United States Court of Appeals

For the Eighth Circuit

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No. 11-3499

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Razorback Concrete Company

lllllllllllllllllllll Plaintiff - Appellant

v.

Dement Construction Company, LLC

lllllllllllllllllllll Defendant - Appellee

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 Appeal from United States District Court 

for the Eastern District of Arkansas - Jonesboro

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 Submitted: April 19, 2012

 Filed: August 6, 2012

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Before MURPHY, MELLOY, and GRUENDER, Circuit Judges.

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GRUENDER, Circuit Judge.

Razorback Concrete Company (“Razorback”) sued Dement Construction

Company (“Dement”) for breach of contract and fraud based on disputes over

performance of a concrete supply contract. The district court granted summary 1

The Honorable Susan Webber Wright, United States District Judge for the

1

Eastern District of Arkansas.
judgment to Dement on the fraud claim and partial summary judgment to Dement as

to the measure of damages for the breach of contract claim, holding that Razorback

was not entitled to recover damages under a lost profits theory. After obtaining a

judgment on the contract claim that it deems inadequate, Razorback appeals the

grants of summary judgment. We affirm. 

I. BACKGROUND2

Dement was the prime contractor on a bridge construction project, and

Razorback was its concrete provider. Pursuant to a written contract requiring

payment by Dement within thirty days of receiving monthly statements, Razorback

was to supply concrete that met the requisite strength level for the bridge. However,

some of the concrete failed strength tests after a specified twenty-eight-day interval

(occurrences the parties describe as “low breaks”). As a result, Dement had to allow

extra time for the concrete to strengthen to an acceptable level for the project. 

Dement sent a letter to Razorback on April 4, 2007 noting that the project had a time

charge of $5,000 for each day that it took Dement to complete the project and that

Dement considered “that thirty (30) days of time charged for [Razorback’s] account

would be equitable.” Razorback responded in writing that the concrete was not

substandard, but rather that the tests—which were not conducted by

Razorback—were flawed. Additionally, Razorback inquired of Dement

whether it is your intention to attempt to set off payments due

[Razorback] for future deliveries of concrete with your claim for

damages. . . . [U]nless we are told to the contrary, [Razorback] will

assume that you will pay for material as it is delivered to the site. If this

assumption is unwarranted you need to say so, because [Razorback] will

The facts in this opinion are stated in the light most favorable to Razorback,

2

the party resisting the grant ofsummary judgment. See Smith v. Arrington Oil &Gas,

Inc., 664 F.3d 1208, 1212 (8th Cir. 2012).

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rely upon your failure to correct this assumption in order to make future

deliveries of concrete to the site. 

After receiving no response from Dement, Razorback wrote another letter on May 8

stating that it would rely on Dement’s failure to respond as a representation that no

amount due Razorback would be withheld as an offset. Razorback also stated that

should Dement later try to offset moneys due Razorback, Razorback would have

claims for breach of contract, fraud, deceit, and misrepresentation. 

Dement responded on May 9 that, to Dement’s knowledge, there were no more

low breaks after Razorback had changed its mix design for the concrete. It also noted

that it had never intended “to unilaterally deduct monies due Razorback based on this

issue” and that it would continue to pay all invoices in a timely manner. In reliance

on Dement’s assurances, Razorback continued to supply concrete to Dement.

On May 18, Dement learned that concrete used in a “critical zone” of what it

described as “probably the most critical pier in the structure” had substandard

strength-test results. Furthermore, Dement was informed on June 8 that the Federal

Highway Administration (“FHWA”) might require concrete to be replaced if a low

break were to occur in a certain area of the construction. According to Razorback,

Dement’s payments in June and August withheld some of the amount owed for

delivered concrete and Dement stopped making any payments after August 2007. In

light of what it viewed as a breach of contract by Dement, Razorback terminated the

contract and refused to supply any additional concrete.

In its suit against Dement, Razorback asserted that it was entitled to $318,767,

representing lost profits that it would have earned by supplying concrete for the

remainder of the project. Razorback also asserted that Dement was liable for fraud

because it withheld payments after promising Razorback that it would not. The

district court granted summary judgment to Dement as to Razorback’s fraud claim,

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holding that Razorback’s evidence wasinsufficient for a reasonable jury to find fraud.

The district court granted partial summary judgment to Dement on the issue of lost

profits as the measure of damages on Razorback’s breach of contract claim because

Razorback’s evidence did not create a material question of fact regarding whether

Razorback was entitled to that measure of damages under the Uniform Commercial

Code (“U.C.C.”). The case proceeded to trial on the remaining breach of contract

claim, and Razorback obtained a jury verdict in its favor. Razorback now appeals the

grants of summary judgment as to the fraud claim and the lost profits measure of

damages on the contract claim. 

II. DISCUSSION

“As a federal court sitting in diversity jurisdiction, we apply the law that the

forum state would apply.” Winthrop Res. Corp. v. Stanley Works, 259 F.3d 901, 904

(8th Cir. 2001). Because the district court determined that Arkansas law governs and

the parties did not appeal that determination, we too will apply Arkansas law. See

Lackawanna Chapter of the Ry. & Locomotive Historical Soc’y, Inc. v. St. Louis

Cnty., Mo., 497 F.3d 832, 835 (8th Cir. 2007). “If the Supreme Court of [Arkansas]

has not addressed an issue, we must predict how the court would rule . . . .” Eubank

v. Kan. City Power & Light Co., 626 F.3d 424, 427 (8th Cir. 2010). 

We review de novo a district court’s grant of summary judgment and its

interpretation of state law. Best Buy Stores, L.P. v. Benderson-Wainberg Assocs.,

L.P., 668 F.3d 1019, 1026 (8th Cir. 2012). “Summary judgment is appropriate when,

viewing the record in the light most favorable to the nonmoving party, there are no

genuine issues of material fact and the moving party is entitled to judgment as a

matter of law.” Smith v. Arrington Oil & Gas, Inc., 664 F.3d 1208, 1212 (8th Cir.

2012). As the moving party, Dement bore “the initial responsibility of informing the

district court of the basis for its motion” and needed to identify “those portions of [the

record] . . . which it believes demonstrate the absence of a genuine issue of material

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fact.” Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.) (en banc)

(alterationsin original) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)),

cert. denied, 565 U.S. ---, 132 S. Ct. 513 (2011). If Dement met this burden,

Razorback needed to submit “evidentiary materials thatset out specific facts showing

that there is a genuine issue for trial.” Id. Razorback needed to “do more than simply

show that there is some metaphysical doubt as to the material facts . . . .” Id.

A. Fraud Claim

Under Arkansas law, fraud consists of the following five elements: (1) “a false

representation of a material fact,” (2) “knowledge that the representation is false or

that there isinsufficient evidence upon which to make the representation,” (3) “intent

to induce action or inaction in reliance upon the representation,” (4) “justifiable

reliance on the representation,” and (5) “damage suffered as a result of the

representation.” Bomar v. Moser, 251 S.W.3d 234, 241 (Ark. 2007). “Fraud is never

presumed, but must be affirmatively proved, and the burden of proving fraud is upon

the party who alleges it and relies on it.” Interstate Freeway Servs., Inc. v. Houser,

835 S.W.2d 872, 873 (Ark. 1992). “An action for fraud or deceit may not be

predicated on representations relating solely to future events. However, this rule is

inapplicable if the person making the representation or prediction knowsit to be false

at the time it is made.” Goforth v. Smith, 991 S.W.2d 579, 586 (Ark. 1999) (internal

citation omitted). “While fraud may be established by circumstantial evidence, the

circumstances must be so strong and well connected as to clearly show fraud.”

Fowler v. SmithKline Beecham Clinical Labs., Inc., 225 F.3d 1013, 1016 (8th Cir.

2000) (quoting Allred v. Demuth, 890 S.W.2d 578, 580 (Ark. 1994)). 

This case turns on whether Razorback produced sufficient evidence to create

a genuine issue of material fact regarding whether Dement, at the time it assured

Razorback that it would not withhold payments (a statement relating solely to future

events), knew that the representation was false. See Goforth, 991 S.W.2d at 586. 

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Razorback asserts that when Dement assured Razorback in May 2007 that it would

not withhold payments, Dement already intended to withhold future payments. In

support, Razorback claims that Dement began withholding payments in June 2007

even though there were no problems with the concrete and that nothing, except

perhaps testing procedures, had changed from the time of Dement’s promise. The

record demonstrates, however, that Dement learned consequential news between the

time that it made the assurance to Razorback and the time that it began withholding

payments. First, Dement learned that concrete used in what it claims was probably

the most critical pier in the structure had substandard strength-test results. Second,

Dement learned that there was no guarantee that the FHWA would allow certain

concrete to remain in place in the event of a low break. In September 2007, Dement

wrote toRazorback stating thatremoval and replacement ofthe concrete, if necessary,

would cost approximately $420,000 to $840,000 and that, in an effort to resolve the

matter without withholding paymentsfrom Razorback, Dement would accept a letter

of credit for the estimated amount of the repair. Dement then stated that it would

release the letter of credit if the issue was resolved without requiring repairs. In

opposition to this undisputed evidence that Dement’s decision to withhold payments

was based on the intervening information, Razorback fails to cite any evidence

suggesting that Dement’s decision to withhold payments beginning in June 2007 was

reached by the time of its initial assurance of continued payments in May 2007. 

