Lincoln Composites, Inc. v. Firetrace USA, LLC

Filing 128

MEMORANDUM AND ORDER that Firetrace's Motion for Remittitur and for New Trial (Filing No. 105) is denied. Ordered by Judge John M. Gerrard. (MBM)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
LINCOLN COMPOSITES, INC.,
Plaintiff,
vs.

4:12-CV-3142
MEMORANDUM AND ORDER

FIRETRACE USA, LLC,
Defendant.
This matter is before the Court on defendant Firetrace's Motion for
Remittitur and for New Trial. Filing 105. For the reasons discussed below,
Firetrace's motion will be denied.
I. BACKGROUND
Plaintiff Lincoln Composites, Inc. ("Lincoln") manufactures equipment
for storing and transporting natural gas. One of the products Lincoln
manufactures is the "Titan Module." As typically sold, the Titan Module
consists of four large tanks, assembled into a single framework. It is used for
bulk transportation of compressed natural gas, and is primarily marketed to
overseas customers. Firetrace manufactures fire detection equipment,
including "fire detection tubing."
Lincoln decided to use Firetrace's tubing as part of the fire detection
system in its Titan Modules. From around 2008 to 2012, Firetrace worked
with Lincoln to supply it with tubing. Throughout this period, Lincoln noticed
certain defects in the tubing, which caused it to become brittle or break. Each
time a new defect arose, Firetrace attempted to fix it, and Firetrace provided
Lincoln with replacement batches of tubing. But defects continued to arise,
and around May 2012, Lincoln determined that it was no longer going to do
business with Firetrace. Lincoln then brought this suit. Lincoln claims that
Firetrace failed to provide non-defective tubing in a timely fashion, in breach
of the parties' contract and certain express and implied warranties contained
therein.
That there was a contract for the purchase and delivery of Firetrace
tubing was not disputed. The terms of that contract, however, were very
much in dispute. Lincoln argued that the contract consisted of the terms and
conditions contained on Lincoln's website and referenced in purchase orders

