Opinion ID: 158323
Heading Depth: 2
Heading Rank: 2

Heading: Remedy Sought

Text: 14 The remedy in this case is difficult to pigeonhole into one distinct category. The posture of the case as a declaratory action further complicates the analysis. Fischer argues that the claim is a straightforward one for money damages. The case is not so simple. Prior to filing suit, Fischer refused to perform under the extended term of the contract. As a result, Fischer had yet to suffer a loss when it filed the declaratory action. Therefore, one of the traditional purposes associated with legal relief, compensation for damages does not apply. See Feltner, 523 U.S. at 352 (1998) (traditional purposes of legal relief include compensation and punishment); see also 5 Corbin, supra § 990 (damages nearly always award reparation in money for harm already done). Such a situation is not unusual in a declaratory action, however, because normally the purpose of such a cause is to obtain relief before a wrong has been committed or a loss incurred. See 5 Corbin supra § 991. 15 In contrast, GE attempts to characterize the remedy as one of reformation of a contract. 1 Reformation is an equitable remedy used to reframe written contracts to reflect accurately [the] real agreement between contracting parties when, either through mutual mistake or unilateral mistake coupled with actual or equitable fraud by the other party, the writing does not embody the contract as actually made. Black's Law Dictionary 1281 (6th ed. 1990); see also Mutual of Omaha Ins. Co. v. Russell, 402 F.2d 339, 344 (10th Cir. 1968). GE argues that Fischer is actually seeking reformation of the contract because Fischer introduced evidence of Fischer's own erroneous expectations of higher gross margins and miscalculations regarding initial pricing of the goods when Fischer entered into the original contract. 16 GE's argument misses the mark. The current dispute is over the extended term contract, not the original contract. The extended term contract cannot be rewritten to express the parties' actual intent regarding the price, because the parties failed to reach any agreement as to price. What Fischer asked the district court to do was not to reform the contract to reflect what the parties actually intended, but to set a reasonable price. In order for the district court to do so, Fischer introduced evidence regarding a reasonable price. Fischer introduced the evidence of false assumptions and miscalculations in the original pricing scheme to show that the pricing provisions in the original contract should not just be grafted onto the extended term contract. The introduction of this evidence did not transform the remedy sought into reformation of the contract. 2 17 In arguing that the remedy should be characterized as reformation or other equitable relief, GE relies heavily on a Nebraska district court case, Burlington Northern R.R. Co. v. Nebraska Public Power District, 931 F.Supp. 1470 (D. Neb. 1996), which, importantly, does not involve setting a reasonable contractual price under U.C.C. § 2-305. 3 In Burlington, both parties sought declaratory relief regarding the pricing mechanism in an extremely complex contract for the transportation of coal. Id. at 1473. Because the term of the contract was for several years, the contract provided two methods to adjust the price if a change in circumstances warranted an adjustment, including a method to amend the contract. Id. at 1480. In other words, the contract contained a specific method for setting a new contract price. If the parties could not agree on whether an adjustment was warranted, or on an amended price, the contract provided that a declaratory action could be brought to decide the disputes. Id. at 1482. The district court characterized the suit as most like a suit for specific performance of a contract coupled with a suit for reformation of a contract. Id. at 1483. 18 Burlington differs significantly from this case, however, because the contract in Burlington provided a method for amending the contract. Unlike the present case, the parties in Burlington contemplated that a reformation of the contract might be necessary. The contract provided that unforeseen changes in circumstances in the future might cause the Effective Rate to no longer reflect the parties' intentions and thus the parties desire to provide a procedure for amending the contract. Id. at 1483. The district court equated these provisions with reformation of the contract. Id. While that analysis may be quite sound, we have no parallel term providing for amendment of the present contract. 