Southwest Forest Industries, Inc. v. Westinghouse Electric Corp.

In 1963 Southwest Forest Industries, Inc. [Southwest] brought suit against Westinghouse Electric Corp. [Westinghouse] for damages resulting from defects in a 25,000 kilowatt turbine generator sold by Westinghouse to Southwest. Jurisdiction in the district court rested on diversity of citizenship. Southwest appeals from the district court’s judgment for Westinghouse. We affirm.

After preliminary feasibility studies,Southwest and Rust Engineering Company [Rust] entered into an agreement under which Rust was to construct a pulp and paper mill for Southwest near Snowflake, Arizona. Pursuant to this agreement, Rust initiated negotiations with Westinghouse for the purchase of the generator in 1960. There followed a warranty battle, the outcome of which is disputed by the parties. Westinghouse built the unit and it was installed in the Southwest plant in late 1961. The bulk of the damages claimed by Southwest are for “lost time, labor, materials, and loss of business” suffered as the result of subsequent slowdowns and shutdowns in Southwest’s Snowflake plant in late 1961 and 1962, allegedly caused by defects in the Westinghouse generator.

1. The proceedings in the trial court.

The…