Marvin Lumber and Cedar Co. v. Ppg Industries, 02-2833.

• Citation: 401 F.3d 901
• Decision Date: 23 March 2005
• Docket Number: No. 02-2869.,No. 02-2833.,02-2833.,02-2869.
• Parties: MARVIN LUMBER AND CEDAR COMPANY; Marvin Windows of Tennessee, Inc., Plaintiffs — Appellees, v. PPG INDUSTRIES, INC., Defendant — Appellant. American Chemistry Council, Amicus on Behalf of Appellant. Marvin Lumber and Cedar Company; Marvin Windows of Tennessee, Inc., Plaintiffs — Appellants, v. PPG Industries, Inc., Defendant — Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 901

401 F.3d 901

MARVIN LUMBER AND CEDAR COMPANY; Marvin Windows of Tennessee, Inc., Plaintiffs — Appellees, v. PPG INDUSTRIES, INC., Defendant — Appellant.

American Chemistry Council, Amicus on Behalf of Appellant.

Marvin Lumber and Cedar Company; Marvin Windows of Tennessee, Inc., Plaintiffs — Appellants, v. PPG Industries, Inc., Defendant — Appellee.

No. 02-2833.

No. 02-2869.

United States Court of Appeals, Eighth Circuit.

Submitted: June 9, 2003.

Filed: March 23, 2005.

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Dan K. Webb, argued, Chicago, IL, for appellant/cross-appellee.

Thomas H. Boyd, argued, St. Paul, MN, for appellee/cross-appellant.

Before BYE, BOWMAN, and BEAM, Circuit Judges.

BOWMAN, Circuit Judge.

PPG Industries, Inc., appeals from the judgment entered in favor of Marvin Lumber and Cedar Company and Marvin Windows of Tennessee, Inc. (collectively, Marvin), on Marvin's claim for breach of express warranty of future performance. Marvin cross appeals. We affirm in part and reverse in part.

I.

This case is before us for the second time. See Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 223 F.3d 873 (8th Cir.2000). As we explained in our first opinion, Marvin is a family-owned company that manufactures, among other things, millwork products — wooden doors and windows. PPG sells wood preservatives and coatings. The genesis of this lawsuit was Marvin's use, from 1985 to 1988, of PPG's wood treatment PILT (preservative in-line treatment) on Marvin's doors and windows. PILT replaced the industry standard in wood preservatives, products containing pentachlorophenol (Penta). Marvin had used Penta products successfully for years until environmental concerns were raised about the active ingredient.

In 1994, Marvin filed this diversity suit seeking damages on a number of legal theories, claiming that PILT had failed to prevent premature rot and decay in Marvin's wood products. The district court dismissed or granted summary judgment to PPG on all counts. On appeal, we affirmed in large part. But we remanded for trial Marvin's claim for breach of an express warranty of future performance, having concluded that there remained genuine issues of material fact on the claim. The warranty arose, Marvin said, from representations by PPG to Marvin employees that wood products treated with PILT would last as long or longer than Penta-treated products. See id. at 879-80.

On remand, at the request of PPG, the four-month jury trial was bifurcated. In part one, the jury found that PPG had given Marvin a warranty of future performance and that such warranty formed part of the basis of the bargain between the parties and was incorporated into their agreement. In the second phase, the jury found the warranty was breached and awarded damages: $53.6 million for out-of-pocket costs, $25.2 million for past lost profits; $27 million for future lost profits; and $30 million for loss of goodwill. The District Court entered judgment for Marvin, awarding $156,118,625.92 for damages (including third-party litigation costs) with interest (not including post-judgment interest). PPG appeals and Marvin cross appeals. We address the issues in the order presented.

II.

For its first issue on appeal, PPG contends that the District Court erred when it granted judgment as a matter of law (JAML) in favor of Marvin on the question of notice.¹ Under Minnesota law, after acceptance of goods, a "buyer must within a reasonable time after the buyer discovers or should have discovered any breach notify the seller of breach or be barred from any remedy." Minn.Stat. § 336.2-607(3)(a) (2002).² We review de novo the District Court's decision to grant JAML to Marvin, applying the same standard as the District Court, that is, Rule 50(a) of the Federal Rules of Civil Procedure. Arabian Agric. Servs. Co. v. Chief Indus., Inc., 309 F.3d 479, 482 (8th Cir.2002). The question for us is: PPG having been "fully heard" on the issue of notice, was there a "legally sufficient evidentiary basis for a reasonable jury to find for" PPG so that granting JAML in Marvin's favor was error? Id. (quoting Fed.R.Civ.P. 50(a)(1)).

