Court Opinion

ID: 883605
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:31:29.557659+00
Date Added: 2024-06-11T15:12:22.022327
License: Public Domain

NO.    95-023
          IN THE SUPREME COURT OF THE STATE OF MONTANA
                                  1995

McCALIF GROWER SUPPLIES, INC.,
A California corporaCion,
          Plaintiff and Respondent,

WILBUR REED, a/k/a BILL REED,
d/b/a REED'S GREENHOUSE,
         Defendant and Appellant.

APPEAL FROM:   District Court of the Fourth Judicial District,
               In and for the County of Missoula,
               The Honorable Ed McLean, Judge presiding.

COUNSEL OF RECORD:
          For Appellant :
               Richard R. Buley, Tipp     &   Buley, Missoula, Montana
          For Respondent:
               Bruce L. Hussey, Missoula, Montana
                  .*+q

                                  Submitted on Briefs:     May 11, 1995
                                                 ~ecided: J u l v 25, 1995

                             I

                                  Clerk
Justice Fred J. Weber delivered the Opinion of the Court.

     This is an appeal from a decision by the Fourth Judicial
District Court, Missoula County, in favor of the plaintiff.                 We
reverse and remand.
     We consider the following issues on appeal:
     I.    Did    the   District    Court    err   by   failing    to   address
defendant's counterclaim for consequential and incidental damages?
     11.   Did the District Court err in awarding plaintiff attorney
fees because defendant should have been awarded judgment and
neither statutes nor contract call for such an award?
     Plaintiff and         respondent, McCalif      Grower Supplies, Inc.
(McCalif) is a California broker which provides the supply and
shipping     of   plants    from   growers    to    wholesale     greenhouses.
Defendant and appellanT:, Wilbur Reed              (Reed) operates a small
greenhouse    in Missoula, Montana          known as    Reed's     Greenhouse.
McCalif and Reed had been involved in a business relationship for
approximately 10 years.        Reed would put in an order and McCalif
would purchase the plant materials from growers and have the

growers ship the plants to its customers such as Reed.
     Reed had received orders from various retail outlets such as
K-Mart and Ernst for Christmas poinsettias. On June 2, 1992, Reed
then ordered poinsettia cuttings from McCalif.             Reed ordered 10%
more plants than the total number ordered from it by its various
retail customers.
     Upon receiving Reed's order, McCalif ordered the plants from
Chipsea Greenhouses in Lafayette, Colorado which directly shipped

                                      2
them to Reed. The shipment of poinsettia cuttings were received by
Reed on August 11, 1992.              When accepting the shipment at the
airport, a Reed employee could find no damage to the boxes
containing the cuttings. However, when the boxes were opened, it
was clear that many of the poinsettias were ruined because they had
not   been   packed        properly    and   were   subsequently      damaged.
Poinsettias are unstable and tender plants and any damage will
cause delayed maturity or will kill them.
      Reed reported the damage within 24 hours to McCalif. McCalif
told Reed to file a claim with the carrier, Delta Airlines.                 Reed
filed a claim and received $924.66 compensation from Delta.
McCalif also informed Reed that because it was so late in the
season, it could not provide replacement plants to Reed.
      Reed refused to pay $3,027.09 for the marketable plants,
contending that       he    had    lost   $8,683.95 on   the   sale    of    the
unmarketable plants and was entitled to offset the amount owed
against his damages.              Reed also testified that he lost the
contracts with three Ernst stores when Reed failed to supply them
according to their contracts.
      McCalif filed an action against Reed for payment of the money
due it for the poinsettias. Reed answered denying that he owed any
amount to McCalif and counterclaimed against McCalif for incidental
and   consequential damages under the Uniform Commercial                    Code
(hereinafterUCC) because of McCalif's failure to deliver according
to their contract.
     A non-jury trial was held on September 6, 1994, and the
District Court entered its findings and conclusions on September 7,
1994, in which the court ordered Reed to pay McCalif $3,223.56 and
awarded attorney fees to McCalif in the amount of $510.
     Reed then moved to amend the findings and conclusions because
of the failure of the District Court to consider his counter
claims. The District Court entered an amended judgment, which did
not grant relief to Reed but did award interest at 10% to McCalif.
     Reed appeals from the amended judgment.
                                 I.

