Opinion ID: 1381094
Heading Depth: 2
Heading Rank: 6

Heading: Did the superior court err in failing to credit appellants with resale proceeds?

Text: We find this aspect of the superior court's damages award must also be remanded for redetermination. The trial court concluded that appellants were entitled to a credit of $7,284.60, representing $7,153.10 TTC allegedly recovered from the resale of some of the Uchitel equipment to ASAG, [22] plus $131.50 for equipment which TTC never ordered. Appellants' primary contention here is that they are entitled to a credit of $33,920.00 based on their estimate of the total proceeds TTC received from the subsequent sale to ASAG. It appears that the superior court calculated appellants' credit from a schedule of costs prepared by TTC. This schedule is evidently incorrect since it lists as a resale credit a figure of $5,518.00, which represents the alleged discount TTC gave to ASAG. This was money which TTC lost/discounted in the resale of equipment to ASAG and should not have been included in the resale proceeds. The fundamental error in the schedule, however, is its failure to specify the price obtained by TTC from its resale to ASAG. It is impossible to calculate the resale credit without first establishing the amount obtained from the resale to ASAG. The figure of $16,043.60, designated on the schedule as Actual Equipment Purchased, apparently represents TTC's wholesale costs for the components, not the purchase price actually paid by ASAG for the assembled system. Appellants' assertion that they are entitled to a credit of $33,920.00 may also be incorrect since it is based on the as yet unproven assumption that the $33,920.00 estimated resale figure does not include any amounts received for equipment that was not originally part of the system designed for the appellants. [23] An accurate resale credit would therefore consist of a $3,372.00 refund from equipment which TTC returned to its suppliers, plus the purchase price of the rejected equipment later sold to ASAG, less the costs incurred in reselling this equipment. We note that there is some uncertainty regarding the appropriateness, under the lost profits theory, of allowing a credit for the proceeds obtained by an aggrieved seller from the resale of the rejected goods. Under the terms of the lost profits formula set out in the Uniform Commercial Code [24] a breaching buyer is theoretically entitled to a credit for any payments or proceeds the seller receives from resale of the goods. The net result, however, of giving the buyer due credit for the resale may be the elimination of the seller's lost profit recovery. [25] Commentators have argued that where the seller is able to demonstrate that he could and would have supplied both buyers, thereby making two sales and profits instead of just one, the court should simply ignore the due credit language in its award of lost profits as damages for the first buyer's breach. [26] We need not resolve this issue, however, because the terms of the contract between TTC and appellants specifically provide that the appellants be given credit for amounts received by TTC from any resale of the equipment upon default by the appellants. [27] The question whether credit must be given under the lost profit formula in AS 45.02.708(b) is therefore irrelevant to the determination of damages in this case. For the reasons above we conclude that the proper resale/refund credit will have to be determined by the superior court on remand.