Patty Precision Products Co. v. Brown & Sharpe Mfg. Co., s. 86-1064
| Decision Date | 17 May 1988 |
| Docket Number | Nos. 86-1064,87-1170,s. 86-1064 |
| Citation | 846 F.2d 1247 |
| Parties | 6 UCC Rep.Serv.2d 692, Prod.Liab.Rep.(CCH)P 11,794 PATTY PRECISION PRODUCTS COMPANY, a corporation, Plaintiff-Appellant, v. BROWN & SHARPE MANUFACTURING CO., a corporation; General Electric Company, a corporation; Tools Capital Corporation, a corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Claire V. Eagan (Frank M. Hagedorn with her, on the brief) of Hall, Estill, Hardwick, Gable, Collingsworth & Nelson, Tulsa, Okl., for plaintiff-appellant.
Theodore Q. Eliot (Sidney G. Dunagan and James W. Rusher with him, on the brief) of Gable & Gotwals, Tulsa, Okl., for defendant-appellee, Gen. Elec. Co.
Steven A. Heath (J.C. Joyce with him, on the brief) of Blackstock, Joyce, Pollard & Montgomery, Tulsa, Okl., for defendants-appellees, Brown & Sharpe Mfg. Co. and Tools Capital Corp.
Before LOGAN, SETH and BARRETT, Circuit Judges.
In these consolidated appeals, Patty Precision Products Company (Patty Precision) appeals from an order of the district court denying its motion for a new trial and an order of the district court awarding appellee (General Electric) attorney fees of $170,421.54.
During April, 1974, Patty Precision was awarded a contract by the United States for the manufacture of bomb racks. Subsequently, Patty Precision contacted appellee (Brown & Sharpe) relative to the purchase of a vertical hydrotape machining center capable of producing the side plates for the bomb racks. Following its meeting This machine, hereinafter referred to as "Machine # 1", was delivered to Patty Precision in January, 1975. A second machining center, "Machine # 2", also equipped with a G.E. 550 Mark Century Numerical Control, was ordered in March, 1975, and delivered to Patty Precision in June, 1975. In October, 1975, Patty Precision ordered a third machine, "Machine # 3", which was identical to machines # 1 and # 2. Machine # 3 was delivered to Patty Precision to replace Machine # 2 which had a cracked base. (R., Vol. II, Tab 297, Joint Pretrial Order, Admitted Facts, p. 4.) After Machine # 3 was delivered, Patty Precision entered into a lease agreement to lease Machine # 2. Id. Machines # 1 and # 3 have remained at Patty Precision's plant since their installation in 1975; Machine # 2 was replevied pursuant to an agreed order in this action in May, 1979. Id.
with Brown & Sharpe, Patty Precision purchased from Marsuco, Inc., a Brown & Sharpe hydrotape vertical machining center equipped with a General Electric "G.E. 550 Mark Century Numerical Control."
It is uncontested that during Patty Precision's initial meeting with Brown & Sharpe that a Brown & Sharpe employee specifically recommended General Electric controls, that the employee stated that Brown & Sharpe had bought over 700 controls from General Electric, and that they had a lot of confidence in the General Electric controls (R., Vol. III at pp. 135-37). It is also uncontested that after Patty Precision had ordered the machines, but prior to their delivery, that Brown & Sharpe notified General Electric of the scheduled shipment of each machine including the serial number of each General Electric control being shipped to Patty Precision, that after the machines were shipped to Patty Precision's plant General Electric employees participated in the installation and start up of each machine, and that because of the volume of controls that General Electric supplied to Brown & Sharpe, General Electric "had a service engineer basically full time at Brown & Sharpe whose job was to assist in the start up of machines and provide any feedback" from customers (R., Vol. XI at p. 1973).
From the outset, the three machines failed to perform in accordance with Patty Precision's expectations:
--In fact, because the machines needed almost constant repairs, defendants voluntarily extended the warranty period on the machines until June, 1977. Despite the alleged poor performance of the machines, plaintiff continued to use them to meet the deadlines of a government contract. After the warranties expired in June, 1977, plaintiff attempted to resolve its grievances by meeting with defendants in November, 1977. Those attempts were unsuccessful and plaintiff filed this diversity suit in May, 1978, more than three years after the purchase of the first machine.
