Court Opinion

ID: 2864765
Source: CourtListenerOpinion
Date Created: 2015-09-06 00:45:14.692089+00
Date Added: 2024-06-11T09:18:42.239412
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO.03-00-00683-CV

Great American Products, Appellant

v.

Permabond International, a Division of National Starch and
Chemical Company, Appellee

FROM THE DISTRICT COURT OF COMAL COUNTY, 22ND JUDICIAL DISTRICT
NO. C98-504A, HONORABLE DON G. HUMBLE, JUDGE PRESIDING

 Appellant Great American Products ("Great American") appeals the district court's 
judgment that Great American take nothing in its suit against appellee Permabond International
("Permabond").  Great American sued Permabond on a variety of tort, extra-contractual, statutory,
and contract theories, claiming that Permabond sold defective adhesive which caused certain product
failures and economic losses.  The jury failed to find for Great American on any of its tort, extra-contractual, or statutory theories.  Although the jury answered favorably for Great American on
certain unconditionally submitted issues, the jury also affirmatively found that Great American had
agreed to be bound by the warranty disclaimer and limited remedy provisions contained in
Permabond's invoices.  Great American moved for judgment, asking the trial court to disregard the
jury's finding that Great American had agreed to the warranty disclaimer and limited remedy
provisions.  Permabond also moved for judgment, asserting that the jury finding that Great American
had agreed to be bound by the warranty disclaimer and limited remedy provisions rendered
immaterial its findings relating to any breach of warranty, breach of agreement, damages, and
attorney's fees.  The trial court rendered judgment that Great American take nothing.  After the court
denied its motion for new trial, Great American appealed.  We will affirm the judgment of the
district court. 

FACTUAL AND PROCEDURAL BACKGROUND

 This dispute arises out of the sale of an industrial adhesive by Permabond to Great
American.  Great American is a wholesale manufacturer and assembler of various gift items,
including glassware affixed with pewter emblems.  Great American uses industrial adhesive to attach
pewter emblems to the glassware.  The glassware is then placed under an ultraviolet light which
cures the adhesive (UV adhesive), permanently affixing the emblem.  Great American has claimed
to use this process, or one similar to it, successfully for approximately twelve years prior to the
dispute with Permabond.
	Permabond is a division of National Starch and Chemical Company ("National
Starch").  National Starch makes a variety of industrial products that in turn are incorporated into
other products.  Permabond manufactures and sells various types of UV adhesive, including the UV
adhesive at issue in this case.
	Before the events giving rise to this suit, Great American had purchased and used
other Permabond adhesives for several years.  In December 1994, Permabond suggested that Great
American begin purchasing a Permabond UV adhesive.  However, after looking at Great American's
operation, Permabond's sales engineer told Great American that it did not currently have a suitable
product that would work with Great American's system. 
	In late 1995, Permabond informed Great American that it had developed an adhesive
suitable for Great American.  According to Great American, Permabond's representatives
consistently assured Great American that changing to Permabond's adhesive would not require Great
American to substantially modify its existing manufacturing process.  Permabond delivered the
adhesive for testing.  After sampling and testing the Permabond adhesive, Great American agreed
to purchase it, signing a blanket order agreement in March 1996.
	The blanket order agreement stated in pertinent part that: "All sales are subject to
National Starch and Chemical Company's standard terms and conditions as set forth in its invoices." 
According to Great American, Permabond did not explain those terms and conditions, but simply
began shipping the adhesive.  In response, Permabond contends that during the course of dealing
with Great American over the years, it consistently communicated the fact that Permabond would
not and could not be responsible for damages that Great American might later claim resulted from
the use of Permabond's adhesives.  Furthermore, it claims that this limitation was conveyed in each
invoice sent with the purchase of a Permabond product and that Great American never disputed any
of the disclaimers it received from Permabond. 
	With each shipment of its adhesive to Great American, Permabond sent a two-sided
invoice that stated the quantity and price on the front and set out the "terms of sale" on the reverse
side.  Among the terms was a disclaimer of warranty which stated in pertinent part:
1.	SELLER HEREBY EXCLUDES ANY AND ALL WARRANTIES,
GUARANTEES, OR REPRESENTATIONS WHATSOEVER, EXPRESS OR
IMPLIED AND EXPRESSLY EXCLUDES ANY AND ALL WARRANTIES
AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE . . . .  BUYER ASSUMES RISK FOR RESULTS OBTAINED
FROM USE OF THESE GOODS WHETHER USED ALONE OR IN
COMBINATION WITH OTHER PRODUCTS.  SELLER'S LIABILITY
HEREUNDER SHALL BE LIMITED TO REPLACEMENT OF ANY GOODS
WHICH ARE NOT OF SELLER'S STANDARD QUALITY, AND SUCH
REPLACEMENT SHALL BE BUYER'S EXCLUSIVE REMEDY.