     Did the District Court err by failing to address defendant's
counterclaim for consequential and incidental damages?
     Reed   argues   that   McCalif   breached   the    warranties   of
merchantability and fitness for a particular purpose by not sending
the ordered poinsettias. Reed further contends that McCalif cannot
waive or limit these warranties after the sale has taken place.
According to Reed, our statutes put the risk of liability on the
seller until the goods are accepted by the buyer. Reed argues that
he rejected the shipment within 24 hours and is not responsible
legally to pay for the rejected shipment.
     McCalif argues that Reed did not reject the goods until
November 27, 1992, a date too far removed from the August delivery
date to be an effective refusal of the goods.          Further, McCalif
argues that as the seller it is not liable for damage to the goods
as long as it delivers them safely to the carrier.         McCalif also
contends that its contract with Reed specifically limits the
warranties for a particular purpose and merchantability.
     The District Court made the following Findings of Fact which
are essentially controlling in this case:
          4. Reed's Greenhouse contacted McCalif in June,
     1992, and placed an order for poinsettia cuttings. Their
     order specified the variety selection, quantity, size,
     date of shipment and the shipping method for a total
     price of $4,475.60. The order was processed immediately
     and the cuttings ordered from Chipsea, Inc., of
     Lafayette, Colorado for shipment on August 10, 1992.
          5. The Reeds received the shipment on August 11,
     1992. At the time of receiving the shipment, Reed's
     driver, Jeff Hausauer, did not see any obvious damage to
     the boxes which contained the poinsettias. When the
     poinsettias were taken to Reeds Greenhouse and opened, it
     was apparent that several of the red poinsettias were
     ruined. Jeff Hausauer testified that the poinsettia
     flats were not packed in the shipping crates with
     materials that would keep the flats from moving and
     disturbing the plant materials. The damage to the plants
     is through the negligence of the shipper and the carrier
     and not the fault of Defendant Reed.
          6. When it was apparent that there was no way to
     save several hundred of the red poinsettias, Maria Reed
     called McCalif to inform them of the damage. The agent
     of McCalif to whom Maria Reed spoke informed her that
     there were no red poinsettias available to replace the
     damaged plants, but they may have been able to find some
     white poinsettias. However, since eighty (80%) of the
     market for poinsettias during the holidays is for red
     poinsettias, that was unacceptable.      Maria Reed was
     further informed by McCalif to file a claim with Delta
     Airlines for the damages, which Reeds did.
          7.   The Defendant received compensation from Delta
     Airlines in the amount of $924.66 - $720 for plant damage
     and $204.66 for shipping refund.
          8.    There was no written contract between the
     parties which limited McCalifTs liability or in any way
     waive or exclude the implied warranties of fitness for a
     particular     purpose   and    implied    warranty    of
     merchantability. . . .
          9. Defendant Reed ordered a total of eight thousand
     twenty poinsettias (8,020) from Plaintiff McCalif. Six
     thousand three hundred seventy (6,370) of those plants
     were of the red variety (See Exhibit 1). Two thousand
     two hundred one (2,201)of the six thousand three hundred
     seventy (6,370) red poinsettias were damaged to the
     extent they could not be sold, leaving Defendant Reed
     only four thousand one hundred sixty-nine (4,169) red
     poinsettias.   Defendant Reed had five thousand eight
     hundred nineteen (5,819) marketable plants for the
     Christmas season.
The District Court then calculated the value of the undamaged 5,819
poinsettias at a total of $3,027.09 plus box and drayage charges of
$196.47.

