Sullivan v. Vernay Products, Inc

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-1876

RODNEY A. SULLIVAN,
Plaintiff - Appellee,

v.

YOUNG BROTHERS & COMPANY, INC.,
Defendant - Appellee.

VERNAY PRODUCTS, INC.,
Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Gene Carter, U.S. District Judge]

Before

Torruella, Chief Judge,

Cyr, Circuit Judge,

and Skinner,* Senior District Judge.

Richard L. Suter, with whom Preti, Flaherty, Beliveau &

Pachios was on brief for appellant.

John R. Bass II, with whom Thompson, McNaboe, Ashley & Bull

was on brief for appellee Rodney A. Sullivan; Barry K. Mills,

with whom Hale & Hamlin was on brief for appellee Young Brothers

& Company, Inc.

August 1, 1996

* Of the District of Massachusetts, sitting by designation.

TORRUELLA, Chief Judge. This products liability action
TORRUELLA, Chief Judge.

arose out of the sinking of the lobster vessel, the SEA FEVER.

The vessel's owner and operator, Rodney Sullivan ("Sullivan"), by

his insurer, brought this suit to recover for damages sustained

due to the SEA FEVER's sinking. Sullivan brought suit against

Vernay Products, Inc. ("Vernay") and Young Brothers and Company

Inc. ("Young Brothers") under theories of strict liability,

negligence, and breach of implied and express warranties. Young

Brothers crossclaimed against Vernay for indemnification and

contribution, and Vernay similarly crossclaimed against Young

Brothers for indemnification and contribution. The district

court found only Vernay to be liable for the damages caused by

the SEA FEVER's sinking and awarded damages to Sullivan in the

amount of $54,318.68. On the crossclaim, it entered judgment in

favor of Young Brothers. Before us is Vernay's appeal of the

district court's judgment, damage award, and denial of its motion

for summary judgment and motions for judgment as a matter of law.

Also before us is Sullivan's cross-appeal of the district court's

finding that Young Brothers was not liable. For the reasons

stated below, we affirm, in part, and reverse, in part, the

judgment below.

I. BACKGROUND
I. BACKGROUND

We take the facts, particularly the more technical

aspects, almost verbatim from the district court's detailed

opinion.

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The SEA FEVER is a forty-foot, fiberglass hull lobster

boat built by Young Brothers in 1989, which Sullivan purchased

new from Young Brothers in February 1990 for $122,000. Sullivan

added various items of gear and furnishings at a cost of

approximately $10,000. Young Brothers built the SEA FEVER with a

wet exhaust system, which was composed, in part, of six-inch

diameter Vernatube fiberglass marine wet exhaust tubing

manufactured by Vernay Products (the "Vernatube"), which is a

manufacturer of various fiberglass components of marine wet

exhaust systems. H & H Propeller Shop ("H & H Propeller" or "H &

H"),1 Vernay's distributor in Maine, was the parts supplier from

which Young Brothers purchased the Vernatube installed aboard the

SEA FEVER.

The SEA FEVER's wet exhaust system was constructed with

a fifteen-foot length of Vernatube. Because Vernatube is sold in

ten-foot lengths, Young Brothers fiberglassed together a ten-foot

and a five-foot length of Vernatube, making, in effect, a single

length of tube. This span of Vernatube was connected to the

engine at the exhaust manifold by a flexible rubber hose and

rigidly installed in the hull of the vessel by fiberglass where

the Vernatube passed through the fish hold bulkhead, the

lazarette bulkhead, and the transom. Aft of the manifold, it was

also fiberglassed to each of the two bulkheads and the transom

1 Sullivan's complaint included claims against H & H Propeller
under theories of strict liability and breach of express and
implied warranties. Before trial began, those claims, along with
crossclaims and third-party claims brought by and against H & H
Propeller, were dismissed by stipulation of the parties.

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and the Vernatube exhaust was supported by a 3/4-inch marine

plywood bracket lined with urethane rubber at about the midway

point of the fish hold. The district court found that the SEA

FEVER's Vernatube wet exhaust system was installed in conformity

with generally accepted methods of installation among builders of

similar vessels in Maine. The SEA FEVER was also equipped with a

Rule 1500 gallon automatic bilge pump. This pump, which was

capable of discharging up to 1500 gallons of water per hour,

could be operated manually or automatically.

Sullivan operated the SEA FEVER as a commercial lobster

vessel during the 1990 fishing season without significant

problems. In early 1991, Sullivan discovered a crack (the "1991

crack") in the portion of the Vernatube exhaust located in the

lazarette, which permitted water to enter the vessel to the point

of near sinking. Sullivan discovered the crack because the bilge

pump was running more than usual. At the time, the boat was tied

to the dock and fully loaded with 90-100 lobster traps, such that

the wet exhaust tubing was completely submerged. Sullivan

notified Young Brothers of this crack, and Young Brothers

repaired it by fiberglassing over the break. Young Brothers also

notified H & H Propeller of the crack. Neither of these

companies notified Vernay of this crack, and there was no

evidence that Sullivan did. The cause of this crack was never

investigated or discovered.

After this repair, the SEA FEVER operated without

further problems and Sullivan fished the 1991 season until

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January 1992. Thereafter, the SEA FEVER remained at her slip

until March 1992, when it was hauled for routine maintenance.

