S. C. Gray, Inc. v. Ford Motor Co., Docket Nos. 77-648

• Decision Date: 15 October 1979
• Docket Number: 77-649,Docket Nos. 77-648
• Citation: 92 Mich.App. 789,286 N.W.2d 34
• Parties: , 29 UCC Rep.Serv. 417 S. C. GRAY, INCORPORATED, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Appellee. S. C. GRAY, INC., Plaintiff-Appellee, v. FORD MOTOR COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 34

286 N.W.2d 34

92 Mich.App. 789, 29 UCC Rep.Serv. 417

S. C. GRAY, INCORPORATED, Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Appellee.

S. C. GRAY, INC., Plaintiff-Appellee, v. FORD MOTOR COMPANY, Defendant-Appellant.

Docket Nos. 77-648, 77-649.

Court of Appeals of Michigan.

Oct. 15, 1979.

Released for Publication Dec. 18, 1979.

Donald A. Turner, Southfield, for plaintiff-appellant.

Leslie W. Fleming, Detroit, for defendant-appellee.

Before GILLIS, P. J., and BEASLEY and WEBSTER, ^* JJ.

GILLIS, Presiding Judge.

S. C. Gray, Inc., filed a complaint against Ford Motor Company, alleging Ford had breached two separate and unrelated contracts. In count one Gray sought to recover for work done pursuant to oral modifications of a contract involving the manufacture of a machine which assembled and tested automobile transmission pumps. In count two Gray essentially sought to recover the contract price for converting certain manually operated test stands to automatic operation.

The complaint was subsequently amended and a third count was added alleging that, as a result of Ford's failure to pay the amounts requested in counts one and two, Gray was forced to borrow money at high interest rates to carry on its business. Gray sought to recover $48,000 as compensation for this expense.

Ford brought a counterclaim for breach of contract and breach of warranty in connection with the transmission pump machine.

Count one and Ford's counterclaim were tried together. A jury returned a verdict of $157,770 in favor of Gray on its claim and no cause of action on Ford's counterclaim. The trial court, Judge Thomas J. Foley, subsequently granted Ford's motion for judgment notwithstanding the verdict and conditional new trials on both count one and the counterclaim. The trial court also granted Ford a new trial to determine damages on its counterclaim.

Finally, the trial court granted Ford's motion for a partial summary judgment on count three for failure to state a claim upon which relief could be granted.

A jury trial, presided over by Judge Roman S. Gribbs, to determine the amount of damages due Ford on its counterclaim resulted in a verdict of $206,226.

The trial on count two was tried before Judge Thomas E. Roumell and a jury, resulting in a verdict in favor of plaintiff in the amount of $72,000. Ford's motion for judgment n. o. v. or new trial was denied as was a subsequent motion for new trial.

Gray appeals from the judgments on counts one and three and Ford's counterclaim. Ford appeals from the judgment on count two.

I

The factual situation underlying count one and Ford's counterclaim is as follows. Ford was interested in acquiring a machine which would automatically assemble and test the hydraulic pumps which are installed in automobile transmissions. The machine was initially conceived of as consisting of three parts. Ford requested quotes on the cost of designing and manufacturing the three sections. Gray submitted quotes on the second and third sections. Ford accepted these quotes and Gray commenced work on the project.

Subsequently, Gray submitted a quote on supplying the first section of the machine which Ford accepted by way of an amendment to the original purchase order.

Five additional amendments to the purchase order were made, bringing the contract price to $275,541.20. This sum was paid by Ford and is not at issue here. Rather, it is Gray's contention that Ford agreed to pay for additional changes but never did so.

Ford's counterclaim is based upon its allegation that the machine did not meet the required specifications and that Gray had, therefore, breached its contract as well as an express warranty.

In ruling upon the post-trial motions, Judge Foley held that while Gray alleged there was an agreed upon formula for determining the price of a particular change, the evidence in support of damages was not based upon this formula. Instead a "reasonable market value or reasonable value" was relied upon to ascertain damages.

In addition, Judge Foley ruled that the jury verdict was, in part, contrary to the express agreement of the parties and the evidence adduced at trial and included damages not supported by factual proof. By way of an amended order, Judge Foley granted judgment notwithstanding the verdict to Ford on Gray's claim.

Judge Foley also granted judgment notwithstanding the verdict to Ford on its counterclaim ruling that no issue of fact was created by the evidence and that Gray was liable for breach of contract and breach of warranty. A new trial, limited to the issue of damages, was granted. This trial resulted in an award to Ford of $206,226.

