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Magnum Press Automation, Inc. v. Thomas & Betts Corp.
State: Illinois
Court: 4th District Appellate
Docket No: 4-01-0062 Rel
Case Date: 11/08/2001

November 8, 2001

NO. 4-01-0062

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT


MAGNUM PRESS AUTOMATION, INC., an
Illinois Corporation,
              Plaintiff-Counterdefendant-
              Appellant,
              v.
THOMAS & BETTS CORPORATION, a Maine
Corporation,
              Defendant-Counterplaintiff-
             Appellee.
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Appeal from
Circuit Court of
Jersey County
No. 99LM20


Honorable
Thomas G. Russell,
Judge Presiding.

JUSTICE COOK delivered the opinion of the court:

Plaintiff Magnum Press Automation, Inc. (Magnum),appeals an adverse verdict on its claim against defendant Thomas& Betts Corporation (T&B) and also a verdict in favor of T&B onT&B's counterclaim, both rendered after a bench trial commencingMay 17, 2000. Magnum's brief is difficult to follow, to say theleast. A verbatim reprint of its recitation of the standard ofreview is illustrative:

"The standard of review of the issues ruled on by the trial court is based onfindings of fact by the trial court and require findings by this reviewing court of such findings being against the manifest weight of the evidence or no evidence on which the trial court based its finds. Authority as this standard are contained in the argument."

Magnum manufactures industrial presses. T&B purchasedthree presses from Magnum. Press 1 was satisfactory. T&Bencountered problems with the power unit of press 2. At thetime, Magnum was in the process of completing press 3. Magnumreplaced power unit 2 with the unit originally meant for press 3. Magnum brought power unit 2 back to its plant, performed maintenance on it, and in turn sent it out again with press 3.

Press 3 was shipped on July 31, 1998, and arrived atT&B's plant on August 6. Press 3 quickly began having problems. T&B's lead maintenance mechanic, Mark Parent, called Magnum'schief engineer, Pat DeStefano, on September 3, 1998, regardingproblems with the unit. Specifically, the valves of the powerunit appeared to be clogged with debris. DeStefano told Parentthe power unit needed to be cleaned. Parent cleaned the powerunit but problems again soon developed. According T&B, it nextcalled DeStefano on September 15. DeStefano again recommendedcleaning and Parent again complied but again unit 3 would notfunction properly. T&B tried to contact DeStefano on September24, but according to T&B, DeStefano was not available. T&B alsostates that around this time it asked DeStefano to come to T&B'splant to fix the unit but that DeStefano merely continued to makesuggestions over the telephone. According to DeStefano, throughout this time he would be contacted by Mark Parent of T&B, giveParent directions, then not hear from Parent for two weeks ormore. During these interims he claimed to assume that the presswas running properly. On or before October 12, 1998, T&B decidedto discontinue using press 3.

Some discussions regarding the problems with press 3had also occurred at senior levels of management. Mike Hamilton,the president of Magnum, testified that in late September hetalked to Paul Burbank, manufacturing manager of T&B. Burbanktold Hamilton that press 3 was not operating correctly, apparently due to contamination in the system. Hamilton informedBurbank that this presented a maintenance issue and was thereforenot a warranty issue. Hamilton was of the opinion that anydebris found in the system would eventually work its way into theunit's filters or would be removed during routine maintenance. Hamilton also claims that he verbally offered to take the pressback in order to work on it. Burbank denies this offer was made. (Burbank also believes that this conversation took place closerto October 16.)

In the meantime, T&B was withholding payment of thefinal two-thirds of its payment on the press. Hamilton then senta series of letters to T&B. In a letter of November 16, 1998, heagain asserted that the problem must be one of a continuingnature, noting that Magnum had flushed the power unit twice andthat T&B had assumably done so at least once. On December 4,Magnum's attorney wrote T&B, again denying that Magnum's workmanship was causing the problems with the unit.

Unbeknownst to Magnum, by early November T&B had hireda third party, Northland-Willette (Northland), to work on press3. Northland flushed and cleaned power unit 3, discoveringdebris in the oil reservoir. The unit was filled with clean oilbut again failed. More contamination was found in the reservoir. The unit was operational after this debris was removed, but itwas feared that some contamination may have worked its way in thecylinders of the power unit. Press 3 was therefore shipped toNorthland for further maintenance.

