Court Opinion

ID: 4151555
Source: CourtListenerOpinion
Date Created: 2017-03-09 18:11:57.107268+00
Date Added: 2024-06-11T14:01:40.991354
License: Public Domain

03/09/2017

               IN THE COURT OF APPEALS OF TENNESSEE
                            AT JACKSON
                              January 18, 2017 Session

              J.W. SMITH, ET AL. v. TIMBERPRO INC., ET AL.

                 Appeal from the Circuit Court for Carroll County
                      No. 13CV76 Donald E. Parish, Judge
                    ___________________________________

                          No. W2016-00757-COA-R3-CV
                      ___________________________________

J.W. Smith d/b/a J.W. Smith Logging (“Smith”) appeals the trial court’s grant of
summary judgment to Don Bush d/b/a Bush Forestry Equipment (“Bush”) and Woodland
Equipment, Inc. (“Woodland”). Smith filed this lawsuit against Bush and Woodland
seeking damages for breach of contract and breach of express and implied warranties.
His claims arose from his purchase of an allegedly defective harvester from Woodland.
The trial court granted summary judgment to Bush based on the absence of contractual
privity between Smith and Bush. The trial court granted summary judgment to
Woodland based on the absence of evidence that it breached any express warranties to
Smith and based on a disclaimer of implied warranties included in its contract with
Smith. On appeal, Smith argues that the record contains issues of disputed fact as to (1)
whether Bush was a joint-seller of the harvester with Woodland, (2) whether Woodland
and Bush breached express warranties to Smith, and (3) whether the disclaimer of
implied warranties was part of Smith’s contract for purchase of the harvester. We agree
with the trial court that the record does not contain any evidence of contractual privity
between Smith and Bush and therefore affirm the trial court’s grant of summary
judgment to Bush on all of Smith’s claims. We also agree that the record does not
contain evidence that Woodland breached express warranties to Smith and therefore
affirm the trial court’s grant of summary judgment to Woodland on Smith’s claim for
breach of express warranties. We do not agree, however, that the disclaimer of implied
warranties was included in Smith’s contract with Woodland for purchase of the harvester.
We therefore reverse the trial court’s grant of summary judgment to Woodland on
Smith’s claim for breach of implied warranties. The judgment of the trial court is
affirmed in part, reversed in part, and this case is remanded for further proceedings.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in
                      Part, Reversed in Part, and Remanded

ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which BRANDON O.
GIBSON and KENNY ARMSTRONG, JJ., joined.
W. Timothy Harvey, and Rebecca J. Garman, Clarksville, Tennessee, for the appellant,
J.W. Smith d/b/a J.W. Smith Logging.

Fred N. McLean, Paris, Tennessee, for the appellee, Don Bush d/b/a Bush Forestry
Equipment.

Kenneth R. Shuttleworth and Michelle Handelsman, Nashville, Tennessee, for the
appellee, Woodland Equipment, Inc.

                                            OPINION

                              BACKGROUND AND PROCEDURAL HISTORY

       Smith owns and operates a logging business based in Tennessee Ridge, Tennessee.
In 2010, Smith decided to purchase a commercial harvester designed and manufactured
by TimberPro, Inc. (“TimberPro”). Smith contacted Bush, a Tennessee TimberPro
dealer, about purchasing a TimberPro harvester equipped with a Risley harvesting head.
Bush referred Smith to Woodland, a Michigan TimberPro dealer, because he believed
that Woodland would be better-suited to installing the harvesting head.

       In April 2010, Smith and Woodland entered into a written contract, titled “Sales
Order,” for the sale of a TimberPro TL735B harvester equipped with a Risley Rolly II
harvesting head. The Sales Order reflects Smith’s agreement to pay Woodland $481,000
for the harvester, states that it constitutes the entire contract between Woodland and
Smith, and includes the following reference to a TimberPro warranty policy:

      NAME01 INSURANCE CO.?
                                                                 .   Of*old usImre Whim?
 -nrwae
    "
        f,6     kirelgiak0 4K15"7
         NT.: moriwAaturge 5
                                       ofO6    re), via=
                                       WOODLAND EQUIPMENT, INC
                                                                                   Al III

       The harvester was delivered to Smith in June 2010. Bush met with Smith when
the harvester was delivered, ostensibly to help familiarize him with the harvester. During
the meeting, Smith signed a document, titled “Delivery Report,” which stated in part,
“Having read the TimberPro Warranty Policy . . . I now have a working knowledge of
[the harvester].”

