Eastern Mountain Platform Tennis, Inc. v. Sherwin-Williams Co.

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 94-1044
EASTERN MOUNTAIN PLATFORM TENNIS, INC.,
Plaintiff, Appellant,
v.
THE SHERWIN-WILLIAMS COMPANY, INC.,
Defendant, Appellee.
No. 94-1045
EASTERN MOUNTAIN PLATFORM TENNIS, INC.,
Plaintiff, Appellee,
v.
THE SHERWIN-WILLIAMS COMPANY, INC.,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Clarence C. Newcomer,* Senior U.S. District Judge]
Before
Torruella, Circuit Judge,
Campbell, Senior Circuit Judge,
and Carter,** District Judge.
* Of the Eastern District of Pennsylvania, sitting by
designation.
** Of the District of Maine, sitting by designation.
Ovide M. Lamontagne with whom George R. Moore and Devine,
Millimet & Branch, P.A. were on brief for The Sherwin-Williams
Company.
Stephen S. Ostrach, Patrick W. Hanifin, Todd S. Brilliant
and New England Legal Foundation were on brief for Business and
Industry Association of New Hampshire, amicus curiae.
Kenneth G. Bouchard with whom Paul B. Kleinman and Bouchard
& Mallory, P.A. were on brief for Eastern Mountain Platform
Tennis, Inc.
November 28, 1994
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CARTER, Chief District Judge. This action arose from
the sale of a paint system recommended by Defendant, The Sherwin-
Williams Company ("Sherwin-Williams"), to Plaintiff, Eastern
Mountain Platform Tennis, Inc. ("EMPT"), for use in producing
platform tennis courts. Sherwin-Williams' representative David
Shelley ("Shelley") recommended a paint system to EMPT after EMPT
informed Shelley that it would not change products unless the new
system met or exceeded the performance of the paint system it had
used previously. The Sherwin-Williams system did not perform as
well as the system it replaced. In fact, the courts covered with
Sherwin-Williams paints began to show signs of wear, with the
coating peeling away from the aluminum panels and the courts'
surface becoming slick due to loss of aluminum oxide aggregate
during the first season of use.1 After a jury trial, the jury
entered a verdict in favor of EMPT in the amount of $1,087,000.
The special verdict form indicated that the jury found that
1 The painting of the tennis platform courts involves a six-step
process and two types of paint. First, aluminum panels are
washed with acid to eliminate grease and etch the surface.
Second, the panels are sanded to increase the profile of the
surface. Third, a layer of primer epoxy paint is applied.
Fourth, aluminum oxide aggregate is pneumatically broadcast over
the wet epoxy primer layer. Fifth, a topcoat of epoxy paint is
applied. Sixth, aluminum oxide aggregate is pneumatically
broadcast over the wet topcoat.
The paint system must have two important characteristics.
First, the primer coat must adhere to the aluminum through
extreme changes of temperature because the game is played
outdoors on a year-round basis with a heater installed under the
platform to melt snow and ice. Second, both the primer coat and
the topcoat must have the capacity to hold aluminum oxide
aggregate to insure a gritty nonslip surface for platform tennis
players.
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Sherwin-Williams had violated an express warranty, an implied
warranty of fitness for a particular purpose, and the New
Hampshire Consumer Protection Act ("CPA" or "the Act"). N.H.
Rev. Stat. Ann. 358-A (1993). In addition, the jury found
that Sherwin-Williams had willfully or knowingly engaged in
unfair or deceptive practices. Pursuant to section 10 of the
CPA, the trial judge doubled the jury verdict. N.H. Rev. Stat.
Ann. 358-A:10 (1993). In addition, the trial judge awarded
prejudgment interest on the amount of the original jury verdict
up to the date of entry of the final judgment. N.H. Rev. Stat.
Ann. 524:1-b (1993).
ISSUES ON APPEAL
Sherwin-Williams raises a number of issues on appeal.