In its complaint, Patty Precision alleged that: Brown & Sharpe and General Electric had fraudulently induced it to purchase the machines; Brown & Sharpe and General Electric had breached numerous express and implied warranties made about the machines; and, Brown & Sharpe and Tools Capitol fraudulently induced Patty Precision to lease Machine # 2. Patty Precision specifically alleged, inter-alia:
With respect to said machines, defendant Brown & Sharpe, at the time of the sales and the lease, made the following express warranties: that said machines were capable of any combination of drilling, boring, tapping and milling; that said machines were capable of manufacturing one set of side plates for bomb racks in 4.6 hours. Defendants, Brown & Sharpe and GE, and each of them, made the following express warranties: that purchases or lessees of said machines, including Patty Precision, would have years of "faultless operation"; that the design features of the machines "guaranteed" simple, economical maintenance; that the GE 550 MC control would prove to be an "outstanding value"; that the GE 550 MC control was "thoroughly reliable" and had been R., Vol. I, Tab # 1, p. 10.
"thoroughly tested" with a proven design; and that the GE 550 MC control would have long life with highly reliable operation; that said machines were free of defects in materials and workmanship; and that if any such defects were found within one year of sale or lease, the same would be repaired or replaced without charge to Patty Precision. Prior to the purchase of Machines No. 1 and No. 3, and the lease of Machine No. 2 by Patty Precision, defendants Brown & Sharpe and GE made the following implied warranties: that said machines were merchantable; and that said machines were fit for the purposes of Patty Precision.
Although our record on appeal does not contain Brown & Sharpe's and Tools Capitol's answers to Patty Precision's complaint, it does contain two of General Electric's answers. Within its first answer filed March 26, 1979, General Electric alleged that Patty Precision's complaint failed to state a claim upon which relief could be granted; denied that its numerical control was in any way defective or that it fraudulently induced Patty Precision to purchase the machines; and, alleged that any loss to Patty Precision was a result of its own negligence in the operation, control, and maintenance of the machines. General Electric also counterclaimed for labor and service charges of $961.49.
On June 6, 1985, more than six years after its first answer, General Electric filed a fourth answer, just eleven days prior to the commencement of trial herein. 1 In this answer General Electric alleged, inter alia, that Patty Precision's claim for relief based on a breach of implied warranties was barred by the applicable statute of limitations; Patty Precision, through its agents and employees, had negligently operated and maintained the General Electric controls and the alleged breakdowns and failures were due to the acts and failures of Patty Precision; Patty Precision had waived and was estopped from asserting any breach of express warranties relative to Machines # 2 and # 3 in view of its use of Machine # 1 prior to ordering Machines # 2 and # 3; and, no privity existed between General Electric and Patty Precision and no express warranties can exist without privity. General Electric also alleged, for the first time, that any express warranties by General Electric to Patty Precision were limited by its warranty set forth in its "Statement of Warranty and Service Policy to Worldwide Users" 2 (Statement of Warranty) and that General Electric was not liable to Patty Precision for the damages claimed in view of the damage limitation (disclaimer) set forth in its statement of warranty.
As written, General Electric's liability under its statement of warranty could not, in any case, exceed its costs of repairing or replacing defective numerical controls for a one year period.
According to the Joint Final Pretrial Order (R., Vol. II, Tab 297, p. 49), filed on June 11, 1985, six days prior to commencement of the trial, the Issues of Law Remaining to be Tried included:
Q. Did General Electric's exclusion of implied warranties to Brown & Sharpe exclude same to Plaintiff?
Q. Did General Electric's limitation of remedies for breach of warranty to Brown & Sharpe limit Plaintiff's remedies?
Trial commenced on June 17, 1985. In his opening arguments, counsel for General Electric stated:
Now, Brown & Sharpe took the [GENERAL ELECTRIC] control and interfaced it with their machining center. When these machines were sold to Brown & Sharpe there was a warranty provided. And what General Electric warranted to Brown & Sharpe was that the equipment was to be free of defects in material, workmanship and title and will be of the kind and quality designated R., Vol. III, pp. 62-63. Thereafter, a bench conference was held during which counsel for Patty Precision argued that counsel's remarks were irrelevant and highly prejudicial, and that General Electric's warranty created an issue of law as to whether a disclaimer can be effective to the end user when not communicated to the end user.
and described in the contract; and that that warranty was exclusive of all other warranties, including the warranty of merchantability and of fitness for purpose; that if any defect appeared within one year of the start-up of the equipment then the company,...
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