from judge kevin sharp's order of january fourteenth two thousand and thirteen in our appeal we addressed the issues but this morning subject to the court's questions and approval i'd like to address three of those issues that mainly center around damages and the good we get your us first or of the jurors federal jurisdiction in this case is clearly no diversity although diversity jurisdiction seems to be alleged as a basis for the case i can't see that there is any diversity jurisdiction and other than that i don't understand where the federal question jurisdiction arises if there is any  nder the warranty act if the warranty fails and that's what we're legit here it doesn't magnusson moss talk about consumer products which are defined basically as personal property are there any cases that say that a this manufactured home is defined as a good day but but magnussen mosque doesn't talk about goods and i know there's at least one case that specifically says a manufactured home is not a consumer product i think his question needs to be nothing in these briefs that sets out if you got really a claim of diversity jurisdiction you need to stay how it is because i think i can find it  and also we need a brief where the jurisdiction is under i will question jurisdiction if there is there i don't believe there is any diversity or honor both of the parties you've summarized what the district court did i don't know what the district court did precisely here because they're in looking through the briefs there is discussion here in there  about what the district court did but i see no summary anywhere yes your honor i tried to summarize at the beginning of each issue that i addressed and as the court indicated address the specific the but you can't confer jurisdiction by consent but if both of you would let's say ten days ten pages ok as to why the court had jurisdiction and what are the consequences  if it doesn't but for the moment at least now that we've raised that if you go ahead and give us your argument especially on damages you said you had three damages points why don't you i'm out and then discuss them yes your honor the three issues of it i'd like to address the first is whether or not the court's award of thirty five thousand two hundred dollars which in effect was a refund for the price paid for the thousand five hundred ninety seven dollars and fifty seven cents now that's independent of the quote forty five thousand for the land and ten thousand for improvements that's in the sales contract correct your honor it doesn't quite come come out but let's say that that's what you got that they got that cash in hand read all the directly not from you they got it from the mortgage company right right and that's primarily our issue is that i believe that the damages buyer's remedies in general that would be relying on diverse  jurisdiction under the national standards the you have to allegations and so you're going to get back with us and tell us how those to give you jurisdiction and you wanted the court to take up everything else brecht so you're under the  forty seven one seven eleven which you're calling me a city gives you incidental inconsequential damages how do you calculate that you've got two hundred nine thousand dollars and you're saying that you are you're owed eighty thousand dollars in interest is that not the interest that was on the four hundred sixty that included both the old land mortgage in the land improvements though your honor that the amount that was paid to th defendant was the contract amount which is the hundred and nine thousand dollars the rest of it essentially was they took out a loan using their land but the defendants received the amount for the cost of the but the fourteen hundred dollars a month was that was the mortgage payment right to the mortgage right so that included interest on the hundred sixty thousand dollars because it included the full mortgage which only in the all mortgage on the land and the ten thousand dollars of land improvements how did you calculate eighty thousand dollars what your honor basically what we did was take the amount of the total amount of the loan which i think was about one hundred  fifty eight thousand to the amount of the contract for the manufacture which is one of them and i basically simple math it came out to be point six percent so my client took the amount of interest that they've paid during payment right yes which comes to one hundred twenty som when you apply your sixty nine and that's where you get the eighty thousand so it's not just the interest you are asking for the principal as well in that if that's where the math comes but let me let me address it this way we're at we're asking for the amount that was paid to the defendant for the manufactured home which was one of fifty seven five nine hundred fifty seven in addition we're asking for the interest that was paid on the mortgage related soley to the home to learn let me they were in a very complicated but i'm the mortgage problem doesn't move me because you might have gotten the money by cashing your ira or by selling stock or taking out your checking account the seller doesn't know that but on the other hand if you start with the one  nine and they take the house would you sort of be satisfied or would a proper theory be the one zero nine less the real value of what you got from living in it you say the thousand a month is way too high and i may agree with you but wouldn't the normal rescission damages be what you pay one hundred nine thousand cash in hand less the value that you got plus interest real pre judgment interest would kind of offset your your mortgage payments to some extent but you know what would be wrong with that as a basis well there be a couple things wanted to depend on the amount of the pre judgment interest which here i think they only got thirty two i understand amazon and i'm dubious about that as well i think we asked for ninety thousand in prejudgment interest so if it was if it approached that