First, it challenges the trial judge's denial of summary judgment
on the CPA claim contending that the CPA does not apply to purely
commercial transactions (i.e., transactions that do not involve
sales to ultimate consumers). Second, Sherwin-Williams argues
that, if the CPA does govern purely commercial transactions, the
trial judge nevertheless erred in denying its motion for summary
judgment on the CPA claim because the undisputed facts did not
establish a violation of the Act. Third, Sherwin-Williams argues
that the trial judge erred in denying its motion to set aside the
verdict on the CPA claim because the issue should not have been
presented to the jury and because it was impossible to determine
what portion, if any, of the award was the result of the CPA
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violation. Fourth, Sherwin-Williams contends that the judge
erred in failing to give the jury instructions on "plaintiff's
misconduct" or comparative fault. Fifth, Sherwin-Williams seeks
a new trial, or remittitur, on the basis that the damages awarded
were speculative. Sixth, Sherwin-Williams asserts that the trial
judge's conduct during the trial requires a new trial. Finally,
Sherwin-Williams challenges the calculation of the award of
prejudgment interest on the grounds that such interest is
available only to the date of the jury verdict, rather than to
the date of entry of final judgment. It further contends that it
was error to award prejudgment interest on the portion of the
verdict which represented an award of future lost profits.
On cross-appeal, EMPT argues that the trial judge erred
in awarding prejudgment interest only on the original jury
verdict and not on the entire amount of the judgment, including
the doubled verdict under the CPA.
We will address, in turn, each of these contentions.
DISCUSSION
I. Application of the New Hampshire Consumer Protection Act to
the Purely Commercial Transaction.
The Appellant has failed to preserve this point for
review on appeal. The denial of a motion for summary judgment
does not merge into the final judgment. Glaros v. H.H. Robertson
Co., 797 F.2d 1564, 1573 (Fed. Cir. 1986). Such a denial, to be
preserved for review of a legal conclusion subsumed in the
ruling, must be perfected by making a motion for judgment as a
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matter of law at the close of the evidence. Watson v. Amedco
Steel, Inc., 29 F.3d 274, 279 (7th Cir. 1994); Whalen v. Unit
Rig, Inc., 974 F.2d 1248, 1251 (10th Cir. 1992); see Lama v.
Borras, 16 F.3d 473 (1st Cir. 1994). The denial of this latter
motion does merge into the judgment, and all rulings of law
subsumed within it are subject to review on appeal from the
judgment.
Here, Appellant failed to make any motion for judgment
as a matter of law at the close of all the evidence.
Accordingly, the determination, as a matter of law, by the trial
judge in ruling on the summary judgment motion that the CPA
applied to business transactions never merged into the judgment
and is not available for review on this appeal.
Even though the issue of statutory construction was not
preserved for appeal, we have nevertheless reviewed the record
and are satisfied that, in determining the legal question as to
whether the CPA applied to the type of transaction disclosed by
the evidence in this case, the trial judge committed no "manifest
error." The appeal on this point raises a question of statutory
construction. In short, Sherwin-Williams argues that the
Consumer Protection Act was intended to redress the discrepancies
between a knowledgeable commercial seller and a consumer who is
placed in the position of relying on the representations of that
seller. The provisions of the Act, Sherwin-Williams argues, have
no application where, as here, a commercial buyer acquires a
product for use in the manufacture of another product in which
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its expertise may easily be greater than that of the seller. On
amicus brief, the Business and Industry Association of New
Hampshire agrees. Because the issue raised is an issue of law,
our review is de novo.
We begin, and could easily conclude, our assessment of
this argument by considering the plain meaning of the words of
the statute. Town of Wolfeboro v. Smith, 556 A.2d 755, 756-57
(N.H. 1989). We must glean the intention of the legislature as
to the scope of the Act "from its construction as a whole, not by
examining isolated words and phrases." Petition of Jane Doe, 564
A.2d 433, 438 (N.H. 1989). A thorough reading of the entire
statute provides no direct support for Sherwin-Williams'
contention that the Act applies only to transactions with
ultimate consumers.
The unfair and deceptive practices prohibited by the CPA appear
to include transactions between business competitors as well as
those involving ultimate consumers. N.H. Rev. Stat. Ann. 358-A:2
(1993). There are no provisions which limit the Act's protection
to ultimate "consumers" alone. Indeed, there is no definition of
a consumer, a consumer good, or a consumer transaction, although
such definitions would be critical if the Act were intended to be
limited in the way that Sherwin-Williams suggests. Moreover, the
statute specifies "exempt transactions" and does not include
among them the kind of "commercial transactions" the defendant
would delete from the purview of the statutory provisions. N.H.
Rev. Stat. Ann. 358-A:3 (1993).
