COURT OF
APPEALS DECISION DATED AND
RELEASED MARCH
26, 1997 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 96-1043
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT II
WISCONSIN
PLATING WORKS
OF
RACINE, INC.,
Plaintiff-Respondent,
v.
BECKART
ENVIRONMENTAL, INC.,
Defendant-Appellant.
APPEAL
from a judgment of the circuit court for Racine County: DENNIS J. FLYNN, Judge. Affirmed.
Before
Snyder, P.J., Brown and Anderson, JJ.
ANDERSON,
J. Beckart Environmental, Inc. (Beckart) appeals
from a judgment denying its motions after verdict and affirming the jury’s verdict
for breach of its performance warranty and awarding damages in favor of
Wisconsin Plating Works of Racine, Inc. (WPW).
Beckart argues that the purchase contract included a limitation of
remedies which should have been enforced; WPW failed to mitigate its damages;
WPW’s lost profits were not foreseeable and should not have been recoverable;
and WPW should have been compelled to elect its remedy before trial. Beckart also questions several evidentiary
rulings made by the trial court. We
conclude that once a performance guaranty is given, the limitation of remedies
fails for its essential purpose because it does not make a party whole if the
guaranteed product or service does not meet the requisite standards. We further conclude that the mitigation of
damages and foreseeability of lost profits are questions for the jury and will
not be disturbed; Beckart waived the election of remedies argument; the rulings
on the two plants are moot; and Beckart’s issues with the expert testimony all
go to the weight of the testimony and not its admissibility. Accordingly, we affirm.
Background
WPW
operated an electroplating plant in Racine, Wisconsin.[1] In 1988, due to federal, state and local
mandates, WPW was required to install a system that would treat the effluent
from its plating production line prior to discharge to the city sewer
system. Between October and December
1988, WPW and Beckart negotiated a contract whereby Beckart agreed to design a
system, purchase equipment and supervise the installation of a pretreatment
system at WPW’s Hamilton Street plant.
Beckart selected an air flotation system for WPW and agreed to provide
certain warranties and guarantees as to the capabilities of the system.
By
April 1989, the system was installed and operational. From the beginning of operation, the system did not function
properly. WPW outlined several of the
problems in a letter dated August 28, 1989.
Beckart made numerous modifications to the system; however, WPW
continued to have system failures through August 1993. In October 1993, the City of Racine issued
an order requiring WPW to stop production at the Hamilton Street plant because
of its continuous noncompliance with its pretreatment permit.
Consequently,
in July 1994, WPW filed suit against Beckart for negligence, misrepresentation,
breach of contract and breach of warranty and sought damages for loss of goods,
loss of past and future profits, and loss of goodwill. Beckart filed a motion for partial summary
judgment to dismiss all claims for damages and to limit WPW’s claim to the cost
of replacement. The trial court denied
the motion.[2]
Beckart
filed motions in limine to preclude expert testimony and evidence on the issue
of profit loss as incidental and consequential damages. The trial court denied both motions. Specifically, the trial court determined
that under § 402.715, Stats.,
“it’s clear under both 1 and 2 as well as the prior section 714(3) that these
type [sic] of damages, lost profits, can in fact be addressed in proper
cases.” The trial court noted that
given the relationship between the parties:
[I]t’s asserted that the defendants were involved in the
design, manufacture and installation of the pretreatment system, that they had
an awareness of the governmental regulations that had to be adhered to, and
that they would particularly and uniquely be aware of the implications that
would inure to a plaintiff in purchasing such a system if the system in fact
did not work as represented.
It therefore concluded that “this is a proper case for
the jury to consider the issue of damages, including the element of loss of
profits.”
After
a six-day trial, the jury rendered a verdict in favor of WPW on its claim for
breach of warranty and awarded WPW $1,101,200 in out-of-pocket loss, past and
future profits and fines. Beckart filed
motions after verdict and WPW filed motions for attorney’s fees and judgment on
the verdict. The trial court granted
WPW’s motions for judgment on the verdict and attorney’s fees for a total
judgment of $1,130,798.84. Beckart
appeals. Additional facts will be
included in the body of the decision as they apply to the issues.
