B-STAR, INC. v. POLYONE CORPORATION

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B-STAR, INC. v. POLYONE CORPORATION
2005 OK 8
114 P.3d 1082
Case Number: 97148
Decided: 02/15/2005
As Corrected: February 18, 2005
THE SUPREME COURT OF THE STATE OF OKLAHOMA

B-STAR, INC., an Oklahoma corporation, Appellee,
v.
POLYONE CORPORATION, formerly M.A. HANNA COMPANY, a Delaware corporation, Appellant.

ON CERTIORARI FROM THE COURT OF CIVIL APPEALS, DIVISION II

¶0 The plaintiff, a manufacturing company, sued the defendant, a rubber compound supplier for, among other things, breach of contract. The defendant counterclaimed. The counterclaim and the breach of contract claim were presented to the jury. The jury rendered verdicts for the plaintiff on both the breach of contract claim and on the counterclaim. The trial court, the Honorable John Maley presiding, entered judgment on the verdicts. Only the breach of contract issues have been preserved on appeal. The Court of Civil Appeals found error in the award of damages for loss of future profits and ordered remittitur, or, in lieu thereof, a new trial. This Court granted the appellee's petition for writ of certiorari.

COURT OF CIVIL APPEALS' OPINION VACATED;
TRIAL COURT'S JUDGMENT AFFIRMED.

Terry P. Malloy, Tulsa, Oklahoma, for the Appellant.
Anthony M. Laizure, Tommy W. Humphries, Tulsa, Oklahoma, for the Appellee.

Taylor, J.

I. ISSUES

¶1 The issues preserved for our review are: (1) whether the jury's damage award was excessive and included damages not authorized by law, (2) whether the jury verdict was supported by the weight of the evidence or was contrary to law, (3) whether the trial judge improperly excluded testimony offered by the appellant at trial, and (4) whether the appellant preserved for appellate review its objection to the jury instructions, and, if not, whether the jury instructions contained any fundamental error. We find no error in the trial court proceedings.

II. FACTS

¶2 In 1990, B-Star, Inc. (B-Star) began producing rubber molded products for clients including O.Z. Gedney (Gedney). B-Star bought its rubber compound from Colonial Rubber Works, later M.A. Hanna Company and now Polyone Corporation, (Hanna). In early 1995, B-Star approached Gedney in hopes of getting Gedney's business for fire stop products. The fire stop products are passive and are used to prevent the spread of fire and gases in military vessels and in buildings.

¶3 In April of 1995, representatives of B-Star and Gedney met with representatives of Hanna to discuss production of the fire stop products. B-Star wanted Hanna to supply a rubber compound to B-Star. Then B-Star would manufacture the fire stop products using the rubber compound by a never before used transfer molding process. Gedney would market the fire stop products.

¶4 B-Star submitted a proposal to Gedney for manufacturing the fire stop products. By letter, Gedney congratulated B-Star on its successful bid and expressed its intent to develop a long-term relationship with B-Star. B-Star did not have a written contract with Gedney to supply the fire stop products for a given time period.

¶5 Hanna agreed to use and to not deviate from Gedney's proprietary formula for the rubber compound without Gedney's written permission. An employee of Hanna testified that Hanna signed a confidentially agreement before receiving the formula and that Hanna knew it could not change Gedney's formula without Gedney's written permission. A vice president of Hanna testified that Hanna had a responsibility to use Gedney's proprietary formula in accordance with Gedney's requirements. He also testified that both Gedney and B-Star were "entitled to rely on Hanna's representation that it would fulfill its responsibility with respect to the use of the formula."

¶6 B-Star built a new facility and bought four presses and two new pumping units, and Gedney bought the molds. When production began in March of 1996, there were no problems with the compound supplied by Hanna. The production for Gedney was so successful that B-Star doubled the volume and turned away other business. In May, an approved change was made to the formula to reduce a hardness problem which B-Star had been having with the compound. With increased production, Hanna also began experiencing problems with the compound. Both B-Star and Hanna continued experiencing problems through 1996 and into 1997. B-Star was having problems with the compound scorching and with its consistency. Hanna was having problems with the compound sticking to its mill. With Gedney's permission, Hanna made a minor change in the formula which corrected the consistency problems but not the scorching problems.

¶7 A representative of Hanna testified that it told B-Star there would have to be changes in the formula or it would stop supplying the compound. Twice in January of 1997, Gedney rejected Hanna's request to make changes in the formula. In February, B-Star called and placed another order at which time Hanna instituted the formula changes. About a year later, B-Star discovered that Hanna had added two ingredients which were not in the original formula and which had not been approved by Gedney. The two ingredients were the ingredients which Gedney had rejected as an addition to the formula in January of 1997.

