Nester Commercial Roofing, Inc. v. American Builders & Contractors Supply Co. , 250 F. App'x 852 ( 2007 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
October 10, 2007
Elisabeth A. Shumaker
FO R TH E TENTH CIRCUIT Clerk of Court
N ESTER CO M M ER CIA L R OOFING,
IN C.,
Plaintiff-Appellant,
v. No. 06-6290
(D.C. No. CIV-05-1169-M )
A M ER ICAN BU ILD ER S A N D (W .D. Okla.)
CONTRACTORS SUPPLY CO. IN C.;
M ULE-H ID E PRODUCTS CO. IN C.,
Defendants-Appellees.
OR D ER AND JUDGM ENT *
Before PO RFILIO, A ND ER SO N, and BALDOCK , Circuit Judges.
This diversity-jurisdiction lawsuit stems from Nester Commercial Roofing,
Inc.’s purchase of roofing material from American Builders and Contractors
Supply Co., Inc. (ABC). The material, M ule-Hide A-320, was manufactured by
M ule-Hide Products, Inc., a company affiliated with ABC. After Nester applied
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
the M ule-Hide A -320 to the roofs of several stores owned by one of its clients,
the roofs leaked. Nester repaired the roofs with a different material, then sued
ABC and M ule-Hide. ABC and M ule-Hide defended on the ground that Nester
had failed to follow the application directions for the M ule-Hide A-320, and ABC
counterclaimed for sums Nester had refused to pay for the replacement roofing
material. The jury decided in favor of Nester on its breach-of-express-warranty
claim and for ABC on its counterclaim. Nester appeals several trial rulings. W e
have jurisdiction under 28 U.S.C. § 1291, and we AFFIRM .
Disclaimer of Implied Warranties
The district court found effective the disclaimers contained on the buckets
of M ule-Hide A-320 and granted defendants a judgment as a matter of law on
Nester’s claims of breaches of the implied warranties of fitness for a particular
purpose and merchantability. Nester argues the court erred in excluding the
implied warranties claims because the disclaimer language was not
“conspicuous,” as required by Oklahoma law. It further argues that the question
of conspicuousness should have been decided by the jury. “W e review de novo
the grant of a judgment as a matter of law.” Weaver v. Chavez, 458 F.3d 1096,
1099 (10th Cir. 2006). Because this matter w as brought under the district court’s
diversity jurisdiction, we apply the law of the forum state. Blanke v. Alexander,
152 F.3d 1224, 1228 (10th Cir. 1998).
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The Oklahoma U niform Commercial Code establishes the implied
warranties of merchantability and fitness for a particular purpose. See Okla. Stat.
tit. 12A, § 2-314(1) (“Unless excluded or modified (Section 2-316), a w arranty
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.”); id., § 2-315 (“W here 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.”). As the statutes plainly state, the implied warranties may be excluded
or modified: for the implied w arranty of merchantability, “the language must
mention merchantability and in case of a writing must be conspicuous,” and for
the implied warranty of fitness for a particular purpose, “the exclusion must be by
a writing and conspicuous.” Id., § 2-316(2). W hether a disclaimer is conspicuous
is a question of law for the court. See id., § 1-201(b)(10). Thus, the district court
did not err by not submitting conspicuousness to the jury.
The buckets of M ule-Hide A-320 contained the following language in black
ink, just underneath a graphic illustrating the warning “DO NOT FREEZE”:
Limited W arranty
All products sold are subject to the following limited warranty:
M ULE-HIDE PRO DU CTS CO., INC . (“SELLER”) W AR RA NTS
FOR A PERIOD O F ONE (1) YEAR FROM DATE OF DELIVERY
TH A T TH E PR OD U CT IS FREE FROM M ANUFACTURING
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DEFECTS. THE SELLER M AK ES NO OTH ER
REPRESEN TA TION OR W ARR ANTY OF ANY KIND, EX PRESS
O R IM PLIED , IN FA CT OR IN LAW , INCLUDING W ITHOUT
LIM ITA TIO N TH E WA R RANTY OF M ERCHANTABILITY OR
THE W AR RA NTY OF FITNESS FOR A PARTICU LAR PURPOSE,
OTHER THAN THE LIM ITED W ARRANTY SET FORTH ABOVE.
Every claim under this warranty shall be deemed waived unless made
in writing and received by the Seller within thirty (30) days of the
date that the defect to which each claim relates is discovered or
should have been discovered. No person is authorized to alter this
warranty orally.
Aplt. App. at 32. 1 Nester contends this language is not conspicuous because it is
in black, and other language on the bucket “is in red and far more easily noticed.”