The first issue raised for our consideration is whether Judge Foley erred in granting judgment notwithstanding the verdict on Gray's claim that it was entitled to payment for additional work done on the machine.

Gray contends that there was an oral modification to the contract. "Doc" Mapes, a Ford processing engineer in charge of the project allegedly agreed that requested changes in the design and construction of the machine would be paid for according to Gray's hourly rate.

At the outset Ford argues that oral modifications to the contract were precluded, since a provision to that effect was contained on the reverse side of its purchase order which constituted, along with Gray's original quote, the contract. However, Richard Gray, vice-president of S. C. Gray, Inc., testified that upon receipt of the Ford purchase order he called Mr. Krolicki of Ford's purchasing department and objected to the terms and conditions contained on the form.

Section 2-207 of the Uniform Commercial Code, M.C.L. § 440.2207; M.S.A. § 19.2207 provides that additional terms contained in an acceptance are to be construed as proposals for addition to the contract. As between merchants, they become part of the contract unless "notification of objection to them has already been given or is given within a reasonable time after notice of them is received".

Assuming the trier of fact believed the testimony of Mr. Gray that he objected to the terms and conditions contained on Ford's form, then, pursuant to the above section, the provision requiring modifications to be in writing did not become part of the contract. ¹

Having determined that Gray was not precluded from showing oral modifications to the contract, we must next determine whether the trial court was correct in finding that plaintiff's evidence of damages was insufficient to support the verdict. The trial court noted that although plaintiff contended the contract price for changes was to be computed by multiplying Gray's hourly rate by the number of hours spent on a change, the evidence of damages was based upon a "reasonable value" determination.

The evidence to support plaintiff's damages was supplied by Richard Gray. He testified that he did not keep records of the number of hours spent in making the changes for which he sought additional compensation. Instead, he gave his opinion as to the reasonable value of the changes.

Plaintiff points to testimony that Mr. Gray estimated the number of hours it took to make each change and then multiplied that by the hourly rate. Plaintiff contends that this testimony shows the claim for each change was based on the agreed upon formula.

We do not find this testimony in conflict with the trial court's determination that plaintiff's evidence of damages was based upon reasonable value. On cross-examination Mr. Gray admitted that while he estimated it took approximately 160 hours to do a particular change he did not know whether, in fact, it took 160 or 260 hours. Hence, it is evident that plaintiff's itemization of damages had no relation to the actual hours spent on a change, but instead was based upon an estimate of a reasonable price for each change.

Where the parties have intended to make a contract but left the price term open, the price will be a reasonable price. U.C.C. § 2-305, M.C.L. § 440.2305; M.S.A. § 19.2305. However, in the instant case the price term was not left open. Hence, "reasonable value" is not the proper measure of damages.

The party asserting a claim has the burden of proving his damages with reasonable certainty. Thornton Construction Co., Inc. v. Mackinac Aggregates Corp., 9 Mich.App. 467, 157 N.W.2d 456 (1968). Here, plaintiff's proofs were unduly speculative. Having alleged an agreed upon formula for determining the price of the changes, it was incumbent upon plaintiff to prove damages by means of that formula and not upon a theory of the reasonable value of the changes.

We conclude the trial court did not err in granting judgment n. o. v. Because of our discussion of the above issue we need not discuss plaintiff's remaining arguments concerning this claim.

II

Plaintiff next claims that Judge Foley erred by granting a partial judgment n. o. v. on the issue of liability to Ford on its counterclaim. In support of this contention plaintiff argues that the evidence created an issue of fact concerning (1) the failure of a portion of the machine to operate, and (2) whether Ford gave notice of the breach of warranty.

In ruling on a motion for judgment notwithstanding the verdict, the standard is whether, after reviewing the facts and all legitimate inferences therefrom in the light most favorable to the party opposing the motion, reasonable men could differ. If they can, the question is for the jury. Sparks v. Luplow, 372 Mich. 198, 125 N.W.2d 304 (1963), Isom v. Farrugia, 63 Mich.App. 351, 234 N.W.2d 520 (1975).

The undisputed evidence indicates that the machine was never operated sufficiently to be used for the testing of pumps for production.

Gray points to testimony that at a tryout held in April, 1971, the machine ran for approximately one hour. While the machine ran at that time, subsequent examination revealed that the pumps were being damaged when inserted into the test stand.

Gray also cites the testimony of ...