Doug Shows v. Man Engines & Components, Inc. and Man Nutzfahrzeuge Aktiengesellschaft ( 2012 )

Motion for Rehearing Granted; Reversed and Remanded; Opinion of October 11,
2011 Withdrawn, and Substitute Opinion filed March 15, 2012.
In The
Fourteenth Court of Appeals
NO. 14-09-00895-CV
DOUG SHOWS, Appellant
V.
MAN ENGINES & COMPONENTS, INC. AND MAN NUTZFAHRZEUGE
AKTIENGESELLSCHAFT, Appellees
On Appeal from the 234th District Court
Harris County, Texas
Trial Court Cause No. 2006-38352
1
SUBSTITUTE OPINION
The owner of a yacht sued the manufacturer of the yacht’s engines and the
manufacturer’s subsidiary, asserting various claims for damages allegedly suffered as a
result of major engine failure. The jury rendered a verdict in favor of the vessel’s owner
on his claim for breach of the implied warranty of merchantability. On appeal, the vessel
owner asserts that the trial court erred in granting a take-nothing judgment against him,
1
We grant appellant’s motion for rehearing, withdraw the opinion issued in this case on October 11,
2011, and issue this opinion in its place.
1
notwithstanding the jury’s verdict. Concluding that the trial court erred, we reverse the
judgment notwithstanding the jury’s verdict and remand for further proceedings
consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
Defendant/appellee Man Nutzfahrzeuge Aktiengesellschaft (hereinafter, ―Man
Germany‖), a German company named as a defendant below, manufactured engines that
were installed in a fifty-foot yacht (hereinafter, the ―Vessel‖). The model year of the
Vessel is 1988. The engines in question were installed on the Vessel in 2000. In
September 2002, plaintiff/appellant Doug Shows purchased this Vessel knowing that the
Vessel and its engines were not new but used. Shows was the Vessel’s third owner since
these engines were installed and commissioned.
In June 2004, the Vessel allegedly suffered a major engine failure, allegedly due to
a defective valve that caused major damage to the starboard engine. The following
summer, in June 2005, the Vessel suffered a second major engine failure, allegedly due to
a defective valve, which allegedly damaged the starboard engine beyond repair, such that
the engine had to be replaced.
The following year, in June 2006, Shows filed this suit against Man Germany and
defendant/appellee Man Engines & Components, Inc. (hereinafter, ―Man Engines‖),
eventually asserting claims for negligence, violations of the Texas Deceptive Trade
Practices Act (―DTPA‖), breach of express and implied warranties, and intentional and
negligent misrepresentation. Man Germany filed a special appearance, but did not file an
answer subject to that special appearance. Before trial, the trial court denied Man
Germany’s special appearance. Without having filed an answer, Man Germany appeared
at trial through its counsel and corporate representative. Shows did not seek a judgment
nihil dicit against Man Germany based on its failure to answer until after he rested his
case in chief at trial. The trial court denied Shows’s request for a judgment nihil dicit.
At trial, the jury was charged on claims for breach of express warranties, breach of
2
implied warranties, and DTPA violations. The jury found liability only on the claim for
breach of the implied warranty of merchantability. The only damages the jury awarded
resulting from this breach was ―the cost to replace the engine(s) in 2005,‖ which the jury
found was $89,967. Shows moved for judgment on the jury’s verdict.
Man Germany and Man Engines (hereinafter collectively, the ―Man Parties‖) filed
a motion for judgment notwithstanding the verdict, arguing as follows:
(1) The claim for breach of the implied warranty of merchantability
under section 2.314 of the Texas Business and Commerce Code
fails as a matter of law because an essential element is missing,
namely privity of contract between Shows and the Man Parties.
(2) It is undisputed that Shows was the third owner of the engines at
issue and that he purchased the Vessel used. As a matter of law,
there is no implied warranty of merchantability because Shows
bought the Vessel knowing the Vessel and its engines were used.