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With this overview of the statute, we now turn to the
specific provisions that EMPT contends make Sherwin-Williams'
acts unlawful, and provide EMPT with a right of action. Here,
the statute declares that "[i]t shall be unlawful for any person
to use any unfair method of competition or any unfair or
deceptive act or practice in the conduct of any trade or commerce
within this state." N.H. Rev. Stat. Ann. 358-A:2 (1993)
(emphasis added).2 Section 10 of the statute provides a private
right of action as follows:
I. Any person injured by another's use of
any method, act or practice declared unlawful
under this chapter may bring an action for
2 The statute defines a "person" and "trade or commerce"
broadly:
I. "Person" shall include, where applicable, natural
persons, corporations, trusts, partnerships,
incorporated or unincorporated associations, and any
other legal entity.
II. "Trade" and "commerce" shall include the
advertising, offering for sale, sale, or distribution
of any services and any property, tangible or
intangible, real, personal or mixed, and any other
article, commodity, or thing of value wherever situate,
and shall include any trade or commerce directly or
indirectly affecting the people of this state.
N.H. Rev. Stat. Ann. 358-A:1 (1993).
Sherwin-Williams' contention that the "where applicable"
language in the definition of person creates ambiguity as to
whether the act applies to commercial transactions is
unconvincing. The language is not surplusage because section 6
of the Act provides different penalties for natural persons and
all other persons. The relevant portions of the statute in this
action specifically override any restriction on the term "person"
by providing that "any person" may be guilty of unlawful or
deceptive practices under section 2, and that "any person" has a
private right of action for damages under section 10 (emphasis
added).
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damages and for such equitable relief,
including an injunction, as the court deems
necessary and proper. If the court finds for
the plaintiff, recovery shall be in the
amount of actual damages or $200, whichever
is greater. If the court finds that the use
of the method of competition or the act or
practice was a willful or knowing violation
of this chapter, it shall award as much as 3
times, but not less than 2 times, such
amount. In addition, a prevailing plaintiff
shall be awarded the costs of the suit and
reasonable attorney's fees, as determined by
the court. Any attempted waiver of the right
to the damages set forth in this paragraph
shall be void and unenforceable.
N.H. Rev. Stat. Ann. 358-A:10 (1993) (emphasis added). Defendant
points to nothing in the statute that suggests that "any person"
in either of these sections should be read to exclude commercial
purchasers. Nor do they point to language that indicates that
"commerce or trade" is restricted to commerce or trade involving
ultimate consumers. The plain meaning of the statute clearly
includes both retail and commercial transactions.
This construction is supported by the decisions of New
Hampshire courts. The New Hampshire Supreme Court has recently
observed:
[T]he Consumer Protection Act "is a
comprehensive statute designed to regulate
business practices for consumer protection by
making it unlawful for persons engaged in
trade or commerce to use various methods of
unfair competition and deceptive business
practices." Chase v. Dorais, 122 N.H. 600,
601, 448 A.2d 390, 391 (1982). The very
words contained in the statute indicate that
the act's proscriptions are to be broadly
applied.
Gilmore v. Bradgate Assoc., Inc., 604 A.2d 555, 557 (N.H. 1992)
(holding that although the condominium industry was regulated by
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a state authority, it was not exempt from the CPA under section 3
because, given the Act's expansive language, "the legislature
. . . could [not] have intended to exclude from the protection of
the act the large number of industries which are subject to
regulation in this State simply because the legislature has
provided for regulation of that industry within a statutory
framework." Id.). Since Gilmore, the issue of whether
nonconsumer plaintiffs have a cause of action under the CPA has
been raised in two New Hampshire courts and, in each instance,
the Courts have held that the plain meaning of the statute and
Gilmore do not require a plaintiff to be a consumer. Christian
Mutual Life Ins. Co. v. Kemper Securities Group, 91-C-190
(Merrimack County Superior Court, Nov. 19, 1993); A & B
Electronics Co. v. Permagile Industries, Inc., 91-C-107 (Coos
County Superior Court Jan. 15, 1993).3 While these cases are
not controlling, the decisions of lower state courts are often
3 Prior to Gilmore, the three courts which had considered the
issue had not reached uniform decisions. Bowman Business Forms,
Inc. v. Bowman, 87-E-0022-D (Merrimack County Superior Court Aug.
11, 1988)(358-A available to nonconsumer plaintiffs), contra,
International Corp. v. IDG Communications/Peterborough, Inc., No.