Discussion
Limitation of
Remedies
Beckart
first argues that the purchase contract included a limitation of remedies which
should have been enforced. Beckart
provided WPW with its original quotation on November 14, 1988, which outlined
the pretreatment process and the type and cost of the equipment required, all
subject to an attached set of terms and conditions. The attached terms and conditions of sale contained an express
warranty that provided:
Beckart
Environmental, Inc. warrants that the goods, services, or equipment furnished
pursuant hereto will (1) conform to the approved or record drawings if any, (2)
be of good workmanship, provided it has had normal use and used in accordance
with manufacturer’s instruction, for a period of 12 months from date of
start-up or 18 months from date of shipment, whichever occurs first.
In the
event that any defects in material and/or workmanship are detected within the
specified period, Beckart Environmental, Inc.’s obligation under this warranty
is limited to furnishing a replacement part F.O.B. factory. Labor of installation shall be done by
others, Beckart shall be given the opportunity to inspect such alleged defects
prior to taking any action. Components
purchased by Beckart from others and incorporated into the equipment furnished
by Beckart from others and incorporated into the equipment furnished by Beckart
shall be limited to the usual guarantee or warranty extended by the
manufacturer or supplier of such components.
BECKART MAKES NO WARRANTY OF MERCHANTABILITY NOR ANY
OTHER WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS STATED ABOVE. IT IS ALSO UNDERSTOOD AND AGREED THAT BUYER
WILL MAKE NO CLAIM AGAINST BECKART FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THE USE AND OPERATION OF
EQUIPMENT FURNISHED HEREUNDER.
In
response to concerns raised by WPW, Beckart submitted an addendum, dated
December 9, 1988, that included a performance guarantee on the treated water
and sludge, added another transfer pump, explained the other systems, i.e.,
alarm, control panel and lime feeding system and requested a 30% down payment
with the purchase order to “seal the deal.”
A December 13, 1988, letter reiterated Beckart’s performance guarantee
as follows:
Beckart
Environmental Incorporated will guarantee to meet the sewer standards as
follows:
A. The Federal Register 40 C.F.R. 413.14, and
subpart A, as of January 28, 1981.
B. Racine Sewer District permit number 1028.1-N.
* The
guarantee is in effect under the following conditions only:
(1) The flow is not to exceed 50 gpm.
(2) All treating programs done as directed by
Beckart Environmental, Inc.
(3) Equipment be properly maintained and a
continuous supply of proper chemicals be in adequate supply at all times.
(4) Polymer be purchased from Beckart
Environmental, Inc. for which they will provide free Engineering services.
(5) Clarifier to be
cleaned as needed to prevent sludge bypass to sewer.
On December 14, 1988, WPW submitted its purchase order
and down payment for the treatment system “as per [Beckert’s] Quotation dated
11/14/88, with Addendums dated 12/9/88, and guarantees dated 12/13/88 and
12/9/88.” The “[p]urchase order is
contingent upon the guarantees by Beckart Environmental to meet Local, State,
and Federal Wastewater Standards. Also
the sludge will be able to pass E.P.A., TCLP tests.” Installation began in early 1989 in conformance with the
contract.
At
the outset, we note that the contract between Beckart and WPW consisted of more
than Beckart’s original quotation. It
is hornbook law that “offer,” “acceptance” and “consideration” are elements of
an enforceable contract. See NBZ,
Inc. v. Pilarski, 185 Wis.2d 827, 837, 520 N.W.2d 93, 96 (Ct. App.
1994). The existence of an offer and
acceptance are mutual expressions of assent, and consideration is evidence of
the intent to be bound to the contract.
See id. And
when a party sends a written offer that makes acceptance of the agreement
subject to its terms, and the offeree responds with a form making its
acceptance expressly conditional on assent to its new or different terms, no
contract is formed unless the offeror accepts the offeree’s terms. See Dresser Indus. Inc. v.
Gradall Co., 965 F.2d 1442, 1449 (7th Cir. 1992). Here, WPW’s purchase order was contingent on
Beckart’s guarantees. Beckart agreed to
those terms when it began drawing up plans and constructing WPW’s system. We conclude that all documents, including
the original quotation, the addendum, guarantees and the purchase order,
constitute the contract between the parties.
Nevertheless,
Beckart submits that “while [the] ¼ performance guarantees may well ¼ have supplanted the
initial limited warranty against defects, what those additional warranties did not
address was the contract’s specific limitations on remedies.” Under the Uniform Commercial Code (UCC) a
seller of goods may limit his contractual liability through a disclaimer of
warranties or a limitation of remedies.
