# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 1- 34 99

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Raz or ba ck Co nc ret e Co m

pa ny

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Dem en t Co ns tru ct io n C om pa ny, L LC

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __

App eal fro m

Uni te d S ta te s Di st ric t Co ur t

fo r th e Eas te rn Dis tri ct of Ark an sa s - J on es bo ro

__ __ __ __ __ __

Su bm it te d: Apri l 1 9, 2 01 2

Fil ed : Au gu st 6, 2 01 2

__ __ __ __ __ __

Befo re MUR PHY, MELLOY, an d GRUENDER, Ci rcu it Ju dg es

.

__ __ __ __ __ __

GRUENDER, Circ ui t J ud ge

.

Raz or ba ck Co n c r et e Co m pa ny (“ Raz or ba ck ”) su ed Dem en t Co ns tru ct io n

Co m pa ny (“ Dem en t” ) fo r br each of co nt ract an d frau d ba se d o n d i s p u t es ov er

pe rfo rm an ce of a co nc ret e su pp ly co nt ract

. The di st ric t co ur t gr an te d s u mm a ry 1

The Hon or ab le Su sa n W eb be r Wr i g ht

, Uni te d St at es Dis tri ct Ju dg e fo r th e 1

East ern Dis tri ct of Ark an sa s.jud gm en t to Dem en t on th e frau d cl ai m an d pa rti al su m m ary jud gm en t to Dem en t as

to th e m eas ur e of da m ag es fo r th e b reac h o f co nt ract cla im , ho ld in g th at Raz or ba ck

w a s no t en ti tl ed to reco ve r da m ag es un de r a lo st pr of it s th eo ry

. Afte r ob t a i n i n g a

jud gm en t on th e co nt ract cl ai m t h a t it de em s in ad eq ua te

, Raz or ba ck ap pe al s th e

gr an ts of s um m ary jud gm en t. We affir m

.

I. BACKGRO UND 2

Dem en t was th e pr im e co nt ract or on a br id ge co ns tru ct io n p r o je c t, an d

Raz or ba ck was it s co nc ret e pr ov id er. Pu rs u a n t to a writ te n co nt ract req ui rin g

pa y m en t by Dem en t wit hi n th irt y da y s o f rec ei vi ng m on th ly stat em en ts , Razo rb ack

was to su pp ly co nc ret e th at m et th e req ui si te st ren gt h le ve l fo r th e br id ge

. Howev er,

so m e of th e co nc ret e fai le d st ren gt h tes ts aft er a sp eci fie d twen ty-eig ht -d ay in te rv al

(o ccu rren ces th e pa rti es de sc rib e as “ lo w br eak s” ). As a res ul t, Dem en t ha d to al lo w

ex tra ti m e fo r t he co nc ret e to st ren gt he n to an acce pt ab le le ve l fo r th e pr ojec t.

Dem en t se nt a le tt er to Raz or ba ck on Apr il 4, 20 07 no ti ng th at th e pr ojec t ha d a ti m e

ch arg e of $5 ,00 0 fo r each da y t h a t it to ok Dem en t to co m pl et e th e pr ojec t an d th at

Dem en t co ns id ered “ th at th irt y (3 0) da y s of ti m e ch arg ed fo r [Raz or ba ck ’s] acco un t

wou ld be eq ui ta bl e.” R a z o r b ack res po nd ed in writ in g th at th e co nc ret e was no t

su bs ta n d a r d

, bu t rat he r th at th e te st s— whi ch were no t co nd uc te d by

Raz or ba ck —wer e fl awed . Add it io na ll y , Razo rb ack in qu ire d o f Dem en t

whe th er it is y ou r i n t e n t io n to at te m pt to se t of

f pa y m en ts du e

[Raz or ba ck ] fo r fu tu re de li ve rie s of co nc ret e wit h yo u r c la im fo r

da m ag es

. . . . [U]nle ss we are to ld to th e co n t r a ry

, [Raz or ba ck ] wil l

as su m e th at y ou wil l pa y fo r m at eri al as it is de li ve red to th e si te

. If th is

as su m pt io n is un warra nt ed y ou ne ed to sa y so

, be cau se [Raz or ba ck ] wil l

The fact s i n t hi s op in io n are stat ed in th e li gh t m os t fa vo rab le to Razo rb ack

, 2

th e pa rty res is ti ng th e gr an t of su m m ary jud gm en t. Se e Smi th v. Arr in gt on Oil & Gas

, In c. , 66 4 F .3d 12 08 , 12 12 (8t h C ir. 2 01 2)

.

