IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
MARK MELOTZ,
d/b/a MELOTZ TRUCKING,
Plaintiff and Respondent,
CRAIG SCHECKLA,
d/b/a SCHECKLA TRUCKING,
Defendant and Appellant.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud,
The Honorable Kenneth R. Wilson, Judge presiding.
- COUNSEL OF RECORD:
For Appellant:
James A. Patten, Patten Law Firm, P.C., Billings,
Montana
For Respondent:
John Houtz, Attorney at Law, Forsyth, Montana
Submitted on Briefs: August 23, 1990
~ecided: November 27, 1990
Filed:
Justice Diane G. Barz delivered the Opinion of the Court.
Appellant Craig Scheckla, appeals from a judgment entered on
a jury verdict rendered in the Sixteenth Judicial District, Rosebud
County, awarding respondent Mark Melotz damages for breach of
warranty. We affirm.
Scheckla raises the following issues on appeal:
1. Did the District Court abuse its discretion by allowing
admission of an exhibit at trial when the court had earlier imposed
discovery sanctions which prohibited the admission of such exhibit?
2. Did the District Court abuse its discretion by failing to
prohibit evidence of lost income as a sanction for discovery abuse?
3. Was the existence of a warranty supported by sufficient
evidence?
4. Was respondent Melotz entitled to consequential damages
for breach of warranty?
Appellant, Craig Scheckla, owns a trucking business and hauls
wood products for a sawmill in Sheridan, Wyoming. Respondent, Mark
Melotz, is likewise in the trucking business and hauls on a
contract basis. In July of 1985, Melotz purchased from Scheckla
a used 335 Cummins diesel engine for $3,000 which was installed in
Melotzls 1970 Peterbilt truck. According to Melotzls testimony at
trial, when he and Scheckla discussed the sale of the engine
Scheckla told him lf[a]llyou [have to] do is take it home, put it
in there [in the truck] and it will go right to work and it was in
good running condition." Melotz further testified Scheckla also
told him the engine recently had some major work done to it.
After installing the engine in late July of 1985, Melotz
immediately encountered problems with the oil pressure. When
informed of the problem by Melotz, Scheckla told him this type of
engine had low oil pressure and, according to Melotzls testimony,
Scheckla told him to replace the bearings and if that did not fix
the problem Scheckla would I1pay for the bearings and everything.I1
Shortly thereafter, Melotz hauled a load to Logan, Utah. During
this trip Melotz encountered problems of low oil pressure and
engine overheating. From Utah, Melotz took a load to Oregon and
en route the problems with low oil pressure and overheating
continued. In Oregon Melotz had new bearings installed. Melotz
then headed to South Dakota with continuing problems. while
passing through Dubois, Wyoming on the way to South Dakota,
Schecklals mechanic examined the engine and replaced a cracked
head.
Due to continuing problems with the engine, Melotz parked the
truck during the months of September and October of 1985. Scheckla
recommended new head gaskets and Melotz installed them in early
November of 1985. On November 4, 1985, Melotz, believing his truck
was capable of performing the job, entered into a contract to haul
rip-rap for Midwest Dumpers, Inc. at Canyon Ferry Lake. Shortly
before he was to commence work on the contract, Melotz had to
notify Midwest Dumpers that he was unable to perform due to
overheating problems which started up again. The engine
subsequently locked up and upon being torn down Melotz discovered
the engine had a cracked block and was unrepairable.
On February 18, 1986, Melotz filed a complaint against
Scheckla seeking damages for breach of warranty and for other
claims not relevant on appeal. This case then began a long
procedural history marked by constant disputes between the parties.
On November 28, 1986, Scheckla served interrogatories and a second
request for production on Melotz. This discovery sought, among
other items, all state and federal income tax returns and financial
statements prepared within the five years preceding the filing of
the complaint.
Following a motion to.compe1 by Scheckla, Melotz responded to
the discovery requests. The answers were deemed nonresponsive by
the District Court and as a result Judge Alfred B. Coate imposed
sanctions upon Melotz on April 10, 1987. Specifically, Judge Coate
ordered: "At trial Plaintiff [Melotz] will not be permitted to
introduce any evidence other than those items supplied to Defendant
on December 12, 1986 [at Melotzls deposition] and marked as items
1 through 33 .I1 The Midwest Dumpers contract was not one of the
marked items but was discussed at the deposition and provided to
Scheckla on February 13, 1987.
On May 8, 1987, the District Court determined the amount in
controversy was less than $3,500 and transferred the case to the
Rosebud County Justice Court. The case was eventually transferred
back to District Court on September 12, 1988.
