Fabrica Italiana Lavorazione Materie Organiche v. Kaiser Aluminum & Chemical Corp., 81-5346

• Decision Date: 01 September 1982
• Docket Number: No. 81-5346,81-5346
• Citation: 684 F.2d 776
• Parties: 34 UCC Rep.Serv. 1193, 11 Fed. R. Evid. Serv. 312 FABRICA ITALIANA LAVORAZIONE MATERIE ORGANICHE, S. A. S., Plaintiff-Appellee, v. KAISER ALUMINUM & CHEMICAL CORPORATION, Defendant, Kaiser Aluminum & Chemical Sales, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 776

684 F.2d 776

34 UCC Rep.Serv. 1193, 11 Fed. R. Evid. Serv. 312

FABRICA ITALIANA LAVORAZIONE MATERIE ORGANICHE, S. A. S. Plaintiff-Appellee, v. KAISER ALUMINUM & CHEMICAL CORPORATION, Defendant Kaiser Aluminum & Chemical Sales, Inc., Defendant-Appellant.

No. 81-5346.

United States Court of Appeals, Eleventh Circuit.

Sept. 1, 1982.

Carlton, Fields, Ward, Emmanuel, Smith & Cutler, Thomas J. Roehn, Eurich Z. Griffin, Tampa, Fla., for defendant-appellant.

John C. Dotterrer, Palm Beach, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before TUTTLE, KRAVITCH and JOHNSON, Circuit Judges.

KRAVITCH, Circuit Judge:

Kaiser Aluminum appeals from a jury verdict in favor of plaintiff-appellee Fabrica Italiana Lavorazione Materie Organiche, S.A.S. (FILMO) in this diversity action for breach of contract. Kaiser alleges that the trial court erred in striking one of Kaiser's defenses, in failing to construe the contract as a matter of law, in not directing a verdict for Kaiser, and in excluding the testimony of one of Kaiser's expert witnesses. Finding no reversible error, we affirm.

I. Background

In September 1979, FILMO and Kaiser Aluminum reached an agreement by telephone for Kaiser to sell FILMO 8,000 metric tons of diammonium phosphate (DAP). The agreed price was $211.70 per ton FOB Tampa, Florida. Subsequently each party sent telexes confirming the sale. On September 10, FILMO sent Kaiser a telex confirming the terms of the agreement and providing "shipment: December 1979-with 12 days preadvice." On September 12 Kaiser responded with a telex that confirmed the basic terms of the agreement and stated "Shipment: December 1979 with min. 15 days notice of named vessel arrival and tonnage declaration. We must have nomination min. 15 days notice as shipment must be made in Dec. 79. Should buyer not nominate vessel with adequate lead time seller reserves right to cancel sale." Five days later, Kaiser telexed FILMO requesting assurance that the DAP would be "moved" during December. ¹ FILMO responded that the "material will be moved in December as per contract."

In November, 1979, FILMO nominated a Soviet vessel, the BELOVODSK, to ship the DAP from Tampa. On November 20, FILMO requested that Kaiser "accept the stem" of the BELOVODSK (i.e., approve shipment in the named vessel). Kaiser did so in a telex which also stated "Pls keep us advised any change ETA of this vessel as we must repeat must have vessel loaded prior end Dec. 79." FILMO then found that because of problems in Cuba, the BELOVODSK could not arrive in Tampa before December 31, and nominated a substitute Soviet vessel, the UELEN, to accept shipment. The UELEN was expected to arrive in Tampa on December 29. Because a ten-day time lag existed between a ship's arrival at the Tampa port and berthing for loading, on December 28, Kaiser informed FILMO that the ship could not be loaded prior to the December 31 deadline, and "cancelled" the contract. ² FILMO immediately purchased "cover" DAP pursuant to U.C.C. §§ 2-711 and 2-712, F.S.A. §§ 672.711 and 672.712 ³ for loading on the UELEN, but by the time the UELEN reached the loading berth, the International Longshoreman's Association had instituted a boycott of Soviet vessels and refused to load the UELEN. FILMO then obtained a non-Soviet vessel to ship the DAP and sued Kaiser for breach of contract.

II.