-2

-rel y up on y ou r fai lu re to co rrec t th is as su m pt io n in or de r to m ak e fu tu re

de li ve rie s o f co nc ret e to th e si te

.

Afte r rece iv in g no res po ns e fro m Dem en t, Raz or ba ck wro te an ot he r le tt er on May 8

st at in g t ha t i t wo ul d re ly on Dem en t’s fa il ur e to res po nd as a rep res en ta ti on th at no

am ou nt du e Raz or

b a c k w o ul d be wit hh el d as an of fs et

. Raz or ba ck al so st at ed th at

sh ou ld Dem en t la te r try to of fs et mo n e ys du e Raz or ba ck

, Raz or ba ck wou ld ha ve

cl ai m s fo r br each of c on tra ct , frau d, d ecei t, an d m is rep res en ta ti on

.

Dem en t res po nd ed on May 9 th at

, to Dem en t’s kn owl ed ge

, th ere were no m or e

lo w br eak s aft er Raz or

ba ck ha d ch an ge d it s m ix de si gn fo r th e co nc ret e. It al so no te d

th at it ha d ne ve r in te nd ed “ to un il at eral ly de du ct m on ie s du e Raz or ba ck ba se d on th is

is su e” an d th at it wou ld co nt in ue to pa y al l in vo ic es in a ti m el y m an ne r. In rel ia nc e

on Dem en t’s as su ran ces , Razo rb ack co nt in ue d t o s up pl y co nc ret e to Dem en t.

On M ay 18 , Dem en t l earn ed th at co nc ret e u se d i n a “ cri ti cal zo ne ” o f wha t it

de sc rib ed as “ pr ob ab ly th e mo s t c r i t ic al pi er in th e st ru ct ur e” ha d su bs ta nd ard

st ren gt h- te st res ul ts

. Fu rth erm or e, Dem en t was in fo rm ed on Ju ne 8 th at th e Fed eral

Hig hwa y Adm in is tra ti on (“ FHW A” ) migh t req ui re co nc ret e to be rep la ced if a lo w

br eak wer e t o o ccu r in a cert ai n area of th e co ns tru ct io n. Acco rd in g to Raz or ba ck

,

Dem en t’s pa y m en ts in Ju ne an d Aug us t wit hh el d so m e of th e am ou nt owe d fo r

de li ve red co nc ret e an d Dem en t st op pe d m ak in g an y pa y m en ts aft er Aug us t 20 07

. In

li gh t of wha t it vi ewed as a br each of co nt ract by Dem en t, Raz or ba ck te rm in at ed th e

co nt ract an d re fu se d t o s up pl y an y ad di ti on al co nc ret e.

In it s su it ag ai ns t Dem en t, Raz or ba ck as se rte d th at it was en ti tl ed to $3 18 ,76 7,

rep res en ti ng lo st p r o fit s th at it wou ld ha ve earn ed by su pp lying co nc ret e fo r th e

rem ai nd er of

th e p ro ject. Ra zo rb ack als o a ss ert ed th at Dem en t was li ab le fo r frau d

be cau se it wit hh el d pa y men t s a fte r pr om is in g Raz or ba ck th at it wou ld no t. The

di st ric t co ur t gr an te d su m m ary jud gm en t t o Dem en t as to Raz or ba ck ’s f rau d cl ai m

,

-3

-hol din g tha t Raz or ba ck ’s ev id en ce was in su ffi ci en t fo r a reas on ab le jury to find fr au d.

The d i s tri ct co ur t gr an te d pa rti al su m m ary jud gm en t to Dem en t on th e is su e of lo st

pr of it s as th e m eas ur e of da m ag es on Raz or ba ck ’s br each of co nt ract cl ai m be cau se

Raz or ba ck ’s ev id en ce di d no t crea te a m at e ria l qu es ti on of fact reg ard in g whe th er

Raz or ba ck was en ti tl ed to th at m eas ur e of da m ag es un de r th e Uni fo rm Co m m erci al

Co de (“ U.C.C.”). The cas e pr oc eed ed to tri al on th e rem ai n i n g b r e a c h of co nt ract

cl ai m

, an d Raz or ba ck ob ta in ed a jury ve rd ic t in it s fav or

. Raz or ba ck no w ap pe al s th e

gr an ts of su m

m ary jud gm en t a s to th e frau d cl ai m an d th e lo st pr of it s m eas ur e of

da m ag es on th e co nt ract cla im

.

