Shomaker Lumber Company, Inc. v. Hardwood Sales & Planning Services, Inc.

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
July 28, 2010 Session
SHOMAKER LUMBER COMPANY, INC. v. HARDWOOD SALES &
PLANNING SERVICES, INC.
Direct Appeal from the Chancery Court for Hardeman County
No. 16287 Martha B. Brasfield, Chancellor
No. W2009-02048-COA-R3-CV - Filed September 2, 2010
This appeal arises out of a dispute between a buyer and seller of lumber. The seller filed suit against
the buyer alleging a right to recover in breach of contract, quantum meruit, and/or quantum valebant
for an outstanding balance owed on several shipments of lumber. The trial court determined that the
buyer accepted approximately half of the disputed shipments due to its failure to timely reject the
initial deliveries but was not liable for additional shipments that it timely rejected. The trial court,
however, did not address whether the buyer revoked its acceptance of the initial shipments or
whether the buyer was entitled to reimbursement for expenses incurred in an attempt to salvage the
rejected shipments. Because the parties tried these issues by consent, the order appealed is not a final
judgment and the appeal must be dismissed.
Tenn. R. App. P. 3 Appeal as of Right; Appeal Dismissed
DAVID R. FARMER, J., delivered the opinion of the Court, in which ALAN E. HIGHERS, P.J., W.S., and
HOLLY M. KIRBY , J., joined.
R. Campbell Hillyer, Memphis, Tennessee, for the appellant, Hardwood Sales & Planning Services,
Inc.
MEMORANDUM OPINION1
This dispute arises out of the sale of lumber. The plaintiff/appellee, Shomaker Lumber
1
Rule 10 of the Rules of the Court of Appeals of Tennessee provides:
This Court, with the concurrence of all judges participating in the case, may affirm, reverse
or modify the actions of the trial court by memorandum opinion when a formal opinion
would have no precedential value. When a case is decided by memorandum opinion it shall
be designated “MEMORANDUM OPINION”, shall not be published, and shall not be cited
or relied on for any reason in any unrelated case.
Company, Inc. (“Shomaker”), is a sawmill in the business of selling various types of lumber,
including frame stock lumber. The defendant/appellant, Hardwood Sales & Planning Services, Inc.
(“Hardwood Sales”), is in the business of purchasing frame stock lumber, which it air-dries, planes,
and resells as frame parts for upholstered furniture. In September 2007, Shomaker filed suit alleging
that the parties had entered an oral agreement for the sale of wood products, Shomaker had delivered
a number of shipments of the agreed-upon products, Hardwood Sales had received each of the
shipments, but Hardwood Sales had failed to compensate Shomaker for several of the shipments.
Shomaker asserted it was entitled to damages in breach of contract or relief under the theories of
quantum meruit and/or quantum valebant. Shomaker also sought an award of court costs, pre-
judgment interest, and post-judgment interest.
Hardwood Sales raised several defenses in its answer to Shomaker’s complaint. In addition
to denying several of Shomaker’s factual allegations, Hardwood Sales asserted that Shomaker failed
to state a claim upon which relief could be granted, the doctrine of “unclean hands” barred any claim
for damages, Shomaker’s losses resulted solely from its own acts or omissions, and Shomaker failed
to properly mitigate damages. Further, Hardwood Sales asserted “all available affirmative defenses
codified in T.C.A. § 47-2-101 et. seq. (Uniform Commercial Code – Sales) including but not limited
to the Statute of Frauds, non-conforming goods, breach of express and implied warranties, improper
delivery and rightful rejection” and “reserve[d] the right to raise any additional affirmative defenses
that may be revealed through discovery.”
The parties proceeded to trial in February 2009, focusing on several disputed issues of law
and fact. Importantly, the parties disputed whether they had agreed upon a specified quantity of
lumber to be delivered, whether Hardwood Sales had accepted or rejected multiple shipments made
in August and September of 2006, and whether Hardwood Sales had revoked its acceptance pursuant
to Tennessee Code Annotated section 47-2-608 of any shipments deemed accepted.2 In addition,
Hardwood Sales argued in its opening and closing statements that it was entitled to compensation
2
Tennessee Code Annotated section 47-2-608 provides:
(1) The buyer may revoke his acceptance of a lot or commercial unit whose
nonconformity substantially impairs its value to him if he has accepted it:
(a) on the reasonable assumption that its nonconformity would be cured and it has
not been seasonably cured; or
(b) without discovery of such nonconformity if his acceptance was reasonably
induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
(2) Revocation of acceptance must occur within a reasonable time after the buyer
discovers or should have discovered the ground for it and before any substantial change in
condition of the goods which is not caused by their own defects. It is not effective until the
buyer notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard to the goods
involved as if he had rejected them.
Tenn. Code Ann. § 47-2-608 (2001).
