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Lester Building Systems v. Lousiana-Pacific Corp.2/17/2004
Appellant challenges the judgment against it as a result of its sale of an allegedly defective pre-fabricated siding material known as Inner-Seal. Appellant argues that the trial court erred by denying its JNOV and new-trial motions regarding respondent's breach-of-warranty and fraud claims; and argues the trial court also erred by denying its JNOV motion regarding the costs respondent paid for the siding. Because the fraud claim is dispositive and supports the entire award on the breach-of-warranty and fraud claims; and because there is a reasonable theory that the evidence supports the verdict that respondent is entitled to recover the costs it paid for Inner-Seal, we affirm the trial court's denial of appellant's JNOV and new-trial motions. Respondent filed a notice of review and argues that the trial court erred by denying its new-trial motion for punitive damages and pre-judgment interest on the lost-profits award. Because the trial court did not clearly abuse its discretion by denying respondent's new-trial motion for punitive damages, and because the jury exercised its discretion to determine lost profits, we also affirm the trial court's denial of respondent's new-trial motion and its order denying pre-judgment interest.
FACTS
Appellant Louisiana-Pacific Corporation (LP) manufactures building materials and wood products for home and commercial builders. LP's principal place of business is Portland, Oregon. LP manufactured and sold Inner-Seal, which is a product used for exterior siding on homes and buildings.
Respondents Lester Building Systems, a division of Butler Manufacturing Company, and Lester's of Minnesota, Inc. (collectively Lester) operate in Lester Prairie, Minnesota, and design and sell pre-engineered wood buildings for non-residential use through a network of independent builders. Lester supplies livestock-containment buildings, particularly buildings for hogs. Prior to 1991, Lester used plywood as the exterior siding on its livestock buildings.
In 1989, LP and Canton Lumber Company (Canton), a third-party distributor, approached Lester and recommended that Lester switch from plywood to Inner-Seal. LP presented Lester with several brochures and written product descriptions that made statements about the quality of Inner-Seal. LP assured Lester that Inner-Seal was resistant to moisture, was proven to be superior to plywood, and that it came with a written 25-year limited warranty. Over the next 18 months, LP made additional sales visits to Lester, where LP continued to describe Inner-Seal as being superior to plywood. To ensure that LP understood the purpose for which Lester would use Inner-Seal, Lester showed LP its plant and the process it used to manufacture its exterior wall units and took LP to livestock buildings to see Lester's buildings in use. In addition, Lester invited LP to its annual builders/sales meeting to describe Inner-Seal and its warranties to Lester's independent builders. At this meeting, LP discussed Inner-Seal's qualities, testing, and warranties and assured the builders that Inner-Seal came with a 25-year warranty. Lester contends that LP never mentioned any limitations on the 25-year warranty, nor did the brochures or written descriptions set forth any exclusion of remedies or warranty disclaimers.
Lester contends that it relied heavily on the representations LP made from 1989 to 1991 in deciding to purchase Inner-Seal. Lester's procurement manager asked LP about their experience with Inner-Seal in the field, and LP responded that it had experienced "no problems" with Inner-Seal and that the product was performing well. In addition, Lester sent a letter, dated February 4, 1991, asking LP to confirm t
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