Savage Industries v. American Pulverizer ( 1996 )

UNITED STATES COURT OF APPEALS Filed 12/27/96
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A.
Shumaker
Clerk Chief Deputy Clerk
December 27, 1996
TO: All recipients of the captioned order and judgment
RE: 95-4159, Savage Industries, Inc. v. American Pulverizer Co.
December 18, 1996
Please be advised of the following correction to the captioned decision:
Judge Godbold’s concurrence/dissent has been amended. The revised
concurrence/dissent is attached. Please substitute it for the one attached to the
original order and judgment filed December 18, 1996.
Very truly yours,
Patrick Fisher, Clerk
Susan Tidwell
Deputy Clerk
UNITED STATES COURT OF APPEALS
Filed 12/18/96
TENTH CIRCUIT
_____________________
SAVAGE INDUSTRIES, INC.,
Plaintiff-Counter-Defendant-Appellee,
v. No. 95-4159
(D.C. No. 94-CV-6)
AMERICAN PULVERIZER COMPANY, (D. Utah)
Defendant-Counter-Claimant-Appellant,
CHRIS GRIESEDIECK,
Defendant-Counter-Claimant.
_____________________
ORDER AND JUDGMENT *
_____________________
Raymond Etcheverry (William J. Stilling with him on the brief) of Parsons Behle
& Latimer, Salt Lake City, Utah, for Plaintiff-Appellee.
Francis E. Pennington, III (Kenneth W. Yeates and Craig W. Dallon of Van Cott,
Bagley, Cornwall & McCarthy with him on the briefs) of Dankenbring, Greiman,
Osterhold & Hoffmann, P.C., St. Louis, Missouri, for Defendant-Appellant.
Before BRORBY, GODBOLD ** and McWILLIAMS, Circuit Judges.
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
**
The Honorable John C. Godbold, Senior United States Circuit Judge for
the Eleventh Circuit, sitting by designation.
_____________________
Savage Industries, Inc. ("Savage Industries") brought suit against American
Pulverizer Company ("American Pulverizer") for negligent misrepresentation,
breach of warranty, breach of contract and equitable estoppel. The district court
granted summary judgment in Savage Industries' favor on the issue of American
Pulverizer's liability for breach of contract, and a bench trial was held on the
issue of damages. Following a two-day trial, the district court issued detailed
Findings of Fact and Conclusions of Law, and entered a Judgment in favor of
Savage Industries for $499,296.26. Thereafter, American Pulverizer filed a
motion to amend findings and judgment, which the district court denied.
American Pulverizer appeals from the district court's judgment and order denying
its motion to amend findings and judgment.
I. Factual Background
In June 1991, Charles T. Main, Inc. contracted with Savage Industries for
Savage Industries to build a waste coal handling system at the Sunnyside
Cogeneration Project in Sunnyside, Utah. The contract required Savage
Industries to provide 200 tons per hour of coal sized less than 1/4 inch to fuel the
Sunnyside Cogeneration Facility.
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Thereafter, American Pulverizer manufactured and sold to Savage
Industries a "double roll crusher" to process waste coal as part of Savage
Industries' obligation under its contract with Charles T. Main, Inc. However, the
performance of the double roll crusher proved unsatisfactory when it produced a
large amount of oversized material which could not be used as fuel for the
Sunnyside Cogeneration Facility. In an attempt to solve the problem with the
crusher, Savage Industries and American Pulverizer entered into an August 1993
agreement which contemplated installation of a newly designed system -- a
"Closed Loop System." 1
Not long after entering the August 1993 agreement, the parties realized the
Closed Loop System would not provide sufficient output to enable Savage
Industries to meet its obligation to Charles T. Main, Inc. Consequently, in
October 1993, Savage Industries and American Pulverizer executed a contract
which provided for the installation of the "Zeigler System" instead of the Closed
Loop System. 2 The October 1993 contract required American Pulverizer to
1
The Closed Loop System was intended to maximize the crusher's output
of the specified size of coal by employing a "looped" configuration of conveyors
that would feed (and re-feed if necessary) oversized coal to the crusher.