II

. DISCUSS IO N

“ As a fed eral co ur t si tt in g in di ve rs it y juri sd ic ti on

, we ap pl y th e la w th at th e

fo ru m st at e wou ld ap pl y .” W in th ro p Res. Co rp

. v. St an le

y W or ks

, 25 9 F.3 d 90 1, 90 4

(8 th Ci r. 20 01 ). Bec au se th e di st ric t co ur t de te rm in ed th at Ark an sa s la w go ve rn s an d

th e pa rti es di d no t ap pe al th at de te rm in at io n, we to o wil l a p p l y A r k a n sa s la w. Se e

L a cka wa nn a Ch ap te r of th e Ry. & Lo co mot iv e His to ri ca l So c’y, In c. v. S t

. L o u i s

Cn ty

., Mo.

, 49 7 F.3 d 83 2, 83 5 (8 th Ci r. 20 07 ). “ If th e Su pr em e Co ur t of [Ark an sa s]

ha s no t ad dr es se d an is su e, we m us t pr ed ic t ho w th e co ur t wou ld ru le

. . . .” Eub an k

v. Ka n. Ci ty Powe r & Lig ht Co

. , 62 6 F .3d 42 4, 4 27 (8t h C ir. 2 01 0)

.

W e r ev ie w de no vo a di st ric t co ur t’s gr an t of su m m ary jud gm en t an d it s

in te rp ret at io n of st at e la w. Best Buy St or es

, L.P. v. Ben de rs on -W ai nb e r g Ass oc s.,

L.P.

, 66 8 F.3 d 10 19

, 10 26 (8 th Ci r. 20 12 ). “ Su m m ary jud gm en t is ap pr op ria te whe n,

vi ewin g th e reco rd in th e li gh t m os t fav or ab le to th e n on m ov in g pa rty, t he re are no

g e n u i n e i s su es of m at eri al fact an d th e m ov in g pa rty is en ti tl ed to jud gm en t a s a

m at te r of la w.” S

m i t h v. Arr in gt on Oil & Gas

, In c.

, 66 4 F.3 d 12 08

, 12 12 (8 th Ci r.

20 12 ). As th e m ov in g pa rty, Dem en t bo re “ th e in it ia l res po ns ib il it y of in fo rm in g th e

di st ric t co ur t of th e ba si s fo r it s m ot io n” an d ne ed ed to id en ti fy “ th os e po rti on s of [th e

reco rd ]

. . . whi ch it be li ev es de m on st rat e th e ab se nc e of a ge nu in e is su e of m at eri al

-4

-fact .” To rg er so n v. Ci ty of Ro ch es te r

, 64 3 F.3 d 10 31

, 10 42 (8 th Ci r.) (en ba nc )

(al te rat io ns in or ig in al ) (q uo ti ng Cel ot ex Co rp

. v. Ca tr et t

, 47 7 U.S. 31 7, 32 3 (1 98 6) ),

cer t. de ni ed

, 56 5 U.S. ---, 13 2 S. Ct

. 51 3 (2 01 1)

. If Dem en t m et th is bu rd en

,

Raz or ba ck ne ed ed to su bm it “ ev id en ti ary m at eri al s th at se t ou t sp eci fic fact s sh owi ng

th at th ere is a ge nu in e is su e fo r tri al .” Id

. Raz or ba ck ne ed ed to “ do m or e th an si m pl y

sh ow t ha t t he re i s s om e m et ap hysic al do ub t as to th e m at eri al fact s . . . .” Id

.

A. Fra ud Cla im

Und er Ark an sa s la w, frau d co ns is ts of th e fo ll owi ng fiv e el em en ts : (1 ) “ a fal se

rep res en ta ti on of

a m at eri al fact ,” (2 ) “ kn owl ed ge th at th e rep res en ta ti on is fal se or

th at th ere is in su ffi ci en t ev id en ce up on whi ch to m ak e th e rep res en ta ti on ,” (3 ) “ in te nt

to in du ce act io n or in act io n in rel ia nc e up o n t he rep res en ta ti on ,” (4 ) “ jus ti fia bl e

rel ia nc e on th e rep res en ta ti on ,” an d ( 5 ) “ da m ag e su ffer ed as a res ul t of th e

rep res en ta ti on .” Boma r v. Mos er

, 25 1 S.W .3d 23 4, 24 1 (Ark

. 20 07 ). “ Frau d is ne ve r

pr es um ed

, bu t m

us t be affi rm at iv el y pr ov ed

, an d th e bu rd en of pr ov in g frau d is up on

th e pa rty who al le ge s it and rel ie s on it .” In te rs ta te Free wa y Se rv s., Inc. v. Hou se r