(3) Because the engines were delivered to the original buyer in October
2000, any implied warranty of merchantability expired four years
later in October 2004. Shows cannot recover based upon an implied
warranty that expired before the 2005 repairs were made. The Man
Parties asserted that this is not a statute-of-limitations issue but
rather an issue regarding the expiration of the implied warranty.
(4) By means of the document contained in Defendant’s Exhibit 1, the
first purchaser of the engines effectively disclaimed the implied
warranty of merchantability as a matter of law and therefore Shows
cannot recover for breach of the implied warranty of
merchantability.
(5) There is no evidence to support the jury’s damages finding because
there is no evidence that the costs of the 2005 repair were reasonable
and necessary, as required by Texas law.2
The trial court granted the Man Parties’ motion for judgment notwithstanding the verdict
(hereinafter, ―JNOV Motion‖) and rendered a take-nothing judgment against Shows. In
its written order, the trial court stated that it was granting the JNOV Motion based upon
2
Though the Man Parties sought judgment notwithstanding the verdict, they did not challenge any jury
question as being immaterial in any post-trial motion.
3
grounds (1), (2), and (4), above. As to ground (3), the trial court stated that it found this
argument to be a statute-of-limitations argument and concluded that because the Man
Parties did not plead limitations, this ground provided no basis for relief. The trial court
did not expressly address the fifth ground.
In two appellate issues, Shows asserts the trial court erred in granting the JNOV
Motion and in refusing to grant his motion for judgment nihil dicit. In a cross-point, the
Man Parties assert that Shows is not entitled to judgment as a matter of law because he
failed to properly designate an expert regarding reasonable and necessary repair costs and
because there is no evidence that the damages awarded by the jury are reasonable and
necessary repair or replacement costs.
II. ISSUES AND ANALYSIS
A. As a matter of law, may a subsequent buyer of used goods sue the
manufacturer of the goods for a breach of the implied warranty of
merchantability that allegedly occurred when the goods left the
manufacturer’s possession as part of the first sale of the goods?
Under his first issue, Shows asserts that the trial court erred in granting relief
based upon the second ground in the JNOV Motion. Under this ground, the trial court
concluded that there is no implied warranty of merchantability in favor of a buyer who
purchases goods knowing that they are used. In support of this ground, the Man Parties
rely upon the Chaq Oil Company case and court-of-appeals cases following it, in which
the courts hold that an implied warranty of merchantability does not arise when a buyer
purchases goods knowing that they are used (hereinafter the ―Chaq Oil Rule‖).3 See
Bren-Tex Tractor Co. v. Massey Ferguson, Inc., 97 S.W.3d 155, 159, n.8 (Tex. App.—
Houston [14th Dist.] 2002, no pet.); Chaq Oil Co. v. Gardner Machine Corp., 500
S.W.2d 877, 878 (Tex. Civ. App.—Houston [14th Dist.] 1973, no writ); Southerland v.
Northeast Datsun, Inc., 659 S.W.2d 889, 891 (Tex. App.—El Paso 1983, no writ);
Bunting v. Fodor, 586 S.W.2d 144, 145–46 (Tex. Civ. App.—Houston [1st Dist.] 1979,
3
The Supreme Court of Texas has not yet addressed this issue.
4
no writ); Valley Datsun v. Martinez, 578 S.W.2d 485, 489 (Tex. Civ. App.—Corpus
Christi 1979, no writ). Commentators have criticized the Chaq Oil Rule, arguing that this
rule is contrary to the unambiguous language of the Uniform Commercial Code and lacks
a sound basis. See Kendall M. Gray, Comment, Merchantability and Used Goods Do
You Really Get What You Pay For? 45 BAYLOR L. REV. 665, 671–83 (1993); John F.
Hunt, Comment, Implied Warranties of Quality on Used Motor Vehicles in Texas, 9 ST.
