Pickwick Co, Inc. v. Infra-Red Technologies, Inc.
| Decision Date | 30 August 2000 |
| Docket Number | 99-1027 |
| Parties | NOTICE! No decision has been made on publication of this opinion. The opinion is subject to modification or correction by the court and is not final until the time for rehearing or further review has passed. An unpublished opinion of the court of appeals MAY NOT BE CITED by a court or by a party in any other action. The official published opinions of the Iowa Court of Appeals are those published in the North Western Reporter published by West Group. PICKWICK COMPANY, INC., Plaintiff-Appellee, vs.TECHNOLOGIES, INC., Defendant-Appellant./ 99-1027 IN THE COURT OF APPEALS OF IOWA Filed |
| Court | Court of Appeals of Iowa |
Plaintiff-appellee, Pickwick Company, Inc., sued defendant-appellant Infra-Red Technologies, Inc., on a number of theories after a painting system defendant sold plaintiff allegedly did not meet plaintiff's expectations. Defendant counterclaimed seeking the balance due on the contract for purchase. Following a jury verdict for the plaintiff awarding actual and punitive damages defendant brings this appeal contending, among other things, that (1) there was not substantial evidence of fraud; (2) evidence as to loss profits was speculative; (3) there was insufficient evidence to support the award of punitive damages; (4) there was not substantial evidence of express warranty; and (5) it was entitled to judgment on its counterclaim. AFFIRMED IN PART AND REVERSED IN PART.
Robert S. Hatala of Crawford, Sullivan, Read & Roemerman, P.C., Cedar Rapids, and Don R. Lolli of Swanson, Midgley, Gangwere, Kitchin & McLarney, L.L.C., Kansas City, Missouri, for appellant.
Leonard T. Strand of Simmons, Perrine, Albright & Elwood, P.L.C., Cedar Rapids, for appellee.
Considered by Sackett, C.J., and Streit and Vaitheswaran, JJ.
Plaintiff-appellee, Pickwick Company, Inc., sued defendant-appellant Infra-Red Technologies, Inc., on a number of theories after a painting system defendant sold plaintiff allegedly did not meet plaintiff's expectations. Defendant counterclaimed seeking the balance due on the contract for purchase. Following a jury verdict for the plaintiff awarding actual and punitive damages defendant brings this appeal contending among other things that (1) there was not substantial evidence of fraud; (2) evidence as to lost profits was speculative; (3) there was insufficient evidence to support the award of punitive damages; (4) there was not substantial evidence of express warranty; and (5) it was entitled to judgment on its counterclaim. We agree with defendant there is no support for an award of punitive damages. We affirm on all other issues.
Plaintiff, located in Cedar Rapids, Iowa, manufactures sheet metal parts for other companies to use in their products. In August of 1994 plaintiff contracted with Case Corporation to manufacture for Case shields for combines. The shields were to be made of steel tubing and perforated sheet metal. The agreement between plaintiff and Case provided plaintiff would supply the parts in painted form according to Case's specifications. At the time of contract plaintiff was not equipped to paint the shields according to these specifications. Consequently plaintiff began shopping for the equipment necessary for it to do the required painting.
After talking to several vendors plaintiff was contacted by a representative of defendant. Following lengthy negotiations an agreement was made in which defendant agreed to install a system that plaintiff believed would meet its needs. The relationship between the two parties after purchase was not satisfactory. Plaintiff contended the equipment was not installed in the promised time frame or manner and it never performed as promised. On May 7, 1996, plaintiff sued defendant. Its petition was amended three times. Plaintiff contended in the third amendment to its petition that the promised system was not promptly installed, the system installed was defective and defendant refused to cure the defects. Plaintiff alleged that (1) defendant breached a January 9, 1995, contract; (2) breached an express warranty; (3) breached an implied warranty of fitness for a particular purpose, (4) breached an implied warranty of merchantability; (5) tortiously interfered with plaintiff's existing contract with Case; (6) and made fraudulent representations in making the sale. Defendant counterclaimed seeking payment for the balance due on the contract.
