IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

MARK MELOTZ, 

d/b/a MELOTZ TRUCKING, 

Plaintiff and Respondent, 

CRAIG SCHECKLA, 

d/b/a SCHECKLA TRUCKING, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Sixteenth Judicial District, 

In and for the County of Rosebud, 

The Honorable Kenneth R. Wilson, Judge presiding. 

- COUNSEL OF RECORD: 

For Appellant: 

James A. Patten, Patten Law Firm, P.C., Billings, 

Montana 

For Respondent: 

John Houtz, Attorney at Law, Forsyth, Montana 

Filed: 

Submitted on Briefs: August 23, 1990 

~ecided: November 27, 1990 
Justice Diane G. Barz delivered the Opinion of the Court. 

Appellant Craig Scheckla, appeals from a judgment entered on 

a jury verdict rendered in the Sixteenth Judicial District, Rosebud 

County, awarding respondent Mark Melotz damages for breach of 

warranty. We affirm. 

Scheckla raises the following issues on appeal: 

1. Did the District Court abuse its discretion by allowing 

admission of an exhibit at trial when the court had earlier imposed 

discovery sanctions which prohibited the admission of such exhibit? 

2. Did the District Court abuse its discretion by failing to 

prohibit evidence of lost income as a sanction for discovery abuse? 

3. Was the existence of a warranty supported by sufficient 

evidence? 

4. Was respondent Melotz entitled to consequential damages 

for breach of warranty? 

Appellant, Craig Scheckla, owns a trucking business and hauls 

wood products for a sawmill in Sheridan, Wyoming. Respondent, Mark 

Melotz, is likewise in the trucking business and hauls on a 

contract basis. In July of 1985, Melotz purchased from Scheckla 

a used 335 Cummins diesel engine for $3,000 which was installed in 

Melotzls 1970 Peterbilt truck. According to Melotzls testimony at 

trial, when he and Scheckla discussed the sale of the engine 

Scheckla told him lf[a]ll you [have to] do is take it home, put it 

in there [in the truck] and it will go right to work and it was in 

good running condition." Melotz further testified Scheckla also 
told him the engine recently had some major work done to it. 

After installing the engine in late July of 1985, Melotz 

immediately encountered problems with the oil pressure. When 

informed of the problem by Melotz, Scheckla told him this type of 

engine had low oil pressure and, according to Melotzls testimony, 

Scheckla told him to replace the bearings and if that did not fix 

the problem Scheckla would I1pay for the bearings and everything.I1 

Shortly thereafter, Melotz hauled a load to Logan, Utah. During 

this trip Melotz encountered problems of low oil pressure and 

engine overheating. From Utah, Melotz took a load to Oregon and 

en route the problems with low oil pressure and overheating 

continued. In Oregon Melotz had new bearings installed. Melotz 

then headed to South Dakota with continuing problems. while 

passing through Dubois, Wyoming on the way to South Dakota, 

Schecklals mechanic examined the engine and replaced a cracked 

head. 

Due to continuing problems with the engine, Melotz parked the 

truck during the months of September and October of 1985. Scheckla 

recommended new head gaskets and Melotz installed them in early 

November of 1985. On November 4, 1985, Melotz, believing his truck 

was capable of performing the job, entered into a contract to haul 

rip-rap for Midwest Dumpers, Inc. at Canyon Ferry Lake. Shortly 

before he was to commence work on the contract, Melotz had to 

notify Midwest Dumpers that he was unable to perform due to 

overheating problems which started up again. The engine 

subsequently locked up and upon being torn down Melotz discovered 
the engine had a cracked block and was unrepairable. 

On February 18, 1986, Melotz filed a complaint against 

Scheckla seeking damages for breach of warranty and for other 

claims not relevant on appeal. This case then began a long 

procedural history marked by constant disputes between the parties. 

On November 28, 1986, Scheckla served interrogatories and a second 

request for production on Melotz. This discovery sought, among 

other items, all state and federal income tax returns and financial 

statements prepared within the five years preceding the filing of 

the complaint. 

Following a motion to.compe1 by Scheckla, Melotz responded to 

the discovery requests. The answers were deemed nonresponsive by 

the District Court and as a result Judge Alfred B. Coate imposed 

sanctions upon Melotz on April 10, 1987. Specifically, Judge Coate 

ordered: "At trial Plaintiff [Melotz] will not be permitted to 

introduce any evidence other than those items supplied to Defendant 

on December 12, 1986 [at Melotzls deposition] and marked as items 

1 through 33 .I1 The Midwest Dumpers contract was not one of the 

marked items but was discussed at the deposition and provided to 

Scheckla on February 13, 1987. 

On May 8, 1987, the District Court determined the amount in 

controversy was less than $3,500 and transferred the case to the 

Rosebud County Justice Court. The case was eventually transferred 

back to District Court on September 12, 1988. 