MARY’S L.J. 308, 315–22 (1977); John J. Stasney III, Comment, UCC Implied Warranty
of Merchantability and Used Goods, 26 BAYLOR L. REV. 630, 637–41 (1974). Texas is
one of the few states to follow the Chaq Oil Rule; most state courts that have addressed
this issue have concluded that a warranty of merchantability is implied in a contract for
the sale of goods, even if the buyer purchases the goods knowing that they are used. See
Beck Enterprises, Inc. v. Hester, 512 So. 2d 672, 675–76 (Miss. 1987) (surveying cases
from various states on this issue); Moore v. Burt Chevrolet, Inc., 563 P.2d 369, 370
(Colo. Ct. App. 1977) (same).
But, significantly, the cases supporting the Chaq Oil Rule address whether an
implied warranty of merchantability arises when a subsequent buyer purchases goods
knowing that they were used; these cases do not address whether the subsequent buyer
may sue the manufacturer of the goods for a breach of the implied warranty of
merchantability that allegedly occurred when the goods left the manufacturer’s
possession as part of the first sale of the goods. See Bren-Tex Tractor Co., 97 S.W.3d at
159, n.8; Chaq Oil Co., 500 S.W.2d at 878; Southerland, 659 S.W.2d at 890–91;
Bunting, 586 S.W.2d at 144–46; Valley Datsun, 578 S.W.2d at 489.4 These cases address
whether a subsequent buyer of used goods may sue the subsequent seller based upon an
implied warranty of merchantability arising in the subsequent sale. See Bren-Tex Tractor
4
Though the Bren-Tex Tractor court analyzed claims against the manufacturer of a tractor, the Bren-Tex
Tractor court did not analyze claims by the subsequent purchaser against the manufacturer. See Bren-Tex
Tractor Co., 97 S.W.3d at 158. Instead, that case involved a claim against the manufacturer for
indemnity by the seller of the used tractor, and the issue was whether the seller was independently liable
so as to preclude the seller’s recovery on the indemnity claim. See id. Therefore, the Bren-Tex Tractor
court addressed whether the buyer of the used tractor had a claim for breach of the implied warranty of
merchantability against the seller of the used tractor. See id. 158–61 & n.8.
5
Co., 97 S.W.3d at 159, n.8; Chaq Oil Co., 500 S.W.2d at 878; Southerland, 659 S.W.2d
at 890-91; Bunting, 586 S.W.2d at 144–46; Valley Datsun, 578 S.W.2d at 489. Even
though a warranty of merchantability is not implied under Texas law in such a contract
for the sale of used goods, a warranty of merchantability still may be implied in a
contract for the sale of new goods by the manufacturer. See Nobility Homes of Texas,
Inc. v. Shivers, 557 S.W.2d 77, 81 (Tex. 1977).
Though the trial evidence proves as a matter of law that Shows bought the Vessel
knowing that the Vessel and its engines were used, Shows did not sue the person who
sold him the Vessel. Thus, this case does not involve any issue as to whether a warranty
of merchantability was implied in the 2002 contract by which Shows purchased the
Vessel. Instead, this case involves a different question: whether a subsequent buyer of
used goods may sue the manufacturer of the goods for a breach of the implied warranty
of merchantability that allegedly occurred when the goods left the manufacturer’s
possession as part of the first sale of the goods.5 As to this issue, the cases supporting the
Chaq Oil Rule are not on point. The parties have not cited and research has not revealed
any Texas case that directly addresses this issue.