eighty thousand and then yes i think my clients would be entirely satisfied but with regard to the offset there's a couple problems with that first of all they never played that in their answer they didn't file a counterclaim and it court the only thing that was put into evidence was my client's testimony about a  we felt like it or were were submitting that the that a man a thousand dollars a month was way too much and something much less than that would be appropriate although again we submit that  chunk between the one sixty and the one tin isn't it i don't know what they did with the balance of the mortgage that they also know you should know it was your money your client's mortgage i hope you got it paid off i assume there's no there's forty thousand it was very high interest rate ten percent interest i believe they got it knocked down somewhat but it's about how what why did the sales contract say six point seven five if that was the other big that was the i believe that was the citation for that i'd sure appreciate it in the midst if not you can bring it up on rebuttal or send to the end but i'd like to be able to find that i'd have to find the ok you don't know where all of the proceeds of the mortgage when right i had to see your i never asked him that question but i assume that probably is accurate they paid off the mortgage on the les and so there was only one lead holder are you trying to recover the amount of the mortgage related to the land no your that's the difference between the one ten you're only asking for one o nine one ten not for one sixty right directly will anything else it is and we agree that the more you just held by an independent third party correct yes and that and your assumption is that one hundred nine has already been paid to the defendant that talk about interesting sure we do need to have federal jurisdiction yes you do to adjudicate these claims yes you do there is no diversity there is no diversity that's what was or one of the things alleged in the complaint right that's correct ok so you agree that that's out i agree that that is out what is the provision do you think there is federal jurisdiction i don't know i have looked at some cases under mag maust that have gone both ways we originally based were happy with federal jurisdiction because we were making way back in the beginning of this case we filed a motion to compel overtrain one of the federal arbitration act and we were using then you're probably happier in federal court than in rather for county georgia probably at the end of the day so we didn't we you're right we did get we certainly can't consent to subject matter jurisdiction but we did not push dead issue we do have the law here you know a law or requires federal jurisdiction absolutely up to both parties to says the chord in determining whether there is any such jurist perhaps and in looking at the cases that i looked at under mag moss i reached a conclusion that while there were cases going both ways that if we were going to tilt them one way or the other they slightly tilted towards a mag moss claim covering a manufactured home and therefore given jurisdiction over or in the court below was the question now raised to read it was the question was not briefed on raised below with regard to the damages issue again i think the easiest way for me to answer that question is to avoid it which is by saying that judge sharp reaching a revocation remedy at all which then leads to all of this crazy math was error by judge sharp below judge sharp recognized in his order that if there is an adequate damages remedy for a breach of contract or breach of warranty then revocation should not be granted he then in ordering revocation simply said damages aren't adequate never explained why i thought he said that the damages remedy in the contract was unconscionable he certainly said that your honor and let's take the damages the limitation let's right now i disagree with that ruling too but for right now take the limitation of remedies provision in the contract if it's unconscionable it's severed from the contract there is a severability provision in the contract at that point all damages all remedies are available that would include the traditional damages remedies for a breach of contract or breach of warranty which in this case would be the cost of repair or the diminished in value of the property due to the defect at the time of the transaction so that would that was defective house is worth so let's say fifty thousand wrecked if there were some evidence as to that did you put in any evidence to your claim of what the house was still worth we did not put any evidence in of what we claim the house was still worth first of all right you know that it was obligated to do so if they didn't prove their claim they but in any and he said we'd there was testimony at trial first from mr baker who was our corporate representative as to the cost of repair of approximately three thousand dollars secondarily there were appraisals of the that we put in that we got through cross examination of mr bennett appraisals of the home that appraised the home and and the land i think one was one hundred forty thousand another was one hundred sixty thousand now you can move those appraisals those appraisals were done a year or two after the home was placed on the property so after the actual transaction but they showed that it were at worst home land that had been worth one hundred sixty thousand dollars if you take what the mortgage was for at the beginning was it worst worth one hundred forty thousand dollars a year later or at best and but our point would be is that you do is that that was the proper measure of damages revocation was an interview because that was the court never addressed that it wasn't appropriate the  restitution narry remedy right correct so has that how's that supposed to work in this got a case i'm not sure it can because it's supposed to put the parties back in the status quo is if the transaction in never existed