Court Opinion

ID: 798904
Source: CourtListenerOpinion
Date Created: 2012-04-27 18:49:54+00
Date Added: 2024-06-11T17:59:46.920559
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 11-1427

FARRAR & FARRAR FARMS,

                 Appellant,

FARRAR & FARRAR DAIRY, INCORPORATED, on behalf of itself and
all others similarly situated,

                 Plaintiff – Appellant,

           v.

MILLER—ST.NAZIANZ, INCORPORATED,

                 Defendant – Appellee

           and

HYPLAST   NV;    KLERK’S      PLASTIC   PRODUCTS   MANUFACTURING,
INCORPORATED,

                 Defendants.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. James C. Dever, III,
Chief District Judge. (5:06-cv-00160-D)

Argued:   March 22, 2012                     Decided:   April 27, 2012

Before Sandra Day O’CONNOR, Associate Justice (Retired), Supreme
Court of the United States, sitting by designation, TRAXLER,
Chief Judge, and HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.
ARGUED: Scott Crissman Harris, WHITFIELD, BRYSON & MASON, LLP,
Raleigh, North Carolina, for Appellants.    Ross Alan Anderson,
WHYTE   HIRSCHBOECK  DUDEK   S.C.,  Milwaukee,  Wisconsin,  for
Appellee.   ON BRIEF: Daniel K. Bryson, LEWIS & ROBERTS, PLLC,
Raleigh, North Carolina, for Appellants.    R. Thompson Wright,
HILL, EVANS, DUNCAN, JORDAN & BEATTY, Greensboro, North
Carolina; Karen L. Tidwall, WHYTE HIRSCHBOECK DUDEK S.C.,
Milwaukee, Wisconsin, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

     Farrar   &      Farrar          Dairy,   Inc.,     and   Farrar   &   Farrar    Farms

(collectively “Farrar”) appeal a district court order granting

summary judgment against them in their products liability action

against Miller-St. Nazianz, Incorporated (“Miller”).                            Finding no

reversible error, we affirm.

                                                I.

     Farrar      &        Farrar       Dairy,        Inc.,    is   a   North      Carolina

corporation that owns and operates a small dairy farm.                            Farrar &

Farrar   Farms       is    a    North    Carolina       partnership      that    owns   the

farm’s land and livestock.                    Miller is a Wisconsin corporation

that sells farm equipment and products.

     In late 2004, Miller purchased the operating assets and

inventory of Ag-Bag International, Inc. (“Ag-Bag”), a company

that sold agricultural silage                    bags under the        name “Ag-Bag.” 1

After    purchasing            the     assets,       Miller    decided     to     continue

distributing silage bags under the “Ag-Bag” brand name.                             At the

     1
          Silage is green forage or fodder that has been chopped
and compacted into an anaerobic container such as a bunker or
fixed silo.    Silage storage bags are designed to provide an
alternative method of protecting such farm feed from spoilage.
While inside the bag, silage undergoes an acid fermentation
process that prevents it from spoiling.       A bagging machine
mechanically inserts the silage into the silage bag.    The bags
can be as long as 300 feet and up to 14 feet wide.

                                                3
time     of     the     asset     purchase,     Ag-Bag    had     a   contractual

relationship with Up North Plastics, Inc. (“Up North”), which

manufactured          the     Ag-Bag    bags.       Miller      terminated    that

relationship, however, and found another manufacturer, Hyplast

NV (“Hyplast”).            Because Miller did not receive Ag-Bag’s plastic

formula       when    it    purchased    Ag-Bag’s   assets,     Miller   provided

Hyplast with a bag that Up North had manufactured, and Hyplast

reverse-engineered a new formula.

       Farrar purchased twelve 10-foot X 250-foot Ag-Bag silage

bags from an authorized dealer on April 18, 2005, and fourteen

more bags of varying size on August 15 of the same year.                      Some

of these 26 bags had been manufactured by Up North, and others

by Hyplast.