Once back in District Court, Judge Kenneth R. Wilson assumed
jurisdiction on January 20, 1989 after Judge Coate retired. Judge
Wilson gave Melotz another chance to produce his income tax returns
and financial statements, ordering that if Melotz did not produce
those items, three of his claims for damages would be dismissed.
This information was not provided and on June 26, 1989, in chambers
before trial, Judge Wilson ordered those claims stricken.
At trial the court refused to hear evidence on the potential
profits of hauls during periods the truck experienced down time,
deeming the evidence too speculative and as an additional sanction
for discovery abuse. The court did allow into evidence the Midwest
Dumpers contract. The jury returned a verdict in favor of Melotz
in the amount of $12,026.40. The District Court reduced the
verdict by $208 and Melotzls bill of costs by $359. The court then
denied Schecklals post-trial motions for judgment notwithstanding
the verdict and to amend or alter the judgment.
Scheckla now appeals raising the aforementioned issues.
I. - 11.
Since issues 1 and 2 both pertain to the imposition of
sanctions for discovery abuse, we will address them simultaneously.
Scheckla contends Judge Wilson abused his discretion by
ignoring Judge Coate's earlier discovery sanction limiting Melotzls
trial exhibits when he allowed the Midwest Dumpers contract into
evidence. Citing Owen v. F.A. Buttrey Company (1981), 192 Mont.
274, 280, 627 P.2d 1233, 1236, he argues that Melotz must I1suffer
the consequence^^^ of his discovery abuse and asserts that Melotz
did not have to do so because he was allowed to go forward with a
major part of his case, i.e. , the Midwest Dumpers contract lost
prof its.
This Court has previously stated that the district court has
the discretion to control discovery activities. State of Oregon
ex rel. Worden v. Drinkwalter (1985), 216 Mont. 9, 12, 700 P.2d
150, 152. The district court also has the discretion to decide
what sanctions are to be imposed on a party who fails to comply
with discovery rules. Barrett v. ASARCO, Inc. (1988), 234 Mont.
229, 234, 763 P.2d 27, 30 (citing Sikorski v. Olin (1977), 174
Mont. 107, 111, 568 P.2d 571, 573) . Judge Wilson impliedly ignored
or overruled Judge Coatelsprevious ruling and gave Melotz one last
chance to produce his tax returns and financial statements. Melotz
did not produce this information and Judge Wilson dismissed three
items of contended damages. Certainly by striking damages
amounting to $32,760, Melotz was required to "suffer the
consequences.I1 The District Court was acting well within its
discretion when it allowed the contract into evidence.
Scheckla further contends the District Court abused its
discretion by failing to prohibit evidence of lost income from the
Midwest Dumpers contract as a sanction for discovery abuse.
Scheckla argues that since he was not provided the requested
financial information he had no way of ascertaining whether
Melotzls testimony concerning lost profits was accurate. "The
exclusion of evidence for noncompliance with discovery rules is a
harsh remedy [and] . . . we will reverse the trial judge only when
his judgment may materially affect the substantial rights of the
appellant and allow a possible miscarriage of justice.11 (Citation
omitted.) Barrett, 763 P.2d at 30-31. We do not find that
situation here. Melotz provided Scheckla with the Midwest Dumpers
contract more than two years before trial. Scheckla himself was
in a similar trucking business and could have testified as to
profitability. Moreover, Scheckla examined Melotz in part of a
seven and one-half hour deposition and again at trial on this
issue.
We hold the District Court did not abuse its discretion in
allowing the contract into evidence and in allowing evidence of
lost income from the contract.
Scheckla attacks the jury1 verdict arguing his statement that
s
the engine could go right to work and was in good running condition
was merely an opinion or upuffingll
and did not create an express
warranty. Scheckla also contends that the evidence presented at
trial did not show that he engaged in the business of selling
engines or that Melotz relied upon his skill and judgment in
selecting a particular engine and therefore the evidence was
insufficient to show that an implied warranty of merchantability
or an implied warranty of fitness for a particular purpose had been
created.
We will not disturb a jury verdict when there is substantial
credible evidence in the record to support it.
"Sufficiency of the evidence. We will
not reverse a judgment based upon a jury
verdict if there is substantial evidence in
the record to support the jury verdict ...
We review in the light most favorable to the
prevailing party, reversing only when there is
a lack of substantial evidence to support the
judgment based upon the jury verdict ...
"The 'substantial evidence test
variously expressed allows reversal only if
there is a complete absence of probative facts
to support the verdict . . . or if the
evidence is so overwhelming there is no room
for an honest difference of opinion .. . or
if there is a complete absence of any credible
evidence in support of the verdict."
(Citations omitted.)
