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Upper Darby Sign Co. v. TEH Enterprise, LLC

Superior Court of Pennsylvania

November 15, 2013

UPPER DARBY SIGN COMPANY, D/B/A PRO SIGNS, Appellant
v.
TEH ENTERPRISE, LLC AND A/D/B/A MARKETECHS, A/D/B/A MARKETECHS DESIGN STUDIO A/D/B/A MARKETECHS EXHIBITS DESIGN AND MARKETECHS, INC. AND A/D/B/A MARKETECHS, A/D/B/A MARKETECHS DESIGN STUDIO A/D/B/A MARKETECHS EXHIBIT DESIGN, Appellee UPPER DARBY SIGN COMPANY, D/B/A PRO SIGNS,
v.
TEH ENTERPRISE, LLC AND A/D/B/A MARKETECHS, A/D/B/A MARKETECHS DESIGN STUDIO A/D/B/A MARKETECHS EXHIBITS DESIGN AND MARKETECHS, INC. AND A/D/B/A MARKETECHS, A/D/B/A MARKETECHS DESIGN STUDIO A/D/B/A MARKETECHS EXHIBIT DESIGN, APPEAL OF: TEH ENTERPRISE, LLC, Appellant

NON-PRECEDENTIAL DECISION

Appeal from the Judgment Entered September 18, 2012 In the Court of Common Pleas of Chester County Civil Division at No(s): 2010-11565

BEFORE: BOWES, OTT, and STRASSBURGER, [*] JJ.

MEMORANDUM

BOWES, J.

Upper Darby Sign Company, d/b/a Pro Signs ("Pro Signs") commenced the within action for breach of contract against TEH Enterprise, LLC and a/d/b/a Marketechs ("Marketechs") when Marketechs refused to pay the balance owing on a contract for custom-manufactured beer signs. In addition to the contract balance, Pro Signs also sought interest and attorneys' fees. Marketechs counterclaimed for return of its deposit and consequential damages incurred as a result of the defective signs. After a non-jury trial, the trial court issued extensive findings of fact and conclusions of law. The trial court concluded that Pro Signs breached the contract and ordered it to reimburse Marketechs the $41, 308.00 it had paid, together with interest and fees, but denied Marketechs' counterclaim for consequential damages. Pro Signs appealed; Marketechs cross-appealed, contending that the trial court erred in denying foreseeable incidental and consequential damages. The appeals were consolidated. After review, we affirm in part and reverse and remand in part.

The record reveals the following. In May 2010, Marketechs approached Pro Signs about designing and manufacturing 1, 542 signs in eight styles to be used in bars to advertise Heineken and Amstel brands of beer. Marketechs provided photographs of the types of signs it wanted, together with a sample A-Frame sign, for Pro Signs to use in preparing its shop drawings. Findings of Fact and Conclusions of Law, 4/4/12, Finding of Fact No. 10, at 5. Shop drawings dated June 22, 2010 were produced. On June 24, 2010, Marketechs completed a "Pro Signs Company Credit Application and Account Agreement" with Pro Signs. Five days later,

Marketechs entered into a contract with Jay Group in which it agreed to furnish these items. While the contract between Marketechs and Jay Group identified Pro Signs as the subcontractor, Marketechs did not inform Pro Signs of its contract with Jay Group.

As early as June 23, 2010, Becky Boyd, the project manager for Marketechs, told Pro Signs that it would be required to box the signs individually and that she would provide labels for each carton. N.T., 3/9/12, at 163-64. In a subsequent discussion with Pro Signs' Engineering Manager, Jamin Rosenfeld, Ms. Boyd confirmed that each sign had to be bubble wrapped for shipping. Id. at 166. It was also agreed that the products would be shipped directly to Jay Group's warehouse.