Once back in District Court, Judge Kenneth R. Wilson assumed 

jurisdiction on January 20, 1989 after Judge Coate retired. Judge 
Wilson gave Melotz another chance to produce his income tax returns 

and financial statements, ordering that if Melotz did not produce 

those items, three of his claims for damages would be dismissed. 

This information was not provided and on June 26, 1989, in chambers 

before trial, Judge Wilson ordered those claims stricken. 

At trial the court refused to hear evidence on the potential 

profits of hauls during periods the truck experienced down time, 

deeming the evidence too speculative and as an additional sanction 

for discovery abuse. The court did allow into evidence the Midwest 

Dumpers contract. The jury returned a verdict in favor of Melotz 

in the amount of $12,026.40. The District Court reduced the 

verdict by $208 and Melotzls bill of costs by $359. The court then 

denied Schecklals post-trial motions for judgment notwithstanding 

the verdict and to amend or alter the judgment. 

Scheckla now appeals raising the aforementioned issues. 

I. - 11. 

Since issues 1 and 2 both pertain to the imposition of 

sanctions for discovery abuse, we will address them simultaneously. 

Scheckla contends Judge Wilson abused his discretion by 

ignoring Judge Coate's earlier discovery sanction limiting Melotzls 

trial exhibits when he allowed the Midwest Dumpers contract into 

evidence. Citing Owen v. F.A. Buttrey Company (1981), 192 Mont. 

274, 280, 627 P.2d 1233, 1236, he argues that Melotz must I1suffer 

the consequence^^^ of his discovery abuse and asserts that Melotz 

did not have to do so because he was allowed to go forward with a 
major part of his case, i. e. , the Midwest Dumpers contract lost 

prof its. 

This Court has previously stated that the district court has 

the discretion to control discovery activities. State of Oregon 

ex rel. Worden v. Drinkwalter (1985) , 216 Mont. 9, 12, 700 P. 2d 

150, 152. The district court also has the discretion to decide 

what sanctions are to be imposed on a party who fails to comply 

with discovery rules. Barrett v. ASARCO, Inc. (1988), 234 Mont. 

229, 234, 763 P.2d 27, 30 (citing Sikorski v. Olin (1977), 174 

Mont. 107, 111, 568 P. 2d 571, 573) . Judge Wilson impliedly ignored 

or overruled Judge Coatels previous ruling and gave Melotz one last 

chance to produce his tax returns and financial statements. Melotz 

did not produce this information and Judge Wilson dismissed three 

items of contended damages. Certainly by striking damages 

amounting to $32,760, Melotz was required to "suffer the 

consequences.I1 The District Court was acting well within its 

discretion when it allowed the contract into evidence. 

Scheckla further contends the District Court abused its 

discretion by failing to prohibit evidence of lost income from the 

Midwest Dumpers contract as a sanction for discovery abuse. 

Scheckla argues that since he was not provided the requested 

financial information he had no way of ascertaining whether 

Melotzls testimony concerning lost profits was accurate. "The 

exclusion of evidence for noncompliance with discovery rules is a 

harsh remedy [and] . . . we will reverse the trial judge only when 

his judgment may materially affect the substantial rights of the 
appellant and allow a possible miscarriage of justice.11 (Citation 

omitted.) Barrett, 763 P.2d at 30-31. We do not find that 

situation here. Melotz provided Scheckla with the Midwest Dumpers 

contract more than two years before trial. Scheckla himself was 

in a similar trucking business and could have testified as to 

profitability. Moreover, Scheckla examined Melotz in part of a 

seven and one-half hour deposition and again at trial on this 

issue. 

We hold the District Court did not abuse its discretion in 

allowing the contract into evidence and in allowing evidence of 

lost income from the contract. 

Scheckla attacks the jury1 s verdict arguing his statement that 

the engine could go right to work and was in good running condition 

was merely an opinion or upuffingll and did not create an express 

warranty. Scheckla also contends that the evidence presented at 

trial did not show that he engaged in the business of selling 

engines or that Melotz relied upon his skill and judgment in 

selecting a particular engine and therefore the evidence was 

insufficient to show that an implied warranty of merchantability 

or an implied warranty of fitness for a particular purpose had been 

created. 

We will not disturb a jury verdict when there is substantial 

credible evidence in the record to support it. 

"Sufficiency of the evidence. We will 

not reverse a judgment based upon a jury 
verdict if there is substantial evidence in 

the record to support the jury verdict . . . We review in the light most favorable to the 

prevailing party, reversing only when there is 

a lack of substantial evidence to support the 

judgment based upon the jury verdict . . . 

"The 'substantial evidence test 

variously expressed allows reversal only if 

there is a complete absence of probative facts 

to support the verdict . . . or if the 

evidence is so overwhelming there is no room 

for an honest difference of opinion . . . or 

if there is a complete absence of any credible 

evidence in support of the verdict." 

(Citations omitted.) 

