Steelcase, Inc. v. Lilly Co., Inc.

379 S.E.2d 40 (1989)

STEELCASE, INC., Plaintiff, v. The LILLY COMPANY, INC., Defendant.

No. 8828SC547.

Court of Appeals of North Carolina.

May 16, 1989.

*42 Van Winkle, Buck, Wall, Starnes and Davis, P.A. by Philip J. Smith and Michelle Rippon, Asheville, for plaintiff.

Morris, Phillips and Cloninger by William C. Morris, Jr., Asheville, for defendant.

WELLS, Judge.

Defendant's Appeal

Without making reference to any exception or assignment of error, defendant presents an argument contending that this case is "a products liability action" and that under applicable provisions of the Products Liability Act, N.C.Gen.Stat. § 99B-4, the jury's answer to issue number 3 under the implied warranty claim defeats plaintiff's claim and entitles defendant to *43 judgment in its favor as a matter of law. The pertinent portions of the statute provide:

G.S. § 99B-4. Injured parties' knowledge or reasonable care. No manufacturer or seller shall be held liable in any product liability action if: (1) The use of the product giving rise to the product liability action was contrary to any express and adequate instructions or warnings delivered with, appearing on, or attached to the product or on its original container or wrapping, if the user knew or with the exercise of reasonable and diligent care should have known of such instructions or warnings....

G.S. § 99B-4(1) (1985).

Defendant's argument has merit as it applies to plaintiff's implied warranty claim, as the jury found, in effect, that plaintiff's contributory negligence in its use of defendant's product defeated plaintiff's entitlement to damages under that claim.

We hold, however, that plaintiff's breach of contract claim does not fall within the purview or effect of the Products Liability Act. Claims under that act are rooted in negligence, to which a defense of contributory negligence would obviously be applicable. Where, as in this case, a plaintiff is able to convince a trier of fact that it has suffered damages flowing from the failure of a defendant to meet direct and express contractual obligations, the defense of contributory negligence has no application to that claim.

Our review of the record and briefs reveals a long and complicated jury trial involving extensive and contradictory testimony and evidence as to the cause of the damage to plaintiff's furniture and plaintiff's resulting monetary losses. Plaintiff offered evidence tending to show that defendant had originally formulated a defective stain containing too much linseed oil, a stain not duplicative of the Sherwin-Williams stain plaintiff had contracted for, and that this breach of contract caused plaintiff's damages and losses. Defendant offered evidence tending to show that if plaintiff had used defendant's stain in accordance with instructions furnished by defendant, plaintiff's furniture would not have been damaged by the use of defendant's stain.

The verdict indicates that the jury sifted through this evidence and found that defendant did breach its contract with plaintiff and that this breach caused plaintiff's damages. Defendant does not contend or question that the evidence did not support this part of the jury's verdict.

As to defendant's appeal, we find no error in the trial.

Plaintiff's Appeal

Plaintiff assigns error to the trial court's ruling that certain evidence pertaining to plaintiff's damages constituted hearsay and was therefore inadmissible. Plaintiff argues that this evidence should have been admitted because it is covered by the business records exception to the hearsay rule. The types of business records covered in the business records exception and its prerequisites are codified at N.C.Gen.Stat. § 8C-1, Rule 803(6)(1988) of the Rules of Evidence, as follows:

(6) Records of Regularly Conducted Activity.A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

In construing Rule 803(6), this Court has stated, "Records made in the usual course *44 of business, made contemporaneously with the occurrences, acts and events, recorded by one authorized to make them and before litigation has arisen, are admissible upon proper identification and authentication." State v. Miller, 80 N.C.App. 425, 342 S.E.2d 553, disc. rev. denied and appeal dismissed, 317 N.C. 711, 347 S.E.2d 448 (1986). We went on to state in Miller that:

Authentication of records of regularly conducted activity is `by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.' Rule 803(6) N.C.Rules Evid. (emphasis added.) `Other qualified witness' has been construed to mean a witness who is familiar with the business entries and the system under which they are made.

Id. at 429, 342 S.E.2d at 556. (emphasis in original.)

In the present case the business records at issue involve evidence of plaintiff's damages as a result of the whitened walnut furniture. These records are illustrative of the following: (1) miscellaneous out-of-pocket expenses; (2) no charge replacements to dealers; (3) additional credit to dealers; and (4) evidence concerning expenses for field trips made by plaintiff in an effort to repair the damaged furniture. The records involved in categories 1-3 above were compiled by the plaintiff's billing adjustments group, which handled product-related problems. Plaintiff's manager of general financial accounting services, Wayne Postma, was responsible for this billing adjustments group. Records involved in category 4 were compiled by the office of plaintiff's division controller for its Fletcher, North Carolina plant. In each case the records were made in the usual course of plaintiff's business and were made contemporaneously with the occurrences of situations involving the damaged furniture. The records were compiled by persons authorized to make themeither the plaintiff's billing adjustments group or the office of plaintiff's division controller for the Fletcher, North Carolina plant. In each case the evidence was identified through the testimony of a witness familiar with the business entries and the system under which they were made and who could have also authenticated the records. As such, we find that the records at issue in the present case are the kind of records intended to be covered by the business records exception to the hearsay rule. The trial court's ruling that this evidence was inadmissible was in error.

Plaintiff also argues that the trial court erred in failing to award plaintiff pre-judgment interest calculated from the date of breach on the judgment award of $250,000. Though N.C.Gen.Stat. § 24-5 clearly provides for interest to be calculated from the date of breach in breach of contract actions, the present case is not governed by the 1985 amendment of G.S. § 24-5 providing for such interest. Chapter 214 of the 1985 Session Laws of North Carolina, which rewrote G.S. § 24-5 to provide for interest from the date of breach states at Section 2: "This act shall become effective October 1, 1985. This act shall not affect pending litigation and shall not affect the law as it existed before the enactment of Chapter 327 of the 1981 Session Laws." The present action was begun on 29 February 1985. Judgment was entered on 23 December 1987. Therefore, the present case was pending at the time the act became effective and is not governed by the current provisions of G.S. § 24-5.

In breach of contract cases decided prior to the 1985 amendment of G.S. § 24-5 interest was allowed from the date of breach under certain circumstances. "The rule in such cases is that when recovery is had for breach of contract and the amount of the recovery is ascertained from the contract itself or from other relevant evidence, interest should be added to the recovery from the date of breach." Wilkes Computer Services v. Aetna Casualty & Surety Co., 59 N.C.App. 26, 295 S.E.2d 776 (1982), disc. rev. denied, 307 N.C. 473, 299 S.E.2d 229 (1983). (emphasis added.) In the present case the plaintiff has been determined by the jury to be entitled to recover damages from the defendant for breach of contract. The amount of the damages to which the plaintiff is entitled can be *45 determined by examining evidence relevant to the contract such as the business records or documentation concerning the damaged furniture. Therefore, we hold that plaintiff is entitled to pre-judgment interest calculated from the date of breach.

As to defendant's appeal, no error.

As to plaintiff's appeal, the case must be remanded for a new trial as to damages consistent with this opinion, and for an appropriate award of interest.

No error in part; new trial and remanded in part.

BECTON and JOHNSON, JJ., concur.