Fremont Insurance Company v. Gro-Green Farms Inc ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
FREMONT INSURANCE COMPANY, UNPUBLISHED
March 17, 2016
Plaintiff-Appellant/Cross-Appellee,
and
STEVE FOLEY and DIANE FOLEY, d/b/a
RAINBOW CREEK FARMS,
Appellants/Cross-Appellees,
v No. 324075
Tuscola Circuit Court
GRO-GREEN FARMS, INC., LC No. 2011-026883-NZ
Defendant-Appellee/Cross-
Appellant.
Before: K. F. KELLY, P.J., and FORT HOOD and BORRELLO, JJ.
PER CURIAM.
Plaintiffs appeal as of right from orders of the trial court granting defendant’s motion for
summary disposition and motion in limine. On appeal, plaintiffs argue that the trial court erred
in granting defendant’s summary disposition on plaintiffs’ tort claims on the basis of the
economic loss doctrine, erred in granting defendant’s motion for summary disposition on the
basis that plaintiffs failed to provide defendant with reasonable notice pursuant to MCL
440.2607(3)(a), and erred in granting defendant’s motion in limine and prohibiting evidence
relating to “clinkers.” Defendant cross appeals as of right, asserting alternative grounds for
affirmance of its motion for summary disposition and motion in limine, and disputing the trial
court’s denial of its motion to amend its witness list. We affirm in part, reverse in part, and
remand for further proceedings consistent with this opinion.
This case arises from a fire that occurred on August 19, 2011, at Rainbow Creek Farms
(Rainbow Creek) in Millington, Michigan. Rainbow Creek is a small dairy farm owned by
plaintiffs Steve and Diane Foley. The Foleys lived a few miles away from the farm. Shortly
after 7:00 a.m. on August 29, 2011, the Foleys were contacted by a neighbor and informed that
there was significant smoke coming from the farm. The fire caused extensive damage to the
farm. Plaintiff Fremont Insurance Company, subrogee, insured the farm, and paid benefits
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amounting to $637,831.30. However, the Foleys were left with uninsured damages amounting to
more than $612,000. Following the fire, an investigation was conducted. It was undisputed that
the fire began in the northeasterly storage barn containing approximately 46 very large bales of
straw, which were produced by defendant Gro-Green Farms, Inc., and sold to Rainbow Creek
about two weeks before the fire.
Plaintiffs subsequently filed a complaint against defendant for negligence, breach of
contract, and related claims. Generally, plaintiffs alleged that the straw bales were defective,
which caused them to spontaneously combust and ignite the fire at Rainbow Creek. Ultimately,
the trial court granted defendant’s motion for summary disposition, in full, leading to this appeal.
Plaintiffs first argue that the trial court erred in granting defendant’s motion for summary
disposition regarding plaintiffs’ tort claims because the claims were barred by the economic loss
doctrine. We disagree. The trial court granted summary disposition on this basis pursuant to
MCR 2.116(C)(10).
This Court reviews de novo a trial court’s decision on a motion for summary disposition.
Alcona Co v Wolverine Environmental Prod, Inc, 233 Mich. App. 238, 245; 590 NW2d 586
(1998). A motion for summary disposition under MCR 2.116(C)(10) “tests the factual
sufficiency of the complaint.” Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 206; 815 NW2d 412
(2012). “In evaluating a motion for summary disposition brought under this subsection, a trial
court considers affidavits, pleadings, depositions, admissions, and other evidence submitted by
the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion.”
Maiden v Rozwood, 461 Mich. 109, 120; 597 NW2d 817 (1999). Summary disposition is proper
where there is no “genuine issue regarding any material fact.” Id. A motion under MCR
2.116(C)(8) “tests the legal sufficiency of the pleadings alone.” Nuculovic v Hill, 287 Mich. App.
58, 61; 783 NW2d 124 (2010).
