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Grevior Furniture, Inc. v. World Sleep Products, Inc.

Supreme Court of New Hampshire

November 19, 2013

Grevior Furniture, Inc.
v.
World Sleep Products, Inc.

The plaintiff, Grevior Furniture, Inc., appeals an order of the superior court declining to award damages for breach of the implied warranty of merchantability by the defendant, World Sleep Products, Inc. (World Sleep). See RSA 382-A:2-314 (2011). We affirm.

At trial, the plaintiff presented two alternative measures of damages: (1) the wholesale value of defective mattresses that World Sleep manufactured and that were returned to the plaintiff by its customers; and (2) incidental or consequential damages incurred by the plaintiff in addressing problems related to those mattresses. The trial court ruled that the plaintiff was not entitled to either measure of damages.

The plaintiff first argues that the trial court erred when it determined that the plaintiff was not entitled to recover the wholesale value of the defective mattresses. When reviewing a trial court's decision on damages, we consider the evidence in the light most favorable to the prevailing party, and will overturn the trial court's decision only if we find it to be clearly erroneous. T&M Assocs. v. Goodrich, 150 N.H. 161, 164 (2003); see Touma v. St. Mary's Bank, 142 N.H. 762, 766 (1998) (reviewing trial court's decision not to award certain damages). "Further, we will review all questions of law de novo and uphold all findings of fact unless they are lacking in evidentiary support or erroneous as a matter of law." Gen. Linen Servs. v. Smirnioudis, 153 N.H. 441, 443 (2006).

"New Hampshire law does not require mathematical certainty in computing damages." However, it does "require an indication that the award of damages was reasonable." T&M Assocs., 150 N.H. at 164. The trial court ruled that, by statute, the plaintiff was entitled to "the value of the conforming mattresses less the value of the non-conforming mattresses, " and was not entitled to the wholesale value of the returned mattresses. See RSA 382-A:2-714(2) (2011) ("The measure of damages for breach of warranty is the difference . . . between the value of the goods accepted and the value they would have had if they had been as warranted."). The court concluded that the plaintiff failed to sustain its burden of proving damages to a reasonable certainty because it did not demonstrate the value of the mattresses in their defective condition. See Bailey v. Sommovigo, 137 N.H. 526, 531 (1993).

The plaintiff now argues that because the mattresses had no value in their defective condition, their wholesale value "represent[s] an appropriate value." However, the trial court found that they had value, and the record supports that finding. The plaintiff's principal testified that the $516 liquidation check he received from World Sleep for mattresses the plaintiff returned to World Sleep did not reflect the true value of the defective mattresses. He testified: "[I]n the state of New Hampshire, we can sell used beds. And . . . I could have gotten probably twice or three times [$516] by selling used beds." Later, he reiterated that, rather than accept $516 for the liquidation of the defective mattresses, he "would have been better off selling those beds on the used side" because he "would have made a lot more than $516 off of them." He also stated: "If I knew that's all I was going to get out of those beds, I would have sold those beds as used beds and doubled or tripled my money and saved myself a lot of man time and a lot of manpower I didn't get back for it." Based upon this testimony, the trial court reasonably found that the returned mattresses had value.

Alternatively, the plaintiff contends that even if the defective mattresses had value, the trial court erred by not using the $516 liquidation amount to calculate damages. The plaintiff has not demonstrated that it made this argument in the trial court. Accordingly, it is not preserved for our review, and we decline to consider it. See Bean v. Red Oak Prop. Mgmt., 151 N.H. 248, 250 (2004).

The plaintiff next argues that the trial court erred when it granted World Sleep's motion to strike the testimony of the plaintiff's principal about the plaintiff's incidental or consequential damages. The trial court found that the plaintiff failed to disclose during discovery that it was seeking such damages. Thus, the court concluded that to prevent unfair surprise, it was necessary to strike the challenged testimony.

The purpose of discovery "is to narrow the issues of the litigation and prevent unfair surprise by making evidence available in time for both parties to evaluate it and adequately prepare for trial." Bursey v. Bursey, 145 N.H. 283, 286 (2000) (quotation omitted). "[T]o prevent unfair surprise, a party may be precluded from presenting evidence that he fails to disclose during discovery." Id. "The decision whether to impose discovery sanctions is a matter resting in the sound discretion of the trial court." Merrill Lynch Futures v. Sands, 143 N.H. 507, 513 (1999). We will not disturb the trial court's decision to impose discovery sanctions absent an unsustainable exercise of discretion. Whitaker v. L.A. Drew, 149 N.H. 55, 58 (2003). In this case, we cannot conclude that the trial court unsustainably exercised its discretion when it precluded the plaintiff from introducing evidence of its incidental or consequential damages.

The record supports the trial court's finding that the plaintiff failed to disclose, before trial, its intent to seek incidental or consequential damages. In its original complaint, the plaintiff stated that it was seeking damages equal to the wholesale value of the defective mattresses. At his deposition, the plaintiff's principal confirmed that this was the only measure of damages sought: "The wholesale price is the only thing I'm asking for, with court costs and lawyer fees." In December 2011, World Sleep's attorney sent a letter to the plaintiff's attorney, stating: "[C]onfirming your interrogatory answers and pleadings to date, [the plaintiff's principal] insists that the claim is limited to a refund of the wholesale price of the defective mattresses. I will take him at his word, and seek no discovery on any other possible measure of damages (e.g., labor, storage, overhead and other expenses incurred in dealing with or replacing [returned] mattresses)." Counsel for the plaintiff never responded to this letter. Based upon this evidence, the trial court reasonably determined that the plaintiff did not disclose, before trial, its intent to seek incidental or consequential damages. See Gen. Linen Servs., 153 N.H. at 443.

The plaintiff contends that there was no unfair surprise because it submitted an expert report before trial that included consequential or incidental damage calculations. The trial court found that the expert report was insufficient to notify World Sleep of the plaintiff's intent to seek incidental or consequential damages. Having reviewed the report, we cannot say that this was an unsustainable exercise of discretion.

The expert report consists of an excel spreadsheet, which is not accompanied by an explanation of what it purports to represent. Given the contrast between the ambiguous expert report and the plaintiff's unequivocal representations regarding its intent to seek only the wholesale value of the defective mattresses as damages, we cannot conclude that the trial court unsustainably exercised its discretion when it concluded that the plaintiff failed to disclose its intent to seek incidental or consequential damages before trial. Moreover, as the trial court observed, the plaintiff did not call the expert to testify; the plaintiff's principal was the only witness to testify as to damages – "the very person who expressly stated during his deposition that the plaintiff was not seeking incidental or consequential damages."

"Resolution of discovery issues is, for obvious reasons, a task best undertaken by the trial judge." Merrill Lynch Futures, 143 N.H. at 514. In responding to World Sleep's request for discovery sanctions, "the court was called upon to assess credibility and to interpret the meaning of statements made at a hearing." Id. Here, the plaintiff has not persuaded us that the trial court's decision to strike the challenged testimony constituted an unsustainable exercise of discretion. Accordingly, we uphold that decision.

Affirmed.

HICKS, LYNN and BASSETT, JJ., ...


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