          The TimberPro warranty policy referenced in the Sales Order and Delivery Report
states:

                                                -2-
        1. Product Warranty. Subject to the terms and conditions of this limited
        warranty, Timberpro, Inc. (“Timberpro”) warrants to the original Purchaser
        only of 725 & 735 Series Machines that under normal use and conditions
        the machines will be free from defect in material and workmanship when
        used for their intended purpose for a period of one (1) year-from delivery to
        the Purchaser or 2000 machine hours, whichever occurs first.

                                                   ...

        THIS LIMITED WARRANTY AND THE REMEDIES DESCRIBED
        HEREIN ARE PURCHASER’S SOLE AND EXCLUSIVE REMEDY,
        AND ARE OFFERED BY TIMBERPRO IN LIEU OF ALL OTHER
        WARRANTIES,    GUARANTEES,    AND/OR     REMEDIES
        WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, IMPLIED
        WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR
        A   PARTICULAR   PURPOSE   UNDER   THE    UNIFORM
        COMMERCIAL CODE, OR OTHER WARRANTIES OR
        GUARANTEES ARISING BY OPERATION OF LAW, ALL OF
        WHICH ARE HEREBY EXPRESSLY DISCLAIMED.

       In May 2013, the harvester was destroyed by a fire. In December 2013, Smith
filed a complaint against Bush in the Carroll County Circuit Court in which he alleged
that the fire was caused by a defect in the harvester’s electrical system.1 Later, Smith
amended the complaint to include Woodland as a defendant. As amended, Smith’s
complaint alleged that Bush and Woodland were liable for, among other things, breach of
contract, breach of express warranties, and breach of the implied warranties of
merchantability and fitness.2

        In December 2015, Woodland and Bush filed motions for summary judgment on
Smith’s contract and warranty claims. In their motions and supporting documents,
Woodland and Bush asserted that Smith was bound by the terms of the TimberPro
warranty policy, which provided a one-year limited warranty on the harvester and
disclaimed all other warranties, including the implied warranties of merchantability and
fitness. They argued that the trial court should dismiss Smith’s warranty claims because

1
  Although Smith’s complaint also named TimberPro as a defendant, the trial court granted summary
judgment to TimberPro on all of Smith’s claims, and Smith does not challenge the trial court’s ruling with
regard to TimberPro on appeal.
2
 Smith’s complaint also asserted tort, products liability, and consumer protection claims against Bush and
Woodland. In September 2015, the trial court granted summary judgment in favor of Bush and Woodland
on those claims. Smith does not challenge the trial court’s ruling with regard to those claims on appeal.
                                                  -3-
the only warranty on the harvester (the one-year limited warranty in the TimberPro
warranty policy) expired before the fire that destroyed the harvester. Additionally, they
argued that the trial court should dismiss Smith’s contract claim because Smith failed to
allege or demonstrate any other basis for a breach of contract. Alternatively, Bush also
argued that Smith’s warranty and contract claims against him should be dismissed
because he was not in contractual privity with Smith.

        In response, Smith argued that he was not bound by the TimberPro warranty
policy because he did not receive a copy of it when he purchased the harvester.
Additionally, Smith asserted that Woodland and/or Bush expressly warranted to him prior
to the sale that the harvester would be “free from defects” and that “they would stand by
their machines.” He argued that the harvester’s defective electrical system constituted a
breach of that express warranty, a breach of the implied warranties of merchantability and
fitness, and a breach of contract. Finally, Smith argued that there was a factual dispute as
to whether Bush was a joint-seller of the harvester and therefore in contractual privity
with Smith.

       In March 2016, the trial court entered an order granting summary judgment in
favor of Woodland and Bush. In relevant part, the trial court’s order states:

               More specifically, with regards to Bush, based on the undisputed
       material facts, this Court finds that there is no contract between Bush and
       Plaintiff. Therefore, no claim for breach of contract or breach of warranty
       exists.

              With regards to Woodland, based on the undisputed material facts,
       Plaintiff has failed to show Woodland breached the Sales Contract with
       Plaintiff. Plaintiff has also failed to show Woodland made or breached any
       warranties to Plaintiff.

              The Court finds it is uncontradicted that any express warranty by the
       manufacturer, Timberpro, Inc., had long expired prior to the loss and all
       implied warranties, if any, were conspicuously waived. This Court finds
       that Plaintiff had the opportunity to, and did see and look at, the warranty.
       However, if Plaintiff did not, Plaintiff at a minimum had the opportunity to
       do so. Plaintiff cannot come back years later and assert there are implied
       warranties when he so plainly waived them years earlier.

Smith timely filed a notice of appeal from the trial court’s order.