In Neibarger v Universal Cooperatives, Inc, 439 Mich. 512; 486 NW2d 612 (1992), the
Michigan Supreme Court adopted the economic loss doctrine, which provides that “where a
plaintiff seeks to recover for economic loss caused by a defective product purchased for
commercial purposes, the exclusive remedy is provided by the [Uniform Commercial Code
(UCC)], including its statute of limitations.” Id. The Court also addressed the application of the
economic loss doctrine where the plaintiff asserted damage to property other than the goods
themselves. The Court held:
The proper approach requires consideration of the underlying policies of tort and
contract law as well as the nature of the damages. The essence of a warranty
action under the UCC is that the product was not of the quality expected by the
buyer or promised by the seller. The standard of quality must be defined by the
purpose of the product, the uses for which it was intended, and the agreement of
the parties. In many cases, failure of the product to perform as expected will
necessarily cause damage to other property; such damage is often not beyond the
contemplation of the parties to the agreement. Damage to property, where it is the
result of a commercial transaction otherwise within the ambit of the UCC, should
not preclude application of the economic loss doctrine where such property
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damage necessarily results from the delivery of a product of poor quality. [Id. at
531.]
Thus, “[w]here damage to other property was caused by the failure of a product purchased for
commercial purposes to perform as expected, and this damage was within the contemplation of
the parties to the agreement, the occurrence of such damage could have been the subject of
negotiations between the parties.” Id. at 532. In Sherman v Sea Ray Boats, Inc, 251 Mich. App.
41, 47-50; 649 NW2d 783 (2002), this Court further extended the economic loss doctrine to
cover individual consumer transactions in situations where the product merely failed to live up to
the economic expectations held by the purchasers.
We agree with the trial court that the economic loss doctrine bars plaintiffs’ tort claims.
The parties were engaged in a commercial transaction, both parties being businesses. While
there was damage to property other than the straw itself, the Neibarger Court explained that
damage to property does not preclude application of the economic loss doctrine. Neibarger, 439
Mich. at 531. In Neibarger, the plaintiff dairy farmer purchased a milking system from the
defendant. Id. at 516. A defect in the milking system caused instances of mastitis in the
plaintiff’s cattle, causing loss of production of milk and damage to the cattle. Id. The Court held
that the plaintiff’s damages were properly considered an economic loss, and that their remedy lay
in contract, not tort. Id. at 533. The Court explained that mastitis in cattle was a common
problem for dairy farmers and that the plaintiff was aware mastitis could occur. Id. at 532-533.
Here, the good at issue was straw, which caused a fire, inflicting property damage to plaintiffs’
farm. The trial court held that “when dealing with straw, the parties would contemplate a loss
due to fire, and that the occurrence of such damage would certainly have been the subject of
negotiations between the parties.” Indeed, plaintiffs, experienced farmers, presented testimony
that fire caused by the spontaneous combustion of straw was a well-documented phenomenon.
Further, common sense alone dictates that fire would be a possible consequence of dealing with
straw, a relatively dry, flammable material. Accordingly, the economic loss doctrine bars
plaintiffs’ contract claims.
Plaintiffs present several cases to support their position that the parties would not
contemplate a loss due to fire. However, as defendant points out, these cases involve
transactions with individual consumers, not commercial transactions. Indeed, further review of
these cases revealed that the subject of the analysis was whether the economic loss doctrine was
applicable based on Sherman, 251 Mich. App. 41. Thus, these cases are not applicable.
Accordingly, the trial court did not err in granting defendant’s motion for summary disposition
regarding plaintiffs’ tort claims because the claims were barred by the economic loss doctrine.
Plaintiffs next argue that the trial court erred in granting summary disposition on the basis
of MCL 440.2607(3)(a). We agree. The trial court granted summary disposition pursuant to
MCR 2.116(C)(8) and (C)(10), concluding that plaintiffs’ UCC claims were barred pursuant to
MCL 440.2607(3)(a).
MCL 440.2607(3)(a) provides that “[w]here a tender has been accepted the buyer must
within a reasonable time after he discovers or should have discovered any breach notify the seller
of breach or be barred from any remedy[.]” As acknowledged by the trial court, “[w]hether a
reasonable time has elapsed is generally a question for the trier of fact. If reasonable minds
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could not differ, however, the question of what constitutes a reasonable time should be decided
on summary disposition as a matter of law.” Bev Smith, Inc v Atwell, 301 Mich. App. 670, 682;
