the contracting parties from which the waiver was implied and enforcement of the contractual limitation would amount to nothing more than fraud.
The facts of this case are substantially different. Here, it is not clear that Envirex knew of the nature or extent of the repairs undertaken by ERA at the job site. Even assuming that it was aware of the repairs, however, it was perfectly reasonable for Envirex to remain silent under the circumstances. ERA had an obligation under the contract to file a satisfactory proof of claim with Envirex and was aware of the fact that Envirex was not liable for any repairs unless they were authorized in writing. ERA had agreed to such a limitation of remedy. Envirex was under no duty in those circumstances to warn ERA that it would enforce the contractual provisions if ERA failed to make satisfactory proof of the claim or obtain written authorization for repairs in writing from Envirex before undertaking repairs and its reliance on para. 7 does not amount to fraud. Therefore, the conduct of Envirex could not constitute waiver as a matter of law. Secondly, the jury was not permitted and should not have been permitted to infer waiver from Envirex's conduct because Envirex's silence could be construed not as a waiver but as an intention to rely on the contract and not pay for the repairs because no proof had been made and no authorization in writing had been obtained by ERA. Unlike the situation in Universal Builders, the repairs were not made for the benefit of Envirex but rather undertaken for ERA's own purposes in incorporating the equipment into the sewage treatment plant. Had Envirex stood by and permitted ERA to confer a benefit upon Envirex and then subsequently refused to pay for the benefit, a waiver might properly have been implied under the circumstances. However, because Envirex's silence is equally consistent with an intention to enforce its contractual rights assuming that at some later time ERA made a claim for damages based upon the repairs which it undertook without written authorization, it would have been improper for the Court to instruct the jury that it could infer a waiver from Envirex's silence. The inference of intent to rely upon the contractual provision in good faith is an equally reasonable one. Therefore, no error was committed.
ERA next contends that the Court erred in not submitting a special verdict question to the jury asking whether it was inequitable for Envirex to rely on the written contentions in para. 7 It is the view of the Court that such a question would ask the jury to render a conclusion of law and that all of the underlying facts concerning whether Envirex was permitted to invoke the limitation of remedy clause were covered by other special verdict questions. The Court asked the jury if Envirex waived compliance with the provisions, if it made a representation that written authorization for repairs would not be required, if the parties agreed that written authorization would not be required, and if Envirex wrongfully refused to authorize repairs under the contract. Therefore, ERA was not harmed by the Court's failure to submit its requested question.
The final contentions in ERA's motion for a new trial relate to the Court's decision to submit the case to the jury by way of special verdict questions. ERA contends that it was denied due process because of the influence that the special verdict questions had on the nature and focus of the jury's deliberations and because in a case as complex as this one, the Court abused its discretion in submitting special verdicts to the jury.
It is clear that the Court has wide discretion in determining whether to submit a case to a jury by way of special verdict questions under F.R.Civ.P. 49(a) and in determining their form so long as the questions are adequate to obtain a jury determination of the facts essential to the judgment. See R.H. Baker & Co. v. Smith-Blair, Inc., 331 F.2d 506, 508 (9th Cir. 1964). Generally, special verdicts are to be preferred in complicated cases because special verdict questions localize the specific problems raised by the evidence and focus the jury's attention on specific issues of fact, thus giving direction to their deliberations and freeing them to concentrate on the facts of the case in an orderly fashion rather than having to deal with a mass of undifferentiated facts as well as a charge on the complexities of the laws. See Jamison Co. v. Westvaco Corp., 526 F.2d 922 (5th Cir. 1976). The Court in that case noted that the additional effort spent in formulating special verdict questions is miniscule when compared to the cost of a retrial and that by focusing the jury's attention on fact issues and isolating the possibility of error, costly retrials or full retrials would be avoided in most cases. The Court took these factors into account in this case. It is the view of the Court that without special verdict questions, the jury would have had no means of structuring its deliberations in order to determine the essential facts of the case and, because the case was so complex, there would have been a substantial risk that a jury verdict in favor of either party would have been based in large part upon speculation and conjecture. The jury did an exceptional job in this case in returning reasoned answers to the Court's questions and the Court concludes that absolutely no harm resulted to either party from the submission of the case to the jury by way of special verdicts. Rather, the Court is convinced that each party got a much fairer trial through the use of special verdict questions than it would have otherwise.
