Source: https://law.justia.com/cases/federal/appellate-courts/F2/945/269/289531/
Timestamp: 2019-07-16 22:45:49
Document Index: 259982408

Matched Legal Cases: ['§ 1291', '§ 2711', '§ 2712', '§ 2715', '§ 2711', '§ 2715']

R.b. Matthews, Inc., Plaintiff-appellee, v. Transamerica Transportation Services, Inc., a Corporation,defendant-appellant, 945 F.2d 269 (9th Cir. 1991) :: Justia
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R.b. Matthews, Inc., Plaintiff-appellee, v. Transamerica Transportation Services, Inc., a Corporation,defendant-appellant, 945 F.2d 269 (9th Cir. 1991)
US Court of Appeals for the Ninth Circuit - 945 F.2d 269 (9th Cir. 1991)
Argued and Submitted July 19, 1991. Decided Sept. 19, 1991
This court has jurisdiction pursuant to 28 U.S.C. § 1291. We review for abuse of discretion a trial judge's decision to exclude live witness testimony. United States v. Layton, 767 F.2d 549, 553 (9th Cir. 1985). A district court's decision based on the language of a contract is a question of law that we review de novo. See Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir. 1985). When the district court's decision is based on findings of fact, reversal will only occur when the decision is clearly erroneous. Id. Finally, we review the legal standards used in the calculation of damages de novo. Galindo v. Stoody Co., 793 F.2d 1502, 1516 (9th Cir. 1986).
Even if the exclusion of the live testimony of White and Reed were erroneous, TTS has failed to indicate any prejudice it suffered as a result. A trial court abuses its discretion only if the exclusion "prejudicially deprived [the defendant] of material evidence critical" to its defense. United States v. Ives, 609 F.2d 930, 933 (9th Cir. 1979) (quoting United States v. Hartfield, 513 F.2d 254, 260 (9th Cir. 1975)), cert. denied, 445 U.S. 919, 100 S. Ct. 1283, 63 L. Ed. 2d 605 (1980). The burden of showing prejudice is particularly heavy in a bench trial. See Ghandi v. Police Dept. of City of Detroit, 747 F.2d 338, 355 (6th Cir. 1984). TTS has not shown how the precluded testimony would have contributed to its case, or how the trial court would have modified its verdict had it heard the testimony. At most, TTS asserts that Reed and White were two key participants in the contract negotiations and that their live testimony would have elaborated upon their deposition testimony and given the court a chance to assess their demeanor and credibility. However, in light of the testimony of other "key" TTS employees (whose testimony covered the areas to be addressed in White's and Reed's live testimony), as well as the deposition testimony of the two excluded witnesses themselves, TTS has not detailed any prejudice it might have suffered from the exclusion. At a minimum, TTS must prove the unique substantive contributions that the live testimony of White and Reed would have made, since, in the absence of such contributions, the issue of witness credibility is rendered insignificant and harmless. TTS has failed to make such proof.
The record does not support this contention. In its first finding of fact, the court wrote: " [T]he agreement provided that defendant use its 'best efforts' in complying with the contract, but plaintiff was required to purchase up to 300 trailers per year for two years at pre-set prices." Findings of Fact and Conclusions of Law of March 8, 1990, at 5. The court's fifth finding of fact reemphasized this conclusion: "The written agreement obligated Matthews to purchase up to 300 drop frame trailers from TTS during each of the years 1984 and 1985, but required TTS to use its 'best efforts.' " Id. at 6. The court properly determined that defendant was obliged to use its "best efforts" to provide 600 trailers for sale to RBM. The court did not impose an absolute duty on TTS to tender 600 trailers for RBM's acceptance during 1984 and 1985.
The rules for measuring damages are very simple. When a seller breaches the contract, the buyer has two possible remedies. First, he may attempt to cover and obtain goods in substitution for those due from the seller. See Cal.Com.Code Ann. § 2711(1) (a) (West 1964).3 If he covers, he can recover the difference between the cost of cover and the contract price together with any incidental or consequential damages. Id. § 2712(2). Consequential damages are those damages which did not arise within the scope of RBM's transactions with TTS, but which stemmed in a foreseeable way from losses incurred by RBM as a result of TTS's breach. Id. § 2715(2) (a). The profits that RBM lost from its resale of the refurbished trailers are one form of consequential damages. See Milgard Tempering, Inc. v. Selas Corp. of America, 902 F.2d 703, 710-11 (9th Cir. 1990) (awarding consequential damages in the form of lost profits where the buyer was unable to produce up to capacity as a result of the faulty performance of the purchased equipment); Dura-Wood Treating Co. v. Century Forest Indus., Inc., 675 F.2d 745, 755 (5th Cir. 1982) (recognizing as a general proposition that consequential damages include the lost profits from a buyer's dealings with a third party), cert. denied, 459 U.S. 865, 103 S. Ct. 144, 74 L. Ed. 2d 122 (1982).
The buyer's second remedy is to recover the difference between the market price and the contract price. Id. § 2711(1) (b), 2713(1). In this case the contract-market price differential is the difference between the market price of the unmodified trailers TTS agreed to provide RBM and the contract price of those trailers. The buyer can also recover consequential damages under this second remedy but only if they could not have been reasonably prevented by cover or otherwise. Id. § 2715(2) (a). If a buyer could have covered, but chose not to do so, then he cannot recover consequential damages. The buyer would only be allowed to recover the contract-market price differential.
Even though the breach was material, RBM could have elected to treat it as immaterial and continue to stand ready to accept performance by TTS. Such an election by RBM could not enhance the damages recoverable from TTS, however. The duty to mitigate damages dictates this result. Carnation Co. v. Olivet Egg Ranch, 189 Cal. App. 3d 809, 816, 229 Cal. Rptr. 261, 265 (1986) (stating the general rule that a buyer of goods must attempt to minimize damages). Acceptance by RBM of late and insufficient performance by TTS can only serve to reduce the damages that otherwise would be recoverable had RBM treated the contract as totally breached.
TTS failed to make a formal offer of proof to the district court as required by rule 103(a) (2) of the Federal Rules of Evidence. Failure to make an offer of proof, however, is excused if an offer of proof would have been redundant, unnecessary, or futile. See, e.g., Waltzer v. Transidyne Gen. Corp., 697 F.2d 130, 134 (6th Cir. 1983); Collins v. Wayne Corp., 621 F.2d 777, 781 (5th Cir. 1980); United States v. Alden, 476 F.2d 378, 381 (7th Cir. 1973). The record indicates that defendant's failure to make a formal offer of proof falls within both the "obviousness" standard and the "futility" standard and should, therefore, be excused for purposes of this appeal