1 Plain tiff sued o ther de fenda nts but the rema ining de fenda nts, exce pt M actro nics, Inc ., were n on-suite d. 

### IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON Assigned O n Brief A

ugust 28, 2002 HGI ASSOCIATES, INC. v. MACTRONI CS, INC. Direct Appeal from the Circuit Court for Shelby County No. CT-003845-00 John R. McCarroll, Judge

No. W2002-00011-COA-R3-CV - Filed Novem ber 15, 2002

Plaintiff was awarded a judgment for br each of contract and incidental damag es in the amount of $18,356. The breach occurred whe n Defendant (Seller) was unable to deliver 500 c omputers which Plaintiff (Buye r) had contracted

to purchase. Plaintiff appeals contending that the damage s awarded by t he trial c ourt wer

e inadeq uate. We a

ffirm. Tenn. R. App.P. Appea l as of Right; Judgment

of the Circ

uit Court Affirme d; and Remanded
D AV ID R. F ARMER , J., de liver ed th e opi nion o f the

cour t, in w hich W. F RANK C RAWFORD , P.J., W.S., and H OLLY K. L ILLARD , J., joined. William A. Cohn, Cordova, Tennessee, for the appellant, HGI Associates, Inc. Rex L. Brasher, Jr., Memphis, Tennessee, for the appellee, Mactronics, I nc., OPINION The plaintiff

, HGI Associat es, I nc. (HGI ) enter ed into a contract to purchase 500 computers from defendant Mactronics, I

nc. 1 at $ 320 eac h. H GI had a c ontract to sell the

computer s to its customer for $355 each. Mactron

ics was un able to de

liver due to the fa ct that it w as unable

to obtain delivery fr

om its seller. Being dissatisfied with the judgment awarded fo llow ing a bench trial, HG I ap peals to th

is Court and present s its issuesas follow s: 1. Whether

the trial court erred in awarding the difference

in the purchase price and the price of the propos ed sal e by the plain tiff to a p rospect ive buy er in-2- lieu of the mandated damages pursuant to T.C.A. § 47-2-713 of the difference between the purchase price and the market value. 2. Whether

the tri al cour t inappropriately e xcluded certain incidental and consequ ential expe

nses fro m the judgment. Our review o f this matte

r is de novo upon the record with the pres umption t hat the trial court’s findings of fact are correct unless the preponderance of the evidence i s otherwis e. Tenn. R. App. P. 13(d). Our review of questions of

law is de novo with no presumption of correctness given to the lower court’s judgments. See Nelson v. Wal-mart Stores, Inc. , 8 S.W.3d 625, 628 (Tenn. 1999 ). The f

indings of the trial court which are depende nt upon determining the credibility of witnesses are entitled to great weig ht on appeal. See Town of Alamo v. Forcum-James Co. , 327 S.W.2d 47, 49 (Tenn. 1 959). The tria l court ha s the oppor

tunity to observ e the witnesses and to assess their de me anor. Therefore, this court will not reevaluate a trial court’s assessment of a witnesses credibi lity

in the absenceof clear and convincing evidenc e to the contrary

. See Wells v. Tennesse e Bd. of Re

gents , 9 S.W.3d 779, 783 (Tenn. 1999). HGI first argues that the trial court fa iled to aw ard the p

roper me asure of

damage s as set fo

rth in T.C.A. § 47-2-713 which pr ovides asfollows: Buyer’s damages for nondelivery orrepudiatio n. – (1) Subject to the provisions of this chapter with respect to proof of market price ( § 4 7-2-723), the measure of damages fo r nonde livery or re pudiation by the seller is the diffe rence between the market price at the time when

the buyer lea

rned of the breach and the contract price together with any incidental and

consequential damages provided in this chapter (§ 47-2-715), but less expenses saved in consequence of the seller ’s breach. (2) Market price is to be determined as of the place for tender

or, in cases of rejecti on after

arriva l or revo cation of

accept ance, a s of the pl ace of a

rrival. Tenn. Code Ann. § 47-2-713 (2001). The trial court awarded Plaintiff a judgment in the a mount of $18,356. This was based on the difference between the purc hase price of $320 and the price of the pr oposed sale which the Plaintiff had arranged with its prospective buy er of $355 per