cases often talk about the fact that you can't give rescission if you're so far down the line that that quite frankly is impossible and we think that at the time any any revocation makes him to work too far in the rant rescission revocation if the if the value of the good has been substantially impaired then revocation can be an appropriate remedy that's where they're traveling is under the u nothing in the federal act that deals with this at all so this is premised on the use of state law or diversity or something or it pendant juristic it is based on state law that is though if you're under magn and moss if you judge marriage statement was correct which i think it is the magnuson moss doesn't specifically tell you how to measure damages then you would tend to look to the normal not necessarily the u specifically but to normal contract law in which the correct statement which you had earlier was if if if breach damages are insufficient then you can have rescissions so would bring you back to it is know it's a three year notice of not conformity failure to cure and then a notice of actual revocation which is a whole separate issue which we it's our position there was never any notice of reputation there was no action actual revocation in this case but that's a finding of fact about the judge who tried the case correct certainly it is and we believe that there was clearly clearly a right and we believe it was clearly erroneous the court took the court based that on two things one the plaintiff's complaints about defects in the home complaints in which they were asking for the home to be fixed that's a punch list that's not asking for the home to be taken back we cite numerous cases in our brief to talk about the fact that that's not revoked those are inconsistent so if the fixes never get fixed then and then where are you if if the if the repair doesn't get married there is still has to be an affirmative by the buyer to revoke and in this case we're saying there was no such affirmative in the suit itself isn't adequate for that well if the suit itself is adequate for that we would we would say that is certainly on time don't you have this period of time during which people are attempting to see whether the product itself can be made to conform certainly wasn't the decision of the district court here that the time period was allowed for your client to fix it and your client filed that's correct but that's not that's not the trigger point for revocation that's trigger point for the breach notification of the nonconformity in this case and then a failure to cure under the warranty that's those that's evidence of the breach if we adequately cure we have not breached if we don't cure are you saying that tennessee law requires that you request through jand before you know if someone can make a product conform and know what i'm saying is that they have to make if you get to that point you've noticed the nonconformity there is a failure to cure that non conformi venn the buyer at that point has a claim for a breach of that warranty and can sue for damages or in this case if damages cannot choose if  if the damages cannot remedy their injury they can rescind but at that point they have to make an affirmative act to rescind just having notified the court my own didn't absolutely you take the position that those discussions are insufficient that's correct because they were not an affirmative act by the plaintiff to revoke those were settlement discussions which are a completely different animal and quite frankly the district court put us between a rock and a hard place because at trial i objected to these settlement discussions coming in under rule four zero eight and judge sharp sustain my objection and then relied on those same very dismayed discussions to determine that they had engaged in the affirmative act basically what the court found was that by my client engaging in settlement discussions one of the options that clearly included buying the house back another option was to repair third option was to replace the existing house with a new house by engaging in those discussions about settlement that that was sufficient to the house could not be made a level that it was apparently the facts were that no one could figure out how to make it well they tried a number of times and people for the defendant this album never work until they can be made a level and you can make it a level so is that the basis really for the that we did not make it level which is a far cry from whether or not somebody could make it live or how long a period over about a year to year and a half in terms of of when it was first determined to be young level til the state closed its filing understand that's another issue of ours because the state determined in their last inspection obviously a highly disputed but the state determined that it was in fact level but if wasn't level after those one or two years it still wasn't level for up until now as far as we know unless the plaintiffs have had somebody else come out less leveled itself which is not likely and given them an estimate on how to level it and in fact work was done by my client to level the house it was dismissed by the district court but i understand that it while it took a long time to figure out why it wasn't level there was a clear expert report as to what could be done to level the house house still there now as far as i know the house is still there you haven't taken it back we have not taken it back because of this they had let me ask you this about the pre judgment interest because her early we're into high finance here but if you went more the way i was raising with your opposing counsel that is you got one hundred nine thousand one hundred ten thousand cash in hand at the rescission damages which would be you have to give back the hundred nine thousand and you're not going to give it back for seven eight years shouldn't there be prejudgment interest from that time up until judgement that you've head the use of that money