See Murray v. Holiday Rambler, Inc., 83 Wis.2d 406,
414, 265 N.W.2d 513, 517 (1978).[3] A disclaimer of warranties reduces the
number of circumstances in which the seller will be in breach of the contract,
thereby limiting the seller’s liability.
See id. at 414, 265 N.W.2d at 517-18. A limitation of remedies restricts the
remedies available to the buyer once a breach is established. See id. at 414, 265
N.W.2d at 518. Here, the contract
included both. Beckart’s original
quotation contained a warranty that the product was free of defects in material
and workmanship and the addendum and performance guarantee[4]
ensured compliance with federal, state and local standards. The quotation also purported to disclaim all
warranties and limited WPW’s remedies to replacement parts only.[5]
When
the express warranty conflicts with the disclaimer of all warranties, the
language of the express warranty must control.
See § 402.316(1), Stats.;
see also Murray, 83 Wis.2d at 417, 265 N.W.2d at 519. In fact, § 402.316
is designed principally to deal with those frequent
clauses in sales contracts which seek to exclude ‘all warranties, express or
implied.’ It seeks to protect a buyer
from unexpected and unbargained language of disclaimer by denying effect to
such language when inconsistent with language of express warranty ¼.
Uniform Commercial Code Comment 1, Wis. Stat. Ann. § 402.316 (West
1995). In this case, the contract
contained an express warranty that the pretreatment system would be free of
defects for up to one year and would comply with the requisite effluent
standards, subject to the limitation of remedies language.
The
contract also limited WPW’s remedies to “furnishing a replacement part F.O.B.
factory.” Such a limitation is
permissible under § 402.719, Stats. “However, the UCC disfavors limitations on
remedies and provides for their deletion where they would effectively deprive a
party of reasonable protection against breach.” Murray, 83 Wis.2d at 418, 265 N.W.2d at 520. Section 402.719(2) specifically provides: “Where circumstances cause an exclusive or
limited remedy to fail of its essential purpose, remedy may be had as provided
in chs. 401 to 411.” The purpose of an
exclusive remedy of repair or replacement, from the buyer’s standpoint, is to
give him or her goods which conform to the contract—in this case, a
pretreatment system that complies with the requisite effluent standards and
WPW’s discharge permit—within a reasonable time after a defect is
discovered. See Murray,
83 Wis.2d at 420, 265 N.W.2d at 520. As
noted by the supreme court in Murray:
[E]very buyer has the right to assume his
new car, with the exception of minor adjustments, will be ‘mechanically new and
factory furnished, operate perfectly, and be free of substantial defects’ ¼
¼ [T]he seller does
not have an unlimited time for the performance of the obligation to replace
and repair parts. The buyer of an
automobile is not bound to permit the seller to tinker with the article
indefinitely in the hope that it may ultimately be made to comply with the
warranty. At some point in time, if
major problems continue to plague the automobile, it must become obvious to all
people that a particular vehicle simply cannot be repaired or parts replaced so
that the same is made free of defect ¼.
Id. at 420-21, 265 N.W.2d at 520-21 (citations omitted) (quoted sources
omitted) (emphasis added). Where the
seller is given a reasonable opportunity to correct the defect or defects, and
the system nevertheless fails to operate free of defects, the exclusive remedy
fails of its essential purpose. See
id. at 421, 265 N.W.2d at 521.
If the exclusive limited remedy of the contract fails of its essential
purpose, then the buyer is entitled to invoke any of the remedies available
under the UCC. See id.
at 430, 265 N.W.2d at 525. This
includes the right to recover incidental and consequential damages under §
402.715, Stats. See Murray, 83 Wis.2d
at 430, 265 N.W.2d at 525.
The
jury determined that Beckart breached its performance warranties. The verdict of a jury will not be disturbed
by this court if, viewing the evidence in the light most favorable to the
verdict, any credible evidence fairly admits of an inference supporting the
verdict. See id.,
at 421-22, 265 N.W.2d at 521. Here, the
evidence was sufficient to support the jury’s implicit finding that Beckart
failed to provide WPW with a pretreatment system substantially free of defects
and that Beckart failed to get the system to comply with the requisite effluent
standards within a reasonable time.