it sent to Firetrace. Firetrace contended that it had delivered its own terms
and conditions to Lincoln, and that these formed the basis of the parties'
contract. Lincoln denied receiving a copy of Firetrace's terms prior to forming
the contract, and Firetrace disputed that Lincoln's terms and conditions were
actually available on its website during the relevant period. Firetrace's terms
provided an express warranty, but disclaimed all implied warranties, and
limited Lincoln's remedies to repair or replacement of any defective tubing.
Lincoln's terms contained an express warranty, which was silent on implied
warranties, and contained no limitation of remedies. Lincoln argued that,
even if Firetrace's terms controlled, any repair and replacement remedy had
failed of its essential purpose, entitling Lincoln to seek the full range of
damages and pursue its claims for breach of the implied warranties.
The case proceeded to a jury trial. Following an 8-day trial, the jury
returned a verdict in favor of Lincoln on its claim for breach of express
warranty, in the amount of $920,277.76.
II. STANDARD OF REVIEW
Pursuant to Fed. R. Civ. P. 59, the Court may grant a new trial when
the first trial resulted in a miscarriage of justice, through a verdict against
the weight of the evidence, an excessive damage award, or legal errors at
trial. Trickey v. Kaman Indus. Technologies Corp., 705 F.3d 788, 807 (8th Cir.
2013). With respect to legal errors, a "miscarriage of justice" does not result
whenever there are inaccuracies or errors at trial; instead, the party seeking
a new trial must demonstrate that there was prejudicial error. Id. Generally
speaking, Firetrace argues that it is entitled to a new trial because (a) the
verdict, as to elements of both liability and damages, was against the great
weight of the evidence; and (b) the Court erred in instructing the jury.
A. SUFFICIENCY OF THE EVIDENCE
A motion for a new trial should only be granted if the jury's verdict is
against the great weight of the evidence so as to constitute a miscarriage of
justice. Bank of America, N.A. v. JB Hanna, LLC, 766 F.3d 841, 851 (8th Cir.
2014). In determining whether a verdict is against the weight of the evidence,
the Court can rely on its own assessment of the evidence—it can weigh the
evidence, disbelieve witnesses, and grant a new trial even where there is
substantial evidence to sustain the verdict. Harris v. Secretary, U.S. Dept. of
the Army, 119 F.3d 1313, 1318 (8th Cir. 1997); see also Boesing v. Spiess, 540
F.3d 886, 890 (8th Cir. 2008). However, the Court may not reweigh the
evidence and set aside the jury verdict merely because the jury could have
drawn different inferences or conclusions or because the Court feels that
another result is more reasonable. Boesing, 540 F.3d at 890; Harris, 119 F.3d
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at 1318. Because this is a diversity action, whether the jury's verdict was
against the great weight of the evidence is judged in accordance with
substantive state law. JB Hanna, 766 F.3d at 851.
B. JURY INSTRUCTIONS
A new trial may be appropriate when a jury has been improperly
instructed. See, e.g., McKay v. WilTel Commc'n Sys., Inc., 87 F.3d 970, 976
(8th Cir. 1996). The Court examines whether, taken as a whole and viewed in
the light of the evidence and applicable law, the instructions fairly and
adequately submitted the issues in the case to the jury. Gill v. Maciejewski,
546 F.3d 557, 563 (8th Cir. 2008). A party is entitled to an instruction on its
theory of the case so long as it is legally correct and there is factual evidence
to support it. Boesing, 540 F.3d at 890. But the instructions need not be
technically perfect, Gill, 546 F.3d at 563, and a party is not entitled to any
particular wording in the instructions. Ryther v. KARE 11, 108 F.3d 832, 847
(8th Cir. 1997). Erroneous jury instructions entitle a party to a new trial only
if the error affected the party's substantial rights. Id. at 846.
III. ANALYSIS
Firetrace argues that it is entitled to a new trial as to liability and
damages on the sole claim decided by the jury: Lincoln's claim for breach of
express warranty. Firetrace contends that Lincoln failed to present sufficient
evidence in support of several aspects of its claim and argues that the Court
erred in instructing the jury. Before turning to each of Firetrace's arguments,
it will be helpful to put them in some context.
As noted above, Lincoln's claims required the jury to determine the
terms of the parties' contract. This was a multi-step undertaking that
required the jury to make a number of factual determinations. Depending on
the jury's determination at one step, the inquiry at the next step might be
different. For example, the jury first had to decide whether Firetrace had
actually provided a copy of its terms and conditions in a timely manner, and
whether Lincoln's terms and conditions were actually available on Lincoln's
website at the relevant time. If the jury had found that neither parties' terms
and conditions were available, there would have been no express warranty.
So, the jury might have found that only one party's terms were incorporated
into the contract. Or the jury might have found that both sets of terms were
in play, which would mean that the jury was confronted with a "battle of the
forms" situation governed by § 2-207 of the Uniform Commercial Code.
In instructing the jury, the Court considered each of the possible
factual findings that the jury could make. Based on the jury's decision at each
step, the instructions then guided the jury to the next decision that it would
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need to make, and supplied the corresponding legal principles to apply. The
Court did this by structuring its instructions as a decision tree or flowchart.
And to aid the jury in navigating these instructions, the Court provided an
actual graphical representation of the instructions, as a flowchart. 1 See filing
88.
The parties did not request a special verdict form, and thus the precise
route that the jury took to reach its verdict is not known. So, Firetrace has
drafted its motion for a new trial to cover each of the possible routes that the
jury took. The Court has reviewed each of Firetrace's arguments, and finds
that, regardless of the route the jury took to reach its verdict, its decision was
supported by sufficient evidence and based on proper instructions.
A. TERMS AND CONDITIONS ON LINCOLN'S WEBSITE
In finding that Firetrace breached an express warranty to Lincoln, the
jury may have determined that Lincoln's terms and conditions were available
on its website, and that the express warranty found therein formed a part of
the contract. Firetrace argues that, if that was the jury's decision, then the
verdict was fatally flawed, as Lincoln did not provide any evidence from
which the jury could have concluded that Lincoln's terms and conditions were
available on its website during the relevant period. The evidence is to the
contrary. Lincoln provided sufficient evidence for the jury to find that its
terms were available on its website during the relevant period.
Each of the numerous purchase orders that Lincoln sent to Firetrace
contained a notice that any contract was subject to Lincoln's terms and
conditions, which were available on Lincoln's website. See, e.g., exh. 26; exh.
32; exh. 221. This occurred on at least 10 purchase orders, from the first
order issued in 2008 all the way through 2012. See filing 101 at 5–7, 41–42;
see, e.g., exh 221 at 1 [Bates no. HL00609]; exh 32. Lincoln presented
testimony from Jessica Yockey, who worked as a purchasing agent for
Lincoln from November 2008 onward, and eventually as the agent who
handled all of Lincoln's transactions with Firetrace. Filing 101 at 3, 7, 10; see
also exh 221 at 4. Yockey testified that Lincoln's terms and conditions, exh.
57, had remained the same for the entire time she worked with Lincoln.
Although not asserted as an independent ground for a new trial, Firetrace argues
generally that the instructions as a whole were "complicated and confusing" and speculates
that the jury must have been confused because they only took 3 hours to deliver a verdict.
Filing 106 at 10. The Court has more faith in the jurors' abilities, and views their prompt,
but by no means hasty, deliberations as evidence that the instructions were actually
helpful. Moreover, Firetrace did not object to the overall construction of the instructions,
nor to the use of a flowchart. In fact, both parties appeared to find the flowchart useful in
framing their closing arguments.
1

