Vicon, Inc. v. CMI Corp.

• Decision Date: 30 September 1981
• Docket Number: No. 80-3324,80-3324
• Citation: 657 F.2d 768
• Parties: VICON, INC., Plaintiff-Appellee, Cross-Appellant, v. CMI CORPORATION, Defendant-Appellant, Cross-Appellee. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 768

657 F.2d 768

VICON, INC., Plaintiff-Appellee, Cross-Appellant, v. CMI CORPORATION, Defendant-Appellant, Cross-Appellee.

No. 80-3324.

United States Court of Appeals, Fifth Circuit.

Unit A

Sept. 30, 1981.

Rehearing Denied Dec. 23, 1981.

George E. Morse, Gulfport, Miss., Jerry Dunlap, Oklahoma City, Okl., Herschel L. Abbott, Jr., Michael L. Stone, Marie A. Moore, New Orleans, La., for defendant-appellant, cross-appellee.

Butler, Snow, O'Mara, Stevens & Canada, Stephen W. Rosenblatt, Thomas M. Prewitt, Jackson, Miss., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Southern District of Mississippi.

Before MARKEY ^*, Chief Judge, and GEE and POLITZ, Circuit Judges.

MARKEY, Chief Judge:

CMI Corporation (CMI) appeals from a judgment of the United States District Court for the Southern District of Mississippi holding it liable to ViCon, Inc. (ViCon) for breach of contract, breach of warranty and tortious misrepresentation relating to the sale of a "hot mix" asphalt plant. CMI also appeals a denial of its motion under Rule 60(b) of the Federal Rules of Civil Procedure (FRCP) to vacate judgment and for a new trial. ViCon cross-appeals that portion of the judgment denying it recovery of interest on the judgment from the filing of the Master's Report. We affirm.

Background

This diversity action arises out of the sale of a "hot mix" asphalt plant by CMI to ViCon. CMI is an Oklahoma corporation engaged in the manufacture of highway construction equipment. From 1969 until 1975, it also engaged in the manufacture of hot mix asphalt plants in Chattanooga, Tennessee. ViCon, a Louisiana corporation qualified to do business in Mississippi, is engaged in the asphalt construction business.

In May 1973, ViCon through its president, Victor Mann (Mann) began discussions in Chattanooga with CMI sales representatives Jones and Barksdale for the purchase of an asphalt plant. Those discussions culminated in a written contract dated June 1, 1973.

Under the contract, plant components were shipped from Chattanooga to ViCon's operations in Pearl River County, Mississippi, and assembled under the supervision of CMI's erection superintendent. The first shipment of components arrived on July 6, 1973 and CMI's erection superintendent began work July 16, 1973. The plant became operational on September 10, 1973.

ViCon experienced mechanical problems with various plant components. ViCon notified CMI of those problems and CMI attempted to correct them at little or no expense to ViCon until March 1, 1974, when CMI put ViCon on a C.O.D. basis for defective material replacements.

Hot mix asphalt is a mixture of rock, gravel, sand or the like (aggregate) and liquid asphaltic oil. The mixture is produced at 250o F to 300o F and is used in paving streets, highways and airport runways. In the production process, the aggregate is first dried and simultaneously heated to the desired temperature. The dried aggregate is then mixed with asphaltic oil and the mixture discharged onto a truck for transport to the paving location.

The CMI plant included a rotary dryer for drying and heating aggregate. Though CMI sales literature represented that this dryer would dry 184 to 244 tons per hour of aggregate with a 6 percent moisture content, ¹ between September 10, 1973 and March 1977, when ViCon sold the plant, ViCon's average production rate was 145 tons per hour.

ViCon filed this action on January 15, 1975 charging CMI with breach of contract, breach of warranty and tortious misrepresentation. ² ViCon alleged that CMI misrepresented:

(1) that the plant would produce 200 tons of asphalt per hour using aggregate of 6% moisture content; (2) that the plant would be free of serious defects; and (3) that repair costs would be low. ViCon also alleged that CMI breached its express warranties in each of those respects.

By agreement and pursuant to FRCP Rule 52, the case was referred to a special master. The Master filed his Report and Recommendation on November 2, 1978, recommending that CMI be held liable to ViCon on all three theories and that ViCon be awarded $1,034,337.20 in damages.

Judge Walter L. Nixon adopted the Master's Report on March 7, 1980 and entered judgment April 5, 1980 awarding the recommended amount to ViCon together with interest from the date of judgment.

CMI argues: (1) that the court's findings of fact are inadequate under Rule 52(a) and are clearly erroneous; ³ (2) that ViCon failed to prove misrepresentation; and (3) that the award and calculation of damages is clearly erroneous.