ERA and Maryland Casualty have also moved for judgment notwithstanding the special verdict and to amend or alter the judgment. In support of the former motion, the Defendants contend that because the jury found that Envirex willfully refused to complete the check-out and start-up services provided for under the contract (answers to special verdict questions 33-36) Envirex could not have been permitted to recover any sum of money in accordance with the contractual provisions.
The contract in this case consisted of two parts, a contract for the sale of goods and a contract for the provision of certain services relating to those goods. The full contract price was $290,000. In response to special verdict question 46, the jury found that of that $290,000 sales price, $5,472.00 was fairly allocable to services with the balance, or $284,528.00, allocable to the sale of sewage treatment equipment from Envirex to ERA. All of the equipment was delivered, but Envirex did not perform check-out and start-up services of the equipment. The sale of goods portion of the contract is clearly governed by the terms of the Uniform Commercial Code. The "substantial performance" rule of general common law, see Sgarlat v. Griffith, 349 Pa. 42, 36 A.2d 330 (1944) is incorporated into the UCC in § 2-601 by giving a buyer the option of rejecting an entire shipment of goods if they fail to conform in any respect to the contract. In other words, even a technical breach of the contract justifies the buyer's rejection of the goods, so that perfection in performance on the part of the seller is required. However, the Code makes it equally clear that if a buyer, rather than rejecting goods, accepts them and thereafter fails to revoke his acceptance in accordance with the provisions of the code, he becomes obligated to pay the purchase price of the goods but may thereafter recover his damages as provided in the code for whatever breach of contract occurred. See UCC §§ 2-606 & 2-607. Therefore, the Court determined in accordance with § 2-607(1) which states that "the buyer must pay at the contract rate for any goods accepted," that because ERA accepted all of the goods delivered to it by Envirex, it became subject to an obligation to pay the contract price for the goods. Because the Code, rather than the common law, controls at least this portion of the contract, ERA may not now invoke the "substantial performance" rule in support of its contention that it is not obligated to pay for any of the goods accepted. Clearly, the Code does not contemplate that a buyer may accept non-conforming goods which may have substantial value but refuse to pay anything at all for them. The remaining portion of the contract, which involves services, was not completed by Envirex and ERA received a credit for the amount of the contract price fairly allocable to those services. Therefore, ERA did not pay for services which it did not receive and it was treated fairly by the Court's determination of damages.
ERA's final contention, that made in support of its motion to amend or alter the judgment, is that the Court should amend the judgment by deducting the sum of $3,618.68 from the amount the Court determined should be paid to Envirex. That sum, according to ERA, represents the "back charge" assessed by the Lock Haven City Authority against ERA because of Envirex's refusal to perform the check-out and start-up services under the contract. As this Court's order in the above-captioned case dated April 12, 1978 indicates, however, ERA is not entitled to a credit in the amount of the "back charges." ERA was damaged by Envirex's failure to complete the services contracted for only if ERA was forced to spend more on those services than it would have paid under the contract. If Envirex's breach permitted ERA to have the services performed for a lesser sum of money, then although there was a breach, ERA was not damaged because it was not required to pay the contract price for the services. In this case, the jury's answers to the special verdict questions indicated that what ERA spent for the services, the amount of the "back charge" was less than the portion of the contract price fairly allocable to the services. Therefore, ERA was not damaged by the breach and the Court will not alter the judgment to reflect a credit for the amount of the "back charge."
An appropriate order will be entered denying the post-trial motions of Ecological Recovery Associates and Maryland Casualty Company.
MUIR, U.S. District Judge
1. Was page 18 attached to the Envirex proposal of August 22, 1973 when the proposal was sent to Ecological Recovery Associates?
Answer: Yes X
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