874 N.W.2d 317
N.D.2016Background
- Patterson Enterprises (Montana) leased used heavy equipment orally from Titan Machinery during 2011 construction projects in ND and MT; disputes arose over unpaid rents, damage, downtime, and repairs.
- Titan sued for unpaid lease amounts and finance charges; Patterson counterclaimed for breaches of warranty and consequential damages.
- At bench trial the district court found Patterson owed Titan $73,852.31, rejected express and implied warranty claims except awarding $839.90 for making two machines operable, and denied broader consequential damages.
- Both parties filed post‑judgment motions; Patterson appealed evidentiary rulings, finance‑charge awards, and warranty rulings; Titan cross‑appealed certain rent calculations for three machines.
- The Supreme Court affirmed some trial findings, but reversed and remanded on (1) the district court’s failure to make findings about statutory late‑charge predicates and (2) its analysis of the implied warranty of merchantability; it rejected Titan’s cross‑appeal claims of miscalculation.
Issues
| Issue | Plaintiff's Argument (Patterson) | Defendant's Argument (Titan) | Held |
|---|---|---|---|
| Admissibility of debt summary under N.D.R.Ev. 1006 | Debt summary was produced after 9 pm before trial; underlying data not timely available; admission prejudiced Patterson | Debt summary listed on exhibit list earlier; underlying invoices were business records and available in discovery; court acted within discretion | Court did not abuse discretion admitting the summary in a bench trial given available underlying invoices and voluminous source material |
| Application of $5,617.63 as finance/late charges | Finance charges were not agreed in oral leases; statutory prerequisites of N.D.C.C. §§ 13‑01‑14 and 13‑01‑15 (no intended credit past 30 days; required periodic statements) were not met; Patterson entitled to credit | Titan contends statutory requirements were met and charges are proper component of damages for breach | Reversed and remanded for factual findings on whether statutory predicates for late charges were satisfied; trial court failed to explain basis for imposing those charges |
| Breach of implied warranty of merchantability | Patterson presented evidence some equipment was not operable on delivery and argued statutory merchantability standard (fit for ordinary use) was met; court’s findings inconsistent | Titan contends Patterson failed to prove merchantability standard or abuse of trade/course exclusions; routine used‑equipment maintenance remains lessee’s duty | Reversed and remanded for clarified findings applying the statutory merchantability standard (N.D.C.C. § 41‑02.1‑21) and on course of dealing/performance or usage of trade as applicable |
| Titan’s cross‑appeal on rent calculations for three machines | (Cross‑appellant) Titan argued trial court undercalculated amounts due and double‑billed adjustments were incorrect | Patterson defends the court’s factual findings that Titan double billed or failed to prove rent‑to‑own completion | Affirmed: Court’s factual findings on billing and rental periods for the three machines were supported by evidence and not clearly erroneous |
Key Cases Cited
- In re R.L.-P., 842 N.W.2d 889 (N.D. 2014) (bench‑trial evidentiary standard and admissibility of incompetent evidence rarely reversible absent inducement of improper finding)
- Industrial Fiberglass v. Jandt, 361 N.W.2d 595 (N.D. 1985) (application of statutory provisions for finance charges on accounts receivable)
- Metric Constr., Inc. v. Great Plains Properties, 344 N.W.2d 679 (N.D. 1984) (treatment of finance charges where contract is silent)
- Royal Jewelers, Inc. v. Kopp, 365 N.W.2d 525 (N.D. 1985) (remand required when trial court fails to find factual predicates for applying § 13‑01‑14 late‑charge statute)
- Edward H. Schwartz Const., Inc. v. Driessen, 709 N.W.2d 733 (N.D. 2006) (standards for reviewing findings of fact and clearly erroneous rule)