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Filing 101 at 6. And the terms and conditions themselves showed a revision
date of October 2005. Exh. 57. While Yockey testified that she did not
personally check to ensure that Lincoln's terms were available on its website
before she issued each purchase order, she stated that she trusted the terms
were, in fact, available on Lincoln's site. Filing 101 at 42. There was no
evidence that the terms were not available, or that Firetrace had tried to
access them and failed. This was a question for the jury, and based on the
evidence, the jury could reasonably have inferred that Lincoln's terms were
available on its website during the relevant period.
The result would be the same even if the jury determined that Lincoln's
terms were not posted on its website on all occasions. The undisputed
evidence shows that, through a series of purchase orders issued over
approximately 4 years, Firetrace was put on notice that Lincoln's terms
existed. See, e.g., exh. 26; exh. 32; exh. 221. In general, a party is charged
with knowledge of the contents of a writing when he signs it and cannot avoid
a contract simply because he failed to read the entire writing, including
matters incorporated by reference. See, e.g., In re Int'l. Profit Assocs., Inc.,
286 S.W.3d 921, 923–24 (Tex. 2009); Ray Tucker & Sons, Inc. v. GTE
Directories Sales Corp., 571 N.W.2d 64, 68 (Neb. 1997). Even if the terms
were possibly not available on the website at all times, Firetrace was on
notice that they existed, and could have requested a copy. As such, Lincoln's
terms remained binding on Firetrace. See, Int'l. Profit Assocs., 286 S.W.3d at
923–24; Ray Tucker & Sons, 571 N.W. 2d at 68–69.
B. FIRETRACE'S EXPRESS WARRANTY FAILED OF ITS ESSENTIAL PURPOSE
Alternatively, the jury may have found that Firetrace breached its own
express warranty. As noted above, that warranty limited Lincoln's recourse
to repair or replacement of any defective tubing and excluded consequential
and incidental damages. See exh. 27. If that was the jury's decision, then the
jury necessarily found that the limited remedy failed of its essential purpose.
Firetrace argues that any such finding was not supported by sufficient
evidence, and contends that the Court erred in instructing the jury on this
point.
1. Sufficiency of the Evidence
Under the U.C.C., a seller is free to establish exclusive, limited written
warranties and limit the availability of damages. Neb. U.C.C. § 2-719; John
Deere Co. v. Hand, 319 N.W.2d 434, 437 (Neb. 1982). So, repair and
replacement warranties and clauses excluding consequential damages are
allowed. John Deere Co., 319 N.W.2d at 437. However, Neb. U.C.C. § 2-719(2)
also provides that, "[w]here circumstances cause an exclusive or limited
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remedy to fail of its essential purpose, remedy may be had as provided in the
Uniform Commercial Code." The comments to § 2-719 explain that "where an
apparently fair and reasonable clause because of circumstances fails in its
purpose or operates to deprive either party of the substantial value of the
bargain, it must give way to the general remedy provisions of this article."
Neb. U.C.C. § 2-719 cmt. 1.
The purpose of an exclusive repair or replacement remedy is to give the
buyer goods which conform to the warranty within a reasonable time after a
defect is discovered. John Deere Co., 319 N.W.2d at 437. Where the seller is
given a reasonable chance to correct defects and the equipment still fails to
function properly, the limited remedy fails of its essential purpose. Id. In
such an event, the buyer may invoke any remedies available under the
Uniform Commercial Code. Id. These include consequential and incidental
damages, Neb. U.C.C. § 2-714(3), even when such damages were specifically
excluded by the warranty. John Deere Co., 319 N.W.2d at 437.
Lincoln adduced ample evidence that any limited remedy failed of its
essential purpose. For example, Lincoln presented the testimony of Don
Baldwin, an engineering director who worked at Lincoln, on the Titan
Modules, from 2008 onward. Filing 110-3 at 5–6. Baldwin described the
repeated, distinct failures of the tubing, and Firetrace's multiple,
unsuccessful attempts to provide defect-free tubing over a period of
approximately 18 months. See filing 110-3 at 28–31, 38–41. Lincoln also
provided testimony from Dr. Paul Gramann, an expert in engineering and
plastics. Filing 82 at 1–14. Gramann explained, in great detail, how and why
the tubing had failed, testifying that the failures were the result of
manufacturing defects. See filing 82 generally and at 60–67. And Gramann
predicted that the remaining Firetrace tubing in the field would, at some
point, suffer similar failures. Filing 82 at 66–67.
As Baldwin put it, after more than a year and several different "fixes"
that did not work, Lincoln was entitled to conclude that "[e]nough is enough."
Filing 110-3 at 40. The evidence was not one-sided; Firetrace had its own
expert testify, and adduced other evidence, that the tubing's defects were due
to problems that were being remedied in the ongoing manufacturing process.
But based on the evidence adduced at trial, the jury could reasonably have
found that Firetrace had not held up its end of the warranty within a
reasonable time. And this left Lincoln with a substantial amount of tubing
that was essentially worthless. This was a question for the jury, and the jury