,

83 5 S.W .2d 87 2, 87 3 ( A r k

. 1 9 92 ). “ An act io n fo r frau d or de cei t m ay no t be

pr ed ic at ed on rep res en ta ti on s re la ti ng so le ly to fu tu re ev en ts

. Howev er, thi s rul e is

in ap pl ic ab le if th e pe rs on m ak in g th e rep res en ta ti on or pr ed ic ti on kn ows it to be fal se

at th e ti m e it is m ad e.” Gof or th v. Smi th

, 99 1 S.W .2d 57 9, 58 6 (Ark

. 19 99 ) (in te rn al

ci ta t io n om it te d)

. “ W hi le frau d m ay be es ta bl is he d by ci rcu m st an ti al ev id en ce, th e

ci r c u ms ta nc es m

us t be so st ro ng an d well co nn ect ed as to cl earl y sh ow frau d.”

Fow le r v. Smi th Kl in e Beech am Cl in ic al La bs

., I n c

. , 2 2 5 F.3 d 10 13

, 10 16 (8 th Ci r.

20 00 ) (q uo ti ng All re d v . Demut h , 89 0 S .W .2d 57 8, 5 80 (Ark . 19 94 )).

Thi s case tu rn s on whe th er Ra zo rb ack pro du ced su ffi ci en t evi de nc e to crea te

a ge nu in e is su e o f materi al fact reg ard in g whe th er Dem en t, at th e ti m e it as su red

Raz or ba ck th at it wou ld no t wit hh ol d pa y m en ts (a st at em en t rel at in g so le ly to fu tu re

ev en ts ), kn ew th at th e rep res en ta ti on w a s f a l s e

. Se e Gof

or th

, 99 1 S.W .2d at 58 6.

-5

-Raz or

ba ck ass ert s th at whe n Dem en t as su red Razo rb ack in May 200 7 t ha t i t wo ul d

no t wit hh ol d pa y m en ts

, Dem en t al read y in te nd ed to wit hh ol d f u t u r e pa y m en ts

. In

su pp or t, Raz or ba ck cl ai m s th at Dem e n t be ga n wit hh ol di ng pa y m en ts in Ju ne 20 07

ev en th ou gh th ere were no pr ob le m s wit h th e co nc ret e a n d t h a t no th in g, ex cep t

pe rh ap s te st in g pr oc ed ur es

, ha d ch an ge d fro m th e ti m e of Dem en t’s pr om is e. The

reco rd de m on st rat es

, ho wev er, th at Dem en t le arn ed co ns eq ue nt ia l ne ws be twee n th e

ti m e th at it m ad e th e as su ran ce to Razo rb ack an d th e ti m e th at it be ga n wit hh ol di ng

pa y m en ts

. Fi rs t, Dem en t l earn ed th at co nc ret e u se d i n wh at it cl ai m s was pr ob ab ly

th e m os t crit ic al pi er in th e st ru ct ur e h ad su bs ta nd ard st ren gt h- te st res ul ts . Seco nd

,

Dem en t le arn ed th at th ere was no gu ar a n t e e t h a t th e FHW A wou ld al lo w cert ai n

co nc ret e to rem ai n in pl ace in th e ev en t of a lo w br eak

. In Sep te m be r 20 07

, Dem en t

wro te to Ra zo rb ack st at in g th at rem ov al an d rep la cem en t of th e co nc ret e, if ne ces sa ry

,

wou ld co st ap pr ox im at el y $4 20 ,00 0 to $8 40 ,00 0 an d th at

, in an effo rt to res ol ve th e

m at te r wit ho ut wit hh ol di ng pa y m en ts fro m Raz or ba ck

, Dem en t wou ld acce pt a le tt er

of cred it fo r th e es ti m at ed am ou nt of th e rep ai r. D e men t t h e n s t at ed th at it wou ld

rel eas e th e le tt er of cred it if th e is su e was res o l v e d wit ho ut req ui rin g rep ai rs

. In

op po si ti on to th is un di sp ut ed ev id en ce th at Dem en t’s de ci si on to wit hh ol d pa y m en ts

was b a s e d o n th e in te rv en in g in fo rm at io n, Raz or ba ck fai ls to ci te an y ev id en ce

su gg es ti ng th at Dem en t’s de ci si on to wit hh ol d pa y m en ts be gi nn in g in Ju ne 20 07 was

reac he d b y

th e ti m e o f it s i ni ti al ass ur an ce o f co nt in ue d p ay m en ts in May 200 7. 3