3

Instead, Razorback suggests that Dement’s explanation is not to be trusted by 3

arguing that Dement demonstrated a lack of candor by claiming in its April 2007

letter “that the negative test[] results caused a delay of 30 days” because Charles

Capps, Dement’s vice president, admitted at his deposition that he “pulled the 30 day

figure out of the air.” However, rather than stating as fact that there was a delay of

thirty days, the letter merely said “[w]e feel that thirty (30) days of time charged for

your account would be equitable.” Moreover, Capps testified at his deposition that

there was probably more than a thirty-day delay attributable to Razorback. This

testimony does not show that Dement is not credible, and it does not raise a material

question of fact regarding whether Dement knew that its representation about future

payments was false at the time of the representation. 

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Given Razorback’s failure to identify any evidence creating a genuine issue of

materialfactregarding whether Dement knew its assurance that it would not withhold

payments was false at the time the statement was made, the district court did not err

by granting summary judgment in favor of Dement on Razorback’s fraud claim. 

B. Lost Profits Measure of Damages

When Razorback filed suit against Dement, itrequested “the monies it is owed”

as damages for its breach of contract claim. However, Razorback conceded at oral

argument that it was clear from its subsequent computation of damages, submitted in

accordance with Federal Rule of Civil Procedure (“FRCP”) 26, that it was seeking

lost profits under Arkansas Code Annotated (“ACA”) section 4-2-708(2), the analog

of U.C.C. section 2-708(2), although it did not include a specific citation to section

4-2-708(2). While section 4-2-708(1) provides a measure of compensatory damages

to an injured seller—the difference between the unpaid contract price and the market

price—premised on the seller’s ability to resell the same goods at market price,

section 4-2-708(2) providesfor lost profits damages but only to sellers who can show

that the section 4-2-708(1) damages are inadequate to place them in as good a

position as performance by the buyer would have. One way to make this showing 4

Section 4-2-708 provides: 4

(1) Subject to subsection (2) and to the provisions of this chapter with

respect to proof of market price (§ 4-2-723), the measure of damagesfor

non-acceptance orrepudiation by the buyer isthe difference between the

market price at the time and place for tender and the unpaid contract

price together with any incidental damages provided in this chapter

(§ 4-2-710), but less expenses saved in consequence of the buyer's

breach.

(2) If the measure of damages provided in subsection (1) is inadequate

to put the seller in as good a position as performance would have done

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is for the seller to prove it “has the capacity to perform the contract which was

breached as well as other potential contracts, due to their unlimited resources or

production capacity.” Bill’s Coal Co. v. Bd. of Pub. Utils., 887 F.2d 242, 245 (10th

Cir. 1989). Such a seller is commonly referred to as a “lost volume seller.” See id.

The district court ruled in favor of Dement because it concluded that Razorback’s

evidence did not create a genuine question of material fact regarding whether

Razorback was a lost volume seller or whether damages under section 4-2-708(1)

were otherwise inadequate.

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On appeal, Razorback first argues that the trial court acted sua sponte in ruling

that Razorback was not a lost volume seller because Dement never argued that

Razorback was not a lost volume seller or that Razorback failed to mitigate its

damages. Thus, Razorback claims that it did not have the opportunity to present

evidence and argument regarding these issues. The record belies this argument. 

After Razorback’s FRCP 26 damages calculation made clear that it was seeking lost

profits, Dement, in seeking summary judgment, made multiple arguments claiming

that Razorback was not entitled to lost profits, including that “[t]he U.C.C. does not

permit a seller to recover consequential damages such as lost profits” and that

Razorback’s claim for lost profits was speculative. Razorback opposed summary

then the measure of damages is the profit (including reasonable

overhead) which the seller would have made from full performance by

the buyer, together with any incidental damages provided in this chapter

(§ 4-2-710), due allowance for costs reasonably incurred and due credit

for payments or proceeds of resale.

Ark. Code Ann. § 4-2-708.

BecauseRazorback does not provide any developed argument that it is entitled 5

to lost profits under a different provision of the Arkansas code, we address its

argument that it is entitled to lost profits by examining ACA section 4-2-708(2). 

Furthermore, we assume without deciding that the facts of this case constitute “nonacceptance or repudiation” by Dement. See Ark. Code Ann. § 4-2-708(1).

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judgment by quoting section 4-2-708(2) in support of its position that a seller can

recover lost profits under the U.C.C. and asserting that its lost profits—which it

calculated asthe contract price minusthe cost of performance—were not speculative. 

