Eriksen Constr Co v. Morey ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ERIKSEN CONSTRUCTION COMPANY,
INCORPORATED, a Nebraska
corporation,
Plaintiff-Appellee,
v.
No. 96-1491
NICHOLAS MOREY, JR., individually
and d/b/a Contractors Equipment
Company, d/b/a Contractors Quality
Cranes,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Parkersburg.
Charles H. Haden II, Chief District Judge.
(CA-95-190-6)
Argued: May 6, 1997
Decided: November 19, 1997
Before MURNAGHAN and NIEMEYER, Circuit Judges, and
STAMP, Chief United States District Judge for the
Northern District of West Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: C. Page Hamrick, III, Charleston, West Virginia, for
Appellant. John Philip Melick, JACKSON & KELLY, Charleston,
West Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Defendant-appellant Nicholas Morey, Jr., individually and d/b/a
Contractors Equipment Company and Contractors Quality Cranes
("Morey"), seeks review of the district court's order denying his post-
trial motions for judgment as a matter of law, for new trial, and to
amend judgment. On appeal, Morey alleges that the district court
erred in denying his motions for judgment as a matter of law on the
issues of fraud, punitive damages, express warranty, implied warranty
of merchantability and damages. Further, Morey alleges that the dis-
trict court erred in giving the proposed jury instructions of plaintiff-
appellee Eriksen Construction Company, Incorporated ("Eriksen") on
the issues of fraud and punitive damages, by giving Eriksen's pro-
posed jury instruction on the issue of express warranty, and by allow-
ing the jury to consider theories of recovery other than that of implied
warranty of fitness of purpose. Because we find error neither in the
district court's denial of Morey's motions for judgment as a matter of
law nor in the district court's instruction of the jury, and because we
find no other errors in the trial, we affirm.
I.
Plaintiff-appellee Eriksen, a Nebraska corporation, is a general
contractor engaged in the business of building churches, schools and
sewage and wastewater treatment facilities. Defendant-appellant
Morey of Parkersburg, West Virginia is engaged in the business of
buying and selling used cranes and other heavy equipment. In 1994,
John Eriksen, the President of Eriksen Construction, contacted Morey
by telephone in response to a notice in a trade magazine, advertising
a large crawler crane which Morey had for sale. The crane which
Morey was offering for sale was a P&H 670 crane which Morey had
purchased from the Meade Paper Company in January 1994 and
which had been built in the late 1960s. The advertisement to which
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Mr. Eriksen referred when he contacted Morey indicated that sale of
the crane would include 150 feet of basic boom, a 50 foot jib section,
a Cummings engine and expandable tracks.
During their first telephone conversation, Morey told Mr. Eriksen
that he had available for purchase a crane built in the 1960s. Mr. Erik-
sen responded that he was interested only in a newer crane. Morey
responded, in return, that he had another crane, a P&H 670, which he
had recently purchased from Meade Paper Company and which had
been built in the 1970s. Mr. Eriksen arranged to have his mechanic,
Roger Ward, travel from Nebraska to West Virginia to inspect the
P&H 670 crane.
While at Morey's business, Ward attempted to inspect the P&H
670 crane. Ward testified that, at the time of his visit, the crane was
inoperable, because it had no cab and the radiator had been removed.
At trial, Morey testified that the P&H 670 crane did operate and that
Morey and Ward ran it and moved it several feet backwards and for-
wards. While in West Virginia, Ward also visited Morey's paint shop
to view the crane's boom and jib which were being sandblasted and
painted. After Ward's visit, Morey and Eriksen negotiated a price for
the crane as well as a price for a second crane which Eriksen was to
buy. As part of the negotiated agreement between Morey and Eriksen,
Morey agreed to fix, before delivery of the crane to Eriksen, those
items on the P&H 670 crane that were on a list created by Ward.
On April 28, 1994, Morey advised Eriksen in writing that the
cranes were ready for shipment and that all of the repair items to
which Ward and Morey had agreed had been completed. The follow-
ing day, Eriksen paid the balance of the price of the crane to Morey
by wire transfer.* Upon receipt of full payment, Morey sent Eriksen
_________________________________________________________________
*Purchase of equipment between Eriksen and Morey also involved
another crane, a link belt HSP. Eriksen made no claims in regard to this
second crane. As part of the agreement between Morey and Eriksen,
Eriksen traded in a Grove crane for which it received $25,000.00 credit
towards the purchase of the link belt HSP and the P&H 670. Eriksen had
made a $10,000.00 down payment on April 12, 1994 and had paid the
balance due, $140,000.00, on April 29, 1994.
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a bill of sale, which specified that the sale was"as is, where is, with
all faults."
Eriksen accepted delivery of the crane on June 2, 1994 in
Nebraska. Upon delivery, several deficiencies immediately became
apparent. The crane could be removed from the delivery trailer only
with great difficulty and the arm of the crane would not swing. Fur-
ther, the radiator which had been removed when Ward viewed the
crane in Parkersburg had been replaced with a radiator from a truck
and was installed by removing a portion of the crane's frame and
adding a length of hose. Upon discovery of these defects, Eriksen
contacted Morey and communicated the defects to him. As part of the
agreement between Eriksen and Morey, Eriksen was to use a crane
which it already owned as a trade in on the two cranes which it pur-
chased from Morey. After noting the problems with the P&H 670
crane that had just been delivered, Eriksen was reluctant to release the
trade-in crane until the problems with the P&H 670 were remedied.
However, after Morey assured Eriksen that if Roger Ward was not
able to correct the problems with the P&H 670 Morey would come
personally to fix the P&H 670 crane, Eriksen released the trade-in
crane to Morey's delivery driver. On June 16, 1994, Eriksen advised
Morey in writing of the deficiencies in the P&H 670 crane. Some of
these deficiencies had already been corrected by Eriksen in an effort
to mitigate damages. In that same letter, Mr. Eriksen demanded that
Morey advise him by June 20, 1994 of plans to correct deficiencies
in the crane. Morey subsequently planned a trip to Nebraska but later
canceled the trip. Ultimately, Eriksen made the repairs to the P&H
670 crane and documented the cost of these repairs with receipts
totaling $60,487.20.
Following these events, Eriksen filed suit against Morey in the Dis-
trict Court of Washington County, Nebraska. Morey removed this
action to the United States District Court for the District of Nebraska
pursuant to 28 U.S.C. § 1332(a), diversity jurisdiction. In March
1995, this action was transferred from the United States District Court
for the District of Nebraska to the United States District Court for the
Southern District of West Virginia where a jury trial was held. At the
close of Eriksen's case, Morey moved for judgment as a matter of law
on the issues of breach of warranty, damages, fraud, and punitive
damages. All of these motions were denied by the district court.
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The jury returned a verdict for Eriksen and against Morey, award-
ing compensatory damages in the amount of $60,487.20 and punitive
damages in the amount of $66,000.00. The trial court also entered its
judgment on the special jury verdicts rendered by the jury. The defen-
dant then filed a motion for judgment as a matter of law or in the
alternative for a new trial or in the alternative to amend judgment by
granting a decrease in damages. These motions were denied by the
trial court. The court then entered an order granting Eriksen's motion
for pre-judgment interest and its motion for attorney's fees and costs.
Similarly, the district court entered its amended judgment on special
jury verdicts granting judgment against defendant Morey and in favor
of plaintiff Eriksen.
II.
We turn first to Eriksen's argument that the district court erred in
denying its motion for judgment as a matter of law on the issues of
fraud and punitive damages. The district court's denial of a motion for
judgment as a matter of law is reviewed de novo . Brown v. CSX
Transportation, Inc., 18 F.3d 245, 248 (4th Cir. 1994). The district
court may grant a motion for judgment as a matter of law if "there is
no legally sufficient evidentiary basis for a reasonable jury to find for
[the opposing party] on that issue . . . ." F.R.C.P. 50(a). "To grant the
motion the district court must examine the evidence in the light most
favorable to the non-moving party and determine`whether a reason-
able trier of fact could draw only one conclusion from the evidence.'"
GSM Dealer Servs., Inc. v. Chrysler Corp., 32 F.3d 139, 142 (4th Cir.
1994) (citing Townley v. Norfolk & W. Ry., 887 F.2d 498, 499 (4th
Cir. 1989)). In reviewing a district court's decision on a motion for
judgment as a matter of law, this court neither weighs the evidence
nor judges the credibility of the witnesses. Id. at 142.
Because this action is brought pursuant to federal diversity jurisdic-
tion, the law of the forum state applies. Under West Virginia law, the
plaintiff must prove the following elements by clear and convincing
evidence to establish a cause of action for fraud:"(1) that the act
claimed to be fraudulent was the act of the defendant or induced by
him; (2) that [the act] was material and false; that the plaintiff relied
upon it and was justified under the circumstances in relying upon it;
and (3) that he was damaged because he relied upon it." Schultz v.