Kaiser first complains that the trial court committed reversible error by striking its eleventh affirmative defense. This defense related to the ILA boycott of Russian ships which prevented the loading of the UELEN. At trial, Kaiser referred to this as an impossibility defense, arguing that it was not liable to FILMO because the boycott prohibited timely performance of Kaiser's obligations to load the DAP. On appeal Kaiser has reformulated its claim into one of proximate cause. ⁴ Essentially, Kaiser argues that it is not liable for the damages suffered by FILMO because the ILA boycott prohibited shipment of the DAP on the vessel nominated by FILMO, the UELEN. Kaiser asserts that the boycott caused FILMO's damages, not Kaiser's prior breach. ⁵

We find Kaiser's argument novel but unpersuasive. Under Fed.R.Civ.P. 12(f), a court may, upon motion of the opposing party, strike "from any pleading any insufficient defense ...." The question before us, therefore, is whether as a matter of law the defense asserted by Kaiser was insufficient. See Massey Fergusen, Inc. v. Bent Equipment Co., 283 F.2d 12, 14 (5th Cir. 1960); Meinrath v. Singer Co., 87 F.R.D. 422, 429 (S.D.N.Y.1980).

We conclude that in the context of this case Kaiser's defense was legally insufficient. U.C.C. § 2-610, F.S.A. § 672.610, states that after a party repudiates the contract, the aggrieved party may suspend his own performance and resort to any remedy for breach. One of these remedies is "cover": the aggrieved party immediately may purchase substitute goods and recover as damages the difference between the cost of cover and the contract price of the goods plus any incidental or consequential damages. U.C.C. § 2-712, F.S.A. § 672.712. These statutory rules vitiate any theory that the subsequent ILA boycott somehow relieved Kaiser of the responsibility for breach. At the moment of breach, FILMO was entitled to suspend performance of the contract and cover. This is exactly what it did; at that moment (prior to the boycott) FILMO's damages for covering were fixed, and only these damages were sought by FILMO in this suit. FILMO's cover unquestionably was the result of Kaiser's anticipatory repudiation; Kaiser, in fact, does not argue otherwise. The damages arising from that cover, therefore, were also the proximate result of Kaiser's breach, and the subsequent ILA boycott was legally irrelevant to those damages. ⁶

The cases cited by Kaiser to support its argument are inapposite. In Manganaro Bros., Inc. v. Gevyn Construction Corp., 610 F.2d 23 (1st Cir. 1979), for example, the subcontractor sued the general contractor for future profits on a contract which was terminated by the general contractor after the owner had terminated the principal contract. The subcontract contained a clause permitting the general contractor to terminate the subcontract "In the event that the Owner terminates or cancels the Principal Contract for any cause whatsoever ...." The district court had held that the general contractor could not rely on the termination clause because of a prior breach of the subcontract. The First Circuit reversed, noting that the cancellation of the principal contract was the operative cause of the cancellation of the subcontract, not the prior breach. The subcontractor, in fact, had not sued on the basis of the prior breach. Accordingly, the court held that the general contractor was not liable for damages for exercising the termination clause.

Although the opinion closed with the statement that "Supervening impossibility of performance not occasioned by the defendant puts an end to recovery, regardless of defendant's prior breach," the case did not involve impossibility but rather whether the general contractor had committed breach by terminating the contract. The case before us, moreover, does not address whether subsequent impossibility might limit recovery for damages caused by that impossibility. ⁷ Here Kaiser's cancellation, not the subsequent ILA boycott, caused FILMO to cover; consequently the boycott had nothing to do with the damages arising from the cover. Accordingly, we hold that the district court did not err in striking Kaiser's eleventh affirmative defense.

III.

Kaiser also complains that the trial court erred by submitting to the jury the issues of whether a contract existed between Kaiser and FILMO and if so its exact terms. Kaiser asserts that the contract was unambiguous and should have been construed by the trial court as a matter of law. Kaiser further contends that after construing the contract, the court should have directed a verdict in its favor.

We disagree. The primary dispute between FILMO and Kaiser was whether the shipment term meant that FILMO had to provide a vessel at the port by December 31 or whether it had to provide a vessel which could be loaded by December 31. Although the interpretation of a contract is for the court when the contract is unambiguous, see General Wholesale Beer Co. v. Theodore Hamm Co., 567 F.2d 311, 313 (5th Cir. 1978); Smith v. State Farm Mutual Automobile Ins. Co., 231 So.2d 193, 194 (Fla.1970), when a contract term is reasonably susceptible of more than one interpretation, it is ambiguous and the resolution of its meaning is for the jury. Barclays Bank D.C.O. v. Mercantile National Bank, 481 F.2d 1224, 1234 (5th Cir. 1973), cert. denied, 414 U.S. 1139, 94 S.Ct. 888, 39 L.Ed.2d 96 (1974); Hoffman v. Terry, 397 So.2d 1184 (Fla.App.1981). FILMO was entitled under U.C.C. § 2-208, F.S.A. § 672.208, to introduce evidence of usage of trade to explain the precise meaning of the "shipment" term....