Flynn v. Siren (1986), 219 Mont. 359, 365, 711 P.2d 1371, 1374.
The court gave the jury instructions on express warranty,
express warranty -- statement of opinion, implied warranty, and
implied warranty of fitness for a particular purpose. The jury,
by general verdict, found that Scheckla warranted the engine he
sold to Melotz and that Scheckla had breached the warranty. After
reviewing the record in a light most favorable to the prevailing
party, we conclude the record contains sufficient evidence upon
which the jury could find that at least an express warranty
existed.
Whether a statement is an express warranty is an issue of
fact. Vandalia Ranch v. Farmers Union & Oil Supply (1986), 221
Mont. 253, 259, 718 P.2d 647, 651; Whitaker v. Farmhand, Inc.
(1977), 173 Mont. 345, 354, 567 P.2d 916, 921. Issues of fact are
for the jury to resolve and should not be taken away from the jury
because some evidence furnishes reasonable grounds for different
conclusions. Kleinsasser v . Superior Derrick Service, Inc. (1985),
.
218 Mont. 371, 374, 708 P.2d 568, 570. In the present case
Scheckla represented to Melotz that the engine was in good working
condition and that the engine could be put in the truck and it
would go right to work. Scheckla also stated that the engine
recently had major repair work done to it. The record indicates
that after the engine was installed, Scheckla told Melotz to
replace the bearings and if that did not correct the problem, he
would pay for the repairs. Additionally, on at least one other
occasion Scheckla recommended the type of repairs that should be
done and Schecklals mechanic replaced the head in an effort to
correct the problems with the engine. The statements made by
Scheckla, together with his conduct after the engine was installed,
provides a sufficient basis upon which the jury could find that an
express warranty existed.
We hold that substantial evidence supports the existence of
a warranty under the circumstances of this case.
IV.
The jury, upon deciding the warranty issue in Melotzls favor
and finding that Scheckla had breached the warranty, awarded Melotz
consequential damages for his claim of lost profits on the Midwest
Dumpers contract. Scheckla contends that under the Uniform
Commercial Code Melotz had to "cover1Ibefore consequential damages
could be awarded. Scheckla argues that all Melotz had to do to
cover was to purchase a substitute engine, and, having failed to
do so, Melotz failed to mitigate his damages and should therefore
be denied any recovery of consequential damages.
Section 30-2-715, MCA, provides that consequential damages
resulting from the seller's breach of warranty include Ir[a]ny loss
resulting from general or particular requirements and needs of
which the seller at the time of contracting had reason to know and
which could not reasonably be prevented by cover or otherwise
. . ." In Harrington v. Holiday Rambler Corporation (1978), 176
Mont. 37, 575 P.2d 578, the plaintiffs sued the manufacturer for
damages for breach of warranty because of defects in the trailer
they had purchased. The defendant contended the plaintiffs failed
to mitigate damages by not.having the trailer repaired by a third
party, failing to cover by purchasing a substitute trailer and
continuing to use the trailer after they knew of the defects. In
holding that the plaintiffs did not fail to mitigate damages, this
Court stated the following regarding the doctrine of avoidable
consequences:
"The duty to reduce or mitigate damages
is a positive one upon the injured person, but
it has limits. The test is: What would an
ordinary prudent person be expected to do if
capable, under the circumstance^?^^ (Citation
omitted.)
Harrinqton, 575 P.2d at 581.
The record in the present case discloses that Melotz did what
an ordinary prudent person would be expected to do under the
circumstances. It is true, as Scheckla points out, that to cover
would have been to purchase a substitute engine. However, there
are no facts in the record to indicate the engine needed to be
replaced until after the time the Midwest Dumpers contract was to
be performed. The record discloses that Melotz made a number of
repairs in an attempt to make the used engine run satisfactorily.
Scheckla himself noted that this type of engine has low oil
pressure and advised Melotz to replace the bearings. Also,
Scheckla's mechanic replaced the head in an effort to determine
what was wrong with the engine.
Melotz entered into the Midwest Dumpers contract in November,
1985 when the engine had undergone recent repairs recommended by
Scheckla and Melotz believed the truck was capable of fulfilling
the contract. Melotz testified that it was only three or four days
before he was supposed to begin performing the contract when he
realized he would not be able to do so due to continuing
overheating problems. At that time he notified Midwest Dumpers
that he would be unable to perform the contract. It was not until
March, 1986, after Melotz had lost the Midwest Dumpers contract,
when the engine locked up and subsequently was completely torn down
that Melotz learned the engine had a cracked block and was
unrepairable.
We hold that under the above set of facts the jury could
reasonably have found that Melotzls consequential damages could not
be prevented by cover or otherwise.
Affirmed.
We concur: