Linc Equipment Services, Inc. v. Signal Medical Services, Inc.

319 F.3d 288 (2003)

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Nature of the Case

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Facts

D an MRI from P for $30,000 per month. P and D were both merchants. D promised to return the MRI at the end of the lease in good condition, less normal wear, and tear. P is a merchant in the business of renting medical equipment, subleased this MRI to a hospital, which later returned the machine directly to P. The MRI was left on during transit, which damaged the magnet and required the machine to be taken out of service for 10 months while it was repaired. The repairs cost $130,000 and were paid for by the insurance carrier. The carrier and P resolved their differences, and only P's claim against D for 10 months' lost rental value remained. The judge assumed that D is responsible for any harm to the MRI and held a hearing to explore the question whether it is liable for consequential damages. The judge held that consequential damages may be awarded only if the signatories 'expressly contemplated' them. The contract does not in so many words entitle P to consequential damages, and at the evidentiary hearing, the persons who negotiated the lease testified that they had not discussed or thought about this subject. The judge concluded consequential damages could not have been 'expressly contemplated.' This finding led to judgment on the merits in D's favor. This appeal resulted.