¶8 After B-Star learned that Hanna had added two unauthorized ingredients, B-Star ordered the compound without the two additional ingredients. The products manufactured using the compound without the two additional ingredients did not break or crack - problems B-Star had experienced with the compound containing the two unauthorized ingredients. B-Star thus concluded that the two unauthorized ingredients were the cause of the breaking and cracking problems.

¶9 B-Star also noticed a strong solvent smell in Hanna's compound. Testing showed that the compound contained tetrachloromethane, a banned and dangerous solvent. Tetrachloromethane was not in the original formula and not approved by Gedney. Hanna acknowledged that it had added ingredients without Gedney's approval.

¶10 In March of 1998, Gedney sent Hanna a letter complaining of the changes in the formula. The letter stated that it had returned products which failed to meet its standards. Many of the products were returned because of "the brittle nature of what should be otherwise flexible rubber components." B-Star stopped buying the compound from Hanna and began buying it from another supplier, an action which Gedney supported. The new supplier also experienced problems with the compound. In July of 1998, Gedney stopped buying the fire stop products from B-Star.

¶11 B-Star sued Hanna for business losses. Hanna defended that the invoices limited and controlled its liability and that the loss of future profits was too speculative to be awarded as damages. At trial, Brad Bunch of B-Star estimated its losses caused by Hanna's action at $402,524.49 as of April 24, 1998. B-Star's expert calculated the total damages from production and loss of future sales for five years after Gedney terminated its relationship with B-Star to be $1,222,591.00 and for ten years to be $1,806,766.00.

¶12 A jury awarded B-Star damages of $1,222,591.00. Hanna appealed.

III. STANDARD OF REVIEW

¶13 Our review of an action at law is governed by the any-competent-evidence standard. Grumman Credit Corp. v. Rivair Flying Service, Inc.,

IV. RULE 1.11(b)

¶14 Rule 1.11(b) limits a brief in chief to thirty pages and requires the appellate court clerk to reject any brief exceeding this limit unless otherwise allowed by this Court. 12 O.S.2001, ch. 15, app., rule 1.11(b). At least ten days before the brief's due date, a party may file an application to exceed the thirty-page limit. Id. Hanna did not file such an application. Hanna presents arguments in its reply brief not presented in its brief in chief. We view the reply brief as an extension of its brief in chief and in violation of rule 1.11(b). Not until its reply brief does Hanna argue that the Uniform Commercial Code applies, that the award of attorney fees was improper,

V. PROPOSITIONS PRESENTED FOR REVIEW

¶15 Hanna's first proposition is that the trial court erred in denying its motion for a new trial for the following reasons: (1) There was an error in the assessment in the amount of damages; (2) The verdict was not sustained by sufficient evidence or was contrary to law; (3) The damages were so excessive as to appear to have been given under the influence of passion or prejudice; and (4) An error of law occurred at trial to which Hanna objected. Hanna's second

VI. DAMAGES

¶16 Hanna argues that the jury improperly awarded damages for (1) unpaid invoices, (2) prejudgment interest, and (3) loss of future profits. Hanna argues that these damages were either not authorized by law, were too speculative to be considered, or were for unpaid invoices. All of these damages were presented through Brad Bunch's testimony and through an exhibit which was admitted as part of video deposition of B-Star's expert. There was no timely objection by Hanna to any of this evidence prior to it being presented to the jury. On appeal, Hanna does not raise any objections to the admission of this evidence. Thus, we cannot say that the jury improperly considered these damages. Weathers v. Fulgenzi,

VII. VIDEO DEPOSITIONS

¶17 A video deposition containing an exhibit relating to B-Star's damages was presented as part of the evidence in this case. This Court understands that video presentation of evidence is a convenient and cost-effective trial tool. To be considered on appeal, the transcript of the video deposition must be made a part of the record in the trial court and on appeal.

¶18 The video deposition in this case was shown to the jury without Hanna objecting before it was shown. After the deposition was shown to the jury, B-Star asked for admission into evidence of the exhibit of the damages. At which time, Hanna objected: "Judge, as we've not formally had the opportunity to interpose our objection, they were in the form of the transcript, but I'd simply like to renew that objection at this time." The trial court overruled the objection. The record is inconclusive as to whether a transcript was admitted at trial. Because Hanna has not presented any argument on appeal that the deposition or the exhibits admitted therewith were improperly admitted, their admission is not before this Court. Reyes v. Reyes,

VIII. VERDICT SUPPORTED BY THE EVIDENCE

¶19 Hanna complains that the evidence does not support the verdict. There is evidence on which a jury could find that Hanna contracted with B-Star to use Gedney's original formula and to refrain from making changes to the formula without Gedney's written permission. Without any preserved objection, the trial court instructed the jury that the parties agreed there was an oral implied contract. B-Star presented evidence that Hanna made changes to the formula without Gedney's written permission, Gedney stopped ordering the fire stop products from B-Star after the changes and the problems associated therewith, and B-Star suffered damages in an amount between $1,222,591.00 and $1,806,766.00 as a result of Hanna's unauthorized formula changes.