On June 30, 2010, Pro Signs received eight purchase orders from Marketechs for the eight different sign designs it agreed to produce. N.T., 3/8/12, at 14. Pro Signs prepared prototypes of several of the designs, and, at a meeting with Marketechs representatives on July 16, 2010, the parties discussed changes to the final products and the specific packaging. Id. at 15. A follow-up email was sent by Marketechs to Pro Signs confirming the changes. Id. at 18. On July 26, 2010, Marketechs paid Pro Signs $41, 308, representing one-half of the total contract price. Following delivery of the goods, Pro Signs invoiced Marketechs for $37, 177.20. Marketechs issued payment on that date, but subsequently stopped payment on the check.

Upon inspection, Jay Group discovered that the signs were defectively manufactured and notified Marketechs. Ms. Boyd and Mr. Ferdebar, one of Marketechs' two owners, immediately proceeded to Jay Group's warehouse and inspected random samples of the product. Ms. Boyd agreed that the quality was inferior and the products were improperly manufactured and packaged. N.T., 3/9/12, at 174. The changes agreed upon and confirmed after the prototype meeting were only partially incorporated into the finished products. Findings of Fact and Conclusions of Law, 4/4/12, Findings of Fact No. 19, at 7. Marketechs advised Pro Signs of the deficiencies, but Pro Signs was unwilling to make corrections on the terms offered by Marketechs. Id. No. 25, at 8. When Marketechs refused to tender payment, Pro Signs initiated the within action.

At trial, Marketechs opened sealed boxes that were randomly pulled from the more than 1, 500 boxes of products and introduced into evidence. The fact finder was able to examine and compare the final products with the prototypes, as modified by the parties at the July 16, 2010 meeting, and confirmed in Ms. Boyd's email. The court found "marked differences between the qualities of workmanship" on those products "versus the prototypes" that Marketechs approved. Id., No. 27, at 9-10. The court noted: the edges were not smooth; the paint was not a gloss finish, as described in the drawings and as used on the prototypes; A-frame designs had only one hinge instead of the two hinges depicted in the shop drawings and prototypes; the surfaces were covered with glue, nail holes, scratches, and handprints; bubble wrap was not used to package the product, although it was discussed at the prototype meeting and confirmed in the email. Id. Generally, the items did not conform to specifications and were sloppily made. The court concluded that Pro Signs' breach was material, that it was not entitled to recover the balance owing on the contract, and ordered it to return Marketechs' initial payment for the signs. Id., Conclusions of Law Nos. 8 and 15, at 19-20.

Pro Signs presents nine issues for our review, many of which overlap.[1]

I. The Lower/Trial Court should have granted the Plaintiff's/Appellant's Motion in Limine to exclude the testimony of The Jay Group representative, Megan Hemple, for the reasons set forth in the Motion.
II. The Appellees/Defendants accepted the design, services, material and/or products provided by the Appellant/Plaintiff.
III. The Appellees/Defendants possessed the right to inspect at any time and in fact inspected the signage without notice of objection or to order the shut down of production; Consequently, the Appellees/Defendants acquiesced and waived any right of breach of contract.
IV. Appellees are not entitled to damages which were not directly foreseeable and or contemplated by the Appellant/Plaintiff in respect to the expectations of the Appellees/Defendants customer, the Jay Group.
V. The Defendants/Appellees own actions were a substantial and material contributing factor, preventing and/or hindering Plaintiff's/Appellant's performance of the contract; Therefore, Appellees/Defendants can not take advantage of its own actions and allege a breach on the part of the Appellant/Plaintiff for the signage purportedly not being in conformity to Shop Drawings, Prototypes and or expectation of Appellees/Defendants and or its customer, The Jay Group; Consequently, the Appellees/Defendants waived any right to a breach of contract on the part of the Appellant/Plaintiff.
VI. The Appellees/Defendants failed to exercise a duty to mitigate damages.
VII. The weight of the evidence established the signage provided by Appellant/Plaintiff were in conformity with the Shop Drawings, Prototypes and issued Purchase Orders, particularly where the Shop Drawings and Prototypes were approved by the Appellees/Defendants. Therefore, verdict was against the weight of evidence.
VIII. The Defendants'/Appellees' payments after approving the Shop Drawings, Prototypes, opportunity to inspect and actual inspections and acceptance of multiple deliveries of the signs over a span of several weeks, was accord and satisfaction of the monies owed by the Appellees/Defendants.
IX. The Lower/Trial Court's finding of facts and conclusions of law and Opinion And Order erroneously and materially found a contractual obligation was created by the Plaintiff/Appellant failure to protest an email wherein no meeting of the minds and or consideration existed and the requirements were not part of the Shop Drawings, Prototypes or Purchase Orders.

