Source: https://law.justia.com/cases/federal/appellate-courts/F2/669/1286/149294/
Timestamp: 2019-11-14 03:12:47
Document Index: 456535288

Matched Legal Cases: ['§ 355', '§ 355', '§ 355', '§ 355', '§ 355', '§ 355', '§ 355', '§ 355', '§ 355', '§ 601', '§ 355', '§ 355']

Dr. Luel P. Overstreet, Plaintiff-appellee, v. Norden Laboratories, Inc., Defendant-appellant, 669 F.2d 1286 (6th Cir. 1982) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1982 › Dr. Luel P. Overstreet, Plaintiff-appellee, v. Norden Laboratories, Inc., Defendant-appellant
Dr. Luel P. Overstreet, Plaintiff-appellee, v. Norden Laboratories, Inc., Defendant-appellant, 669 F.2d 1286 (6th Cir. 1982)
US Court of Appeals for the Sixth Circuit - 669 F.2d 1286 (6th Cir. 1982) Argued June 2, 1981. Decided Feb. 3, 1982
On appeal Norden alleges that the failure to instruct the jury on the requirement that the plaintiff must have relied on the express warranty was error. We agree. Reliance is an element of a cause of action for express warranty under Ky.Rev.Stat. § 355.2-313(1) (a). We therefore vacate the judgment entered below and remand for proceedings consistent with this opinion.
To be merchantable, goods must, inter alia, "be fit for the ordinary purposes for which such goods are used." Ky.Rev.Stat. § 355.2-314(2) (c).
We appreciate the formidable task which confronts a trial judge in charging a jury. We must nevertheless remain loyal to the mandate of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938), which requires a federal court sitting in diversity to apply the substantive law of the state in which it sits. In the instant case, however, no Kentucky court has construed Ky.Rev.Stat. § 355.2-313.3 Thus, it is the duty of the federal court to decide such unsettled issues of state law4 as a Kentucky state court would. See Erie v. Tompkins, supra; Hardy v. Johns-Manville Sales Corp., 509 F. Supp. 1353, 1357 (E.D. Tex. 1981); Delduca v. U.S. Fidelity and Guaranty Co., 357 F.2d 204, (5th Cir. 1966). "(A) federal court without benefit of guidance from the forum state's highest court or its state legislature should analyze the indications and determine the path that state would follow." Id. at 207.
An express warranty may be created by any affirmation of fact or promise made by a seller which relates to the goods. Ky.Rev.Stat.Ann. § 355.2-313(1) (a) (Baldwin). The language creating an express warranty need not contain special phrases or formal words such as guarantee or warranty. Ky.Rev.Stat. § 355.2-313(2). See Note, The Uniform Commercial Code and Greater Consumer Protection Under Warranty Law, 49 Ky.L.J. 240, 243 (1960) (hereinafter cited as Consumer Protection Under Warranty Law). In fact, a seller need not have intended that the language create an express warranty. Ky.Rev.Stat.Ann. § 355.2-313(2) (Baldwin). Every statement made by a seller, however, does not create an express warranty. A seller may puff his wares and state his opinion on their value without creating an express warranty. Ky.Rev.Stat.Ann. § 355.2-313(2) (Baldwin). See, e.g., Royal Business Machines v. Lorraine Corp., 633 F.2d 34, 30 UCC Rep. 462, 468 (7th Cir. 1980).
The existence of an express warranty depends upon the particular circumstances in which the language is used and read. See, e.g., Interco, Inc. v. Randustrial Corp., 533 S.W.2d 257, 19 UCC Rep. 464, 470 (Mo.App.1976); Sessa v. Riegle, 427 F. Supp. 760, 21 UCC Rep. 745, 752 (E.D. Pa. 1977), aff'd without op., 568 F.2d 770 (3rd Cir. 1978). A catalog description or advertisement may create an express warranty in appropriate circumstances. See Interco, Inc., supra, 19 UCC Rep. at 470; McKnelly v. Sperry Corp., 642 F.2d 1101, 30 UCC Rep. 1533, 1540 n.10 (8th Cir. 1981). The trier of fact must determine whether the circumstances necessary to create an express warranty are present in a given case. See Sessa, supra, 21 UCC Rep. at 751-52; Janssen v. Hook, 1 Ill.App.3d 318, 272 N.E.2d 385, 388 (App.Ct.1971). The test is "whether the seller assumes to assert a fact of which the buyer is ignorant, or whether he merely states an opinion or expresses a judgment about a thing as to which they may each be expected to have an opinion and exercise a judgment." Wedding v. Duncan, 310 Ky. 374, 378, 220 S.W.2d 564, 567 (1949). See Consumer Protection Under Warrant Law, supra, at 243.