836 NW2d 872 (2013) (citations omitted).
Here, the straw was delivered on August 4, 2011. Diane testified that, about a week after
delivery, she noticed that the straw from one bale was moist. Diane did not contact defendant
and continued using the straw. The fire occurred on August 19, 2011. Defendant was promptly
notified of the fire. Defendant claims that, as a matter of law, plaintiffs failed to notify defendant
of the defect within a reasonable time because Diane noticed the straw bale was wet. We
disagree. Just over two weeks passed between delivery and plaintiffs notifying defendant of the
alleged breach, whereas just over one week passed between Diane noticing the wet straw and the
notification of the breach. Regardless of whether the breach was considered the delivery of the
moist straw or the fire, there is a question of fact whether it was unreasonable for Diane not to
notify defendant immediately. Plaintiffs purchased 46 bales of straw from defendant. On the
day Diane noticed the wet straw, she handled two bales, only one of which was wet. It is
possible that Diane thought only one bale would be wet, and would have contacted defendant
later if it turned into a larger problem. Given the short amount of time that passed, the nature of
the goods in question, and the large amount of product delivered, we do not agree that, as a
matter of law, plaintiffs’ notice was unreasonable as a matter of law. Accordingly, the trial court
erred.
Plaintiffs next argue that the trial court abused its discretion in granting defendant’s
motion in limine regarding the admission of expert testimony on clinkers. We agree. This Court
reviews for an abuse of discretion a trial court’s decision to admit or bar expert testimony. Gay v
Select Specialty Hosp, 295 Mich. App. 284, 290; 813 NW2d 354 (2012). “An abuse of discretion
occurs when the trial court chooses an outcome falling outside the range of principled
outcomes.” Edry v Adelman, 486 Mich. 634, 639; 786 NW2d 567 (2010).
Generally, clinkers are a mass of organic material created in hay or straw fires; a clinker
was found in plaintiffs’ barn following the fire. Defendants argued that evidence of clinkers was
unreliable and inadmissible, and the trial court agreed. MRE 702 and MCL 600.2955 govern the
admissibility of expert scientific testimony. MRE 702 sets out the requirements for the
admission of expert testimony, and provides:
If the court determines that scientific, technical, or other specialized
knowledge will assist the trier of fact to understand the evidence or to determine a
fact in issue, a witness qualified as an expert by knowledge, skill, experience,
training, or education may testify thereto in the form of an opinion or otherwise if
(1) the testimony is based on sufficient facts or data, (2) the testimony is the
product of reliable principles and methods, and (3) the witness has applied the
principles and methods reliably to the facts of the case.
Pursuant to MRE 702, the trial court must function as a gatekeeper in making decisions
regarding the admissibility of scientific evidence and ensuring that expert testimony meets that
rule’s standard of reliability. Gilbert v DaimlerChrysler Corp, 470 Mich. 749, 782; 685 NW2d
391 (2004). In addition, MCL 600.2955 provides:
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(1) In an action for the death of a person or for injury to a person or
property, a scientific opinion rendered by an otherwise qualified expert is not
admissible unless the court determines that the opinion is reliable and will assist
the trier of fact. In making that determination, the court shall examine the opinion
and the basis for the opinion, which basis includes the facts, technique,
methodology, and reasoning relied on by the expert, and shall consider all of the
following factors:
(a) Whether the opinion and its basis have been subjected to scientific
testing and replication.
(b) Whether the opinion and its basis have been subjected to peer review
publication.
(c) The existence and maintenance of generally accepted standards for
governing the application and interpretation of a methodology or technique and
whether the opinion and its basis are consistent with those standards.
(d) The known or potential error rate of the opinion and its basis.
(e) The degree to which the opinion and its basis are generally accepted
within the relevant expert community. As used in this subdivision, “relevant
expert community” means individuals who are knowledgeable in the field of
study and are gainfully employed applying that knowledge on the free market.
(f) Whether the basis for the opinion is reliable and whether experts in that
field would rely on the same basis to reach the type of opinion being proffered.
(g) Whether the opinion or methodology is relied upon by experts outside
of the context of litigation.
