Farrar & Farrar Dairy, Inc v. Miller-St. Nazianz, Inc

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 5:06-cv-00160-D Copies to all parties and the district court/agency. [998841904].. [11-1427]

Appeal: 11-1427

Document: 31

Date Filed: 04/27/2012

Page: 1 of 20

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 11-1427

FARRAR & FARRAR FARMS,
Appellant,
FARRAR & FARRAR DAIRY, INCORPORATED, on behalf of itself and
all others similarly situated,
Plaintiff – Appellant,
v.
MILLER—ST.NAZIANZ, INCORPORATED,
Defendant – Appellee
and
HYPLAST
NV;
INCORPORATED,

KLERK’S

PLASTIC

PRODUCTS

MANUFACTURING,

Defendants.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh.
James C. Dever, III,
Chief District Judge. (5:06-cv-00160-D)

Argued:

March 22, 2012

Decided:

April 27, 2012

Before Sandra Day O’CONNOR, Associate Justice (Retired), Supreme
Court of the United States, sitting by designation, TRAXLER,
Chief Judge, and HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.

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ARGUED: Scott Crissman Harris, WHITFIELD, BRYSON & MASON, LLP,
Raleigh, North Carolina, for Appellants.
Ross Alan Anderson,
WHYTE
HIRSCHBOECK
DUDEK
S.C.,
Milwaukee,
Wisconsin,
for
Appellee.
ON BRIEF: Daniel K. Bryson, LEWIS & ROBERTS, PLLC,
Raleigh, North Carolina, for Appellants.
R. Thompson Wright,
HILL, EVANS, DUNCAN, JORDAN & BEATTY, Greensboro, North
Carolina; Karen L. Tidwall, WHYTE HIRSCHBOECK DUDEK S.C.,
Milwaukee, Wisconsin, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Farrar

&

Farrar

Dairy,

Inc.,

and

Farrar

&

Farrar

Farms

(collectively “Farrar”) appeal a district court order granting
summary judgment against them in their products liability action
against Miller-St. Nazianz, Incorporated (“Miller”).

Finding no

reversible error, we affirm.

I.
Farrar

North

Carolina

corporation that owns and operates a small dairy farm.

Farrar &

Farrar

Farms

&

Farrar

is

a

Dairy,

North

farm’s land and livestock.

Inc.,

Carolina

is

a

partnership

that

owns

the

Miller is a Wisconsin corporation

that sells farm equipment and products.
In late 2004, Miller purchased the operating assets and
inventory of Ag-Bag International, Inc. (“Ag-Bag”), a company
that sold agricultural silage
After

purchasing

the

bags under the

assets,

Miller

name “Ag-Bag.” 1

decided

to

distributing silage bags under the “Ag-Bag” brand name.

1

continue
At the

Silage is green forage or fodder that has been chopped
and compacted into an anaerobic container such as a bunker or
fixed silo.
Silage storage bags are designed to provide an
alternative method of protecting such farm feed from spoilage.
While inside the bag, silage undergoes an acid fermentation
process that prevents it from spoiling.
A bagging machine
mechanically inserts the silage into the silage bag.
The bags
can be as long as 300 feet and up to 14 feet wide.

3

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time

Document: 31

of

the

Date Filed: 04/27/2012

asset

purchase,

Page: 4 of 20

Ag-Bag

had

a

contractual

relationship with Up North Plastics, Inc. (“Up North”), which
manufactured

the

Ag-Bag

bags.

Miller

terminated

that

relationship, however, and found another manufacturer, Hyplast
NV (“Hyplast”).
formula

when

it

Because Miller did not receive Ag-Bag’s plastic
purchased

Ag-Bag’s

assets,

Miller

provided

Hyplast with a bag that Up North had manufactured, and Hyplast
reverse-engineered a new formula.
Farrar purchased twelve 10-foot X 250-foot Ag-Bag silage
bags from an authorized dealer on April 18, 2005, and fourteen
more bags of varying size on August 15 of the same year.