As evidenced by the disclaimer, the invoice provided that replacement was the exclusive remedy for
nonconforming adhesive. (1)
	Great American timely remitted the payments charged on each invoice.  However, 
Great American claims it never expressly accepted the "terms of sale" on the invoices.  Permabond
contends the invoice disclaimer put Great American on notice that Great American would have no
recourse for relying on the recommendations or advice of Permabond, and Great American agreed
that its exclusive remedy would be replacement adhesive.
	The parties dispute the extent of the express warranty made to Great American by
Permabond.  Great American contends Permabond expressly warranted that the adhesive it supplied
would be suitable for use in Great American's manufacturing process, without substantial
modification, and would perform satisfactorily if implemented into that process.  Permabond
contends it made only a limited warranty that it would provide Great American with its standard
quality adhesive.
	The blanket order agreement expired on April 30, 1997.  Great American continued
to purchase adhesive from Permabond but claims that after the blanket order agreement expired,
there was no expression, either in Great American's purchase order or in Permabond's response, and
no other evidence which suggested the parties had continued to be bound by the "terms of sale" set
forth in the invoices.  Permabond contends that Great American never informed Permabond that it
did not consider itself bound by the warranty exclusion and limited remedy provisions set out on
each invoice.  Permabond also contends that the exclusion of warranty provisions and limited
remedy provisions in the invoices were part of the parties' course of dealing and course of
performance and were in accord with standard industry practices. 
	In July 1997, Things Remembered, a customer of Great American, reported that the
pewter emblems on its glass mugs were falling off.  The first failures reported by Things
Remembered were all produced at an Anchor Hocking plant in Ohio, which had been employed to
do some of Great American's manufacturing while the company relocated to Texas from Illinois. 
Great American claims that the plant had just begun using the Permabond adhesive and had used the
lighting system that was recommended by Permabond to properly cure the adhesive.  Subsequently,
more problems were noted by Great American in products manufactured at its New Braunfels plant.
	After Great American became aware of problems with the UV adhesive, it notified
Permabond.  Permabond dispatched representatives to the New Braunfels facility to investigate the
problem.  After running tests on the adhesive, Permabond informed Great American that it thought
Great American's curing light source was inadequate and this was the source of the problem.  Great
American claims that Permabond did not acknowledge its earlier assurances that its product was
compatible with Great American's existing manufacturing process.  Furthermore, Great American
claims that Permabond did not explain the Anchor Hocking problems which occurred despite Great
American's use of Permabond's preferred fusion-lighting system.
	After testing the adhesive, Permabond supplied Great American with an alternative
UV adhesive to address the problems that Great American had experienced.  Great American used
this adhesive for a short period, but eventually returned to the original adhesive it used before the
Permabond product.
	Great American filed suit in June 1998.  The case was tried before a jury.  The trial
court submitted the charge proposed by Great American which included the following liability
theories: deceptive trade practices, breach of warranties, breach of contract, fraud, negligent
misrepresentation, and negligence.  As to the deceptive trade practices claims, fraud claims, and
negligent misrepresentation claims, the jury failed to find Permabond liable.  
	When asked in Question No. 3 and Question No. 4 whether Permabond failed to
comply with any warranty and whether this failure was a producing cause of damages to Great
American, the jury answered affirmatively. (2)  The questions submitted did not differentiate between
express and implied warranties.  For the breach of warranty claim, the jury awarded Great American
$70,000 for repair and replacement expenses and $250,000 in lost profits. 
	In a series of answers to the sub-parts of Question No. 7, (3) the jury found that Great
American and Permabond had agreed to the following: (A) Permabond would provide adhesive
suitable for use in Great American's manufacturing facility, (B) Permabond would provide technical
service regarding adhesive supplied for use in the Great American process, (C) Great American
would pay Permabond for adhesive it supplied that was suitable for use in Great American's
manufacturing facility, and (D) the parties would be bound by the standard terms and conditions as
stated in Permabond's invoices.
	In Question No. 8, (4) which dealt with the breach of contract claim, the jury found
Permabond failed to comply with the terms of the agreement inquired about in Question No. 7.  As
to the breach of contract claim, the jury awarded Great American $70,000 for repair and replacement
expenses and $250,000 in lost profits.
	Following the return of the jury's verdict, but before the rendition of judgment,
Permabond moved for entry of judgment in its favor asserting that the jury's answer to Question No.
7(D), that the parties were bound by the terms and conditions set forth in the invoices, negated the
jury's findings relating to the breach of warranty and breach of contract claims because the invoices
effectively disclaimed express and implied warranties.  Alternatively, Permabond requested that the
court enter judgment non obstante veredicto (notwithstanding the verdict).  See Tex. R. Civ. P. 301.
	In response, Great American contended that the jury's answers required judgment in
its favor.  Great American asked the trial court to disregard the jury's finding that Great American
had agreed to be bound by the standards and terms stated in Permabond's invoices, which included
the warranty disclaimer and limited remedy provision.  It argued that because Permabond had
expressly warranted its goods and services, its attempted disclaimer was ineffective.
	The trial court rendered judgment that Great American take nothing.  Great American
then moved to modify the judgment and alternatively for a new trial, but the court denied the motion. 
In five issues on appeal, Great American contends that: (1) the trial court erred in rendering judgment
that Great American take nothing because the blanket order agreement had expired at the time of the
breach and a proper construction of the verdict entitles Great American to recover damages for both
breach of warranty and breach of contract; (2) even if there were an effective disclaimer of implied
warranty, the trial court erred in not rendering judgment that Great American recover for breach of
express warranty, because the disclaimer was legally inoperative as to the express warranty; (3) even
if there were an effective disclaimer of warranty, the trial court erred in not rendering judgment that
Great American recover for breach of contract, because, as a matter of law, Permabond's invoices
did not disclaim responsibility for breach of the agreement; (4) even if there were an effective
limitation of remedy, the trial court erred in not rendering judgment that Great American recover
damages, because, as a matter of law, the limitation of remedy provision in Permabond's invoices
failed of its essential purpose; and (5) the trial court erred in not rendering judgment that Great
American recover attorney's fees awarded by the jury.

