IMA North America, Inc. v. Marlyn Nutraceuticals, Inc.

Filing 155

ORDER - IT IS ORDERED that, except for Pla IMA North America's claim for unjust enrichment, the parties' 102 REPORT re: Rule 26(f) Planning Meeting (Joint Pretrial Statement), which the Court and parties treated as a pretrial order, is he reby amended to indicate that all claims and defenses, if any, in this litigation are controlled by Arizona's version of the U.C.C. The parties' written final arguments, proposed findings of fact and conclusions of law shall address the U.C .C. accordingly. FURTHER ORDERED that Pla IMA's conditional objection contained in 152 MEMORANDUM is hereby OVERRULED. The Court will consider Marlyn's rescission claim as one of rejection or revocation of acceptance under Arizona's U.C.C. provisions and IMA's breach of contract claim as an "[a]ction for the price" pursuant to A.R.S. § 47-2709 and other relevant provisions of Arizona's U.C.C.. Signed by Magistrate Judge Lawrence O Anderson on 11/17/08. (SAT)

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WO IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA ) ) Plaintiff/Counterdefendant, ) ) ) vs. ) ) Marlyn Nutraceuticals, Inc., d/b/a) ) Naturally Vitamins, ) Defendant/Counterclaimant. ) ) ) IMA North America, Inc., No. CV-06-344-PHX-LOA ORDER Shortly after the conclusion of the bench trial in this case, the Court entered an Order to Show Cause, requiring counsel to show cause in writing why this Court should not consider Defendant Marlyn Nutraceuticals's ("Marlyn") counterclaim seeking rescission of the subject contract to be one for rejection or revocation of acceptance of the subject Comprima 230 tablet press pursuant to A.R.S. 47-2601, 47-2602, 47-2607(B), 47-2608 and 2714 in order to prevent manifest injustice. (docket # 128) Timely responding thereto, Defendant Marlyn consented to the Court's treating its rescission claim as one of rejection or revocation of acceptance under Arizona's version of the Uniform Commercial Code ("U.C.C.") and Plaintiff IMA North America ("IMA") conditionally objected to such consideration. (docket ## 151, 152) The Court has considered the parties' briefing on the issue. Under Federal Rule of Civil Procedure 16(e), the final pretrial order controls the subsequent course of the litigation. A district court may modify the pretrial order "only 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to prevent manifest injustice." Rule 16(e), Fed.R.Civ.P. (emphasis added); Sousa ex. rel. Will of Sousa v. Unilab Corp Class II, 252 F.Supp.2d 1046, 1058 (E.D. Cal. 2002), affirmed by, 83 Fed. Appx. 954 (9th Cir. 2003) (holding that the district court did not abuse its discretion in amending final pretrial order to include limitations defense as disputed legal issue). "The purpose of the final pretrial order is `to guide the course of the litigation,' and `[o]nce formulated, [it] should not be changed lightly . . . . " Id. "District courts have broad discretion to determine the preclusive effect of a final pretrial order on the determination of issues of law and fact at trial." Id. (citing Miller v. Safeco Title Ins. Co., 758 F.2d 364, 369 (9th Cir. 1985)). The Court finds that as a result of the unique circumstances of this case more fully explained in its October 28, 2008 OSC, consideration of Marlyn's rescission claim as one of rejection or revocation of acceptance under Arizona's U.C.C. provisions and IMA's breach of contract claim as an "[a]ction for the price" pursuant to A.R.S. 47-2709 and other relevant provisions of Arizona's U.C.C. for Marlyn's failure to pay the full purchase price for the subject press will prevent manifest injustices. Moreover, had the parties formally moved to modify their Pretrial Statement during trial in order to assert the aforesaid U.C.C. claims once counsel realized that the U.C.C. controlled this litigation, the Court would have granted their requests. Also see, Fed. R. Civ. P. 15(b)(2) ("When an issue not raised by the pleadings is tried by the parties' express or implied consent, it must be treated in all respects as if raised in the pleadings. . . ."). By considering the parties' claims pursuant to the U.C.C. at this time, even though the bench trial has concluded, each side is not prejudiced because counsel became aware of the applicability of the U.C.C. during trial in sufficient time to ask relevant questions and counsel may reasonably cure their collective oversight of the U.C.C.'s applicability with their written final arguments, proposed findings of fact and conclusions of law. Benton v. Board of County Com'rs, 2007 WL 3342706, * 1 (D. Colo. 2007) (citing Koch v. Koch Indus., Inc., 203 F.3d 1202, 1222 n. 10 (10th Cir. 2000). IMA's reliance upon Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 695 (Tex. App. 1989) is misplaced -2- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 because (1) it is not controlling Arizona authority and (2) the trial in Carrow was to a jury and the buyer failed to submit the issue of revocation to that jury. In the case sub judice, the U.C.C. issues can be properly briefed and addressed by counsel for the Court's consideration. Furthermore, there can be no reasonable claim of surprise because the Court addressed the applicability of the U.C.C. during trial and prior to the parties' submission of their written final arguments, proposed findings of fact and conclusions of law. Benton, 2007 WL 3342706 at * 1. Certainly, there is no evidence of either side engaging in bad faith by overlooking the fact that Arizona's U.C.C. controls this litigation and amendment of the Pretrial Statement at this time applies even handedly to both sides. Accordingly, IT IS ORDERED that, except for Plaintiff IMA North America's claim for unjust enrichment, the parties' Pretrial Statement, docket # 102, which the Court and parties treated as a pretrial order, is hereby amended to indicate that all claims and defenses, if any, in this litigation are controlled by Arizona's version of the U.C.C. The parties' written final arguments, proposed findings of fact and conclusions of law shall address the U.C.C. accordingly. IT IS FURTHER ORDERED that Plaintiff IMA's conditional objection contained in docket # 152 is hereby OVERRULED. The Court will consider Marlyn's rescission claim as one of rejection or revocation of acceptance under Arizona's U.C.C. provisions and IMA's breach of contract claim as an "[a]ction for the price" pursuant to A.R.S. 47-2709 and other relevant provisions of Arizona's U.C.C. Dated this 17th day of November, 2008. -3-

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