In st ead

, Raz or

ba ck su gg es ts th at Dem en t’s ex pl an at io n is no t to be tru st ed by 3

arg ui ng th at Dem en t de m on st rat ed a la ck of can d or by cl ai m in g in it s Apr il 20 07

le tt er “ th a t t h e ne ga ti ve te st [] res ul ts cau se d a de la y of 30 da y s” be cau se Ch arl es

Cap ps

, Dem en t’s vi ce pr es id en t, ad m it te d at hi s de po si ti on th at he “ pu ll ed th e 30 da y

fig ur e o ut of t he air .” Howev er, rat he r th an st at in g as fact th at th ere was a de la y of

th irt y da y s, th e le tt er m erel y sa id “ [w]e feel th at th irt y (3 0) da y s of ti m e ch arg ed fo r

y ou r acc ou nt wou ld be eq ui ta bl e.” Mo reo ve r, Cap ps tes ti fie d a t h is de po si ti on th at

th ere w a s p ro ba bl y mor e th an a th irt y -d ay de la y at tri bu ta bl e to Raz or ba ck

. Thi s

te st im on y do es no t sh ow th at Dem en t is no t cred ib le

, an d it do es no t rai se a m at eri al

qu es ti on of fact reg ard in g whe th er Dem en t kn ew th at it s rep res en ta ti on ab ou t fu tu re

pa y m en ts was fa ls e at th e ti m e o f th e rep res en ta ti on

.

-6

-Giv en Raz or ba ck ’s fai lu re to id en ti fy an y ev id en ce crea ti ng a ge nu in e is su e of

m at eri al fact reg ard in g whe th er Dem en t kn ew it s as su ran ce th at it wou ld no t wit hh ol d

pa y m en ts was fal se at th e ti m e th e st at em en t was m ad e, th e di st ric t cou rt di d no t err

by gran ti ng su m

m ary jud gm en t i n fa vo r of Dem en t o n R azo rb ack ’s frau d c la im

.

B. Lo st Prof

its Mea su re o f Damag es

W he n Raz or ba ck fi le d su it ag ai ns t Dem en t, it req ue st ed “ th e m on ie s it is owe d”

as da m ag e s f

or it s br each of co nt ract cl ai m

. Howev er, Raz or ba ck co nc ed ed at or al

arg um en t th at it was cl ear fro m it s su bs eq ue nt co m pu ta ti on of da m ag es

, su bm it te d in

acco rd an ce wit h Fed eral Ru le of Ci vi l Pro ced ur e (“ FRCP ”) 26

, th a t i t w a s se ek in g

lo st pr of it s un de r Ark an sa s Co de Ann ot at ed (“ ACA”) se ct io n 4- 2- 70 8( 2)

, th e an al og

of U.C.C. se ct io n 2 -7 08 (2 ), al th ou gh it di d n ot in cl ud e a s pe ci fic cit at io n to se ct io n

4- 2- 70 8( 2)

. W hi le se ct io n 4- 2- 70 8( 1) pr ov id es a m eas ur e of co m pe ns at or y da m ag es

to an in jure d se ll er— th e di ffer en ce be twee n th e un pa id co nt ract pr ic e an d th e m ark et

pr ic e—p rem is ed on th e se ll er’s ab il it y t o r es el l th e sa m e go od s at m ark et pr ic e,

se ct io n 4- 2- 70 8( 2) pr ov id es fo r lo st pr of it s da m ag es bu t on ly to se ll ers who can sh ow

th at th e se ct io n 4- 2- 70 8( 1) da m ag es are in ad eq ua te to pl ace th e m i n a s g o od a

po si ti on as pe rfo rm an ce by t he bu y er wou ld ha ve

. One way to m ak e th is sh owi ng 4

Sect io n 4 -2 -7 08 pro vi de s: 4

(1 ) Su bjec t to su bs ect io n (2 ) an d to th e pr ov is io ns of th is ch ap te r wit h

res pe ct to pr oo f of m ark et pr ic e (§ 4- 2- 72 3)

, th e m eas ur e of da m ag es fo r

no n- acce pt an ce or rep ud ia ti on by th e bu y er is th e di ffer en ce be twee n th e

m ark et pr ic e at th e t i me a n d pl ace fo r te nd er an d th e un pa id co nt ract

pr ic e to ge th er wit h an y in ci de nt al da m ag es pr ov id ed in t h i s ch ap te r

(§ 4- 2- 71 0)

, bu t le ss ex pe ns es sa ve d in co ns eq ue nc e of th e bu y er's

br each

.