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Consolidation Coal Co., 475 S.E.2d 467, 471 (W. Va. 1996). Morey
contends that Eriksen's entire fraud theory of recovery was based on
the testimony of a Nebraska banker who was to provide financing for
Eriksen's purchase of the crane. At trial, the banker testified that a
representative of Contractors Equipment Company (Morey's busi-
ness) told him that the serial number of the crane in question was
35008, while at trial the parties stipulated that the serial number of the
crane was 30003. Morey contends that because this misrepresentation
occurred after the sale of the crane in question, it cannot constitute
fraud because Eriksen could not have relied on that information in
entering into the contract. In contrast, Eriksen contends that at trial it
presented ample evidence that Morey committed fraud before, during
and after the formation of the contract for the sale of the P&H 670
crane. Eriksen presented evidence that Morey told Eriksen that the
crane would be in excellent condition before it was shipped, but, that
when it arrived, the crane was nearly inoperable. Further, Eriksen
presented evidence that Morey convinced Mr. Eriksen to send the
trade-in crane back with Morey's delivery person before the deficien-
cies in the P&H 670 were corrected and subsequently failed to rem-
edy these deficiencies.
Reviewing the evidence in the light most favorable to Eriksen, we
find that Eriksen did present sufficient evidence for a reasonable jury
to find for Eriksen on the issue of fraud. Thus, we find no error in the
district court's denial of the motion for judgment as a matter of law
on the issue of fraud.
As noted above, Morey also moved for judgment as a matter of law
on the issue of punitive damages. Morey argues that because, as he
alleges, Eriksen failed to prove fraud, an award of punitive damages
is precluded. Thus, Morey contends that he was entitled to judgment
as a matter of law on the issue of punitive damages. However, the
same evidence which we have found to be legally sufficient for a rea-
sonable jury to find for Eriksen on the issue of fraud is also sufficient
to support the district court's submission of the question of whether
to award punitive damages to the jury. See Winant v. Bostic, 5 F.3d
767 (4th Cir. 1993); Vandevender v. Sheetz, Inc. , No. 23463, 1997
WL 384655, at *9 (W. Va. July 11, 1997) ("[W]here gross fraud . . .
appear[s] . . . the jury may assess exemplary, punitive, or vindictive
damages; these terms being synonymous.") (citations omitted). Thus,
6
we find no error in the district court's denial of Morey's motion for
judgment as a matter of law on the issue of punitive damages.
In addition to the error which Morey assigns to the district court's
denial of his motions for judgment as a matter of law on the issues
of fraud and punitive damages, he contends that the district court
erred in giving Eriksen's proposed instructions 13 through 21 on these
issues. Morey contends first that it was error for the district court to
instruct the jury on the issues of fraud and punitive damages for Erik-
sen's failure to make out a prima facie case on these issues. This
argument is rendered moot by our decision on the motions for judg-
ment as a matter of law on these issues above. In addition, Morey
contends, more specifically, that the district court erred in giving
Eriksen's instructions numbered 14, 17, 19 and 21. Morey argues that
Eriksen's instruction 14, which provided that "if a person induces
someone to enter into a contract by false representations which he
knows or should know are untrue, the statements are considered
fraudulent, and the defrauded person may pursue damages for any
losses sustained," improperly shifted the burden of proof on the issue
of fraud from Eriksen to Morey. Morey contends that Eriksen's
instruction number 17, which refers to "concealed or latent condi-
tions" is inaccurate in that it refers to "conditions" and not to "defects"
and also that it fails to instruct that these latent defects must be mate-
rial and substantial. As to Eriksen's instruction number 19, Morey
contends that the district court erred in giving that instruction because
Eriksen failed to present evidence that its alleged damages arose from
any specific and material misrepresentation of Morey. Finally, as to
Eriksen's instruction number 21, Morey repeats his argument that
Eriksen should not have been entitled to an instruction on punitive
damages for his failure to present a prima facie case on the same.
Generally, we will reverse an erroneous instruction only if the error
was prejudicial, when viewed in light of the record as a whole.
Hartsell v. Duplex Products, Inc., No. 97-1114, 1997 WL 501220(4th Cir. August 25, 1997) (citing Ross v. St. Augustine's College, 103
F.3d 338, 344 (4th Cir. 1996)). When considered under this standard,
Morey's challenges to the adequacy and appropriateness of the jury
charge are without merit. Accordingly, we reject Morey's challenges
to the jury instructions on the issues of fraud and punitive damages
7
and find no error in the district court's inclusion of the challenged
instructions.
III.
