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Row Equipment, Inc. v. Terex USA, LLC

United States District Court, S.D. Georgia, Waycross Division

December 6, 2019

ROW EQUIPMENT, INC., Plaintiff,
v.
TEREX USA, LLC d/b/a TEREX ENVIRONMENTAL EQUIPMENT, Defendants.

          ORDER

          R. STAN BAKER UNITED STATES DISTRICT JUDGE.

         Plaintiff ROW Equipment, Inc. (at times, “ROW”) sued Terex USA, LLC (at times, “Terex”), seeking damages for its purchase (from Defendant Terex) of wood chippers that Plaintiff ROW contends were faulty, frequently malfunctioned, and were never properly repaired or replaced by Terex. The Court granted summary judgment in favor of Terex on all but one of Plaintiff's claims. (Doc. 57.) The sole claim remaining for adjudication at trial is a claim that Defendant Terex breached its express standard warranty that the chippers would be free of “defects in manufacture or materials” and that it would adequately repair or replace the chippers to address any such defects. (Doc. 51, pp. 11, 13; doc. 57, pp. 16-17; see also doc. 15.) Defendants filed a number of Motions in Limine in anticipation of trial, most of which the Court has already addressed via prior Order, (doc. 131). Following additional briefing ordered by the Court, Defendant's “Motion in Limine on Damages, ” (doc. 85), and Plaintiff's “Amended Motion in Limine, ” (doc. 97), remain pending and are presently before the Court, along with Defendant's recently filed “Motion to Enforce Exclusion, ” (doc. 139). For the reasons set forth more fully below, the Court DENIES Defendant's “Motion in Limine on Damages, ” (doc. 85); DENIES without prejudice Plaintiff's “Amended Motion in Limine, ” (doc. 97); and DENIES without prejudice Defendant's “Motion to Enforce Exclusion, ” (doc. 139).

         BACKGROUND

         Defendant's “Motion in Limine on Damages, ” (doc. 85), sought to limit or exclude certain testimony, particularly if it pertained to damages that were incidental or consequential in nature. Relatedly, Plaintiff's “Amended Motion in Limine, ” (doc. 97), sought a ruling from the Court that the limited warranty failed its essential purpose as a matter of law and that Plaintiff was therefore entitled to incidental and consequential damages. In addressing these motions, the Court noted material inadequacies and inconsistencies in both of the parties' filings. First, it was unclear whether the issue of the warranty's alleged failure of its essential purpose (which, under Georgia law, could potentially impact the types of available damages) was an issue of law for the Court or one of fact for the jury. Additionally, neither party had ever addressed the applicability of a provision in the warranty that appears to preclude Plaintiff from recovering incidental and consequential damages regardless of whether there was a failure of the warranty's essential purpose. The Court therefore ordered additional briefing on these topics in hopes of making a clear determination on the availability of incidental and consequential damages, which would in turn help guide the Court's rulings on the probative value and admissibility of certain objected-to evidence and testimony.

         Thereafter, both parties filed thorough briefs, (see docs. 132, 136). In its brief, Plaintiff withdrew its Amended Motion in Limine, (doc. 136, p. 6).[1] When the lingering issue of the availability of incidental and consequential damages arose during the pretrial conference, Defendant orally moved to exclude all consequential and incidental damages, citing the written limitation provision in the warranty. In response, Plaintiff argued that the provision was unconscionable and thus unenforceable. At that time, both parties agreed that the enforceability of the damages-limitations provisions involved a question of law that would be prudent to address prior to trial. Given the fact that trial was scheduled to begin in just over two weeks, the Court invited Defendant to file a written motion within one week and provided Plaintiff with two days to file a response. While this response window was short, the Court notes that, given the parties' prior briefing and the lengthy discussion and oral argument during the Pretrial Conference, Plaintiff was well-aware (in advance of Defendant's filing) of the general topics it would need to address in its response. Defendant has filed its Motion, (doc. 139 (“Terex's Motion to Enforce the Exclusion of Incidental and Consequential Damages and to Exclude Evidence of Such Damages at Trial”)), and Plaintiff has filed a Response in opposition, (doc. 142).

         DISCUSSION

         I. Terex's Motion to Enforce the Exclusion of Incidental and Consequential Damages and to Exclude Evidence of Such Damages at Trial, (doc. 139)

         The at-issue warranty for the chippers included the following provisions which are relevant to Defendant's Motion:

10. Incidental or Consequential Damage: TEREX SHALL NOT BE LIABLE FOR AN [sic] INDIVIDUAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF PRODUCTION, INCREASED OVERHEAD, LOSS OF BUSINESS OPPORTUNITY, DELAYS IN PRODUCTION, COSTS OF REPLACEMENT COMPONENTS AND INCREASED COSTS OF OPERATION THAT MAY ARISE FROM THE BREACH OF THIS WARRANTY, WHETHER OR NOT CAUSED DIRECTLY OR INDIRECTLY BY ANY NEGLIGENCE OF TEREX. The Buyer's sole remedy shall be limited to (at the sole option of Terex) repair or replacement of the defective part.
IN THE EVENT OF ANY BREACH OF THIS WARRANTY BY TEREX, THE AGGREGATE LIABILITY OF TEREX SHALL BE LIMITED EXCLUSIVELY TO THE REMEDIES (AT THE SOLE OPTION OF TEREX) OF REPAIR OR REPLACEMENT OF ANY DEFECTIVE EQUIPMENT OR PART COVERED BY THE WARRANTY. IN NO EVENT SHALL TEREX BE LIABLE FOR INCIDENTAL, INDIRECT, CONSEQUENTIAL OR OTHER DAMAGES OR LOSSES RESULTING FROM A BREACH OF OR OTHER DAMAGES OR LOSSES RESULTING FROM A BREACH OF WARRANTY INCLUDING, WITHOUT LIMITATION, LABOR COSTS, LOSS OF USE OF OTHER EQUIPMENT, THIRD PARTY REPAIRS, LOST PROFITS, LOSS OF PRODUCTION, INCREASED OVERHEAD, INCREASED COSTS OF OPERATIONS, TOWING OR HAULING OF EQUIPMENT, RENTAL COSTS, PERSONAL INJURY, EMOTIONAL OR MENTAL DISTRESS, IMPROPER PERFORMANCE OR WORK, PENALTIES OF ANY KIND, LOSS OF SERVICE PERSONNEL, OR FAILURE OF EQUIPMENT OR PARTS TO COMPLY WITH ANY FEDERAL STATE OR LOCAL LAW.

(Doc. 51-4, p. 3 (emphasis and capitalization in the original).)

         Notwithstanding these provisions, Plaintiff's Amended Complaint seeks incidental and consequential damages. (See Doc. 15, p. 7 (“Plaintiffs bring this action against Terex USA . . . to recover loss of revenue, and loss of current and future business . . . .”).) In its Motion to Enforce the Exclusion of Incidental and Consequential Damages and to Exclude Evidence of Such Damages at Trial, (doc. 139), Defendant cites these provisions and argues that, because there is no evidence that the provisions are unconscionable, the Court should enforce them and thus exclude incidental and consequential damages at trial. (See Doc. 140, pp. 1-8.) Specifically, Defendant asks the Court to “bar introduction at trial of evidence of incidental and consequential damages” and to hold that Plaintiff is “limited to seeking damages for the alleged difference in value of the chippers.” (Id. at pp. 8-9.)[2]

         Under Georgia law, “[t]he measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.” O.C.G.A. § 11-2-714(2). Notably, however, Georgia courts have routinely recognized that a breach or failure of a limited warranty does not negate clauses excluding specific types of damages. See, e.g., Hightower v. General Motors Corp., 332 S.E.2d 336, 338-39 (Ga.Ct.App. 1985) (“The breach or defeat of a limited warranty to repair or replace, of course, does not simultaneously invalidate other limitations of damages contained in the new car warranty . . . .”); A-larms, Inc. v. Alarms Device Mfg. Co., 300 S.E.2d 311, 314 (Ga.Ct.App. 1983) (“[C]onsequential damages may be excluded or limited unless such would be unconscionable, and such limitation of damages where the loss is commercial is not prima facie unconscionable.”); see also Atl. Waste Servs., Inc. v. Mack Trucks, Inc., No. CV414-211, 2016 WL 1248942, *5 (S.D. Ga. March 25, 2016); Atlanta Specialty Food Distributors, Inc. v. Watkins Leasing, Inc., No. C81-1341A, 1982 WL 139732, at *3 (N.D.Ga. 1982) (“Where an exclusive remedy fails of its essential purpose it may be ignored but other clauses in the contract which limit remedies may be left to stand or fail independently of the stricken clause.”). Thus, under Georgia law, the at-issue limitations provisions (recited above) preclude Plaintiff from seeking and recovering damages that are consequential or incidental in nature unless Plaintiff proves that the limitations provisions are unconscionable.

         In its Response, Plaintiff first argues that while Defendant styles its Motion as a motion to exclude evidence, in reality the motion is an untimely effort to seek summary judgment. Plaintiff contends that, rather than the exclusion of evidence, Defendant seeks a ruling that the at-issue limitations provisions are not unconscionable as a matter of law and “in effect seeking dismissal of Plaintiff's claim for consequential damages.” (Doc. 142, pp. 4-5.) While Plaintiff concedes that “unconscionability” is a question of law that should be determined by the Court, Plaintiff objects to the timing of the motion raising the question, particularly given the abbreviated time afforded to Plaintiff for filing a response. (Id. at pp. 7-8.) Plaintiff emphasizes that O.C.G.A. § 11-2-302, the Georgia statute addressing unconscionable contracts or clauses, specifically provides that, “[w]hen it is claimed or appears to the court that the contract or any clause thereof may be unconscionable[, ] the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.” O.C.G.A. § 11-2-302(2) (emphasis added). Plaintiff offers some argument, though limited, in an effort to show unconscionability, but urges that it “anticipates that the facts introduced at trial will support both substantive and procedural unconscionability, with more emphasis on substantive unconscionability.” (Id. at p. 10 (claiming substantive unconscionability is demonstrated by the fact that “the Plaintiff, who paid hundreds of thousands of dollars for the defective chippers, was stuck with a faulty product, and his available remedies were left to ‘repair/replacement' of the defective components, ” and that “Terex, and Terex only, had the ability to decide whether the machine was defective, and whether this defect was covered under the Warranty”).)

         Plaintiff additionally argues that, even if it is precluded from recovering incidental and consequential damages, certain evidence related to those types of damages is still relevant and should not be excluded, as Plaintiff is entitled to rely on it to support its claim ...


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