       The warranty accompanying Farrar’s Ag-Bags stated in part:

            Ag-Bag® . . . guarantees our “Bonded”[] silage
       bags to be free of defects in workmanship and
       materials. If a properly packed bag should fail from
       a defect during normal useful life, Ag-Bag® will
       replace the bag without charge.    If the feed in the
       damaged bag requires rebagging[,] Ag-Bag® will replace
       the bag with two bags.

J.A. 1304.       Additionally, each Ag-Bag box contained a document

titled    “Flat-Folded          Bag     Installation     Instructions,”      which

included the following language:

       All recommendations or suggestions of use are made
       without guarantee, since conditions of use are beyond
       our control[.] Ag-Bag . . . maintains no obligations
       or liabilities for consequential damages arising out
       of, or in connection with[,] use of this product,

                                           4
       including but not limited to inconvenience, loss of
       profit, commercial use, food loss of any type, or
       costs o[f] removal, installation or reinstallation.

J.A. 239.

       Shortly after purchasing the bags in April 2005, Farrar

notified     Miller    that     several       of    the     bags     had     split.

Accordingly,     Miller      contacted       Arthur      Schuette,     a     Miller

representative who lived near Farrar, to investigate.                      Schuette

visited the Farrar farm soon after and visually inspected the

split bags.     He noticed some stretching that he knew, more times

than not, was the result of the bags being overpacked.                     However,

he also learned that the type of crop that had been packed was

rye silage, which, in his experience, tended to “cause more bag

stretching than a lot of other crops.”                   J.A. 1028.        For that

reason, Schuette “decided to give . . . Farrar the benefit of

the doubt” and submit a warranty claim to Miller on his behalf

with the recommendation that Farrar receive replacement bags.

J.A.   1028.     Miller      then   processed      the    warranty    claims    and

provided Farrar with replacement bags.                    At least one of the

replacement    bags   also     split.        The   record    does    not    reflect

whether another replacement bag or bags were provided.

       As a result of the bags’ splitting, Farrar incurred costs

associated     with   lost    feed,     re-bagging,       disposal    of    spoiled

silage, acquiring new bags and techniques and new silage, and a

                                         5
decrease in farm profitability due to the resources that it was

required to expend addressing the bag failures.

       Farrar subsequently brought suit in federal district court

against    Miller,       asserting     claims         of     negligence,      breach      of

express warranty, breach of implied warranty of merchantability,

unfair trade practices, and unjust enrichment.                        In response to a

motion for summary judgment filed by Miller, Farrar abandoned

the    latter   two   claims.        The   district          court   granted     Miller’s

motion regarding the remaining three claims.

                                           II.

       Farrar    first    argues     that       the    district       court     erred    in

granting summary judgment on its negligence claim.                          We disagree.

       We review the district court’s grant of summary judgment de

novo, viewing the facts and the reasonable inferences therefrom

in the light most favorable to the nonmoving party.                          See EEOC v.

Navy    Fed.    Credit   Union,    424 F.3d 397,    405    (4th    Cir.   2005).

Summary    judgment      is   appropriate        when      “the     movant    shows     that

there is no genuine dispute as to any material fact and [that]

the movant is entitled to a judgment as a matter of law.”                               Fed.

R. Civ. P. 56(a).             “Because we are sitting in diversity, our

role is to apply the governing state law, or, if necessary,

predict how the state’s highest court would rule on an unsettled

                                            6
issue.”      Horace Mann Ins. Co. v. General Star Nat’l Ins. Co.,

514 F.3d 327, 329 (4th Cir. 2008).

      Under North Carolina law, which the parties agree applies

to    the    claims   before    us,     a   plaintiff       bringing    a   products

liability action based on negligence must “prove (1) the product

was defective at the time it left the control of the defendant,

(2) the defect was the result of defendant’s negligence, and (3)

the   defect      proximately      caused       plaintiff    damage.”       Red   Hill

Hosiery Mill, Inc. v. MagneTek, Inc., 530 S.E.2d 321, 326 (N.C.