Some

of these 26 bags had been manufactured by Up North, and others
by Hyplast.
The warranty accompanying Farrar’s Ag-Bags stated in part:
Ag-Bag® . . . guarantees our “Bonded”[] silage
bags to be free of defects in workmanship and
materials. If a properly packed bag should fail from
a defect during normal useful life, Ag-Bag® will
replace the bag without charge.
If the feed in the
damaged bag requires rebagging[,] Ag-Bag® will replace
the bag with two bags.
J.A. 1304.
titled

Additionally, each Ag-Bag box contained a document

“Flat-Folded

Bag

Installation

Instructions,”

which

included the following language:
All recommendations or suggestions of use are made
without guarantee, since conditions of use are beyond
our control[.] Ag-Bag . . . maintains no obligations
or liabilities for consequential damages arising out
of, or in connection with[,] use of this product,

4

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including but not limited to inconvenience, loss of
profit, commercial use, food loss of any type, or
costs o[f] removal, installation or reinstallation.
J.A. 239.
Shortly after purchasing the bags in April 2005, Farrar
notified

Miller

Accordingly,

that

Miller

several

contacted

of

the

Arthur

bags

had

split.

a

Miller

Schuette,

representative who lived near Farrar, to investigate.

Schuette

visited the Farrar farm soon after and visually inspected the
split bags.

He noticed some stretching that he knew, more times

than not, was the result of the bags being overpacked.

However,

he also learned that the type of crop that had been packed was
rye silage, which, in his experience, tended to “cause more bag
stretching than a lot of other crops.”

J.A. 1028.

For that

reason, Schuette “decided to give . . . Farrar the benefit of
the doubt” and submit a warranty claim to Miller on his behalf
with the recommendation that Farrar receive replacement bags.
J.A.

1028.

Miller

then

processed

the

provided Farrar with replacement bags.
replacement

bags

also

split.

The

warranty

claims

and

At least one of the

record

does

not

reflect

whether another replacement bag or bags were provided.
As a result of the bags’ splitting, Farrar incurred costs
associated

with

lost

feed,

re-bagging,

disposal

of

spoiled

silage, acquiring new bags and techniques and new silage, and a

5

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decrease in farm profitability due to the resources that it was
required to expend addressing the bag failures.
Farrar subsequently brought suit in federal district court
against

Miller,

asserting

claims

of

negligence,

breach

of

express warranty, breach of implied warranty of merchantability,
unfair trade practices, and unjust enrichment.

In response to a

motion for summary judgment filed by Miller, Farrar abandoned
the

latter

two

claims.

The

district

court

granted

Miller’s

motion regarding the remaining three claims.

II.
Farrar

first

argues

that

the

district

court

granting summary judgment on its negligence claim.

erred

in

We disagree.

We review the district court’s grant of summary judgment de
novo, viewing the facts and the reasonable inferences therefrom
in the light most favorable to the nonmoving party.

See EEOC v.

Navy

Cir.

Fed.

Summary

Credit

judgment

Union,
is

424

F.3d

appropriate

397,

when

405

“the

(4th
movant

2005).

shows

that

there is no genuine dispute as to any material fact and [that]
the movant is entitled to a judgment as a matter of law.”
R. Civ. P. 56(a).

Fed.

“Because we are sitting in diversity, our

role is to apply the governing state law, or, if necessary,
predict how the state’s highest court would rule on an unsettled

6

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issue.”

Date Filed: 04/27/2012

Page: 7 of 20

Horace Mann Ins. Co. v. General Star Nat’l Ins. Co.,

514 F.3d 327, 329 (4th Cir. 2008).
Under North Carolina law, which the parties agree applies
to

the

claims

before

us,

a

plaintiff

bringing

a

products

liability action based on negligence must “prove (1) the product
was defective at the time it left the control of the defendant,
(2) the defect was the result of defendant’s negligence, and (3)
the

defect

proximately

caused

plaintiff

damage.”

