Severn v. Sperry Corp.

• Decision Date: 28 July 1995
• Docket Number: Docket No. 151353
• Citation: 212 Mich.App. 406,538 N.W.2d 50
• Parties: , 28 UCC Rep.Serv.2d 204 James D. SEVERN and Debbie Severn, Plaintiffs-Appellees/Cross-Appellants, v. SPERRY CORPORATION, a Delaware Corporation, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 50

538 N.W.2d 50

212 Mich.App. 406, 28 UCC Rep.Serv.2d 204

James D. SEVERN and Debbie Severn Plaintiffs-Appellees/Cross-Appellants, v. SPERRY CORPORATION, a Delaware Corporation Defendant-Appellant/Cross-Appellee.

Docket No. 151353.

Court of Appeals of Michigan.

Submitted Jan. 4, 1995, at Detroit.

Decided July 28, 1995, at 9:00 a.m.

Released for Publication Oct. 10, 1995.

[212 Mich.App. 408] Donald E. Cline, Jr., Saginaw, for plaintiffs.

Ronald R. Pawlak, Birmingham, and Smith, Bovill, Fisher, Meyer & Borchard, P.C. by Robert A. Jarema, Saginaw, for defendant.

Before JANSEN, P.J., and MICHAEL J. KELLY and HOOD, JJ.

MICHAEL J. KELLY, Judge.

Defendant appeals as of right a judgment entered by the circuit court, following a second jury trial, awarding plaintiffs $32,056.96 in damages for breach of warranty, plus costs, attorney fees, and interest. Defendant challenges the denial of its motions for a directed verdict and a new trial and the grant of plaintiff James Severn's motion to add Debbie Severn, his wife, as a party plaintiff. Plaintiffs cross appeal as of right an order of the circuit court denying their motion for mediation sanctions. In particular, they contest the trial court's failure to award attorney fees for time spent in preparation for the first jury trial, which also resulted in a verdict for plaintiffs. That verdict was found to be against the great weight of the evidence, and a new trial was ordered. Plaintiffs also appeal the order granting a new trial.

I

In December 1984, plaintiffs, who operate a dairy farm, purchased a cattle feed grinder

that was manufactured by defendant. The device was supposed to grind and mix feed and supplemental nutrients uniformly. The grinder was covered by a two-year written warranty under which defendant's obligations were limited to repairing defects or, at defendant's option, replacing any parts that in defendant's judgment were defective. The warranty also stated:

Except as set forth above THE COMPANY SHALL HAVE NO OBLIGATION OR LIABILITY OF ANY KIND ON ACCOUNT OF ANY OF ITS EQUIPMENT, AND SHALL NOT BE LIABLE FOR SPECIAL OR CONSEQUENTIAL DAMAGES. THE COMPANY MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AND SPECIFICALLY, THE COMPANY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS.

The second page of the warranty provided details regarding coverage, stating in part:

ITEMS NOT COVERED

* * * * * *

7. Miscellaneous--No warranty shall apply to damage resulting from accident, misapplication, abuse, or damage caused by environment (such as exposure to corrosive material).

Plaintiffs took delivery of the grinder on January 7, 1985. Plaintiffs testified that not long after they began to use the grinder, they noticed a decrease in milk production among their cows, which were fed from the grinder. Because they first thought that something might be wrong with the feed concentrate that they had been using since 1979, they arranged for a feed analysis. However, the analysis showed that the balance of feed and concentrate given to the cows had not changed since 1979.

In March 1986, plaintiffs complained for the first time to the salesman who sold them the grinder. They contended that the grinder was mixing the feed and nutrition supplements unevenly. The salesman, Chris Muto, arranged to have a service representative of defendant inspect the grinder. The service representative, Loran Cook, found four inches of rust around the bottom of the mixing tub. Plaintiffs had been grinding high-moisture corn and storing the mixture in the tub during the first year of use. Defendant contended that this caused the feed mixture to stick to the sides of the mixing cone, inhibiting uniform mixing. Plaintiff James Severn arranged for the rust to be sanded down.

In April or May 1986, Muto and Cook returned to plaintiffs' farm. Plaintiff complained that the grinder was still not mixing properly. Cook suggested that the mixing arms on the grinder be extended to improve performance, which plaintiff James Severn undertook to do himself. However, the lengthened arms bent because they were not strong enough to withstand the forces experienced during the mixing and grinding. Plaintiffs subsequently replaced the original mixing arms on the grinder.

In July 1986, plaintiffs stopped making payments on the grinder, and defendant's credit company threatened legal action. Plaintiff James Severn acted first, filing a complaint on October 26, 1986, against defendant. He alleged breaches of warranty under the Uniform Commercial Code (UCC), M.C.L. § 440.1101 et seq.; M.S.A. § 19.1101 et seq., and the commission of various torts. On February 26, 1989, the trial court granted defendant's motion for summary disposition of the tort claims, leaving only the breach of warranty claim.