Ct. App. 2000).

      Farrar sought to prove that had Miller exercised reasonable

quality control practices with respect to the silage bags that

it purchased from Hyplast to resell under the Ag-Bag brand, it

would have discovered that they were defectively designed.                          In

moving      for   summary    judgment    on      the   negligence   claim,    Miller

maintained, as is relevant here, that Farrar failed to create a

genuine dispute regarding whether the failed bags were defective

or whether the defect was the result of Miller’s negligence.

      In response, Farrar pointed to evidence that Miller, aware

that other companies had experienced problems with their silage

bag manufacturers, had contemplated sending the Hyplast bags to

an    independent     lab    for    analysis.          Farrar   also    pointed     to

evidence      that    many   other    of      Miller’s      customers   experienced

problems with their bags in the summer of 2005, and that several

                                            7
Miller employees expressed concerns about the quality of the

plastic Hyplast used to make the bags and theories regarding why

some of the bags were failing.              Farrar further offered evidence

of a PowerPoint presentation, apparently given by Hyplast in

late 2005, stating an “[i]ntermediate conclusion” that bags it

examined split due to a combination of factors including that

the three-ply bags had a transparent middle layer, J.A. 1301, in

contrast to Up North’s bags, which had utilized a white middle

layer.      The presentation suggested that a white middle layer

better reflected the sun’s rays and therefore better protected

the bags from the effects of high temperatures.                       After this

presentation, Hyplast informed Miller that “a certain ‘batch’”

of the bags Hyplast had shipped to Miller appeared to have “a

possible higher than normal failure rate” and were “possibly

defective.”        J.A. 1979, 1713.         Miller, in turn, notified its

territory    managers     and   dealers     of   that   information,     and    the

territory managers notified their dealers that “if any of the

specific lot of potentially problematic silage bags identified

by Hyplast were in their possession, they should be returned to

[Miller] and they would be exchanged for new silage bags.”                     J.A.

1979.

     Farrar    maintained       that   by   producing      the    above-mentioned

evidence,     it    had    proffered      both    direct     evidence    of     the

defectiveness       of    the   bags   in     question      and    proven     their

                                        8
defectiveness             by     showing        “(1)        [that]        the      silage      bags

malfunctioned; (2) that the silage bags were put to ordinary

use; (3) [the occurrence of] similar accidents involving the

same product; and (4) [the] elimination of other possible causes

of the accident.”               J.A. 966.        Farrar contended that the direct

evidence          it     had    referenced       gave       rise     to       an   inference     of

negligence          on    the     part    of    the     manufacturer. 2               It    further

maintained that Miller had been “on notice of potential problems

with       the    silage       bags,    and    that    a    reasonable          man   would    have

exercised greater care in inspecting and testing” them.                                        J.A.

972.

       On reply, as is relevant here, Miller argued that much of

Farrar’s evidence would not be admissible at trial and therefore

could not be considered at the summary judgment stage.                                       Miller

further          emphasized      that    Farrar       had    not     produced         any   direct

evidence of a product defect that would be admissible at trial

and no direct evidence of Miller’s negligence.                                 Miller therefore

asserted         that     Farrar   had    failed       to    create       a     genuine     dispute

regarding          the     negligence         element       of     its    negligence         claim.

       2
          Farrar maintained that Miller, “as the apparent
manufacturer of the silage bags, . . . had a duty to use
reasonable care in the design and manufacture of its products.”
J.A. 969.

                                                 9
      Farrar       filed       a     sur-reply        in     which         it     defended        the

admissibility of its proffered evidence.