Red

Hill

Hosiery Mill, Inc. v. MagneTek, Inc., 530 S.E.2d 321, 326 (N.C.
Ct. App. 2000).
Farrar sought to prove that had Miller exercised reasonable
quality control practices with respect to the silage bags that
it purchased from Hyplast to resell under the Ag-Bag brand, it
would have discovered that they were defectively designed.
moving

for

summary

judgment

on

the

negligence

claim,

In

Miller

maintained, as is relevant here, that Farrar failed to create a
genuine dispute regarding whether the failed bags were defective
or whether the defect was the result of Miller’s negligence.
In response, Farrar pointed to evidence that Miller, aware
that other companies had experienced problems with their silage
bag manufacturers, had contemplated sending the Hyplast bags to
an

independent

evidence

that

lab
many

for

analysis.

other

of

Farrar

Miller’s

also

customers

pointed

to

experienced

problems with their bags in the summer of 2005, and that several

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Miller employees expressed concerns about the quality of the
plastic Hyplast used to make the bags and theories regarding why
some of the bags were failing.

Farrar further offered evidence

of a PowerPoint presentation, apparently given by Hyplast in
late 2005, stating an “[i]ntermediate conclusion” that bags it
examined split due to a combination of factors including that
the three-ply bags had a transparent middle layer, J.A. 1301, in
contrast to Up North’s bags, which had utilized a white middle
layer.

The presentation suggested that a white middle layer

better reflected the sun’s rays and therefore better protected
the bags from the effects of high temperatures.

After this

presentation, Hyplast informed Miller that “a certain ‘batch’”
of the bags Hyplast had shipped to Miller appeared to have “a
possible higher than normal failure rate” and were “possibly
defective.”
territory

J.A. 1979, 1713.

managers

and

Miller, in turn, notified its

dealers

of

that

information,

and

the

territory managers notified their dealers that “if any of the
specific lot of potentially problematic silage bags identified
by Hyplast were in their possession, they should be returned to
[Miller] and they would be exchanged for new silage bags.”

J.A.

1979.
Farrar
evidence,

maintained
it

defectiveness

had
of

that

proffered
the

bags

by

producing

both
in

8

direct

question

the

above-mentioned

evidence
and

proven

of

the
their

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defectiveness

Date Filed: 04/27/2012

by

showing

“(1)

Page: 9 of 20

[that]

the

silage

bags

malfunctioned; (2) that the silage bags were put to ordinary
use; (3) [the occurrence of] similar accidents involving the
same product; and (4) [the] elimination of other possible causes
of the accident.”
evidence

it

negligence

on

J.A. 966.

had

referenced

the

part

of

Farrar contended that the direct
gave

rise

to

an

inference

manufacturer. 2

the

It

of

further

maintained that Miller had been “on notice of potential problems
with

the

silage

bags,

and

that

a

reasonable

man

would

exercised greater care in inspecting and testing” them.

have
J.A.

972.
On reply, as is relevant here, Miller argued that much of
Farrar’s evidence would not be admissible at trial and therefore
could not be considered at the summary judgment stage.

Miller

further

direct

emphasized

that

Farrar

had

not

produced

any

evidence of a product defect that would be admissible at trial
and no direct evidence of Miller’s negligence.
asserted
regarding

that
the

Farrar

had

negligence

failed

to

element

2

create
of

its

Miller therefore
a

genuine

dispute

negligence

claim.

Farrar maintained that Miller, “as the apparent
manufacturer of the silage bags, . . . had a duty to use
reasonable care in the design and manufacture of its products.”
J.A. 969.

9

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Farrar

Date Filed: 04/27/2012

a

filed

Page: 10 of 20

which

sur-reply

in

it

defended

the

admissibility of its proffered evidence.
In granting summary judgment against Farrar on this claim,
the district court agreed with Miller that Farrar had failed to
create a genuine dispute regarding whether any defect in the
bags sold to Farrar was the result of negligence on Miller’s
part.

The

court

noted

defectiveness

of

product

evidence

negligence

and

a

that,
may

can

under
be

Carolina

established

sometimes

existence of a product defect.

