Opinion ID: 1272032
Heading Depth: 1
Heading Rank: 17

Heading: appropriateness of the remedies granted appellees

Text: In this final section of the opinion we examine GAC's contentions concerning the propriety of the remedies awarded United and I&M by the trial court. After entry of the sanctions order and default judgment, the court conducted a trial on damages. [165] The court invalidated the 1973 and 1974 Supply Agreements, and held that United had no obligation to supply any uranium to GAC or its predecessors. The court also found that GAC was obligated to indemnify United for any liabilities connected to United's failure to deliver uranium covered by the 1973 Agreement or any of the utility contracts. The court awarded I&M $15,950,752 in damages, and decreed specific performance of GAC's obligation to supply uranium to I&M. GAC contends that these remedies were improper. GAC argues that the invalidation of a contract which displaced a prior, valid contract reinstates the prior contract. GAC also argues that rescission of a contract requires restoration of the status quo ante. Prudential Insurance Company of America v. Anaya, 78 N.M. 101, 106, 428 P.2d 640, 645 (1967). Because the 1973 Supply Agreement replaced the 1971 Agreement and continued United's obligation to supply uranium to Gulf-United, GAC contends that if the 1973 Agreement was correctly invalidated, the 1971 Agreement remains in force. Therefore, it concludes that the trial court erred in holding that United had no further obligations to supply uranium to GAC. Alternatively, GAC argues that if the 1971 Agreement is also invalidated, United remains obligated to supply uranium to the utilities by virtue of the utility contracts it entered into prior to the execution of the 1971 Agreement. The principles GAC relies on do not apply here. Entry of the default had the effect of establishing as true the allegations of the complaint ( Gallegos v. Franklin, supra, 89 N.M. 123, 547 P.2d at 1165)-namely that the 1973 Supply Agreement was unenforceable due to antitrust violations, fraud, breach of fiduciary duty, economic coercion and commercial impracticability. Among the averments established by the default was that the purpose or effect of the 1973 Agreement was to restrain trade in and further the monopolization of the uranium market in New Mexico. Acceptance of GAC's contract revival argument would merely substitute one invalid contract with another which would have the same illegal effect. See Evans v. Ideal Brick and Brikcrete Mfg. Co., 287 P.2d 454, 456 (Okla. 1955). The default also established as true the allegation that United's performance of the 1973 Agreement was commercially impracticable. If performance of the 1973 Agreement is commercially impracticable, performance of the 1971 Agreement at the lower prices contained therein would be even more so. Second, GAC contends that there was no basis for the trial court to hold that GAC was obligated to indemnify United. We disagree. In this instance, the issue of indemnification was a question of liability and not of damages. United pled facts entitling it to indemnification. The default established the truth of those averments. Gallegos v. Franklin, supra . Finally, GAC contends that the remedies awarded to I&M were improper because I&M was not entitled to specific performance of its contract, and because the trial court improperly refused to hear evidence on limitation of liability and equitable judgment clauses in the I&M contract. GAC argues that specific performance was not a proper remedy because fabricated nuclear fuel is not a unique good. Section 55-2-716, N.M.S.A. 1978, provides that specific performance may be decreed where the goods are unique or in other proper circumstances. Official Comment 1 to Section 55-2-716 states that the intent of this provision is to liberalize the availability of this remedy. Comment 2 makes it clear that the uniqueness of the goods is not the sole basis of the remedy. A decree of specific performance is proper where the remedy at law, in this case damages, is inadequate. To be adequate, the remedy at law `must be as certain, prompt, complete, and efficient to attain the ends of justice as a decree of specific performance.' Laclede Gas Company v. Amoco Oil Company, 522 F.2d 33, 40 (8th Cir.1975), quoting from National Marking Mach. Co. v. Triumph Mfg. Co., 13 F.2d 6, 9 (8th Cir.1926). In this case, there is substantial evidence to support the conclusion that damages are an inadequate remedy. The evidence shows that no seller was willing to make a long-term contract with I&M on any basis other than the market price at the time of delivery. Because fixed price contracts for future delivery were unavailable, there was no way to predict the price I&M might have to pay. Thus, specific performance was a proper remedy, even though the goods involved are not unique in the traditional sense of that term. Other courts have decreed specific performance in similar circumstances. Laclede Gas Company v. Amoco Oil Company, supra, 522 F.2d at 40 (supply contract for propane); Eastern Air Lines, Inc. v. Gulf Oil Corp., 415 F. Supp. 429, 442-43 (S.D. Fla. 1975) (supply contract for aviation fuel). The issues concerning the limitation of liability and equitable adjustment clauses are more troubling. The I&M contract contains a clause which limits the seller's liability. Another clause provides for certain adjustments in price for increased costs incurred by the seller as a result of delays caused by the purchaser. The trial court held that by reason of the default, GAC was precluded from offering evidence on either issue. We disagree. The limitation of liability clause is directly related to the question of damages. A hearing on its applicability was not precluded by the act of default. See Kohlenberger, Inc. v. Tyson's Foods, Inc., 256 Ark. 584, 510 S.W.2d 555, 565 (1974). We need not consider I&M's various arguments as to the inapplicability of this clause. The time and place for resolving those issues is at a damages hearing in the trial court. We also hold that the trial court erred in refusing to hear evidence on the question of the applicability of the equitable adjustment clause of the I&M contract. I&M argues that the default established that the largest component of GAC's claimed increase in cost was caused by the activities of the cartel, and that GAC therefore had no equitable claim to compel I&M to bear the consequences of GAC's misdeeds. Although the default established that uranium price increases were due to cartel activities, which is a finding we do not disturb, GAC was nevertheless entitled to show that other costs, such as those for separative work, were due to I&M's delays in constructing one of its nuclear reactors, and that it was therefore entitled to price increases under the equitable adjustment clause of the I&M contract. The trial court did not make specific findings setting forth any factual or legal basis for precluding evidence with respect to these contractual clauses. A search of the record shows a dearth of argument, briefing, or other means by which we can pin point the reasons for that decision. On the record before us, we cannot determine whether these clauses are applicable, or whether, if applied, they would reduce the amount of damages which were awarded. That award will not be disturbed unless on remand the trial court finds that the limitation of liability or equitable adjustment clauses are applicable and would change the result. We are satisfied that the trial court adequately considered the other damage questions GAC raises on appeal. However, the case is remanded to the trial court for the limited purpose of a hearing on the applicability of the limitation of liability and equitable adjustment clauses of the I&M contract.