MILAN SUPPLY CHAIN SOLUTIONS INC. F/K/A MILAN EXPRESS INC.
NAVISTAR INC. ET AL.
Session: June 19, 2019
from the Circuit Court for Madison County No. C-14-285 Roy B.
Morgan, Jr., Judge.
appeal involves a jury verdict in a commercial dispute
pertaining to the quality of trucks purchased by the
plaintiff, Milan Supply Chain Solutions, Inc. Contending that
the purchased trucks were defective, Milan filed suit against
Navistar, Inc. and Volunteer International, Inc., alleging
various legal claims, including breach of contract, violation
of the Tennessee Consumer Protection Act, and fraud. Although
some of Milan's claims were dismissed prior to trial, the
remaining fraud and Tennessee Consumer Protection Act claims
were tried before a jury. Defendant Volunteer International,
Inc. was granted a directed verdict upon the conclusion of
Milan's proof and later awarded attorney's fees, but
a monetary judgment for both compensatory and punitive
damages was entered against Navistar, Inc. The parties now
appeal, raising a plethora of issues for our consideration.
For the reasons stated herein, including our conclusion that
the asserted fraud claims are barred by the economic loss
doctrine, we reverse the judgment awarded to Milan. We
affirm, however, the trial court's award of
attorney's fees in favor of Volunteer International, Inc.
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Reversed in Part, Affirmed in Part and
Martinez, Washington, D.C, Kevin Jakopchek, Chicago,
Illinois, Eugene N. Bulso, Jr. and Paul J. Krog, Nashville,
Tennessee, for the appellant, Navistar, Inc.
Phillips, Adam Nelson, Jackson, Tennessee, Clay Miller,
Lawrence R. Lassiter, Dallas, Texas and Donald Capparella,
Nashville, Tennessee, for the appellee, Milan Supply Chain
Solutions, Inc. f/k/a Milan Express, Inc.
Martinez, Washington, D.C., Kevin Jakopchek, Chicago,
Illinois, Eugene N. Bulso, Jr. and Paul J. Krog, Nashville,
Tennessee, for appellee, Volunteer International, Inc.
Bradley M. Davis, Chattanooga, Tennessee, for amicus curiae
Tennessee Chamber of Commerce and Industry.
B. Goldin, J., delivered the opinion of the Court, in which
Kenny Armstrong, and Carma Dennis McGee, JJ., joined.
B. GOLDIN, JUDGE.
AND PROCEDURAL HISTORY
Milan Supply Chain Solutions, Inc. ("Milan") is a
logistics company that is engaged in the business of hauling
refrigerated and dry van commodities across the country.
Defendant Navistar, Inc. ("Navistar") is a Delaware
corporation that manufactures trucks and other equipment.
Defendant Volunteer International, Inc.
("Volunteer") is a Tennessee company that sells and
services Navistar trucks and equipment.
present dispute arose as a result of Milan's business
dealings with Navistar and Volunteer, specifically its
purchase of over two hundred Navistar trucks through a series
of separate transactions. When Milan purchased its trucks,
they were subject to a standard "Limited Warranty";
Milan also purchased "Optional Service Contracts"
concerning the trucks. Pursuant to the terms of the
"Limited Warranty" and "Optional Service
Contracts," Navistar agreed to "repair or
replace" parts of the trucks that proved defective.
Among other things, however, the documents also provided that
no warranties were given beyond those described in the
warranty documents and that the warranties of merchantability
and fitness for a particular purpose were specifically
November 13, 2014, Milan commenced the present litigation by
filing a complaint in the Madison County Circuit Court
against both Navistar and Volunteer. The complaint alleged
that the trucks purchased by Milan were defective and stated
that not long after they were purchased, Milan "began to
experience numerous breakdowns of the Trucks." Milan
asserted that although it had taken the trucks to the
"Navistar Network" for repair, it had been
repeatedly delayed in getting the trucks back into operation.