     We have reviewed the record, including the transcript, and
conclude that there is substantial, largely uncontradicted evidence
which supports each of the above described findings of fact. This
Court will uphold findings of a trial court if they are not clearly
erroneous. Anderson v. Johnson (1994),264 Mont. 6 6 , 870 P.2d 59.
Our next step is to apply the above-described findings of fact to
the law of the case.      We note that the District Court did not
consider the counter claims on the part of Reed, but only entered
conclusions of law which awarded damages to McCalif in the amount
of $3,223.56, computed as above set forth.     It is clear that this
transaction is subject to the Uniform Commercial Code, Title 30,
chapter 2.   The following code section establishes the general
obligation of the parties:
     30-2-301. General obligation of parties. The obligation
     of the seller is to transfer and deliver and that of the
     buyer is to accept and pay in accordance with the
     contract (Emphasis added.)
It therefore was the obligation of McCalif to transfer and deliver
the poinsettias to Reed
     With regard to Reed's right to reject a portion of the
poinsettias, the following section provides:
    30-2-601.  Buyer's rights on improper delivery. . . . if
    the goods or the tender of delivery fail in any respect
    to conform to the contract, the buyer may:
         (a) reject the whole; or
         (b) accept the whole; or
         (c) accept any commercial unit or units and reject
    the rest.
The record demonstrates that Reed accepted a portion of the
commercial units of poinsettias and rejected the rest. The record
further demonstrates, without contradiction, that Reed notified
McCalif within 24 hours
    With regard to warranty the UCC states:
          30-2-314. Impliedwarranty--merchantability--usage
     of trade.  (1) . . . a warranty that the goods shall be
     merchantable is implied in a contract for their sale if
     the seller is a merchant with respect to goods of that
     kind. . . .
McCalif as seller therefore impliedly warranted that the plants
were merchantable and fit for their particular purpose, which was
planting in order to resell to retail outlets.       While these
warranties may be limited if there is an exclusion in writing, the
District Court found there was no such written agreement between
the parties as mentioned in finding of fact 8.   In addition, the
following warranty section is applicable:
          30-11-217. Warranty when thing cannot be examined
     by buyer.  One who sells or agrees to sell merchandise
     inaccessible to the examination of the buyer thereby
     warrants that it is sound and merchantable.
As a result McCalif warranted to Reed that the plants were sound
and merchantable
     The extent of Reed's damages is specified in the following
section:
           30-2-713.   Buyer's damages for nondelivery or
      repudiation.   (1) . . . the measure of damages for
      nondelivery or repudiation by the seller is the
      difference between the market price at the time when the
      buyer learned of the breach and the contract price
      toqether with any incidental and consequential damaqes
                                          ,
      provided in this chapter 130-2-715) but less expenses
      saved in consequence of the seller's breach. (Emphasis
      supplied.)
The pertinent part of the above-referenced section on consequential
damages is the following:
           30-2-715.     Buyers   incidental   and   consequential
      damages.  . . .
           (2) Consequential damages resulting from the
      seller's breach include:
           (a) any loss resulting from general or particular
      requirements and needs of which the seller at the time of
      contracting had reason to know and which could not
      reasonably be prevented by cover or otherwise; and
           (b) injury to person or property proximately
      resulting from any breach of warranty.
The record shows without contradiction that there was no other
source for replacement of the damaged poinsettias             (cover as
referred to in the UCC) .   The record also shows that these elements
were discussed between McCalif and Reed.
      We therefore conclude that based upon the record before us,
and the findings of fact of the District Court, Reed is entitled to

damages for nondelivery or repudiation by Reed which includes the
difference in the market price mentioned in the statute as well as
the   incidental   and   consequential damages.       The   record does
demonstrate that Reed proved that he would have been paid $3.95 per
plant and that as a result he claimed damages in the sum of
$8,693.95.    Reed argues that judgment should be entered in his
behalf in that amount.      We point out that the record does not
demonstrate whether or not there were any "expenses saved in
consequence of the seller's breachu on the part of Reed.               We may
assume there would have been some cost in raising the plants from
August to December and that additional evidence may be required in
order to determine any such offset.
     We    reverse the      judgment    for McCalif     and   remand   for a
determination by the District Court of the amount owing to Reed
under     its   counter    claim,   including    such   consequential     and
incidental damages as the court determines to be appropriate, and
the entry of the appropriate judgment balancing the awards to
McCalif and Reed.
                                       11.

     Did the District Court err in awarding plaintiffs attorney
fees because defendant should have been awarded judgment and
neither statutes nor contract call for such an award?
     Our review of the record indicates there is not a written
contract which provides for the award of attorney fees.                    In
addition no statute has been called to our attention which provides
for attorney fees.
     We therefore reverse the award by the District Court of
attorney fees to McCalif.
        Reversed and remanded for the determination of damages to the
parties as previously specified.

                                             '
                                             .
We Concur:

         - Chief Justice