Facts
- Dr. A.H. Manouchehri, a physician in Cedar Crest, New Mexico, sought to purchase a used 100/100 x-ray machine for use in his medical practice.
- Jeff Heim, a medical supply sales representative who had previously sold items to Dr. Manouchehri, sold him a machine for $1,900 in December 1991.
- Dr. Manouchehri paid by check bearing notations stating the machine was “guaranteed to work” as a “Continental 100-100 x-ray” and that the payment was for “purchase and installation”; Heim signed the check after the notations were read to him.
- After installation, the machine performed as a 100/60 unit, limiting its ability to produce adequate images for many adult patients.
- Dr. Manouchehri notified Heim and requested repair, offering to pay half the repair costs; Heim sent an inspector, but no repairs were made.
- Dr. Manouchehri testified Heim ultimately admitted knowing the machine was 100/60 and suggested its limited capability corresponded to its low price.
- Over roughly two and a half years, Dr. Manouchehri continued seeking a cure while the machine’s limitations allegedly caused lost profits from x-rays he could not perform.
- Dr. Manouchehri sued for breach of warranty; after a bench trial in which he was the only witness and Heim offered no affirmative evidence, the district court awarded $1,900 in direct damages and $2,500 in lost-profit consequential damages (though labeled “incidental” by the trial court).
Issues
- Whether the defendant’s venue challenge was waived because it was raised too late.
- Whether direct damages were improper where the trial court referenced repair costs but the plaintiff offered no evidence of repair cost.
- Whether lost-profit consequential damages were barred or reduced because (a) the plaintiff should have avoided losses by promptly obtaining a replacement, (b) the losses were not foreseeable, or (c) the losses were not proved with reasonable certainty.
Decision
- The Court of Appeals of New Mexico affirmed the judgment.
- The venue objection was untimely and not properly preserved, so it provided no basis for reversal.
- The $1,900 direct-damages award was sustainable under the UCC “difference in value” measure (value as warranted minus value as delivered), regardless of the trial court’s discussion of repair cost.
- The $2,500 lost-profit award was properly treated as consequential damages and was supported by evidence of foreseeability, non-avoidability under the circumstances, and reasonable certainty of proof.
Legal Principles
- Venue objections can be waived if not timely raised; a defendant who answers and litigates without promptly objecting may forfeit the issue.
- For breach of warranty in a sale of goods, direct damages may be measured by the difference between the value of the goods as warranted and the value as accepted; an award may be affirmed if supported by any correct legal theory consistent with the evidence.
- Consequential damages for lost profits are recoverable when the seller had reason to know of the buyer’s intended use and the losses were foreseeable at contracting.
- A buyer’s mitigation duty does not necessarily require immediate replacement when the buyer reasonably relies on the seller’s assurances or conduct suggesting the defect will be cured.
- Lost profits need not be proved with mathematical precision; credible testimony can provide a reasonably certain basis for a reasonable estimate.
Conclusion
The court affirmed damages for sale of a nonconforming x-ray machine, holding that venue was waived by an untimely objection, direct damages were supportable under the UCC difference-in-value measure despite the trial court’s repair-cost framing, and lost-profit consequential damages were recoverable because they were foreseeable, not unreasonably avoidable, and proved with reasonable certainty.