H. H. Taylor, C. A. v. Ramsay-Gerding Construction Company

196 P.3d 532 (2008)

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Nature of the Case

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Facts

Ps hired Ramsay (D) as a general contractor to build a hotel. Ramsay (D) hired a subcontractor to install stucco plaster exterior siding and accompanying accessories. Pursuant to the stucco installer's recommendation, Ramsay (D) proposed using a stucco system called 'SonoWall,' manufactured by ChemRex (D)., and Ps approved that proposal. During construction, Ps grew concerned about possible rusting of the galvanized fittings that were included in the stucco system. Ramsay (D) halted construction until the problem could be solved. A meeting was called and Mike McDonald, ChemRex's (D) territory manager for Oregon was present. McDonald asserted that the SonoWall system was 'bullet-proof' against rust but noted that a corrosion inhibitor would provide further protection. When P was still unconvinced, McDonald stated, 'Mr. Taylor, did you know you're getting a five-year warranty?' By the end of that meeting, P agreed to go forward, with the addition of the corrosion inhibitor. After construction had been completed, but before all construction funds had been disbursed, McDonald sent a letter to the stucco installer on ChemRex letterhead. The letter stated, in part, 'This letter is to confirm that [ChemRex] will warrantee the Sonowall stucco system for five years covering the material and labor on this project starting in March of 1999,' and was signed 'Mike McDonald, Territory Manager OR.' Ps eventually received the letter. The walls became discolored from rust and no one fixed the problem. Ps sued Ramsay (D) who filed a third-party complaint for indemnity and contribution against ChemRex (D). The express warranty claims were tried to a jury. ChemRex (D) moved for a directed verdict, arguing that there was insufficient evidence for the jury to find that McDonald had the authority to act for ChemRex (D) in giving the warranty. The court allowed the jury to determine whether McDonald had apparent authority. Ps got the verdict and D appealed. Ps appealed the trial court's submission of ChemRex's (D) comparative fault defense to the jury. ChemRex (D) cross-appealed on the issue of apparent authority. The Court of Appeals agreed with ChemRex (D) and reversed the judgment. It held that McDonald's role as a selling agent and his title of territory manager were insufficient to establish apparent authority to provide a warranty on ChemRex's (D) behalf. Ps appealed.