Opinion ID: 1767013
Heading Depth: 1
Heading Rank: 8

Heading: Compensatory, consequential and incidental damages were proper.

Text: ¶ 70. Mercury argues on appeal that the jury should not have been instructed on these damages. And the majority has held that since there were no breaches in this case, it need not address the issue. Since the majority's factual and legal reasoning is deficient throughout this appeal, however, damages are addressed here. ¶ 71. Mercury's counsel did not specifically object to omissions or defects in the jury instructions. Rather, he simply stated: We don't think this is a proper case for compensatory, incidental, or consequential damages, and so, therefore, we object to any instruction given to the jury on those issues. So the present question is whether this is a proper case for such damages. ¶ 72. Foremostly, while Section 75-2-719 of the Mississippi UCC generally allows for remedy limitations, sub-section (4) thereof provides that [a]ny limitation of remedies which would deprive the buyer of a remedy to which he may be entitled for breach of an implied warranty of merchantability or fitness for a particular purpose shall be prohibited.  Miss.Code Ann. § 75-2-719(4) (2000) (Emphasis added). Since these warranties and breaches thereof exist in the present case, despite the majority's conclusion, Travis's was allowed to pursue remedies beyond the limited remedy provided him under Mercury's express warranty. ¶ 73. Specifically, Travis sought $34, 980. in damages as costs associated with the defective motors. The breakdown of this amount is as follows: Replacement motors, labor to install: 21,370. North Carolina repair and travel: $ 4,904 Dauphin Island Tournament repair: $ 3,706. Lost prize money (estimate): $ 5,000. [7] ¶ 74. The jury awarded Travis $30,000, which covers only the actual damages, not the prize moneyas this was speculative. Indeed, the point of an award of damages for breach of a warranty is to put the injured party where he would have been had there been no such breach. To cite the Fifth Circuit, [t]his general principle serves as the focal point of the appropriate measure of damages as we work our way through the applicable provisions of the Mississippi UCC. Miss. Chem. Corp. v. Dresser-Rand Co., 287 F.3d 359, 370 (5th Cir.2002). ¶ 75. Mercury argues that this is not a proper case for cover damages. Mercury is correct. Indeed, cover damages are not available to a party who has accepted goods. Miss.Code. Ann. § 75-2-11 (2000). Since Travis had already accepted the motors, he is not entitled to any a cover remedy. Therefore, and since revocation of acceptance was not plead in this matter, Travis's damages are governed entirely by Section 75-2-714: § 75-2-714. Buyer's Damages for Breach in Regard to Accepted Goods. (1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) [§§ 75-2-607] he may recover as damages for any nonconformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable. (2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under section 75-2-715 may also be recovered. ¶ 76. Miss.Code Ann. § 75-2-714 (2000). This section provides that damages for any non-conformity of tender may be determined in any manner which is reasonable. Id. The Comment to this Section instructs that [t]he `non-conformity' referred to in subsection (1) includes not only breaches of warranties but also any failure of the seller to perform according to his obligations under the contract. Miss.Code. Ann. § 75-2-714 cmt. 1 (2000). [8] Further, while the basic damage measurement is provided by subsection (2) as `the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been warranted,' a buyer is entitled to measure his damages differently if `special circumstances' show proximate damages of a different amount. Roy R. Anderson, Damages Under the Uniform Commercial Code. § 7:05. (3rd ed.) (Supp.2000). This Section also provides that [i]n a proper case any incidental and consequential damages under Section 75-2-715 may be recovered. Miss. Code Ann. § 75-2-714(3); see also Beck Enterprises, Inc. v. Hester, 512 So.2d 672 (Miss.1987). Such damages are defined in Sections 75-2-715(1) and 75-2-715(2): (1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. (2) Consequential damages resulting from the seller's breach include (a) any 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 ... ¶ 77. The value differential formula of Section 75-2-714(2) is not applicable in the present case since the cost of the replacement Yamaha motors can in no way reflect the value of the Mercury motors at the time they were accepted. However, the award for the cost of replacement motors in this case was justified under the special circumstances exception of Section 75-2-714(2) as well as the provision allowing damages to be measured in any manner that is reasonable in Section 75-2-714(1). ¶ 78. City of New York v. Pullman, 662 F.2d 910 (2nd Cir.1981), is most instructive for the present damages analysis. The City of New York and the New York City Transit Authority sought to recover from Pullman, Inc. and Rockwell International Corporation (Rockwell) for breach of warranty arising from Pullman's sale of 754 subway cars to the City. Id. at 912. Rockwell designed unique undercarriages, which were to withstand an average stress when the cars were in service. Id. at 913. But once the cars were in use, the transform arms on the undercarriages were subject to far more stress than they could withstand on a regular basis. Id. They vibrated excessively which led to inordinate cracking. Id. The undercarriages of the subway cars consistently failed and had to be replaced. Id. Rockwell then designed a system for repairing the undercarriages, referred to as a retrofit. Id. However, experts concluded that the retrofit would add stresses on untested parts of the cars that were not designed to take heavy loads. Id. Ultimately the City and Transit authority had to replace the Rockwell undercarriages with standard undercarriages, and sought the cost of replacement under the special circumstances provision of the UCC. ¶ 79. The Second Circuit upheld the replacement cost, reasoning that, [w]here special circumstances