90-E-247 (Hillsborough County Superior Court August 27, 1990),
and Thermal Dynamics Corp. v. McGrath, No. 88-C-090 (Grafton
County Superior Court May 4, 1989)(nonconsumer plaintiffs did not
have a cause of action under the CPA.) International Corp. was
decided by Justice Kathleen McGuire who, in light of Gilmore, has
since held that the CPA's provisions extend to actions between
businesses in Christian Mutual Life, supra.
Federal judges considering the same issue have uniformly
concluded the New Hampshire Supreme Court would construe the Act
as applying to commercial transactions. See, e.g., Nault's
Automobile Sales, Inc. v. America Honda Motor Co., Acura Auto
Div., 148 F.R.D. 25, 48 (D.N.H. 1993); Globe Distributors, Inc.
v. Adolph Coors Co., 111 B.R. 377 (Bankr. D.N.H. 1990).
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the best indicator of how the high court will resolve an issue.
Commissioner v. Estate of Bosch, 387 U.S. 456, 465 (1967); In re
Brooklyn Navy Yard Asbestos Litigation, 971 F.2d 831, 850 (2d
Cir. 1992). Despite the plain language of the statute and the
dearth of case law to support its proposition that the New
Hampshire courts would adopt this narrow construction of the Act,
Sherwin-Williams makes several other arguments in favor of this
construction. We will address these arguments briefly.
Sherwin-Williams first argues that the New Hampshire
Supreme Court's decision in Chase v. Dorais, 448 A.2d 390 (N.H.
1982), supports its contention that the Consumer Protection Act
is not as broad as it appears. In Chase, the New Hampshire
Supreme Court held that no cause of action was available under
chapter 358-A when an individual, who was not in the business of
selling used cars, sold a used car to another private individual.
Id. at 391-92. This transaction was characterized by the Court
as "strictly private in nature." Id. at 392. Because the sale
in Chase did not take place in a "trade or business context" it
was not in the course of "commerce or trade" as required by
section 2 of the CPA. Id. Therefore, the CPA had no
application. The decision in Chase did not turn on whether the
transaction was a "consumer transaction" or a "commercial
transaction" but on whether it was a "private transaction" or a
"commercial transaction." Because the transaction between
Sherwin-Williams and EMPT took place in the "trade or business
context," Chase has no relevance to the issue at hand in this
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case.
Sherwin-Williams next argues that the CPA does not
apply to purely commercial transactions because it is analogous
to the Massachusetts Consumer Protection Act (Mass. Gen. L. ch.
93A, "chapter 93A"), but, unlike chapter 93A, has never been
expressly amended to provide a cause of action for transactions
between businesses. This argument is based on a myopic view of
the history of the two acts. It is true that the New Hampshire
Act is analogous in many regards to the Massachusetts Act, and
that New Hampshire courts refer to Massachusetts case law where
appropriate in construing the Act. See Chase, 448 A.2d at 391.
However, Massachusetts authorities lose relevance when, as here,
the New Hampshire legislature opted to enact different provisions
from those set out in chapter 93A. The New Hampshire Act never
included any counterpart to section 9 of chapter 93A which, prior
to 1979, restricted the availability of a private right of action
"to any person who purchases or leases goods, services or
property . . . primarily for personal, family or household
purposes." The New Hampshire legislature did not adopt this
restriction, opting instead for broad applicability in all
commerce and trade. Therefore, New Hampshire had no need to
adopt an express provision to cover commercial transactions.
Because we find no ambiguity in the plain language of
the statute, we need not consider the title of the Act in
determining the correct construction. See 2A Sutherland on
Statutory Construction 47.03 (5th ed. 1992) (the title of a
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statute should be considered only when the language of the law is
ambiguous). Even so, reference to the title "Regulation of
Business Transactions for Consumer Protection" does nothing to
shed doubt on our conclusion. The Act regulates "Business
Transactions." It is clear from the facts of the case at hand
that deceptive practices in the sale of inputs between a producer
and a manufacturer can have significant impact on consumer
welfare. This is particularly true where, as here,
misrepresentations about such matters are likely to be discovered
only after the final product begins to fail, creating costly and
potentially dangerous situations for end-line consumers.
Because the plain language of the statute encompasses
the transaction at issue and Defendant points to no authority
which would require this Court's deviation from the plain
language of the statute, there is ample basis for the trial
judge's determination to stand that the sale of the Sherwin-
Williams paint system to EMPT was covered by the New Hampshire
Consumer Protection Act.
II. Sherwin-Williams' Motion for Summary Judgment on the Basis
of Failure to Show "Rascality" as a Necessary Predicate to
Liability Under the Consumer Protection Act Claim.
