Court Opinion

ID: 9468858
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:25:28.795002+00
Date Added: 2024-06-11T17:41:05.397366
License: Public Domain

ENGEL and CORNELIA G. KENNEDY, Circuit Judges,
concurring specially.
We agree with Judge Keith that the evidence is insufficient to sustain a finding that appellant breached any implied warranty. We also agree that while there was sufficient evidence for the jury to find that appellant expressly warranted that Rhino-mune prevents equine rhinopneumonitis, the trial court’s instructions on express warranty erroneously failed to include ap-pellee’s reliance on the warranty as a necessary element of the claim. However, we do not agree with Judge Keith that the District Court correctly instructed the jury on the measure of damages.
There was evidence at trial that Rhino-mune failed to prevent appellee’s mares’ contracting equine rhinopneumonitis, thereby failing to prevent the abortions of appel-lee’s foals. The Rhinomune did not cause the equine rhinopneumonitis, and appellee does not here claim that it did. There was conflicting, evidence on the efficacy of Rhi-nomune in general. There was also evidence that no abortion preventive more effective than Rhinomune was available to appellee, and that even if one was available, appellee would not have used it.
The District Court’s instruction on damages required the jury to award appellee, after it found a breach of warranty, the difference in value between the mares with foal and the same mares without foal. In directing the jury to award this amount the District Court was holding that the value of the foals was the correct measure of damages in all circumstances which the jury could find. This was error.
The measure of damages for breach of warranty in Kentucky is set out in Ky. Rev.Stat. §§ 355.2-714 and 355.2-715. Section 355.2-714(2) provides for the recovery of “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, ...” Thus, if appellee persuades the jury on remand that appellant breached an express warranty, he is entitled to the difference in value between Rhinomune as he received it and the value Rhinomune would have enjoyed if it had worked as promised. Section 355.2-714(3) permits recovery as well for damages incidental to and a consequence of the breach. Section 355.2-715(1) defines incidental damages. This section entitles appellee to recover costs incurred in handling and administering the Rhinomune and any other expenses of this type. The District Court failed to instruct the jury on these elements of damages.
The only possible support for the instruction that the District Court did give is section 355.2-715(2). This section defines consequential damages, damages that are a consequence of the breach, as follows:
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; and (b) injury to person or property proximately resulting from any breach of warranty.
Under this section it is clear that once ap-pellee has demonstrated a breach of warranty he may recover only for damages that are caused by the breach. See White & Summers, Uniform Commercial Code § 10-A (1972); Brown v. Globe Laboratories, Inc., 165 Neb. 138, 84 N.W.2d 151, 160, 163, 167 (1957).1
*1296The only item of consequential damages appellee claimed here was the value of the aborted foals. Appellee might have established a causal link between the loss of the foals and the breach in any of several ways. He might have claimed that the abortions were directly due to some effect of the vaccine, or that this batch of Rhinomune was ineffective and a good batch of Rhinomune would better have prevented the abortions. He might have claimed that the warranty induced him to forego some other, effective means of preventing the abortions, or that he acted to his detriment in some other way in reliance on the warranty. Of these possible claims, there is evidence in the present record to support the claims that appellee would have used another abortion preventive but for the Rhinomune warranty or possibly that appellee’s lot of Rhinomune was ineffective as compared to other Rhinomune.2 The evidence on these theories is conflicting. Thus, causation was not established as a matter of law. If neither Rhinomune nor any other product or device would have been effective or could have been used by appellee to prevent the abortions, then any breach of warranty did not cause the abortions. The fact that the abortions were foreseeable if the Rhinomune did not work does not mean the breach of warranty was the cause of the abortions. There was simply a failure to prevent an occurrence that nothing would have prevented, and appellee may not recover the value of the foals.
Judge Keith correctly notes that appellant established the conditions of liability when it warranted that Rhinomune would prevent equine rhinopneumonitis. However, the warranty did not further establish, by itself, appellant’s liability for particular items of consequential damage in the event of a breach. Ky.Rev.Stat. § 355.2-715(2) clearly requires that the additional element of causation be proved to establish liability for consequential damages. The concern that Judge Engel and I share is that the jury was not permitted to decide whether appellant’s promises caused any damage to result from the breach where the evidence on this issue was in dispute.
To our minds the result we reach is a straightforward application to the facts of this case of the well-settled requirement that causation must be proved to recover damages. Judge Keith overstates our contribution to the law by categorizing it with the heady title “Alternative Product Rule.” Nonetheless, Judge Keith’s concerns about the scope of the result prompt some additional comments. The inquiry is always whether the breach caused the particular harm complained of. The existence or nonexistence of an alternative product aids this inquiry only in those cases where there is no other causal link between the breach and the harm for which consequential damages are sought.
The existence of an alternative product would not be relevant in this case if appel-lee had had his mares impregnated in reliance on a warranty by appellant and now sought to recover that cost. It would not be relevant had appellant, in reliance on the warranty, entered into contracts for delivery of the foals to another and been sued for failure to deliver. Appellee’s reliance on the warranty would have caused him to incur expenses and the breach would have *1297caused those losses, even in the absence of an effective alternative product.
An example from every day living may be useful. Let us assume, as appears to be the case, that nothing will reverse or prevent baldness. The condition is genetic and beyond the control of medicine. Suppose a warrantor, in good faith, represents to a man who is beginning to go bald that use of the warrantor’s product will prevent the loss of his hair. The product fails to work and the man goes bald. He can recover for the diminished value of the product he bought and he can recover any expenses incurred in administering or storing the product. That is the import of Ky.Rev.Stat. §§ 355.2-714, 355.2-715(1). If in reliance on the warranty he gave away his assortment of wigs he could recover from the warrantor the cost of replacing them. This would be an item of consequential damages under Ky.Rev.Stat. § 355.2-715(2). However, he could not recover for the loss of his hair. The breach simply had no effect on the presence or absence of the hair.
In those few cases where the existence of an alternative product is important, the defendant is not entitled to an instruction on the lack of alternatives unless the issue has been fairly raised. If it has been fairly raised, as it has here, then as a necessary part of establishing causation the plaintiff bears the burden of proving that an effective alternative was available. We do not share Judge Keith’s concern that this is an onerous burden in the few cases where it will arise.
The result we reach does not insulate manufacturers from liability for consequential damages or lead to absurd results, as Judge Keith fears.3 Liability for truly consequential damages, including damages flowing from reliance on the warrantor’s promise, should be a sufficient deterrent to unsupportable claims of performance. If not, a suit alleging fraud might be appropriate, and there are many state and federal agencies that police false advertising. It is not also necessary to award damages where no damage has been caused, in effect imposing absolute liability for a breach of warranty, as Judge Keith would do. This would render the consequential damages provision of Kentucky’s statute meaningless. It is not a windfall to the warrantor to be liable only for losses that it causes, nor is it a hardship to the warrantee only to recover for losses caused by the breach.

