Court Opinion

ID: 47914
Source: CourtListenerOpinion
Date Created: 2010-04-25 23:31:54+00
Date Added: 2024-06-11T17:18:09.467881
License: Public Domain

United States Court of Appeals
                                                                      Fifth Circuit
                                                                     F I L E D
                        UNITED STATES COURT OF APPEALS
                                                                  December 28, 2006
                            FOR THE FIFTH CIRCUIT
                                                               Charles R. Fulbruge III
                                                                       Clerk

                                 No. 06-60588
                               Summary Calendar

     AGFA CORPORATION,

                                               Plaintiff-Appellant,

                                      v.

     LAWRENCE PRINTING COMPANY,

                                               Defendant-Appellee.

         Appeal from the United States District Court for the
                   Northern District of Mississippi
                             4:02CV297P-B

Before DAVIS, BARKSDALE, and BENAVIDES, Circuit Judges.

PER CURIAM:*

     AGFA    Corporation(“AGFA”)      challenges    the   district    court’s

dismissal    of   its    complaint   against   Lawrence   Printing    Company

(“Lawrence”) for breach of contract, and the court’s award of

$22,427.34 plus interest in damages against AGFA for failure to

furnish acceptable goods under the contract.          We AFFIRM.

     Lawrence, a commercial printing business, purchased printing

     *
       Pursuant to 5th Cir. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
equipment    through     a    distributor,      Heartland   Imaging   Company

(“Heartland”),     for       several   years.       In   2000,   Heartland’s

representative recommended Lawrence replace its old processor with

a new AGFA processor. Lawrence heeded its distributor’s advice and

entered into an agreement with AGFA to purchase specified volumes

of AGFA printing plates for a five-year term running from April 1,

2000, to March 31, 2005.          The contract also provided for AGFA’s

recovery of liquidated damages in the event of early termination of

the agreement.

     In February, 2001, Lawrence began experiencing considerable

difficulty using the AGFA plates, resulting in extensive downtime;

the images disappeared off the plates, and the plates transferred

ink in unwanted portions of the images.          Lawrence complained to its

Heartland representative, who initially replaced several boxes of

the plates and returned them to AGFA.            The problems persisted.

     Heartland’s       representative        made    several     unsuccessful

troubleshooting attempts, then solicited AGFA’s input on April 26,

2001. Two AGFA service technicians visited Lawrence, performed a

general maintenance check, and advised Lawrence to stop recycling

developer.    Lawrence followed the technician’s advice, but the

problems continued.

     After numerous, increasingly futile communications between the

Heartland representative and AGFA, AGFA sent additional personnel

to the Lawrence plant on June 11-12, 2001.                  The technicians

conducted another inspection and suggested Lawrence use a different

                                       2
fountain    solution.      Again,     Lawrence    heeded      AGFA’s    suggestion

without success.      Technicians returned to Lawrence a month later,

but did not suggest any corrective action.

      Finally, as a last resort, Lawrence tried using plates by a

different manufacturer. The plates performed flawlessly. Lawrence

changed to another processor, and Heartland notified AGFA of the

necessary change.       AGFA responded by sending a letter to Lawrence

acknowledging that Lawrence intended to “default” on its remaining

contractual    obligation      to    purchase   AGFA    plates,    and   demanded

payment of liquidated damages.

      In the ensuing litigation, the district court found that AGFA

had   failed   to   furnish     acceptable      goods   under     the    contract,

dismissed    AGFA’s   claims    with    prejudice,      and   awarded    Lawrence

damages based on AGFA’s repeated failure to furnish acceptable

goods under the contract.           We review the district court’s factual

findings for clear error, and its legal conclusions de novo.                   See

Employers Ins. of Wasau v. Suwannee River Spa Lines, Inc., 866 F.2d

752, 758 (5th Cir. 1989).

      We affirm the district court for the reasons stated in its

well-reasoned opinion.        The outcome of this case turns entirely on

which of the two parties breached the contract.               Under New Jersey’s

version of Article 2 of the UCC, which controls the construction of

contracts in this case, Lawrence had the right to reject or revoke

acceptance of nonconforming goods.           N.J.S.A. 12A:2-601, 602, 603.

                                         3
As demonstrated by the facts of this case, AGFA’s goods failed

their essential purpose.           AGFA’s failure to provide acceptable

goods to Lawrence and its failure to correct the problems within a

reasonable time precludes AGFA from recovering on its breach of

contract claim.

      AGFA argues that the limited remedy provision in the contract,

which    specifies      replacement    product    as   the   exclusive   remedy,

shields AGFA from liability.            New Jersey law, however, provides

that “[w]here circumstances cause an exclusive or limited remedy to

fail of its essential purpose,” as is the case here, “remedy may be

had     as   provided     in    this   act.”      N.J.S.A.     12A:   2-719(2).

Specifically,     the     act   provides    for   Lawrence    to   recover   the

difference between the cost of cover and the contract price as

damages.     N.J.S.A. 12A:2-712(2).

      For the foregoing reasons, we AFFIRM the district court.

                                        4