We need not address the merits of this preverdict
challenge to the sufficiency of the evidence on the motion for
summary judgment. Such an attack on the denial of defendant's
motion for summary judgment "has been overtaken by subsequent
events, namely, a full-dress trial and an adverse jury verdict."
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Lama v. Borras, 16 F.3d at 476 n.5. In such circumstances, we
will not address the propriety of the denial of summary judgment
where challenge is made on the basis of the insufficiency of
evidence to support the denial in the motion record. Id. and
cases there collected. The rationale for this rule has been
based on the procedural fact that a denial of a motion for
summary judgment "is merely a judge's determination that genuine
issues of material fact exist. It is not a judgment, and does
not foreclose trial on issues on which summary judgment was
sought." Glaros v. H.H. Robertson Co., 797 F.2d at 1573. Hence,
a challenge to the sufficiency of the evidence adduced on the
motion to support the district court's conclusion that genuine
issues of material fact exist will not lie on appeal.
We have reviewed the record with respect to the merits
of this aspect of the Plaintiff's proposed challenge and are
satisfied that no manifest error exists.
III. Defendant's Motion to Set Aside the Jury Verdict on the
Consumer Protection Act Claim.
In Sherwin-Williams' motion to set aside the jury
verdict, it contended that the judge erred in submitting the CPA
claim to the jury for two reasons: (1) because the determination
of violations of the Act was a matter for the judge, not the
jury; and, (2) because it was impossible to ascertain what
portion, if any, of the damages represented actual damages
flowing from the CPA violation. The judge reviewed these
contentions to determine whether the verdict was so clearly
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against the weight of the evidence as to constitute a manifest
miscarriage of justice. Kearns v. Keystone Shipping Co., 863
F.2d 177, 181 (1st Cir. 1988). Finding that the "clear and great
weight of evidence" supported the jury verdict the judge denied
the motion. Having reviewed the record, we find that Sherwin-
Williams has waived these claims.
As for the argument that claims of violations under the
CPA are for the judge alone to try, the district judge concluded
that by failing to object to the submission of the CPA claim to
the jury, Sherwin-Williams had waived any objection.4 The judge
further noted that it was not inappropriate to submit factual
issues to the jury, reserving the equitable issues under the CPA
for the Court's determination. Memorandum, dated June 19, 1993,
at 5. Because the objection to submitting the CPA claim to the
jury was not raised below, and was not argued before this Court,
we conclude that this objection was waived.5
As for the contention that the jury verdict must be set
aside because it is impossible to ascertain what portion of the
verdict represents damages flowing from the CPA violation, this
4 In fact, Sherwin-Williams submitted proposed jury instructions
and special verdict forms which covered the claims under the CPA.
5 On appeal Sherwin-Williams argues that the matter should not
have gone to the jury because a jury verdict was precluded by the
judge's findings on the motion for summary judgment on the fraud
and bad faith claims. This point was not argued in the motion to
set aside the verdict, nor did Sherwin-Williams raise this
objection or seek a directed verdict on this basis. Accordingly,
this argument was waived. Furthermore, as discussed in section
two above, a CPA violation may be established where express or
implied warranties are breached.
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ambiguity was the result of special jury questions to which
Sherwin-Williams made no timely objection. Under Federal Rule of
Civil Procedure 49(a), the parties agree to let the court resolve
issues of fact not covered by special jury interrogatories unless
an objection is raised before the jury retires. Rule 49(a)
"ensures that, if submitted questions omit material issues of
fact and no timely objection is lodged, the district court may
itself make the findings which are necessary to cure the
omission. . . . Curative findings are implied even when not
expressly made." Peckham v. Continental Casualty Insurance Co.,
895 F.2d 830, 836 (1st Cir. 1990) (citation omitted). By failing
to object to the damages interrogatory before the jury retired,
Sherwin-Williams agreed to let the court determine this issue.
Sherwin-Williams has not challenged the district court judge's
determination that all damages flowed from the CPA violation, an
implicit finding based on the court's doubling of the damages.
Therefore, the issue was waived.