Pro Signs' brief at 3-4 (footnote omitted).

Pro Signs filed post-trial motions seeking judgment notwithstanding the verdict ("nov") or, in the alternative, a new trial.

We begin with our standard and scope of review in an appeal from a non-jury verdict. Our appellate role in cases arising from non-jury trial verdicts is to determine whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in any application of the law. The findings of fact of the trial judge must be given the same weight and effect on appeal as the verdict of a jury. We consider the evidence in a light most favorable to the verdict winner. We will reverse the trial court only if its findings of fact are not supported by competent evidence in the record or if its findings are premised on an error of law.

Rissi v. Cappella, 918 A.2d 131, 136 (Pa.Super. 2007) (citations omitted).

Pro Signs' first assignment of error is that the trial court erred in denying its motion in limine to preclude the testimony of Megan Hemple, [2] a representative of Jay Group. With regard to the admission of evidence, our standard of review is established:

. . . we must acknowledge that decisions on admissibility are within the sound discretion of the trial court and will not be overturned absent an abuse of discretion or misapplication of law. In addition, for a ruling on evidence to constitute reversible error, it must have been harmful or prejudicial to the complaining party.

Simmons v. Cobb, 906 A.2d 582, 585 (Pa.Super. 2006).

The substance of Pro Signs' argument is that the trial court should have excluded the testimony of Megan Hemple and that it erred in crediting that testimony. It avers that Ms. Hemple was not competent to testify about the contract or its terms since she was not privy to the contractual relationship between the parties. Furthermore, Pro Signs maintains that she lacked the expertise to testify as an expert.

Marketechs counters that there is a presumption that a person is competent to testify generally. Furthermore, an individual with personal knowledge of a relevant matter can testify. Marketechs contends that Ms. Hemple was not called to testify about the contract terms, but to establish the condition of the goods when they arrived at the Jay Group warehouse, evidence that was relevant to its breach of warranty claim and Pro Signs' breach of contract claim.

The trial court permitted Ms. Hemple to testify as to the condition of the signs and packaging upon receipt based upon her personal observation. She described the absence of bubble wrap, broken mirrors, and mirrors that had fallen out of their frames. Such testimony was clearly probative of whether the goods conformed to the contract and were merchantable for their ordinary use. Additionally, the testimony was based upon the witness's personal observations. We find no abuse of discretion regarding the admission of such testimony.

Pro Signs' second and third issues involve allegations that the trial court erred in concluding that Marketechs did not accept the goods. Pro Signs contends that by signing off on the prototypes, Marketechs accepted the goods. Alternatively, Pro Signs maintains that by failing to reject the merchandise as non-conforming during the production process, Marketechs accepted it.

The Uniform Commercial Code ("UCC"), 13 Pa.C.S. § 2606, defines acceptance of goods:

(a) General rule. --Acceptance of goods occurs when the buyer:
(1) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their nonconformity;
(2) fails to make an effective rejection (section 2602(a)), but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them; or
(3) does any act inconsistent with the ownership of the seller; but if such act is wrongful as against the seller it is an acceptance only if ratified by him.

The trial court applied this provision of the UCC and concluded that Marketechs' approval of the prototypes did not constitute acceptance of goods that had yet to be manufactured. Furthermore, Ms. Boyd's visit to the plant, when she viewed production, was not a reasonable opportunity to inspect the goods that triggered the time for rejection within the meaning of the UCC. Acceptance occurred, if at all, after delivery, and Marketechs communicated the deficiencies within a reasonable time after delivery. The trial court found that Marketechs notified Pro Signs that the merchandise was defective the same day it learned from Jay Group, which had received delivery, that the items were unacceptable. Findings of Fact and Conclusions of Law, 4/4/12, Conclusions of Law No. 10, at 20.