      In granting summary judgment against Farrar on this claim,

the district court agreed with Miller that Farrar had failed to

create a genuine dispute regarding whether any defect in the

bags sold to Farrar was the result of negligence on Miller’s

part.        The     court         noted     that,     under       North         Carolina        law,

defectiveness        of    a       product    may     be     established             by   indirect

evidence     and     negligence        can     sometimes         be       inferred        from   the

existence of a product defect.                       However, the court ruled that

negligence cannot be inferred from the existence of a defect if

the defect has been established entirely by indirect evidence.

Determining that Farrar had not offered direct evidence (such as

expert testimony) that the bags were defective, the court ruled

that, in order to prove Miller’s negligence, Farrar would have

to   present       “evidence        that    suggests       what       a    reasonable       person

would   do    in    similar         circumstances.”              J.A.      2610-11        (internal

quotation marks omitted).                  Concluding that “the record lacks any

information as to quality control mechanisms that distributors

generally      employ      for       goods     manufactured               by    an    independent

manufacturing        company,”        J.A.     2612,       the    court         granted     summary

judgment against Farrar on the negligence claim.

      Farrar advances several challenges to the court’s analysis,

which we address seriatim.

                                               10
       Farrar           first        contends        that     the         district        court

mischaracterized North Carolina law when it concluded that when

a products liability plaintiff relies on indirect evidence to

prove that the product was defective, it cannot rely solely on

the same evidence to prove the defect was the result of the

defendant’s negligence.                 Farrar is incorrect, however, as that

proposition is established both by Dewitt v. Eveready Battery

Co., 550 S.E.2d 511, 520 (N.C. Ct. App. 2001), aff’d on other

grounds, 565 S.E.2d 140 (N.C. 2002), and by Red Hill Hosiery

Mill, Inc., 530 S.E.2d at 327 n.7.                     See also Carlton v. Goodyear

Tire & Rubber Co., 413 F. Supp. 2d 583, 588 (M.D.N.C. 2005)

(explaining        that     products-liability             plaintiff      “may     not   prove

negligence         by    stacking       inference      upon    inference”).              Farrar

insists that the principle that a products liability plaintiff

cannot       prove       negligence         simply    by     offering       circumstantial

evidence of a product defect is “inconsistent with the North

Carolina Supreme Court’s statement in DeWitt that a plaintiff

need not satisfy each of the factors explicitly stated in DeWitt

to   prove     a     product         defect   through       circumstantial       evidence.”

Appellants’        brief        at    24.     That    is     not    the    case,     however.

Rather, the principle simply reflects that “[t]o prove a product

defective is one thing,” but “to prove that the defect flowed

from     a     failure          to     exercise       reasonable          care     is     quite

                                                11
another.”      Red Hill Hosiery Mill, Inc., 530 S.E.2d at 326 n.5

(internal quotation marks omitted).

     Farrar        alternatively         contends         that    it     presented       direct

evidence of a design defect in Farrar’s split bags, from which

Miller’s negligence could be reasonably inferred.                                 Relying on

the testimony of Miller’s Rule 30(b)(6) witness, Steve Pesik,

Farrar contends Miller tested plastic samples from each of the

eight   silage       bags       at   issue,      and      determined,          based    on     the

testing, that each was defective.                        See Appellants’ brief at 26

(citing    J.A.      1869-70).           Farrar’s         characterization             misstates

Pesik’s testimony, however.                   Pesik testified that Miller treated

Farrar’s    warranty        claims       as    viable     losses        under    the    limited

warranty      that     covered       defects        in    material       and     workmanship.

Pesik   did    not     testify         that    Miller     tested        each    bag,     and    he

certainly did not testify there was any defect in the bags’

design.       In     any   event,       because       Farrar      did    not    rely     on    the

existence      of     this      testimony        in      opposing        Miller’s       summary

judgment      motion       in    the    district         court,    the     court       was     not

required to consider it.               See Fed. R. Civ. P. 56(c)(3).