Jeff
Toeppe, vice-president of WPW, maintained daily journals of the different
problems with the system, self-monitoring violations, city violations and
visits or consultations with Beckart employees. According to his testimony, some of the problems included: adjustments to the system at the outset; a
carry-over problem—the metal hydroxides failing to float—in May 1989 that continued
until the system was shut down in October 1993; the equalization tanks failed
to operate properly and constantly overflowed; the chain on the clarifier kept
breaking; difficulty with the lime feed; and ultimately, continuous violations
of the effluent limits. J.Toeppe also
documented the visits, adjustments and modifications made to the system by
Beckart. However, the problems
persisted, leading WPW to restrict the water flow, cut down on production and
cease certain types of line work.
J.Toeppe also testified that “[t]he city was very, very concerned about
our facility there and we were in threat of losing our discharge permit.” After losing a significant number of
customers and goodwill, WPW “decided that at this time [1993] we couldn’t
afford to put the proper equipment in at the Hamilton Street Plant.”
There
was also testimony from WPW’s system operators who were present during the
installation by Beckart until the eventual closure. All recounted the continuous problems with the system as designed,
from the mixing tanks to the sludge settling in the clarifier tank instead of
floating to the top, despite the adjustments and modifications made by Beckart.
In
addition, Frank Altmayer, a consultant in the metal finishing industry, was
hired by WPW to evaluate and provide recommendations to correct the problems
with the system. Altmayer reported four
problems with the Beckart system: (1)
the small retention time in the chromium reduction tank; (2) the size of the pH
adjustment tank; (3) insufficient chemicals to induce flocculents; and (4) the
air flotation was misapplied in this plant and should be changed to a gravity
system. His conclusion and advice “was
that the dissolved air flotation system was inadequate to achieve the standards
that they were attempting to achieve and that they ought to abandon the air
flotation system and replace it with ¼ a gravity system.”
Altmayer questioned the viability of the air flotation system because of
the difficulty to control or maintain the air particles at 100 microns or less
and the inability to consistently sustain the .05 to .03 mass ratio of air to
solids.
Altmayer’s
testimony was confirmed by another consultant, Mark Zielbeck, president of
J.Mark Systems. He stated that in his
opinion the probability of an air flotation system adequately separating WPW’s
waste as to “meet[] their discharge limits is very low, and low ¼ is less than ten
percent.” Even after modifications, for
example, the additional settling tank would not solve the problem because
“you’ve removed the material that’s heavy that wants to sink first and now
you’re still using ¼ an inefficient means of taking the rest of these
solids, the other 50 percent of them that are floating and you still do not
have a high removal rate or separation rate from the water.” For Zielbeck, the tri-weekly cleanings of
the clarifier also exemplified that the “liquid solid technique, be it floating
or sinking, is not working, what’s on the bottom of a flotation unit solids
that were supposed to float but did not.”
Finally,
Beckart’s own employee, Tom Dougherty, made numerous recommendations in a memo
dated August 27, 1993, to improve the operation of WPW’s wastewater treatment
system. Similar to WPW’s experts,
Dougherty advocated replacing the floating clarifier with a settling clarifier.
We
conclude that this evidence supports the jury’s conclusion that, despite
reasonable opportunity for repair, Beckart failed to provide WPW with a system
that conformed to the contract—a pretreatment system that complied with the
requisite effluent standards—within a reasonable time. Despite continuous adjustments and
modifications, Beckart’s “limited remedy of repair or replacement of defective
parts fail[ed] of its essential purpose when[], despite reasonable opportunity
for repair, the goods [were] not restored to a non-defective condition ¼.” Murray, 83 Wis.2d at 424, 265
N.W.2d at 522. The remedy therefore
failed of its essential purpose and the remedy of consequential damages became
available.
Nonetheless,
Beckart maintains that whether the separate limitation on consequential damages
would have made the remedy fail of its essential purpose was never addressed by
the trial court. In fact, Beckart
submits that the jury’s award of $45,000 for WPW’s loss of benefit of the
bargain/out- of-pocket loss provided WPW with “a ‘fair quantum of remedy’ for
what the jury determined was a breach of the performance guarantee.”
We
disagree. First, Beckart seems to
ignore the fact that under the contract the only remedy available to WPW was
replacement parts. Under the contract,
consequential damages were not available as a remedy. Only if the exclusive remedy—repair or replacement—failed of its
essential purpose did damages become available. As noted by the Murray court, even though “an
express warranty excludes consequential damages, when the exclusive contractual
remedy fails, the buyer may recover consequential damages under sec. 402.715,
Stats., as though the limitation had never existed.” Murray, 83 Wis.2d at 432, 265 N.W.2d at 526.