computer , a diffe

rence o f $35 per

unit times 500 units for

a total of $17,500. In addition, Plaintiff was awarde d $800 for travel expenses and $56 in expenses incurr ed in a wire transfer fee. I t is Plaintiff’s contention that the evidence supports a market price of $400 per unit which would result in damag es of $80 per unit or $40,000.
Ron Schwartz, president of HGI, testified that he arrived

in Memphis on Tuesday, January 20 , 2000, to in spect the units. Had the units passed his inspection, he would have made arrang ements to ship the units to HGI’s customer. However, w hen he a rrived he was advised by David Neese, repres entative

of Mactr onics, tha t the unitshad not arrived from Mactronics’ seller. Mr. Neese made several phone ca lls to Mactronic’s seller to no avail. Mr. Sch wartz testified that2 The recor d befor e us doe s not contai n deposit ions. However, t here does not appear to be any disput e between the parties that questions and answers con tained in the transcript are acc urate portrayals of the d epositions.

3 Mr. Sam testified that his actual name is Sina Sanad-Zadah.

-3- he realized

the foll ow ing Thur sday

that the u

nits were not going

to be ther

e. As a r esult of th

is nondelivery, HGI

refunded its buye

r $177,500 (500 units times $355).
As set forth

in the statute, the measure of damages for nondelivery by

seller is the difference betweenthe market price at the time t hat the b uyer lea

rned of the breach and the contra ct price together with any incidental and c onsequential damages. Market price is to be determined as of the place for tender. Tenn. Code Ann. § 47-2-713 (2001). The key issue is when did the plaintiff know that the contract had been breached. See Hurt v. Earnhart , 539 S.W.2d 133, 137 (Tenn. Ct. App. 1976). Our

review of this record indicates that Plaintiff did not present evidence of a ma rket price other than the price of $355 per unit as determined by the trial court. The only witnesses to testify were Mr. Schwartz and two representatives of the Defendant. Mr. Schwartz testified that he did not remember what themarket price was at the time of the breach. He also testified that he attempted to find rep laceme

nt units in or

der to be able tofulfill the contract with HGI ’s buy

er, but w as unable to do so. The

refore , to support its theory, Plaintiff relies upon the te stimony of Defenda nt’s witnesse s. Da vid Ne ese, sal es age nt manag er for M actroni cs, was c ross-exa mined fro m his deposition. 2 Mr. Neese was asked if he was able to f ind replacement computers at the contract price and he replied that he was not. He stated, “[t]o beho ne st , w e c ou ld n’ t f in d t he qu an ti ty. Nobody had the product we needed or if somebody had them, they we

re probably

over $40 0.” Mr. Mi k e Sam, 3 president of Mactronics, testified [w]ell, we gaged our pric e at what to sell it in the market for. We gaged it based on what we saw in the market that the product was selling for. Now, - - just to define market, there are

different definitions. A broker market, like, with what Ron and I were dealing in, the price would be similar be tween 340 to 350 to get easily

. In a market where, I

would just have to go ahead and buy it immediately

from a - - what I would call a sma ll retail shop or something tha t sells used - - would probably be somew

here in the vicinity of $400 to $425. The trial court determined that the market price a tthe time the buyer lea

rned of the breach was $355, the

price pe r unit at w

hich HGI had contr

acted to sell to its buy er. We

do not find the evidenc e to prep onderat

e aga inst this finding by

the trial court. HGIfurther

contendsthat the tr

ial cour t erred in failing to award it the add

itional sum o f $95,505 for loss of business for a period of 15 months following this failed transaction. Mr

. Schwart z testified t hat the trans action upon which HGI def aulted as a result of nondelivery by-4-

Mactronics resulted

in that cu stomer no t doing bu siness wit h HGI for some 15 months f

ollowi ng HGI’s breach

on its cont

ract to r esell the computer s. He testified as to profits his firm had realized from sales to that customer prior to this breach and extrapolated that similar profits would have been realized had the customer done business with H GI in the in terim 15 months. However, Mr. Schwart z also testified that he did not have any other contracts with that customer at that time which were cancelled. There was no testimony from that customer

as to why they did not do bu siness wit

h HGI for that 1 5 month

peri od. We

believe that this basis for damage is speculative and f ind that the trial court did not err in failing to award additional damag es. Based uponour review of this record, we do not find the evidenc e to prep onderat

e aga inst the trial cou

rt’s find ings and the judg ment ente

red belo w is affirmed. Costs of this appeal are taxed to HG I As so ci at es , In c. , a nd it s s ur et y.

___________________________________ DAVID R. FARMER, JUDGE