Unlike most other states, Texas adopted the Uniform Commercial Code without
choosing any of its three statutory options concerning who may sue on warranties;
instead, the Texas Legislature expressly delegated that choice to the courts. Compare
U.C.C. § 2.318 (1966) (providing three alternatives under which a seller’s express or
implied warranties extend to either (1) any natural person in the family or household of
the seller’s buyer or who is a houseguest of the buyer, if it is reasonable to expect that
such person may use, consume, or be affected by the goods and who suffers personal
injury as a result of the breach of warranty, (2) any natural person who may reasonably
5
To prove a breach-of-implied-warranty-of-merchantability claim, the plaintiff must show, among other
things, that when the goods left the defendant’s possession they ―were unfit for the ordinary purposes for
which they are used because of a lack of something necessary for adequacy, i.e., because of a defect.‖
Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 444 (Tex. 1989). The jury’s liability finding is broad
enough to encompass a breach of the implied warranty of merchantability by the Man Parties in 2000,
when the engines were delivered to the original buyer.
6
be expected to use, consume, or be affected by the goods and who suffers personal injury
as a result of the breach of warranty, or (3) any person who may reasonably be expected
to use, consume, or be affected by the goods and who suffers injury as a result of the
breach of warranty), with Tex. Bus. & Comm. Code Ann. § 2.318 (West 2011) (stating
that ―this chapter does not provide whether anyone other than a buyer may take
advantage of an express or implied warranty of quality made to the buyer or whether the
buyer or anyone entitled to take advantage of a warranty made to the buyer may sue a
third party other than the immediate seller for deficiencies in the quality of the goods.
These matters are left to the courts for their determination.‖). See PPG Industries, Inc. v.
JMB/Houston Centers Partners Limited Partnership, 146 S.W.3d 79, 88 (Tex. 2004).
Pursuant to that mandate, in Nobility Homes of Texas, Inc. v. Shivers, the Supreme
Court of Texas held that a downstream buyer of a mobile home could bring a claim for
breach of the implied warranty of merchantability against a remote manufacturer, even
though there was no privity of contract between them. See Nobility Homes, 557 S.W.2d
at 81. In the Nobility Homes opinion, the Supreme Court of Texas broadly stated that a
manufacturer can be liable to a consumer, without regard to privity, for the economic loss
resulting from the manufacturer’s breach of the implied warranty of merchantability. See
id. Though the Nobility Homes court did not specifically say that a subsequent buyer
who bought the goods knowing that they were used could sue the manufacturer for
breach of this implied warranty, the high court did not exclude this possibility. See id. at
80–82. Indeed, the Nobility Homes court did not even mention whether the mobile home
was new or used when the claimant bought it. See id. at 77–78, 80–82. In addition, the
Nobility Homes court indicated that a ―consumer‖ may sue a manufacturer whose alleged
breach of the implied warranty of merchantability resulted in economic loss to the
―consumer.‖6 See id. at 77, 81. We conclude that a subsequent buyer of used goods may
sue the manufacturer of the goods for a breach of the implied warranty of merchantability
that allegedly occurred when the goods left the manufacturer’s possession as part of the
6
The Nobility Homes court did not specifically define the category of persons to whom the implied
warranty of merchantability extends. See Nobility Homes, 557 S.W.2d at 80–82.
7
first sale of the goods, even if the subsequent buyer knew the goods were used when he
purchased them.7 This conclusion is supported by authority from other states. 8 See
Hargett v. Midas Int’l Corp., 508 So. 2d 663, 664–65 (Miss. 1987) (holding that
subsequent buyer of used motor home could sue manufacturer of motor home for breach
of the implied warranty of merchantability that allegedly occurred when the goods left
the manufacturer’s possession as part of the first sale of the goods); Perry v. Lawson
Ford Tractor Co., 613 P.2d 458, 461–62 (Okla. 1980) (holding that subsequent buyer of
used combine could sue combine manufacturer for breach of the implied warranty of
merchantability, even though combine was used at time of the subsequent purchase);
Western Equipment Co. v. Sheridan Iron Works, Inc., 605 P.2d 806, 807–10 (Wyo. 1980)
(holding that subsequent buyer of used water tanks could sue manufacturer of the tanks
for breach of the implied warranty of merchantability, even though water tanks were used
at time of the subsequent purchase).