The trial court “shall consider all of the factors listed in MCL 600.2955(1).” Clerc v Chippewa
Co War Mem Hosp, 477 Mich. 1067, 1068; 729 NW2d 221 (2007). The party offering the expert
testimony has the burden of satisfying the preconditions established by MRE 702 and MCL
600.2955(1) and (2). Gilbert, 470 Mich. at 781. In determining admissibility under the statutory
standard, a court must consider the statutory factors, but not all of the facts need favor
admissibility before the evidence may be admitted. Rather, the pertinent determination is
whether a scientific opinion is rationally derived from a sound foundation. Chapin v A & L
Parts, Inc, 274 Mich. App. 122, 127 (Davis, J.), 139 (Meter, J.); 732 NW2d 578 (2007).
Defendant also asked that the evidence be excluded pursuant to MRE 403, which
provides:
Although relevant, evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice, confusion of the
issues, or misleading the jury, or by considerations of undue delay, waste of time,
or needless presentation of cumulative evidence.
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Evidence is not inadmissible simply because it is prejudicial. Clearly, in every case, each party
attempts to introduce evidence that causes prejudice to the other party. Waknin v Chamberlain,
467 Mich. 329, 334; 653 NW2d 176 (2002).
Below, the trial court granted defendant’s motion in limine to exclude evidence regarding
clinkers. The court explained:
Here, plaintiff[s’] experts will be testifying that the presence of clinkers indicates
that a fire was caused by spontaneous combustion. In Kirk’s Fire Investigation,
5th Edition, which plaintiff[s’] experts rel[y] upon, it is stated that the presence of
clinkers can be used to determine whether spontaneous combustion is the cause of
the fire. However, defendant points out that in the 7th Edition of Kirk’s Fire
Investigation, the authors indicate that a lack of clinkers does not indicate an
incendiary cause, and the presence of clinkers does not prove spontaneous
combustion.
Plaintiffs point to no other reliable principles or methods specifically regarding
clinkers except for the deposition testimony of the expert themselves. With no
other reliable principles or methods involving the clinkers theory, any testimony
regarding clinkers will only confuse the issues and mislead the jury.
The Kirk’s Fire Investigation (Seventh Edition) excerpt on clinkers states the following:
One of the interesting artifacts of spontaneously ignited hay fires is the formation
the “hay clinker[.”] This glassy, irregular mass, gray to green in color, can be
found throughout the pile wherever temperatures were the highest and most
prolonged but are likely to be concentrated near the center. The clinker is
composed of the inorganic residues of silicon, sodium, and calcium from the plant
stems as well as impurities baled with the hay (soil, dust) fused into a glassy mass
by the heat developed in the fire. Hicks has done an in-depth study of hay
clinkers that strongly indicates that the inorganic constituents of various grasses
may be linked to their propensity to form such glasses. [Aaron J. Hicks, Hay
Clinkers as Evidence of Spontaneous Combustion, Fire & Arson Investigator
(1998).] Recently, Tinsley, Whaley, and Icove performed a series of live fire
experiments examining the formation of hay clinkers in externally ignited fires.
[Andrew Tinsley, Michael Whaley, and David J. Icove, Analysis of Hay Clinker
as an Indicator of Fire Cause (2010).] The result of that study indicated that the
formation of hay clinkers is dependent on a variety of factors, none of which
reliably indicate the origin or cause of the fire. Hay fires in pole barns with metal
roofs may cause the formation of numerous large masses as opposed to a few
smaller clinkers. Clinkers do not occur in all self-heating hay fires, so their
absence cannot be taken as proof incendiary cause, and their presence should not
be taken as proof of spontaneous origin. A hay clinker may be mistaken for the
residue of an incendiary device, but it is innocuous. Elemental analysis is
essential. It must also be remembered that spontaneous combustion is an easy
decision to reach when the cause of the fire is not known. It seems certain that
many fires that have been attributed to spontaneous combustion causes were
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actually set. [John D. DeHaan and David J. Icove, Kirk’s Fire Investigation
(Seventh Edition), pp 214-215.]