North

be

by

inferred

law,

indirect
from

the

However, the court ruled that

negligence cannot be inferred from the existence of a defect if
the defect has been established entirely by indirect evidence.
Determining that Farrar had not offered direct evidence (such as
expert testimony) that the bags were defective, the court ruled
that, in order to prove Miller’s negligence, Farrar would have
to

present

would

do

“evidence

in

similar

that

suggests

what

circumstances.”

quotation marks omitted).

a

J.A.

reasonable
2610-11

person

(internal

Concluding that “the record lacks any

information as to quality control mechanisms that distributors
generally

employ

manufacturing

for

company,”

goods
J.A.

manufactured
2612,

the

by

court

an

independent

granted

summary

judgment against Farrar on the negligence claim.
Farrar advances several challenges to the court’s analysis,
which we address seriatim.

10

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Farrar

Date Filed: 04/27/2012

first

contends

Page: 11 of 20

that

the

district

court

mischaracterized North Carolina law when it concluded that when
a products liability plaintiff relies on indirect evidence to
prove that the product was defective, it cannot rely solely on
the same evidence to prove the defect was the result of the
defendant’s negligence.

Farrar is incorrect, however, as that

proposition is established both by Dewitt v. Eveready Battery
Co., 550 S.E.2d 511, 520 (N.C. Ct. App. 2001), aff’d on other
grounds, 565 S.E.2d 140 (N.C. 2002), and by Red Hill Hosiery
Mill, Inc., 530 S.E.2d at 327 n.7.

See also Carlton v. Goodyear

Tire & Rubber Co., 413 F. Supp. 2d 583, 588 (M.D.N.C. 2005)
(explaining
negligence

that
by

products-liability

stacking

inference

plaintiff
upon

“may

not

inference”).

prove
Farrar

insists that the principle that a products liability plaintiff
cannot

prove

negligence

simply

by

offering

circumstantial

evidence of a product defect is “inconsistent with the North
Carolina Supreme Court’s statement in DeWitt that a plaintiff
need not satisfy each of the factors explicitly stated in DeWitt
to

prove

a

Appellants’

product
brief

at

defect
24.

through
That

is

circumstantial
not

the

evidence.”

case,

however.

Rather, the principle simply reflects that “[t]o prove a product
defective is one thing,” but “to prove that the defect flowed
from

a

failure

to

exercise

11

reasonable

care

is

quite

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Date Filed: 04/27/2012

Page: 12 of 20

Red Hill Hosiery Mill, Inc., 530 S.E.2d at 326 n.5

another.”

(internal quotation marks omitted).
Farrar

alternatively

contends

that

it

presented

direct

evidence of a design defect in Farrar’s split bags, from which
Miller’s negligence could be reasonably inferred.

Relying on

the testimony of Miller’s Rule 30(b)(6) witness, Steve Pesik,
Farrar contends Miller tested plastic samples from each of the
eight

silage

bags

at

issue,

and

J.A.

1869-70).

Farrar’s

Pesik’s testimony, however.
Farrar’s

warranty

warranty

that

Pesik

did

claims

on

the

characterization

misstates

Pesik testified that Miller treated
as

viable

covered

defects

testify

not

based

See Appellants’ brief at 26

testing, that each was defective.
(citing

determined,

that

in

Miller

losses

under

material

and

tested

each

the

limited

workmanship.
bag,

and

he

certainly did not testify there was any defect in the bags’
design.
existence
judgment

In
of

any

event,

this

motion

in

because

testimony
the

required to consider it.

in

district

Farrar

did

opposing
court,

not

rely

Miller’s

the

court

on

the

summary
was

not

See Fed. R. Civ. P. 56(c)(3).

Miller also argues that Hyplast’s PowerPoint presentation
constituted direct evidence of the defectiveness of the bags’
design.
hearsay.

