Title: Moore & Moore Gen. Contr. v. Basepoint Inc.

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
MOORE & MOORE GENERAL  
CONTRACTORS, INC. 
 
OPINION BY JUSTICE A. CHRISTIAN COMPTON 
v.  Record No. 961324                  April 18, 1997 
 
BASEPOINT, INC. 
 
 
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY 
 
J. Peyton Farmer, Judge 
 
 
The parties to this dispute agree that its outcome is 
controlled by the Uniform Commercial Code 
___ Sales (UCC), Code 
§ 8.2-101 et seq.  The central issues on appeal are whether, 
under the facts, a buyer's acceptance of nonconforming goods can 
be revoked because of the nonconformity, and whether, 
notwithstanding the inability to revoke, the buyer is entitled to 
recover from the seller the cost of substitute goods. 
 
This controversy stems from a contract between a 
subcontractor and a general contractor in connection with 
construction of a Red Lobster restaurant in Spotsylvania County. 
 Basepoint, Inc., the subcontractor, entered into an agreement 
with Moore & Moore General Contractors, Inc., the general 
contractor, to supply casework, including cabinets, and interior 
trim items for the facility, which was owned by General Mills 
Restaurants, Inc.   
 
Moore & Moore, the buyer, refused to pay for cabinets 
delivered by Basepoint, the seller.  Thereafter, the seller 
timely filed a memorandum of mechanic's lien in the sum of 
$28,080 and the present bill of complaint to enforce the lien.  
Named as defendants to the bill were the buyer and the owner. 
 
In its answer, the buyer denied indebtedness to the seller, 
 
 
 
 
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claiming the materials supplied were defective.  In addition, the 
buyer filed a cross-bill seeking recovery of approximately 
$47,000 to cover the cost of removing the "defective" casework, 
rebuilding the casework, and finishing the remaining work under 
the seller's contract.   
 
Subsequently, by order, the property was released from the 
lien upon the filing of an appropriate bond as provided by Code 
§ 43-70.  The owner then was dismissed from the suit.   
 
The cause was referred to a commissioner in chancery, who 
conducted an evidentiary hearing.  The facts were presented 
through ore tenus testimony, a de bene esse deposition, and 
documentary exhibits. 
 
The commissioner submitted a report finding that the lien 
was valid, that the seller was entitled to judgment against the 
buyer in the sum claimed, and that the buyer was not entitled to 
judgment on its cross-claim.   
 
The trial court overruled the buyer's exceptions to the 
commissioner's report and confirmed it.  The buyer appeals from 
the March 1996 final decree. 
 
Upon appellate review, a commissioner in chancery's factual 
findings based on ore tenus evidence that are confirmed by the 
trial court are given great weight.  These findings will be 
reversed only if they are plainly wrong or without evidence to 
support them.  Cooper v. Cooper, 249 Va. 511, 518, 457 S.E.2d 88, 
92 (1995). 
 
 
 
 
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The commissioner made the following factual findings.  In 
connection with the bidding process for the Red Lobster project, 
the buyer provided the seller, which makes and sells woodwork, 
with plans and specifications prepared by Vision III, an 
architect, dated in November 1990.  The seller made a proposal in 
December 1990 to the buyer "to furnish millwork items in 
accordance with plans and specifications, prepared by Vision III, 
dated 11-30-90."  These items included custom-made cabinets such 
as bar cabinets, food service cabinets, overhead office cabinets 
and restroom vanity cabinets.  Shop drawings then were prepared 
and accepted by the parties.   
 
The Vision III plans provided that all cabinets would be 
made of wood.  The approved shop drawings made reference to the 
use of "melamine."  There was a dispute in the evidence over the 
meaning of "melamine."  The seller offered evidence to show that 
"melamine," as used in the shop drawings, referred to a composite 
product with a particular type of hard finish.  The buyer 
presented evidence that the word "melamine" referred only to a 
finish, which can be placed on composite material or wood.  
According to the buyer, reference in the shop drawings to 
"melamine" meant that the seller was authorized to provide wood 
covered with "melamine," not a composite material covered with a 
hard surface.   
 
In making his factual findings, the commissioner principally 
relied upon the ore tenus testimony of Donnie Ray Hall.  Called 
 
 
 
 
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as a witness by the seller, Hall had been the buyer's job 
superintendent for the Red Lobster project.  Hall, a contractor 
who was experienced in millwork and carpentry, worked under the 
buyer's field superintendent, Allen L. Lyle. 
 
According to Hall, he and Lyle were aware of the reference 
to "melamine" in the shop drawings and that the Vision III plans 
called for the use of plywood cabinets.  Describing "melamine" as 
"a product with a particle board core in it," Hall testified that 
Lyle "knew" that particle board was to be used instead of 
plywood, that he and Lyle concluded the owner "would not know the 
difference" were it used in place of plywood, and that the 
particle board was a product that would perform "just as well" as 
wood in these circumstances.   
 