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pursuant to Tennessee Code Annotated sections 47-2-603 and -604 for expenses incurred in an
attempt to salvage the rightfully rejected shipments of lumber.3 The proof on this issue showed that
Hardwood Sales sent a letter to Shomaker’s chief executive officer purporting to reject the August
and September shipments; the notice explained that Shomaker could pick up the wood or Hardwood
Sales would attempt to salvage the goods; Shomaker’s chief executive officer threw the letter in the
trash; and Hardwood Sales, receiving no response, attempted to salvage the wood in vain.
The trial court, in a lengthy and fairly detailed order, awarded judgment in favor of Shomaker
in part. The court found that Hardwood Sales accepted the August shipments because it failed to
reject the lumber within a reasonable time. The court found that the rejection of the September
shipments, on the other hand, was timely.4 As a result, the court concluded that Shomaker was
3
Tennessee Code Annotated section 47-2-603 provides:
(1) Subject to any security interest in the buyer (§ 47-2-711(3)), when the seller has
no agent or place of business at the market of rejection a merchant buyer is under a duty
after rejection of goods in his possession or control to follow any reasonable instructions
received from the seller with respect to the goods and in the absence of such instructions to
make reasonable efforts to sell them for the seller’s account if they are perishable or threaten
to decline in value speedily. Instructions are not reasonable if on demand indemnity for
expenses is not forthcoming.
(2) When the buyer sells goods under subsection (1), he is entitled to reimbursement
from the seller or out of the proceeds for reasonable expenses of caring for and selling them,
and if the expenses include no selling commission then to such commission as is usual in
the trade or if there is none to a reasonable sum not exceeding ten percent (10%) on the
gross proceeds.
(3) In complying with this section the buyer is held only to good faith and good faith
conduct hereunder is neither acceptance nor conversion nor the basis of an action for
damages.
Tenn. Code Ann. § 47-2-603 (2001). Tennessee Code Annotated section 47-2-604 provides:
Subject to the provisions of the immediately preceding section on perishables if the seller
gives no instructions within a reasonable time after notification of rejection the buyer may
store the rejected goods for the seller’s account or reship them to him or resell them for the
seller’s account with reimbursement as provided in the preceding section. Such action is not
acceptance or conversion.
Tenn. Code Ann. § 47-2-604 (2001).
4
It is not entirely clear whether the court intended to hold that Hardwood Sales properly “rejected”
the September shipments of lumber or that Hardwood Sales properly “revoked” its prior acceptance of the
shipments. The court’s order finds that “Hardwood Sales accepted the lumber . . . ,” but later finds that
Hardwood Sales’s “letter of rejection” was timely sent. A party, however, cannot “reject” nonconforming
(continued...)
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entitled to compensation for the August shipments in the amount of $21,440.70 plus pre- and post-
judgment interest. The trial court’s order, however, did not address whether Hardwood Sales
properly revoked its acceptance of the August shipments or whether Hardwood Sales was entitled
to recover the costs it incurred in the attempt to salvage the rightfully rejected September shipments.
This despite the fact that the court’s order specifically found that Hardwood Sales provided
Shomaker notice of two options for the handling of the rejected shipments—one of which
indisputably included processing the wood in an attempt to salvage the shipments—and that
Shomaker made only one failed attempt to respond. Following entry of the order, Hardwood Sales
timely appealed.
Hardwood Sales raises the following issues, as slightly reworded, for our review:
(1) Whether the trial court erred when it determined that Hardwood Sales
“accepted” any shipments of lumber in dispute pursuant to Tennessee Code
Annotated section 47-2-606;
(2) Whether the trial court erred when it determined that Hardwood Sales’s
rejection of the August 2006 shipments was not made within a reasonable
time pursuant to Tennessee Code Annotated section § 47-2-602;
(3) Whether the trial court erred when it determined that Hardwood Sales did not
revoke its acceptance pursuant to Tennessee Code Annotated section
47-2-608 if Hardwood Sales did in fact “accept” the August 2006 shipments;
(4) Whether the trial court erred when it did not award Hardwood Sales its costs
and expenses incurred pursuant to Tennessee Code Annotated sections
47-2-603 and 47-2-604 as to any shipments rightfully rejected.
The dispositive issue on appeal, however, concerns this Court’s subject matter jurisdiction, or lack
therefore, to decide the issues presented.
“Subject matter jurisdiction concerns the authority of a particular court to hear a particular
controversy.” Meighan v. U.S. Sprint Commc'ns Co., 924 S.W.2d 632, 639 (Tenn. 1996) (citing
Landers v. Jones, 872 S.W.2d 674, 675 (Tenn. 1994)). The question of subject matter jurisdiction
is one that appellate courts must consider even if the parties do not raise the issue. Tenn. R. App.