However, evidence of this presentation was inadmissible
See Maryland Highway Contractors Ass’n v. State of

Md., 933 F.2d 1246, 1251 (4th Cir. 1991) (“[H]earsay evidence,

12

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which is inadmissible at trial, cannot be considered on a motion
for summary judgment.”).

Farrar did not identify or depose the

author of the presentation, and no one at Hyplast was questioned
concerning
evidence

its

of

contents.

the

Farrar

presentation

argues

would

fall

conclusorily
under

the

that

business

records hearsay exception, see Fed. R. Evid. 803(6), but Farrar
fails to explain how the elements of that exception could be
established.

In any event, while the presentation does suggest

steps for Hyplast to take in an effort to improve the bags, it
does not appear to conclude that any problem with the design of
the bags rose to the level of a design defect.
In its reply brief, Farrar contends for the first time that
Miller’s negligence could be reasonably inferred not simply from
evidence of the bags’ defectiveness but from direct evidence
that

Miller

inspection

failed
of

approximately
problems.
Farrar

to

the
six

silage

months”

Appellants’

asserts

“perform

that

bags

and

reply

Miller

an

to

adequate
or

issue

warn

its

at

27.

brief
learned

investigation

of

a

a

recall

customers
In

this

problem

of

or
for
the

regard,

with

its

Hyplast-manufactured silage bags during the weeks of May 30 and
June 6, 2005.
Because Farrar did not make this argument in its opening
brief, it is waived.
231,

241

n.6

(4th

See Edwards v. City of Goldsboro, 178 F.3d
Cir.

1999)

(claim

13

not

properly

raised

in

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Page: 14 of 20

appellant’s opening brief is deemed abandoned); Cavallo v. Star
Enter., 100 F.3d 1150, 1152 n.2 (4th Cir. 1996) (argument not
raised in opening brief, but raised for first time in reply
brief, is waived).

In any event, the district court rejected

this same argument on the bases that (1) “the record lacks any
information as to quality control mechanisms that distributors
generally

employ

manufacturing

for

company”

goods
and

manufactured

(2)

neither

by

an

Miller’s

independent
awareness

of

problems other companies had experienced with their silage bag
manufacturers

nor

the

fact

that

Miller

contemplated

sending

Hyplast’s bags to an independent lab for testing is sufficient
“to show whether a reasonable person, in similar circumstances
to Miller, would have conducted such an independent lab analysis
or adopted some other quality control measure.”

J.A. 2612.

In

its reply brief, Farrar simply argues that the district court
erred in concluding that Farrar failed to create a jury issue
with this theory without addressing, or even acknowledging, the
basis for the district court’s ruling.
brief at 25-29.
reason as well.

See Appellants’ reply

Thus, Farrar’s argument is waived for this
See Eriline Co. S.A. v. Johnson, 440 F.3d 648,

653 n.7 (4th Cir. 2006) (holding that conclusorily assigning
error without providing supporting argument is insufficient to
raise issue).

14

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Page: 15 of 20

III.
Farrar

next

maintains

that

the

district

court

erred

in

granting summary judgment against it on its claims for breach of
Miller’s express warranty and breach of an implied warranty of
merchantability.

We disagree.

The district court ruled that Miller owed Farrar a duty
both under its express warranty and under an implied warranty of
merchantability.
merchantability,

Under
Farrar

North
could

Carolina’s
recover

implied

“the

warranty

difference

.

of

.

.

between the value of the goods accepted and the value they would
have had if they had been as warranted.”
2-714(2).

Additionally, “[i]n a proper case any incidental and

consequential

damages

recovered.”

N.C.

statutory
remedy

N.C. Gen. Stat. § 25-

law

Gen.

also

available

under

in

.

Stat.

permits
the

.

.

[§ 25-2-715]

§ 25-2-714(3).

written

event

of

may

North

also

Carolina

warranties

to

a

however,

breach;

be

limit

the
when

“circumstances cause an exclusive or limited remedy to fail of
its essential purpose, remedy may be had as provided” in the
absence of the warranty limitations.
719(2).