While the SEA FEVER was out of the water, Sullivan did not

specifically inspect the exhaust system. The record shows that

the last time he inspected it was at the end of the summer of

1991. On March 17, 1992, Edward S. Blackmore, a marine surveyor

appointed by Sullivan's marine hull insurance company, surveyed

the SEA FEVER. Blackmore found the vessel to be in "A-1"

condition with a fair market value of $130,000. Blackmore's

inspection included observation of the Vernatube exhaust, which

did not have any water in it at the time of the inspection as the

SEA FEVER was not loaded. Nothing unusual was noted about the

condition of the Vernatube and Blackmore observed no fractures,

no discoloration, and no staining or other evidence of failure in

the Vernatube.

After the March maintenance and inspection, the SEA

FEVER was not operated and remained at her slip until April 4,

1992. On that day, Sullivan and his sternman made an

eight-to-ten-mile trip aboard the SEA FEVER, picking up

approximately eighty lobster traps. After returning, they tied

the SEA FEVER to the dock at about 1:00 p.m. and went home for

the day. Due to the weight of the lobster traps, the end of the

exhaust discharge port was several inches under water and, as a

result, the Vernatube had water in it. The SEA FEVER was left

with the automatic bilge pump switch in the "off" position rather

than the "automatic" one. Later that day, at approximately 7:30

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p.m., Sullivan was notified that the SEA FEVER had sunk at the

dock. Sullivan retained Wayne Godfrey, a salvage diver from D &

G Diving Services, to raise the vessel, which was approximately

90% to 95% submerged. The SEA FEVER was surveyed by Werner

Splettstoesser of Marine Safety Consultants on behalf of

Sullivan's insurer, who determined that the SEA FEVER sank due to
,

a crack in the wet exhaust tubing which was visible from the

access hatch to the fish hold compartment. This suit followed.

On July 26, 1995, after a four-day bench trial, the

district court issued its written decision and order, in which it

found that the cause of the SEA FEVER's sinking was a full

circumference crack in the Vernatube located a few inches forward

of the bulkhead between the lazarette and fish hold (the "1992

crack"). The district court further found that this crack was a

fatigue failure caused by tension stresses over time exceeding

the axial length of the tube. As there was no other known

instance prior to the lawsuit in which a Vernatube had cracked

under similar circumstances, much of the trial testimony was

directed at the question of whether the 1992 crack had been

caused by a defective section of Vernatube or by improper

installation of the exhaust system by Young Brothers.

After evaluation of expert testimony offered by all

three parties, review of the largely technical evidence, and

inspection and analysis of the SEA FEVER's Vernatube, the

district court found that the ten-foot section of the Vernatube,

which developed at least two cracks during a two-year period, was

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defective. The district court specifically found that the

evidence regarding the Vernatube's porosity, wall thickness, and

longitudinal strength "clearly proves that the section of

Vernatube was defective" and that its defect contributed to the

Vernatube's failure in the SEA FEVER. In particular, the

district court found that with respect to these physical

measures, the Vernatube did not live up to the specifications

described in the Vernay Products Information Sheet (the "VPIS").

In making its finding, the district court noted that inspection

of the Vernatube revealed several cracks, delamination, and areas

of prospective failure, all located in the ten-foot section as

well as one area of debonding (i.e., where strands of fiber had

come loose). The district court explicitly ruled out other

claimed reasons for the Vernatube's failure, noting that there

was no evidence of owner misuse and no indication of Vernatube

failures in boats similarly constructed. Noting that the trial

testimony "clearly established that hundreds of boats of similar

design have been constructed with this type of rigid exhaust

system without one known failure," the district court found that

the rigid installation of SEA FEVER's exhaust system was not a

cause of the Vernatube's failure and that, therefore, Young

Brothers was not strictly liable for its installation of the wet

exhaust system. In making this finding, the district court noted

that "the existence of multiple failures and imperfections within

the single ten-foot section of Vernatube, notwithstanding the

product's known track record of problem-free similar

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installations in hundreds of other vessels, supports the

conclusion that the SEA FEVER sank because this particular length

of tube, rather than its installation, was defective."

In addition, the district court held that (i) Vernay's

warning against rigid installation, while insufficient, did not

give rise to recovery -- but Vernay was nonetheless liable under

theories of negligence and strict liability based on defects in

tubing; (ii) Sullivan was partially responsible for damage due to

his failure to leave his boat's bilge pump in automatic position

despite knowing of another crack in the Vernatube exhaust that

needed repair; (iii) Vernay was also liable for breach of express

and implied warranties; (iv) Sullivan's notice to Young Brothers

was sufficient to allow recovery for breach of warranty by

Vernay; and (v) Sullivan's recovery would be reduced by 40% to

reflect his comparative fault.

The district court entered an amended judgment on

July 28, 1995, based on its earlier decision and order. The

district court had subject matter jurisdiction based on diversity

of citizenship and satisfaction of the jurisdictional amount.

See 28 U.S.C. 1332(a). We have jurisdiction pursuant to 29

U.S.C. 1291 (appeals from a district court's final judgment).

II. DISCUSSION
II. DISCUSSION

After a bench trial, we review the trier's factual

determinations for clear error, see Smith v. F.W. Morse & Co., 76

F.3d 413, 420 (1st Cir. 1996); Cumpiano v. Banco Santander P.R.,

902 F.2d 148, 152 (1st Cir. 1990); Fed. R. Civ. P. 52(a), but

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afford plenary review to the trier's formulation of applicable

legal rules, see Smith, 76 F.3d at 420; Johnson v. Watts

Regulator Co., 63 F.3d 1129, 1132 (1st Cir. 1995). The

jurisprudence of clear error prevents us from ruling anew on

factual issues. See, e.g., Jackson v. Harvard Univ., 900 F.2d

464, 466 (1st Cir.), cert. denied, 498 U.S. 848 (1990); Keyes v.