     Miller also argues that Hyplast’s PowerPoint presentation

constituted direct evidence of the defectiveness of the bags’

design.     However, evidence of this presentation was inadmissible

hearsay.       See Maryland Highway Contractors Ass’n v. State of

Md., 933 F.2d 1246, 1251 (4th Cir. 1991) (“[H]earsay evidence,

                                               12
which is inadmissible at trial, cannot be considered on a motion

for summary judgment.”).                Farrar did not identify or depose the

author of the presentation, and no one at Hyplast was questioned

concerning        its    contents.            Farrar      argues           conclusorily        that

evidence     of    the       presentation      would       fall           under   the    business

records hearsay exception, see Fed. R. Evid. 803(6), but Farrar

fails to explain how the elements of that exception could be

established.        In any event, while the presentation does suggest

steps for Hyplast to take in an effort to improve the bags, it

does not appear to conclude that any problem with the design of

the bags rose to the level of a design defect.

       In its reply brief, Farrar contends for the first time that

Miller’s negligence could be reasonably inferred not simply from

evidence of the bags’ defectiveness but from direct evidence

that   Miller      failed       to    “perform      an    adequate           investigation        or

inspection        of     the     silage       bags       or        issue      a    recall        for

approximately          six    months”    and     to      warn      its      customers     of     the

problems.         Appellants’         reply    brief      at       27.       In   this    regard,

Farrar   asserts         that    Miller       learned         of      a    problem      with     its

Hyplast-manufactured silage bags during the weeks of May 30 and

June 6, 2005.

       Because Farrar did not make this argument in its opening

brief, it is waived.             See Edwards v. City of Goldsboro, 178 F.3d
231,   241   n.6       (4th    Cir.    1999)     (claim         not       properly      raised    in

                                               13
appellant’s opening brief is deemed abandoned); Cavallo v. Star

Enter., 100 F.3d 1150, 1152 n.2 (4th Cir. 1996) (argument not

raised in opening brief, but raised for first time in reply

brief, is waived).      In any event, the district court rejected

this same argument on the bases that (1) “the record lacks any

information as to quality control mechanisms that distributors

generally   employ    for   goods    manufactured       by   an    independent

manufacturing   company”    and    (2)    neither    Miller’s     awareness   of

problems other companies had experienced with their silage bag

manufacturers   nor   the   fact    that    Miller    contemplated     sending

Hyplast’s bags to an independent lab for testing is sufficient

“to show whether a reasonable person, in similar circumstances

to Miller, would have conducted such an independent lab analysis

or adopted some other quality control measure.”              J.A. 2612.       In

its reply brief, Farrar simply argues that the district court

erred in concluding that Farrar failed to create a jury issue

with this theory without addressing, or even acknowledging, the

basis for the district court’s ruling.               See Appellants’ reply

brief at 25-29.       Thus, Farrar’s argument is waived for this

reason as well.      See Eriline Co. S.A. v. Johnson, 440 F.3d 648,

653 n.7 (4th Cir. 2006) (holding that conclusorily assigning

error without providing supporting argument is insufficient to

raise issue).

                                     14
                                         III.

     Farrar    next      maintains      that      the    district      court    erred       in

granting summary judgment against it on its claims for breach of

Miller’s express warranty and breach of an implied warranty of

merchantability.      We disagree.

     The district court ruled that Miller owed Farrar a duty

both under its express warranty and under an implied warranty of

merchantability.         Under       North    Carolina’s       implied       warranty       of

merchantability,      Farrar     could       recover        “the   difference     .     .    .

between the value of the goods accepted and the value they would

have had if they had been as warranted.”                      N.C. Gen. Stat. § 25-

2-714(2).     Additionally, “[i]n a proper case any incidental and

consequential     damages      under     .    .   .     [§ 25-2-715]     may     also       be

recovered.”       N.C.    Gen.    Stat.       § 25-2-714(3).           North    Carolina

statutory   law    also       permits    written        warranties      to     limit    the

remedy    available      in    the    event       of    a    breach;    however,       when

“circumstances cause an exclusive or limited remedy to fail of

its essential purpose, remedy may be had as provided” in the

absence of the warranty limitations.                        N.C. Gen. Stat. § 25-2-

719(2).     Finally, “[c]onsequential damages may be limited or

excluded unless the limitation or exclusion is unconscionable.”