justify the use of a measure of damages other than that expressly provided by statute plaintiff may recover for its direct damages in any manner that is reasonable. Id. at 918 citing Am. Power Co. v. Westinghouse Elec. Corp., 418 F.Supp. 435, 454 n. 34 (S.D.N.Y. 1976) Official Comments 2 and 3 to N.Y. U.C.C. § 2-714 (McKinney 1964). The Court held that: An appropriate measure of damages under that provision is the `actual cost' of a remedy that meets the ultimate requirements of the contract by converting non-conforming goods into goods which will perform as warrantedeven if that remedy required replacing defective parts with parts substantially different than those provided under the contract, at a time later than deliveryas long as that remedy meets the ultimate requirements of the contract `at the lowest cost and with the least delay.' District Concrete Co. v. Bernstein Concrete Corp., 418 A.2d 1030, 1036, (D.C.App.1980); see Curtis v. Murphy Elevator Company, 407 F.Supp. 940, 948 (E.D.Tenn.1976). 662 F.2d at 918. ¶ 80. In the present case, Travis's purchase of the Yamaha motors is justified under the same reasoning. The special circumstances are those surrounding the bargain made with Mercury, which were articulated to the jury, in Travis's words, by counsel below: This is not just a customer/manufacturer warranty case. This is a Mercury Saltwater pro-team fisherman request to make me whole because you didn't provide the motors that you selected for me that you promised me would perform, not just in any situation, but in competitive team fish competition that you knew Clear River would engage in over the course of the next twelve months and have only limited opportunities to successfully engage in that endeavor for the benefit, not just of [Travis] but for the benefit of Mercury. ¶ 81. Nevertheless, in the final instance of motor failure Travis had to repair or replace the motor at his own expense, in addition to expenses incurred traveling up and down the Eastern half of North Carolina's looking, and hoping, for a Mercury mechanic with the ability and tools to effect repair in the first instance. He tried to work with Mercury in locating a mechanic, or a dealer, or another motor, all to no avail. Travis only had two choices remaining: go to another dealer or do not compete. Additionally, to work properly, both motors had to be of the same brand. Travis was therefore required to buy two Yamaha motors even though only one Mercury motor failed. Because of the unique situation presented here, especially those regarding Mercury's awareness of the time-sensitivity involved, Travis is entitled to the purchase price of the replacement motors under the special circumstances provision of our UCC. ¶ 82. Additionally, Travis is entitled to both incidental and consequential damages under Section 75-2-714(3). This Court has held that a proper case for incidental and consequential damages is one in which a seller fails to effect its warranty. Massey-Ferguson Inc., v. Evans, 406 So.2d 15 (Miss.1981). [9] Generally, if an express limited warranty provides the exclusive remedy, and that warranty fails of its essential purpose, the purchaser can then pursue the other remedies provided by the Code including consequential or incidental damages. Id. Specifically, a buyer is entitled to recover expenses 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. Massey-Ferguson 406 So.2d 15 (Miss.1981). ¶ 83. In Massey-Ferguson, we held (1) that such damages must be reasonably ascertainable and (2) the plaintiff cannot recover from losses he reasonably could have prevented. Id. Quoting J. Wright and S. Summers, Handbook of the Law Under the Uniform Commercial Code (2nd ed.1980), we reiterated that Section 75-2-715(2) codifies the more liberal reading of Hadley v. Baxendale and further quoted that [m]ost of the courts have recognized that a seller is liable for all damages resulting from his breach if they arise from circumstances that the seller knew about or had reason to know about, even if he did not consciously assume the risk of such liability. 406 So.2d at 19. And finally, [t]he consequential damages provisions provide the only Code remedy that can come close to fully compensating a plaintiff for damages suffered due to a seller's breach. Id. at 20. ¶ 84. The evidence showed that, as a result of repeated motor failure, Travis incurred consequential and incidental damages. He is entitled to recovery for these damages under the discussed UCC provisions and as guided by our case law. Indeed, Mercury could easily foresee at the time of contracting that undesirable consequences would follow if Travis could not compete due to motor failure. And the evidence at trial did not indicate that Travis engaged in avoidable, exorbitant spending to deal with such consequences when they did arise. The jury was instructed accordingly. And for these reasons, it properly awarded Travis consequential and incidental damages resulting from Mercury's breach of its warranties. ¶ 85. One final consideration on this topic is Mercury's objection to Instruction Six, regarding the relative bargaining power of the parties and thus to the limited warranty, and, thus to incidental and consequential damages. Mercury argued there was nothing in evidence on the relative bargaining power of the parties, and that the limited warranty prohibition was therefore inapplicable. The trial judge disagreed: This case is a little different because of Mr. Travis's company's saltwater fishing team relationship with Mercury; and while I would agree with you [that] if this were a general case of the failure of a motor by any buyer, that would not be a proper instruction; I think in this case the court can look at those issues; and there's been a lot of testimony about who did what when and who suggested what when, and all of those items I think are properly considered by the jury. (emphasis added). ¶ 86. Based on a thorough reading of the record, Mercury's argument on this point is without merit. Based on the evidence and the court's appropriate instructions, the jury awarded Travis $30,000 in damages. And this award is entirely supported by the law and evidence.