DISCUSSION
Breach of Express Warranty
	In its second issue, Great American complains that the trial court erred in not
rendering judgment that it recover for breach of express warranty.  Great American asserts that the
jury's affirmative answer to Question No. 3 regarding breach of any warranty necessarily means that
the jury found that Permabond breached an express warranty.  We disagree.
	The question regarding breach of warranty submitted to the jury states in pertinent
part:

Do you find that Permabond failed to comply with any warranty?

You are instructed in answering this Question that the term "failed to comply" means
any of the following:

Failing to comply with an express warranty 
 Implied Warranty of Merchantability
 Implied Warranty of Fitness for Particular Purpose
 Implied Warranty of Good and Workmanlike Performance

Answer "Yes" or "No."

Because of the ambiguous nature of the jury question, one cannot discern whether the jury's
affirmative answer relates to one or more of the implied warranties or to the express warranty.  Based
on the plain meaning of the instruction, an affirmative answer to "any of the following" is not a
finding of breach of express warranty.
	In order to recover for the breach of an express warranty, a plaintiff must prove: (1)
an express affirmation of fact or promise by the seller relating to the goods; (2) that such affirmation
of fact or promise became a part of the basis of the bargain; (3) that the plaintiff relied upon said
affirmation of fact or promise; (4) that the goods failed to comply with the affirmations of fact or
promise; (5) that the plaintiff was injured by such failure of the product to comply with the express
warranty; and (6) that such failure was the proximate cause of plaintiff's injury.  Morris v. Adolph
Coors Co., 735 S.W.2d 578, 587 (Tex. App.--Fort Worth 1987, writ ref'd n.r.e.).  Great American
had the burden to plead, prove, and submit all elements but failed to do so.  In essence, Great
American is asking this Court to deem a finding of breach of express warranty based on an
ambiguous jury submission so as to invalidate the trial court's judgment.  This we will not do. 
	Great American requested Jury Question No. 3, and the trial court submitted it over
Permabond's objections.  The jury answered this question in the affirmative.  It is unknown whether
the jury found an express warranty by Permabond.  Even assuming the validity of Great American's
argument regarding express warranties, where a jury's findings are capable of two constructions and
one would reconcile the findings in favor of the judgment, reconciliation in favor of the judgment
that was rendered on the jury verdict is mandatory.  Materials Mktg. Corp. v. Spencer, 40 S.W.3d
172, 176 (Tex. App.--Texarkana 2001, no pet.).  We overrule issue two.

Disregarding Jury Findings
	In issues one and three, Great American argues that the trial court erred by
disregarding, or failing to reconcile, certain jury findings in support of the jury's verdict.  Underlying
these issues is the apparent conflict between the jury's answers to Questions Nos. 3 and 8 (that
Permabond breached a warranty and breached its agreement) and the jury's answer to Question No.
7(D) (that Great American agreed to be bound by the standard terms and conditions in Permabond's
invoices). (5)  As discussed, the standard terms and conditions in Permabond's invoices disclaimed all
warranties and limited Great American's remedy to replacement of the glue.
	A trial court may disregard a jury's answers that have no support in the evidence or
when the answers to the questions are immaterial.  Southeastern Pipe Line Co., Inc. v. Tichacek, 997
S.W.2d 166, 172 (Tex. 1997); see also Southwestern Bell Tel. Co. v. FDP Corp., 811 S.W.2d 572,
577 (Tex. 1991) (rendering take nothing judgment and holding that limited warranty and limited
remedy provision rendered irrelevant any jury finding regarding lost profits).  A question is