The mere existence of a warranty is insufficient to sustain an action for breach of an express warranty. The warranty must be "part of the basis of the bargain" between the parties. Ky.Rev.Stat.Ann. § 355.2-313(1) (a) (Baldwin). A warranty is the basis of the bargain if it has been relied upon as one of the inducements for purchasing the product. See Ky.Rev.Stat.Ann. § 355.2-313(1) (a), Comment 1(C) (Baldwin);5 Consumer Protection Under Warranty Law, supra, at 243; Van Deren Hardware Co. v. Preston, 224 Ky. 170, 5 S.W.2d 1052, 1053 (Ky.1928). See also Hagenbuch v. Snap-on-Tools Corp., 339 F. Supp. 676, 680, 10 UCC Rep. 1005 (D.N.H. 1972); Stamm v. Wilder Travel Trailers, 44 Ill.App.3d 530, 3 Ill.Dec. 215, 358 N.E.2d 382, 20 UCC Rep. 1142 (App.Ct.1972); Bender's UCC Service, Duesenberg & King, Sales and Bulk Transfers § 601, n.2 (Matthew Bender & Co. 1980). But see, Interco, supra, 19 UCC Rep. at 469.
A buyer is not under a duty to investigate the seller's representations; he may accept them at face value. See Interco, supra, 19 UCC Rep. at 469; City Machine & Manufacturing Co. v. A. & A. Machinery Corp., 4 UCC Rep. 461, 465 (E.D.N.Y. 1967). However, a buyer may not rely blindly on a statement or affirmation that he knows is incorrect. See City & Manufacturing Co., supra, at 465; Royal Business Machines, supra, 30 UCC Rep. at 472. A buyer does not disregard any special knowledge he possesses or his accumulated experience with a product in determining whether to enter the bargain. Id.; Janssen, supra, 272 N.E.2d at 488. Consequently, a statement known to be incorrect cannot be an inducement to enter a bargain. City Machine & Manufacturing Co., supra. An incorrect representation by the seller which is qualified in any manner may become the basis of a bargain to the extent it is believed and relied upon. For example, a seller represents in its advertising that its product is capable of lifting 100 pounds. The buyer is aware that the product cannot lift the weight claimed in its advertising. Nevertheless, he relies on his subjective belief that the product could lift 75 pounds and purchases the product. The product fails to lift 75 pounds. In an action for breach of express warranty against the seller, the buyer will prevail. The seller cannot complain because his product failed to perform at a level of proficiency lower than that originally claimed in its advertising.
We do not reach the issue of whether an expert may rely on the representations of another expert in his area of specialty. At a minimum, however, an expert may rely on the representations of a seller of a newly marketed, unique product. Butcher v. Garrett-Enumclaw Co., 20 Wash. App. 361, 581 P.2d 1352, 24 UCC Rep. 832, 843 (Ct.App.1978). In Butcher, the court held that an expert with many years of experience as a conventional saw mill operator and consultant could rely on the representations of the seller of a newly developed portable small log sawmill. Where the capabilities and properties of a unique, newly developed product are known only to the seller, the expert is in no better position to evaluate the representations of the seller than a layperson. Therefore, he is entitled to reply on representations concerning such a novel product. See Grinnell v. Charles Pfizer & Company, 274 Cal. App. 2d 424, 79 Cal. Rptr. 369, 378 (Ct.App.1969) (Physician could rely upon representations of drug manufacturer where manufacturer possessed superior knowledge concerning the properties of the drug.)
This instruction did not permit the jury to determine which of appellee's losses were caused by appellant's breach. In effect, it held as a matter of law that the measure of damages was the value of the aborted foals, leaving for the jury only the issue of what that value was. The instructions should have included causation language equivalent to that used to establish the breach.7 Measure of Damages
We have analyzed the Kentucky cases involving express warranties which were decided prior to the enactment of Ky.Rev.Stat. 2-313(1) (a). Further, we sought guidance from other Erie indicators of state law, including the sparse legislative and scholarly commentary. These Erie-indicators support our conclusion that reliance is an element in an action for express warranty under Kentucky law. Further, my colleagues hold that the trial court improperly instructed the jury on the measure of damages.
Where a federal court's jurisdiction is based solely on diversity of citizenship, the difficulty of ascertaining what the state courts may thereafter determine the state law to be does not in itself afford a sufficient ground for declining to exercise its jurisdiction. Meredith v. Winter Haven, 320 U.S. 228, 234, 64 S. Ct. 7, 10, 88 L. Ed. 9 (1943)
Ky.Rev.Stat. § 355.2-715(2) (a) provides:
However, we note with interest that the official comment (1) to Ky.Rev.Stat. § 355.2-715.2(2) construes subsection (2) (a) as imposing on a buyer a requirement "to attempt to minimize damages by cover or otherwise" under appropriate circumstances. It does not, however, operate as a defense to an otherwise actionable breach.