Joy Mfg. Co. v. Sola Basic Industries, Inc.

• Decision Date: 30 December 1982
• Docket Number: No. 81-2695,81-2695,Nos. 81-2694,No. 81-2694,81-2694,s. 81-2694
• Parties: 12 Fed. R. Evid. Serv. 381 JOY MANUFACTURING COMPANY, a corporation Appellant inv. SOLA BASIC INDUSTRIES, INC., a corporation, Lindberg Division of Sola Basic Industries, Inc. and General Signal Corporation, a corporation Sola Basic Industries, Inc., a corporation; Lindberg Division of Sola Basic Industries, Inc., Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 104

697 F.2d 104

12 Fed. R. Evid. Serv. 381

JOY MANUFACTURING COMPANY, a corporation Appellant in No. 81-2694 v. SOLA BASIC INDUSTRIES, INC., a corporation, Lindberg

Division of Sola Basic Industries, Inc. and

General Signal Corporation, a corporation

Sola Basic Industries, Inc., a corporation; Lindberg

Division of Sola Basic Industries, Inc., Appellant

in No. 81-2695.

Nos. 81-2694, 81-2695.

United States Court of Appeals, Third Circuit.

Argued Sept. 16, 1982.

Decided Dec. 30, 1982.

Roger Curran (argued), Gail L. Gratton, Rose, Schmidt, Dixon & Hasley, Pittsburgh, Pa., for Joy Mfg. Co.

Joseph M. Loughren (argued), Robert E. Wayman, Wayman, Irvin & McAuley, Pittsburgh, Pa., for Sola Basic Industries, Inc., Lindberg Division of Sola Basic Industries, Inc.

Before ADAMS, HUNTER and BECKER, Circuit Judges.

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

Joy Manufacturing Company ("Joy") brought this diversity action against Sola Basic Industries, Inc., Lindberg Division of Sola Basic Industries, Inc., and General Signal Corporation ¹ to recover damages resulting from the failure of two heat treating furnaces purchased by Joy from the Lindberg

                Division of Sola Basic Industries. 2   The case was tried on the theories of breach of warranty and misrepresentation, and the jury returned a verdict in the amount of $7,968.31.  Both parties filed timely appeals claiming various errors in the trial below.  Because we find the district court erred in excluding certain evidence and in not allowing defendants to amend their pretrial statement, we will vacate the judgment and remand for a new trial
                

FACTS

In the mid-1970's Joy purchased two new heat treating furnaces from Lindberg for use in its Chain Plant Operation in Reno, Pennsylvania. The first was delivered on March 24, 1975 and, after assembly, was ready for normal operation in late May, 1975. The second was installed and ready for operation in July, 1976.

Both furnaces experienced operational difficulties ³ shortly after installation. These operational problems reoccurred at approximately six to eight week intervals, resulting in substantial downtime for both furnaces. From 1975 to 1977, both Joy and Lindberg made various efforts to correct the furnace problems with little success. Finally in 1977 the hearths in both furnaces were replaced and, with minor exceptions, the furnaces have since operated properly. App. at 22a, 23a.

PROCEEDINGS BELOW

On March 23, 1979, Joy filed the instant action in the District Court for the Western District of Pennsylvania alleging breach of express and implied warranties, strict liability, negligence, and misrepresentation on the part of Lindberg. Joy sought damages in excess of $800,000.

In a pretrial notice dated April 23, 1979, the district court directed counsel for both parties to comply with the provisions of the Rule 5-II Pre-Trial Procedures of the District Court for the Western District of Pennsylvania. Under that rule each party is required to submit a "brief narrative statement of the material facts [to be offered] at trial." Plaintiffs must include "all damages claimed, the method of calculation, and how damages will be proven," and defendants must include all "defense[s] to the damage claims." W.D.Pa.R. 5-II(D). In its pretrial narrative, Joy discussed the factual background leading up to its filing of this action and repeated its claims of strict liability, breach of express and implied warranties, negligence, and misrepresentation. App. at 17a. Joy claimed specific damages for lost commercial heat treating, down-time, overtime, repair costs, and various other losses allegedly the result of Lindberg's actions. In their pretrial narrative, defendants disputed Joy's recitation of the facts and claimed that the furnaces were properly designed and manufactured, that no express warranties concerning quality of workmanship had been made, and that all implied warranties had been fulfilled. ⁴ App. at 186a.

The case proceeded to trial. During their cross-examination of Steven Baldwin, one of plaintiff's liability witnesses, defendants attempted to ask questions about a proposal form for Lindberg equipment sent by Lindberg to Joy. Joy's counsel objected on the ground that, if defendants were using that line of questioning to establish that there were terms in the contract different from those that plaintiff had "put in," ⁵ defendants were advancing a theory which they had not raised in their pretrial narrative. App. at 200a-01a. Defendants claimed that questions about the proposal form were In its presentation of evidence on damages plaintiff recalled Steven Baldwin. He had earlier testified on direct about his familiarity with Joy's heat treating operation, app. 42a-45a, his familiarity with the purchase of two furnaces from Lindberg, app. at 46a, and his familiarity with problems Joy had experienced with the furnaces, app. at 47a, 50a-57a. ⁷ In the course of plaintiff's questioning, counsel for Joy asked Baldwin for his estimation of the percentage of losses incurred by Joy that were attributable to the hearth failures. Over objection, Baldwin testified that 90% of the general labor expenses, ⁸ 90% of the labor costs related to downtime, ⁹ 90% of the labor variance, ¹⁰ and all of the overtime costs, ¹¹ On cross-examination, defendants' counsel questioned Baldwin about the source of his estimates. He first testified that he received the information needed to complete those calculations "[f]rom the records of Joy Manufacturing and my personal knowledge." App. at 101a. Upon further questioning, however, Baldwin testified that he had only received a summary of the records, app. at 135a, and that he was not sure what records had been used in preparation of that summary, app. at 136a. He further testified that, to his knowledge, Joy did not keep records which specified the reason a furnace was down on a particular date. App. at 140a. The court then asked the witness:

                proper because the document contained a disclaimer of all warranties, including any warranties implied by law.  App. at 205a. 6   After extended discussion at side bar, app. at 200a-09a, the court held that defendants could not address the subject of the disclaimer "because [they had] not listed it in [their] pretrial statement."    App. at 205a.  Defendants then requested permission to amend their pretrial statement prior to presentation of their case in chief in order to be able to raise the issue of disclaimer.  The court denied the request.  App. at 209a
                were attributable to the hearth problems of the Lindberg furnaces. 12
                

THE COURT: Are you saying, Mr. Baldwin, you cannot connect down time to any particular reason?

THE WITNESS: That is correct. A particular reason was that this part broke on the furnace or this was wrong--no.

[COUNSEL FOR LINDBERG]: Your Honor, I would move that this testimony of down time damages be stricken as being purely speculative and conjectural.

THE COURT: I am going to strike that testimony.

[COUNSEL FOR JOY]: I don't think that is what he said. I think he said he can't testify from the records. He testified from his personal observations.

THE COURT: Mr. Baldwin, do you remember, in your mind, every day and how much down time there was and the reason for it?

THE WITNESS: No. That is absurd.

THE COURT: He doesn't remember it in his mind, and there is nothing in the records to substantiate it, and I do strike the testimony dealing with down time.

App. at 141a. The court went on to strike Baldwin's testimony as to labor variance, overtime, the amount of heat treating required to be subcontracted out by Joy, and the amount of lost commercial heat treating. App. at 142a-43a. The only damage evidence the court allowed Joy to introduce consisted of invoices totaling $7,968.31. The jury awarded that amount to Joy.

DISCUSSION

A. Lindberg's Motion to Amend its Pretrial Narrative

Lindberg argues that the trial court abused its discretion by not allowing defendants to amend their pretrial statement during trial. The court held that defendants were precluded from raising the issue of whether all implied warranties had been disclaimed under the proposal sent by Lindberg to Joy. App. at 205a, 209a. ¹³ The trial court based its ruling on the statement made by Lindberg in its pretrial narrative that Lindberg had never made any express warranties to Joy and that all implied warranties had been fulfilled. ¹⁴

Defendants' pretrial narrative was filed with the court in accordance with W.D.Pa.R. 5-II(D)(2). Rule 5-II(D)(5)(d) states:

Failure to fully disclose in the pretrial narrative statement or at the pretrial conference, the substance of the evidence proposed to be offered at trial, will result in the exclusion of that evidence at trial unless the parties otherwise agree or the court otherwise orders.

The purpose of this rule is to simplify issues, to expedite the disposition of cases, and to avoid unnecessary delays once a trial had begun. See Ely v. Reading Company, 424 F.2d 758, 763-64 (3d Cir.1970).

We previously have held that it is within the trial court's discretionary power to allow for amendment of a pretrial narrative, E.C. Ernst, Inc. v. Koppers Co., 626 F.2d 324, 331 (3d Cir.1980), and absent clear abuse of discretion, our interference with the use of that discretion should be minimal. Ely v. Reading Company, 424 F.2d at 763-64. Our decisions identify four principal criteria for making and evaluating that discretionary judgment: (1) the prejudice or surprise in fact to the nonmoving party, (2) the ability of that party to cure the prejudice, (3) the extent to which the waiver of the rule would disrupt the orderly and efficient trial of the case, and (4) bad faith or willfulness on the part of the movant. Berroyer v. Hertz, 672 F.2d 334, 338 (3d Cir.1982); see Meyers v. Pennypack Woods Home Ownership Association, 559 F.2d 894, 904-05 (3d Cir.1977). ¹⁵ Applying these factors to the instant case, we are...