IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON JOHNSON BROTHERS CONTRACTING, INC., Appellant,

SIMPSON TACOMA KRAFT COMPANY, LLC, Respondent. No. 71735-9-1
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### DIVISION ONE S 3° f- 3* 

### UNPUBLISHED OPINION ?> o- i XT :-. n K •-- 

## FILED: August4, 2014 5 ^

o Appelwick, J. — Johnson Brothers Contracting, Inc. appeals the summary 

### judgment order dismissing its breach of contract, promissory estoppel, and negligent misrepresentation claims againstSimpson Tacoma KraftCompany, LLC. JBC sued after 

### Simpson declined tofollow through with an oral eighteen month contract for the sale of hogfuel. Simpson argues that JBC's claims are barred by the statute of frauds and the independentduty doctrine. We affirm. FACTS 

### In early 2009, Simpson Tacoma Kraft Company LLC was building a power plant that would require large quantities of "hogfuel" to operate. "Hog fuel" is ground forest slashthat isusedto fuelgenerators. Johnson Brothers Contracting Inc.(JBC), a Montana 

### company, produces hogfuel. Simpson approached JBC to supply hogfuel for itsplant. The parties met on March 3, 2009 at a Chehalis restaurantowned by Brent Deroo. Deroo acted as JBC's hog fuel sales broker in the negotiations. Simpson was 

### represented by Steve Regelin, its fuel procurement manager at that time. Regelin indicated that Simpson was a few months away from completing its plant and would soon need about 100 truckloads of hog fuel perday to run the plant's generators.No. 71735-9-1/2 During theirdiscussion, the parties agreed on JBC supplying 90 truckloads a week for 12 months, after which either party could give written notice to terminate the 

### agreement six months from that date. Each truckload held about 33 tons. The parties discussed an initial price of$53 perton. The going rate for hog fuel at thattime was $63 perton, so this was a good deal for Simpson. Simpson also proposed that JBC set up a 

### processing site in Olympia, nearby Simpson's plant, to reduce trucking and transport costs. No written contractwas produced. 

### A few days later, Regelin sent an e-mail to JBC acknowledging the meeting and their discussions. Johnson requested that Regelin send a more detailed letter of intent


### so Johnson could present it to a lender if he needed to obtain funding. Regelin did so, 

### writing, "This letter is to confirm Simpson Tacoma Kraft Company's desire to enter into 

### an agreementwith Johnson Brothers Contracting, Inc. to purchase hog fuel produced in 

### yourfacilities." Itthendetailed the terms setforth bytheparties. Theletterconcluded, "I believe this captures the items we discussed and I'm looking forward to developing this important source of hog fuel using forest slash material." 

### Though the letter was sufficientto obtainfunding, itwas more "wishy-washy" than Johnson wouldhave liked. But,Johnson thoughtthe parties made a deal at the March 3 

### meeting. Johnson also thought that Regelin and Deroo were proceeding as ifthe deal
was done. Derootreated the March 3 meeting as a commitment, onethat obligated JBC to move forward on the project. 

### According to Johnson and Deroo, Regelin called at the end of March and confirmed that JBC should proceed with the Olympia site per the terms of the March 23 letter. JBC obtained a site lease from Welco LLC, and developed the Olympia locationNo. 71735-9-1/3
forthe purpose of providing hog fuel to Simpson. JBC expended about $200,000 setting up the processing site. Simpson's representatives visited the processing site regularly as itprogressed. One Simpson representative, Blayde Fry, visited several times that spring. Inlate spring, Regelin retired and a newfuel buyer, Bill Disbrow, took over. Atthis point, Disbrow indicated that Simpson would not be purchasing hog fuel from JBC's 

### Olympia site as discussed. Fry had expressed concern about the quality of JBC's Olympia hog fuel, which he said led to Simpson's ultimate decision not to enter into a contractwith JBC. According to Regelin, neitherthe March 3 meeting nor the March 23 

### letter constituted a binding contract. Instead, they were demonstrations of interest in 

### entering into an agreement inthe future. Johnson maintained, however, thatthe parties had formed a contract that Disbrow broke because he overcommitted to other suppliers that offered better deals. Disbrow instructed JBC to shut down the site to "stop the bleeding." JBC resold its hog fuel to another company, but at a loss. On March 12, 2012, JBC sued Simpson for breach of contract, promissory 

### estoppel, and negligent misrepresentation. Simpson moved for summary judgment seeking to dismiss all ofJBC's claims. Simpson argued that the statute of frauds barred JBC's breach of contract and promissory estoppel claims; that JBC failed to present a 

