Opinion ID: 3009593
Heading Depth: 1
Heading Rank: 3

Heading: Statement of Procedural History

Text: On August 12, 1985 U&W filed this action against MMA. The complaint sought damages for breach of contract, contending U&W was entitled to actual, formal notice in July, 1984 of MMA's decreased needs so that U&W could make appropriate adjustments in its own inventory levels. U&W alleged MMA had failed to give notice of a decrease in its production level and that this was a breach of the governing agreements. Both parties filed motions for summary judgment on liability. On April 24, 1987 the late Chief Judge David V. O'Brien granted partial summary judgment in favor of U&W after concluding MMA constructively canceled five of the contracts when it implemented internal inventory reductions in July of 1984 without advance notice to U&W and that this breached an implied obligation of good faith and fair dealing reciprocal to U&W's express contractual duty to maintain an inventory adequate to meet MMA's requirements. The court held U&W was entitled to thirty days' notice of MMA's changed needs because MMA had an express contractual right to terminate the blanket contracts on thirty days' written notice. Judge O'Brien granted summary judgment to MMA on the remaining liability issues and ordered a hearing at a later date to determine damages.1 He issued two additional orders on July 16, 1987 and September 21, 1987 concerning the damages U&W would be permitted to prove. Under these orders, U&W was limited to damages resulting from its inability to dispose of inventory acquired during the thirty days immediately prior to U&W's receipt of MMA's reduction orders.2 If U&W had thirty days advance notice of MMA's construction cancellation, the court reasoned that U&W would not have purchased any additional inventory during this thirty day period. The court did not permit U&W to recover damages for the inventory it had on hand but could not return prior to the date notice was required. Judge O'Brien's unfortunate death and Hurricane Hugo delayed final decision in the case for several years. In 1991, it was assigned to a visiting judge, who had been temporarily assigned to the District Court for the Virgin Islands. The district court held a hearing to assess damages and on December 27, 1991, appointed a Special Master to prepare a report with findings of fact and conclusions of law and [make] a 1 . U&W has not appealed the portion of Judge O'Brien's order granting partial summary judgment to MMA. 2 . Neither the parties nor the district court tell us whether those damages would be measured by the difference between the salvage price U&W received for the items it purchased during that thirty day period and its cost, or the prices it expected to receive from MMA. recommendation for total damages to be awarded to [U&W]. Jt. App. at 10. On August 20, 1992, the Special Master filed a report recommending U&W receive damages of $27,790.19. The Special Master concluded that the thirty day window for damages ran from June 20, 1984 to July 20, 1984. The report stated that the Special Master view[ed] the scope of her review as being strictly limited to the holdings of the late [Judge] O'Brien and therefore awarded damages only for inventory acquired during the thirty-day window as the inventory U&W could have . . . returned3 within the thirty day window but for lack of fair notice from MMA. Jt. App. at 11-12, 17. In setting U&W's damages at a net of $27,790.19, the Special Master decided U&W had not fully mitigated the loss that resulted from MMA's July 20, 1984 cancellation of the contracts because U&W should have immediately made greater efforts to reduce its inventory than it had. The Special Master found that U&W did make some reduction in its purchases after July 20, 1984, that U&W knew it would not need to maintain as large an inventory as it had before that date and that this triggered its immediate duty to mitigate. Perhaps the Special Master's most pointed conclusion on mitigation was that U&W should have reduced its inventory to the 3 . The fact that MMA continued to purchase parts from U&W after July of 1984, and as late as May of 1985 when the plant closed, seems arguably inconsistent with the conclusion that U&W would have ceased purchasing inventory during the thirty days prior to the reduction. See also infra note 12. level it would have normally maintained absent its blanket contracts to supply MMA's requirements. Finally, the Special Master recommended that U&W receive prejudgment interest of 9% on the damages awarded from the date of cancellation, July 20, 1984, until payment. Both U&W and MMA objected to the Special Master's Report. On April 12, 1993 the district court adopted the Special Master's Report and ordered MMA to pay damages to U&W in the amount of $27,790.19, but only awarded interest of $3.98 per day to U&W from July 20, 1992 to date.4 U&W appealed this order on May 3, 1993. MMA filed its cross-appeal on May 11, 1993. III. Statement of Jurisdiction and Standard of Review The district court had subject matter jurisdiction over this breach of contract action pursuant to V.I. Code Ann. tit. 4, § 32(a) (Supp. 1993). We have appellate jurisdiction pursuant to 28 U.S.C.A. § 1291 (West 1993). The construction of an unambiguous contract is a matter of law for the court and therefore is subject to plenary review. Contract interpretation, as opposed to construction, involves mixed questions of law and fact. We exercise plenary review over questions of law and reverse findings of fact only if they are clearly erroneous. See Coca-Cola Bottling Co. of Elizabeth, Inc. v. Coca-Cola Co., 988 F.2d 386, 401 (3d Cir.), cert. denied, 114 S. Ct. 289 (1993). 4 . The district court rejected the Special Master's prejudgment interest recommendation because she felt both sides had contributed to the long delay in this case. When reviewing an order granting summary judgment, we view the facts in the light most favorable to the nonmoving party and decide whether any genuine issue of material fact exists and whether the moving party is entitled to summary judgment as a matter of law. Fed. R. Civ. P. 56(c); see Clark v. Modern Group Ltd., 9 F.3d 321, 326 (3d Cir. 1993). An order granting summary judgment will be reversed if there is sufficient evidence for a jury to return a verdict in favor of the nonmoving party; however, if the evidence is merely colorable or not significantly probative, an order granting summary judgment should be affirmed. A disputed fact is material if it would affect the outcome of the lawsuit. Id.