Scientific Application, Inc. v. Delkamp

• Decision Date: 24 February 1981
• Docket Number: No. 9833,9833
• Parties: 30 UCC Rep.Serv. 1256 SCIENTIFIC APPLICATION, INC., an Iowa Corporation, Plaintiff, Appellant, and Cross-Appellee, v. Darryl DELKAMP, Individually and d/b/a Capitol Homefoamers, Inc., Defendant, Appellee, and Cross-Appellant. Civ.
• Court: North Dakota Supreme Court

Page 71

303 N.W.2d 71

30 UCC Rep.Serv. 1256

SCIENTIFIC APPLICATION, INC., an Iowa Corporation, Plaintiff, Appellant, and Cross-Appellee, v. Darryl DELKAMP, Individually and d/b/a Capitol Homefoamers, Inc., Defendant, Appellee, and Cross-Appellant.

Civ. No. 9833.

Supreme Court of North Dakota.

Feb. 24, 1981.

Ramlo, Anderson & Associates, Fargo, for plaintiff, appellant, and cross-appellee; argued by Wayne T. Anderson, Fargo.

Wheeler, Wolf, Wefald, Peterson & McDonald, Bismarck, for defendant, appellee, and cross-appellant; argued by David L. Peterson, Bismarck.

ERICKSTAD, Chief Justice.

The appellant, Scientific Application, Inc. (Scientific), appeals from a denial of its motion for new trial by the trial court after an adverse jury verdict was rendered in the district court of Burleigh County. The appellee, Darryl Delkamp, doing business as Capitol Homefoamers, Inc. (Delkamp), cross-appeals from the trial court's order of a remittitur from the jury verdict.

Delkamp became a dealer of a catalytic coating product produced by Scientific called Spraylock. Spraylock is produced when a resin held in one tank of an applicating machine is mixed in the head of a spray gun with a catalyst from another tank. The resin and catalyst are pumped to the head under pressure through hoses. The resulting spray was recommended as a sealer for surfaces made of metal, concrete, or wood.

Both parties testified that the application of the product and operation of the machine required technical knowledge and care in cleaning the surfaces to which Spraylock was to be applied. After attending a demonstration, Delkamp decided to become a dealer. He received instruction on how to use and apply Spraylock during the spring of 1978. Delkamp also received a contract containing limitations of warranties from Scientific which he did not sign or return. ¹ After becoming a dealer, Delkamp entered into seven contracts for the application of Spraylock during 1978. The first contract involved a swimming pool in Jamestown. Delkamp testified that the product and machinery worked relatively well and that he was paid for the project. He was not, however, able to cover as many square feet per day as he had been told he would be able to do. He had been told, and literature stated, he should be able to do 6,000 square feet per day.

Delkamp then contracted with Andy Gimbel to Spraylock a roof for $6,000. He testified that the spray gun would plug continuously due to a foreign substance in the resin. A representative was sent out by Scientific who confirmed that the resin was contaminated and the resin was replaced by Scientific. In addition, the pump on the applicating machine did not have sufficient power to pump the material to the peak of the 18-foot roof. A larger pump was then ordered. The Gimbel job has never been satisfactorily completed and Delkamp has not been paid for it.

The Doll milkhouse was Delkamp's next contract for $1,930. The milkhouse related to old construction. Delkamp testified that he sandblasted and repaired the milkhouse before applying Spraylock. Subsequently the Spraylock peeled and, consequently, Delkamp has not been paid for the job.

Delkamp's next contract involved new construction. He completed that contract and was paid in full. Delkamp testified, however, that he did have problems with the machine and that it took 35 days to do 8,000 square feet.

The last job Delkamp worked on was the application of Spraylock to machinery at Jamestown for $4,635 for Peavey Elevator. Delkamp testified he was still having problems with "chunky material" and with the applicating machine itself. Additionally, as the temperature fell to around 40o , the material became extremely thick and could not be pumped through the hoses. Testimony was submitted by Scientific that the recommended temperature for application was 65o . The Peavey contract was not completed and Delkamp has not been paid for it.

Delkamp executed one more contract for the application of Spraylock for $3,892 on October 30, 1978, with August Pfeifer. Because of the previous problems, however, Delkamp did not attempt to fulfill this contract.

Delkamp refused to pay for some of the material associated with Spraylock and also refused to pay for some foam insulation material supplied by Scientific, which he testified was satisfactorily used in his related business of home insulation. Scientific sued Delkamp on this unpaid account for $20,855.60 plus interest. Delkamp counterclaimed for damages, loss of contract profits, and expenses related to promoting Spraylock in the amount of $85,402. The jury returned a verdict for Delkamp in the amount of $105,835 and for Scientific in the amount of $4,950. The trial court agreed with the jury's verdict, but determined that the award to Delkamp was not supported by the evidence and ordered a reduction in the verdict to $64,275.64 for Delkamp. Scientific now appeals from the order denying its motion for a new trial on the basis of the following issues:

Were the jury's findings that warranties were given by Scientific and breached by Scientific supported by the evidence when Delkamp had notice of limitations of warranties?

