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The Rough Notes Company Inc.

Will the real tractor owner please stand up?

Will the real tractor owner please stand up?

December 26
09:32 2018

Will the real tractor owner please stand up?

DNJ, Inc., purchased a forage chopper from Burks Tractor Company, Inc. The chopper was manufactured by Krone North America, Inc., and was the subject of two warranties: the New Equipment Limited Warranty and the Krone North America Crown Guarantee. On October 15, 2012, the chopper was destroyed by fire. Western Community Insurance Company, DNJ’s insurer, paid DNJ $440,779 for the loss of the chopper. Western Community then brought a subrogation action in which it advanced theories of express warranties found in the two warranties provided by Krone, breach of the covenant of good faith, and violations of the Idaho Consumer Protection Act (ICPA).

The court dismissed Western Community’s ICPA claims against Krone and Burks, holding that “a subrogee may not sue under the ICPA absent an express agreement … .” Although all parties’ pleadings identified Burks as the owner of the chopper when it was sold to DNJ, shortly before trial Krone informed the court and Western Community that the chopper actually had been owned by Krone. Western Community filed an amended complaint that reflected this new information. In response, Burks filed an answer that included several new affirmative defenses. Western Community filed a motion to strike the new defenses. The court denied the motion, finding that the amendments did not prejudice Western Community.

At trial, a jury found for Krone on all counts, holding that: (1) Krone did not breach the express terms of the New Equipment Limited Warranty; (2) Krone did not breach the express terms of the Krone North America Crown Guarantee; (3) Krone did not violate a duty of good faith with respect to the New Equipment Limited Warranty; and (4) Krone did not violate a duty of good faith with respect to the Krone North America Crown Guarantee. Thereafter, Western Community filed motions for reconsideration and a new trial. The court denied both motions, and Western Community appealed.

On appeal, the court held that the trial court erred in dismissing Western Community’s ICPA claim and by denying its motion for a new trial, asserting that the lower court had erroneously relied on a case that was markedly different than the current action. The court held that the lower court did not err in denying Western Community’s motion for a new trial for an abuse of discretion because the insurer did not meet the required burden of proof.

The court found further that the lower court did not abuse its discretion by denying Western Community’s motion to strike and permitting Burks to assert new legal and factual defenses before trial after it was discovered that the chopper actually was owned by Krone rather than Burks. The court held that the new defenses did not prejudice Western Community.

The court also found that the lower court did not err in entering a directed verdict for Burks, because Western Community had failed to present evidence to show privity between DNJ and Burks.

The judgment of the lower court was affirmed, and Burks and Krone were awarded attorney fees and costs.

Western Community Insurance Company vs. Burks Tractor Company, Inc.-Supreme Court of Idaho-September 6, 2018-No. 44372.

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