### valid negligentmisrepresentation claim; and that the statuteoflimitations precluded JBC's
suit. 

### The court granted Simpson's motion in its entirety. JBC appeals.No. 71735-9-1/4

DISCUSSION This court reviews summary judgment orders de novo. Hadlev v. Maxwell, 144 Wn.2d 306, 310-11, 27 P.3d 600 (2001). Summaryjudgment is appropriate only where there are no genuine issues ofmaterial fact and the moving party is entitled tojudgment

as a matter of law. CR 56(c); Peterson v. Groves, 111 Wn. App. 306, 310, 44 P.3d 894 (2002). When considering the evidence, we draw reasonable inferences inthe lightmost favorable to the nonmoving party. Schaafv. Hiqhfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995). We may affirm the trial court's ruling on any grounds adequately supported by the record. State v. Costich, 152 Wn.2d 463, 477, 98 P.3d 795 (2004). I. Breach of Contract JBC asserts that the trial court improperly concluded that the statute of frauds barred its breach of contractclaim. Underthe statute offrauds, certain contracts mustbe 

### in writing to be valid. See RCW 19.36.010. This includes contracts that will not be performed inone year. RCW 19.36.010(1). Where a contract is for the sale ofgoods, the Uniform Commercial Code (UCC) applies. RCW 62A.2-101, .2-102. The UCC has 

### its own statute offrauds provision, which states that a contractfor the sale ofgoods for $500 or more is not enforceable unless it is in writing. RCW 62A.2-201(1). JBC does not assert that ithad a written contractfor this transaction, northat ithad an oral agreement for a year or less. A. Contract for Services or Goods 

### Johnson contends that its agreementwithSimpson was not forthe sale ofgoods, but for a service—namely, the processing and transport of hog fuel. Where a contract involves both goods and labor, this court looks to the "predominantfactor" of the contractNo. 71735-9-1/5

to determine whether it is for goods or services. Tacoma Athletic Club, Inc. v. Indoor Comfort Svs.. Inc., 79 Wn. App. 250, 257, 902 P.2d 175 (1995). InTacomaAthletic, the defendant sold and installed a dehumidification systemfor the plaintiff. Id. at252. The defendantarguedthatthe parties had a construction contract, not a sale of goods, jd. In applying the predominant factor test, the Court of Appeals looked at both the written terms ofthe contract and the parties' negotiations, jd. at 258- 59. The court found that substantial evidence supported the trial court's conclusion that the contractwas for the sale ofgoods: The negotiations leading up to the contract focused on the goods, not the services, aspect of the sale. Comfort Systems recommended a specific productto the Club, Dri-Airedehumidifiers. The Club president insisted on viewing other facilities at which Dri-Airedehumidifiers had been installed. The written contract predominantly lists the goods being sold [and] states 

### that the "system includes" labor. This language clearly suggests that the subject ofthe sale is "the system," withthe labor incidental to the system. \j± 

### Here, the parties' negotiations similarly reflect a focus on the goods aspect ofthe contract. Simpson approached JBCwiththe desireto purchase a specifictonnage of hog fuel. JBC replied with its production capacity, also expressed interms ofquantity. The 

### parties discussed a price per ton, not per hour. And, Regelin's letter of intent, which reflects the parties' negotiations, refers to Simpson's desire to "purchase hog fuel" and notes Simpson's quality standards for a product, not for services. This is not a case where Simpson hired JBC to exclusively process forest slash that Simpson had on site. JBC obtained the slash from various sources, processed it, 

### and prepared it for sale by the ton. Though laborwas required to convert the slash intoNo. 71735-9-1/6

the final product, the predominant factor of the contract was the hog fuel. The parties' 

### contractwas forthe sale ofgoods and thus falls underthe UCC.1 B. Exception to Writing Requirement JBC argues that its agreement with Simpson was nonetheless enforceable under
an exception to the UCC writing requirement. Where a contract does not satisfy the writing requirement, but is valid inother respects, it is enforceable if the goods are to be specially manufactured for the buyer and are not suitablefor sale to others inthe ordinary course ofthe seller's business and the seller, before notice ofrepudiation is received and undercircumstances which reasonably indicate thatthe goods areforthe buyer, has made either 

### a substantial beginning of their manufacture or commitments for their procurement. RCW62A.2-201(3)(a). 

### JBC argues that section (3)(a) preserves the parties' contract, because JBC substantially changed its position in reliance on Simpson's oral agreement and incurred damages as a result. JBC notes that itset upthe Olympia site specifically for Simpson. However, JBC cites no authority to indicate that goods produced at a specific site would 

### be necessarily be "specially manufactured" underthe UCC. Importantly, the goods here
were suitablefor saleto others inthe ordinary course ofJBC's business: JBC's President Ernest Johnson stated that JBC was able to sell all of the hog fuel to another buyer 

### "withoutany trouble." Thus, they were not speciallymanufactured nor unsuitable forsale to others as required to triggerthis section.