                                            -4-
                                          ISSUES

       Smith raises the following issues on appeal, restated from his appellate brief:
       1. Whether the trial court erred in granting summary judgment in favor of
       the defendants on Smith’s claim for breach of express warranty.

       2. Whether the trial court erred in granting summary judgment in favor of
       the defendants on Smith’s claims for breach of the implied warranties of
       merchantability and fitness.

       3. Whether the trial court erred in granting summary judgment in favor of
       the defendants on Smith’s claim for breach of contract.

       4. Whether the trial court erred in holding that there was no contractual
       privity between Bush and Smith.

       5. Whether the trial court erred in holding that Smith was bound by the
       TimberPro warranty policy after holding that there was no contractual
       privity between TimberPro and Smith.

                                 STANDARD OF REVIEW

       This is an appeal from a grant of summary judgment. Summary judgment is
appropriate when “the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.”
Tenn. R. Civ. P. 56.04. On appeal, we review a trial court’s ruling on a motion for
summary judgment de novo with no presumption of correctness. Abshure v. Methodist
Healthcare-Memphis Hosps., 325 S.W.3d 98, 103 (Tenn. 2010). In doing so, we make a
fresh determination of whether the requirements of Rule 56 of the Tennessee Rules of
Civil Procedure have been satisfied. Id. The following standards guide our de novo
review:

       [I]n Tennessee, as in the federal system, when the moving party does not
       bear the burden of proof at trial, the moving party may satisfy its burden of
       production either (1) by affirmatively negating an essential element of the
       nonmoving party’s claim or (2) by demonstrating that the nonmoving
       party’s evidence at the summary judgment stage is insufficient to establish
       the nonmoving party’s claim or defense. We reiterate that a moving party
       seeking summary judgment by attacking the nonmoving party’s evidence
       must do more than make a conclusory assertion that summary judgment is
                                           -5-
       appropriate on this basis. Rather, Tennessee Rule 56.03 requires the
       moving party to support its motion with “a separate concise statement of
       material facts as to which the moving party contends there is no genuine
       issue for trial.” Tenn. R. Civ. P. 56.03. “Each fact is to be set forth in a
       separate, numbered paragraph and supported by a specific citation to the
       record.” Id. When such a motion is made, any party opposing summary
       judgment must file a response to each fact set forth by the movant in the
       manner provided in Tennessee Rule 56.03. “[W]hen a motion for summary
       judgment is made [and] . . . supported as provided in [Tennessee Rule 56],”
       to survive summary judgment, the nonmoving party “may not rest upon the
       mere allegations or denials of [its] pleading,” but must respond, and by
       affidavits or one of the other means provided in Tennessee Rule 56, “set
       forth specific facts” at the summary judgment stage “showing that there is a
       genuine issue for trial.” Tenn. R. Civ. P. 56.06.

Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 264-65 (Tenn. 2015)
(judicially adopting a summary judgment standard parallel to the statutory standard set
forth in Tennessee Code Annotated section 20-16-101); see also Am. Heritage
Apartments, Inc. v. Hamilton Cnty. Water & Wastewater Treatment Auth., 494 S.W.3d
31, 39-40 (Tenn. 2016) (explaining that the Rye standard applies in lawsuits commenced
after July 1, 2011, the date that the standards set forth in Tennessee Code Annotated
section 20-16-101 became effective).

                                       DISCUSSION

                      Contractual Privity Between Bush and Smith

        First, we address whether the trial court erred in dismissing Smith’s claims against
Bush based on its determination that the two were not in contractual privity. On appeal,
Smith does not challenge the trial court’s conclusion that his claims against Bush fail in
the absence of contractual privity. Rather, Smith argues that the trial court erred because
there is a factual dispute as to whether Woodland and Bush acted together as joint-sellers
of the harvester. This argument is premised on Smith’s assertion that Woodland
delivered the harvester to Bush, who then delivered it to Smith in exchange for a portion
of Woodland’s profits from the sale. As an initial matter, we note that Smith does not
cite any legal authority to support this argument in his appellant’s brief or reply brief,
which could result in a waiver of the argument on appeal. See, e.g., Forbess v. Forbess,
370 S.W.3d 347, 355 (Tenn. Ct. App. 2011). In any event, however, an agreement
between Woodland and Bush for delivery of the harvester is not evidence of an
agreement between Bush and Smith for sale of the harvester. As such, we are satisfied
that the record does not contain any evidence from which a reasonable person could
                                           -6-
conclude that a contract existed between Bush and Smith for sale of the harvester. We
therefore affirm the trial court’s grant of summary judgment to Bush on Smith’s claims.3

                                       Express Warranties

        Next, we address whether the trial court properly granted summary judgment in
favor of Woodland on Smith’s claim for breach of express warranties. Under the
Tennessee Code, “[a]ny affirmation of fact or promise made by the seller to the buyer
which relates to the goods and becomes part of the basis of the bargain creates an express
warranty that the goods shall conform to the affirmation or promise.” Tenn. Code Ann. §
47-2-313(1)(a). To establish a prima facie claim for breach of an express warranty, a
plaintiff must prove that (1) the seller made an affirmation of fact intending to induce the
buyer to purchase the goods; (2) the buyer was, in fact, induced by the seller’s acts; and
(3) the affirmation of fact was false regardless of the seller’s knowledge of the falsity or
intention to create a warranty. Coffee v. Dowley Mfg., Inc., 187 F. Supp. 2d 958, 969 (M.
D. Tenn. 2002), aff’d, 89 Fed.Appx. 927 (6th Cir. 2003) (citing H.B.H. Enters., Inc. v.
Cates, No. 03A01-9608-CV-00253, 1997 WL 76804, at *2 (Tenn. Ct. App. Feb. 25,
1997)). Smith argues that the trial court erred in granting summary judgment to
Woodland on this issue because he relied on oral representations made by or on behalf of
Woodland in purchasing the harvester. Specifically, Smith asserts that he was told prior
to the sale that the harvester “would perform cut to length timber and would be free from
defects and they would stand by their machines.” We note, however, that the only
material that Smith cites as evidence of an express warranty is a 2010 trade magazine
article about his business. The article quotes Smith as stating, “They (TimberPro) have a
good product[.] They stand by their machine.” The article does not quote or reference
any statements or affirmations made on behalf of Woodland. As such, we conclude that
there is no evidence in the record to support Smith’s contention that Woodland breached
an express warranty related to the harvester. We therefore affirm the trial court’s grant of
summary judgment to Woodland on Smith’s claim for breach of express warranties.

                     Implied Warranties of Merchantability and Fitness

      The next issue we address is whether the trial court properly granted summary
judgment to Woodland on Smith’s claim for breach of the implied warranties of
merchantability and fitness. The trial court held that Woodland was entitled to judgment

3
  In his reply brief, Smith argues that our ruling on this issue could leave him without recourse if
Woodland presents proof on remand that it did not sell the harvester to Smith. Notwithstanding the fact
that such proof would not have any bearing on Bush’s relationship with Smith, this argument is moot in
light of Woodland’s repeated acknowledgment–in the trial court and on appeal–that it sold the harvester
to Smith.

                                                 -7-
on that claim as a matter of law because it conspicuously disclaimed any implied
warranties in the TimberPro warranty policy. Smith argues that the trial court erred in
reaching that conclusion because the TimberPro warranty policy was not part of his
contract to purchase the harvester. In Tennessee, “a warranty that the goods shall be
merchantable is implied in a contract for their sale if the seller is a merchant with respect
to goods of that kind.” Tenn. Code Ann. § 47-2-314(1). Likewise, “[w]here the seller at
the time of contracting has reason to know any particular purpose for which the goods are
required and that the buyer is relying on the seller’s skill or judgment to select or furnish
suitable goods, there is . . . an implied warranty that the goods shall be fit for such
purpose.” Tenn. Code Ann. § 47-2-315. A seller may disclaim the implied warranties of
merchantability and fitness for a particular purpose in writing only if the disclaimer is
“conspicuous.” Tenn. Code Ann. § 47-2-316(2).4 Pursuant to the Tennessee Code, a
disclaimer is conspicuous when it is “so written, displayed, or presented that a reasonable
person against which it is to operate ought to have noticed it.” Tenn. Code Ann. § 47-1-
201(10). The Tennessee Code further specifies that a heading or language in greater size
than the surrounding text or in contrasting type, font, or color to the surrounding text is
conspicuous. Id. Of course, a written disclaimer with those stylistic qualities must
nonetheless be a part of the parties’ agreement to be effective. See Parton v. Mark Pirtle
Oldsmobile-Cadillac-Isuzu, Inc., 730 S.W.2d 634, 637 (Tenn. Ct. App. 1987) (“At a
minimum, the reallocation [of risk] must be physically conspicuous. Beyond that, it must
have been manifested in a fashion comprehensible to the party against whom it is sought
to be enforced.”) (quoting J. Murray, On Contracts § 353 2d Revised Ed. (1974)). “The
keys to an effective disclaimer are notice and assent, and one can neither notice nor
assent to that which one has not seen.” Bd. of Dirs. Of City of Harriman Sch. Dist. v. Sw.
Petroleum Corp., 757 S.W.2d 669, 676 (Tenn. Ct. App. 1998).

        While the language in the TimberPro warranty policy has the stylistic qualities of
a conspicuous disclaimer, Smith argues that there is a factual dispute as to whether it was
part of his contract with Woodland. In support of that argument, Smith cites his
deposition testimony that he was not aware of the TimberPro warranty policy until after
he initiated this lawsuit. For its part, Woodland argues that the reference to a TimberPro
warranty on the Sales Order was sufficient to notify Smith of the TimberPro warranty
policy and bind him to its terms. We disagree with Woodland’s argument. The
requirement that a disclaimer of implied warranties be conspicuous is not satisfied by a
contract’s mere reference to the disclaimer in another document, regardless of whether
the disclaimer is conspicuously printed in the document in which it appears. See LeConte
Props., LP v. Applied Flooring Sys., Inc., No. E2006-01122-COA-R3-CV, 2007 WL
1108904, at *6 (Tenn. Ct. App. Apr. 13, 2007); (holding that a reference in the contract to

4
 A disclaimer of the implied warranty of merchantability must also mention merchantability. Tenn. Code
Ann. § 47-2-316(2).
                                                -8-
“standard one (1) year warranty” did not constitute notice that the seller intended to limit
the implied warranty of fitness); see also Woodward v. Naylor Motor Sales, 14 U.C.C.
Rep. Serv. 1269 (Mich. Dist. Ct. 1974); Koellmer v. Chrysler Motors Corp., 818 U.C.C.
Rep. Serv. 668 (Conn. Cir. Ct. 1970). There is nothing in the Sales Order to indicate that
Woodland intended to limit or disclaim any implied warranties on the harvester. 5 As
such, Woodland cannot rely on the Sales Order as evidence that Smith agreed to the
disclaimer. Woodland also argues that Smith’s signature on the Delivery Report reflects
that he was aware of and agreed to the TimberPro warranty policy. It is undisputed,
however, that Smith signed the Delivery Report when the harvester was delivered in June
2010 and not when he actually purchased the harvester in April 2010. The delivery of a
written warranty after the contract of sale has been entered into does not modify or negate
the statutory obligations created by the sale. Ford Motor Co. v. Taylor, 446 S.W.2d 521,
532 (Tenn. Ct. App. 1969).

       Smith testified in his deposition that he did not receive a copy of the Timberpro
warranty policy at the time of the sale. Woodland has not presented any evidence that
refutes Smith’s testimony. As such, the record does not conclusively establish that the
TimberPro warranty policy was part of the agreement between Woodland and Smith. For
that reason, we reverse the trial court’s grant of summary judgment to Woodland on
Smith’s claim for breach of the implied warranties of merchantability and fitness.6

                                          Breach of Contract

       Finally, we briefly address Smith’s argument that the trial court erred in granting
summary judgment to Woodland on his claim for breach of contract. In the trial court
and on appeal, Smith has argued that Woodland breached their contract by selling him a
defective harvester. In advancing that argument, however, Smith has not specified what,
if any, contractual terms that Woodland actually breached. Instead, it appears that
Smith’s breach of contract claim is based solely on Woodland’s alleged breach of the
terms implied in the contract by statute. To the extent that Smith’s breach of contract
claim is based on some alleged breach other than a breach of implied warranties, we
affirm the trial court’s grant of summary judgment to Woodland on that claim. To the
extent that Smith’s breach of contract claim is based solely on an alleged breach of
implied warranties, we decline to discuss it further.

5
 Moreover, the Sales Order only references the TimberPro warranty policy as a whole; it does not contain
a specific reference to the disclaimer of implied warranties in the TimberPro warranty policy.
6
  Smith also argues that the trial court’s holding that he was bound by TimberPro’s warranty policy is
inconsistent with its previous ruling that he was not in contractual privity with TimberPro. In light of our
resolution of the foregoing issue, discussion of that argument is pretermitted.
                                                   -9-
                                     CONCLUSION

       For the foregoing reasons, we affirm the trial court’s grant of summary judgment
to Bush. We also affirm the trial court’s grant of summary judgment to Woodland on
Smith’s claims for breach of contract and breach of express warranties. However, we
reverse the trial court’s grant of summary judgment to Woodland on Smith’s claim for
breach of the implied warranties of merchantability and fitness. This case is remanded to
the trial court for such further proceedings as are necessary and consistent with this
Opinion. Costs of this appeal are taxed to the appellee, Woodland Equipment, Inc., for
which execution may issue if necessary.

                                                  _________________________________
                                                  ARNOLD B. GOLDIN, JUDGE

                                         - 10 -