Aplt. Br. at 12. It also points out “that language is placed among various other
non-application related words.” Id. at 12-13.
The O klahoma Uniform Commercial Code defines “conspicuous” as “so
written, displayed, or presented that a reasonable person against w hom it is to
operate ought to have noticed it.” Okla. Stat. tit. 12A, § 1-201(b)(10). In Collins
Radio Co. v. Bell, the Oklahoma Court of Civil Appeals stated that there are many
factors relevant to determining conspicuousness, “including location in the
contract, type face and type size, variation in the printing, length of the contract,
and the sophistication of the buyer.” 623 P.2d 1039, 1050 (Okla. Civ. App.
1980). In that case, the court found the disclaimer w as conspicuous:
1
It appears the trial exhibit displayed an express warranty slightly different
than that set forth on the buckets Nester actually received. Aplt. A pp. at 57.
Because the language excluding the implied warranties was the same on all the
buckets, any differences in other parts of the warranty paragraph are not material
to our analysis.
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It appears on the reverse side of a single sheet contract. It appears in
all capital letters in a separate paragraph and is the only language in
capitals on the page save the section headings and the limitation of
remedies clause. Reference is made on the front to the terms of the
contract appearing on the back. Although the reference is in smaller
type than all the other terms on the front page of the contract, it is
easily read, amply spaced, set off by horizontal lines, and appears
just above the space provided for the buyer’s signature.
Id. at 1051; cf. P.E.A.C.E. Corp. v. Okla. Nat. Gas Co., 568 P.2d 1273, 1278
(O kla. 1977) (finding disclaimer not conspicuous, in part, because it was not in
capital letters, a different size type, or a different color).
As a matter of law , the disclaimer on the M ule-Hide A-320 buckets is
conspicuous. It is expressed in a separate paragraph entitled “Limited W arranty,”
and the exclusion of implied warranties is in all-capital letters. Although it is
entirely in black and in smaller text than other labeling on the bucket, it “is easily
read” and “amply spaced,” and there is not a large amount of other text on the
bucket. Collins Radio Co., 623 P.2d at 1051. Further, Nester, as a commercial
roofing business represented by an experienced roofer/businessman, is a
sophisticated buyer of products such as M ule-Hide A-320. The district court did
not err in excluding Nester’s implied-warranty claims. 2
2
In this section of its opening brief, Nester also remarks upon the district
court’s decision to limit express warranty damages. Aplt. Br. at 8, 13. But
Nester does not set forth an argument on the issue, so the matter is waived. See
Abercrom bie v. City of Catoosa, 896 F.2d 1228, 1231 (10th Cir. 1990).
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Breach of Contract
Nester also contends the district court erred in not allowing it to proceed to
the jury with a separate breach of contract claim against ABC. Nester argues that
its principal, Bill Nester, explained to ABC’s salesman the circumstances of the
jobs and the salesman recommended that Nester use the M ule-Hide A-320; that
the M ule-Hide A-320 actually was inappropriate for the circumstances; and that
Nester was injured by using the M ule-Hide A-320 because the client no longer
uses Nester for its roofing jobs. The district court stated that the breach of
contract claim would not go to the jury because in its pre-trial filings Nester had
not made any distinction between ABC and M ule-Hide, instead referring to
defendants collectively. As with the implied warranties claim, our review is de
novo and relies on O klahoma law.
Even if the district court erred in its rationale for not allowing the claim, it
was not reversible error. These facts do not establish a claim for breach of
contract that is separate or distinguishable from claims of breach of the implied
warranty of merchantability and implied warranty of fitness for a particular
purpose. The facts described are a quintessential example of circumstances
underlying a claim for breach of those implied warranties. See, e.g., Am.
Fertilizer Specialists, Inc. v. Wood, 635 P.2d 592, 594-95 (Okla. 1981). And
Nester could not pursue a breach-of-implied-warranty claim against ABC for the
same reason it could not pursue such claims against M ule-Hide; namely, an
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effective disclaimer. ABC’s purchase contract contains a disclaimer of the
implied warranties of merchantability and fitness for a particular purpose. Aplee.
