Opinion ID: 1282691
Heading Depth: 1
Heading Rank: 4

Heading: incidental damages

Text: Sprague is entitled also to incidental damages. RCW 62A.2-708 provides that the seller is entitled to the difference between the market price and contract price together with any incidental damages provided in this Article (RCW 62A.2-710), but less expenses saved in consequence of the buyer's breach. Incidental damages are defined in RCW 62A.2-710 as follows: Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach. At trial, the jury found that respondent sustained incidental damages of $216,498 for the following items: (a) cost of refinancing, $39,674; (b) extra transportation cost, $5,612; (c) loss of revenue on Flip Blowdown not covered by contract, $9,121; (d) loss of logging time, 11 weeks, $171,200; and (e) cost of moving tower, $2,115. Sumitomo contends that some of these items are not incidental damages but more properly classified as consequential. Consequential damages are not allowed except as specifically provided in RCW Title 62A or by other rule of law. RCW 62A.1-106. Washington Comment to section 2-710 indicates that consequential damages are denied to sellers under the Uniform Commercial Code. RCWA 62A.2-710. [6] The distinction between consequential and incidental damages was made in Petroleo Brasileiro, S.A., Petrobras v. Ameropan Oil Corp., 372 F. Supp. 503, 508 (E.D.N.Y. 1974): While the distinction between the two is not an obvious one, the Code makes plain that incidental damages are normally incurred when a buyer (or seller) repudiates the contract or wrongfully rejects the goods, causing the other to incur such expenses as transporting, storing, or reselling the goods. On the other hand, consequential damages do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting. (Citations omitted. Italics ours.) We find that the loss of logging time is an inappropriate item of incidental damages. Sprague's damage claim for loss of logging time is essentially a claim for lost profits on a contract with Mt. Baker Plywood. In Petroleo Brasileiro, the court stated that consequential damages do not arise within the scope of the immediate buyer-seller transaction [as do incidental damages], but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties ... Petroleo Brasileiro, at 508. Applying this test to Sprague's claim for loss of logging time, Sprague's loss clearly did not arise within the scope of his contract with Sumitomo; instead, Sprague incurred this loss as a consequence of his delay in performing his contract with Mt. Baker Plywood, a third party. The fact that Sumitomo's conduct proximately caused Sprague's loss is irrelevant to this analysis. The focus is upon losses arising within the scope of the immediate contract. Accordingly, Sprague's loss can only be characterized as consequential. Therefore, the judgment awarded Sprague is reduced by $171,200. The remaining costs are not seriously contested by appellant and appear to be appropriate items of incidental damages. See Bulk Oil (U.S.A.), Inc. v. Sun Oil Trading Co., 697 F.2d 481 (2d Cir.1983); Lee Oldsmobile, Inc. v. Kaiden, 32 Md. App. 556, 363 A.2d 270 (1976); Gray v. West, 608 S.W.2d 771 (Tex. Civ. App. 1980).