(2 ) If the m eas ur e of da m ag es pr ov id ed in su bs ect io n (1) is in ad eq ua te

to pu t th e se ll er in a s go od a po si ti on as pe rfo rm an ce woul d hav e do ne

-7

-is fo r th e se l l e r t o p r o v e it “ ha s th e cap aci ty to pe rfo rm th e co nt ract whi ch was

br eac h e d a s well as ot he r po te nt ia l co nt ract s, du e to th ei r un li m it ed res ou rces or

pr od uc ti on cap aci ty.” Bil l’s Co al Co

. v. Bd. of Pub

. Uti ls

. , 88 7 F.2d 24 2, 24 5 (10 th

Ci r. 19 89 ). Su ch a se ll er is co m m on ly refe rred to as a “ lo st vo lu m e se ll er.” Se e id

.

The di st ric t co ur t ru le d in fav or of Dem en t be cau s e i t co nc lu de d th at Raz or ba ck ’s

ev id en ce d i d n ot crea te a ge nu in e qu es ti on of m at eri al fact reg ard in g whe th er

R azo rb ack was a lo st vo lu m e se ll er or whe th er da m ag es un de r se ct io n 4- 2- 70 8 ( 1 )

were o th erwi se in ad eq ua te

. 5

On ap pe al

, Raz or ba ck fir st arg ue s th at th e tri al co ur t act ed su a sp on te in ru li ng

th at Raz or ba ck was no t a lo st vo lu m e se ll er be cau se Dem e n t n e v e r arg ue d th at

Raz or ba ck was no t a lo st vo lu m e s e l le r or th at Raz or ba ck fai le d to m it ig at e it s

da mag e s. Thu s, Raz or ba ck cl ai m s th at it di d no t ha ve th e op po rtu ni ty to pr es en t

ev id en ce an d a r g u men t r eg ard in g th es e is su es

. The reco rd be li es th is arg um en t.

Afte r Raz or ba ck ’s FRCP 26 da m ag es cal cu la ti on m ad e cl ear th at it was se ek in g lo st

pr of it s, Dem en t, in se ek in g su m m ary jud gm en t, m ad e m

ul ti pl e arg um en ts cl ai m in g

th at Raz or ba ck was no t en ti tl ed to lo st pr of it s, in cl ud in g th at “ [t]he U.C.C. do es no t

pe rm it a se ll er to reco ve r co n s e q u e n ti al da m ag es su ch as lo st pr of it s” an d th at

Raz or ba ck ’s cl ai m fo r lo st pr of it s was sp ecu la ti ve

. Raz or ba ck op po se d su m m ary

th en th e m eas ur e of da m ag es is th e pr of it (in cl ud in g r e a s o n ab le

ov erh ead ) whi ch th e se ll er woul d hav e m ad e fro m fu ll pe rfo rm an ce by

th e bu y er, to ge th er wit h an y in ci de nt al da m ag es pr ov id ed in th is ch ap te r

(§ 4- 2- 71 0)

, du e al lo wan ce fo r co st s reas on ab ly in cu rred an d du e cred it

fo r pa y m en ts or p ro ceed s o f res al e.

Ark . Cod e Ann . § 4 -2 -7 08

.

Bec au se Raz or back doe s not pr ov id e an y de ve lo pe d arg um en t th at it is en ti tl ed 5

to lo s t pr of

it s un de r a di ffer en t pr ov is io n of th e Ark an sa s co de

, we ad dr es s it s

arg um en t th at it is en ti tl ed to lo st pr of it s by ex am in in g ACA se ct io n 4- 2- 70 8( 2)

. Fu rth erm or e, we as su m e wit ho ut de ci di ng th at th e fact s of th is cas e co ns ti tu te “ no nacce pt an ce o r rep ud ia ti on ” b y Dem en t. Se e Ark. Co de Ann . § 4 -2 -7 08 (1 ).

-8

-jud gm en t by qu ot in g se ct io n 4- 2- 70 8( 2) in su pp or t of it s po si ti on t h a t a s e ll er can

reco v e r l o s t p r of

it s un de r th e U.C.C. an d as se rti ng th at it s lo st pr of it s— whi ch it

cal cu la te d as th e co nt ract pr ic e m in us th e co st of pe rfo rm an ce— were no t sp ecu la ti ve

.