¶20 Hanna's primary complaint that the award is not supported by the evidence regards the amount of damages. The amount of damages is a jury question. Carris v. John R. Thomas and Assoc., P.C.,

IX. EXCESSIVENESS OF THE DAMAGE AWARD

¶21 Without evidentiary support, Hanna complains that the damages were so excessive as to appear to have been given under the influence of passion or prejudice. B-Star presented evidence that its damages ranged from $1,222,591.00 and $1,806,766.00. The jury rendered a general verdict for B-Star of $1,222,591.00, the lower of the range. Because we find that the damage award was supported by the evidence, it is not so excessive as to appear to have been given under the influence of passion or prejudice. Dodson v. Henderson Properties, Inc.,

X. JURY INSTRUCTIONS

¶22 Rule 1.11(e)(1) provides: " Where a party complains of an instruction given or refused, the party shall cite to the place in the record on appeal where said instruction may be found, together with the objection thereto." 12 O.S.2001, ch. 1, app., rule 1.11(e)(1). Hanna fails in its brief in chief to direct this Court's attention to any particular instruction as to which it alleges error. Further, Hanna fails to cite to the place in the record where it objected. Because Hanna has failed to preserve its objections to the instructions for this Court's review, we review for fundamental error. Sellars v. McCullough,

¶23 It is the trial court's duty "to give instructions which accurately reflect the law. . . ." Id. Fundamental error occurs when the trial court does not accurately instruct on the law. Id. Having reviewed the instructions, we conclude that there was no prejudicial misstatement of law appearing in the instructions and, thus, no fundamental error.

XI. TESTIMONY

¶24 Hanna complains about the exclusion of testimony of Raymond Giles, Tulsa Rubber Company's president. Tulsa Rubber Company, like B-Star manufactured fire stop products for Gedney. However, Tulsa Rubber Company used a different manufacturing process. Rule 1.11(e)(1) provides: "Where a party complains of the admission or rejection of testimony, that party shall set out the testimony to the admission or rejection of which the party complains, stating specifically the objections thereto." 12 O.S.2001, ch. 1, app., rule 1.11(e)(1). Hanna has failed to set out the rejected testimony in its brief.

¶25 An examination of the record shows that Hanna offered the testimony of Raymond Giles to show Tulsa Rubber Company's profit margin. B-Star objected based on its relevancy, based on Mr. Giles not being an accountant, and based on the testimony not being included in the pretrial order. The trial court sustained the objection unless Hanna could lay a proper foundation by showing similarities. Hanna then asked if Tulsa Rubber Company was manufacturing the same product as B-Star and if Mr. Giles was familiar with the profit margins one could expect from manufacturers of similar products. B-Star again objected, and the trial court again sustained the objection.

¶26 The trial court has discretion to admit or exclude "evidence based on the judge's assessment of its relevance and reliability." Myers,

XII. CONCLUSION

¶27 The determination of the amount of damages is a jury question. The verdict is supported by the evidence. We find no abuse of discretion in the trial court's denial of the motion for a new trial. Applying rule 1.11, Hanna has failed to establish any reversible error in the proceedings before the trial court. Thus, we vacate the Court of Civil Appeals' opinion and affirm the trial court's judgment.

COURT OF CIVIL APPEALS' OPINION VACATED; TRIAL COURT'S JUDGMENT AFFIRMED.

¶28 Watt, C.J., Winchester, V.C.J., Lavender, Hargrave, Opala, Kauger, Edmondson, Taylor, JJ., concur.

¶29 Colbert, J., disqualified.

FOOTNOTES

1 Hanna made a change in the type of Neoprene used in the compound. B-Star acknowledges that this change did not require written approval.

2 Hanna had filed a counterclaim for unpaid invoices. The jury found in favor of B-Star on the counterclaim. There are no allegations of error regarding the counterclaim before this Court.

3 In the trial court, B-Star sought and was awarded attorney fees pursuant to title 12, section 936 of the Oklahoma Statutes. We have not ruled on the merits of this award because the issue was not properly preserved for review.

4 Hanna's second proposition is: "The jury erroneously considered and awarded damages for specific costs and or [sic] losses suffered or incurred by appellee, the recovery of which is not authorized by law, or which the undisputed evidence reveals was never expended by appellee, or was so speculative in nature, so as to so grossly overstate the damages sustained by appellee in a contract action".

5 Hanna's third proposition is: "The jury verdict is clearly erroneous, unsupported by and against the weight of the evidence or contrary to law".

6 Section 3232(C) of title 12 of the Oklahoma Statutes provides: "Except as otherwise directed by the court, a party offering deposition testimony pursuant to this section may offer it in stenographic or nonstenographic form, but, if in nonstenographic form, the party shall also provide the court with a transcript of the portions so offered."

ORDER