Lincoln Composites, Inc. v. Firetrace USA, LLC, 14-3554

825 F.3d 453

Lincoln Composites, Inc.,Plaintiff–Appellee

v.Firetrace USA, LLC, Defendant–Appellant.

No. 14-3554

United States Court of Appeals, Eighth Circuit.

Submitted: November 19, 2015

Filed: June 8, 2016

Counsel who presented argument on behalf of the appellant was Peter W. Sorensen, of Phoenix, AZ. The following attorney(s) also appeared on the appellant brief; Nathan T. Mitchler and Ryan G. Lockner, of Phoenix, AZ.

Counsel who presented argument on behalf of the appellee was Daniel E. Klaus, of Lincoln, NE. The following attorney also appeared on the appellee brief; Sheila A. Bentzen, of Lincoln, NE.

Before RILEY, Chief Judge, BEAM and KELLY, Circuit Judges.

KELLY, Circuit Judge.

Firetrace USA, LLC (Firetrace) appeals the district court's¹ denial of its Federal Rule of Civil Procedure 59 motion for new trial or remittitur, following a jury verdict in favor of Lincoln Composites, Inc. (Lincoln). Finding no error, we affirm.²

I. Background

Lincoln manufactures composite tanks for the storage and transport of natural gas in places where pipelines are unavailable. Firetrace makes custom designed fire suppression systems that detect and suppress fires. Through a series of transactions, Lincoln purchased fire detection tubing from Firetrace, which Lincoln then installed in its “Titan Module” tanks. There is no dispute that through these transactions the parties entered a contract for the purchase and delivery of Firetrace's tubing, although the parties dispute the terms and conditions of the contract. Some of the tubing was defective and, despite Firetrace's repeated attempts to fix the defect, the tubing failed, resulting in natural gas being vented into the air when there was not a fire. After 18 months, Lincoln decided it could no longer use the Firetrace tubing and demanded Firetrace refund the purchase price. Firetrace refused, contending the contract was governed by its terms and conditions, which limited remedies to repair or replacement of the tubing. Lincoln claimed its terms and conditions governed the contract between the parties, and these terms and conditions did not limit its remedies.

Lincoln then sued Firetrace in Nebraska state court for breach of contract, breach of express warranty, breach of implied warranty of merchantability, and breach of implied warranty of fitness for a particular purpose. Firetrace removed the case to federal court. Following an eight-day trial, a jury returned a verdict in favor of Lincoln, finding Firetrace breached an express warranty to Lincoln. The jury awarded damages in the amount of $920,227.76.

Firetrace then filed a Rule 59 motion. Firetrace alleged Lincoln failed to present sufficient evidence on several aspects of its claim and that the district court made several errors in instructing the jury. Prior to the district court ruling on Firetrace's Rule 59 motion, Firetrace appealed from the final judgment entered as well as from orders by the district court denying Firetrace's motion for sanctions and Firetrace's motion for summary judgment. The district court ultimately denied the Rule 59 motion.

II. Jurisdictional Issue

As a preliminary matter, Lincoln argues we do not have jurisdiction over Firetrace's appeal because Firetrace filed its notice of appeal while its Rule 59 motion was still pending and never filed an amended notice of appeal. Under Federal Rule of Appellate Procedure 4(a)(4)(B)(ii), once its Rule 59 motion was denied, Firetrace was required to file an amended notice of appeal.³ Lincoln contends Firetrace's failure to file an amended notice of appeal deprives us of jurisdiction. See Miles v. Gen. Motors Corp. , 262 F.3d 720, 722–23 (8th Cir. 2001) (finding no jurisdiction to review order denying new trial where no amended notice of appeal filed).

Firetrace concedes it did not file an amended notice of appeal but asserts it filed the “functional equivalent.” Following the district court's denial of its Rule 59 motion, Firetrace filed an Amended Statement of Issues in our court that included the issue “[w]hether the district court erred by denying Firetrace's Motion for Remittitur and for New Trial.” Firetrace also filed an Amended Designation of Record on Appeal that added both parties' briefings related to the motion for new trial and the district court's order denying the motion. Firetrace points out it filed its Amended Statement of Issues within the proper time and asks us to construe that as its Amended Notice of Appeal.