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could reasonably have concluded that Lincoln had been substantially
deprived of the benefit of its bargain.2
2. Jury Instructions
Firetrace takes issue with jury instruction no. III-4, which told the jury
how to decide if Firetrace's limited repair and replacement remedy had failed
of its essential purpose. See filing 88 at 26. At the outset, the Court notes that
Firetrace failed to make a timely object to this instruction.
To preserve any objection to an instruction, or the Court's refusal to
give an instruction, Firetrace was required to object at the final jury
instruction conference. See Fed. R. Civ. P. 51(b)-(c). The Court conducted a
comprehensive informal jury instruction conference, at which both parties'
concerns were addressed. As a result of this informal conference,
modifications were made to various instructions, including no. III-4. At the
final, formal instruction conference, Firetrace stated on the record that it had
no objections to instruction no. III-4. Filing 103 at 8. Firetrace had earlier
objected to Lincoln's proposed instruction on failure of essential purpose, and
suggested its own version. See, filing 65 at 20; filing 68 at 5; filing 72 at 5.
But that was not a substitute for objecting at the final conference. The duty
to object at the final conference exists in order to give district courts the
opportunity to correct errors before submitting the case to the jury, and,
relatedly, to prevent a losing party from obtaining a new trial by pointing out
an error only after receiving an unfavorable verdict. Moore v. Am. Family
Mut. Ins. Co., 576 F.3d 781, 786 (8th Cir. 2009).
Because it did not object, Firetrace has waived any objection, absent a
showing of plain error. See, Fed. R. Civ. P. 51(d)(2); Niemiec v. Union Pac.
R.R. Co., 449 F.3d 854, 858–59 (8th Cir. 2006). Plain error exists if: (1) the
Court deviated from a legal rule; (2) the error is clear under current law; and,
(3) the error affects substantial rights, which ordinarily means that the error
affects the outcome of the proceedings. Bauer v. Curators of Univ. of Mo., 680
F.3d 1043, 1045 (8th Cir. 2012). And plain error will not be corrected unless
In a related vein, Firetrace argues that a new trial is warranted based on the Court's
denial of its motion for summary judgment. In that motion, Firetrace argued that there was
no evidence from which a reasonable jury could conclude that the limited remedy had failed
of its essential purpose. See, filing 33; filing 40 at 16–19; filing 60. But as the Court has
explained, there was sufficient evidence to support such a finding, and Firetrace's motion
for summary judgment was properly denied. And in any event, a motion to alter or amend
the judgment under Rule 59 is not a proper vehicle for attacking a denial of a motion for
summary judgment, as such a denial does not result in any judgment which can be altered
or amended. See Moodie v. Fed. Reserve Bank of N.Y., 835 F. Supp. 751, 752 (S.D.N.Y.
1993); see also James v. Nebraska, 2011 WL 5553634, at *1 (D. Neb. Nov. 15, 2011).
2