Northland disassembled the press, removing a handful ofmetal drill chips as well as performing other tasks, but couldnot get it to operate properly. Northland again dissembled themachine, cleaned it again, and performed other work. Northlandwas again unsuccessful. T&B eventually told Northland to ceaseits efforts.

At some unspecified point, certain facets of the press'computer programming had been altered. Specifically, it appearsthat a safety feature required the operator to press certainbuttons during each pressing. T&B admitted that one of itsemployees had altered the program to bypass this procedure. According to T&B, this was done so as to allow continuous testingof the machine without the necessity of constant attention. T&Balso claims that DeStefano or other employees of Magnum told T&Bhow to change the program. For its part, Magnum did not denyT&B's allegations but nonetheless asserted that this change inprogramming contributed to the problems the press experienced. Magnum did not specifically explain how or why this was true.

On December 17, 1998, T&B sent Magnum a letter revokingacceptance of press 3. On December 21, 1998, Magnum respondedwith a letter offering to take press 3 back and repair it toT&B's satisfaction. T&B did not accept that proposal. Magnumintroduced testimony that when it finally received the press andpower unit, it found that two valves had been incorrectly switched with each other. It also noted the change in programmingpreviously mentioned.

After T&B rejected Magnum's proposal, Magnum sued forthe outstanding balance on the press, $30,225, plus interest. T&B counterclaimed for $27,600.35: $16,275 representing its paiddeposit and $11,325.35 representing various charges for Northland's services. The trial court found in favor of T&B on bothMagnum's claim and T&B's counterclaim, awarding T&B $27,600.35plus $1,335.85 for interest accruing from the date of T&B'srevocation of acceptance, December 17, 1998.

On appeal, we are (apparently) asked to consider (1)whether the trial court correctly found that Magnum had beenafforded adequate opportunity to cure the defects in press 3; (2)whether the trial court correctly found that T&B had properlyrevoked its acceptance of press 3; (3) whether the trial courtproperly allowed T&B's claim for the cost of Northland's work;(4) whether the trial court properly excluded Magnum's evidenceof the allegedly simple corrections necessary to actually repairpress 3; and (5) whether the trial court erred in allowing T&B toamend its complaint following trial so as to include a claim forprejudgment interest.

I. MAGNUM'S OPPORTUNITY TO CURE

Magnum seems to argue on appeal that T&B's revocationwas invalid because Magnum was not allowed the opportunity tocure any defects in the press or the power unit. Section 2-508(1) of the Uniform Commercial Code (UCC or Code) provides"Where any tender or delivery by the seller is rejected becausenon-conforming and the time for performance has not yet expired,the seller may seasonably notify the buyer of his intention tocure and may then within the contract time make a conformingdelivery." 810 ILCS 5/2-508(1) (West 2000). We cannot agreethat section 2-508(1) operates to save this transaction. T&Bproduced ample evidence that over a course of months it hadrepeatedly complained to Magnum about the operation of the press. It also produced evidence that Magnum did not attempt to inspectthe press and, indeed, disclaimed any responsibility for curingthe problem. Magnum may dispute this evidence but determinationof the matter fell within the province of the trier of fact, inthis case the court. The court's determination was not againstthe manifest weight of the evidence.

II. T&B'S REVOCATION OF ACCEPTANCE

Magnum also apparently argues that T&B's revocation ofacceptance of press 3 was improper, although again, Magnum'spresentation of its position somewhat hampers our understanding. Section 2-608 of the UCC provides in part as follows:

"Revocation of Acceptance in Whole or in Part. 

(1) The buyer may revoke his acceptance of a lot or commercial unit whosenon-conformity substantially impairs its value to him if he has accepted it 

(a) on the reasonable assumptionthat its non-conformity would be cured and it has not been seasonably cured; or 

(b) without discovery of such nonconformity if his acceptance wasreasonably induced either by the difficulty of discovery before acceptance or by theseller's assurances.

(2) Revocation of acceptance must occur within a reasonable time after the buyerdiscovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it.

(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them." 810 ILCS 5/2-608 (West 2000).

Magnum argues that the change in the computer programming and the switched valves constitute a "substantial change inthe condition of the goods," precluding revocation. Magnum'sposition seems to be somewhat inconsistent with its overallargument, for elsewhere Magnum seems to claim that the ease inwhich these conditions were remedied indicates the unreasonableness of both T&B's position and also the costs charged by Northland. In any event, whether these changes were substantial innature was a question to be resolved by the trier of fact and wedo not find the court's judgment to be against the manifestweight of the evidence.