Supp. App. at 161. The disclaimer appears on the reverse of a one-page purchase
agreement, which contains on the first page a reference to the terms on the
reverse; it is set forth in a separate paragraph, it is easily read, and amply spaced;
and the disclaimer portion of the paragraph is printed in all-capital letters, unlike
any other text on the page save the heading. Id. Under the principles of Collins,
we find the disclaimer to be conspicuous. See 623 P.2d at 1051. Allowing Nester
to present its proposed “breach of contract” claim against A BC would eviscerate
the disclaimer of implied warranties. Accordingly, there is no basis for reversing
the district court’s decision not to allow the claim to proceed. 3
Expert Testimony
Finally, Nester contends the district court erred in excluding the testimony
of its certified public accountant as to Nester’s lost profits. The district court
determined that the CPA could provide only non-expert testimony because he had
not been listed as an expert witness or provided an expert report. 4 W e review the
3
Further, to the extent Nester sought to pursue this claim to recover damages
for lost profits, we note that ABC’s purchase agreement contains a disclaimer of
consequential and incidental damages. Aplee. Supp. App. at 161. Oklahoma law
permits the limitation or exclusion of consequential damages. Okla. Stat. Ann.
tit. 12A, § 2-719(3); Collins Radio Co., 623 P.2d at 1051.
4
It is not clear whether the district court precluded the C PA’s expert
testimony because Nester had not declared him as an expert witness, because it
(continued...)
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district court’s decision to admit or exclude evidence, including expert testimony,
for an abuse of discretion. Ralston v. Smith & Nephew Richards, Inc., 275 F.3d
965, 968 (10th Cir. 2001). “A trial court’s decision will not be disturbed unless
this Court has a definite and firm conviction that the trial court has made a clear
error of judgment or exceeded the bounds of permissible choice in the
circumstances.” Id. at 968-69 (quotation and alterations omitted).
Nester argues that “[t]he underlying question as to whether M r. Chain
should have been allowed to offer additional testimony in his role as an acting
C.P.A. is whether he was retained in anticipation of litigation.” Aplt. Br. at 14.
Nester is correct that, because the CPA was not retained or specially employed to
provide expert testimony, Federal Rule of Civil Procedure 26(a)(2)(B) did not
require him to provide an expert report. See Watson v. United States, 485 F.3d
1100, 1107 (10th Cir. 2007).
It does not follow, however, that Nester could also neglect to identify the
CPA as an expert witness if it wished him to testify to matters involving
4
(...continued)
had not provided an expert report, or for both reasons. See Aplt. App. at 66 (in
summarizing its prior ruling for the record, the court stated, “I left it up to the
Plaintiff’s counsel to ask appropriate questions that would not elicit expert
testimony, because M r. Chain was not declared as an expert witness”); id. at 48-
49 (in objecting to expert testimony during trial, defense counsel stated, “He
could testify as to the tax returns he prepared, but would not be allowed to give
expert testimony because he had not been listed as an expert, had not provided an
expert report. I understood that to be the ruling on the motion in limine.”). In an
abundance of caution, we analyze the issue under both reasons.
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“scientific, technical, or other specialized knowledge.” Fed. R. Evid. 702.
Federal Rule of Civil Procedure 26(a)(2)(A) states “a party shall disclose to other
parties the identity of any person who may be used at trial to present evidence
under R ules 702, 703, or 705 of the Federal Rules of Evidence” (emphasis added).
This rule does not distinguish between expert witnesses retained in anticipation of
litigation and other expert witnesses. As the district court recognized, the CPA
need not be listed as an expert to testify to his personal knowledge of events
relevant to the litigation. See U nited States v. Caballero, 277 F.3d 1235, 1247
(10th Cir. 2002) (“[W ]itnesses need not testify as experts simply because they are
experts–the nature and object of their testimony determines whether the
procedural protections of Rule 702 apply.”). But if Nester wished its CPA to give
expert testimony, it should have disclosed him as an expert witness. See Bank of
China, New Y ork Branch v. NBM LLC, 359 F.3d 171, 182 (2d Cir. 2004); M usser
v. Gentiva H ealth Servs., 356 F.3d 751, 756-57 (7th Cir. 2004); compare Watson,
485 F.3d at 1108 n.5 (noting that plaintiff had the opportunity to depose the
expert witness with “full knowledge that the government intended to call him as
an expert witness”). Accordingly, the district court did not abuse its discretion by
restricting counsel’s ability to elicit expert testimony from Nester’s CPA. See
Fed. R. Civ. P. 37(c)(1) (“A party that without substantial information fails to
disclose information required by Rule 26(a) . . . is not, unless such failure is
harmless, permitted to use as evidence at trial . . . any . . . information not so
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disclosed.”); Sims v. Great Am. Life Ins. Co., 469 F.3d 870, 894-95 (10th Cir.
2006) (holding that district court properly excluded expert witness who was not
timely designated); M usser, 356 F.3d at 757-60 (holding that district court did not
abuse its discretion in excluding expert testimony because party lacked substantial
justification for disclosing witnesses under Rule 26(a)(1) but not Rule 26(a)(2)).
The judgment of the district court is AFFIRMED.
Entered for the Court
Bobby R. Baldock
Circuit Judge
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