CMI also argues Judge Nixon erred in denying its motion to set aside the judgment and for a new trial on grounds of newly discovered evidence. ⁴ That evidence related to Mann's April 17, 1980 indictment on charges stemming from a ViCon contract to repave runways at New Orleans International Airport. Mann subsequently pleaded guilty to charges of conspiring to defraud the United States and of knowingly making false statements about ViCon's contract performance.

ViCon asserts that Judge Nixon erred in denying it interest from the date of the Master's Report.

Issues

The issues are (I) whether Judge Nixon's findings comply with Rule 52(a); (II) whether Judge Nixon erred in holding CMI liable for tortious misrepresentation; (III) whether the award and calculation of damages is clearly erroneous; (IV) whether Judge Nixon properly denied CMI's Rule 60(b) motion; and (V) whether ViCon is entitled to interest from the date of the Master's Report.

OPINION

(I) Findings of Fact under Rule 52(a).

Regarding adequacy under Rule 52(a), CMI correctly says a court's findings "must be sufficiently detailed to give (the reviewing court) a clear understanding of the analytical process by which ultimate findings were reached and to assure (the reviewing court) that the trial court took care in ascertaining the facts." Golf City Inc. v. Wilson Sporting Goods Co., 555 F.2d 426, 433 (5th Cir. 1977). This court has recognized, however, that that requirement is not rigid: "Courts need not indulge in exegetics, or parse or declaim every fact and each nuance and hypothesis." Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 518 (5th Cir. 1969). The test is whether findings are sufficiently comprehensive and pertinent to the issues to provide a basis for decision. Id. at 515.

In formulating his findings, the Master requested proposed findings of each of the parties, selected those he deemed correct and rejected those he deemed incorrect. ⁵ That the Master substantially accepted ViCon's proposed findings, and rejected CMI's, does not alone indicate that the Master failed to properly perform his judicial function.

While counsel may be disappointed that findings do not discuss propositions sincerely contended for, that, alone, does not make them inadequate or suggest that the propositions were not understood by the court. A decision, as between two contestants, necessarily rejects contentions made by one or the other.

Schilling v. Schwitzer-Cummins Co., 142 F.2d 82, 84 (D.C.Cir.1944). To the contrary, review of the Master's Report and Judge Nixon's opinion establishes the presence of detailed findings of subsidiary facts sufficient to provide a basis for decision and review by this court. Hence CMI's attack on the adequacy of the findings must fail.

Similarly, CMI's assertion that the findings here are clearly erroneous is unfounded. Rule 52(a) provides that a master's findings, to the extent adopted by the district court, are to be considered findings of the court and are not to be set aside unless clearly erroneous. The question for the appellate court under Rule 52(a) is not whether it would have made the same findings, but whether "on the entire evidence (it) is left with the definite and firm conviction that a mistake has been committed". United States v. U. S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948); Zenith Corp. v. Hazeltine, 395 U.S. 100, 103, 123, 89 S.Ct. 1562, 1566, 1576 (1969).

Because the present findings are amply supported by the evidence, as discussed herein, we cannot agree that they are clearly erroneous.

(II) Tortious Misrepresentation.

A. Choice of Law

Judge Nixon, in finding that CMI was liable to ViCon on: (1) breach of contract, (2) breach of warranty, and (3) tortious misrepresentation, held that Tennessee law should govern all three theories. CMI agrees that Tennessee law should apply to (1) and (2) but contests its application to (3).

In resolving choice of law questions, federal courts must follow the conflicts of law rules of the forum state. Klaxton Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In this case, the forum state is Mississippi.

Mississippi has adopted the "center of gravity" test for resolving choice of law questions in tort actions. Mitchell v. Craft, 211 So.2d 509 (Miss.1968). Under that test, the forum court is required to apply the law of the place having "the most significant relationship to the events or parties, or which, because of the relationship or contact with the events and parties, has the greatest concern with the specific issues with respect to the liabilities and the rights of the parties to the litigation." Craig v. Columbus Compress and Warehouse Co., 210 So.2d 645, 649 (Miss.1968).

CMI concedes that the center of gravity test should apply, but contends that it compels application of Mississippi's law on misrepresentation. We disagree.

In applying the center of gravity test in Mitchell, the court noted approvingly the principles set forth in the Restatement (Second) of Conflict of Laws. Regarding the tortious misrepresentation theory, Comment F to the Restatement (Second) Conflict of Laws, Section 145, states:

The principal location of the defendant's conduct is the contact that will usually be given the greatest weight in determining the state whose local law determines the rights...