Secretary of the Navy, 853 F.2d 1016, 1019 (1st Cir. 1988).

This case comprises interrelated issues of liability

involving three players. The basic outline of the flurry of

claims is as follows. Vernay contests the district court's

ruling that it was liable under theories of warranty, both

express and implied, as well as strict liability for product

defects and negligence. Furthermore, Vernay argues that the

district court erred in rejecting the argument that Young

Brothers' negligence constitutes a defense to Vernay's liability.

Additionally, Vernay argues that the district court erred in

failing to conclude that Sullivan's own conduct should have

operated to bar Vernay's liability, rather than occasion a 40%

reduction. Finally, Vernay argues that the district court erred

in finding Young Brothers to be without liability under any of

Sullivan's theories.

Sullivan rejects Vernay's arguments that we should

reverse the district court's conclusions with respect to Vernay's

liability to him. Moreover, Sullivan contends that the district

court correctly did not bar his recovery due to his own conduct.

Sullivan also argues that the district court erred in finding

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that Young Brothers was not liable under theories of breach of

warranty and strict liability for product defects, although

Sullivan contends that the district court correctly concluded

that Young Brothers was not liable under a negligence theory.

For its part, Young Brothers argues that the district court

correctly decided that it was not liable and that Vernay was.

We address first Vernay's liability, then Young

Brothers' liability. Issues of Sullivan's conduct are discussed

as they apply to the other two parties' liability. Following our

liability discussions, we turn to issues of damages.

A. Vernay's Liability
A. Vernay's Liability

The district court found that Vernay breached certain

express and implied warranties in the sale of the Vernatube to

Young Brothers, all in violation of Me. Rev. Stat. Ann. tit. 11,

2-313 (express warranty), 2-314 (implied warranty of

merchantability), and 2-315 (implied warranty of fitness for a

particular purpose), and that Vernay was also liable under

theories of strict liability for product defects and negligence.

The district court arrived at its conclusions after making

extensive findings regarding the Vernatube and the VPIS which

were based both on trial testimony, exhibits entered into

evidence and the parties' joint stipulations, dated June 1, 1994

("Joint Stipulations"). On appeal, Vernay challenges, for a

number of reasons, the district court's conclusions that Vernay

is liable for breach of express warranties, breach of implied

warranties, and strict liability for product defects.

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Breach of Express Warranty
Breach of Express Warranty

Pursuant to the Maine Uniform Commercial Code, express

warranties by the seller are created by "[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." Me.

Rev. Stat. Ann. tit. 11, 2-313. Furthermore, "[i]t is not

necessary to the creation of an express warranty that the seller

use formal words such as 'warrant' or 'guarantee' or that he have

a specific intention to make a warranty, but an affirmation

merely of the value of the goods or a statement purporting to be

merely the seller's opinion or commendation of the goods does not

create a warranty." Id. In general, the question whether

certain language creates an express warranty is reserved for the

trier of fact. See Cuthbertson v. Clark Equip. Co., 448 A.2d

315, 320 (Me. 1982). Below, Sullivan contended that: the

Vernatube had insufficient nominal wall thickness; the Vernatube

was porous on the inner surface, affecting the tube's overall

integrity; and the longitudinal strength was insufficient for the

application and could have been increased through changes in the

tube's manufacture. Based on an extensive review of the

technical evidence presented, the district court agreed, finding

that the deficiency in the nominal wall thickness and the

substandard longitudinal strength were not what Vernay expressly

warranted in its VPIS, and that the porous nature of the inner

surface of the Vernatube contributed to the weakening of the

fibers and the fatigue crack which caused the vessel to sink.

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The district court ultimately concluded that the "breach of these

express warranties was collectively the cause of the failure of

this section of Vernatube." Vernay challenges the district

court's conclusion that it breached an express warranty arising

from the VPIS on several grounds. We reject all of them.

First, Vernay points out that neither Sullivan nor

Young Brothers pled any violation of an express warranty arising

from the VPIS. Sullivan only pled a violation of the express and

implied warranties of merchantability and fitness for a

particular purpose, and Young Brothers only pled a breach of an

implied warranty of merchantability. Accordingly, Vernay argues,

the district court erred when it held Vernay breached certain

express warranties made in the VPIS. We do not agree.

Under Fed. R. Civ. P. 15(b),2 we find that the express

warranty arising from the VPIS was tried by implied, if not

express, consent of the parties and, thus, we "treat[] [it] in

all respects as if [it] had been raised in the pleadings." Id.;

see Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal

2 Fed. R. Civ. P. 15(b) provides, in pertinent part:

When issues not raised by the pleadings
are tried by express or implied consent
of the parties, they shall be treated in
all respects as if they had been raised
in the pleadings. Such amendment of the
pleadings as may be necessary to cause
them to conform to the evidence and to
raise these issues may be made upon
motion of any party at any time, even
after judgment; but failure so to amend
does not affect the result of the trial
of these issues.