### 1 JBC argues that, were this court to find that the parties' contract was for services—not goods—the contract would survive under the general statute of frauds provision, RCW 19.36.010. However, thatstatute similarlybars JBC's claim, as itrenders void an oral contract exceeding one year. RCW 19.36.010(1). Itcontains no exception for contracts for services.No. 71735-9-1/7

The parties did not form a valid contract. The trial court properly granted summary judgment on JBC's breach of contract claim. II. Promissory Estoppel 

### JBC arguesthatthetrial court improperlydismissed itspromissoryestoppel claim.2 However, an oral promise for the sale ofgoods that is otherwise barred by the statute of frauds is notenforceable on the basis ofpromissory estoppel. Liqe Dickson Co. v. Union Oil Co. ofCal., 96 Wn.2d 291, 292, 635 P.2d 103 (1981). JBC attempts to distinguish the present case, arguing that the Liqe court had limited facts that did not require it to intervene with equity. Though the Liqe court commented that equitable estoppel did not
seem appropriate on the facts before it, its ultimate conclusion was a legal one: 

### "[pjromissory estoppel cannot be used to overcome the statute offrauds in a case which involves the sale ofgoods." ]d, at 299. 

### Liqe controls here. The trial court properly granted summaryjudgment on JBC's promissory estoppel claim. III. Negligent Misrepresentation JBC contends that the trial court improperly dismissed its negligent 

### misrepresentation based on the independent duty doctrine. Under this doctrine, a party 

### seeking to recoverforbreach ofcontract may also recoverforbreach of a tort duty ifthe tort duty arose independently of the terms of the contract. Eastwood v. Horse Harbor 2Simpson argues thatJBC's promissoryestoppel and negligentmisrepresentation claims were barred due to JBC's lapsed corporate registration status at the time of suit. However, JBC cured this problem by paying its license fee on June 28, 2012. See Portland Ass'n of Credit Men. Inc. v. Earlev, 42 Wn.2d 273, 279, 254 P.2d 758 (1953) 

### ("Nonpayment of the license fee affects only the corporation's capacity to maintain the action attime oftrial."), overruled on othergrounds by Ford v. Logan, 79 Wn.2d 147, 150, 483 P.2d 1247 (1971).No. 71735-9-1/8 Found., Inc., 170 Wn.2d 380, 389, 241 P.3d 1256 (2010). JBC fails to demonstrate an independenttort duty. 

### JBC alleges that Simpson committed negligent misrepresentation when Regelin orally agreed to honor an 18 month hog fuel contract with JBC, even though he lacked the authority to do so. Washington lawrecognizes the tort ofnegligentmisrepresentation

as setforth in Restatement (Second) ofTorts § 552(1) (1977): "One who, in the course of his business, profession or employment, or in 

### any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is 

### subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or 

### competence in obtaining or communicating the information." Hinesv. Data Line Svs., Inc., 114Wn.2d 127, 150, 787 P.2d 8 (1990) (emphasis added). 

### "[T]o prevail on a claim ofnegligent misrepresentation, a plaintiffmust prove byclear, 

### cogent, and convincing evidence that he or shejustifiably relied on the information that the defendant negligently supplied." Lawyers Title Ins. Corp. v. Baik, 147Wn.2d 536, 545, 55 P.3d 619 (2002). 

### The statuteoffrauds renders void any oral agreementthat cannotbe performed in 

### oneyear. RCW 19.36.010(1). Therefore, as a matteroflaw, itwould beimpossiblefor Regelin to make an enforceable 18 month oral contract with JBC. Accordingly, JBC cannot present clear, cogent, and convincing evidence that itjustifiably relied on a negligent misrepresentation. 

### The trial court properly granted summary judgment on JBC's negligent misrepresentation claim.

8No. 71735-9-1/9

IV. Attorney Fees JBC requests attorney fees and costs under RCW 4.84.010. RCW 4.84.010(6) 

### provides that a prevailing party shall be allowed to recover certain expenses, including statutory attorney fees. JBC is not the prevailing party. We deny JBC's request. The trial court properly granted summary judgment dismissing JBC's suit in its entirety. We affirm.

WE CONCUR: 

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