COA splits on damages award in nursing home’s breach of warranty dispute

A split Indiana Court of Appeals panel has reversed a damages award to a nursing home in its breach of warranty dispute with a roofing company, with a dissenting judge arguing that the damage award was within the scope of the evidence.

Just one day before its 15-year Red Shield Warranty with Firestone Building Products expired, Maples Health Care Inc. filed a complaint in March 2016 alleging that Firestone failed to repair leaks in the building’s roof over the period of 2006 through 2016 and refused “to perform necessary repairs in 2015 and 2016,” and seeking damages for the breach. Maples’ facility is a nearly 100-year-old five-story structure in Bluefield, West Virginia.

Maples’ complaint principally referred to the Red Shield Warranty but also mentioned its 20-year Membrane Warranty, and it attached a copy of the Red Shield Warranty but did not attach a copy of the Membrane Warranty.

Firestone denied that Maples was entitled to recover damages for the alleged warranty breach and asserted affirmative defenses, but the Hamilton Superior Court ultimately ruled for Maples following a bench trial on liability and damages. The court awarded Maples $9,500 in damages, prompting Maples to file a request for clarification and motion to correct errors on whether the trial court’s order finding Firestone in breach extended to both the Red Shield Warranty and the Membrane Warranty and the proper measure of damages for the breach.

After a hearing was held on that issue, the trial court orally denied Maples’ request for clarification and motion to correct errors and entered a written order stating that its judgment finding breach was “as to all claims made by [Maples] in its complaint” and that the damages entered were “the maximum damages supported by competent evidence.”

In partially affirming and reversing the trial court’s decision, a divided Indiana Court of Appeals panel concluded that the judgment finding Firestone liable for breach of warranty extended only to the Red Shield Warranty “as it was the sole claim alleged in the complaint that was properly before the trial court.”

“We disagree that Maples made a separate claim under the Membrane Warranty in its complaint,” Judge James Kirsch wrote for the majority, joined by Judge Rudolph Pyle III.

The majority first noted that the proper venue for a dispute under the Membrane Warranty was arbitration and not the trial court, further pointing out that the complaint mentioned the existence of the Membrane Warranty but did not otherwise specifically raise a claim under the Membrane Warranty and did not attach a copy of it.

“Therefore, the trial court’s judgment finding Firestone liable for breach extends only to the Red Shield Warranty as it was the sole claim alleged in the complaint that was properly before the trial court, and we affirm that judgment only as to breach of the Red Shield Warranty,” it wrote.

Regarding damages, the majority concluded that it could not say that the $9,500 award was based on probative evidence in light of the record of spot-repairs as to the measure of Maples’ damages.

“We, therefore, reverse the damage award and the order on the request for clarification and motion to correct error as to damages. We remand with instructions to hold another hearing on damages that addresses: (1) the appropriate measure of damages, including (if necessary) the use of a third party expert to review the pleadings and evidence and render an opinion on the calculation of damages; (2) whether Maples failed to mitigate its damages; and (3) whether the (Uniform Commercial Code) applies and if (Rheem Mfg. Co. v. Phelps Heating & Air Conditioning, Inc., 746 N.E.2d 941, 948 (Ind. 2001)) limits Maples’s proposed damage award; with an order containing findings and conclusions that explain the damage award,” it concluded.

Concurring in part with the majority’s decision on the breach issue, Judge Elizabeth Tavitas in a separate opinion dissented in part regarding the majority’s reversal of the damage award. Instead, she concluded that the evidence supported the trial court’s damage award.

“Pursuant to the Red Shield Warranty, Firestone’s liability was limited to the repair of the leak and excluded consequential damages. James Montgomery testified that Dunford Roofing gave him an estimate of $9,500.00 to repair the roof. The trial court found that Maples proved damages in the amount of $9,500.00. The trial court’s damage award was within the scope of the evidence, and I would affirm,” Tavitas wrote.

The case is Maples Health Care, Inc v. Firestone Building Products, 20A-PL-01095.