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Practice and Procedure: Civil 2d 1493 (1990) ("Rule 15(b) does

not require that a conforming amendment be made and there is no

penalty for failing to do so."). In his pretrial memorandum,

Sullivan argues that Vernay Products breached certain express

warranties in connection with the sale of the Vernatube, citing

to Me. Rev. Stat. Ann. tit. 11, 2-313 and referring to the

statements made in the VPIS. Although in its pretrial memorandum

Vernay did point out, albeit somewhat in passing and without

reference to any legal rule, that Sullivan had not originally

pled breach of an express warranty arising from the VPIS, we find

that, because issues relating to both express and implied

warranties arising from the VPIS were tried interchangeably and

without further objection, the breach of an express warranty

arising from the VPIS was tried by implied, if not express,

consent under Fed. R. Civ. P. 15(b). The record shows that

Vernay did not object to the presentation of evidence regarding

express warranties made in the VPIS, and that Vernay itself

introduced considerable testimony regarding its interpretation of

the VPIS.

Furthermore, we are unpersuaded by Vernay's

counterargument that, because the VPIS was only admitted and

discussed for purposes of the strict liability claim's failure to

warn issue, its failure to object to the admission of the VPIS or

to related testimony cannot be deemed an implied consent to amend

the pleadings. Not only was the evidence and testimony regarding

the VPIS related directly to the breach of warranties claims that

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Sullivan and Young Brothers had pled, but Vernay failed to raise

any sort of objection or state for the record that it was not

consenting to Sullivan's claim of a breach of an express warranty

claim arising from the VPIS. In addition, Vernay's counsel

explicitly admitted to the breach of warranties claims, without

reference to the fact that an express warranty arising from the

VPIS had not been pled: In support of defendants' motion for

judgment as a matter of law, Vernay's counsel stated that

"[w]ell, we have a breach of contract account here, but I would

say there is [an] absolute defense to Vernay under [Me. Rev.

Stat. Ann. tit. 11, ] 2-607(3)" given that Vernay was not given

notice of the defect. (6/21/94 Tr. p. 223). In any event, even

assuming, arguendo, that Vernay had not consented to the

amendment of the pleadings, it does not affect the outcome of the

appeal as we nonetheless affirm the district court's findings

that Vernay breached the express and implied warranties which had

originally been pled.

Second, Vernay argues that, even if a breach of express

warranty is deemed to have been pled, there was no evidence

proffered at trial to show that either Young Brothers or Sullivan

relied on the representations made in the VPIS. In support of

his argument, Vernay cites Phillips v. Ripley & Fletcher Co., 541

A.2d 946, 950 (Me. 1988), and cases from other jurisdictions for

the proposition that reliance is an element of a breach of

express warranty claim in Maine. As Phillips notes, comments to

Me. Rev. Stat. Ann. tit. 11, 2-313 suggest that "the

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requirement that the affirmation become part of the 'basis of the

bargain' is meant to continue the uniform sales act requirement

that the purchaser must show reliance on the affirmation in order

to make out a cause of action for breach of warranty." Phillips,

541 A.2d at 950 (internal citations omitted).

Although the district court did not explicitly discuss

reliance as an element of the breach of express warranty claim in

its memorandum, testimony was given that Young Brothers relied on

the VPIS. The following colloquy ensued between counsel for

Sullivan and Colby Young, part owner and vice president of Young

Brothers:

Q. Is it fair to state that you made the
decision to change your installation
practice and use vernatubing for your wet
exhaust tube based upon the
representations set forth in the [VPIS]?
A. Yes, sir.
. . .
Q. So [sic] in other words, your decision to
use the vernatube was based upon the
content of the information set forth in
[the VPIS]?
A. That's correct.
. . .
Q. If Vernay in its brochure had told you
that a rigid installation was improper,
you wouldn't have done it?
A. Certainly not. It never would have been
done.

(6/21/94 Tr. T. at 199, 203). Following up on this and other

testimony by Young, counsel for Vernay engaged in this exchange

with Young:

Q. Mr. Young, you said that you relied on
this document to decide whether or not to
install Vernay in your first boat; isn't
that right?

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A. That and the representation from the rep
[from H & H Propeller], yes.
Q. Okay. So you relied on things that [the
representative] from H & H Propeller
Shop, Inc. told you?
A. In fact, he brought it to us and asked us
to try it, yes.
Q. You say that [the VPIS] is the only thing
that Vernay gave you?
A. Yes.

(6/21/94 Tr. T. at 207).

Based on Young's testimony, including cross-examination

by Vernay's counsel, we conclude that the district court could

have reasonably inferred reliance. Thus, although the district

court did not explicitly address reliance, we nonetheless affirm

the breach of an express warranty claim based on the record

evidence and the failure of Vernay's counsel to object to it,

finding that the district court's failure amounts to harmless

error in this case, since the failure to make findings of fact

and conclusions of law dealt here with an issue on which most

relevant facts are undisputed and the law can be applied without

the district court's assistance. See Conservation Law Found. v.

Busey, 79 F.3d 1250, 1271 (1st Cir. 1996); Associated Elec.

Coop., Inc. v. Mid-America Transp. Co., 931 F.2d 1266, 1272 (8th

Cir. 1991).

Lack of Privity
Lack of Privity

We dismiss as meritless Vernay's next claim that

Sullivan may not enforce the express warranty because there was

no evidence proffered that Sullivan "ever saw" the VPIS prior to

litigation, let alone relied on its representations. In Maine,

"[l]ack of privity between plaintiff and defendant shall be no

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defense in any action brought against the manufacturer, seller or

supplier of goods for breach of warranty, express or implied,

although the plaintiff did not purchase the goods from the

defendant, if the plaintiff was a person whom the manufacturer,

seller or supplier might reasonably have expected to use, consume

or be affected by the goods." Me. Rev. Stat. Ann. tit. 11, 2-

318 (1995); see Stanley v. Schiavi Mobile Homes, Inc., 462 A.2d

1144, 1147 n.4 (Me. 1983) (noting that lack of privity is no

defense in breach of implied warranty actions). Although there

is a lack of privity between Sullivan and Vernay in that Sullivan

did not purchase the Vernatube directly from Vernay, Sullivan was

certainly a person whom Vernay might reasonably have expected to

use, or be affected by, the Vernatube. Indeed, Vernay itself

stipulated to this very fact. See Joint Stipulations, No. 6.