Interestingly, plaintiffs attached an affidavit from DeHaan, co-author of Kirk’s Fire
Investigation. In the affidavit, DeHaan explained that the Tinsley experiment produced large
masses of charred organic material, rather than the gray-green glassy masses that he referred to
in his original text. Accordingly, he believed the study by Hicks, which evaluated the glassy
clinkers, was a more applicable technique when considering the formation of glassy mineral
content. “Therefore, [the Tinsley experiment] cannot be interpreted as proof that true hay
clinkers can be produced by direct (piloted) ignition of hay bales.” DeHaan concluded:
As I point out in Kirk’s, hay clinkers have not been found in some fires
whose causes were otherwise identified as spontaneous combustion. There is still
much that is unclear about the formation of the glassy hay clinkers, but it is my
opinion . . . that the prolonged high, center-of-mass temperatures typical of hay
fires caused by self-heating are the primary factor in the production of the true
glassy hay clinkers in susceptible fuels and are therefore of evidentiary value.
The crux of defendant’s argument is that clinkers cannot conclusively show the cause of a
fire. Indeed, plaintiffs’ experts admit that the existence of a clinker, alone, does not show that
the cause of a fire was spontaneous combustion. However, we do not agree that is a necessary
determination in order for the evidence to be presented to the jury. Based on the materials
submitted, spontaneous combustion of hay and straw is a documented biological process. Often,
the formation of these clinkers is linked to and referenced in discussions surrounding
spontaneous combustion, as in Kirk’s Fire Investigation, which was relied upon by both parties.
Indeed, a glassy, worm clinker was formed here. The fact that the existence of a clinker does not
show, conclusively, that the fire was caused by spontaneous combustion is not fatal to the
evidence. Chapin, 274 Mich. App. at 127, 139. If it were, summary disposition on the issue of
causation in favor of plaintiffs would be more appropriate. Rather, it appears the evidence
regarding clinkers is relevant as a factor supporting the argument that the fire was caused by
spontaneous combustion, as clinkers are often associated with such fires. The fact that the
clinker does not, by itself, prove the cause of the fire should certainly be an issue raised on cross-
examination, but that does not render the evidence unreliable or misleading. A publication is
authoritative if it is an accepted source of expert information or advice. It need not always
provide absolute truth. See McCarty v Sisters of Mercy Health Corp, 176 Mich. App. 593, 600;
440 NW2d 417 (1989). The distinction could be explained to the jury through questioning and
argument, or even a limited instruction if deemed appropriate by the trial court.
Moreover, the 2010 experiment by Tinsley, which certainly may be used to impeach
plaintiffs’ experts, MRE 707, does not, in our opinion, show that the consideration of clinkers is
unreliable. This is especially true considering the difference in the consistency and composition
of the clinkers, which plaintiffs’ expert David G. Howitt, Ph.D. explained was essential to
distinguishing the Tinsley experiment results from the current case. The clinker at issue here
could certainly be used to demonstrate the nature of the clinker formed, and the jury could
determine the weight of that distinction as it related to the fire and the scientific evidence.
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Defendant also argues that there were no studies to show that spontaneous combustion
was possible in straw. However, an article by plaintiffs’ own expert witness provides: “Hay and
straw can spontaneously combust under certain conditions. The most important factor is the
moisture content of the hay or straw when it is baled.” Dennis Murphy, Fires in Hay and Straw,
p 25. Additionally, in Kirk’s Fire Investigation (Seventh Edition), the authors state that “the
most common fires termed spontaneous are without a doubt those that are ignited in hay, grasses,
bagasse, or other vegetation residues.” DeHaan and Icove, Kirk’s Fire Investigation (Seventh
Edition), p 213. In his article, Hicks explained, “Many organic compounds, including sawdust,
animal, oils, plant fibers, manure, charcoal, coal, feed and grains, are subject to spontaneous
heating.” Hicks, Hay Clinkers as Evidence of Spontaneous Combustion, p 10. Defendant
presented an article which provided that “Moisture content is the main factor that causes hay and
straw to spontaneously combust.” Linda M. Fetzer & Cheryl Skjolaas, Preventing Fires in Baled
Hay and Straw (2014). Even the Tinsley study provides that self-heating may occur in a porous,
organic material. Tinsley, Analysis of Hay Clinker as an Indicator of Fire Cause. Accordingly,
we are not convinced that spontaneous combustion cannot occur in straw fires. Again, the fact
that no specific studies have been done on spontaneous combustion in straw fires or that there are
no documented instances of spontaneous combustion in straw would be a more appropriate
inquiry for cross-examination.