We decline the Man Parties’ suggestion that we extend the Chaq Oil Rule to
preclude a subsequent buyer from bringing a claim for breach of the implied warranty of
merchantability against the manufacturer whenever the buyer knew the goods were used
when he purchased them. We conclude the trial court erred to the extent it granted
judgment notwithstanding the verdict under the second ground asserted in the JNOV
Motion. See Nobility Homes, 557 S.W.2d at 80–82; Hargett, 508 So. 2d at 664–65;
Perry, 613 P.2d at 461–62; Western Equipment Co., 605 P.2d at 807–10.
7
We conclude that such a subsequent buyer may assert a claim against the manufacturer for breach of the
implied warranty of merchantability. Of course, a particular claim still may fail for any number of other
reasons, such as disclaimer of the warranty or statute of limitations. But the claim against the
manufacturer is not barred simply because the claimant is a subsequent purchaser who bought the goods
knowing they were used.
8
This court’s opinion in Hou-Tex, Inc. v. Landmark Graphics is not on point. See 26 S.W.3d 103, 108–09
(Tex. App.—Houston [14th Dist.] 2000, no pet.). The Hou-Tex court held that the claimant could not
maintain a claim for breach of the implied warranty of merchantability, but the claimant in that case was
never a buyer, end-user, or possessor of the product. See id. at 108. In addition, the Hou-Tex court did
not address whether claimants in other fact patterns could sue for breach of this warranty. See id. at 108–
09.
8
B. Did the trial court err in requiring privity of contract?
In the first ground of the JNOV Motion, the Man Parties argued that Shows cannot
assert a claim for breach of the implied warranty of merchantability because there is no
evidence that the Man Parties sold any goods to Shows, which the Man Parties alleged
was required for Shows to recover on this claim. The trial court agreed and granted the
JNOV Motion on the first ground based upon the lack of privity of contract between
Shows and the Man Parties. Privity of contract is not required for Shows to recover
based upon an alleged breach of the implied warranty of merchantability. See Nobility
Homes, 557 S.W.2d at 80–82. The trial court erred to the extent it granted judgment
notwithstanding the verdict under the first ground asserted in the JNOV Motion. See id.
C. Did the trial court err in granting the JNOV Motion based upon an alleged
disclaimer by the first purchaser?
In the fourth ground in the JNOV Motion, the Man Parties asserted that, by means
of the document contained in Defendant’s Exhibit 1, the first purchaser of the engines
effectively disclaimed the implied warranty of merchantability as a matter of law and
therefore Shows cannot recover for breach of the implied warranty of merchantability.
Disclaimer of the implied warranty of merchantability is an affirmative defense that must
be pleaded under Texas Rule of Civil Procedure 94. Johnston v. McKinney American,
Inc., 9 S.W.3d 271, 280 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). The Man
Parties did not plead this affirmative defense.
The Man Parties assert that their disclaimer defense was tried by consent. They
note that Defendant’s Exhibit 1, upon which they base their disclaimer argument, was
admitted into evidence at trial without objection. Clark Bruening, the corporate
representative for both of the Man Parties, testified that Defendant’s Exhibit 1 is the
warranty form used from 1998 through 2000 for the type of engine installed on the
Vessel in 2000. Shows testified he found this warranty form on the internet in 2004,
when Shows was trying to locate the warranty applicable to the Vessel’s engines. Shows
stated that ―at first I was hoping it didn’t apply, because of the date on the agreement . . .
