The Court of Appeals for the Sixth Circuit reversed the vacation of summary judgment in favor of the defendant and the entry of judgment against that defendant following a trial against a co-defendant. In Dillon v. Cobra Power Corp., 560 F.3d 591 (5th cir. 2009), suit was brought against Cobra Power Corp. for a breach of warranty and against a co-defendant for breach of contract and warranty. In October 2003 the court granted Cobra’s Motion for Summary Judgment thereby dismissing it as a party. The Court also granted summary judgment on the warranty claim against the co-defendant and then held a bench trial on the remaining breach of contract claim. The summary judgment for Cobra was based on an affidavit from Cobra’s president that no warranty had been given. However, at the subsequent trial Cobra’s president, when called as a witness, testified that there was a warranty given. Cobra, having been dismissed, was not a party at the trial.
On August 5, 2005 following conclusion of the bench trial against the co-defendant, Cobra’s attorney received a court order and learned for the first time the Court was not only vacating its earlier dismissal of Cobra, but was holding Cobra liable for breach of warranty that entitled plaintiff to recover damages from Cobra. In June 2006 the Court ordered Cobra to file a pleading to contest its liability. Then on December 14, 2006, the court terminated the case finding Cobra liable for breach of warranty and awarded damages to the plaintiff. The Court of Appeals held that the District Court erred in reversing its prior grant of summary judgment and later entering judgment in favor of the plaintiff. The Court said,
“… Once dismissed from the case, Cobra had no reason or right to participate in the later trial. No claim was pending against it at that time. The prejudice to Cobra in the instant case is obvious. Certainly with a bench trial, the better procedure would have been to adjourn the trial, join Cobra again as a party defendant, and allow it an opportunity to respond to the new testimony. Participation at trial as a party may well have prevented any prejudice by such a late reversal of summary judgment. (p. 651)