2
The Zeigler System was intended to recirculate oversized material back
through a refurbished double roll crusher.
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"[r]efurbish the Double Roll Crusher to meet OEM standards and specifications
on or before November 8, 1993." It also required American Pulverizer to furnish
all equipment for the Zeigler System, including the conveyor which would
recirculate oversized material back into the system for crushing. 3
Three days after entering the October 1993 agreement, American Pulverizer
notified Savage Industries it was not financially able to perform its obligations
under the contract. Although American Pulverizer's sales engineer subsequently
installed newly machined roll segments on the double roll crusher, American
Pulverizer never refurbished the double roll crusher as the contract required.
In order to satisfy its contractual obligation to Charles T. Main, Inc.,
Savage Industries searched for an economical crusher to replace the double roll
crusher in the Zeigler system. Ultimately, Savage Industries purchased a Canica
vertical impact crusher which met the output requirements for the Sunnyside
Facility, and did so at the lowest cost possible by requiring fewer new conveyors
and screens than the Zeigler System. 4
3
The October 1993 contract refers to the recirculating conveyor as the
Fourth Conveyor (referred to hereinafter as the "CV-111 conveyor").
4
Whereas the Zeigler system called for five new conveyors and two new
screens, the Canica crusher required only two new conveyers and one new screen.
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From February 1994 until May 1994, while modifications were being made
to accommodate the new Canica crusher, Savage Industries rented a different,
temporary crusher from Canica to meet the fuel requirements at the Sunnyside
Facility. Savage Industries installed the permanent Canica crusher in May 1994.
Although the Zeigler System contemplated a closed loop system, whereby
oversized product would be recirculated back through the system, Savage
Industries initially elected, due to cost concerns, not to install a CV-111 conveyor
to "close the loop" on the Canica system. Instead, oversized material was
removed by conveyor to a stockpile area for reclamation by a front-end loader. In
order to handle the growing stockpile of oversized material, Savage Industries
employed additional workers, operated a second front-end loader, and operated its
loaders two shifts instead of one. Savage Industries had not purchased a CV-111
conveyor as of the time of trial; however, Savage Industries received capital fund
approval for the conveyor in June 1995.
II. Issues Raised on Appeal
This case was tried before the district court, sitting without a jury, in June
1995. Following a two-day trial, the district court entered its Findings of Fact
and Conclusions of Law, awarding Savage Industries damages in the amount of
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$499,296.26. Included in the district court's damages award is the sum of
$62,330.00 for the CV-111 conveyor which Savage Industries had not purchased
as of the date of trial. 5 Also included in the court's damages award is
$116,484.93 for additional operating expenses incurred by Savage Industries
between November 9, 1993, and the end of May 1994. On appeal, American
Pulverizer contests the damages awarded for the CV-111 conveyor and additional
operating expense.
Specifically, American Pulverizer's appeal raises three issues: (1) whether
the district court erroneously applied Utah law in awarding $62,330.00 to Savage
Industries for the CV-111 conveyer; (2) whether the $62,330.00 award for the
CV-111 conveyor is supported by sufficient evidence; and (3) whether the
$116,484.93 award for additional operating expenses is supported by sufficient
evidence. After thoroughly reviewing the parties' respective briefs, the entire
5
The district court made no specific finding of fact on this particular item
of damages. However, in discussing the issue of pre-judgment interest in its
Conclusions of Law, the district court stated "on one substantial item of damage
Savage has been allowed for the CV 111 Conveyor (i.e., $62,330.00),
prejudgment interest is obviously inappropriate." This statement clearly implies
the district court found Savage Industries entitled to $62,330.00 in damages for
the CV-111 conveyor. The record indicates the omission of this item from its
Findings of Fact was merely a clerical error. See "Findings of Fact and
Conclusions of Law," at 16-17 (district court's findings of fact skips from
paragraph 17 to paragraph 19).
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record, and all relevant law, we conclude American Pulverizer's appeal is without
merit and should be denied.
III. Analysis
A. The CV-111 Conveyor
American Pulverizer contends the district court's award of $62,330.00 for
the CV-111 conveyor is based upon a misapplication of Utah law and is not
supported by the evidence. 6 Ordinarily, we apply a clearly erroneous standard in
reviewing a trial court's determination of the amount of damages resulting from a
breach of contract. See Paramount Pictures Corp. v. Thompson Theaters, Inc.,
621 F.2d 1088, 1091 (10th Cir. 1980).
"We are not constrained by the clearly erroneous standard, however, when
the trial court's computation of damages is predicated on a misconception
of the governing rule of law. Bose Corp. v. Consumers Union of United
States, Inc., 466 U.S. 485, 501 (1984) [further citations omitted]." Thus,
in reviewing challenges to a trial court's determination of damages in a
breach of contract case, we must distinguish between the challenge to the
6
We note Savage Industries asserts American Pulverizer's appeal should be
dismissed because American Pulverizer failed to raise its arguments before the
district court. We assume, without deciding, American Pulverizer properly
presented its arguments to the district court.
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computation of the amount from the challenge to the law applied in
computing that amount.
EDO Corp. v. Beech Aircraft Corp., 911 F.2d 1447, 1450 (10th Cir. 1990)
(quoting Chaparral Resources, Inc. v. Monsanto Co., 849 F.2d 1286, 1289 (10th
Cir. 1988)). Here, taking careful note of this distinction, we review de novo
American Pulverizer's challenge to the law applied by the district court in
computing damages, while we review American Pulverizer's challenge to the
sufficiency of the evidence under the clearly erroneous standard.
1. Trial Court's Application of Utah Law
American Pulverizer first contends the trial court misapplied Utah law in
awarding Savage Industries damages for the CV-111 conveyer. Essentially,
American Pulverizer argues the district court improperly allowed Savage
Industries to recover both the cost of the Canica System under a "cover" theory
and the cost of the CV-111 conveyor under a "benefit of the bargain" theory.
Such a recovery, argues American Pulverizer, is in direct contravention to Utah's
enactment of the Uniform Commercial Code, which provides an aggrieved buyer
may either elect to cover and recover the expenses it incurred in covering or it
may recover damages for non-delivery based upon the benefit of the bargain.
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Here, since Savage Industries chose to "cover," American Pulverizer contends it
is only entitled to recover damages for the costs of acquiring and installing the
replacement Canica System.
Savage Industries, on the other hand, argues it is not precluded from
recovering damages for the CV-111 conveyor because Savage Industries only
effected a "partial cover" when it purchased and installed the Canica System.
Unlike the design of the Zeigler System, the Canica System did not have a closing
loop conveyor. Thus, according to Savage Industries, the purchase of the Canica
System was merely a "partial cover," and does not bar Savage Industries from
recovering the economic value of the CV-111 conveyor.
Under Utah's enactment of the Uniform Commercial Code, where the seller
of goods in a transaction fails to deliver or repudiates his obligation to do so, the
buyer may effect cover and receive damages as measured by the difference
between cover price and the contract price or recover the economic loss of a
contract as measured by the difference between market price and the contract
price. Utah Code Ann. §§ 70A-2-711-70A-2-713 (1990). In order to prevent
double recovery, a buyer may recover the economic loss "only when and to the
extent that the buyer has not covered." U.C.C. § 2-713 Official Comment 5. The
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remedies set forth in Utah's Uniform Commercial Code "shall be liberally
administered to the end that the aggrieved party may be put in as good a position
as if the other party had fully performed." Utah Code Ann. § 70A-1-106.
American Pulverizer has cited no Utah case law in support of its argument
that the trial court erroneously applied Utah law in awarding Savage Industries
damages for the CV-111 conveyor. Our review of relevant authorities indicates
no Utah court nor any other court located in the Tenth Circuit has spoken on the
issue of whether a buyer may recover "benefit of the bargain" damages in
situations where the buyer has partially covered. Thus, we must turn to outside
jurisdictions for guidance.
In Mann & Parker Lumber Co. v. Wel-Dri, 579 F.2d 973, 975 (6th Cir.
1978), the defendant contracted to sell kilns and lumber handling equipment to
the plaintiff. Thereafter, the defendant repudiated the contract and the plaintiff
purchased substitute kilns from a third-party. Id. at 976. The district court
denied the plaintiff damages for the defendant's failure to deliver and install the
lumber handling equipment because the plaintiff had "still not acquired an
inspection and grading system." Id. at 977. On appeal, the Sixth Circuit
disagreed, stating "we know of no principle of contracts that requires an
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aggrieved buyer to purchase substitute goods with respect to each and every part
of the contract in the event of a total breach of contract, as a condition precedent
to an award of damages for that breach." Id. at 979. Consequently, the Sixth
Circuit remanded the case for the district court to determine the amount of
damages resulting from the defendant’s failure to deliver and install the
equipment. Id. at 980.
Similarly, in Interior Elevator Co. v. Limmeroth, 594, 565 P.2d 1074, 1075
(Ore. 1977), the parties entered into a contract whereby the defendant agreed to
sell the plaintiff 125,801 bushels of wheat. The plaintiff then entered a contract
with a third-party to provide him with 125,000 bushels of wheat. 565 P.2d. at
1076. After delivering 120,663 bushels of wheat to the plaintiff, the defendant
informed the plaintiff he would not be able to supply the remaining portion of
wheat due under the contract. 565 P.2d at 1076-77. The plaintiff then covered
the balance of its contract with the third-party, and filed suit against the
defendant. 565 P.2d at 1076-77. The trial court did not allow the plaintiff to
recover the value of the remaining 801 bushels since the plaintiff did not cover
this amount. 565 P.2d at 1079. The Oregon Supreme Court, relying on Comment
5 to U.C.C. § 2-713, rejected the district court's determination, stating:
the language emphasized in comment 5 ... makes it clear that the
drafters of the code contemplated situations in which buyers would
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only partially cover. This is precisely what occurred here. The
plaintiff "covered" only enough to meet its contract obligation to
Dreyfus. It would appear, therefore, that plaintiff would have been
entitled to the actual cost of cover, if shown to be reasonable, plus
damages measured under ORS 72.7130 as to the remaining 801
bushels.... The fact that plaintiff did not cover the entire amount
does not bar recovery under ORS 72.7130.
565 P.2d at 1080. 7
As the Oregon Supreme Court concluded in Limmeroth, we believe
Comment 5 to § 2-713 of the Uniform Commercial Code indicates a buyer who
has partially covered may also recover damages for economic loss pursuant to
Utah Stat. Ann. § 70A-2-713 "to the extent he has not covered." Similar to the
plaintiff in Limmeroth, Savage Industries was committed to perform under a
contract with a third-party when American Pulverizer repudiated its contract with
Savage Industries. In order to fulfill its obligations to the Sunnyside Facility,
Savage Industries purchased and installed the Canica System. However, like the
plaintiffs in Mann and Limmeroth, Savage Industries only effected a partial cover.
The Canica crusher did not contain a closed loop configuration, which was part of
the goods Savage Industries was entitled to under its contract with American
7
Oregon Rev. Stat. § 72-7130 is virtually identical to Utah Stat. Ann.
§ 70A-2-713. Similarly Oregon's statutory provisions concerning cover are
indistinguishable from Utah Stat. Ann. §§ 70A-2-711-70A-2-712. See Or. Rev.
Stat. §§ 72.7110-72.7120 (1995).
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Pulverizer.
As the plaintiff in Mann was permitted to recover damages for the lumber
handling system and the plaintiff in Limmeroth was entitled to recover damages
for the 81 bushels of wheat it did not cover, Savage Industries should be
permitted to recover the economic value of the CV-111 conveyor. Such recovery
is necessary to comply with Utah Code Ann. § 70A-106's purpose of putting the
aggrieved party in as good a position as if the other party had fully performed.
Moreover, if we were to overlook Comment 5's language and prohibit a party
from recovering benefit of the bargain damages where it has only partially
covered, we would create an additional hardship for an injured party who must
cover to satisfy a third-party contract. In order to obtain full recovery, such a
party would be forced to cover for the value of the entire contract regardless of its
ability to pay for cover and regardless of the economic circumstances existing at
the time of cover. We refuse to adopt such a strict interpretation of Utah Code
Ann. §§ 70A-2-711-13, and we therefore conclude the trial court's determination
that Savage Industries is entitled to the economic value of the CV-111 conveyor is
proper and in accordance with Utah law.
2. Sufficiency of the evidence
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American Pulverizer also contends the trial court's damages award for the
CV-111 conveyor is not supported by sufficient evidence. According to American
Pulverizer, the record reveals Savage Industries had not purchased the CV-111
conveyor as of the date of trial nor did it have any definite plans to purchase the
equipment. American Pulverizer argues "Savage [Industries] should not be
awarded damages on the basis of mere speculation that it will later obtain and
install" the conveyor.
Notwithstanding American Pulverizer's contentions, we believe Savage
Industries presented sufficient evidence to enable it to recover damages for the
CV-111 conveyor. In Mann, the Sixth Circuit determined the plaintiff was
entitled to damages for the lumber handling equipment even though the plaintiff
had not purchased this equipment. 579 F.2d. at 980. The Court determined an
aggrieved buyer need not "purchase substitute goods with respect to each and
every part of the contract in the event of a total breach." Id. at 979.
Similarly in Continental Sand & Gravel, Inc. v. K & K Sand & Gravel, Inc.,
755 F.2d 87, 92 n.5 (7th Cir. 1985), the Seventh Circuit concluded under U.C.C.
§ 2-712, "damages based on cost of repair are recoverable regardless whether the
repairs are actually undertaken." The court affirmed the award of damages for
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estimated repair costs, explaining even "if the repairs are not made, the potential
market value of the goods is reduced by an amount equivalent to the value which
would have been added by repair." Id.
Similar to the Sixth Circuit's determination in Mann and the Seventh
Circuit's determination in Continental Sand, Savage Industries' failure to purchase
the CV-111 conveyor does not bar it from recovering damages for the economic
value of the conveyor. Savage Industries presented evidence at trial showing the
parties contracted for the installation of a closed loop Zeigler System which
would recirculate oversized material back through a refurbished double roll
crusher until the material was reduced to the specified size. Following American
Pulverizer's breach, Savage Industries partially covered by purchasing a Canica
crusher which did not contain a closed loop system. In order to place Savage
Industries in as "good a position as if the other party had fully performed,"
Savage Industries is entitled to the economic value of the CV-111 conveyor
pursuant to Utah Code Ann. § 70A-2-713. We thus affirm the trial court’s award
of $62,330.00 damages for the CV-111 conveyor.
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B. Additional Operating Costs
The district court awarded Savage Industries $116,484.93 in damages for
additional operating costs incurred as a result of American Pulverizer's failure to
refurbish the double roll crusher by November 8, 1993. American Pulverizer
contends the district court's award of additional operating costs was clearly
erroneous because Savage Industries did not establish these costs were
proximately caused by American Pulverizer's breach of the October 1993 contract.
We disagree.
"'Recovery of damages for a breach of contract is not allowed unless
acceptable evidence demonstrates that the damages claimed resulted from and
were caused by the breach.'" Highland Constr. Co. v. Union Pac. R.R. Co., 683
P.2d 1042, 1047 (Utah 1984) (quoting Boyajian v. United States, 423 F.2d 1231,
1235 (Ct. Cl. 1970)). The costs must be tied to the fault of the defendant, id., and
a plaintiff may only recover those costs directly attributable to the defendant's
breach. Boyajian, 423 F.2d at 1235 (citing Saddler v. United States, 287 F.2d 411(Ct. Cl. 1961).
Here, the October 1993 contract called for the installation of a closed loop
Zeigler System which would recirculate oversized material back through a
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refurbished double roll crusher until the material was reduced to the specified
size. One of the main reasons the parties contracted for the Zeigler System was to
eliminate the expense of having to use a front-end loader to move oversized
material back into the system for crushing. The October 1993 contract required
American Pulverizer to "[r]efurbish the Double Roll Crusher to meet OEM
standards [by] November 8, 1993." American Pulverizer explicitly represented in
the contract the refurbished double roll crusher would produce 175 tons per hour
of crushed product, with at least 85% of the finished crushed product being 1/4
inch or less.
The record in this case clearly reveals American Pulverizer breached its
contract with Savage Industries by failing to refurbish the double roll crusher. At
trial, in support of its claims for damages, Savage Industries presented testimony
from Shawn Reddington, Savage Industries' Project Manager for the Sunnyside
Cogeneration Project. According to Mr. Reddington, "a mountain of oversized
material" continued to build-up following American Pulverizer's failure to
refurbish the double roll crusher. Mr. Reddington testified Savage Industries was
compelled to expend additional operating expenses in order to handle this
growing stockpile of oversized material. Specifically, Savage Industries brought
in additional workers, operated a second front-end loader, and operated its front-
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end loaders for two shifts instead of one. Mr. Reddington opined that Savage
Industries would not have incurred any additional operating expenses if American
Pulverizer had fulfilled its contractual obligation to bring the double roll crusher
up to O.E.M. standards by November 8, 1993.
From Mr. Reddington's testimony, we believe the trial court reasonably
could have concluded American Pulverizer's breach of contract proximately
caused Savage Industries to sustain additional operating costs. If American
Pulverizer had performed as required under its contract, the Zeigler System would
have been installed. The Zeigler System would have produced 175 tons per hour
of crushed product, and recirculated oversized material back through the system,
eliminating the time and expense of using a front-end loader to haul the oversized
product back into the system. However, since the Zeigler System was not
installed, "a mountain of oversized product" accrued, and, according to Mr.
Reddington, Savage Industries was forced to incur extra costs for labor and
equipment to deal with this product. Clearly, Savage Industries presented
sufficient evidence from which the trial judge reasonably could have concluded
Savage Industries' additional operating expenses were directly attributable to
American Pulverizer's breach. We therefore affirm the district court's order and
judgment awarding damages to Savage Industries for additional operating
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expenses.
III. CONCLUSION
For the reasons stated above, we AFFIRM the district court's damages
awards of $62,330.00 for the CV-111 conveyor and $116,484.93 for additional
operating costs.
Entered for the Court:
WADE BRORBY
United States Circuit Judge
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No. 95-4159, SAVAGE INDUSTRIES, INC., Plaintiff-Appellee, versus
AMERICAN PULVERIZER COMPANY, Defendant-Appellant.
GODBOLD, Senior Circuit Judge, concurring in part and dissenting in part:
I concur except with respect to damages of $62,330 that appear to have
been awarded for a conveyor that plaintiff was found to be entitled to but has not
yet purchased. On this issue I would reverse or, at a minimum, vacate and
remand.
As I understand the facts -- and they are not easy to understand -- there are
several phases in the history of this case.
Phase 1: Defendant agreed to install a double-roll crusher. It was not
satisfactory because it produced an excess of oversized material.
Phase 2: The parties agreed on a substitute "closed loop" system that
would recirculate oversized crushed material back into the system to be crushed
again. Soon thereafter the parties realized that the proposed closed loop system
would not produce sufficient output of materials (Opinion of this court, Mss. p.
3).
Phase 3: The parties then agreed to install the "Zeigler system," and an
agreement for this was executed. It was agreed that defendant would furnish
equipment for the Zeigler system, including a conveyor that would recirculate
oversized material back into the system for recrushing. To implement this
agreement, plaintiff bought a Canica crusher, which plaintiff, in its proposed
finding 9, agrees was a "cost effective alternative" to the original crusher. It has
been awarded damages for the cost of the Canica.
Phase 4: As an incident of the Zeigler system plaintiff installed a
recirculating system to recirculate product back through the crusher. The
requirement to recirculate oversized material was met. Plaintiff's proposed
finding 10 reads:
10. In order to achieve the output contemplated by the parties
for the Zeigler System, as set forth in paragraph 9 of the Contract,
Savage installed a system for recirculating oversized produce back
through the Canica crusher. The system achieved the same result as
the Zeigler System was intended to achieve, but did so with fewer
conveyors and screens than were called for in the Zeigler System.
The Canica crusher was installed in May 1994. For some five to six
months before that time the recirculating system in place was producing an excess
of oversized crushed material. Plaintiff claimed that the excess required it to
move materials by front-end loader, which increased its expenses. Plaintiff was
awarded $116,484.93 for this expense. After May 1994 the Canica crusher was
fully operative, and plaintiff has claimed no damages from costs of moving excess
oversized material thereafter.
Several problems are presented by this court's decision.
It is not clear that plaintiff suffered any economic loss after May 1994.
The $62,330 is the cost of a new conveyor to move material through the
recirculating system as installed. Plaintiff says it will enable it to make the
system into a closed loop system, and this court agrees that plaintiff is entitled to
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the cost of a conveyor to achieve that design. But it is not clear that plaintiff is
entitled to the components of a closed loop design. It is not clear from the
evidence and the district court's findings whether the recirculating system, as
installed, is the equivalent of a closed loop design. It is not disputed that the
recirculating system worked as to volume of output. But, with respect to quality,
the evidence is not clear to me, nor are the district court's findings. Plaintiff
claimed damages for a period to May 1984, when the Canica crusher was
installed, because the system produced an excess of oversized material that had to
be moved with front-end loaders. It was awarded those damages. The situation
after May 1994 is cloudy. For that period plaintiff claimed no damages arising
from excess of oversized material. Indeed plaintiff says that the Canica crusher
"achieved the same result as contemplated." Plaintiff was entitled to show that
after May 1994 the recirculating system, as installed, including the Canica
crusher, was not the equivalent of a closed loop design, in expected life, cost of
repairs, or some other similar way. No such deficiency has been proved.
The award of $62,330 is not supported by adequate district court findings.
First, this court holds, in footnote 5, that the absent findings are implied and were
omitted through clerical error, and it infers an intent by the district court to award
the $62,330. In another case this action by an appellate court might be
appropriate. In this case, in view of the considerations I have set out, this is not
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appropriate. Second, the district court found that plaintiff "properly covered
APCO's breach of the contract." (Finding 4.) This court, in a finding essential to
its decision and without explanation, holds that plaintiff "only effected a partial
cover" and is entitled to a balance of $62,330. Moreover, the fact situation is
further clouded by the question whether plaintiff has any need for another
conveyor. The Zeigler system called for five new conveyors. Savage installed
instead the recirculating system that, it says, required only two new conveyors. It
purchased and installed one new conveyor. In its proposed finding 11 H(1)
plaintiff says: "In order to eliminate the need for four of the conveyors
contemplated under contract, Savage relocated and refurbished a conveyor from
the original crusher system." It is not clear why Savage, having met the need for
four conveyors by relocating equipment and, having purchased one new one, has
not met the requirement for five.
This case is different from Mann & Parker Lumber Co. v. Wel-Dri , 579
F.2d 973 (6th Cir. 1978), and Interior Elevator Co. v. Limmeroth , 565 P.2d 1074(Or. 1977) (en banc). In Mann & Parker the seller contracted to supply dry kilns
and lumber handling equipment but failed to do so. The purchaser sued. The
district court misapplied a liquidated damage provision as it related to the kilns,
and the court of appeals remanded for redetermination of those damages. 579
F.2d at 979. As to lumber handling equipment, the district court denied damages
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because the purchaser had not purchased complete substitute systems. This was
remanded, on the ground the purchaser was not required to purchase substitute
goods for every part of the contract. Id. There was no issue of whether a
different and substituted lumber handling system performed the same as the
system contracted for, indeed there was no substitute system.
In Interior Elevator the seller agreed to supply 125,801 bushels of wheat
but breached after delivering less than that. Purchaser covered to the extent of
125,000 bushels that it had contracted to sell to a third party. The district court
denied recovery for the 801 bushels. The court of appeals reversed, holding that
the fact that purchaser did not cover the entire amount did not bar recovery. 565
P.2d at 1080. The purchaser suffered an economic loss of the discrete item
consisting of 801 bushels. There was, obviously, no issue of whether 25,000
bushels had the same economic value as 25,801 bushels.
I would reverse the award of $62,330 for a conveyor never purchased or, at
a minimum, I would remand this issue to the district court to be addressed again
and for entry of findings that would remove the uncertainties and differences in
understanding that divide the members of this panel.
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