P. 13(b); Osborn v. Marr, 127 S.W.3d 737, 740 (Tenn. 2004). “[P]arties cannot confer subject
matter jurisdiction on a trial or an appellate court by appearance, plea, consent, silence, or waiver.”
Dishmon v. Shelby State Cmty. Coll., 15 S.W.3d 477, 480 (Tenn. Ct. App. 1999) (citing Caton v.
Pic-Walsh Freight Co., 364 S.W.2d 931, 933 (Tenn. 1963); Brown v. Brown, 281 S.W.2d 492, 501
4
(...continued)
goods after “acceptance” under the Uniform Commercial Code; rather, it must “revoke” its acceptance once
given. See Tenn. Code Ann. §§ 47-2-602, -606, -608 (2001).
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(Tenn. 1955)). This Court’s subject matter jurisdiction is limited to final judgments except where
otherwise provided by procedural rule or statute. Bayberry Assocs. v. Jones, 783 S.W.2d 553, 559
(Tenn. 1990) (citing Aetna Cas. & Sur. Co. v. Miller, 491 S.W.2d 85, 86 (Tenn. 1973)). Rule 3(a)
of the Tennessee Rules of Appellate Procedure provides:
In civil actions every final judgment entered by a trial court from which an appeal lies
to the Supreme Court or Court of Appeals is appealable as of right. Except as
otherwise permitted in rule 9 and in Rule 54.02 Tennessee Rules of Civil Procedure,
if multiple parties or multiple claims for relief are involved in an action, any order
that adjudicates fewer than all the claims or the rights and liabilities of fewer than all
the parties is not enforceable or appealable and is subject to revision at any time
before entry of a final judgment adjudicating all the claims, rights, and liabilities of
all parties.
Tenn. R. App. P. 3(a). In this case, the parties have not filed an application for an interlocutory
appeal and the trial court did not purport to certify its judgment as final pursuant to Rule 54.02 of
the Tennessee Rules of Civil Procedure. Thus, the court’s order is appealable only if it adjudicates
all of the claims, rights, and liabilities of the parties.
The order in this case is not a final judgment because it does not adjudicate the issues of
revocation and reimbursement under the Uniform Commercial Code. Regardless of whether
Hardwood Sales properly pled these issues, the parties clearly tried them by consent. Rule 15.02 of
the Tennessee Rules of Civil Procedure provides, in pertinent part:
When issues not raised by the pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects as if they had been raised in the pleadings.
Such amendment of the pleadings as may be necessary to cause them to conform to
the evidence and to raise these issues may be made upon motion of any party at any
time, even after judgment; but failure so to amend does not affect the result of the
trial of these issues.
Tenn. R. Civ. P. 15.02. Generally, an opposing party has tried an issue by consent where that party
“knew or should reasonably have known of the evidence relating to the new issue, did not object to
this evidence, and was not prejudiced thereby.” Zack Cheek Builders, Inc. v. McLeod, 597 S.W.2d
888, 890 (Tenn. 1980), reh’g denied (Tenn. May 5, 1980). Here, Hardwood Sales argued the issue
of reimbursement in its opening, presented evidence to support its position during its proof-in-chief,
and reiterated its rights to recovery on this basis during its closing. Shomaker raised no objection
to considering this issue during the trial or on appeal; further, Shomaker addressed the separate issue
of revocation multiple times during its closing, arguing the issue as if it were properly before the trial
court.5 In prior unreported cases, this Court has held that an appellate court is without subject matter
jurisdiction where a trial court’s order does not resolve an issue tried by implied consent of the
5
Shomaker did not file a brief in this appeal.
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parties. See Van Hooser v. Van Hooser, No. W2009-01191-COA-R3-CV, 2010 WL 597451, at *3
(Tenn. Ct. App. Feb. 22, 2010) (no perm. app. filed) (dismissing an appeal for lack of final judgment
where the trial court had not adjudicated an issue tried by implied consent of the parties); Scott v.
Yarbro, No. W2005-02830-COA-R3-CV, 2007 WL 121425, at *4-5 (Tenn. Ct. App. Jan. 19, 2007)
(same). We agree. The trial court in this case, while reproducing Tennessee Code Annotated
sections 47-2-603, -604, and -608 in its order, did not rule on whether Hardwood Sales was entitled
to reimbursement for the costs incurred in its attempt to salvage the rejected lumber and did not
address the question of revocation. As a result, the court’s order is not a final judgment that is
appealable of right because it does not dispose of all of the claims, rights, and liabilities of the
parties. This appeal is dismissed.
Conclusion
For the foregoing reasons, this appeal is dismissed for lack of subject matter jurisdiction.
Costs of this appeal are taxed to the appellant, Hardwood Sales & Planning Services, Inc., and its
surety for which execution may issue if necessary.
_________________________________
DAVID R. FARMER, JUDGE
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