This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994)
Ag-Chem Equipment Co., Inc.,
Minnesota Court of Appeals #C9-95-2074
Hennepin County District Court #9217587
May 7, 1996
John A. Cotter, Christopher K. Larus, Larkin, Hoffman, Daly & Lindgren, 1500 Norwest Financial Center, 7900 Xerxes Avenue South, Bloomington, MN 55431-1194 (for respondent)
Thomas F. Hutchinson, Eastlund, Solstad & Hutchinson, 1702 Midwest Plaza Building, 801 Nicollet Mall, Minneapolis, MN 55402 (for appellant)
Considered and decided by Davies, Presiding Judge, Parker, Judge, and Schumacher, Judge.
U N P U B L I S H E D O P I N I O N
Ceram-Traz Corporation appeals from a jury verdict in favor of respondent Ag-Chem Equipment Co., Inc. and the trial court's denial of its motion for a new trial, arguing Ag-Chem failed to prove any direct economic injury, failed to instruct the jury on proximate cause, and the evidence was not sufficient to sustain the verdict. We affirm.
Ag-Chem is a Minnesota company that manufactures self-propelled agricultural fertilizer applicators and then sells these applicators to farmers and various agricultural concerns throughout the United States. Ag-Chem is the industry leader in self-propelled fertilizer applicators.
Ag-Chem distinguishes its machines through the use of a "signature color" called "Ag-Chem yellow." Ag-Chem places great value in its distinct color and markets the quality of the paint to its customers.
Between 1985 and 1986, Ag-Chem decided to upgrade its paint because it wanted superior color and gloss retention and to reduce painting time and hazardous lead waste content. It began negotiations with Ceram-Traz, a Minnesota corporation specializing in custom formulation of industrial paint coatings.
Ag-Chem representatives consistently told Ceram-Traz that color and gloss retention were critical qualities for the paint. Sales people from Ceram-Traz represented to Ag-Chem that their paint had "superior color and gloss retention combined with excellent chemical resistance properties."
In 1987, Ag-Chem began buying and using Ceram-Traz paint on their machines. Ag-Chem used three colors from Ceram-Traz: white, black, and Ag-Chem yellow. Ag-Chem projected that using Ceram-Traz paint reduced hazardous waste cleanup and saved approximately $126,000 per year due to faster drying time.
Sometime in mid-1989, Ag-Chem began receiving numerous complaints about the fading of the yellow and white paint on the machines painted with Ceram-Traz paint. Ag-Chem stopped purchasing and using Ceram-Traz paint in October, 1990. Ag-Chem's total cost for purchasing the Ceram-Traz paint was $1,029,008.50.
Ag-Chem brought breach of contract and breach of warranty claims against Ceram-Traz. Ag-Chem claimed Ceram-Traz sold it defective topcoat paints for its agricultural machinery that faded soon after application, contrary to Ceram-Traz's warranties about color and gloss retention.
At trial, Ag-Chem's expert witnesses testified the fading was not due to the elements or to fertilizer corrosion, but was due to Ceram-Traz's use of a pigment that was only for interior applications. Ag-Chem's expert witnesses also testified the Ceram-Traz paint had no value because it failed to retain its color and gloss as Ceram-Traz initially indicated. Ceram-Traz's experts testified the fading could be explained by Ag-Chem's improper application, chemical interaction with fertilizer, or improper cleaning of the machines following their use. Ag-Chem, however, presented testimony that spare parts subjected to only sunlight experienced the same fading problems.
Ag-Chem employees testified they witnessed more than one hundred machines painted with Ceram-Traz paint that were faded. One witness testified the color looked "more like the Mertz tan." Mertz is a competitor of Ag-Chem and Ceram-Traz produced the color for Mertz. Testimony also indicated many of Ag-Chem's customers threatened to cease doing business with it unless something was done about the fading problem. At the time of trial, Ag-Chem had sandblasted and repainted a number of the customers' machines at a cost totalling $180,000.
The jury found on special interrogatories that Ceram-Traz breached express and implied warranties and that the paint had no value. The jury awarded Ag-Chem the paint's purchase price of $1,029,008.50 in damages and $180,000 for consequential damages from repainting the machines.
Ceram-Traz moved for judgment notwithstanding the verdict, a new trial, and remittitur. The trial court denied the posttrial motions, and Ceram-Traz appeals.