Razorback further asserted that “to the extent that [Dement] may be arguing that

Razorback [could not] have supplied concrete on other jobs if it had continued

supplying concrete on the Dement job, . . . Razorback’s high-capacity plants

permitted Razorback to meet all the requirements of the Dement job as well as being

able to supply concrete on other jobs.” Thus, we conclude that the issue was properly

before the district court. 

Razorback next argues that the issue of whether it was a lost volume seller

would only be relevant if Dement had argued that Razorback failed to mitigate its

damages. We disagree. Section 2-708(2) generally isinterpreted as placing upon the

seller the burden of demonstrating that it should be compensated as a lost volume

seller if that is a theory by which the seller seeks to show that damages under section

2-708(1) are inadequate. See, e.g., Bill’s Coal Co., 887 F.2d at 245 (“Sellers have the

burden of proving that they are lost volume sellers . . . .”); R.E. Davis Chem. Corp.

v. Diasonics, Inc., 826 F.2d 678, 684 (7th Cir. 1987) (“Diasonics must establish, not

only that it had the capacity to produce the breached unit in addition to the unit

resold, but also that it would have been profitable for it to have produced and sold

both. Diasonics carries the burden of establishing these facts because the burden of

proof is generally on the party claiming injury to establish the amount of its damages

. . . .”). Finding no Arkansas law addressing this question directly, we predict

Arkansas likewise would place this burden upon the seller claiming damages. See

Marine Servs. Unlimited, Inc. v. Rakes, 918 S.W.2d 132, 136 (Ark. 1996) (“The

burden of proving damages rests on the party claiming them and the proof must

consist of facts, not speculation.”). At the summary judgment stage, Razorback had

the burden of identifying facts that at least created a genuine issue of material fact

regarding whether Razorback was eligible to recover under ACA section 4-2-708(2). 

To meet this burden, Razorback needed to provide the district court with sufficient

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proof as to why the damages under subsection (1) were inadequate. Nothing in

section 4-2-708 conditions this burden on whether the buyer asserted a failure to

mitigate damages.

Razorback next argues that the district court erred by concluding that no

reasonable jury could find that Razorback was a lost volume seller. Again, we

disagree. The testimony of Razorback’s general manager, Keith Wetsell, showsthat

Razorback would have had a limited capacity to perform other contracts if Dement

had not breached. According to Wetsell, Razorback “probably turned away or didn’t

bid [on] some work that had come along during the time we were doing the Dement

project . . . because we knew we were kind of at maximum peak there with their job.” 

Although Wetsell later indicated that Razorback “could have done plenty of other

work” if the opportunity were there, he specified that it would have had to be a size

that Razorback could handle. Given this testimony that Razorback was operating at

near peak capacity, the absence of contrary evidence indicating that Wetsell

understated Razorback’s capacity to supply concrete, and the lack of evidence

regarding whether the additional jobs that Razorback took after ending its

relationship with Dement were of a size it could have handled if it were still

supplying Dement under the contract, the district court did not err in determining that

Razorback failed to create a genuine issue of fact as to its status as a lost volume

seller. See Bill’s Coal Co., 887 F.2d at 245.

Finally, Razorback contendsthat it is entitled to lost profits under Arkansas law

based on Capital Steel Co. v. Foster & Creighton Co., 574 S.W.2d 256 (Ark. 1978),

where the court affirmed a jury’s award of lost profits to a supplier. There are many

obstacles, however, to applying Capital Steel to this case. First, the court held that

the breaching buyer forfeited its argument that a jury instruction premised on what

is now ACA section 4-2-708(2) was “an incorrect declaration of the law” because its

objection to the instruction was not sufficiently specific. Id. at 259. Second, the

court held that what is now section 4-2-708(1) was not applicable because Capital

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Steel could not have tendered actual performance. Id. Notably, Razorback did not

argue that it could not have tendered actual performance. Finally, the court held that

once the instruction on damages under section 4-2-708(2) went to the jury, it was not

outside the realm of the jury’s competence, based on the evidence presented at trial,

to find that Capital Steel “may have been in a position to make a profit on two

transactions instead of one.” See id. at 260. Here, Razorback did not provide

evidence from which a reasonable jury could conclude that Razorback was in a

similar position because it did not show that it had the capacity to complete profitably

the project for Dement plus any of the other jobs that it acquired after ending its

relationship with Dement. 

We conclude that Razorback failed to supply evidence creating a fact issue

regarding whether it was a lost volume seller or whether the damages provided for

under section 4-2-708(1) were otherwise inadequate and that such evidence was

necessary for Razorback to show successfully that lost profits under section 4-2-

708(2) were potentially appropriate. Therefore, the district court did not err by

granting partial summary judgment to Dement on Razorback’s claim for lost profits

under section 4-2-708(2). 

III. CONCLUSION

For the foregoing reasons, we affirm. 

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