The case was tried to a jury. The jury answered a number of interrogatories finding against the defendant on plaintiff's claims for breach of contract, breach of express warranty and fraud.1 The jury awarded plaintiff actual damages of $16,500 for excess installation costs, $51,500 for the difference between payment and market value, $28,300 for cost of redesigning the system, $163,000 for lost profits, for a total of $309,000 in actual damages. The jury also awarded plaintiff an additional $50,000 in punitive damages. The jury rejected defendant's counterclaim.
Defendant first contends there was not substantial evidence to support the submission of fraud. Plaintiff's claim of fraud is that during December of 1994 or January of 1995 defendant represented to it that the painting equipment it proposed to sell plaintiff would automatically paint the parts plaintiff sought to paint with no manual touchup painting necessary.
Defendant contends there was not substantial evidence to support the submission of this claim. Plaintiff, while conceding that defendant preserved error on this issue, alleges the instruction and subsequent jury finding was supported by substantial evidence.
The trial court instructed the jury that for plaintiff to succeed on its fraud claim it was required to prove by clear, convincing and satisfactory evidence that:
1. The Defendant in December 1994, or and/or January 1955, made a representation to Plaintiffs that the painting equipment that Defendant proposed to sell Plaintiff would automatically paint 11 particular parts, with no manual touch up painting necessary.
2. The representation was false.
3. The representation was material.
4. The Defendant knew the representation was false.
5. The Defendant intended to deceive Plaintiffs.
6. The Plaintiffs acted in reliance on the truth of the representation and were justified in relying on the representation.
8. The amount of damage.
The instruction given properly instructed on the law. See Hyler v. Garner, 548 N.W.2d 864, 871 (Iowa 1996), McGough v. Gabus, 526 N.W.2d 328, 331 (Iowa 1995); Robinson v. Perpetual Servs. Corp., 412 N.W.2d 562, 565 (Iowa 1987). The question being whether the necessary evidence was introduced to support the giving of the instruction.
The first three elements require that a material misrepresentation must have been made. A misrepresentation may occur when one with superior knowledge, dealing with inexperienced persons who rely on him or her, purposely suppresses the truth respecting a material fact involved in the transaction. Clark v. McDaniel, 546 N.W.2d 590, 592 (Iowa 1996); Kunkle Water & Elec., Inc. v. City of Prescott, 347 N.W.2d 648, 653 (Iowa 1984).
Defendant contends no representation was made in that plaintiff was never assured the system would paint the parts automatically with no manual painting necessary. Plaintiff contends the representations were made. Plaintiff claims defendant admitted it gave a warranty which plaintiff contends was a representation for purposes of its fraud claim and which the jury was instructed plaintiff had to prove was false.
Plaintiff contends the evidence shows the system sold was not capable for painting the shields without manual painting. Plaintiff further contends the testimony of Steve Wilcoxon supported a finding that the representations when made were false. Plaintiff relies on the language in four letters written after defendant made a formal quote on the equipment it was recommending to plaintiff as support for its position that the representation was made.
On December 21, 1994, plaintiff sent defendant a letter to serve as its purchase order. The letter indicated it was an order for specified equipment at total cost of $134,564.00 with certain specified conditions including the following:
4. "On installation the entire system is warranted for fitness of use on the eleven part numbers, using the material specified, with no manual painting."
Defendant in a December 27, 1994, letter written by the Director of its Finishing Process Group Steve Wilcoxon responding to modifications in Plaintiff's purchase order (letter) dated December 21, 1994 said:
4.
On December 28, 1994, plaintiff responded to defendant's December 27, 1994 letter and in reference to the warranty said:
4.
On January 9, 1995, defendant again in a letter written by Steve Wilcoxon responded to items in plaintiff's December 21, 1994 letter and as to item 4 said:
The January 9, 1995, letter written by the defendant concluded with the following paragraph:
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