Here,
the jury implicitly determined that even though Beckart replaced or modified
defective parts, the system still failed to comply with the performance
guarantee. Section 402.719(2), Stats., provides that once a limited
remedy fails of its essential purpose, “remedy may be had as provided in chs.
401 to 411.” “In such a case the
exclusive contractual remedy ‘¼ must give way to the general remedy provision of this
Article [ch. 402, Stats.].’” Murray, 83 Wis.2d at 432, 265
N.W.2d at 526 (quoted source omitted).
Accordingly, WPW was entitled to recover consequential damages,
including reasonable damages incurred as a result of the loss of use of the
pretreatment system. See id.
Mitigation of Damages
The
law is well established in this state that a plaintiff must do all that is
reasonable to minimize damages after a breach of contract has occurred. See Sprecher v. Weston’s Bar,
Inc., 78 Wis.2d 26, 42, 253 N.W.2d 493, 500 (1977). “‘Damages are not recoverable for harm that
the plaintiff should have foreseen and could have avoided by reasonable effort
without undue risk, expense, or humiliation.’”
Id. at 44, 253 N.W.2d at 501 (quoted source omitted). However, “‘[i]t is not reasonable to expect
the plaintiff to avoid harm if at the time for action it appears that the
attempt may cause other serious harm.
He need not enter into other risky contracts, incur unreasonable
inconvenience or expense, disorganize his business, or put himself in a
humiliating position or in one involving loss of honor and respect.’” Id. (quoted source
omitted). While the “duty” to mitigate
damages rests with the aggrieved party, the burden of proof is upon the
defaulting party to establish that the former failed to do all that was
reasonable to minimize his or her damages subsequent to the breach. See id. at 42, 253
N.W.2d at 500.
Beckart
does not contest either the trial court’s jury instructions on the duty to
mitigate damages or the way the special verdict question was phrased. Rather, Beckart argues that WPW “could have
replaced the Beckart system for as little as $20,000 - $30,000,” but instead
elected the “unreasonable” option of closing its Hamilton Street plant, thereby
failing to mitigate its damages as a matter of law.
We
disagree. Beckart concedes, but
nevertheless ignores, the fact that whether WPW exercised ordinary care to
mitigate its damages is a question of fact for the jury. See Kuhlman, Inc. v. G.
Heileman Brewing Co., 83 Wis.2d 749, 755, 266 N.W.2d 382, 385
(1978). We must affirm the jury’s
verdict if there is any credible evidence to support it. See Richards v. Mendivil, 200
Wis.2d 665, 671, 548 N.W.2d 85, 88 (Ct. App. 1996). When the verdict has the trial court’s approval, this is even
more true. See Kuklinski v.
Rodriguez, 203 Wis.2d 324, 331, 552 N.W.2d 869, 872 (Ct. App.
1996). The verdict may not be
overturned unless “there is such a complete failure of proof that the verdict
must be based on speculation.” Id. There was sufficient evidence in this case
to support the jury’s determination.
Robert
Toeppe, president of WPW, explained the substantial decline in WPW’s annual
sales from installation of the Beckart system to the closure of the Hamilton
Street plant. The gross sales of the
plant declined from $812,042 in 1988 to $65,536 in 1994.[6] According to WPW’s expert, Donald Becker,
“[i]n 93 they were coming off of three significant loss years of about
$400,000, so that cash may not have been available” for WPW to invest a minimum
of $20,000 to $30,000 to fix the system.
Experts
for both sides also testified that even if WPW returned to operation at the
Hamilton Street plant, the business would not immediately return to 1988
levels. WPW’s expert, Becker, estimated
that it would take approximately five years for WPW to recapture the lost
business, whereas Beckart’s expert, Robert Berkley, determined that it would
take three years for WPW to recover lost sales.
As
the supreme court pointed out in Sprecher:
Following a
breach, it is sometimes possible for the nondefaulting party to minimize his
damages by spending a sum of money. If
the courts were to require this expenditure in every case in which it turns
out, as a matter of hindsight, that such expenditure would have minimized the
loss, courts would effectively be requiring the innocent party to incur risks
beyond those in the contract in the hope that damages could be recovered from
the breacher. ¼ Damages will
not be decreased through showing that a substantial expenditure would have
minimized the total loss or that the suggested expenditure may or may not have
decreased damages. The defaulter is in
no position to cast this risk of substantial expenditures on the
plaintiff. Since such risks arose
because of the breach, they are to be borne by the defaulting party.