Magnum also complains about the time T&B took to revokeacceptance. T&B cites the difficulties it encountered in discovering the defects. Standing alone, T&B's argument is not onpoint because T&B confuses the nature or cause of a defect withthe existence of a defect itself. That is to say, T&B knew veryearly on that press 3 was not operating correctly. It is seemingly irrelevant that T&B was not able to isolate precisely whatthe problem was. As far as section 2-608 is concerned, it isenough that a buyer knows of a problem and can therefore beexpected to consider and decide upon its various courses ofaction.

On the other hand, T&B raises the assurances it received from Magnum. Technically, under section 2-608(1)(a) suchassurances primarily serve as a prerequisite to revocation (or"excuse" for acceptance of nonconforming goods). T&B argues,however, that such assurances should also inform the time forrevocation under section 2-608(2). We agree this can be takeninto account. See 810 ILCS Ann. 5/2-608, Uniform Commercial CodeComment 4, at 380 (Smith-Hurd 1993). In the end analysis, thequestion is whether T&B acted in conformity with commerciallyacceptable standards. It is not unreasonable to assume that abuyer may delay revocation upon the seller's assurances. Again,we find that the trial court's judgment was not against themanifest weight of the evidence.

III. T&B'S CLAIM FOR INCIDENTAL DAMAGES

In this case, T&B received defective goods; T&B askedMagnum to repair the goods; Magnum declined; T&B hired a thirdparty to attempt repairs; the third party's efforts were unsuccessful; T&B then revoked acceptance of the goods. Part of T&B'scounterclaim in this case includes the third party's bill. Thequestion therefore presented is whether the cost of unsuccessfulrepairs attempted prior to revocation of acceptance may berecovered as incidental damages.

Section 2-711(1)(b) of the Code provides that a buyerrevoking acceptance may recover both so much of the price as hasbeen already paid and also damages for nondelivery. 810 ILCS5/2-711(1)(b) (West 2000). Section 2-713(1) provides thatdamages for nondelivery include incidental damages. 810 ILCS5/2-713(1) (West 2000). Section 2-715 provides:

"Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt,transportation[,] and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses[,] orcommissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach." 810 ILCS 5/2-715(1) (West 2000).

The incidental damages listed are not exhaustive but merelyillustrative (810 ILCS Ann. 5/2-713, Uniform Commercial CodeComment 1, at 449-50 (Smith-Hurd 1993)); however, the Code doesnot further define "incidental." Under one view, the costs ofrepair are not like the other expenses listed. Expenses such asinspection, transportation, and the care of the goods are necessarily part of the transaction whether the transaction is ultimately successful or not. Indeed, under some circumstances thebuyer may have an affirmative duty to undertake these expenseseven when the buyer is in the right. See 810 ILCS 5/2-602, 2-603(West 2000). Providing for their recoupment therefore constitutes sound policy. However, the costs of repair are not likesuch expenses because they are not necessarily incurred by thebuyer. The buyer always has the option of rejecting or revokingacceptance of the goods. In other words, attempted repair is avoluntary decision, not a necessary expense. In this case, thetrial court deemed the expenses incurred by T&B necessary,stating that Magnum left T&B "no meaningful option but to have[the press] repaired by outside experts." As we have juststated, that is not true. T&B was free at any time to reject orrevoke acceptance of the press.

Further, the case is complicated by the fact that T&Bdid not in fact repair the press. Its efforts were ineffectual. This is why T&B seeks to characterize these expenses as "incidental." Consider: A buyer receives nonconforming goods. The buyerpays to have the goods successfully repaired. Aside from circumstances not plainly apparent here, such as market fluctuation,why would the buyer then return the goods nonetheless? As apractical matter, the buyer would not. The buyer would simplykeep (accept) the goods and seek the repair costs under a varietyof alternate approaches, such as a warranty theory. The repaircosts could be recouped under the general measure of warrantydamages, among other theories. See 810 ILCS 5/2-714 (West 2000). The cases cited by T&B similarly involve recovery under warrantytheories and therefore are not directly on point because theyinvolve slightly different issues.

However, our research has revealed that in instanceswhere revocation (or rejection) has occurred, some courts havenonetheless allowed repair costs as incidental damages under theUCC. These cases mostly involve automobiles. (They are, however, sparse and somewhat dated.) Presumably many if not allcontemporary warranty plaintiffs have sought their remedies underthe Magnuson-Moss Warranty Federal Trade Commission ImprovementAct (15 U.S.C.

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