Morey next argues that the district court erred in denying his
motion for judgment as a matter of law on the issues of express war-
ranty and implied warranty of merchantability. Morey argues that the
only evidence presented by Eriksen of an express warranty was the
list of items created by Eriksen's employee, Roger Ward, which
delineated the items to be remedied on the P&H 670 crane prior to
its delivery to Eriksen. Morey contends that these items of repair were
merely "maintenance items" and not inconsistent with the age of the
crane. However, as Eriksen points out in its brief, under West Vir-
ginia law "[w]here a seller promises to pay for repairs to goods deliv-
ered to the buyer in a defective condition and the buyer accepts the
defective goods in reliance upon the promise to repair, such promises
of the seller constitute express warranties." Mountaineer Contractors,
Inc. v. Mountain State Mack, Inc., 268 S.E.2d 886, 892 (W. Va.
1980). Here, substantial evidence was presented as to the list of
repairs to be made to the P&H 670 crane, the condition in which the
crane was delivered to Eriksen and Eriksen's reliance on the promises
made by Morey's delivery person and by Morey as to the remedy for
these defects to suggest that Morey had made an express warranty in
the sale of the P&H 670 crane. Thus, when viewed in the light most
favorable to Eriksen, it was reasonable for a jury to determine that an
express warranty had been made as to the sale of the P&H 670 crane.
Therefore, we find no error in the district court's denial of Morey's
motion for judgment as a matter of law on the issue of express war-
ranty.
Morey further contends that the district court erred in denying his
motion for judgment as a matter of law on the issue of implied war-
ranty of merchantability. In support of this contention, Morey argues
that Eriksen presented evidence only on the issue of implied warranty
of fitness of purpose and not on the issue of implied warranty of mer-
chantability. As Eriksen points out, however, Morey's admission that
he was a crane "merchant" triggers W. Va. Code§ 46-2-314 which
provides for an implied warranty of merchantability which, in turn,
requires that goods sold be "fit for the ordinary purposes for which
8
such goods are used." W. Va. Code § 46-2-314(2)(c) (1993 Repl.
Vol.). At trial, substantial evidence was presented on the issue of the
deficiencies of the P&H 670 crane at the time of its delivery to Erik-
sen. When viewed in the light most favorable to Eriksen, a reasonable
jury could find for Eriksen on the theory of implied warranty of mer-
chantability. Thus, the district court did not err in denying Morey's
motion for judgment as a matter of law on the issue of implied war-
ranty.
Morey further contends that the district court erred in permitting
the jury to consider any theory of recovery other than that of implied
warranty of fitness of purpose. This argument is moot by virtue of our
decisions as to Morey's motions for judgment as a matter of law on
the issues of express warranty and implied warranty of merchanta-
bility.
Finally, Morey contends that the district court erred in giving Erik-
sen's proposed instruction number 7. Morey contends that this
instruction incorrectly instructed the jury that any statements made by
Morey to Eriksen which related to the P&H 670 crane created an
express warranty. However, Eriksen's instruction number 7 also pro-
vided that the promise or factual assertion made by Morey must
become "a basis for their bargain." The inclusion of this language is
consistent with the language of W. Va. Code § 46-2-313(b) which
provides that "[a]ny description of the goods which is made part of
the basis of the bargain creates an express warranty. . . ." W. Va.
Code § 46-2-313(b) (1993 Repl. Vol.). When reviewed in light of the
record in this matter as a whole, we conclude that the inclusion of
Eriksen's instruction number 7 was not prejudicial to Morey and that
the district court did not err in including that instruction in its jury
charge.
IV.
Finally, Morey argues that the district court erred in denying his
motion for judgment as a matter of law on the issue of damages.
Morey contends that Eriksen failed to present evidence as to the spe-
cific costs of the allegedly missing twenty feet of boom or car body
jacks, the decrease in fair market value of the crane due to the missing
twenty feet of boom or car body jacks or costs incurred by Eriksen
9
for the missing boom or car body jacks. Eriksen countered this argu-
ment by obtaining quotes for the same from established dealers. As
Eriksen points out, W. Va. Code § 46-2-714(1) provides that damages
resulting from a seller's breach may be "determined in any manner
which is reasonable." We find that the manner in which Eriksen deter-
mined the damages for the missing portion of boom and car body
jacks was reasonable within the meaning of the statute. Thus, when
viewed in the light most favorable to Eriksen, we find that a reason-
able jury could find for Eriksen on the issue of damages on the basis
of the evidence which Eriksen presented. Therefore, the district court
did not err in denying Morey's motion for judgment as a matter of
law on the issue of damages.
Accordingly, we find that the district court did not err in denying
Morey's motions for judgment as a matter of law. We also conclude
that the district court did not err in instructing the jury.
AFFIRMED
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