Even without the stipulation, the record supports this finding.

As Vernay points out in its brief, approximately 70-75% of its

products are sold directly to boat builders and the rest are sold

to wholesale distributors and engine dealerships. H & H

Propeller Shop was Vernay's distributor in Maine and the parts

supplier from which Young Brothers purchased the Vernatube

installed aboard the SEA FEVER. As a purchaser of a new vessel

from a Maine boat building company which purchased goods from

Vernay's Maine distributor, Sullivan was certainly a person whom

Vernay might reasonably expect to use, or be affected by, its

product.

Notice Requirement
Notice Requirement

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Vernay contends that the district court erred in

holding it liable under a breach of warranty theory, arguing that

it cannot be held responsible for the damages because Sullivan

failed to comply with the notice requirements set forth in Me.

Rev. Stat. Ann. tit. 11, 2-607(3). That section requires that,

where the tender has been accepted, the buyer must notify the

seller of any breach within a reasonable time after he or she

discovered or should have discovered any breach or be barred from

any remedy. Id., 2-607(3). The "seller" is defined as "a

person who sells or contracts to sell goods." Me. Rev. Stat.

Ann. tit. 11, 2-103(d). The district court found that Sullivan

satisfied the notice requirement, because he notified Young

Brothers, his immediate seller, of the 1991 crack.

On appeal Vernay contends -- as it did below -- that

Sullivan is barred from any remedy because he failed to notify

Vernay of the undisputed 1991 crack which caused water to enter

the SEA FEVER's holds. Vernay argues as follows: If the 1992

crack is considered to be a breach of any warranty then the

similar 1991 crack must also be considered a breach and, because

it is undisputed that neither Sullivan nor Young Brothers

provided Vernay with any notice of the 1991 crack,3 Sullivan is

barred from any remedy. For support, Vernay argues that "the

majority of courts" have held that for claims of economic loss,

remote manufacturers must be notified, and that notice to the

3 As the district court noted, although Young Brothers did
notify H & H Propeller of the 1991 crack, H & H did not notify
Vernay.

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seller of the product alone is insufficient for purposes of

Section 2-607(3). The consequence of not receiving notice of the

first crack, Vernay explains, is that it never had an opportunity

to offer a cure. See Me. Rev. Stat. Ann. tit. 11, 2-605. The

district court rejected Vernay's argument, concluding that the

majority of courts in fact have held that buyers need only notify

their immediate sellers. Sullivan, 893 F. Supp. at 1159

(collecting cases). However, Vernay disputes the cases that the

district court cited, and argues that a majority of courts hold

the opposite.

However, even accepting, arguendo, Vernay's argument,

the record supports the conclusion that Vernay had constructive

notice and knowledge of the 1991 crack. As the district court

noted when denying defendants' motion for judgment as a matter of

law, viewing the evidence in the light most favorable to the

plaintiff -- as the verdict here requires us to -- a fact finder

could conclude that Vernay was effectively notified via

communication to H & H Propeller, Vernay's representative in

Maine. The district court concluded, and we agree, that a fact

finder could reasonably infer that the representative had the

apparent authority to accept reports for Vernay and that notice

given to that agent was effectively constructive knowledge to

Vernay, who retained that representative and that company as its

exclusive representative in Maine.

Finally, Vernay raises an additional argument based on

the district court's finding that Sullivan was aware of a new

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crack in 1992 which he "had been meaning to repair." Vernay now

contends that because there is no evidence that Sullivan provided

anyone with notice of the 1992 crack prior to the sinking,

Sullivan is barred from any remedy. Vernay further contends that

on the facts of this case (namely, that the 1991 crack almost

resulted in the sinking of the SEA FEVER and the new crack had

the potential to do the same), reasonable notice of this new

crack could be nothing less than immediate notice.

Vernay has failed to adduce legal authority for the

proposition that, under Maine's version of Article 2 of the UCC,

Sullivan's failure to give immediate notice voids his claim. In

contrast, an applicable comment to the UCC states that:

"[a] reasonable time" for notification
from a retail consumer is to be judged by
different standards [than notice from a
merchant buyer], . . . for the rule of
requiring notification is designed to
defeat commercial bad faith, not to
deprive a good faith consumer of his
remedy.

Uniform Commercial Code, 2-607.4 cmt. In this case, where the

1992 crack had given Sullivan no indication of trouble, we must

reject Vernay's "immediate notice" gloss on what constitutes "a

reasonable time." To adopt Vernay's reading would require

consumers to give notice of problems that amount to little more

than a nuisance, and would tend to defeat worthy claims with

little off-setting benefit to anyone. Even if consumers were to

comply with this burden, manufacturers would be deluged with

notices about harmless defects. In light of the UCC comment's

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apt caution regarding the notice requirement and retail

consumers, we think that it would be unwise to shift the balance

in this flow of information in the manner that Vernay urges.