In support of its position that Marketechs accepted the goods, Pro Signs cites numerous cases for the proposition that a buyer who takes delivery of goods must inform the seller within a reasonable time if those goods are non-conforming. None of those authorities, however, supports Pro Signs' contention that acceptance occurs prior to delivery or that inspection of a prototype is equivalent to inspection of the finished goods. Furthermore, none of the cases cited recognizes a duty to inspect goods prior to their delivery.

Ms. Boyd visited the plant on three occasions. During the first visit, she observed pieces of MDF that were cut out and readied for priming. N.T., 3/9/12, at 169. She made the second visit to deliver six mirrors and did not tour production. Id. at 170. The third visit occurred during the last week of August 2010, and "everything was in boxes." Id. Ms. Boyd and Pro Signs' project manager, Joseph Brennan, stood in the shipping area and observed the boxes as they were shrink-wrapped and placed on skids. Thus, during that third visit, Ms. Boyd never saw the finished signs because they were concealed in the packaging. This is consistent with the testimony of Mr. Rosenfeld from Pro Signs that while he saw some of the signs in production, he did not see any finished signs because "production was moving at a rate in which there was an assembly line set up and as – as the finishing touches went on the sign, they were packaged." N.T., 3/8/12, at 130. Thus, this position fails.

Next, Pro Signs alleges that the damages awarded were not reasonably foreseeable because it could not have known that the expectations of the ultimate customer, Jay Group, were different from those of Marketechs. Such an argument mistakenly presumes that the goods delivered conformed to the contract with Marketechs, but were deficient in the opinion of Jay Group. That was not the case. The trial court found that the finished goods did not conform to the contract, they were haphazardly made, some were broken, and the packaging was incomplete. The damages awarded represent the partial payment advanced, together with interest and attorneys' fees, all of which were foreseeable in the event of breach.

Pro Signs also contends that Marketechs' conduct hindered its performance and substantially contributed to the breach. In support of that proposition, it contends that Marketechs did not object that the signage was non-conforming until Jay Group complained, and that the latter's expectations were different from those communicated by Marketechs. Pro Signs appears to be suggesting that, by failing to disclose the existence of Jay Group and include it in the process of developing the product, Marketechs effectively impeded Pro Signs from manufacturing a product that would satisfy Jay Group. The trial court found that the goods did not conform to the contract and to the prototypes. Such a finding was not premised upon Jay Group's dissatisfaction with the final product. Had the product met the contract specifications, but been rejected by Jay Group, Pro Signs would have prevailed on its breach of contract. This claim lacks merit.

Next, Pro Signs contends that the trial court should have ordered Marketechs to pay the balance due on the contract in light of its failure to mitigate damages. Specifically, Pro Signs contends that Marketechs failed to mitigate damages by not routinely inspecting the goods during the production process, not demanding shut-down due to non-conforming goods, failing to get prior approval of Jay Group, and failing to communicate that entity's expectations.

Pro Signs' argument reveals a fundamental misunderstanding of the requirement that the non-breaching party mitigate its damages. Such a duty arises after a breach of contract. TruServ Corp. v. Morgan's Tool & Supply Co., 39 A.3d 253, 262 (Pa. 2012) ("A party who suffers a loss due to a breach of contract generally has a duty to make reasonable efforts to mitigate his losses."). All of the conduct that Pro Signs identifies as evidence that Marketechs failed to mitigate damages occurred before the contract was breached, i.e., before the non-conforming goods were delivered. We find no merit in this claim.

Pro Signs also argues that a new trial is warranted as the trial court's verdict was against the weight of the evidence. Specifically, it challenges the trial court's specific finding of fact that the sampling of finished products opened for the first time at trial were markedly different from the prototypes. Finding of Fact No. 27.