N.C. Gen. Stat. § 25-2-719(3).

     Miller’s express warranty provided that should an Ag-Bag

fail from defect, it would be replaced without charge and that

                                             15
should the damaged bag require the farmer to rebag the feed,

Miller would provide two replacement bags.                            The district court

treated      this     remedy     and    the        remedies     granted     under    North

Carolina statutory law as consistent and therefore cumulative.

The court concluded that since Farrar chose to remedy the breach

by    accepting       replacement       bags,      it    was    not    entitled     to   any

additional         remedy    under    N.C.    Gen.      Stat.   § 25-2-714.         As   for

Miller’s exclusion of consequential damages, the district court

noted it was valid unless it was unconscionable, which the court

concluded it was not.                Farrar offers several challenges to the

district court’s analysis, which we consider seriatim.

       Farrar first maintains that the district court erred in not

recognizing         that     Miller’s    warranty        failed       of   its   essential

purpose, and therefore that Farrar was entitled to all of the

remedies listed in § 25-2-714, including consequential damages. 3

A limited, exclusive remedy fails of its essential purpose when

“unanticipated circumstances preclude the seller from providing

the        buyer      with      the     remedy          to      which      the      parties

agreed.”       Computer Network, Inc. v. AM Gen. Corp., 696 N.W.2d
3
          In this regard, Farrar claims that “Farrar never
actually made the warranty claim under the express warranty.”
Appellants’ brief at 33-34.     However, Farrar, when asked at
deposition whether he ever submitted a written warranty claim,
responded that he dealt with Schuette and “[w]hatever he had me
do is what[] I did.” J.A. 2302.

                                              16
49,     55     (Mich.         Ct.       App.   2005)       (internal        quotation          marks

omitted); see Stutts v. Green Ford, Inc., 267 S.E.2d 919, 926

(N.C.    Ct.      App.    1980)         (holding    that     a    warranty       fails    of     its

essential purpose when “there is a defect which is not or cannot

be    repaired         within       a    reasonable        period    as    required       by     the

warranty”).            We see no basis for concluding that Farrar showed

that it did not receive the remedy that Miller had promised.

Miller provided replacements for the defective bags within a

reasonable period of time, just as its warranty contemplated.

Although at least one of the replacement bags also ended up

splitting, Farrar offers no evidence that the replacement bag

was not also promptly replaced.

       In    the       end,    Farrar      seems      to    suggest       that   the     warranty

failed       of    its        essential        purpose       because       Miller        did    not

compensate Farrar for the substantial costs it incurred “with

purchasing new feed, the labor costs of rebagging the feed, and

the    loss       in    milk    production          due     to    Farrar’s       inability        to

adequately feed his livestock.”                        Appellants’ brief at 36.                   Of

course, though, the fact that Farrar was not compensated for

those        losses       simply           reflected         Miller’s        disclaimer           of

consequential           damages.          It   is     to    the     effectiveness        of     that

disclaimer that we now turn.

       Farrar argues that the disclaimer of consequential damages

was not effective because it was “not conspicuous as required by

                                                 17
[N.C.    Gen.    Stat.    §]     25-2-316(2),       and     the    warranty       does   not

mention merchantability.”              Appellants’ brief at 32.                However, as

the district court correctly determined, Miller’s disclaimer did

not need to meet § 25-2-316(2)’s requirements to be effective.

That section concerns only attempts to “exclude or modify the

implied warranty of merchantability or any part of it.”                               Here,

what Miller limited by disclaiming consequential damages was not

the    warranty,    but    the    remedy      for    a    breach    of    the     warranty.