immaterial when it should not have been submitted, it calls for a finding beyond the province of the
jury, e.g., a question of law, or when it was properly submitted but has been rendered immaterial by
other findings.  Id.  A trial court may disregard a finding on an immaterial issue and render judgment
on the remaining findings; such a judgment is not considered a judgment notwithstanding the verdict. 
Kuenhoefer v. Welch, 893 S.W.2d 689, 692 (Tex. App.--Texarkana 1995, writ denied). 
	In the instant case, Permabond filed a motion for judgment in which it urged the trial
court to disregard the jury's findings of breach of warranty and breach of agreement based on the
jury's affirmative answer to Question No. 7(D), finding that Great American agreed to be bound by
the standard terms and conditions, i.e., the disclaimer of warranties contained in its invoices.  In the
alternative, Permabond asked for a judgment notwithstanding the verdict based on insufficient
evidence.  The trial court ultimately rendered final judgment for Permabond that Great American
take nothing by its suit.
	We agree with Permabond that the jury's answer to Question No. 7(D) rendered its
answers relating to breach of warranty immaterial.  In answering Question No. 7(D), the jury
impliedly found that Great American agreed to be bound by the standard terms and conditions,
including the disclaimer and limitation of remedy, contained in its sales invoices.  Once the jury
found that Great American agreed to be bound by the standard terms and conditions on Permabond's
invoices, the jury's findings of breach of warranty became immaterial.  A disclaimer of warranty is
an affirmative defense.  Tex. R. Civ. P. 94; Johnston v. McKinney Am., Inc., 9 S.W.3d 271, 280
(Tex. App.--Houston [14th Dist.] 1999, pet. denied).  An affirmative defense is by its nature "one
of confession and avoidance" which seeks to establish an independent reason why the plaintiff
should not prevail.  Texas Beef Cattle Co. v. Green, 921 S.W.2d 203, 212 (Tex. 1996) (jury's finding
of affirmative defense of justification rendered immaterial finding of actual malice).
	In addition, the jury's answer to Question No. 7(D) rendered its answer to Question
No. 8 immaterial because Permabond expressly provided in its invoices that a buyer's exclusive
remedy for substandard goods was limited to replacement of the goods.  By answering all sub-parts
to Question No. 7 in the affirmative, the jury specifically found: (1) Permabond agreed to provide
suitable adhesive and technical service to Great American; (2) Great American agreed to pay
Permabond for the adhesive if suitable; and (3) both parties agreed to be bound by the terms included
in Permabond's invoices.  In answering Question No. 8 affirmatively, the jury found that Permabond
had failed to comply with its part of the agreement, specifically, providing suitable adhesive and
technical service to Great American.  At the same time, by finding that the parties agreed to be bound
by the terms and conditions of the invoices, the jury also found that the remedy for failure to comply
with the agreement was limited to replacement of the defective product.
	The record reveals that the issue of disclaimer was addressed throughout the trial,
during closing arguments, and was raised by Permabond in its pleadings below.  Permabond's
general manager testified that Permabond's disclaimer of warranty and limitation of remedy
language was standard in the chemical industry, or a "usage of trade."  Additionally, from the
testimony of Great American's CEO and purchasing agent, the jury could infer that Great American,
based on its prior course of dealing with Permabond, should have been aware of the disclaimer
language contained on Permabond's invoices and correspondence.  Furthermore, the preface to
Question No. 7 of the court's charge specifically instructed the jury on course of dealing and usage
of trade:

	A "course of dealing" is a sequence of previous conduct between the parties
to a particular transaction which is fairly to be regarded as establishing a common
basis of understanding for interpreting their expressions or other conduct.

	A "usage of trade" is any practice or method of dealing having such regularity
of observance in place, vocation or trade as to justify an expectation that it will be
observed with respect to the transaction in question.

	Where an agreement for sale involves repeated occasions for performance by
either party with knowledge of the nature of the performance and opportunity for
objection to it by the other, any course of performance accepted or acquiesced in
without objection shall be relevant to determine the meaning of the agreement.

	Finally, we note that Great American requested the charge of which it now complains. 
In summary, we hold that the trial court did not err by disregarding the jury's answers to the breach
of warranty and breach of agreement questions.  We overrule issues one and three.

Limited Remedy Failed of Essential Purpose?
	In issue four, Great American urges that, as a matter of law, the limited remedy
Permabond provided in its invoices failed of its essential purpose and that the jury's inconsistent
answers can be reconciled on this basis.  Permabond responds that Great American failed to submit
a jury question on the issue or raise the issue in its pleadings below and thus has waived it on appeal. 
Great American counters that its failure to submit a jury question on whether Permabond's limited
remedy failed of its essential purpose is not fatal to its pursuit of this issue on appeal.  See Mercedes
Benz of N. Am., Inc. v. Dickenson, 720 S.W.2d 844 (Tex. App.--Fort Worth 1986, no writ).  In
Mercedes Benz, the court of appeals considered the issue of whether a limited remedy failed of its
essential purpose, reasoning that the defendant could not complain of the plaintiff's failure to plead
the issue or to submit a jury question on the issue in the absence of special exceptions to the
plaintiff's pleadings.  Id. at 853-54.  The court relied on Roark v. Allen in which the supreme court
rejected the appellate court's determination that the plaintiffs' petition was insufficient to support
the submission of special issues to the jury on the issue of negligence.  663 S.W.2d 804, 809-10
(Tex. 1982).  However, unlike the instant case, the Roark plaintiffs submitted a jury question on the
issue of negligence, although they did not plead it specifically in their petition.  Id. at 809.  In the
instant case, Great American not only failed to plead but also failed to submit a jury question on the
issue of whether the limited remedy failed of its essential purpose; therefore, we hold it has waived
this issue on appeal.  Tex. R. App. P. 33.1; see also Henderson v. Ford Motor Co., 547 S.W.2d 663,
668-69 (Tex. App.--Amarillo 1977, no writ).

Attorney's fees
	In issue five, Great American claims the trial court erred in not rendering judgment
on the jury's award of attorney's fees to Great American.  To recover attorney's fees under Section
38.001 of the Texas Civil Practice and Remedies Code, a party must (1) prevail on a cause of action
for which attorney's fees are recoverable, and (2) recover damages.  See Tex. Civ. Prac. & Rem.
Code Ann. § 38.001 (West 1997); Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997) (citing
State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex. 1995)).  Great American has neither
prevailed on any cause of action for which attorney's fees are recoverable, nor has it recovered any
damages.  Issue five is overruled. 

CONCLUSION
	Having overruled all of Great American's issues on appeal, we affirm the
judgment of the district court.

  
					David Puryear, Justice
Before Chief Justice Aboussie, Justices B. A. Smith and Puryear
Affirmed
Filed:   October 10, 2002
Publish
1.      	The invoice also stated:

2.	While Seller may from time to time offer recommendations and advice with respect
to the use of its products, it is understood that Buyer, in acting on any such
recommendation or advice does so entirely at its own risk.

	. . . .

9.	THE GOODS COVERED BY THIS INVOICE ARE SOLD EXPRESSLY ON THE
CONDITION OF BUYER'S ASSENT THAT THESE TERMS OF SALE,
INCLUDING THE EXCLUSION OF WARRANTIES GOVERN THIS
PURCHASE AND SALE.  BUYER'S FAILURE TO OBJECT TO THESE TERMS
OF SALE WITHIN FIVE DAYS AFTER THE DATE OF SELLER'S
ACKNOWLEDGMENT & TERMS OF SALE (IF SUCH AN
ACKNOWLEDGMENT WAS MADE TO HIS ORDER) OR BUYER'S TAKING
DELIVERY OF ANY GOODS SUPPLIED HEREUNDER, WHICHEVER IS
SOONER, SHALL CONSTITUTE SUCH ASSENT.
2.      	Question No. 3 of the jury charge was "Do you find that Permabond failed to comply with
any warranty?  You are instructed . . . that 'failed to comply' means any of the following."  The
question then listed and defined the following warranties: (1) express warranty; (2) the implied
warranty of merchantability; (3) the implied warranty of fitness for a particular purpose; and (4) the
implied warranty of good and workmanlike performance.  Question No. 4 of the jury charge was "
Was the failure, if any, of Permabond to comply with a warranty a producing cause of damages to
GAP?"
3.      	Question No. 7 of the jury charge was "Did the agreement between GAP and Permabond
include any of the following terms: (A) Permabond would provide adhesive suitable for use in
GAP's manufacturing facility, (B) Permabond would provide technical service regarding adhesive
supplied for use in the GAP process, (C) GAP would pay Permabond for adhesive it supplied that
was suitable for use in GAP's manufacturing facility, (D) The parties would be bound by the
standard terms and conditions as stated in Permabond's invoices."  The jury answered "yes" to each
subpart of Question No. 7. 
4.        Question No. 8 of the jury charge was " Did Permabond fail to comply with the agreement?"
5.        In issue one, Great American specifically claims that because the blanket order agreement had
expired at the time of breach, the jury findings of breach of warranty and breach of agreement can
be reconciled by construing the answer to Question No. 7(D) as a finding that the parties had once
agreed to be bound, but that the agreement was not in force when the breach occurred.  However,
that is not how the jury charge reads.  The jury was instructed that the parties had "entered into an
agreement regarding the purchase and sale" of the Permabond adhesive.  The jury was asked whether
that agreement included the agreement to be bound by the standard terms contained in Permabond's
invoices.  In answering Question No. 7, the jury was directed to consider the parties' course of
dealing, usage of trade, and course of performance.  There is nothing in the charge or question that
referenced the blanket order agreement.  In addition, there is nothing to indicate the jury was thinking
about some prior, expired blanket order agreement when it answered Question No. 7.  In answering
Question No. 7(D) affirmatively, the jury expressly found that Great American had agreed to be
bound by the terms and conditions stated in the invoices; therefore, the terms and conditions in the
invoices were found to be part of the parties' agreement.