Sprecher, 78 Wis.2d at 45, 253 N.W.2d at 501-02. The record is clear that WPW attempted to minimize its
damages. For four years WPW allowed
Beckart to adjust and modify the system in order to comply with the
guarantee. In addition, WPW made
additional modifications in response to Dougherty’s recommendations. WPW “purchased some of the recommended
equipment from Beckart that they gave us in the list, did the maintenance that
they requested and recycled or reran the water through the system to try to
clean it to the point where we could discharge this water into the city
sewer.” However, the Toeppes ultimately
decided that they “couldn’t afford to put the proper equipment in at the
Hamilton Street Plant.” The jury
determined that this was reasonable and we will not, based on this record,
upset that determination.
Lost Profits
Beckart
further argues that WPW’s lost profits were not foreseeable and should not have
been recoverable. Damages must flow
directly and necessarily from the breach of contract, and must be reasonably
foreseeable at the time the contract was made as a probable result of the
breach. See Reiman
Assocs., Inc. v. R/A Advertising, Inc., 102 Wis.2d 305, 320, 306 N.W.2d
292, 300 (Ct. App. 1981). As noted in Fidelity
& Deposit Co. v. Krebs Eng'rs, 859 F.2d 501, 507 (7th Cir. 1988),
“the test is whether the seller, knowing or having reason to know the buyer’s
needs, could have reasonably foreseen the loss as a probable consequence of a
breach.” The jury answered this
question in the affirmative and awarded damages of $700,000 in loss of past
profits and $350,000 in loss of future profits. On appeal, this court is to search for credible evidence to
sustain the verdict, not for evidence to sustain a verdict the jury could have
reached, but did not. See Reiman, 102 Wis.2d at 322, 306
N.W.2d at 301.
We
conclude that there is sufficient evidence before the jury from which it could
determine that Beckart could foresee damages such as those awarded. In particular, the guaranty specifically
warranted compliance with the sewer standards under 40 C.F.R. 413.14, and
subpart A, as well as the City of Racine discharge limits, permit number
1028.1-N. Without question, if the
discharge limits were not met, then WPW either would not be able to continue
plating or could go out of business.
The result of either scenario would be or could be lost profits.
In
fact, J.Toeppe stated that although WPW agreed with the “basic nuts and bolts
of the quote,” it was concerned that “there was no guarantee or performance
guarantee that they would stand behind their equipment.” J.Toeppe expressed his concerns to Tom
Fedrigon, and the two negotiated a guarantee promising compliance with federal,
state and local discharge limits.
Clearly, the parties, in particular Beckart, could reasonably have
foreseen the loss as a probable consequence of a breach.
Similar
to Krebs,[7]
Beckart knew when it sold the pretreatment system to WPW that WPW was using it
to comply with mandated discharge limits to the municipal sewer system. “It should have been reasonably foreseeable
to [Beckart] that if the [system] did not work as it should, and the [system]
could not meet applicable [discharge] standards, litigation would likely
result.” Krebs, 859 F.2d
at 507. At the time Beckart contracted
with WPW, Beckart could also have reasonably foreseen that breaching that
warranty, by supplying an inadequate pretreatment system, would result in loss
of business and profits to WPW. We
affirm the jury’s verdict as to this claim.
Election of
Remedies
Beckart
next argues that WPW should have been compelled to elect its remedy prior to
trial. In footnote 6 of its brief,
Beckart maintains that it did not waive this issue. We disagree; Beckart did not raise this argument until its
motions after verdict—a month after return of the jury’s verdict. Such failure to timely object constitutes a
waiver. See Miles v. Ace
Van Lines & Movers, Inc., 78 Wis.2d 538, 545, 241 N.W.2d 186, 189
(1976).
Evidentiary Rulings
Finally,
Beckart questions several evidentiary rulings made by the trial court. According to Beckart, the trial court
precluded testimony that WPW’s Carroll Street plant “was awash with compliance
and maintenance problems”;2 allowed
testimony relating to Shephard Plating’s dissatisfaction with its Beckart
wastewater system; and allowed WPW’s accounting expert’s “speculative
projections,” but restricted Beckart’s accounting expert from commenting on the
veracity of WPW’s expert. We will
address each seriatim.