N.C. Gen. Stat. § 25-2-

Finally, “[c]onsequential damages may be limited or

excluded unless the limitation or exclusion is unconscionable.”
N.C. Gen. Stat. § 25-2-719(3).
Miller’s express warranty provided that should an Ag-Bag
fail from defect, it would be replaced without charge and that

15

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Date Filed: 04/27/2012

Page: 16 of 20

should the damaged bag require the farmer to rebag the feed,
Miller would provide two replacement bags.
treated

this

remedy

and

the

remedies

The district court
granted

under

North

Carolina statutory law as consistent and therefore cumulative.
The court concluded that since Farrar chose to remedy the breach
by

accepting

additional

replacement

remedy

under

bags,
N.C.

it

Gen.

was
Stat.

not

entitled

§ 25-2-714.

to

any

As

for

Miller’s exclusion of consequential damages, the district court
noted it was valid unless it was unconscionable, which the court
concluded it was not.

Farrar offers several challenges to the

district court’s analysis, which we consider seriatim.
Farrar first maintains that the district court erred in not
recognizing

that

Miller’s

warranty

failed

of

its

essential

purpose, and therefore that Farrar was entitled to all of the
remedies listed in § 25-2-714, including consequential damages. 3
A limited, exclusive remedy fails of its essential purpose when
“unanticipated circumstances preclude the seller from providing
the

buyer

agreed.”

with

the

remedy

to

which

the

parties

Computer Network, Inc. v. AM Gen. Corp., 696 N.W.2d

3

In this regard, Farrar claims that “Farrar never
actually made the warranty claim under the express warranty.”
Appellants’ brief at 33-34.
However, Farrar, when asked at
deposition whether he ever submitted a written warranty claim,
responded that he dealt with Schuette and “[w]hatever he had me
do is what[] I did.” J.A. 2302.

16

Appeal: 11-1427

49,

Document: 31

55

(Mich.

Date Filed: 04/27/2012

Ct.

App.

2005)

Page: 17 of 20

(internal

quotation

marks

omitted); see Stutts v. Green Ford, Inc., 267 S.E.2d 919, 926
(N.C.

Ct.

App.

1980)

(holding

that

a

warranty

fails

of

its

essential purpose when “there is a defect which is not or cannot
be

repaired

within

warranty”).

a

reasonable

period

as

required

by

the

We see no basis for concluding that Farrar showed

that it did not receive the remedy that Miller had promised.
Miller provided replacements for the defective bags within a
reasonable period of time, just as its warranty contemplated.
Although at least one of the replacement bags also ended up
splitting, Farrar offers no evidence that the replacement bag
was not also promptly replaced.
In
failed

the
of

end,
its

Farrar

seems

essential

to

purpose

suggest

that

because

the

Miller

warranty
did

not

compensate Farrar for the substantial costs it incurred “with
purchasing new feed, the labor costs of rebagging the feed, and
the

loss

in

milk

production

due

adequately feed his livestock.”

to

Farrar’s

inability

Appellants’ brief at 36.

to
Of

course, though, the fact that Farrar was not compensated for
those

losses

consequential

simply
damages.

reflected
It

is

to

Miller’s
the

disclaimer

effectiveness

of

of
that

disclaimer that we now turn.
Farrar argues that the disclaimer of consequential damages
was not effective because it was “not conspicuous as required by

17

Appeal: 11-1427

[N.C.

Document: 31

Gen.

Stat.

Date Filed: 04/27/2012

§]

25-2-316(2),

mention merchantability.”

Page: 18 of 20

and

the

warranty

Appellants’ brief at 32.

does

not

However, as

the district court correctly determined, Miller’s disclaimer did
not need to meet § 25-2-316(2)’s requirements to be effective.
That section concerns only attempts to “exclude or modify the
implied warranty of merchantability or any part of it.”

Here,

what Miller limited by disclaiming consequential damages was not
the

warranty,

but

the

remedy

for

a

breach

of

the

warranty.

