Court: Court of Appeals of Washington; July 21, 1983; Washington; State Appellate Court
On April 18, 1978, Mr. and Mrs. Barnard entered into a contract with Compugraphic Corporation to purchase the EditWriter 7500 typeset machine for their commercial printing business. The Barnards subsequently sued Compugraphic for damages due to the machine and its replacements malfunctioning. Following a bench trial, the court found that Compugraphic breached both express and implied warranties and negligently misrepresented the machine's capabilities, which included features meant to enhance efficiency by composing, storing, and producing typeset material.
The EditWriter was represented to have numerous advanced functionalities, such as a video terminal with a keyboard and a screen capable of displaying up to 6,000 characters, and the ability to store jobs on floppy disks. However, the machine failed to perform as advertised; issues included a malfunctioning RAM board, a locking keyboard, a blank screen, and a faulty photo unit that produced poor-quality output. Similar problems occurred with two replacement machines, and despite continuous attempts by the Barnards and repair efforts from Compugraphic, the equipment was inoperable from its installation in July 1978 through the trial.
As a result of these failures, the Barnards faced production delays, customer complaints, and financial losses, leading to a judgment awarding them $117,797.55 plus costs and interest for lost profits, employee wages, and the purchase price of the machine. Compugraphic appealed, arguing that the evidence did not support the trial court’s findings of frequent malfunctions and that the claims for lost data and profits were speculative.
The court will uphold trial court findings supported by evidence, even if an appellate court might have reached a different conclusion. In reviewing cases with conflicting evidence, the focus is on whether the evidence favoring the prevailing party substantiates the challenged findings. The findings of fact in this case were supported by evidence and justified the court's damage award. Compugraphic did not contest the findings regarding its liability or the Barnards' damages, making those findings definitive.
The Barnards are entitled to recovery despite the difficulty in precisely determining the damage amount attributable to Compugraphic's fault, as long as evidence provides a reasonable basis for estimating losses. The trial court has discretion in assessing damages, which will not be overturned without evidence of abuse. The Barnards presented a reasonable basis for estimating their losses. Compugraphic's objections pertained to the credibility of testimony, which is determined by the trial court.
The court rejected Compugraphic's argument that the award should be reversed due to a lack of foresight regarding the loss, stating that foreseeability pertains to the general expectation of damages resulting from a breach. Additionally, the Barnards were not required to deduct employee labor costs from their lost profits, as their accountant confirmed that no extra labor was necessary due to the breach.
Compugraphic's claim that the Barnards failed to mitigate damages by not purchasing a dual disk drive was dismissed; evidence indicated that the purchase would not necessarily resolve the malfunctions and might require the Barnards to waive their rights to repair or replacement. The court will not impose a requirement for the injured party to acquire additional equipment to restore the machine's original function, especially given the associated risks.
Requiring the Barnards to pursue dissatisfied customers was deemed unreasonable, as evidence indicated such efforts would likely fail. However, Compugraphic's argument that the Barnards should not retain the EditWriter while recovering its full purchase price is valid. The court's judgment did not address the EditWriter's disposition, and allowing the Barnards to keep the machine while obtaining a full refund would lead to double recovery. The measure of damages for breach of warranty is based on the difference between the value of the goods accepted and their warranted value. The Barnards used the EditWriter until the trial, indicating it had some residual value.
The Barnards' appeal raises two issues: (1) the purchase price of accessories (film fonts and width cards) for the EditWriter, and (2) the interest paid for financing the purchase. No error was found regarding the accessories, as the Barnards failed to provide evidence of their worthlessness, but the issue is remanded for further consideration. If the court decides the EditWriter should be returned, Compugraphic must refund the accessories' purchase price. If the Barnards retain the EditWriter, the denial of accessory price recovery is upheld.
Regarding the interest issue, while the Barnards claimed interest as damages, they did not present a recovery theory to the trial court. Interest is not considered part of the value of the goods or consequential damages from a breach but rather the cost of borrowed money for purchase. Therefore, the interest incurred by the Barnards would have existed regardless of the EditWriter's condition and does not arise from Compugraphic's breach. The damage award is affirmed, with remand for the disposition of the EditWriter and accessories. Concurrent opinions were given by Roe, C.J., and Munson, J.