9
But I learned . . . from MAN that it did apply.‖ The Man Parties’ counsel then asked
Shows, ―That — that version applied?‖ Shows answered, ―I can’t tell you that.‖ Neither
Bruening nor Shows testified to any personal knowledge regarding the 2000 transaction
or the sale of the engines used on the Vessel. Bruening testified that (1) in 2000 Man had
a warranty on its engines, (2) Defendant’s Exhibit 1 is the warranty form that Man was
using in October 2000, (3) Defendant’s Exhibit 1 is ―the warranty that was in place in
2000 that MAN was using for engines such that Mr. Shows has in his book [sic].‖
The word ―disclaimer‖ was not uttered at trial. None of the testimony or
questioning addressed or mentioned section V(h) of Defendant’s Exhibit 1, which
contains a disclaimer of implied warranties. Shows sought to recover based upon a claim
for breach of express warranty, and the testimony regarding Defendant’s Exhibit 1 was
relevant to another issue—the scope of the express warranty. Shows asserted that, as
reflected by Plaintiff’s Exhibit 3, there was a different express warranty that covered the
alleged defect. If Defendant’s Exhibit 1 was the express warranty in question, then the
valve problem in question would not be covered by the express warranty. Therefore, the
admission and use of Defendant’s Exhibit 1 at trial was relevant to express-warranty
issues and did not necessarily reflect that a disclaimer argument was being advanced.
The jury was not charged on disclaimer. On this record, we conclude that the Man
Parties’ disclaimer defense was not tried by consent.9 See Johnston, 9 S.W.3d at 281–82
(holding that disclaimer defense was not tried by consent). Because the Man Parties did
not plead the disclaimer defense and because it was not tried by consent, the Man Parties
waived this defense.10 The trial court erred to the extent it granted judgment
notwithstanding the verdict under the fourth ground asserted in the JNOV Motion.11
9
The Man Parties cite a case in which the court held that an affirmative defense was tried by consent. See
Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711, 719–20 (Tex. App.—Dallas 2004, no pet.).
But in that case, the defense was unambiguously raised as an issue at trial. See id.
10
Judgment notwithstanding the verdict would not have been appropriate even if the parties had tried the
disclaimer defense by consent. There was no jury finding regarding this defense, and the evidence at trial
did not conclusively prove this defense.
11
We need not and do not address Shows’s alternative argument regarding the Magnuson-Moss Warranty
10
D. Can this court affirm the trial court’s judgment based upon the third ground
in the JNOV Motion?
In the third ground in the JNOV Motion, the Man Parties asserted that any implied
warranty of merchantability expired no later than October 2004 (four years after the
engines were delivered to the original buyer). The Man Parties argued that Shows cannot
recover based upon an implied warranty that expired before the 2005 repairs were made.
The Man Parties asserted that this is not a statute-of-limitations issue but rather an issue
regarding the expiration of the implied warranty.
The Man Parties claim that the trial court granted the JNOV Motion based upon
the third ground. We disagree. In its order granting the JNOV Motion, the trial court
specifically states that, contrary to the Man Parties’ argument, the third ground is a
statute-of-limitations argument. Because the Man Parties did not plead this argument, the
trial court states that it is not relevant to the case under review. The order contains
general language, in which the trial court states that the JNOV Motion is granted. But in
this order the trial court does not state that the JNOV Motion is in all things granted or
granted on all grounds.
After reviewing the entire order and its substance, we conclude that the trial court
did not grant the third ground of the JNOV Motion.12 In addition, on appeal, the Man
Parties have not asserted a cross-point or cross-issue in which they argue that the third
ground would have vitiated the verdict or would have prevented affirmance of the
judgment if the trial court had rendered judgment on the verdict. Accordingly, the Man
Parties have waived the third ground. See Tex. R. App. P. 38.2(b)(1).
Act.
12
Even if the trial court had granted the JNOV Motion based upon the third ground, this ruling would
have been error. In the third ground, the Man Parties did not assert that the statute of limitations barred
Shows’s claim. The Man Parties did not cite any authority for the proposition that the implied warranty
of merchantability expires, as opposed to being barred by limitations, four years after delivery of goods to
the original buyer, and this argument lacks merit. See Tex. Bus. & Comm. Code Ann. § 2.725 (West
2011); Garcia v. Texas Instruments, Inc., 610 S.W.2d 456, 465 (Tex. 1980).