Upon delivery of the cabinets to the jobsite between 
March 19, 1991 and April 12, 1991, Hall and Lyle inspected them 
and "did see it was particle boards."  Hall found the product to 
be "in A-1 shape . . . other than . . . what it was made of."  
According to Hall, Lyle "had to get" the exposed ends of the work 
"covered up" with drop cloths before installation so that the 
owner's inspector would not see "these products prior to" 
installation.  Hall testified that Lyle "thought he was saving 
money" by accepting the cabinets as delivered.   
 
Lyle then directed installation of all the cabinets and 
every one was installed prior to the inspection by the owner's 
representative.  On May 1, 1991, the owner's inspector examined 
 
 
 
 
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the installed millwork.  He rejected the cabinets, stating they 
did not conform to the plans and specifications.  On May 2, 1991, 
the buyer sent a letter to the seller stating, "On Wednesday, May 
1, 1991, it was discovered that most of your casework is 
constructed of particle board.  Since the plans [] we provided 
you for the above referenced job [] call for plywood, all of the 
casework that has particle board does not conform and must be 
replaced."  In the letter, the buyer set the following Tuesday as 
the deadline for delivery of the replacement material, noting 
that the seller already had notified the buyer's field 
superintendent it could not meet the deadline. 
 
Later, Hall was told by one of the buyer's executives "that 
Allen Lyle had made a big mistake and they had used the wrong 
products, they had approved the wrong products to be used in the 
cabinets."  According to Hall, the executive "felt that his man 
was really at fault and had made a mistake in this."   
 
Upon removal of the cabinets made of particle board, the 
buyer immediately procured plywood replacements from another 
subcontractor.  The new cabinets were installed promptly and the 
project was completed nearly on time.   
 
UCC § 8.2-601, dealing with a buyer's rights on improper 
delivery, provides, as pertinent, that if "goods . . . fail in 
any respect to conform to the contract, the buyer may (a) reject 
the whole; or (b) accept the whole; or (c) accept any commercial 
unit or units and reject the rest." 
 
 
 
 
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UCC § 8.2-606, dealing with what constitutes acceptance of 
goods, provides, as pertinent, that "(1) Acceptance of goods 
occurs when the buyer . . . (c) does any act inconsistent with 
the seller's ownership. . . ." 
 
The buyer's installation of the nonconforming cabinets 
constituted an "act inconsistent with the seller's ownership" and 
thus amounted to an acceptance of the goods under § 8.2-
606(1)(c).  The buyer does not dispute this conclusion.  Instead, 
the buyer contends that it properly revoked its acceptance of the 
cabinets because of their nonconformity to the plans and 
specifications.   
 
The buyer had no right, however, to revoke the acceptance.  
The buyer, through its field superintendent and job 
superintendent, had full knowledge that the cabinets supplied by 
the seller did not conform to the plans and specifications.  The 
consequences of an "acceptance" under these circumstances is 
clearly set forth in UCC § 8.2-607(2).  The statute provides that 
a buyer's acceptance of goods "precludes rejection of the goods 
accepted and if made with knowledge of a nonconformity cannot be 
revoked because of it. . . ."  In other words, revocation is 
unavailable for a nonconformity known to the buyer at the time of 
acceptance, except under circumstances not present here.  See 
Official Comment 2. 
 
But § 8.2-607(2) also provides that "acceptance does not of 
itself impair any other remedy provided by this title for 
 
 
 
 
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nonconformity."  The buyer contends that while acceptance of the 
cabinets entitles the seller to payment of the contract price of 
approximately $28,000, the nonconformity of the goods entitles 
the buyer to judgment on its cross-bill for approximately $47,000 
for the cost incurred to remove and replace the nonconforming 
cabinets.  Thus, the issue arises whether the buyer is entitled 
to recover under its cross-bill.   
 
The buyer based its cross-bill on only the "cover" remedy 
available under UCC §§ 8.2-711 and -712, which allow a buyer to 
recover for procurement of substitute goods.  Under § 8.2-711, 
the "cover" remedy is available in four situations:  when the 
seller "fails to make delivery;" when the seller "repudiates" the 
contract; when the buyer "rightfully rejects" the goods; and when 
the buyer "justifiably revokes acceptance" of the goods.  None of 
those situations exists in this case, as the commissioner and the 
trial court properly ruled in denying the cross-bill. 
 
Finally, we summarily reject the buyer's contention that the 
mechanic's lien was unenforceable.  The buyer contends that 
because the materials were removed from the building before the 
memorandum was filed, the goods did not enhance the value of the 
building, thus making the lien invalid. 
 
Code § 43-3 authorizes a lien in favor of "[a]ll persons 
performing labor or furnishing materials . . . for the 
construction . . . or improvement of any building."  The seller 
furnished materials for this building project, and the cabinets 
 
 
 
 
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were delivered, accepted, installed, and added value to the 
structure.  The fact that the cabinets were removed before the 
memorandum was filed is irrelevant.  The legislature could not 
have intended that a supplier's mechanic's lien may be avoided 
simply by removing from the building the materials furnished and 
incorporated in it. 
 
Consequently, we hold that the commissioner's factual 
findings confirmed by the trial court are not plainly wrong but 
are supported by credible evidence, and that the court's 
conclusions of law are correct.  Thus, the judgment of the trial 
court will be 
 
Affirmed.