began to 'warp, twist, buckle' and turn a darker color. A monthly inspection of the jobsite by representatives of the architect and the owner of the project and by Austin, the President of Jetero, produced a decision that the SML studs with green or unpainted ends which had been used had to be replaced. Some 13,640 SML studs were replaced. None of the studs which had to be replaced were of the 'red end' type.

The removed studs were substantially useless for construction, and were disposed of by Jetero. The bulk of the 'green end' or unpainted studs, apparently over 34,000, remained in bundles stacked at the construction site. Jetero considered this lumber unsuitable for use at Audubon. Jetero then contacted Hart, a Texas manufacturer who did business with Jetero. Hart shipped 25,728 studs to Jasper, Texas. He was to have the studs nailed in pairs in an effort to straighten them for possible use in other Jetero projects. Jetero paid Hart $4,461 for this service but the lumber still proved inadequate. Jetero made two written demands of SML to remove and replace the defective studs at SML's cost. On October 1, 1973, SML responded claiming that the lumber was not defective and that it conformed to the purchase order.

Following a trial in District Court at which both sides presented a number of witnesses, the District Court, on December 13, 1974, issued a lengthy opinion in which it concluded that SML had, under Tennessee law, breached its implied warranties of merchantability and fitness for a particular

Page 1351

purpose. The District Court awarded $16,000 damages for the breach and $8,743.50 as consequential damages for the cost of removing and replacing the 13,640 studs which had been utilized for a total award of $24,743.50. Before judgment was entered, Jetero, on December 19, 1974, pursuant to Rule 59(e), Federal Rules of Civil Procedure, filed a Motion to Alter or Amend Judgment seeking an increased damage award for the breach. On January 16, 1975, the District Court issued an order which noted Jetero's motion and despite noting generally some factors adverse to Jetero, raised the damages award for breach to $20,000, for a total judgment of $28,743.50. On January 27, 1975, eleven days after entry of judgment, Jetero filed another memorandum with the District Court, styled 'Memorandum of Jetero Construction Company.' The District Court, apparently treating this memorandum as another Rule 59(e) motion to alter or amend judgment, entered an 'Amended Final Judgment' on February 19, 1975. This 'Amended Final Judgment', with only a notation that the court had considered Jetero's latest memorandum and SML's response, raised the damage award for breach to $30,000, the consequential damages remained constant and the total award was $38,743.50.

SML brings this appeal challenging as clearly erroneous the District Court's decision and Jetero cross-appeals seeking a larger damage award.

Before turning to consideration of the merits of this appeal we are compelled to review the District Court's highly unusual post-opinion procedure of in effect twice reconsidering its damage award. We believe the District Court was without jurisdiction to enter its 'Amended Final Judgment.'

Although the District Court issued an opinion in this action on December 13, 1974, a review of the record...

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