Flynn v. Siren (1986), 219 Mont. 359, 365, 711 P.2d 1371, 1374. 

The court gave the jury instructions on express warranty, 

express warranty -- statement of opinion, implied warranty, and 

implied warranty of fitness for a particular purpose. The jury, 

by general verdict, found that Scheckla warranted the engine he 

sold to Melotz and that Scheckla had breached the warranty. After 

reviewing the record in a light most favorable to the prevailing 

party, we conclude the record contains sufficient evidence upon 

which the jury could find that at least an express warranty 

existed. 

Whether a statement is an express warranty is an issue of 

fact. Vandalia Ranch v. Farmers Union & Oil Supply (1986), 221 

Mont. 253, 259, 718 P.2d 647, 651; Whitaker v. Farmhand, Inc. 

(1977), 173 Mont. 345, 354, 567 P.2d 916, 921. Issues of fact are 

for the jury to resolve and should not be taken away from the jury 

because some evidence furnishes reasonable grounds for different 

conclusions. Kleinsasser v.. Superior Derrick Service, Inc. (1985) , 

218 Mont. 371, 374, 708 P.2d 568, 570. In the present case 
Scheckla represented to Melotz that the engine was in good working 

condition and that the engine could be put in the truck and it 

would go right to work. Scheckla also stated that the engine 

recently had major repair work done to it. The record indicates 

that after the engine was installed, Scheckla told Melotz to 

replace the bearings and if that did not correct the problem, he 

would pay for the repairs. Additionally, on at least one other 

occasion Scheckla recommended the type of repairs that should be 

done and Schecklals mechanic replaced the head in an effort to 

correct the problems with the engine. The statements made by 

Scheckla, together with his conduct after the engine was installed, 

provides a sufficient basis upon which the jury could find that an 

express warranty existed. 

We hold that substantial evidence supports the existence of 

a warranty under the circumstances of this case. 

IV. 

The jury, upon deciding the warranty issue in Melotzls favor 

and finding that Scheckla had breached the warranty, awarded Melotz 

consequential damages for his claim of lost profits on the Midwest 

Dumpers contract. Scheckla contends that under the Uniform 

Commercial Code Melotz had to "cover1I before consequential damages 

could be awarded. Scheckla argues that all Melotz had to do to 

cover was to purchase a substitute engine, and, having failed to 

do so, Melotz failed to mitigate his damages and should therefore 

be denied any recovery of consequential damages. 
Section 30-2-715, MCA, provides that consequential damages 

resulting from the seller's breach of warranty include Ir[a]ny loss 

resulting from general or particular requirements and needs of 

which the seller at the time of contracting had reason to know and 

which could not reasonably be prevented by cover or otherwise 

. . . " In Harrington v. Holiday Rambler Corporation (1978), 176 

Mont. 37, 575 P.2d 578, the plaintiffs sued the manufacturer for 

damages for breach of warranty because of defects in the trailer 

they had purchased. The defendant contended the plaintiffs failed 

to mitigate damages by not.having the trailer repaired by a third 

party, failing to cover by purchasing a substitute trailer and 

continuing to use the trailer after they knew of the defects. In 

holding that the plaintiffs did not fail to mitigate damages, this 

Court stated the following regarding the doctrine of avoidable 

consequences: 

"The duty to reduce or mitigate damages 

is a positive one upon the injured person, but 

it has limits. The test is: What would an 

ordinary prudent person be expected to do if 

capable, under the circumstance^?^^ (Citation 

omitted. ) 

Harrinqton, 575 P.2d at 581. 

The record in the present case discloses that Melotz did what 

an ordinary prudent person would be expected to do under the 

circumstances. It is true, as Scheckla points out, that to cover 

would have been to purchase a substitute engine. However, there 

are no facts in the record to indicate the engine needed to be 

replaced until after the time the Midwest Dumpers contract was to 

be performed. The record discloses that Melotz made a number of 
repairs in an attempt to make the used engine run satisfactorily. 

Scheckla himself noted that this type of engine has low oil 

pressure and advised Melotz to replace the bearings. Also, 

Scheckla's mechanic replaced the head in an effort to determine 

what was wrong with the engine. 

Melotz entered into the Midwest Dumpers contract in November, 

1985 when the engine had undergone recent repairs recommended by 

Scheckla and Melotz believed the truck was capable of fulfilling 

the contract. Melotz testified that it was only three or four days 

before he was supposed to begin performing the contract when he 

realized he would not be able to do so due to continuing 

overheating problems. At that time he notified Midwest Dumpers 

that he would be unable to perform the contract. It was not until 

March, 1986, after Melotz had lost the Midwest Dumpers contract, 

when the engine locked up and subsequently was completely torn down 

that Melotz learned the engine had a cracked block and was 

unrepairable. 

We hold that under the above set of facts the jury could 

reasonably have found that Melotzls consequential damages could not 

be prevented by cover or otherwise. 

Affirmed. 
We concur: