Egerer v. CSR West, LLC

Court of Appeals of Washington, Division 1 · 2003 · Contracts

ContractsUCC buyer's remediesDamagesPrejudgment interestConsequential damagesUCC 2-713UCC 2-723cover

Facts

Egerer owned land he planned to develop and needed about 17,000 cubic yards of fill. In 1997, CSR agreed to deliver all of its Interstate 5 shoulder excavation material to Egerer's site for $0.50 per cubic yard, but after delivering on only two nights, CSR diverted virtually all 16,750 cubic yards to the State because that became more profitable. Egerer did not actually buy replacement fill in 1997, and in early 1998 he obtained quotes for pit run at $8.25 to $9.00 per cubic yard; shoulder excavation material was rarely available. The trial court used $8.25 per cubic yard as the market price for damages, awarded prejudgment interest from July 1997, and denied requested sales tax and consequential damages.

Issue

When a seller fails to deliver goods and the buyer does not actually cover, may the court calculate RCW 62A.2-713 damages using the price of a reasonable substitute material quoted several months after breach? Also, were the damages liquidated so as to support prejudgment interest from the date of breach, and were sales tax and consequential damages recoverable on these facts?

Rule

If a seller fails to deliver and the buyer does not cover, the buyer may recover under RCW 62A.2-713 the difference between the contract price and the market price when the buyer learned of the breach. Under RCW 62A.2-723, if direct evidence of that market price is not readily available, the court has reasonable leeway to use a reasonable substitute price from a reasonable time before or after breach, including goods of somewhat different quality if they are a reasonable commercial substitute. A claim is liquidated for prejudgment-interest purposes when the measure of damages is fixed and the evidence supplies objective data permitting exact computation once the factfinder determines the relevant market value. Sales tax is not part of hypothetical market-price damages unless actually incurred, and consequential damages require that the seller had reason to know of the buyer's particular needs at contracting.

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In Boise, Idaho, Nora Velasquez contracted with High Mesa Earthworks, LLC to buy 12,000 cubic yards of crushed roadbed reclaimed from a highway widening project for $0.60 per cubic yard. Two days before deliveries were to begin, High Mesa sold the material elsewhere. Reclaimed roadbed was rarely available, and Nora did not cover, but four months later she obtained quotes for ordinary base gravel at $7.40 per cubic yard, which local contractors testified would have been the material she reasonably would have used instead.

If Nora sues for nondelivery damages under Article 2, what is the strongest argument for using the $7.40 quote as the market price?

Explanation. The majority held that for nondelivery damages under the statutory market-price measure, the court has reasonable leeway to use evidence from a reasonable time before or after breach and may use a commercially reasonable substitute when direct market evidence for the contracted goods is hard to obtain. The substitute need not be identical if commercial judgment supports it.