IV. Plaintiff Misconduct as Defense to Warranty Claims.
Defendant's next assignment of error is that the
district court judge erred in refusing to instruct the jury on
"plaintiff misconduct" or comparative fault due to Plaintiff's
alleged failure to use the vinyl wash primer or to test the paint
system adequately before going into full production with Sherwin-
Williams products. Defendant contends that principles of
comparative fault apply under New Hampshire law to claims based
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on breach of warranty.6 In support of this proposition,
Sherwin-Williams relies on Thibault v. Sears, Roebuck & Co., 395
A.2d 843 (N.H. 1978). In Thibault, the Court gave judicial
recognition to comparative fault in personal injury cases based
on strict liability and breach of implied warranty of
merchantability. Id. at 850. Plaintiff argued, and the district
court agreed, that Thibault does not apply to all warranty cases
but is limited to personal injury cases. Memorandum denying
Sherwin-Williams' motion for a new trial, dated June 1, 1993, at
6. The district court judge further held that, even if he had
erred in failing to give an instruction on Plaintiff's
misconduct, the error was harmless because, in order to render
its verdict, the jury had to determine that EMPT's reliance on
Sherwin-Williams' recommendations was reasonable. Memorandum
dated June 1, 1993, at 7. For the reasons that follow, we find
that the district judge did not err in refusing to give an
instruction based on "plaintiff's misconduct."
First, we agree that the holding in Thibault does not
presage the general extension of notions of comparative fault to
6 On appeal, Sherwin-Williams also argues that a comparative
fault instruction should have been given with regard to the CPA.
However, Sherwin-Williams never articulated the position that
comparative fault was relevant to the CPA claim. Rather, in its
motion for a new trial Sherwin-Williams' assignment of error was
addressed only to the Court's refusal "to charge the jury and
submit special interrogatories on the issue of 'plaintiff's
conduct' (i.e. assumption of the risk) with respect to its breach
of warranty claims." Defendant's Motion for a New Trial on
Liability and Damages, 3 (emphasis added). Accordingly, we
find that Sherwin-Williams has waived the issue of the
application of comparative fault principles under the CPA.
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all breach of warranty cases. Thibault was decided to bring
recovery rules in cases based on strict liability in tort into
line with statutory recovery rules governing tort cases based on
negligence. Id. Sherwin-Williams has not cited, nor have we
found, any New Hampshire case which applies comparative fault in
warranty cases except in personal injury cases based on dual
theories of strict liability in tort and breach of an the implied
warranty of merchantability. N.H. Rev. Stat. Ann. 382-A:2-314
(1993).
Thibault does not address the availability of such a
defense to override either an express warranty or an implied
warranty of fitness for a specific purpose under the New
Hampshire Uniform Commercial Code ("NHUCC"). N.H. Rev. Stat.
Ann. 382-A:2-313, 2-315. These provisions govern the creation
of specific warranties between the buyer and seller of goods.
Under NHUCC, such warranties may be excluded or modified only (a)
in writing, or (b) under specific circumstances.7 N.H. Rev.
7 One such circumstance which has the effect of limiting implied
warranties is when a buyer examines, or has the opportunity to
examine, a product and, despite defects that the buyer discovered
or should have discovered, enters into a contract to purchase
goods. See N.H. Rev. Stat. Ann. 382-A:2-316(3)(b) (1993).
However, the buyer is not responsible for discovering latent
defects. Id. Here, it is undisputed that early inspection of
the first deck painted using Sherwin-Williams products did not
reveal the defects which caused the failure of the paint system
within the first season in use.
More important, inspection and testing does not negate an
express warranty. See General Electric Co. v. United States
Dynamics, Inc., 403 F.2d 933, 935 (1st Cir. 1968)(holding that
under identical provisions of the Massachusetts Uniform
Commercial Code "inspection [under section 2-316(3)(b)] could not
offset express warranties").
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Stat. Ann. 382-A:2-316 (1993). We do not believe that the New
Hampshire Supreme Court, in crafting a judicial rule of recovery
governing strict liability in tort cases, had any intention of
altering the comprehensive statutory provisions of the NHUCC
governing sales contracts.
Furthermore, even if the concept of comparative fault
were available as a defense to a claim based on breach of
warranty in a contract case, Sherwin-Williams has not alleged
anything amounting to "plaintiff misconduct" on EMPT's part. The
New Hampshire Supreme Court has defined "plaintiff's misconduct"
as "product misuse or abnormal use, as well as embodying the
'negligence' or 'assumption of the risk' concepts in our prior
cases of voluntarily and unreasonably proceeding to encounter a
known danger." Thibault, 395 A.2d at 849. Defendant has not
alleged that Plaintiff either misused the products or
"voluntarily and unreasonably proceed[ed] to encounter a known
danger." The uncontroverted evidence at trial established that
EMPT used the products in accordance with Sherwin-Williams'
recommendations and that such use was supervised by a Sherwin-
Williams representative who observed each phase of the
application process. After the first deck was completed, there
was no indication that the paint system was not suitable for
EMPT's purpose. Thus, there is no evidence that EMPT "misused"
the paints, put the paints to abnormal use, or that it knowingly
and unreasonably proceeded to encounter a known danger.