Our standard of review in denying a motion for a new trial is to decide whether the trial court committed an error of law that controlled the outcome of the case or committed an abuse of discretion. Daniel v. William R. Drach Co., Inc., 849 A.2d 1265, 1267-68 (Pa.Super. 2004) (quotations and citations omitted). With regard to a claim that the verdict is against the weight of the evidence, the following principles govern our review:

Appellate review of a weight claim is a review of the exercise of discretion, not of the underlying question of whether the verdict is against the weight of the evidence. Because the trial judge has had the opportunity to hear and see the evidence presented, an appellate court will give the gravest consideration to the findings and reasons advanced by the trial judge when reviewing a trial court's determination that the verdict is against the weight of the evidence. One of the least assailable reasons for granting or denying a new trial is the lower court's conviction that the verdict was or was not against the weight of the evidence and that a new trial should be granted in the interest of justice. Helpin v. Trustees of Univ. of Pennsylvania, 2009 PA.Super. 58, 969 A.2d 601, 615 (Pa.Super. 2009). "It is not the role of an appellate court to pass on the credibility of witnesses; hence we will not substitute our judgment for that of the factfinder." Lebanon County Hous. Auth. v. Landeck, 2009 PA.Super. 37, 967 A.2d 1009, 1012 (Pa.Super. 2009). "Thus, the test we apply is not whether we would have reached the same result on the evidence presented, but rather, after due consideration of the evidence which the trial court found credible, whether the trial court could have reasonably reached its conclusion." Id.

Fazio v. Guardian Life Ins. Co. of Am., 62 A.3d 396, 413 (Pa.Super. 2012). If there is any support in the record for the trial court's decision to deny the appellant's motion for a new trial based on weight of the evidence, then we must affirm. Carrozza v. Greenbaum, 866 A.2d 369, 380 (Pa.Super. 2004), affirmed 916 A.2d 553 (Pa. 2007).

Given the aforementioned standard of review, we have no basis to reverse the trial court's finding of fact. The testimonial evidence was conflicting. The court credited the testimony of Ms. Boyd, Mr. Ferdebar, and Ms. Hemple regarding the inferior quality of the products. Testimony to the contrary from Pro Signs' Vice-President Vincent Protesto, engineer Rosenfeld, and project manager Brennan does not render that finding against the weight of the evidence. The court expressly discredited the testimony of Pro Signs' expert witness, Seth Davis. The court performed its own examination of the physical evidence by comparing the finished signs with the prototypes. It studied the documentation, drawings, and communications between the parties, and concluded that the finished products were materially different from the contracted-for goods. We have no basis to disturb the trial court's findings.

Pro Signs argues that Marketechs' issuance of a check for $37, 177.20 after delivery and after Marketechs had an opportunity to inspect, constituted an accord and satisfaction. Marketechs subsequently stopped payment on the check. While Pro Signs correctly states the elements of accord and satisfaction, namely a dispute, a clear and unequivocal offer of payment in full satisfaction, and acceptance and retention of payment, it neglects to establish how those elements were satisfied here. As the trial court correctly noted, that was Pro Signs' burden. Beechwood Commons Condominium Association v. Beechwood Commons Associates Ltd., 580 A.2d 1 (Pa.Super. 1990).

We agree with the trial court that there was no accord and satisfaction. When the shop drawings and prototypes were approved, there was no dispute. The dispute arose when, after inspection, the products were rejected as non-conforming. According to Mr. Tom Haag, COO of

Marketechs, the check issued before the goods were inspected and found to be unacceptable, and issued only because Pro Signs refused to send the remaining product until a second payment was made. N.T., 3/9/12, at 191. Upon learning of the problems, Marketechs immediately stopped payment. Thus, there was no offer of payment and no retention of payment by Pro Signs. The record confirms that once the dispute arose, the parties did not settle it. Thus, accord and satisfaction is not applicable on the facts herein.

Pro Signs contends that there was no contract as to certain terms, specifically, the modifications that were discussed at the prototype review meeting on July 16, 2010, and confirmed in the July 19, 2010 email. Those included: an improved finish on the signs; the mounting of the mirrors from the back of the frames and gluing them in; using a corrugated material on the back of the mirrors; and wrapping the products in bubble wrap for individual shipment. Furthermore, Pro Signs argues that the purchase order for the A-frame signs did not include chalk or double chains, and the absence of hanging wire on the wall signs was consistent with the shop drawings, prototypes, and purchase orders.