11
E. Can this court affirm the trial court’s judgment because the record contains
no evidence that the damages awarded by the jury are reasonable and
necessary repair or replacement costs?
In the fifth ground in the JNOV Motion, the Man Parties asserted that no evidence
supports the jury’s damage finding because there is no evidence that the costs of the 2005
repair were reasonable and necessary, as required by Texas law. After reviewing the
entire order and its substance, we conclude that the trial court did not grant the fifth
ground of the JNOV Motion. However, on appeal, the Man Parties have asserted a
similar argument in a conditional cross-point. In this cross-point, they argue that Shows is
not entitled to recover the damages found by the jury (1) because he failed to designate an
expert to testify that the repair or replacement damages he sought were reasonable and
necessary and (2) because there is no evidence that the damages awarded by the jury
were reasonable and necessary costs of repair or replacement. 13 The jury found that ―the
cost to replace the engine(s) in 2005‖ was $89,967 and that this amount would fairly and
reasonably compensate Shows for his damages resulting from the breach of the implied
warranty of merchantability found by the jury.
The jury charge did not require that the damages found by the jury be reasonable
and necessary costs of repair or replacement. At the charge conference, no party objected
to the trial court’s failure to charge the jury on this requirement.14 Therefore, this court
measures the sufficiency of the evidence using the charge given, even if the charge does
not correctly state the law. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000)
(holding that appellate court could not review the sufficiency of the evidence based on a
particular legal standard because that standard was not submitted to the jury and no party
13
In their conditional cross-point, the Man Parties do not assert any error regarding the trial court’s denial
of their motion for directed verdict at the close of Shows’s case-in-chief, in which they argued that there
was no evidence that the repair costs that Shows sought to recover were reasonable and necessary. Even
if the Man Parties had asserted such error, the Man Parties waived this complaint by offering evidence in
their case-in-chief and then failing to reurge their directed-verdict motion at the close of the evidence.
See Shindler v. Marr & Assocs., 695 S.W.2d 699, 706 (Tex. App.—Houston [1st Dist.] 1985, writ ref’d
n.r.e.).
14
The Man Parties objected that there was no evidence to support the submission of parts of the actual
damages question, but they did not object to the form or the wording of this question.
12
objected to the charge on this ground or requested that the jury be charged using this
standard); Hirschfeld Steel Co. v. Kellogg Brown & Root, Inc., 201 S.W.3d 272, 283–86
(Tex. App.—Houston [14th Dist.] 2006, no. pet.) (reviewing sufficiency of evidence
based on unobjected-to jury instruction and rejecting various arguments based on
different legal standards). We presume, without deciding, that Texas law requires that
any damages awarded regarding engine replacement in 2005 be reasonable and necessary
repair or replacement costs. But even under this presumption, the absence of such
evidence would not make the evidence legally insufficient to support the jury’s damage
finding, because this court reviews that finding under the charge, which does not require
that the costs be reasonable and necessary. See Osterberg, 12 S.W.3d at 55; Hirschfeld
Steel Co., 201 S.W.3d at 283–86. Therefore, the alleged absence of any evidence to
support a finding that the damages awarded were reasonable and necessary costs is not a
ground that would have vitiated the verdict or would have prevented affirmance of the
judgment if the trial court had rendered judgment on the verdict. 15 See Tex. R. App. P.
38.2(b)(1). Accordingly, we overrule the Man Parties’ sole cross-point.
Concluding that none of the grounds in the JNOV Motion provide a basis for
affirming the trial court’s judgment, we sustain Shows’s first issue.
F. Did the trial court err in denying the plaintiff’s motion for judgment nihil
dicit based on a defendant’s appearance in the case without filing an answer?