As a result, we uphold the district court's conclusion

that Vernay was liable for breach of its express warranties

regarding the Vernatube's nominal wall thickness, porosity of its

inner surface, and longitudinal strength. Furthermore, given the

expert testimony heard by the district court, its finding of

causation cannot be clear error. See Clement v. United States,

980 F.2d 48, 53 (1st. Cir. 1992) (stating that, under Maine law,

causation-in-fact is a factual inquiry); Greenstreet v. Brown,

623 A.2d 1270, 1271 (Me. 1993) (stating that "[p]roximate cause

is a question of fact" and "[w]e will not disturb the trial

court's finding of fact unless there is no competent evidence in

the record to support it"); LaFerriere v. Paradis, 293 A.2d 526,

528-29 (Me. 1972). Because we uphold the district court's

finding of Vernay's liability based on a breach of its express

warranty, we need not consider Vernay's liability with respect to

theories of implied warranty, or with respect to negligence or

strict liability for product defects.4 See Dudley v. Bungee

4 We taken no position, however, on the question of whether
Sullivan's loss constitutes purely "economic loss" under
Oceanside. We note in passing that, with respect to Vernay's

liability under theories of negligence or strict liability, we
express no opinion as to the district court's assertion that "the
[Maine] Law Court has not decided th[e] issue" of the economic
loss doctrine's applicability to recoveries under such theories,
Sullivan v. Young Bros. & Co., 893 F. Supp. 1148, 1153 (D. Me.

1995), in light of Oceanside at Pine Point Condo. Ass'n v.

Peachtree Doors, Inc., 659 A.2d 267, 270-71 (Me. 1995) (decided

two months prior to Sullivan) (stating that "plaintiffs may not

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Int'l Mfg., 76 F.3d 372, 1996 WL 36977, *2, (4th Cir. 1996) (per

curiam) (finding it "unnecessary to address the question of

whether labelling on the [product] created any express

warranties," since the court had affirmed claim for compensatory

damages on a negligence count); Compton v. Wyle Laboratories, 674

F.2d 206, 208 n.1 (4th Cir. 1982) (declining to address alternate

theory of breach of warranty on which plaintiff had prevailed

below, since the court of appeals affirmed district court's

finding of liability based on negligence); Drayton v. Jiffee

Chem. Corp., 591 F.2d 352, 358 (6th Cir. 1978) (upholding

district court's conclusion of liability solely on breach of

express warranty grounds, without ruling with respect to court of

appeals' concerns regarding district court's conclusions of

liability on bases of breach of implied warranty, strict

liability and negligent design).5

recover for [economic] damages in tort").

5 Vernay also contends that the district court's judgment should
be reversed because Sullivan's insurers made payments to Sullivan
as "volunteers" and were under no contractual obligation to do
so, but we think this argument is without merit. As Vernay
itself states in its brief, an insurer is a "volunteer" and
without rights to subrogation only if it pays its insureds when
it clearly has no obligation to do so under its policy. See,

e.g., Allstate Ins. Co. v. Quinn Constr. Co., 713 F. Supp. 35, 38

(D. Mass. 1989) (stating that an insurer "could be characterized
as a volunteer only if it paid [insured] when it clearly had no
obligation to do so," and any "doubt . . . is construed in favor
of the insurer and the nonexistence of a volunteer status"). The
purpose of this rule is "to encourage insurers to settle promptly
claims that appear to be valid." Id. To be sure, Vernay asserts

that because Sullivan's policy states that recovery shall be made
"provided such loss or damage has not resulted from want of due
diligence by the assured," the insurer acted as a volunteer in
paying Sullivan despite his negligent conduct. However, we
conclude that the district court did not err in concluding that

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Sullivan's Conduct
Sullivan's Conduct

Vernay also appeals the district court's finding that

its acts were the proximate cause of Sullivan's injuries. Vernay

contends that Sullivan's own actions were an intervening and

superseding cause of his loss. Because proximate cause is a

factual inquiry, the district court's determination must stand

unless it is clearly erroneous. See Clement, 980 F.2d at 53

("[c]ausation-in-fact is, by definition a factual inquiry" under

Maine law); Greenstreet, 623 A.2d at 1271 ("[p]roximate cause is

a question of fact").

The district court ruled that the breach of the express

warranties was collectively the cause of the failure of the

Vernatube, which in turn caused the complained-of harm.

Sullivan, 893 F. Supp. at 1159. Vernay correctly identifies

evidence that Sullivan's own actions could have contributed to

the SEA FEVER's sinking. However, the district court also

considered expert testimony regarding the Vernatube's physical

defects and their role in the SEA FEVER's sinking. Furthermore,

the district court reduced Sullivan's recovery accordingly.

Based on our review of this evidence, we conclude that there was

sufficient evidence to render the district court's conclusion

reasonable. As a result, we cannot conclude that the district

court's finding that Vernay proximately caused the complained-of

any consequent argument that the insurer was not necessarily
required to pay Sullivan was not sufficiently compelling to meet
the legal standard that the insurer clearly had no obligation to

pay.

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harm was clearly erroneous. Accordingly, we affirm the district

court's conclusion that Vernay is liable to Sullivan for breach

of its express warranty.

We note in passing that we do not opine on whether

Sullivan's recovery under a breach of express warranty theory

could appropriately be reduced under comparative negligence

principles, since Sullivan does not cross-appeal the reduction.