North Carolina Code section 25-2-316(4) plainly provides that

“[r]emedies for breach of warranty can be limited in accordance

with . . . [N.C. Gen. Stat. §§] 25-2-718 and 25-2-719.”                                  N.C.

Gen. Stat. § 25-2-316(4) (emphasis added).                        Section 25-2-719, in

turn, provides that “[c]onsequential damages may be limited or

excluded unless the limitation or exclusion is unconscionable.”

Thus, so long as the limitation is not unconscionable, it is

valid.     See Billings v. Joseph Harris Co., 220 S.E.2d 361, 366

(N.C. Ct. App. 1975).

       Farrar argues that the limitation is unconscionable for two

reasons.        First,    it     contends     that       Farrar    had    no     meaningful

choice regarding the terms of the warranty.                             In this regard,

Farrar   contends       that   “when     a    manufacturer         is    aware    that    its

product is inherently defective, but the buyer has ‘no notice of

[or]    ability    to     detect’      the    problem,       there       is    perforce    a

substantial       disparity       in    the       parties’        relative       bargaining

                                             18
power.”        Appellants’ brief at 37 (quoting Carlson v. General

Motors    Corp.,       883 F.2d 287,     296    (4th     Cir.   1989)).         Farrar

maintains that, at the time it purchased the bags in question,

Miller knew that Hyplast had changed the formula for the silage

bags, while Farrar had no way of knowing that.                                   That fact is

certainly       not    much       help       to   Farrar,       however.         When    Farrar

purchased bags in April 2005, Miller had no reason to believe

that Hyplast would produce defective bags.                          And, it was shortly

thereafter      that       several      of    the      bags   split.       Although      Miller

learned    that       summer       of    other      customers      who     had    experienced

problems with its bags, by that point, Farrar was certainly on

notice    of    a     possible      problem         as   well.      Thus,    there       was   no

substantial disparity in bargaining power between the parties,

even regarding the August purchases.

     Farrar         also    contends         that      Miller’s    consequential-damages

exclusion was unconscionable because, with the exclusion, the

terms of the purchase were unreasonably favorable to Miller.                                   We

do not agree.          Any disclaimer of a customer’s right to recover

consequential damages as a warranty remedy can have significant

effects,       but    in     a    transaction          between    business       entities,     a

provision disclaiming consequential damages for commercial loss

is not presumptively unconscionable.                          See N.C. Gen. Stat. § 25-

2-719(3) (providing that limitation of consequential damages for

commercial      loss       is    not    prima       facie     unconscionable);          Stan   D.

                                                  19
Bowles Distrib. Co. v. Pabst Brewing Co., 317 S.E.2d 684, 690

(N.C. Ct. App. 1984) (“Courts rarely find limitation clauses in

transactions               between               experienced                businessmen

unconscionable.”); Billings, 220 S.E.2d at 366.

      In its reply brief, Farrar argues for the first time that

the     exclusion    of     consequential         damages        was     unconscionable

because    at     least    one     of   the     replacement       bags    that    Miller

provided ended up breaking.               Because Farrar did not make this

argument in its initial brief, it is waived.                       See Edwards, 178
F.3d at 241 n.6; Cavallo, 100 F.3d at 1152 n.2.                          In any event,

the consequential damages exclusion became effective when the

bags were purchased.             Subsequent events have no bearing on the

issue of unconscionability.               See Weaver v. Saint Joseph of the

Pines, Inc., 652 S.E.2d 701, 712 (N.C. Ct. App. 2007) (“The

question of unconscionability is determined as of the date the

contract was executed.”).

      For all of these reasons, we conclude as a matter of law

that the consequential damages exclusion was valid and that the

court    properly    granted       summary      judgment    on    Farrar’s       warranty

claims.

                                          IV.

      In   sum,     we    affirm    the    district    court’s         order     granting

summary judgment against Farrar.

                                                                                 AFFIRMED

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