19 The district court's decision in Burlington was also based on the complexity of the task of determining a price. 4 The district court was not only required to determine the reasonable cost to the defendant, but was also required to interpret numerous terms in the contract. 5 Id. The district court characterized the nature of the undertaking as tantamount to plenary interpretation of the contract, a task traditionally left to judges. See id. (quoting Markman, 370 U.S. at 381). 20 Unlike Burlington, our case is not dependent on, nor does it involve, interpreting a plethora of contractual terms. Determining the reasonable price of the Tilt C units may require consideration of the parties course of dealing, course of performance, and the fair market value of the goods. 1 J. White and R. Summers, Uniform Commercial Code, § 3-8, (1995). The determination may also require consideration of production costs, including materials and labor. See Kuss Machine Tool & Die Co., Inc. v. El-tronics, 143 A.2d 38, 40 (Penn. 1958). These determinations, however, do not require a wholesale interpretation of the terms of the contract. See Markman, 370 U.S. at 381-82 (judges not juries, ordinarily construe written documents). The determination of a reasonable price is a relatively straightforward factual inquiry which does not involve the type of highly discretionary calculations traditionally performed by judges. Tull, 412 U.S. at 427 (determining amount of civil penalties under Clean Water Act involved highly discretionary calculations that take into account multiple factors, and, as such, was task best left to judges). For these reasons, we find GE's reliance on Burlington unpersuasive. 21 After considering the parties' arguments regarding legal versus equitable relief, it is apparent that this case does not fit neatly into either category. In the hopes of resolving the dilemma, we next consider how this case might have come to the court absent declaratory judgment procedures. See 9 Wright & Miller, Federal Practice and Procedure, Civ. 2d § 2313. Without a declaratory judgment action, Fischer could have delivered the Tilt C units and, upon GE's refusal to pay the demanded price, sued GE for breach of contract seeking monetary damages in the amount of a reasonable price for the goods. In such a case, Fischer would have been entitled to have a jury determine damages. See Terry, 494 U.S. at 569-70 (unless restitutionary or incidental to or intertwined with injunctive relief, monetary awards constitute legal relief). In the alternative, Fischer could have delivered the Tilt C units, invoiced at a price GE believed was unreasonable, and GE could have paid the invoice price and then sued Fischer for breach of contract. In such a case, the damages would be the difference between the invoice price and the contract price, which § 4-2-305 provides is a reasonable price. Likewise this claim for monetary damages would be triable to a jury. 22 If Fischer failed to deliver the Tilt C units, GE could cover and sue Fischer for breach of contract, seeking the difference between the contract price, as set by § 4-2-305 as a reasonable price, and the cover price, as well as any incidental or consequential damages associated with effecting cover. See Colo. Rev. Stat. § 4-2-712. Such a suit for money damages would be tried to a jury. If GE chose not to cover, GE could sue for breach of contract seeking the difference between the market price at the time of the breach and the contract price, i.e., a reasonable price, plus any consequential or incidental damages. See Colo. Rev. Stat. § 4-2-713. Again, this action for money damages would be tried to a jury. Finally, if GE was unable to cover because the goods were unique, GE could sue under Colo. Rev. Stat. § 4-2-716 for specific performance for delivery of the Tilt C units. Because specific performance is an equitable remedy, the case would not be tried to a jury. In a suit for specific performance, a determination of a reasonable price would be not necessary to the disposition of the claim. 6 As illustrated above, in all the scenarios where U.C.C. § 2-305 can come into play, the relief sought is legal in nature. See Terry, 494 U.S. at 569-70. Accordingly, because Fischer's statutory suit, if not brought as a declaratory action, would sound in contract and seek legal relief, we conclude that the § 4-2-305 suit is an action at law. Cf., Johnson v. Fidelity & Casualty Co. of N.Y., 238 F.2d 322, 324-25 (8th Cir. 1956) (insurer entitled to jury trial in declaratory judgment action to determine coverage under insurance policy); Hargrove v. American Cent. Ins. Co., 125 F.2d 225, 228 (10th Cir. 1942) (same).