In
reviewing a trial court’s decision concerning the admission or exclusion of
evidence, we apply the discretionary standard of review. See State v. Oberlander,
149 Wis.2d 132, 140-41, 438 N.W.2d 580, 583 (1989). We will uphold the trial court’s ruling unless it erroneously
exercised its discretion. See id. A trial court properly exercises its
discretion if it applied the proper law to the relevant facts and reached a
rational conclusion. See id. Our inquiry is not whether this court would
have admitted the evidence, but is limited to whether the trial court acted in
accordance with accepted legal standards and the facts of record. See State v. Sohn, 193
Wis.2d 346, 352, 535 N.W.2d 1, 3 (Ct. App. 1995). Even if the trial court erroneously exercised its discretion, we
will not reverse if the error was harmless.
See State v. Dyess, 124 Wis.2d 525, 543, 370 N.W.2d
222, 231-32 (1985).
Beckart’s
first contention is that “evidence of noncompliance and maintenance problems
with [WPW’s] Carroll Street system would have been highly probative” on whether
maintenance failures not only caused the compliance problems at the Hamilton
Street system, but voided the warranty.
Beckart also believes this information would have undermined R.Toeppe’s
credibility.
The
trial court concluded that “[w]hat occurred in the other plant with the other
system has absolutely no relevance to this case whatsoever”; that “the danger
of unfair prejudice far exceeds the probative value of such evidence”; and that
“information relative to the Carroll Street plant would be something other than
the established proposition in the case.”
The evidence supports this conclusion.
Bias
evidence which is only marginally relevant or which may confuse the issues is
excludable. See State v.
Lindh, 161 Wis.2d 324, 362, 468 N.W.2d 168, 182 (1991). Such is the case here. There is no duplication of finishes at the
Carroll Street and Hamilton Street plants.
J.Toeppe testified that at “[o]ne plant we do electroplating of zinc,
zinc cobalt, nickel, copper, chrome and chromating. At the other plant we have—which is the Hamilton Street plant—we
have a very small amount of electropolishing.”
In addition, the pretreatment systems at the two plants were two
different designs by two different companies.
Carroll Street utilized a gravity clarification system designed by
J.Mark Systems and Hamilton Street used the air clarification system designed
by Beckart. The trial court was
concerned that “the Carroll Street matter would have the trial divert itself.” Such evidence may have directed the jury’s
attention away from the case and is therefore prejudicial. See id. at 363, 468
N.W.2d at 182.
Beckart
further argues that the trial court erroneously exercised its discretion by
allowing evidence of Shephard Plating’s experience with its Beckart pretreatment
system. We disagree.
The
trial court concluded that testimony about Shephard Plating “relating to
whether the system (a) functioned or didn’t function and (b) whether a manual
was provided or not provided is a matter that can be gone into.” The trial court decided this because the
“link involving the defendant and plaintiff was Shephard Plating and ¼ that the plaintiff
relied directly on statements as to the installation of that type of defendant
system in Shephard Plating.”
Edward
Raymond, the former general manager of Shephard Plating, testified that
Fedrigon made certain representations about what the Beckart system could
do. The testimony was relevant to the
misrepresentation claim. The trial
court set forth a reasoned decision for admission and properly exercised its
discretion.
Even
if the trial court had erroneously exercised its discretion, Beckart prevailed
on the misrepresentation claims. Such
an error would be harmless. See Dyess, 124 Wis.2d at 543,
370 N.W.2d at 231-32.
Finally,
Beckart maintains that the trial court erred when it allowed Becker, WPW’s
accountant, to render opinions which “amounted to a mere repetition of
speculative projections made by plaintiff’s principals.” Beckart continues “[t]2he court then refused
to permit defendant’s C.P.A. to comment on the assumption and methodology that
underlay the opinions of plaintiff’s expert.”
Again, we disagree.
Expert
testimony is admissible only if it is relevant. See State v. Ross, 203 Wis.2d 66, 80, 552
N.W.2d 428, 433 (Ct. App. 1996).
Section 907.02, Stats.,
allows expert testimony if it “assist[s] the trier of fact to understand the
evidence or to determine a fact in issue.”