Defendant also argues, in a cursory manner that is not addressed by his question
presented or preserved below, that Kale DeMott, a competitor in the straw baling business and
proposed expert witness for plaintiffs, should not be permitted to testify regarding common
standards for baling straw. This issue was unaddressed by the trial court and, thus, unpreserved,
so we need not address it. Hines v Volkswagen of America, Inc, 265 Mich. App. 432, 443; 695
NW2d 84 (2005). However, we note that the evidence would be relevant to explain to the jury
the straw baling process, as utilized by DeMott’s business. MRE 401. Moreover, his experience
in the field could qualify him as an expert witness. MRE 702. The process of baling straw is not
one that would be familiar to most people, and it is likely that testimony explaining the process
would be helpful to the jury. Plaintiffs are certainly not required to accept defendant’s
contentions regarding the proper baling of straw, as they allege that it was done improperly.
On cross appeal, defendant first argues alternative grounds for affirmance of its motion
for summary disposition regarding plaintiffs’ negligence claims. Because we agree with the trial
court that the economic loss doctrine bars plaintiffs’ negligence claims, it is unnecessary for us to
address this issue.
Defendant next argues alternative grounds for affirmance of its motion for summary
disposition of plaintiffs’ breach of contract claims.1 In the trial court, defendant argued that
1
Plaintiffs assert that these arguments were waived because they were not asserted in
defendant’s answer or affirmative defenses. MCR 2.111(F). However, plaintiffs present no
legal authority to show that the arguments raised were affirmative defenses or were required to
be raised in defendant’s answer. While the arguments may be unpreserved for appeal, defendant
has not waived the ability to substantively argue against plaintiffs’ UCC claims.
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plaintiffs’ UCC claims should be dismissed for failure to provide reasonable notice pursuant to
MCL 440.2607. The trial court agreed and granted summary disposition on that basis.
Defendant did not raise additional defenses to plaintiffs’ UCC claims. Thus, this issue is
unpreserved. However, we address a few of defendant’s assertions in order to aid the trial court
on remand.
In the trial court, plaintiffs brought claims for breach of express and implied warranty.
As defendant points out, it seems that, based on the oral contract between the parties, a breach of
implied warranty most appropriately applies. MCL 440.2314(1) provides that, unless otherwise
excluded, “a warranty that the goods shall be merchantable is implied in a contract for their sale
if the seller is a merchant with respect to goods of that kind.” Merchantable goods must:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the
description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality
and quantity within each unit and among all units involved; and(e) are adequately
contained, packaged, and labeled as the agreement may require; and
(f) conform to the promises or affirmations of fact made on the container or label
if any. [MCL 440.2314(2).]
In addition, MCL 440.2315 provides:
Where the seller at the time of contracting has reason to know any particular
purpose for which the goods are required and that the buyer is relying on the
seller’s skill or judgment to select or furnish suitable goods, there is unless
excluded or modified under the next section an implied warranty that the goods
shall be fit for such purpose.
Defendant argues that plaintiffs cannot prevail on their claim for breach of implied warranty for
several reasons: plaintiffs accepted the goods pursuant to MCL 440.2606, plaintiffs failed to
reject the goods pursuant to MCL 440.2602, and plaintiffs cannot show proximate cause
necessary to recover consequential damages pursuant to MCL 440.2715.
In regard to these issues, we opine that plaintiffs have established a question of fact.
MCL 440.2606 provides that acceptance occurs:
(a) after a reasonable opportunity to inspect the goods signifies to the seller that
the goods are conforming or that he will take or retain them in spite of their
nonconformity; or
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(b) fails to make an effective rejection (subsection (1) of section 2602), but such
acceptance does not occur until the buyer has had a reasonable opportunity to
inspect them; or
(c) does any act inconsistent with the seller’s ownership; but if such act is
wrongful as against the seller it is an acceptance only if ratified by him.
“Rejection of goods must be within a reasonable time after their delivery or tender. It is
ineffective unless the buyer seasonably notifies the seller.” MCL 440.2602(1). Defendant
argues that, as a matter of law, plaintiffs had a reasonable time to inspect the goods, failed to
notify defendant after finding the defect, and continued to use the goods in a manner inconsistent
with the seller’s ownership.