Raz or ba ck fu rth er as se rte d th at “ to th e ex te nt th at [Dem en t] m a y b e a r g u i ng th at

Raz or ba ck [co ul d no t] ha ve su pp li ed co nc ret e o n o t he r job s if it ha d co nt in ue d

su pp lying co nc ret e on th e Dem en t job

, . . . Raz or ba ck ’s hi gh -cap aci ty pl an ts

pe rm it te d Raz or ba ck to m eet al l th e req ui rem en ts of th e Dem en t job as well as be in g

ab le to su pp ly co nc ret e on ot he r job s.” Thu s, we co nc lu de th at th e is su e was pr op erl y

be fo re t he di st ric t co ur t.

Raz or ba ck ne xt arg ue s t h a t t h e is su e of whe th er it was a lo st vo lu m e se ll er

wou ld on ly be rel ev an t if Dem en t ha d arg ue d th at Raz or ba ck fai le d to m it ig at e it s

da m ag es

. W e di sa gr ee. Sect io n 2- 70 8( 2) ge ne ral ly is in te rp ret ed as pl aci ng up on th e

se ll er th e bu rd en of de m on st rat in g th at it sh ou ld b e c o mp e ns at ed as a lo st vo lu m e

se ll er if th at is a th eo ry by whi ch th e se ll er se ek s to sh ow th at da m ag es un de r se ct io n

2- 70 8( 1) are in ad eq ua te

. Se e, e.g

. , Bil l’s Co al Co

. , 88 7 F.2 d at 24 5 (“ Sel le rs ha ve th e

bu rd en of pr ov in g th at th ey are lo st vo lu m e se ll ers . . . .”); R.E. Da vi s Ch em. Co rp

.

v. Dia so ni cs

, In c.

, 82 6 F.2 d 67 8, 68 4 (7 th Ci r. 19 87 ) (“ Dias on ic s m us t es ta bl is h, no t

on ly th at it ha d th e cap aci ty to pr od uc e t h e b r e a ch ed un it in ad di ti on to th e un it

res ol d, bu t al so th at i t wou ld ha ve be en pr of it ab le fo r it to ha ve pr od uc ed an d so ld

bo th

. Dias on ic s carr ie s th e bu rd en of es ta bl is hi ng th es e fact s be cau se th e bu rd en of

pr oo f is ge ne ral ly on th e pa rty cl ai m in g in jury to es ta bl is h th e am ou nt of it s da m ag es

. . . .”). Fi nd in g no Ark an sa s la w ad dr es si ng th i s q ue st io n di rect ly, we pr ed ic t

Ark an sa s li ke wis e wou ld pl ace th is bu rd en u po n th e se ll er cl ai m in g da m ag es

. Se e

Mar in e Se rv s. Unl imi te d, I n c. v. Rak

es

, 91 8 S.W .2d 13 2, 13 6 (Ark

. 19 96 ) (“ The

bu rd en of pr ov in g da m ag es res ts on th e pa r t y c l a i m in g th em an d th e pr oo f m us t

co ns is t of fact s, no t sp ecu la ti on .”). At th e su m m ary jud gm en t st ag e, Raz or ba ck ha d

t h e bu rd en of id en ti fy in g fact s th at at le as t crea te d a ge nu in e is su e of m at eri a l f a c t

reg ard in g whe th er Raz or ba ck was el ig ib le to reco ve r un de r ACA se ct io n 4- 2- 70 8( 2)

.

To m eet th is bu rd en , R azo rb ack ne ed ed to pr o v id e th e di st ric t co ur t wit h su ffi ci en t

-9

-p r o o f a s to why th e da m ag es un de r su bs ect io n (1 ) were in ad eq ua te

. Not hi ng in

se ct io n 4- 2- 70 8 co nd it i o n s t h i s b ur de n on whe th er th e bu y er as se rte d a fai lu re to

m it ig at e d am ag es

.

Raz or ba ck ne xt arg ue s t h a t th e di st ric t co ur t erre d by co nc lu di ng th at no

reas on ab le jury co ul d fin d th at Raz or ba ck was a lo st vo lu m e se ll er. Aga in

, we

di sa gr ee. The te st im on y of Raz or ba ck ’s ge ne ral m an ag er, Keit h W et se ll

, sh ows th at

Raz or ba ck wou ld ha ve ha d a l im it ed cap aci ty t o pe rfo rm ot he r co nt ract s if Dem en t

ha d no t br each ed

. Acco rd in g to W et se ll

, Raz or ba ck “ pr ob ab ly tu rn ed away or di dn ’t

bi d [o n] so m e wor k th at ha d co m e al on g du rin g th e ti m e we were do in g th e Dem en t

pr ojec t

. . . be cau se we kn ew we were ki nd of at m ax im um pe ak th ere wit h th ei r job .”