However, Mr. Rosenfeld testified that after the prototype meeting, he "modified the internal cost structure on these products to include these items." N.T., 3/8/12, at 133-34. The mirrors were placed in the frame from the rear as requested, although they were not glued in and they were not backed with corrugated cardboard. The trial court found that Pro Signs redesigned the mirrored items after the meeting and made adjustments to the cost worksheets. Findings of Fact and Conclusions of Law, 4/4/12,

Finding of Fact No. 18, at 7. Pro Signs did not "protest or refuse any of the directives set forth in the July 19th email." Id., Finding of Fact No. 19, at 7. The court concluded that, "The understanding or agreement between the parties was comprised of the purchase orders, shop drawings, oral conversations, prototypes, and emails exchanged by the parties' representatives." Id., Finding of Fact No. 21, at 7. The record supports the findings of the trial court.

We turn now to Marketechs' issues on the cross-appeal:

1. Did an implied warranty of merchantability arise and was it breached by Pro Signs?
2. Were the damages arising from the breach of warranty foreseeable by Pro Signs at the time of the breach?

Marketechs' brief at iii.

Marketechs alleges that the trial court erred in failing to find that Pro Signs breached the implied warranty of merchantability and in refusing to award foreseeable consequential damages. Such warranties arise, according to Marketechs, by operation of law "unless excluded or modified." 13 Pa.C.S § 2314(a). In order to be merchantable, goods must at least "pass without objection in the trade under the contract description . . ." Id. at § 2314(b)(1). They must be "fit for the ordinary purposes for which such goods are used, " be of even kind and quality within the units, and adequately packaged "as the agreement may require." Id. at § 2314(b)(3), (4), and (5). In order to be marketable, the goods do not have to be of the highest quality. Phillips v. Cricket Lighters, 883 A.2d 439, 444 (Pa. 2005). They are required, however, to "have an inherent soundness which makes them suitable for the purpose for which they are designed" and "free of significant defects." Gall by Gall v. Allegheny County Health Department, 555 A.2d 786, 789 (Pa. 1989).

The trial court found that the warranty was excluded by the contract's reliance upon "specific features as set forth in shop drawings, the prototypes, and the modifications set forth in the emails" rather than general acceptance in the trade. Trial Court Opinion, 8/24/12, at 29. The court concluded: "There were no implied warranties. Marketechs examined and accepted the prototypes and was able to examine the product during production at any time." Findings of Fact and Conclusions of Law, 4/4/12, Conclusions of Law No. 17, at 21. We disagree with the trial court's application of the law to the facts.

The UCC, 13 Pa.C.S. § 2316(b), provides in pertinent part that, in order to exclude or modify implied warranties of merchantability and fitness, "the language must mention merchantability and in case of a writing must be conspicuous." Language is sufficient "if it states, for example, that 'There are no warranties which extend beyond the description on the face hereof.'" 13 Pa.C.S. § 2316(b).

Notwithstanding subsection (b):

(1) Unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is, " "with all faults" or other language which in common understanding calls the attention of the buyer to the exclusion of warranties and makes plain that there is no implied warranty.
(2) When the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him.
(3) An implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.

(emphasis added).

The writings between the parties did not contain any exclusion of implied warranties and thus, the exception for a conspicuous writing is not applicable on the facts herein. While Marketechs examined the prototypes, the trial court found that the meeting was intended to be an opportunity to fine-tune the design prior to production. Herein, the prototypes were not accepted. Approval was premised upon the modifications being made to the design. The trial court's legal conclusion that there were no implied warranties because "Marketechs examined and accepted the prototypes" is unsupported by the facts. Findings of Fact and Conclusions of Law, 4/4/12, Conclusions of Law No. 17, at 21. Furthermore, an examination of prototypes only vitiates implied warranties "with regard to defects which an examination ought in the circumstances to have revealed." 13 Pa.C.S. § 2316(b)(2). Defects in the final product that were not present in the prototypes or modified by the parties could not have been revealed. The fact that Marketechs could have examined the product during production does not alter our thinking. Pro Signs' open-door policy that permitted, but did not obligate, Marketechs' representatives to examine the product during production, did not vitiate the implied warranties. Thus, we find that there were implied warranties that were not excluded and that the warranties were breached by Pro Signs.