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(4) it seriously affected the integrity, fairness, or public reputation of judicial
proceedings. Id. The Court has reviewed the instructions and finds no error
that would have "misled the jury or had a probable effect on the jury's
verdict." Goss Int'l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft,
434 F.3d 1081, 1093 (8th Cir. 2006).
Instruction no. III-4 provided, in relevant part:
To show that the limited remedy of repair and replacement has
failed of its essential purpose, Lincoln Composites must prove all
of the following elements by the greater weight of the evidence:
1.

That Lincoln Composites provided Firetrace
with a reasonable opportunity to fix the defects
in the tubing;

2.

That despite Firetrace's attempts to fix the
defects or provide replacement tubing, the
tubing still failed to function properly; and

3.

That this deprived Lincoln Composites of the
substantial value of its contract with Firetrace.

It is for you to decide how many attempts were needed, and what
was a reasonable time frame in which to remedy the defect,
before the remedy would fail of its essential purpose, if it did.
Filing 88 at 26.
Firetrace argues that, in place of the final sentence quoted above, the
Court should have instructed the jury that:
The mere fact that a defect is not properly remedied after the
first attempt, or even multiple attempts to repair or replace it
does not mean the warranty failed its essential purpose.
Additionally, if Defendant stands ready to perform, there is no
failure of essential purpose, even though the buyer remains
highly unsatisfied with the results obtained by the limited
remedy. Finally, a repair or replace remedy does not fail of its
essential purpose so long as repairs are made each time a defect
arises.
Filing 72-1 at 2.
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The Court rejected Firetrace's instruction in favor of its own instruction
that was fair to both parties. The Court's instruction was a correct statement
of the law, distilled from the Nebraska Supreme Court's thorough treatment
of the subject in John Deere Co., 319 N.W.2d at 437. As that case made clear,
the key inquiry is whether Firetrace was given a "reasonable chance" to
correct defects, and whether they did so within a "reasonable time." Id. What
constitutes reasonableness in this context was a question for the jury, and it
was a question the jury was equipped to answer with the plain language
instruction that was given.
C. SUFFICIENCY OF THE EVIDENCE: DAMAGES
Firetrace next argues that it is entitled to a new trial on the issue of
damages,3 as there was insufficient evidence to support the jury's damage
award of $920,227.76. The parties did not request an itemized verdict form;
but based on the amounts claimed by Lincoln, it is apparent that the total
award was based on the following recoveries for Lincoln:
Purchase price of tubing

$857,334.48

Some, but not all, of the expenses Lincoln had
already incurred in replacing the tubing ("current
replacement" costs)

5,753.28

The costs Lincoln estimated it would incur to
replace tubing in 37 additional modules ("future
replacement" costs)
Total

+ 57,140.00
$920,227.76

See filing 106 at 10 n.5; filing 107-1 at 51–54.
The measure of a buyer's damages for a breach of warranty is the "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."
Neb. U.C.C. § 2-714(2). In addition to these "direct" damages, a buyer may
recover incidental and consequential damages. Neb. U.C.C. § 2-714(3).
Firetrace objects to both components of the jury's damage award.

More specifically, Firetrace asks the Court to condition denial of the motion for a new trial
upon the plaintiff's agreement to remit the unsupported portion of the jury's award. See,
e.g., Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1328 (11th Cir. 1999).
3

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1. Direct Damages
The Court begins with Lincoln's direct damages: the difference between
the value of the Firetrace tubing as delivered to Lincoln and the value of the
tubing if it had been as warranted. Firetrace does not object to the Court's
jury instruction on direct damages, which simply paraphrased § 2-714(2). See
filing 88 at 33. And Firetrace agrees that the value of the tubing, if it had
been as warranted, was the purchase price paid by Lincoln: $857,334.48.
However, the jury credited Lincoln's evidence and found that the value of the
defective tubing that Lincoln actually received was $0. Firetrace argues that
this determination was not supported by the evidence. The Court finds that
there was sufficient evidence, if believed by the jury, to support its
conclusion.
John Schimenti, Lincoln's president, testified as follows:
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
A.
Q.
A.