Milan further charged Navistar and Volunteer with making a
number of misrepresentations concerning the trucks. According
to Milan, it had been provided with false information
regarding the trucks' performance capabilities, fuel
economy, and overall fitness for use.
subsequently-filed amended complaint, Milan reiterated these
same concerns and asserted several legal claims for relief,
including breach of contract, breach of express and implied
warranties, fraud, and violation of the Tennessee Consumer
Protection Act. Although a number of Milan's claims were
dismissed prior to trial, including its warranty claims,
asserted fraud and Tennessee Consumer Protection Act claims
were allowed to proceed to trial before a jury.
the close of Milan's proof, the Circuit Court ruled that
a directed verdict should be entered in favor of Volunteer.
As it explained in a subsequent order memorializing this
ruling, the court noted that Milan's former president had
specifically testified that Volunteer's representative
was an honest and credible man. With regard to Navistar,
however, the case was submitted to the jury for a verdict.
After deliberating, the jury returned a verdict in favor of
Milan, finding, among other things, that Navistar had
represented that the trucks purchased were of a particular
standard and quality when they were that of another. Pursuant
to the Circuit Court's "Order of Judgment,"
which was entered on the jury's verdict, Milan was
awarded over $10, 000, 000 in compensatory damages and $20,
000, 000 in punitive damages.
entry of the "Order of Judgment," various motions
and responses to motions were filed by the parties, including
a motion for new trial and accompanying memorandum of law by
Navistar. Ultimately, the Circuit Court entered a series of
orders wherein it denied Navistar's motion for new trial,
awarded Milan attorney's fees and discretionary costs
against Navistar, and awarded Volunteer attorney's fees
and discretionary costs against Milan. This timely appeal
parties raise a number of issues for our consideration in
this appeal. In Navistar's appellate brief, it
specifically raises the following matters:
1. Whether the trial court erred in holding that
Tennessee's economic loss doctrine categorically does not
apply to fraud claims.
2. Whether the trial court erred in holding that a commercial
truck sold to a company for business use falls within the
Tennessee Consumer Protection Act's definition of
"[g]oods," Tenn. Code Ann. § 47-18-103(7).
3. Whether the trial court erred in holding that material
evidence supported the jury's finding that Milan filed
its Tennessee Consumer Protection Act claim within the
one-year statute of limitations.
4. Whether the trial court erred in excluding evidence of
conspicuous written disclaimers in the parties'
5. Whether the trial court erred in holding that Tennessee
law does not require benefit-of-the-bargain damages to be
calculated as of the time of sale.
6. Whether the trial court erred in upholding the jury's
award of lost profits in the absence of any proof of lost
7. Whether the trial court failed to carry out its thirteenth
juror responsibility when it deferred to the jury's
verdict without independently deciding whether it agreed with
8. Whether the jury's $20 million punitive damages award
was excessive and unreasonable in violation of Tennessee law
or Navistar's due-process rights.
separately raises the following two issues, restated verbatim
from its brief:
1. The trial court denied Volunteer's motion for summary
judgment on all Milan's misrepresentation-based claims,
including Milan's claim under the TCPA, finding that
there were "genuine issues of material fact," and
Volunteer never claimed that the trucks were not
"goods" under the TCPA. Though the trial court
ultimately granted Volunteer's motion for directed
verdict during the trial, it awarded attorney's fees to
Volunteer under the TCPA. Did the trial court err because,
having survived a summary-judgment motion, Milan's TCPA
claim against Volunteer was not, by definition
"frivolous, without legal or factual merit, or brought
for the purpose of harassment?"
2. Under Tennessee law, a limited "repair or
replace" remedy in a warranty can fail of its essential
purpose if there is evidence that the seller is unable to
effectively repair the goods. There was ample evidence in the
summary-judgment record that whatever repairs Navistar did
perform were ineffective, with multiple trucks needing
multiple repairs of the EGR system, as well as evidence from
Navistar's own internal records showing that it was never
able to effectively repair the EGR system. Did the trial
court err by dismissing Milan's breach of express
warranty claims against Navistar by ruling that a limited
"repair or replace" remedy cannot fail of its
essential purpose as a matter of law as long as the seller
performs repairs when asked and there were triable issues of
fact as to whether the remedy failed of its essential
part, Volunteer separately raises as an issue whether it
"is entitled to recover attorney's ...