Were the jury's findings as to damages and the reduction of damages ordered by Judge Hodny supported by the evidence with requisite certainty?

Is Delkamp entitled to recover damages for lost profits, direct expenses, and marketing expenses when the evidence indicates reasonable mitigation could have reduced such damages?

Was the introduction of Exhibit G, (an internal memo), testimony regarding Scientific's withdrawal of "Spraylock" from the market and testimony of Scientific's dealings with other nonparty "Spraylock" dealers irrelevant and so prejudicial that failure to exclude said evidence was prejudicial error?

Delkamp cross-appeals from the amount of remittitur ordered by the trial court. We affirm the trial court's denial of the motion for new trial and the order of remittitur.

I. SCOPE OF REVIEW

A motion for new trial based upon insufficiency of the evidence is addressed to the trial court's discretion. Chicago, M., St. P. & P. RR. Co. v. Johnston's Fuel Liners, 130 N.W.2d 154, 157 (N.D.1964). In Wall v. Penn. Life Ins. Co., 274 N.W.2d 208 (N.D.1979), we said:

"As we have stated before, a motion for a new trial based upon sufficiency of the evidence 'is addressed to the sound discretion of the trial court, and the trial court's action in granting such a motion will not be disturbed on appeal unless a manifest abuse of discretion is shown.' (Citations omitted.) A trial court abuses its discretion when it acts in an arbitrary, unreasonable or unconscionable manner. (Citation omitted.) A new trial may not be granted if the trial court merely disagrees with the jury's verdict when the evidence is nearly balanced or where different minds could reach different conclusions. In order to set aside a jury verdict and grant a new trial, the trial court must find the verdict to be manifestly against the weight of the evidence. (Citations omitted.)" 274 N.W.2d at 218-19.

We review the evidence in the light most favorable to the verdict. Chicago, M., St. P. & P. RR. Co. v. Johnston's Fuel Liners, supra, 130 N.W.2d at 158.

We will review the evidence in the light most favorable to the verdict on each of the issues Scientific has raised to determine whether or not the trial court abused its discretion by denying Scientific's motion for a new trial.

II. EXCLUSION OF WARRANTIES

At trial, Delkamp argued that Scientific had breached implied warranties of merchantability and fitness for a particular purpose and an express warranty that he would be able to cover 6,000 square feet per day. Scientific contends that Delkamp cannot recover on the basis of breach of warranty as he had notice of the limitations of warranty found in the dealer's contract he received from Scientific even though he did not sign it. See footnote 1.

Sections 41-02-30, 41-02-31, and 41-02-32, N.D.C.C., set out the requirements of an express warranty, and implied warranties of merchantability and fitness for a particular purpose. The question whether or not an express warranty is given is a question of fact for the jury. Autzen v. John C. Taylor Lumber Sales, Inc., 280 Or. 783, 572 P.2d 1322, 1326 (1977). An implied warranty of merchantability is deemed to have been given unless excluded or modified. § 41-02-31, N.D.C.C. Whether or not such a warranty is excluded or modified is a question of fact for the jury. Knipp v. Weinbaum, 351 So.2d 1081 (Fla. 3d D.C.A. 1977). Whether or not an implied warranty of fitness for a particular purpose is given is also a question of fact for the jury. Singer Co. v. E.I. DuPont deNemours & Co., 579 F.2d 433, 439 (8th Cir. 1978).

While all warranties may properly be excluded, ² such exclusion must be part of the basis of the bargain between the parties. Knipp v. Weinbaum, supra, 351 So.2d at 1085. We agree with what the Court of Appeals of Washington said in DeCoria v. Red's Trailer Mart, Inc., 5 Wash.App. 892, 491 P.2d 241 (1972):

"Disclaimers of warranty are disfavored in the law and are ineffectual unless explicitly negotiated between buyer and seller and set forth with particularity showing the particular qualities and characteristics of fitness which are being waived." 491 P.2d at 244.

Mere notice of limitations of warranty which are not incorporated into the contract and therefore not a basis of the bargain is insufficient to prevent a buyer from seeking recovery for breach of warranty. Rehurek v. Chrysler Credit Corp., 262 So.2d 452, 455 (Fla. 2d D.C.A. 1972).

In this case, Delkamp did not sign the dealer contract containing the limitations of warranty. The only "contract" was one prepared, signed, and sent to Scientific by Delkamp granting him an exclusive dealership area. There was no evidence that any limitation of warranty was the basis of the bargain. As mere notice in an unsigned dealer contract is...