[by Lincoln's attorney]: Now, Mr. Schimenti, were the
products that were sold by Firetrace to Lincoln Composites
of any value to Lincoln Composites?
No.
We've already talked about some of the failures that have
occurred and I think there's also been testimony that not
all of the Firetrace tubing failed; is that correct?
That is correct.
Ultimately, has Lincoln Composites made a decision as a
company as to what it will do with the Firetrace product
that is still installed in Titan Modules in the field?
Yes. We've made a decision that we will replace that
material with our alternative approach which that is a cost
to us.
Is it your intent as the company to charge the customer for
the replacement of the Firetrace tubing with the new
system?
No.
You already -- also indicated that there is certain unused
Firetrace tubing that's located with Lincoln Composites,
correct?
Yes.
Is that unused stock of Firetrace tubing of any value to
Lincoln Composites?
No, it's of the same lot that failed.

Filing 100 at 30–31.
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Lincoln also presented evidence that it was not safe or prudent for its
customers to continue using the Firetrace tubing in their existing Titan
Modules, even when that tubing had not yet failed. In the event the tubing
did break, it would trigger the Titan's fire detection system, which would
trigger a release of all the natural gas stored in the module. Filing 109 at 10–
12. As Baldwin explained:
Q.

A.
Q.
A.

[by Lincoln's attorney] There's also been discussion during
the course of the trial about inadvertent releases of product
from the Titan Module. Do you understand what's meant
by an "inadvertent release"?
Well, it -- I understand that to be a -- I would call it a false
positive. Basically, it's acting like there's a fire when there's
not one and releasing the gas.
Is that situation of concern to Lincoln Composites?
Certainly. I mean, right now these modules can -- can
operate anywhere in the United States. I think of, you
know, if you have a truck sitting at 15th and O Street here
in Lincoln and this were to happen, you'd be dumping 7400
kilograms of natural gas to atmosphere at that point. There
would probably be evacuations of the neighborhood. You'd - you'd probably close down a -- a nine square block area of
downtown Lincoln if that were to happen.
....

Q.
A.

Q.
A.

Was there any decision made at Lincoln Composites with
respect to the replacement of Firetrace tubing in existing
modules?
Yeah. I think we saw it as a -- a latent defect which
basically could manifest itself at random time intervals
and, therefore, the prudent thing to do was not continue to
wait for failures to happen but to begin replacing it in the
field.
And has that process continued since the time that decision
was made to replace it in existing modules?
Yes, it has. I believe we replaced it in all modules except
the ones in Vietnam.

Filing 109 at 12, 40; see also filing 110-2 at 72:11–21.