Alt ho ug h W et se ll la te r in di cat ed th at Raz or ba ck “ co ul d ha ve do ne pl en ty o f o t he r

wor k” if th e op po rtu ni ty were th ere, he spe ci fie d th at it wou ld ha ve ha d to be a si ze

th at Raz or ba ck co ul d ha nd le

. Giv en th is te st im on y th at Raz or ba ck was op erat in g at

ne ar pe ak cap aci ty, th e ab se nc e of co nt rary ev id en ce in d i c a t i n g th at W et se ll

un de rs ta te d Raz or ba ck ’s c a p aci ty to su pp ly co nc ret e, an d th e la ck of ev id en ce

reg ard in g whe th er th e ad di ti on al job s th at Raz or ba c k to ok aft er en di ng it s

rel at i o n s h i p w i th Dem en t were of a si ze it co ul d ha ve ha nd le d if it were st il l

su pp lying Dem en t un de r th e co nt ract

, th e di st ric t co ur t di d no t err in de te rm in in g th at

Raz or ba ck fai le d to cre a t e a ge nu in e is su e of fact as to it s st at us as a lo st vo lu m e

se ll er. Se e Bil l’s Co al

Co

. , 88 7 F .2d at 2 45

.

Fi na ll y

, Raz or ba ck co nt en ds th at it is en ti tl ed to lo st pr of it s un de r A rk an sa s la w

ba se d on Ca

pi ta l St eel Co

. v. Fos te r & Cr ei gh to n Co

. , 57 4 S.W .2d 25 6 (Ark

. 19 78 ),

whe re th e co ur t affi rm ed a jury’ s award of lo st pr of it s to a su pp li er. The re are m an y

ob st acl es , h owe ve r, to ap pl y in g Ca pi ta l St eel to th is cas e. Fir st , th e co ur t he ld th at

th e br each in g bu y er fo rfei te d i t s a r g u ment th at a jury in st ru ct io n pr em is ed on wha t

is no w ACA se ct io n 4- 2- 70 8( 2) was “ an in co rrec t de cl arat io n of th e la w” be cau se it s

ob jecti on to th e in st ru ct io n was no t su ffi ci en tl y sp eci fic

. Id

. at 25 9. Seco nd

, th e

co ur t he ld th at wha t is no w se ct io n 4- 2- 70 8( 1) was no t ap pl ic ab le be cau se Cap it al

-1 0-St eel co ul d no t ha ve te nd ered act ua l pe rfo rm an ce. Id

. No ta bl y , R azo rb ack di d no t

arg ue th at it co ul d no t ha ve te nd ered act ua l pe rfo rm an ce. Fi na ll y

, th e co ur t he ld th at

on ce th e in st ru ct io n on da m ag es un de r se ct io n 4- 2- 70 8( 2) wen t to th e jury, it was no t

ou ts id e th e real m of th e jury’ s co m pe te nc e, ba se d on th e ev id en ce pr es en te d at tri al

,

to fin d th at Cap it a l S t e e l “ m ay ha ve be en in a po si ti on to m ak e a pr of it on two

tra ns act io ns in st ead of on e.” S ee id

. at 26 0. Here, Raz or ba ck di d no t pr ov id e

ev id en ce fro m whi ch a reas on ab le jury co ul d co nc lu de th a t R a z o rb ack was in a

si m il ar po si ti on be cau se it di d no t sh ow th at it ha d th e cap aci ty to co m pl et e pr of it ab ly

th e pr ojec t fo r Dem en t p l u s a n y o f th e ot he r job s th at it acq ui red aft er en di ng it s

rel at io ns hi p wi th Dem en t.

W e co nc lu d e t ha t Raz or

ba ck fai le d to su pp ly ev id en ce crea ti ng a fact is su e

reg ard in g whe th er it was a lo st vo lu m e se l l e r or whe th er th e da m ag es pr ov id ed fo r

un de r se ct io n 4- 2- 70 8( 1) were ot he rwis e in ad eq ua te an d th at su ch ev i de nc e was

ne ces sa ry fo r Raz or ba ck to sh ow su cces sf ul ly th at lo st pr of

i t s u n d e r se ct io n 4- 2-

70 8( 2) were po te nt ia l l y a p p r o p ria te

. The refo re, th e di st ric t co ur t di d no t err by

gr an ti ng pa rti al su m

m ary jud gm en t to Dem en t on Raz or ba ck ’s cl ai m fo r lo st pr of it s

un de r se ct io n 4 -2 -7 08 (2 ).

II I. CONCLUSI ON

Fo r th e fo reg oi ng reas on s, we af fir m

.

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