The UCC provides further that:

§ 2715. Incidental and consequential damages of buyer.
(a) Incidental damages. --Incidental damages resulting from the breach of the seller include:
(1) expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected;
(2) any commercially reasonable charges, expenses or commissions in connection with effecting cover; and
(3) any other reasonable expense incident to the delay or other breach.
(b) Consequential damages. --Consequential damages resulting from the breach of the seller include:
(1) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(2)injury to person or property proximately resulting from any breach of warranty.

13 Pa.C.S. § 2715.

While storage costs may be recoverable, the trial court did not find credible Mr. Haag's testimony that Marketechs incurred costs of $13, 300 for storing the non-conforming goods at its own facility. Nor did the trial court credit Mr. Haag's testimony that disposal of the goods would require sixty-two dumpsters at a cost of $335 per dumpster. Our standard of review compels us to defer to the trial court's credibility determinations. The trial court declined to award labor costs attributed to Marketechs' employees, calculated to be $2, 550, that would have been incurred regardless of the breach, and we agree.

Generally, lost profits are recoverable in a breach of contract action when "there is evidence to establish them with reasonable certainty, " and if "there is evidence to show that they were the proximate consequence of the wrong" and if "they were reasonably foreseeable." Quinn v. Bupp, 955 A.2d 1014, 1021 (Pa.Super. 2008) (quoting Company Image Knitware, Ltd. v. Mothers Work, Inc., 909 A.2d 324, 336 (Pa.Super. 2006)). According to the trial court, Marketechs' proof of lost profits did not meet the certainty and causation requirements. The trial court concluded that the lost profits of $15, 000 could not be attributed solely to Pro Signs' breach because Marketechs, not Pro Signs, approved prototypes for the design of A-frame signs that contained black rather than silver hinges, and one chain instead of two chains, both of which Jay Group found unacceptable. Findings of Fact and Conclusions of Law, 4/4/12, Conclusions of Law No. 14, at 20. Thus, these deficiencies were caused by Marketechs, not Pro Signs. The costs associated with curing those deficiencies would have been the responsibility of Marketechs and reduced its profits. The trial court, uncertain as to how remediation would have impacted Marketechs' expected profits, declined to award such damages. We find no error on the record before us.

We find, however, that the trial court erred in denying Marketechs' reimbursement for the $12, 814 cost of the mirrors it provided to Pro Signs on the ground that this loss was unforeseeable. Id., Conclusion of Law No. 20, at 21. Pro Signs knew that Marketechs was supplying the mirrors, and blamed Marketechs when their delivery was delayed. Furthermore, we disagree with the trial court that the transportation costs of $1, 545 associated with the return of the rejected goods from Jay Group were not foreseeable. While Pro Signs did not know the terms of the contract between Marketechs and Jay Group, Pro Signs was advised early on that it was shipping the goods directly to Jay Group. Thus, those damages were clearly foreseeable and caused by Pro Signs' breach.

For the foregoing reasons, we affirm the trial court's finding that Pro Signs materially breached the contract; we reverse the court's finding that there were no implied warranties on the facts herein. In light of the court's finding that the goods differed substantially from the prototypes as modified, and that the goods were of substandard quality and lacked proper packaging and wrapping, we find that Pro Signs breached the implied warranty of merchantability for ordinary use. We affirm the award of damages in part, but reverse and remand to the trial court for purposes of modifying the damages award to include the cost of the mirrors and transportation associated with the return of the rejected goods, both of which were caused by Pro Signs and were foreseeable in the event of breach.

Judgment affirmed in part, and reversed and remanded in part. Jurisdiction relinquished.

Judgment Entered.


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