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Lincoln argued to the jury that, instead of serving its function as a
safety device, the tubing presented a safety hazard. Lincoln's customers could
disable the tubing—leaving their modules with no fire detection system. Or
they could continue to use the tubing, subject to the risk that, at any time,
the module might vent all of its natural gas into the surrounding area.
Neither of these were attractive options. And as noted above, Gramann
predicted that the remaining tubing would fail at some point. Filing 82 at 66–
67. Faced with these obvious safety risks, Lincoln chose what it considered to
be a reasonable alternative: it offered its customers a different fire detection
system.
Firetrace counters by noting that the majority of the tubing had not
failed. Again, this is a jury question, and given the safety risks posed by
inadvertent release(s), the jury could reasonably have concluded that even a
relatively low failure rate rendered the tubing too risky to use, and thus
worthless.
Firetrace argues that the tubing must have been worth something,
because Lincoln was able to sell Titan Modules containing the tubing at a
profit, which Lincoln has not refunded. But that overlooks the fact that, when
the modules were sold, the tubing's defective nature was unknown. Firetrace
further argues that the jury's award would result in an unconscionable
windfall or double recovery for Lincoln. Again, the evidence does not support
the argument. If the tubing had been as warranted, Lincoln still would have
incorporated it into its modules and made a profit. But Lincoln (and its
customers) would have enjoyed the benefit of $800,000 worth of tubing that
actually worked. As it stands, Lincoln paid over $800,000 for tubing that it
ultimately had to replace. The jury's verdict did not result in a double
recovery. Rather, it reflects a straight-forward application of Neb U.C.C. § 2714(2): the difference between the value of the tubing as warranted and the
value of the tubing as delivered.
In sum, there was sufficient evidence for the jury to reasonably
conclude that the tubing, including the tubing which had not yet failed, was
of no value to Lincoln.
2. Replacement Costs
Firetrace next argues that Lincoln failed to prove its future
replacement costs to a reasonable degree of certainty. Those costs were based
on the expenses Lincoln would have to incur to install new fire detection
systems on 32 modules in Vietnam and 5 modules in Peru. See filing 80 at
96–99. Lincoln presented testimony from Ken Halvorsen, one of its engineers.
Halvorsen estimated the costs to replace this tubing based on his previous
trips to service Titan Modules in Vietnam and Peru. Filing 80 at 96–99.
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Lincoln needed to present evidence sufficient to enable the jury to estimate
the future replacement costs with a reasonable degree of certainty and
exactness. El Fredo Pizza, Inc. v. Roto-Flex Oven Co., 261 N.W.2d 358, 363
(Neb. 1978). Halvorsen's testimony provided that evidence. Firetrace points
to the fact that Halvorsen provided only "estimates" and that no "rigorous
study was undertaken." Filing 106 at 18. But Lincoln was only required to
prove its damages to reasonable certainty, not "mathematical certainty." El
Fredo Pizza, 261 N.W.2d at 363.
Firetrace next notes that Lincoln has been trying, since at least June
2013, to replace the fire detection systems in Vietnam, but has not yet
succeeded in doing so. See filing 81 at 17–18. But Schimenti and Halvorsen
both testified that it remained Lincoln's intent to replace those systems.
Filing 100 at 31; filing 80 at 96. It was the jury's role to weigh this evidence,
and the jury was entitled to conclude that Lincoln would ultimately replace
those systems.
Finally, Firetrace argues that the Court erred in instructing the jury on
these costs.4 Firetrace asserts that the Court erred by instructing the jury
that it could award damages for replacement expenses that Lincoln "might
incur in the future," inviting the jury to base its decision on speculation and
conjecture. Filing 106 at 17.
But the Court did not instruct the jury that it could award Lincoln
costs that it might incur in the future. Instead, the Court instructed the jury
that Lincoln could recover damages that were proximately caused by
Firetrace's breach, filing 88 at 20, 22, 24, including any "reasonable expenses
Lincoln Composites incurred or will be required to incur in replacing the
tubing, as a result of any breach of warranty, including reasonable travel and
labor expenses." Filing 88 at 33. And the Court cautioned the jury not to
engage in speculation, guess, or conjecture, nor award any damages by way of
punishment or through sympathy. Filing 88 at 33. These instructions
correctly stated the law and equipped the jury to award only those damages
supported by the evidence.
D. INSTRUCTION ON SPOLIATION
Finally, Firetrace argues that the Court erred in refusing to offer its
proposed adverse inference (spoliation) instruction. Firetrace failed to request
such an instruction at the final jury instruction conference, see filing 103 at
12, and has waived any objection, absent a showing of plain error.
An adverse inference instruction is only warranted if the Court finds
(1) that Lincoln intentionally destroyed evidence with a desire to suppress
4

Firetrace did not object to this instruction. See filing 103 at 10.

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the truth; and (2) prejudice to Firetrace. Hallmark Cards, Inc. v. Murley, 703
F.3d 456, 460 (8th Cir. 2013). As the Magistrate Judge explained in her wellreasoned Memorandum and Order of September 26, 2014 (filing 62),
Firetrace has failed to present any evidence that Lincoln destroyed tubing, or
failed to retain it, with an intent to suppress the truth. That did not change
at trial. Accordingly, Firetrace was not entitled to an adverse inference
instruction, and the Court's refusal to give the instruction was not error,
plain or otherwise.
IV. CONCLUSION
Firetrace is not entitled to a new trial. The jury was properly
instructed, and its verdict was supported by more than sufficient evidence.
Accordingly,
IT IS ORDERED:
1.

Firetrace's Motion for Remittitur and for New Trial (filing
105) is denied.

Dated this 2nd day of January, 2015.
BY THE COURT:

John M. Gerrard
United States District Judge

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