Whether plaintiffs had a reasonable opportunity to inspect the goods and whether
plaintiffs seasonably notified defendant that it rejected the goods are questions of fact for the
same reasons discussed in relation to MCL 440.2307, supra. Again, just over two weeks had
passed since defendant delivered 46 large bales of straw to plaintiffs. We cannot say, as a matter
of law, that plaintiffs acted unreasonably in failing to notify defendant after finding one moist
bale of straw, or that a reasonable amount of time for plaintiffs to inspect the straw bales had
passed. Additionally, defendant asserts that plaintiffs began using the straw in a manner
inconsistent with defendant’s ownership. While plaintiffs admitted to using a few of the bales of
straw, over 40 bales remained untouched in plaintiffs’ barn. Moreover, even assuming plaintiffs
did use the goods in a manner inconsistent with the seller’s ownership, MCL 440.2606(c), there
remains a question of fact whether plaintiffs failed to make an effective rejection and had a
reasonable opportunity to inspect, MCL 440.2606(b), MCL 440.2602(1).
MCL 440.2715(2) provides:
(2) Consequential damages resulting from the seller’s breach include
(a) any loss resulting from general or particular requirements and needs of
which the seller at the time of contracting had reason to know and which could
not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of
warranty. [Emphasis added.]
Comment 5 of MCL 440.2715 provides:
Subsection (2)(b) states the usual rule as to breach of warranty, allowing recovery
for injuries “proximately” resulting from the breach. Where the injury involved
follows the use of goods without discovery of the defect causing the damage, the
question of “proximate” cause turns on whether it was reasonable for the buyer to
use the goods without such inspection as would have revealed the defects. If it
was not reasonable for him to do so, or if he did in fact discover the defect prior
to his use, the injury would not proximately result from the breach of warranty.
[Emphasis added.]
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Defendant asserts that because plaintiffs discovered the defect before the injury, they cannot
show proximate cause. However, we disagree. Again, there is a question of fact whether the
discovery that one bale of straw was moist would constitute discovery of a defect. Further, if the
defect was not discovered, the issue of whether it was reasonable for plaintiffs to use the goods
without sufficient inspection also presented a disputed question of fact.
Defendant next argues that the trial court abused its discretion when it failed to allow
defendant to amend its witness list. We disagree. We review the trial court’s denial of a
request to amend a witness list for an abuse of discretion. Tisbury v Armstrong, 194 Mich. App.
19, 20; 486 NW2d 51 (1991). “An abuse of discretion occurs when the trial court chooses an
outcome falling outside the range of principled outcomes.” Edry, 486 Mich. at 639.
MCR 2.401(l) addresses the filing of witness lists, stating:
(1) No later than the time directed by the court under subrule (B)(2)(a), the parties
shall file and serve witness lists. . . .
(2) The court may order that any witness not listed in accordance with this rule
will be prohibited from testifying at trial except upon good cause shown.
(3) This subrule does not prevent a party from obtaining an earlier disclosure of
witness information by other discovery means as provided in these rules.
Here, we do not agree that the trial court abused its discretion. The trial court declined to find
good cause to amend the witness list because the case had been ongoing for an extended amount
of time. This does not strike us a being an unprincipled outcome where the case had been
ongoing for two years, defendant had already identified and deposed an expert witness, and the
deadlines for case evaluation and trial were approaching. Moreover, defendant will likely still be
able to impeach plaintiffs’ expert witness using the Tinsley publication.
Defendant asks this Court to review the court’s decision as a discovery sanction, in
accordance with Dean v Tucker, 182 Mich. App. 27, 32-33; 451 NW2d 571 (1990). In Dean, this
Court considered a case where summary disposition was granted on the basis of the plaintiff’s
failure to procure an expert witness. “Where the sanction is the barring of an expert witness
resulting in the dismissal of the plaintiff’s action, the sanction should be exercised cautiously.”
Id. at 32. Here, defendant already had an expert witness on its witness list, Dennis Murphy, and
was seeking to add an additional expert. Summary disposition was not granted or denied on the
basis of defendant’s failure to procure an additional expert witness. Thus, this issue should not
be analyzed as a discover sanction such as in Dean.
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Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion.
/s/ Kirsten Frank Kelly
/s/ Karen M. Fort Hood
/s/ Stephen L. Borrello
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