As the district court properly noted, whether such a reduction is

permissible regarding a breach-of-warranty theory is an "open

question under Maine law." Sullivan, 893 F. Supp. at 1161

(citing Dongo v. Banks, 448 A.2d 885, 891 (Me. 1982) (expressly

declining to decide the issue of whether plaintiff's negligence

is or should be a defense to an action for breach of implied

warranty)). The district court reduced Sullivan's recovery under

both express warranty and implied warranty theories on the basis

of trends in case law applying comparative negligence principles

to actions for breach of implied warranties. Id. We neither

adopt nor reject the principle that express warranties implicate

the same interests as implied warranties with respect to this

question.6 Rather, we uphold the reduction of Sullivan's award

6 Some courts have apparently extended comparative negligence
principles to actions for breach of express warranties. See,

e.g., Haysville U.S.D. No. 261 v. GAF Corp., 233 Kan. 635, 644,

666 P.2d 192, 201 (1983); Interwest Constr. v. Palmer, 886 P.2d

92, 99-100 (Ct. App. Utah 1994); see also Merritt Logan, Inc. v.

Fleming Cos., 901 F.2d 349, 365 (3d Cir. 1990) (construing New

Jersey statutes to authorize consideration of comparative
negligence in assessing damages for breach of warranty, without
stating whether holding applies to express warranties). But see

Shaffer v. Debbas, 21 Cal. Rptr. 2d 110, 114 (Cal. Ct. App. 1993)

(stating that "comparative negligence is not a defense to a

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because of his waiver by failing to cross-appeal. As a result,

we caution that our decision to allow a reduction under an

express warranty theory for comparative negligence does not stand

for an endorsement of comparative negligence's applicability to

express warranty theory-based claims.

B. Young Brothers' Liability
B. Young Brothers' Liability

Vernay argues that the district court erred in finding

no liability on the part of Young Brothers on theories of

negligence, implied warranty and strict liability. Sullivan also

argues that the district court correctly found no liability on

Young Brothers' part under a negligence theory, but that the

district court erred in finding Young Brothers not liable for

breach of implied warranty. We address Young Brothers' liability

on each of these theories in turn.

Negligence
Negligence

Vernay argues that the district court erred in finding

no liability on Young Brothers' part under a negligence theory.

Vernay makes a two-part argument. First, Vernay argues that

Young Brothers was negligent in its design and building of the

SEA FEVER. Second, Vernay contends that Young Brothers was

negligent in its conduct after the SEA FEVER had been delivered

to Sullivan.

With respect to Vernay's first argument, we affirm the

district court's conclusion that Young Brothers was not negligent

in designing and building the SEA FEVER. Vernay points out that

breach of express warranty action").

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Young Brothers used a rigid installation of the Vernatube,

disregarding written boat building standards, and that the

district court heard testimony disapproving of such installation

methods. But the district court also heard testimony of others

in the industry to the effect that the installation of Vernatube

in the SEA FEVER was typical of customary installation practices

in Maine7 -- and custom within the boat building profession is a

factor relevant to the standard of care owed by Young Brothers.

See Restatement (Second) of Torts 294A (1965). The district

court also heard testimony as to the relatively trouble-free

operation of Vernatube generally with rigid installation. While

Vernay may wish it otherwise, ours is not the task of crediting

witnesses, see Coastal Fuels of Puerto Rico, Inc. v. Caribbean

Petroleum Corp., 79 F.3d 182, 195 (1st Cir. 1996); Wytrwal v.

Saco Sch. Bd., 70 F.3d 165, 171 (1st Cir. 1995), and the

testimony of these witnesses, we conclude, justified the district

court's conclusion that Young Brothers acted without negligence,

see The T.J. Hooper, 60 F.2d 737, 740 (2d Cir.) (L. Hand, J.)

(stating that the court should not find that the "whole [boat

building] calling may have unduly lagged" without good reason),

cert. denied, 287 U.S. 662 (1932).

7 In fact, another boat builder testified that he had been "in
every boatyard up and down the Maine coast" and he had "never
seen it done differently." See Sullivan, 893 F. Supp. at 1157.

Additionally, Vernay's distributor in Maine testified that 90% of
boat builders install Vernatube in the same way as it was
installed in SEA FEVER. Id.

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Vernay also contends that Young Brothers was negligent

in failing to notify Vernay regarding the 1991 crack. We dismiss

this argument for the same reason that we dismissed Vernay's

claim that Vernay is not liable because it was not notified of

the 1991 crack. In fact, Sullivan notified Young Brothers, and

Young Brothers in turn notified H & H Propellers, Vernay's Maine

distributor and the supplier from whom Young Brothers purchased

the Vernatube. In light of this notice to Vernay's distributor,

we cannot accept the contention that Young Brothers was somehow

negligent in its handling of the 1991 crack. Vernay also argues

that Young Brothers was negligent in not finding the cause of

this crack; however, one must possess a duty before one can

breach it, and as Vernay has not pointed to authority showing

that Young Brothers owed a duty beyond notifying its supplier, we

reject this contention. As a result, we conclude that Young

Brothers cannot be held liable under a negligence theory.

Implied Warranty and Strict Liability
Implied Warranty and Strict Liability

Vernay argues that the district court erred in finding

Vernay liable and Young Brothers not liable under theories of

implied warranty and strict liability. Vernay argues that the

district court erred by concluding that Vernay was liable under a

theory of implied warranty, while Young Brothers did not breach

its implied warranty that the vessel would be fit for its

ordinary use. Additionally, according to Vernay, both of these

parties participated in the sale of the allegedly defective

Vernatube, and therefore, it is impossible for Vernay to be held

-27-

strictly liable and Young Brothers not to be held strictly

liable.