In his second issue, Shows argues that the trial court erred in denying his motion
for judgment nihil dicit based upon Man Germany’s failure to file an answer. 16 As noted,
Man Germany filed a special appearance but did not file an answer subject to that special
15
The Man Parties also request that this court remand the case to the trial court under Texas Rule of
Appellate Procedure 38.2(b)(2) and Texas Rule of Civil Procedure 324(c) for the taking of additional
evidence. See Tex. R. App. P. 38.2(b)(2); Tex. R. Civ. P. 324(c). But, under these rules a remand for the
taking of additional evidence is warranted only if the Man Parties raise a cross-point that requires the
taking of such evidence. See Tex. R. App. P. 38.2(b)(2); Tex. R. Civ. P. 324(c). Because the Man
Parties’s cross-point does not require the taking of additional evidence, we deny the Man Parties’ request
under these rules.
16
This issue is not moot based upon the sustaining of the first issue because Shows arguably could have
obtained a larger money judgment against Man Germany if the trial court had granted his motion for
judgment nihil dicit.
13
appearance. Before trial, the trial court denied Man Germany’s special appearance; but,
Man Germany still did not file an answer before trial began. Man Germany appeared at
trial through its counsel and its corporate representative. Though Shows was entitled to
seek a judgment nihil dicit against Man Germany based on its failure to answer, Shows
did not do so until after he rested his case in chief at trial. At that time, Man Germany
still had not filed an answer. The trial court denied Shows’s request for a judgment nihil
dicit and concluded that Shows waived his right to this relief by proceeding to trial.
Though Shows would have been entitled to seek a judgment nihil dicit before trial,
he did not do so and instead proceeded to trial against Man Germany. Thus, the trial
court did not err by concluding that Shows waived any right to a judgment nihil dicit.
See Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979) (stating that, though there is a
difference between default judgments and judgments nihil dicit, the same rules generally
apply to both); Estate of Grimes v. Dorchester Gas Producing Co., 707 S.W.2d 196, 204
(Tex. App.—Amarillo 1986, writ ref’d n.r.e.) (holding that plaintiffs waived their right to
a default judgment or interlocutory judgment against non-answering defendants by
proceeding to trial); Foster v. L.M.S. Development Co., 346 S.W.2d 387, 397 (Tex. Civ.
App.—Dallas 1961, writ ref’d n.r.e.) (concluding that even if defendant who participated
at trial had failed to file an answer, plaintiffs waived their right to a default judgment by
proceeding to trial). Accordingly, we overrule Show’s second issue.
III. CONCLUSION
Under the Chaq Oil Rule, a warranty of merchantability under the Uniform
Commercial Code is not implied in a contract for the sale of goods if the buyer purchases
the goods knowing that they are used. But this rule does not apply to the case under
review, and we decline to extend the Chaq Oil Rule to apply to a claim by a subsequent
buyer against the manufacturer. Instead, we conclude that a subsequent buyer of used
goods may sue the manufacturer of the goods for a breach of the implied warranty of
merchantability that allegedly occurred when the goods left the manufacturer’s
possession as part of the first sale of the goods, even if the subsequent buyer knew the
14
goods were used when he purchased them. Because none of the grounds in the JNOV
Motion provide a basis for affirming the trial court’s judgment, we sustain Shows’s first
issue. Under the charge submitted to the jury, the Man Parties’ cross-point lacks merit.
In addition, the trial court did not err in concluding that Shows waived any right he had to
a judgment nihil dicit against Man Germany by proceeding to trial without first seeking
such a judgment. Accordingly, we reverse the trial court’s judgment and remand with
instructions for the trial court to adjudicate Shows’s request for attorney’s fees and then
to render judgment on the jury’s verdict, with attorney’s fees to be awarded as
determined by the trial court on remand.17
/s/ Kem Thompson Frost
Justice
Panel consists of Chief Justice Hedges and Justices Frost, and Christopher.
17
The parties stipulated before trial that Shows’s request for attorney’s fees would be tried separately to
the bench.
15