However, “expert testimony does not assist the fact finder if it conveys
to the jury the expert’s own beliefs about the veracity of another witness
because such testimony usurps the jury’s role.” State v. Richardson, 189 Wis.2d 418, 423, 525
N.W.2d 378, 380 (Ct. App. 1994). Both
the trial court’s determination of whether expert evidence is relevant and
whether the evidence will assist the trier of fact are discretionary
decisions. See Ross,
203 Wis.2d at 80, 552 N.W.2d at 434.
Here,
the trial court decided at the motion in limine hearing to allow Becker to testify,
concluding that “this expert states he accepted certain data that would
otherwise be hearsay data and that based on that as well as other matters he
formulated an opinion; that opinion is something the jury can consider. ¼ It then becomes
a matter of how much weight the jury would want to give to the opinion that’s
stated.” In short, the trial court
ruled that the issue went to weight and not admissibility.[8] Becker recited his opinion on the lost
profits that WPW suffered because of Beckart’s pretreatment system. This testimony was relevant and could assist
the jury to determine a fact at issue—lost profits, if any. Accordingly, we conclude that the trial
court did not erroneously exercise its discretion in admitting Becker’s opinion
testimony.
Furthermore,
the trial court properly refused to admit Exhibit 67 or to permit Beckart's
C.P.A., Robert Berkeley, to comment on the assumptions and methodology that
underlay the opinions of WPW’s expert.
Berkeley strongly disagreed with Becker’s calculation of lost profits
and his letter, Exhibit 67, reflected this disagreement with language such as
“highly speculative,” “looks ridiculous,” and
“lack of reasonableness.” This
is precisely the type of attack on the character and veracity of another expert
that Richardson does not allow.
We affirm the trial court’s conclusion.
Moreover,
the trial court did not preclude Berkeley from providing the jury with his
opinions as to WPW’s total profit loss.
Berkeley explained to the jury how he calculated lost profits. In contrast to Becker’s opinion of
$2,500,000 in lost profits, Berkeley computed $344,934 in lost profits due to a
wastewater treatment facility that did not work.
It
is for the jury, not this court, to resolve conflicts in testimony and
determine the credibility of witnesses.
See State v. David J.K., 190 Wis.2d 726, 741, 528
N.W.2d 434, 440 (Ct. App. 1994). The
jury apparently chose not to rely too heavily on either expert and calculated
WPW’s lost profits to be somewhere in between their figures. We will not overturn the jury’s credibility
determinations.
By
the Court.—Judgment affirmed.
Not
recommended for publication in the official reports.
[1] WPW has two plants: Plant 1 on Carroll Street and Plant 2 on
Hamilton Street. The Carroll Street
plant specializes in electroplating and metal finishing. The Carroll Street plant was in compliance
with federal, state and local standards until 1991, at which time a
bottom-method wastewater treatment system was installed by a different company. The Carroll Street plant is not at issue on
appeal.
[2] In November 1995, Heritage Mutual Insurance
Company, Beckart’s insurer, filed a motion to intervene to seek declaratory
judgment regarding coverage issues.
This motion was also denied.
[3] Although Murray v. Holiday Rambler, Inc.,
83 Wis.2d 406, 265 N.W.2d 513 (1978), involved the revocation of acceptance of
a motor home, the principles enunciated therein are substantially analogous to
the case at bar and therefore control our analysis as well.
[4] That the performance guarantee constitutes
an express warranty under § 402.313, Stats.,
is not in dispute.
[5] Because the contract specifically precluded
WPW from making a claim for damages, we conclude that WPW’s exclusive remedy
was replacement parts. Presumably WPW
agreed to this exclusive remedy based upon Beckart’s performance guarantee.
[6] The exact figures provided to the jury were: 1988, $812,042; 1989, $642,650; 1990,
$590,000; 1991, $389,812; 1992, $329,341; 1993, $262,369; and 1994,
$65,536.
[7] In Fidelity & Deposit Co. v. Krebs
Eng'rs, 859 F.2d 501, 502 (7th Cir. 1988), two Wisconsin towns hired a
construction company to build an incinerator to burn their garbage. The construction company hired a
subcontractor to handle the incinerator’s pollution-control system. The subcontractor purchased the scrubber
from Krebs Engineers, but unfortunately the scrubber did not scrub as it was
supposed to and the emissions exceeded the limits. See id. at 502-03. Despite a damage disclaimer in Krebs’ contract, the court
determined that the consequential damages were foreseeable and affirmed the
damage award. See id.
at 507.