We “liberally construe the requirements of Rule 3” of the Federal Rules of Appellate Procedure. Smith v. Barry , 502 U.S. 244, 248, 112 S.Ct. 678, 116 L.Ed.2d 678 (1992). We have “jurisdiction over [an] underlying order if the appellant's intent to challenge it is clear, and the adverse party will suffer no prejudice if review is permitted.” Hallquist v. United Home Loans, Inc. , 715 F.3d 1040, 1044 (8th Cir. 2013). Even when the notice is “technically at variance with the letter of [Rule 3], a court may nonetheless find that the litigant has complied with the rule if the litigant's action is the functional equivalent of what the rule requires.” Smith , 502 U.S. at 248, 112 S.Ct. 678 (quoting Torres v. Oakland Scavenger Co. , 487 U.S. 312, 316–317, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988) ). At oral argument, Lincoln was unable to explain how Firetrace's filings differed from an amended notice of appeal or how it was prejudiced. We conclude Firetrace made its intent clear by filing its Amended Statement of Issues and Amended Designation of the Record on Appeal and that Lincoln will not be prejudiced if we allow review. We now consider the issues raised on appeal.

III. Firetrace's Motion for Remittitur or New Trial

Firetrace argues that it is entitled to a new trial on the merits based on sufficiency of the evidence and faulty jury instructions and either a new trial on or remittitur of damages. “[T]he granting or denial of a new trial is a matter of procedure governed by federal law.” Bank of Am., N.A. v. J.B. Hanna, LLC , 766 F.3d 841, 851 (8th Cir. 2014) (alteration in original) (quoting Brown v. Royalty , 535 F.2d 1024, 1027 (8th Cir. 1976) ). We review the denial of a motion for new trial for an abuse of discretion. Weitz v. MH Washington , 631 F.3d 510, 523 (8th Cir. 2011). A district court abuses its discretion in denying a motion for new trial based on sufficiency of the evidence “if the verdict is against the weight of the evidence and allowing it to stand would result in a miscarriage of justice.” Bennett v. Riceland Foods, Inc. , 721 F.3d 546, 552–53 (8th Cir. 2013) (quoting The Shaw Grp., Inc. v. Marcum , 516 F.3d 1061, 1067 (8th Cir. 2008) ). “Remittitur is appropriate where the verdict is so grossly excessive as to shock the judicial conscience.” Id. at 553. A new trial or remittitur is not appropriate “merely because we may have arrived at a different amount from the jury's award.” Id.

A. Motion for New Trial Based on Sufficiency of the Evidence

Firetrace first asserts it is entitled to a new trial because the jury's finding that it breached an express warranty to Lincoln is against the weight of the evidence. “When the basis of the motion for a new trial is that the jury's verdict is against the weight of the evidence, the district court's denial of the motion is virtually unassailable on appeal.” Children's Broad. Corp. v. Walt Disney Co. , 357 F.3d 860, 867 (8th Cir. 2004) (quoting Jones v. Swanson , 341 F.3d 723, 732 (8th Cir. 2003) ). In making this determination, the district court “can rely on its own reading 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.’ ” White v. Pence , 961 F.2d 776, 780 (8th Cir. 1992) (quoting Ryan v. McDonough Power Equip. , 734 F.2d 385, 387 (8th Cir. 1984) ). Because this is a diversity action, we apply the substantive law of the forum state, in this case, Nebraska. Bank of Am. , 766 F.3d at 851–52. Under Nebraska law, “the existence and scope of an express warranty is one of fact.” Peterson v. N. Am. Plant Breeders , 218 Neb. 258, 354 N.W.2d 625, 629 (1984).

The parties agree they entered into a contract for the sale of tubing but dispute some of the terms of the contract, with each party insisting the contract was governed by its own terms and conditions. Both parties' terms provided an express warranty. The terms differed, however, in one key respect: Upon a breach of the express warranty, Firetrace's terms limited Lincoln's remedies to repair or replacement of any defective tubing; Lincoln's terms had no limitation on remedies.

To reach a verdict, the jury had to decide whose terms and conditions governed the contract. Because there was no special verdict, we do not know specifically how the jury reached its verdict. Nonetheless, the parties agree that by finding that Firetrace breached an express warranty to Lincoln and awarding damages to Lincoln, the jury must have decided the case in one of two ways. The jury could have decided that Firetrace's terms and conditions governed, which would mean it concluded that the exclusive repair or replace remedy failed of its essential purpose, making a remedy of damages available. Or, the jury could have decided that Lincoln's terms and conditions governed, which allowed for a remedy of damages as awarded. Firetrace argues the evidence does not support either conclusion, so we examine each in turn.

Firetrace argues that, if the jury found that Firetrace's terms governed, it nevertheless erroneously concluded that Firetrace's limited remedy of repair or replace failed of its essential purpose. Nebraska law allows a seller to establish exclusive limited warranties, as well as to limit the availability of damages. John Deere Co. v. Hand , 211 Neb. 549, 319 N.W.2d 434, 437 (1982) (citing Neb. U.C.C. § 2-719 ). But, “[w]here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in ...