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Frank Arnold Contractors Inc. v. Vilsmeier Auction Co.

filed: December 2, 1986.

FRANK ARNOLD CONTRACTORS, INC., APPELLEE,
v.
VILSMEIER AUCTION COMPANY, INC., APPELLANT, AND ITT INDUSTRIAL CREDIT COMPANY



Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil 85-2307.

Author: Seitz

PRESENT: SEITZ, GIBBONS, Circuit Judges, and BARRY, District Judge.*fn*

SEITZ, Circuit Judge.

Defendant Vilsmeier Auction Company, Inc. ("Vilsmeier") appeals from the final judgment of the district court in favor of plaintiff Frank Arnold Contractors, Inc. ("Arnold"). We have jurisdiction under 28 U.S.C. ยง 1291.

I.

In August 1980, ITT Industrial Credit Company ("ITT") loaned money to Edward McGinn General Contractors, Inc. ("McGinn"). In return, McGinn gave ITT a security interest in several pieces of construction equipment, including a Caterpillar hydraulic excavator. ITT properly perfected the security interest.

In the summer of 1981, ITT became aware that McGinn was experiencing significant financial problems and had failed to make certain payments to ITT on its loan agreements. While the parties dispute succeeding events, it is clear that following discussions between McGinn and ITT representatives the hydraulic excavator was sold at auction by Vilsmeier in October 1981.

Vilsmeier president Hutchinson admitted that prior to the commencement of the auction, Vilsmeier made a public announcement to the effect that all of the equipment being sold was free and clear of any liens, encumbrances or other security interests. Vilsmeier did not disclaim this warranty of title. Appellee Arnold purchased the hydraulic excavator at the auction for approximately $44,000, and began using it in its business. While it possessed the machine, Arnold invested over $5,000 in repair and maintenance of the excavator.

In May 1983, Arnold learned that ITT was suing it to recover the excavator on the basis of the perfected security interest. Although the suit, filed in federal court, was dismissed for lack of jurisdiction, Arnold incurred legal expenses of over $3100. ITT subsequently filed the same claim against Arnold in state court. On the advice of counsel, Arnold surrendered the excavator to ITT in October 1983. Arnold thereafter purchased a replacement excavator for $41,000.

Arnold later filed this diversity action against both Vilsmeier and ITT. During trial before a jury, the district court directed a verdict as to liability for Arnold and against Vilsmeier. The court also granted ITT's motion for a directed verdict as to liability. The court permitted the jury to determine Arnold's damages. After considering Vilsmeier's and Arnold's evidence on damages, the jury awarded Arnold $52,150.50. The district court subsequently denied Vilsmeier's motion for anew trial, and entered judgment in favor of Arnold. This appeal followed.

II.

Vilsmeier raises two challenges to the proceedings in the district court. We will consider these challenges in turn.

A.

Vilsmeier first contends that the district court erred in directing a verdict of liability in favor of Arnold and against it. Our review of the grant of a directed verdict is plenary and we apply the same standard as would the district court in passing on the motion originally. ...


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