Accordingly, Sherwin-Williams was not entitled to an instruction
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on Plaintiff's misconduct.
V. Denial of Motion for New Trial on Damages and Remittitur.
The trial judge denied Sherwin-Williams' motion for a
new trial or remittitur, concluding that the damages awarded were
based on a rational appraisal of the damages. In reviewing an
award of damages, the district court is obliged to review the
evidence in the light most favorable to the prevailing party and
to grant remittitur or a new trial on damages only when the award
"exceeds any rational appraisal or estimate of the damages that
could be based upon the evidence before it." Kolb v. Goldring,
Inc., 694 F.2d 869, 872 (1st Cir. 1982). Under New Hampshire law
a jury award of damages may be set aside only if it is
"conclusively against the weight of the evidence." Panas v.
Harakis, 529 A.2d 976, 983 (N.H. 1987). This standard "should be
interpreted to mean that the verdict was one no reasonable jury
could return." Id. Where an award of future lost profits is at
issue, the verdict will be upheld if there is sufficient data to
indicate that profits were reasonably certain to result. Petrie-
Clemons v. Butterfield, 441 A.2d 1167, 1171 (N.H. 1982). This is
so even if a business posted losses every year that it operated.
Restaurant Operators, Inc. v. Jenney, 519 A.2d 256, 260 (N.H.
1986) (upholding award of future lost profits based on
uncontradicted evidence that business "had reached the break-even
point and gave every prospect of continued growth.").
In this case, the record indicates that EMPT was at a
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break-even point and had shown strong growth for six years
preceding the paint failure. There was testimony that the cost
of repairing the decks covered with Sherwin-Williams paint would
be approximately $267,000. Lost profits to the date of trial
were $383,000 based on Plaintiff's expert's testimony that EMPT
had shown an approximate growth rate of 15% and a profit margin
of 23% on each deck. EMPT had recently constructed a new factory
and hired additional employees and, therefore, had the capacity
to maintain this growth rate into the future. There was further
testimony that it would take Mr. Rogers approximately three years
to rebuild the business. The jury awarded EMPT a total of
$1,087,000, an award that apparently includes $437,000 in lost
future profits.8
In its motion, Sherwin-Williams contended that there
was no evidence to support the award of lost profits and that,
therefore, the jury award is speculative. The trial judge, who
8 The instruction on lost profits covered both past profits and
future lost profits as follows:
Loss of profits may be recovered as consequential
damages if the plaintiff proves that it was more
probable than not that the business profits sought to
be recovered were reasonably foreseeable by the
defendant when the contract was entered, reasonably
ascertainable, and were reasonably certain to result
based upon the relevant data presented to you as
evidence in this case.
Future lost profits do not have to be proven with
absolute certainty but the plaintiff must produce
sufficient evidence to demonstrate some profits were
otherwise reasonably certain to result. As stated
above, you may not award damages that are merely
speculative.
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had the benefit of hearing the testimony and observing the
witnesses, denied this motion, finding that "the jury's verdict
is well supported up to the point that it awarded $650,000" in
repair costs and past lost profits. The district court found
that an award of future lost profits was also supported by a
rational appraisal of the evidence.
The jury could also award a higher figure
because there was sufficient evidence for the
jury to determine future lost profits. . . .
The evidence produced concerning future lost
profits was not precise, but it was
sufficient to enable the jury to project and
calculate beyond the $650,000 amount. For
example, Plaintiff's expert, Mr. Hughes
testified that the business had gotten to the
stage where the fixed costs were covered so
that every additional sale went to the bottom
line; therefore, the profits from additional
sales go directly to net profit. In addition
to this, Mr. Rogers testified that it would
take three years to rebuild the business,
. . . and Messrs. Rogers, Hughes, Crabtree,
and Liddy all testified that the business was
generally not affected by the fluctuations in
the economy and that the business continued
to grow on a yearly basis. The evidence was,
therefore, sufficient to support an award of
future lost profits in the amount of
$437,000.
