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Toshiba Machine Co.11/10/2005
tware" and "there will never be any revisions or updates" to the software provided with the BMC-800. When SPM confronted Toshiba about these statements, Toshiba dismissed them as a miscommunication. Toshiba said it planned to showcase the orbit boring software along with the new NX-76 at a Chicago tool show in September. SPM would receive the software immediately after the show, promised Toshiba.
SPM sent a representative to the Chicago tool show. Toshiba did exhibit orbit boring on the new NX-76, but told SPM's representative that the NX-76 software would not be available for the BMC-1000 until January.
SPM and Toshiba continued to wrangle over the BMC performance issues, and especially the orbit boring software, for another year. As late as May 13, 1999, Toshiba's Oliphant sent a memorandum to SPM promising delivery of the orbit boring software within two months. SPM, Maruka, and Toshiba scheduled a meeting at SPM's factory for August 1999. At the meeting, Toshiba definitively announced that SPM would not receive the orbit boring software.
From June 1998, when the BMC-1000 became operational at SPM, until November 2001, SPM used the Toshiba machines extensively to help make fluid ends. Although the lack of orbit boring software made the Toshibas useless for internal contouring, they could be used for rough machining. Using the Toshiba machines for 15,000 hours in conjunction with 18,600 hours on other machines, SPM produced 344 fluid ends at the average rate of 100 hours per fluid end--down from 115 hours per fluid end before the Toshibas went online, but far longer than the fifteen to fifty hours predicted by Toshiba.
When Toshiba announced that SPM would not receive the orbit boring software, SPM began to shop for machines to replace the Toshibas. In May 2000, SPM purchased the first of two machine tools from Toshiba rival Goss Trevisan. The first Goss went online in July 2000. A second Goss went online in May 2001. In November 2001, SPM stopped using the Toshiba machines altogether. SPM offered testimony at trial that the Goss machines could produce a complete fluid end in thirty-four hours.
In February 2000, SPM sued Toshiba for fraud, negligent misrepresentation, breach of contract and breach of warranty. Toshiba counterclaimed for the unpaid balance of the BMC-800.
The case was tried to a jury. SPM claimed three broad categories of damages: refund of the $898,200 SPM paid for the two Toshiba machines; $969,945 in incidental expenses for items such as pouring foundations for the Toshiba machines and time spent designing tools for the Toshiba machines; and $6,038,492 in lost profits.
The jury returned a verdict in favor of SPM on every cause of action. SPM elected to recover on the basis of its breach of contract claim, for which the jury awarded SPM $3,003,613 for each machine, for a total of $6,007,226. The issue of attorney's fees was submitted to the trial court by agreement of the parties. The trial court found that SPM was entitled to $1.5 million in attorney's fees through the date of judgment, plus additional fees if Toshiba unsuccessfully appealed the trial court's judgment. The trial court also found that SPM was entitled to prejudgment interest beginning on the day SPM filed suit through the date of judgment. Both parties appealed.
III. Discussion
a) Toshiba's Issues
i) Did SPM accept the machines as a matter of law?
A threshold question in this case, and key to several of Toshiba's issues, is whether SPM accepted or rejected the Toshiba machines. The jury found that SPM accepted but later revoked its acceptance of the BMC-1000 and failed to find that
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