D E C I S I O N
1. Ceram-Traz argues Ag-Chem failed to prove it suffered direct economic injury from the breach of warranty because Ag-Chem recovered the full cost of the defective paint in the price of each piece of machinery it sold. Ceram-Traz argues Ag-Chem should only be able to collect the consequential damages of repainting the machinery. Ceram-Traz argues that Ag-Chem's recovery of the paint's purchase price was an impermissible windfall. We disagree.
The measure of damages for a breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
Minn. Stat. § 336.2-714(2) (1994).
In a factually similar case, the supreme court upheld a jury verdict for the purchase price where the jury found the value of defective furnaces at acceptance was zero. Louis DeGidio Oil & Gas Burner Sales & Serv., Inc. v. Ace Eng'g Co., 302 Minn. 19, 28-29, 225 N.W.2d 217, 223 (1974). In DeGidio, the court expressed concern about the possibility of the verdict being a windfall for DeGidio if it did not have to replace the furnaces that, while defective, still worked at the time of trial. Id. at 26-27, 225 N.W.2d at 222. The court concluded, however, that if
the burners which DeGidio installed were in fact valueless, DeGidio is entitled to recover against Ace for breach of warranty and that DeGidio's ultimate disposition of the defective equipment is not relevant to the issues between Ace and DeGidio. Apart from what appears to be the right to recover under the common law and now under the Uniform Commerical Code, if the burners were valueless, clearly DeGidio had a liability to his vendees to make them whole.
Id. at 27, 225 N.W.2d at 222. The court went on to note:
In short, we are of the opinion that having found DeGidio and Ace to be buyer and seller, DeGidio is entitled to damages for breach of warranty without reference to what profit it may have realized from the sale and installation of the burners or what other arrangements it may have made to correct the problems the burners presented due to their faulty design and construction.
Id. at 27, 225 N.W.2d at 223; see also Peterson v. Bendix Home Sys., Inc., 318 N.W.2d 50, 55-56 (Minn. 1982) (affirming jury award of purchase price of mobile home rendered unusable by formaldehyde problems despite allowing claimant to keep possession of mobile home) (citing DeGidio).
We believe the reasoning of DeGidio applies equally to this case. Here, the evidence showed that Ag-Chem sold approximately 1,700 machines painted with the Ceram-Traz paint and that more than 100 machines were already faded enough to need repainting. The evidence also showed it could cost up to $12,000 to repaint a machine. While it is possible that Ag-Chem may receive a windfall if it never is required to repaint another machine, it is clear that Ag-Chem would incur expenses far in excess of the jury award if all of the customers who purchased machines painted with Ceram-Traz paint were to request that their machines be repainted. This is solely Ag-Chem's liability and the measure of damages accurately reflects that risk.
2. Ceram-Traz argues the trial court erred in failing to instruct the jury that Ag-Chem's damages must have been proximately caused by Ceram-Traz's breach of warranty. We decline to review this issue because Ceram-Traz failed to object to the instructions at trial and failed to raise the issue in its posttrial motions. See Minn. R. Civ. P. 51 (error in instructions regarding fundamental law may be assigned in motion for new trial); see also Duchene v. Wolstan, 258 N.W.2d 601, 606 (Minn. 1977) (holding jury instructions subject to appellate review only if alleged instructional errors were raised at trial or in posttrial motions).
3. Ceram-Traz argues the evidence does not support the jury's verdict that the paint purchased by Ag-Chem had no value. We disagree.
Denial of a motion for a new trial based on insufficiency of the evidence will be upheld absent an abuse of discretion. Cafferty v. Monson, 360 N.W.2d 414, 417 (Minn. App. 1985). Where a denial of a motion for a new trial is appealed, it is not the duty of the appellate court to solve doubts arising from the evidence or reconcile conflicting evidence. Kilton v. Richard G. Nadler & Assocs., 447 N.W.2d 468, 470 (Minn. App. 1989), review denied (Minn. Jan. 12, 1990).
The record here shows that there was ample evidence to support the jury's verdict. Ag-Chem's expert witnesses testified Ceram-Traz's paint had no value because of its fading problems. They testified the paint contained pigments that were not suitable for exterior use, and any protection came solely from the primer. They also testified the fading occurred under all conditions and was not caused by improper application or environmental effects. The trial court did not abuse its discretion in denying Ceram-Traz's posttrial motions.
After oral argument the attorney for Ag-Chem submitted various documents concerning the DeGidio case. We did not give leave for additional briefing and did not consider the submission. See Minn. R. Civ. App. P. 128.02, subd. 4 (further briefing requires leave of appellate court).