PPG claims that Marvin had discovered or should have discovered the breach no later than 1990; that the notice finally given to PPG in April 1993 was inadequate; and that adequate notice was not given until September 1997. According to PPG, whether the notice was given in 1993 or 1997, it was not, as a matter of law, given "within a reasonable time," and so Marvin is not entitled to any remedy for breach. PPG asks that we order judgment for PPG on the question of notice or at the very least remand for a new trial so the issue can be decided by a jury.

Initially, PPG asserts in its brief that "this Court held in Marvin I that a reasonable jury could find that Marvin discovered or should have discovered its claim for breach" in early 1990, suggesting that our comment foreclosed JAML on the question of notice. Brief of Appellant at 23. We did note that fact questions existed on the issue of when Marvin knew or should have known of the breach for purposes of a statute of limitations issue — was suit filed within four years of the time when the alleged breach was known or should have been known?³ But the District Court's conclusion as a matter of law that Marvin gave reasonable notice of breach to PPG is not in any way inconsistent with our determination in Marvin I, on the record before the Court at that time, that a jury could find Marvin knew or should have known of the problems with PILT before April 1990. The language from Marvin I noting that fact questions made summary judgment inappropriate on the statute of limitations question on the record before us in that case does not preclude JAML on the notice issue on the record before us now. The District Court's decision on notice followed a full-blown trial. Marvin, no doubt having read our opinion in Marvin I as carefully as did PPG, presumably worked to tighten up its evidence in hopes of winning a jury verdict — or better yet, JAML — on the question of notice.

It is true that the sufficiency of notice under § 2-607 ordinarily is a question of fact to be determined by a jury. Church of the Nativity of Our Lord v. WatPro, Inc., 491 N.W.2d 1, 5 (Minn.1992), overruled on other grounds, Ly v. Nystrom, 615 N.W.2d 302 (Minn.2000). But if, as the District Court decided, "no reasonable jury could have determined" that Marvin failed to give the requisite notice, it was not error for that court to decide the issue and enter judgment as a matter of law in favor of Marvin on the issue. Order and Memorandum of June 7, 2002, at 3. We now look at the evidence before the court on the question of notice.

Under § 2-607, Marvin's duty to give notice to PPG arose when Marvin discovered or should have discovered the breach — by early 1990, according to PPG. Marvin's position is that it was unaware of the breach until just before it gave PPG notice in April 1993. The undisputed evidence at trial showed that Marvin indeed had some concerns about wood deterioration before 1993 but that company employees did not know that the rot problems correlated with the switch to PILT until 1993. Moreover, given the representations about PILT's superior ability to prevent rot, it was reasonable that Marvin did not come quickly to the realization that the wood preservative might be the cause of the problem until it had explored and ruled out other potential causes — which it had done by 1993. Marvin's duty under the "should have known" standard, once it became aware of excessive rot problems, was to investigate further and determine whether PILT was the problem. This it did.

But PPG cites evidence in the record from which, it says, a reasonable jury would have found (or at the very least, could have found) that Marvin knew or should have known about the breach of warranty by early 1990. First, PPG identifies a Marvin document dated December 12, 1989, that lists thirty-five "anticipated concern[s]," among which is number twenty-nine, "wood rotting complaints," with "wood treatment systems" under the corresponding "comment." Defendant's Exhibit 624. But the document does not indicate that complaints were escalating or that they were primarily in the newer, PILT-treated products. And as we have learned from our review of the trial transcript, wood treatment "systems" would refer not only to the preservative pretreatment, but also to coatings that go on top of the treated wood (e.g., paint) and the method by which the pretreatment and the coatings are applied. In other words, a reasonable jury could not have found that the Marvin employees who saw this document knew or should have known — because of the content of this document — that PILT had failed to live up to PPG's promises regarding its future performance.

PPG also brings to this Court's attention Marvin's "Wood Deterioration Project" of 1990. Defendant's Exhibit 1576. Significantly, the bulk of the report lists the specific millwork products about which complaints had been received and the location of the deterioration within those products. Exterior finish is noted, but type of pretreatment is not. Instead, PPG suggests that Marvin should have known PILT was the problem because the report noted that of the 554 windows and doors with reported deterioration problems, 139 of the units reported upon were manufactured from 1985 to 1988, during which time Marvin was using PILT. But the Wood Deterioration Project is simply a report of raw numbers; no statistical analysis accompanied the project. For example, the numbers do not reflect the actual percentage of production for a given year that was affected with deterioration problems. In truth, the most dramatic correlation, if there is one, is between deterioration and geography: 373 of the reports came from the northeast, more than the other three geographical areas combined. No...