The district court correctly concluded that Young

Brothers could not be found liable for breach of an implied

warranty of merchantability. Maine's version of Article 2 of the

UCC provides that "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." Me.

Rev. Stat. Ann. tit. 11, 2-314(1) (emphasis added). In Suminski

v. Maine Appliance Warehouse, 602 A.2d 1173 (Me. 1992), the Maine

Law Court interpreted the phrase "goods of that kind." Id. at

1175 (discussing section 2-314(1)). The Law Court concluded that

a defective switch that did not affect use of a television for

more than a year did not render a seller of televisions liable

for breach of an implied warranty. In particular, the Law Court

stated that

the sale of a major appliance with a
switch that fails more than a year later
cannot support a finding that the entire
appliance was unmerchantable when sold.
To use an automotive example, an
unmerchantable battery may not render an
entire vehicle unmerchantable.

Suminski, 602 A.2d at 1175. We conclude, similarly, that in the

instant case, where the Vernatube did not impede use of the SEA

FEVER for more than one year, and Young Brothers sells boats, not

Vernatube, Young Brothers cannot be held liable for breach of an

implied warranty of fitness for ordinary purposes.

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However, we cannot agree with the district court's

conclusion that Young Brothers was not strictly liable to

Sullivan. Maine's strict liability statute provides that

[o]ne who sells any goods or products in
a defective condition unreasonably
dangerous to the user or consumer or his
property is subject to liability for
physical harm thereby caused to a person
whom the manufacturer, seller or supplier
might reasonably have expected to use,
consume or be affected by the goods, or
to his property . . . . This section
applies although the seller has exercised
all possible care in the preparation and
sale of his product and the user or
consumer has not bought the product from
or entered into any contractual relation
with the seller.

Me. Rev. Stat. Ann. tit. 14, 221. The district court concluded

that Young Brothers was not strictly liable because "the rigid

installation of SEA FEVER's exhaust system was not a cause of the

failure in the Vernatube." Sullivan, 893 F. Supp. at 1155. This

conclusion cannot be reconciled with the statute's explicit

direction that a seller's liability attaches notwithstanding the

seller's exercise of "all possible care." If the Vernatube

section was "defective" and "unreasonably dangerous," as the

district court suggests in its opinion, it would be immaterial

that Young Brothers' own actions did not cause Sullivan's

injuries. As a result, we must vacate the district court's

judgment that Young Brothers was not liable to Sullivan under a

strict liability theory.

Young Brothers' sole apparent argument to rebut the

conclusion that it is strictly liable to Sullivan is that, based

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on Suminski, Young Brothers' should be considered a seller of

boats, not the Vernatube in the boats. As discussed above,

Suminski applies on its face to allegations that an implied

warranty of merchantability has been violated, not to theories of

strict liability. Suminski, 602 A.2d at 1175. We decline to so

greatly extend Suminski's reach, and as a result we must grant

judgment to Sullivan against Young Brothers under a theory of

strict liability. As the parties have neither briefed nor argued

Maine indemnification law among tortfeasors, we remand to the

district court for further proceedings regarding Young Brothers'

rights to indemnity from Sullivan.

C. Damages
C. Damages

Vernay also challenges the district court's computation

of Sullivan's damages. In particular, Vernay takes issue with

the district court's choice of the cost of repair rather than

diminution in the value of the damaged property. Under Maine

law, both measures may be used to prove the amount of damages.

See Paine v. Spottiswoode, 612 A.2d 235, 240 (Me. 1992).

"Generally, we will not substitute our judgment for

that of the [factfinder] in assessing damages and will not

disturb the [factfinder's] damage award unless that award is a

product of bias, prejudice, improper influence, or was reached

under a mistake of law or in disregard of the facts." Bradford

v. Dumond, A.2d , , 1996 WL 242615, at *5 (Me. 1996);

Currier v. Cyr, 570 A.2d 1205, 1210 (Me. 1990). The district

court "is entitled to act upon probable and inferential as well

-30-

as direct and positive proof in determining damages." Bradford,

1996 WL 242615, at *5; Cyr, 570 A.2d at 1210. In the present

case, we think that the district court was justified in relying

on the undisputed costs of Plaintiff's initial loss

investigation, the cost of a salvor to raise the SEA FEVER,

Plaintiff's repair costs for the vessel's machinery, and the

insurer's estimate of water damage to the deck and superstructure

of the vessel. As a result, we do not think that the district

court's estimate of Plaintiff's loss, reduced for Plaintiff's own

comparative negligence,8 of $54,318.68 can be said to have been

made in disregard of the facts. And certainly, no contention has

been made that the award was the product of bias, prejudice or

improper influence.

However, we conclude that a mistake of law compels

reduction of the award by $5,000 -- the amount of the settlement

between H & H Propellers and Sullivan. Under Maine Law, when a

person seeks recovery for property damage caused by two or more

parties, if a settlement or release is made with one party, "the

trial judge shall reduce the verdict [against the non-settling or

non-releasing party or parties] by an amount equal to the

settlement with or the consideration for the release of the other

[party or parties]." Emery Waterhouse Co. v. Lea, 467 A.2d 986,

995 (Me. 1983). The district court neglected to take the

settlement with H & H Propellers into account in fixing the

8 See, supra n.6.

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verdict. As a result, the verdict against Vernay must be reduced

to $49.318.68.

CONCLUSION
CONCLUSION

For the foregoing reasons, the district court's

decision is affirmed in part and reversed in part. No costs to
affirmed in part reversed in part.

any party.

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