Legal Lode: Oh Deere

You know the old adage, “If at first you don’t succeed, try, try again”? Well, here’s a tale of a waste company that learned how very trying repeated tries can be.

Consolidated Waste Industries (“CWI”) based in Capitol Heights, Maryland, paid $424,600 for a John Deere 744J Loader from Standard Equipment Company (“Standard”) in June 2005. Alas, the purchase agreement did not spell out which party was responsible for preventive maintenance and major repairs.

CWI used the loader at its transfer station approximately 13 hours a day, five-and-a-half days a week. Twenty months later (5,635 operating hours after the original purchase) the loader developed steering problems and generally sluggish performance. CWI diagnosed the problem as a hydraulic system failure and sent the unit back to Standard for repairs.

After a month, Standard notified CWI that the work was complete, and CWI paid the repair invoice in the amount of $17,630. When put to the test, however, the loader turned out to be inoperable. Standard took another look and found that the hydraulic fluid was contaminated with metal debris.

In May, 2007 – four months after first receiving the loader – Standard completed the second round of repairs and returned the loader to CWI in operating condition, costing CWI another $2,800.

Seven months and 2,150 operating hours later, CWI transported the loader to Standard to fix similar performance problems. In mid-January, 2008, Standard returned the “repaired” unit after CWI had paid another $16,770. Not 30 minutes after the loader returned to service, the same problems occurred. Back went the loader to Standard where the repairs took another four months. CWI reclaimed its loader after paying the $16,850 invoice – this time, “under protest.”

In December 2008, CWI sued Standard in a Maryland state court alleging negligence and breach of contract for failure to properly perform the third and fourth rounds of repairs. The complaint asked for damages in the amount of $33,620.

While the case was pending, approximately 20 months and 4,400 hours of operating time after the disputed repairs, CWI had hydraulic system problems again. This time, CWI took the loader to Carter Machinery, which found metal debris in the hydraulic tank. Cleaning out the hydraulic system cost CWI another $40,000.

Preceding the start of the trial, the judge granted Standard’s motion to exclude any testimony about uncontested repairs (work done by Standard in 2007) and Carter’s subsequent repairs to the loader in 2010.

During the two-day jury trial, besides other evidence presented by the parties, Carter’s product support representative testified as an expert witness for CWI. As he saw it, the metal debris present in the hydraulic tank indicated contamination of the entire hydraulic system. He also expressed an opinion about the proper industry standard for correcting metal contamination, and he described his past work generally in supervising such repairs on the Deere 744J. Notably, he refused to comment specifically on the details or competency of the work performed by Standard, even after examining the repair invoices.

The jury verdict in favor of Standard included a specific finding that CWI failed to prove “by a preponderance of evidence” that Standard was negligent. CWI appealed based, in part, on the judge’s refusal to allow evidence of Carter’s subsequent repairs.

Upholding the exclusion of the evidence, the state’s highest court found that the probative value of the subsequent repairs was limited. “A reasonable person could conclude, as the trial judge did, that evidence of the subsequent repairs could confuse or mislead the jury into concluding erroneously that Standard breached the contract or acted negligently simply because [Carter made] subsequent and similar repairs.”

[Consolidated Waste Industries, Inc. v. Standard Equipment Co., 15 A.3d 298 (2011)]

Barry Shanoff is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail: [email protected].