The first trial commenced on February 14, 1989. Near the beginning of the trial, plaintiff James Severn moved to add his wife, Debbie Severn, as a party plaintiff. The trial court granted the motion. A jury verdict for plaintiffs was returned on February 23 in the amount of $60,426.35, not including interest, costs, and attorney fees.

On July 7, 1989, the trial court heard defendant's motions for judgment notwithstanding the verdict (JNOV) and a new trial. The motion for a new trial was granted. Although the order implied that the jury erred with regard to the question of liability, the trial court stated that it was not granting a new trial on that basis. Rather, the court was convinced that the jury was confused regarding certain damages. Plaintiffs' application for leave to appeal the order granting a new trial was denied by this Court on January 2, 1990.

A second jury trial began on October 9, 1991, with a different judge presiding. On October 22, 1991, the jury returned a verdict for plaintiffs in the amount of $48,850. Once again, defendant moved for JNOV and a new trial, which the trial court denied with respect to liability. However, the court found that certain damages were clearly excessive. Because plaintiffs had no desire to go through a third trial, they agreed to remit $16,793.04 in damages, leaving $32,056.96, which represented net lost profits from reduced milk production.

On February 24, 1992, a hearing was held on plaintiffs' request for mediation sanctions under MCR 2.403(O ). Plaintiffs had accepted, but defendant had rejected, a $35,000 mediation evaluation before the first trial. Although the trial court awarded costs and fees for work associated with the second trial, it declined to grant plaintiffs' request for costs and fees for work associated with the first trial.

On April 9, 1992, judgment was entered in the amount of $32,056.96, plus costs in the amount of $3,315.65, attorney fees in the amount of $15,187.50, and interest.

II

Defendant first challenges the trial court's denial of its motions for JNOV and a new trial.

A

In reviewing a motion for JNOV, this Court views all evidence in a light most favorable to the nonmoving party. If reasonable jurors could honestly have reached different conclusions, the jury verdict must stand. Thorin v. Bloomfield Hills Bd. of Ed., 203 Mich.App. 692, 696, 513 N.W.2d 230 (1994). With respect to a motion for a new trial, the trial court's function is to determine whether the overwhelming weight of the evidence favors the losing party. This Court's function is to determine whether the trial court abused its discretion in making such a finding. This Court gives substantial deference to the conclusion of a trial court that a verdict was not against the great weight of the evidence. However, less deference is afforded a determination that the verdict was against the great weight of the evidence. Arrington v. Detroit Osteopathic Hosp. (On Remand), 196 Mich.App. 544, 560, 564, 493 N.W.2d 492 (1992).

B

In actions for breach of warranty, a jury may infer the existence of a defective condition from circumstantial evidence alone. Holloway v. General Motors Corp. (On Rehearing), 403 Mich. 614, 618, 271 N.W.2d 777 (1978); Caldwell v. Fox, 394 Mich. 401, 410, 231 N.W.2d 46 (1975). Here, plaintiffs testified that the grinder did not properly grind and mix the feed and supplements and offered evidence of a resulting decline in milk production. An independent visual inspection performed under defendant's direction between the two trials showed that the grinder was not mixing properly. Subsequent chemical analysis confirmed that there was wide variation in the contents of feed samples taken from the grinder. Such evidence was sufficient to allow the jury at the second trial to conclude that the grinder was defective even if no particular defect could be identified.

The issue still remaining is whether the defect was actionable in light of defendant's limited written warranty. Under U.C.C. § 2-719, M.C.L. § 440.2719; M.S.A. § 19.2719, plaintiffs were limited to defendant's written warranty, providing only for replacement of defective parts and materials, unless the warranty failed of its essential purpose. In Price Bros. Co. v. Charles J. Rogers Construction Co., 104 Mich.App. 369, 374-375, 304 N.W.2d 584 (1981), this Court held that a warranty fails of its essential purpose where unanticipated circumstances preclude the seller from providing the buyer with the remedy to which the parties agreed, in which event the buyer is entitled to seek remedies under the standard UCC warranty provisions. In Kelynack v. Yamaha Motor Corp., USA, 152 Mich.App. 105, 112-113, 394 N.W.2d 17 (1986), this Court held that a seller's good-faith efforts to repair or replace defective parts under a limited warranty are insufficient to justify reliance on the limited warranty alone when the seller is unable to effect repairs within a reasonable time.

Here, plaintiffs informed defendant in March 1986 that the grinder was not operating properly. Although defendant acted promptly and apparently in good faith, it was unable to repair the grinder. When plaintiffs...