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Jury award set aside by court.

Byline: Virginia Lawyers Weekly

A supplier's motion to set aside a jury's award to a door manufacturer was granted because the award was not supported by the record or was based on anerroneous damages argument.

Background

Steves & Sons is an independent manufacturer of interior molded doors, and it relies primarily on JELD-WEN INC. to supply it with the doorskins needed to make the doors. Accordingly, on May 1, 2012, Steves and JELD-WEN entered into a long-term supply agreement pursuant to which Steves would purchase interior molded doorskins from JELD-WEN.

In count two of the complaint, Steves asserted that JELD-WEN allegedly supplied Steves with defective doorskins and did not reimburse Steves for the price of those doorskins after notice and inspection, and that, although JELD-WEN had consistently reimbursed Steves for the full cost of its interior molded doors that incorporated defective doorskins before JELD-WEN's 2012 acquisition of CraftMaster Manufacturing Inc., it unilaterally ceased such practice after that date in order to harm Steves.

At trial, the jury agreed with both arguments. JELD-WEN now challenges the jury's determinations as to both theories of liability.

Failure to Reimburse for Defective Doorskins

Edward Steves stated that, before the 2012 merger, JELD-WEN would generally extend Steves credit after it submitted letters about doorskin defects. But, in 2014, following a change in procedure, JELD-WEN did not accept for reimbursement "a large portion of those [doorskins]" that Steves had identified as defective. The jury's award of $441,458 for unreimbursed defective doorskins was drawn directly from the identical VDM figures noted during the testimony of Steves' damages expert, Avram Tucker

JELD-WEN argues that this evidence does not support the jury's conclusion that JELD-WEN violate contends that the reimbursement obligation is not implicated here because Steves presented no evidence that the defective doorskins did not meet JELD-WEN's specifications or were not subject to JELD-WEN's standard written warranty. Second, JELD-WEN says, Steves has failed to connect Tucker's general damages with particular VDMs, preventing the jury from being able to determine that any of the unreimbursed doorskins were actually defective in a way that would require reimbursement.

The construction of the supply agreement makes JELD-WEN's first argument unpersuasive. JELD-WEN's second argument, however, makes this a moot point. There is no doubt that the VDMs upon which Tucker based his calculation might pertain to doorskins with actual defects, but this evidence creates serious doubt as to the probability, or the extent, of such defects. Accordingly, the "mere possibility" that JELD-WEN failed to reimburse Steves for defective doorskins is not enough to sustain the jury's inference in that regard. For these reasons, Steves did not present sufficient evidence to allow the jury to infer that JELD-WEN wrongfully failed to reimburse Steves for $411,458 because of defective doorskins.

Failure to reimburse

According to Gartner, in 2010 and 2011, Steves sought reimbursement from JELD-WEN for the full cost of the doors with defective doorskins. However, according to Sam Steves, JELD-WEN adopted a policy in 2015 to reimburse Steves for the defective doorskins only, rather than the full cost of the doors. As with the defective doorskins claim, the jury's award of $1,776,813 for unreimbursed doors was identical to Tucker'' damages figure.

JELD-WEN asserts that judgment as a matter of law should be granted because, considering this evidence, Steves has not proven: (1) that the supply agreement required JELD-WEN to reimburse Steves for the cost of doors with defective doorskins; or (2) that, even if some obligation existed, JELD-WEN breached it with respect to the unreimbursed doors used in Tucker's calculation.

Whether Steves should have been reimbursed for doors with defective doorskins depends on the effectiveness of the additional costs provision in Section 8 of the supply agreement. Under that provision, "[a]ny additional costs over the price of the Defective Product shall be negotiated by [Steves and JELD-WEN] on a case by case basis." Steves contends that the limitation fails of its essential purpose because the doorskins that were incorporated into doors contained latent defects that Steves could not have discovered during a reasonable inspection. The record does not establish that the additional costs limitation in Section 8 fails of its essential purpose.

Alternatively, Steves contends, JELD-WEN committed to a course of performance under Section 8 by consistently reimbursing Steves for the full cost of doors with defective doorskins, essentially rendering the additional costs provision meaningless. Steves' assertions about course of performance rest on a weak foundation. Second, and more problematic for Steves, the clear meaning of the additional costs provision makes any JELD-WEN course of performance irrelevant. Even assuming that the Supply Agreement required JELD-WEN to reimburse Steves for the full door costs, there was not enough evidence for the jury to conclude that JELD-WEN breached that obligation. For the foregoing reasons, Steves' claim for damages in the amount of $1,776,813 because of JELD-WEN's failure to reimburse for the cost of doors that incorporated defective doorskins fails as a matter of law.

Motion for judgment granted.

Steves and Sons Inc. v. JELD-WEN Inc., Case No. 16-cv-545, Sept. 28, 2018. EDVA at Richmond (Payne). VLW 018-3-429. 32 pp.

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Title Annotation:Steves and Sons Inc. v. JELD-WEN Inc., U.S. District Court for the Eastern District of Virginia
Publication:Virginia Lawyers Weekly
Date:Oct 28, 2018
Words:857
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