Summary
The Tenth Circuit reviewed consolidated appeals arising from a warranty dispute involving machining centers and General Electric numerical controls. The court held that General Electric’s disclaimer to Brown & Sharpe, which was not disclosed in writing to Patty Precision, was not binding on Patty Precision under Oklahoma law and was improperly admitted into evidence and submitted to the jury. The court also addressed the denial of a new trial and related attorney-fee issues.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion by admitting evidence of and instructing the jury on General Electric's disclaimer and limitation of remedies to Brown & Sharpe.
- Whether General Electric's undisclosed disclaimer to Brown & Sharpe could bind Patty Precision, an ultimate purchaser lacking direct contractual privity with General Electric.
- Whether Patty Precision waived its challenge to the disclaimer by introducing notebooks that apparently contained copies of the disclaimer.
- Whether the appellate court needed to reach Patty Precision's challenge to the denial of an increase in its ad damnum for interest paid on borrowed funds.
- Whether the attorney-fee judgments should be set aside in light of reversal on the merits.
Holdings
- General Electric's disclaimer, which was disclosed only to Brown & Sharpe and was never communicated in writing to Patty Precision, was not binding on Patty Precision under Oklahoma law.
- The district court erred in admitting evidence of General Electric's Statement of Warranty and in instructing the jury concerning the disclaimer and limitation of remedies.
- Patty Precision did not waive its challenge to the validity or admissibility of General Electric's disclaimer.
- The court did not reach Patty Precision's contention that it should have been permitted to increase its ad damnum to include interest paid on borrowed funds.
Key quotations
“Based on our review of applicable Oklahoma law, we hold that General Electric’s disclaimer to Brown & Sharpe was not binding on Patty Precision, that the disclaimer was irrelevant, and that the district court erred in admitting it in evidence and instructing on it.” (846 F.2d at 1252)
“Thus, an ultimate consumer in the distribution chain in Oklahoma can bring a direct breach of warranty action against a manufacturer, notwithstanding his lack of privity.” (846 F.2d at 1254)
“Under such circumstances, we hold that Patty Precision did not waive its challenge to the validity of General Electric’s disclaimer and the court’s instructions relative thereto.” (846 F.2d at 1255)
Factual background
Patty Precision purchased and leased three Brown & Sharpe machining centers equipped with General Electric numerical controls for manufacturing bomb-rack components under a government contract. The machines allegedly required almost constant repairs, and the defendants extended the service warranties through June 1977. General Electric's written warranty and disclaimer were provided to Brown & Sharpe, but Patty Precision was not informed of or shown the disclaimer before purchasing or leasing the machines; General Electric employees nevertheless participated in installation and startup at Patty Precision's plant.
Procedural history
Patty Precision sued in diversity after three machining centers and their General Electric numerical controls allegedly failed to perform as warranted. The jury found Brown & Sharpe and Tools Capitol liable on certain warranty claims but found General Electric liable on none of the express or implied warranty claims and rejected the fraud claims. The district court entered judgment for Patty Precision against Brown & Sharpe, awarded attorney fees to Patty Precision and General Electric, and denied Patty Precision's motion for a new trial. The Tenth Circuit held that the disclaimer was improperly admitted and that the instructions concerning it were erroneous, set aside the relevant judgments, and remanded for a new trial.
Remand instructions
The judgments in favor of Patty Precision against Brown & Sharpe and awarding attorney fees to Patty Precision and General Electric were set aside. The case was remanded for a new trial without admission of or instructions concerning General Electric's undisclosed disclaimer to Brown & Sharpe.