they're having to pay the mortgage and i don't personally one judge i don't think they're entitled the interest on it but on the other hand the equivalent is you've got the hundred  nine thousand so why wouldn't prejudgment interest be appropriate at an appropriate financial rate i think there's two answers two parts then seen the first one is that the way the u c c is written it is the purchase price that has been paid not the purchase price that's been received so i think you look at it from the buyer's perspective and what is the buyer out and what this guy buyer ironing out the obligation that is that's what i said to him i don't think it matters where he got the money i don't think it matters whether it's a mortgage or his ira that's his money that's his obligation so so he has paid you the hundred nine thousand wherever he got it from but it goes back to what  he first of all it's not what they requested to didn't request or standard i or obligation back and so from that perspective i think what the court was trying to do was find a middle ground between what it found to be a clearly excessive pre judgment interest under tennessee law and their request for it at that maximum and although he could have that's why set a financial isn't it up to ten percent if he says the real price of money is five percent he could could have awarded full interest but just said five percent is the right rate certainly could have done that also understanding that he would have had to apply as we as we argue an appropriate amount for the fair and reasonable use value now that i said that to your colleague but we have the whole separate question with say my to cut my two colleagues live within a few miles of this house so they might have a i think your time sure go ahead and see him age homes this is headquartered concern is correct but love time is not love homes was a d b a of c m h own so i'm not sure that love homes ever existed as a separate legal corporate entity at one point in my question  the eighty thousand dollars interest klein is it your understanding that there were lights only two hundred four hundred in one thousand dollar value you know in my understanding that that was all of the interest that had been paid to date under l purchase cut practice found at exhibit four of the head next however i was looking at that that exhibit it doesn't cite the interest and i'm not and i can't recall if that was testified to try to exhibit four of the appendix is the closing document that is correct ok i will look it up thank you counsel go ahead i wanted to address this issue of revocation and it is tantamount to a rescission but the standard is not the same and i think the courts are ready recounted that the standard what the standard is and one of the things we haven't addressed here this morning is that the home was installed by unlicensed installers and under tennessee law my clients can't even live there now at this point so revocation is the most because it is not livable well no because it was not installed by a licensed installer or really technically a certified installed i mean there's a certificate of occupancy that's invalid or something and they did live there for five more years living there for eight years actually water here saying no no your honor but i mean if or if we're following the we're here for today well they never did because you talked about storage expenses and other expenses they never did do that oh they have not moved out hypothetical yes your honor if they were ok so they're still there they are still there yes but they're paying to live there and of course the second reason we feel the revocation is appropriate is that they had years to fix this problem and actually the home being on level was not found until september of two thousand and six when the state or it was october of two thousand and six when the state did the first inspection my client was told and this was put into evidence that the defendant was going to send in the the best may in the level  he came in he did whatever he was going to do the state came back out in february of two thousand and seven and the home was still not level and it was that point that the proof a trial showed the party started talking about what to do how to handle this and the problem with affirmative act of revocation here is that we're dealing with it is a manufactured home but it's not something they can just h off and put on love homes a lot which doesn't exist anymore so the only thing they could do was contact the defendant say fix this when they couldn't fix it they asked him to please take it back and originally file this case in state court no no your honor we didn't we we had a discussion actually and we we determine are they said they were going to file a removal if i filed in state court so i filed in federal court they did file a motion to dismiss for lack of jurisdiction but that was overruled and essentially dropped in they i mean they said that they weren't pressing that point is not after that motion no they did not all right if you'll have a seat for a second are finished first speaking for the court now no sir you two are speaking for the court we've said that we want briefs on jurisdiction within ten days not more than ten pages possibly including what happens if we don't have jurisdiction speaking now only for myself you spend a lot of money litigating if we decide we don't have jurisdiction you're going to spend a lot more money litigating we're clearly this judge is concerned about a lot of issues including the adequacy of damages so judge sharp below said you might want to consider settlement  well not for mediations before you head the concerns expressed by this panel about both jurisdiction they end in adequacy of damages and if you may want to take this up again and if you don't if you don't settle you'll have to file those briefs if you do settle you may not have to file those briefs all right counsel thank you very much the case will be submitted clerk may call the next case