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Toshiba Machine Co.11/10/2005
hat resolution of the orbit boring problem was "right around the corner" and refused to ship the BMC-800 otherwise.
Toshiba delivered the BMC-800 in September 1998. Lowrance testified that Toshiba's Steve Oliphant told him that SPM would receive the orbit boring software immediately following the debut of the NX-76 in Chicago that same month. Chris Wall testified that Oliphant told him on September 18, 1998 that Toshiba was working on the orbit boring software and would deliver it in January of the following year. On May 13, 1999, Oliphant sent a memo to SPM's George Reeve in which he stated that Toshiba would deliver orbit boring software within two months. Gene Burkes, general manager of Maruka U.S.A., testified that he called Oliphant on SPM's behalf at least a dozen times between January and May 1999. According to Burkes, Oliphant "kept saying the software is coming." In August 1999, Toshiba announced that it would not deliver orbit boring software to SPM.
Ray Gilbert, SPM's vice president of finance, testified that the BMC machines were worthless to SPM without the orbit boring function. Nevertheless, as detailed later in this opinion under the issues of damages and mitigation, SPM cut the time needed to make a fluid end from 115 hours to 100 hours by making what use it could of the BMC machines, though the production time was far longer than the fifteen to fifty hours SPM expected to achieve. It is undisputed that SPM used the BMC machines for 17,000 hours.
We note that it is unclear from the record when and how SPM notified Toshiba that it was revoking its acceptance of the BMC-1000 and rejecting the BMC-800. But Toshiba does not complain of lack of notice, so we will not dwell on this point.
We turn to the question of SPM's revocation of acceptance of the BMC-1000 under section 2.608. The non-conformity identified by SPM was the lack of the orbit boring function. Gilbert testified that the lack of orbit boring substantially impaired the BMC-1000's value to SPM. The jury could reasonably conclude that SPM did not discover the non-conformity until Toshiba announced in August 1999 that it would not deliver the orbit boring software, and that SPM's failure to discover the non-conformity was induced by Toshiba's many assurances that it would deliver the orbit boring software. Both Toshiba's assurances and SPM's use of the BMC-1000 to mitigate its damages until it could obtain replacements tend to support the conclusion that SPM's extensive use of the BMC-1000 was reasonable, before and after SPM revoked its acceptance. Moreover, Chris Wall testified that replacement machines suitable to SPM's needs were not easy to obtain, and the replacement machines SPM ultimately bought had a long lead time. Whether SPM's use of the BMC-1000 was reasonable was a fact question for the jury to decide. The evidence supports the conclusion that SPM's use was reasonable. We hold that there was more than a scintilla of evidence to support the jury's finding that SPM revoked its acceptance of the BMC-1000.
With regard to the BMC-800, the same factors--Toshiba's repeated assurances of an imminent fix, SPM's use of the BMC-800 to mitigate its damages, and the difficulty of obtaining replacement machines--tend to justify SPM's use of, and delay in rejecting, the BMC-800. We hold that there is more than a scintilla of evidence to support the jury's failure to find that SPM accepted the BMC-800.
We overrule the part of Toshiba's second issue that concerns acceptance of the BMC machines (the same issue raises other complaints, which we address in the next section of this opinion). This conclusion is the starting point for our analysis of Toshiba's other issues.
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