Memorandum, dated June 1, 1993, at 10-11. Having reviewed the
record, we cannot say that the district court erred in concluding
that the jury's damage award was supported by the evidence.
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VI. The Judge's Conduct During Trial.
In its brief, Sherwin-Williams points to two statements
made by the judge during the course of the trial which, it
contends, irreversibly prejudiced the process and constituted
judicial misconduct. In order to sustain this charge, this court
must find that "a party was so seriously prejudiced as to be
deprived of a fair trial . . . . in light of the entire
transcript." Aggarwal v. Ponce School of Medicine, 837 F.2d 17,
22 (1st Cir. 1988) (citing Crowe v. Di Manno, 225 F.2d 652, 659
(1st Cir. 1955); Glasser v. United States, 315 U.S. 60, 83
(1942)).
Here, Defendant contends that two statements by the
judge to the effect that the "only issue" or "sole issue" in the
case was whether or not the Sherwin-Williams paint had failed had
prejudiced Sherwin-Williams to the extent of depriving it of a
fair trial. Taken out of context, the statements appear
improper. However, viewed in context, the statements related
only to the relevancy of comparisons of product specifications
which were both confusing and cumulative. Moreover, in both
instances, the judge permitted the Defendant's attorneys to
proceed with their questions relating to these specifications.
In light of the jury instructions at the beginning of the trial
explaining the proper role of judge and jury, and the
instructions at the end of the trial outlining the many factual
issues to be decided by the jury, we do not believe these
isolated statements had the effect of removing issues from the
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jury and depriving Sherwin-Williams of a fair trial.
VII. Sherwin-Williams' Objections to the Award of
Prejudgment Interest.
Sherwin-Williams is correct in its challenge to the
award of prejudgment interest from the date of the jury verdict
to that of the final judgment. The New Hampshire legislature has
provided for prejudgment interest in cases "in which a verdict is
rendered or a finding is made for pecuniary damages to any party
. . . from the date of the writ or the filing of the petition to
the date of such verdict or finding." N.H. Rev. Stat. Ann.
524:1-b (1993). The plain language of the statute indicates
that the award of prejudgment interest should be granted to the
date of the verdict or finding. Although Plaintiffs contend that
the word "finding" should be interpreted to mean a "final
judgment," there can be no doubt, in light of the history of the
statute, that this was not the legislature's intention. The
history of the statute reveals that in 1969, the provision was
rephrased and the words "verdict or finding" were substituted for
"entry of final judgment." Accordingly, we conclude that EMPT
was entitled to prejudgment interest only up to January 12, 1993,
the date of the verdict in this case, and we remand for a
recalculation of prejudgment interest and entry of final judgment
in accordance therewith.
Defendant's second argument, that the award of
prejudgment interest on future lost profits was improper, has
been waived. Sherwin-Williams never raised the issue of
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prejudgment interest on future lost profits -- objecting only to
the award of such interest on the "punitive" portion of the
judgment.9 Moreover, Sherwin-Williams' request for relief was
for the district court to "calculate the award of pre-judgment
interest based on the amount of the jury's verdict of
$1,087,000." Defendants' Objection to Plaintiff's Amended Motion
for Pre-Judgment Interest. Accordingly, Sherwin-Williams has
waived any objection to the award of prejudgment interest on
future lost profits.
VIII. EMPT's Objection to the Award of Prejudgment Interest.
EMPT cross-appeals claiming that the trial judge erred
in denying its request for prejudgment interest on the full
amount of the judgment after the judge doubled the jury award
pursuant to section 10 of the CPA. The district court judge
denied the request for prejudgment interest based on the purpose
of section 524:1-b, which is to compensate the plaintiff for loss
of use of the money it should have had. See Lakin v. Daniel Marr
& Son, Co., 732 F.2d 233, 238 (1st Cir. 1984). Noting, in
particular, that the statute provides for prejudgment interest on
"pecuniary damages," we agree that the judge did not err in
refusing to award prejudgment interest on the doubled award.
9 The jury was instructed that damages were available to
compensate plaintiff for (a) the cost of repairs, and (b) lost
profits. We are satisfied that, based on these instructions, the
jury verdict included only pecuniary damages.
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CONCLUSION
The decision below is remanded for recalculation of
prejudgment interest from the date of filing to the date of the
jury verdict. In all other regards, the district courts rulings
and judgment are affirmed.
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