North Carolina Code section 25-2-316(4) plainly provides that
“[r]emedies for breach of warranty can be limited in accordance
with . . . [N.C. Gen. Stat. §§] 25-2-718 and 25-2-719.”
Gen. Stat. § 25-2-316(4) (emphasis added).

N.C.

Section 25-2-719, in

turn, provides that “[c]onsequential damages may be limited or
excluded unless the limitation or exclusion is unconscionable.”
Thus, so long as the limitation is not unconscionable, it is
valid.

See Billings v. Joseph Harris Co., 220 S.E.2d 361, 366

(N.C. Ct. App. 1975).
Farrar argues that the limitation is unconscionable for two
reasons.

First,

it

contends

that

Farrar

had

choice regarding the terms of the warranty.
Farrar

contends

that

“when

a

manufacturer

is

no

meaningful

In this regard,
aware

that

its

product is inherently defective, but the buyer has ‘no notice of
[or]

ability

substantial

to

detect’

disparity

in

the

problem,

the

18

parties’

there

is

relative

perforce

a

bargaining

Appeal: 11-1427

Document: 31

Page: 19 of 20

Appellants’ brief at 37 (quoting Carlson v. General

power.”
Motors

Date Filed: 04/27/2012

Corp.,

883

F.2d

287,

296

(4th

Cir.

1989)).

Farrar

maintains that, at the time it purchased the bags in question,
Miller knew that Hyplast had changed the formula for the silage
bags, while Farrar had no way of knowing that.
certainly

not

much

help

to

Farrar,

That fact is

however.

When

Farrar

purchased bags in April 2005, Miller had no reason to believe
that Hyplast would produce defective bags.
thereafter
learned

that

that

several

summer

of

of

the

other

bags

And, it was shortly

split.

customers

who

Although
had

Miller

experienced

problems with its bags, by that point, Farrar was certainly on
notice

of

a

possible

problem

as

well.

Thus,

there

was

no

substantial disparity in bargaining power between the parties,
even regarding the August purchases.
Farrar

also

contends

that

Miller’s

consequential-damages

exclusion was unconscionable because, with the exclusion, the
terms of the purchase were unreasonably favorable to Miller.
do not agree.

We

Any disclaimer of a customer’s right to recover

consequential damages as a warranty remedy can have significant
effects,

but

in

a

transaction

between

business

entities,

a

provision disclaiming consequential damages for commercial loss
is not presumptively unconscionable.

See N.C. Gen. Stat. § 25-

2-719(3) (providing that limitation of consequential damages for
commercial

loss

is

not

prima

facie

19

unconscionable);

Stan

D.

Appeal: 11-1427

Document: 31

Date Filed: 04/27/2012

Page: 20 of 20

Bowles Distrib. Co. v. Pabst Brewing Co., 317 S.E.2d 684, 690
(N.C. Ct. App. 1984) (“Courts rarely find limitation clauses in
transactions

between

experienced

businessmen

unconscionable.”); Billings, 220 S.E.2d at 366.
In its reply brief, Farrar argues for the first time that
the

exclusion

because

at

of

least

consequential
one

of

the

provided ended up breaking.

damages

was

replacement

unconscionable

bags

that

Miller

Because Farrar did not make this
See Edwards, 178

argument in its initial brief, it is waived.

F.3d at 241 n.6; Cavallo, 100 F.3d at 1152 n.2.

In any event,

the consequential damages exclusion became effective when the
bags were purchased.

Subsequent events have no bearing on the

issue of unconscionability.

See Weaver v. Saint Joseph of the

Pines, Inc., 652 S.E.2d 701, 712 (N.C. Ct. App. 2007) (“The
question of unconscionability is determined as of the date the
contract was executed.”).
For all of these reasons, we conclude as a matter of law
that the consequential damages exclusion was valid and that the
court

properly

granted

summary

judgment

on

Farrar’s

warranty

claims.
IV.
In

sum,

we

affirm

the

district

court’s

order

granting

summary judgment against Farrar.
AFFIRMED

20