. Brown v. Globe Laboratories, relied on by Judge Keith, supra, at 1293, involved a vaccine that was supposed to prevent enterotoxemia in lambs. The vaccine plaintiff used caused disease in some iambs and failed to keep other lambs from contracting enterotoxemia. As *1296Judge Keith notes, plaintiff in Brown was permitted to recover damages for the failure of the vaccine to prevent enterotoxemia. Brown does not here lead to the result Judge Keith suggests. In Brown the uncontradicted evidence showed that plaintiff had used an effective vaccine from another manufacturer for several years. The failure of the vaccine that was the subject of the suit caused plaintiff’s damages because the warranty induced plaintiff to fore-go the use of a product that would have worked. Thus the failure of the product to prevent the disease as promised, though it did not cause the disease, still caused the losses that resulted from the disease, since it did cause plaintiff to forego the use of the effective vaccine. In this case there is a jury question whether Rhinomune, although it did not cause the rhinopneumonitis, nonetheless caused ap-pellee damages when his horses aborted. The District Court’s failure to let the jury answer that question requires reversal.

. Appellant’s alleged warranty that Rhinomune was 100% effective could arguably provide a basis for a jury finding that the batch of Rhino-mune used was not up to par.

. Judge Keith posits Consumer A and Consumer B, both of whom buy a product which fails to perform as warranted. Consumer A could have used an alternative, but Consumer B could not, being allergic to all alternatives. Judge Keith claims that under our analysis Consumer A would be able to recover consequential damages but Consumer B would not, and argues that this distinction between the two is unprincipled.
Our analysis does not lead to the blanket result that Judge Keith fears, requiring that all of Consumer A’s claims for consequential damages be satisfied and all of Consumer B’s denied. That depends on the existence of a causal link between the breach and each item of damage claimed. However, to make Judge Keith’s example concrete, assume that the product A and B used was a drug warranted to prevent disease, and the drug proved ineffective. Assume also that both A and B sue to recover for contracting the disease and not for any other damage. The fact is that A’s contracting the disease was a consequence of his not using some other drug in reliance on the warranted product, while B could have done nothing else. B’s illness was not a consequence of the breach. While A was harmed by the breach, B was not. This is a perfectly principled distinction between A and B.