Kline Iron & Steel v. Gray Com. Consultants, Inc., Civ. A. No. 3:88-560-16.
| Decision Date | 10 February 1989 |
| Docket Number | Civ. A. No. 3:88-560-16. |
| Citation | 715 F. Supp. 135 |
| Court | U.S. District Court — District of South Carolina |
| Parties | KLINE IRON AND STEEL CO., INC., Plaintiff, v. GRAY COMMUNICATIONS CONSULTANTS, INC., Defendant. |
William F. Austin, Russell H. Putnam, Columbia, S.C., for plaintiff.
Elizabeth Carpentier, William C. Boyd, Columbia, S.C., for defendant.
This matter is before the Court on the defendant's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Rule 56(c) provides in part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Because the Court finds that there is no genuine issue of material fact and that the defendant is entitled to judgment as a matter of law, it grants the defendant's motion and orders that judgment be entered in the defendant's favor.
On a motion for summary judgment, the Court must view the facts and inferences to be drawn therefrom in the light most favorable to the nonmoving party. United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). Viewed in the light most favorable to the plaintiff, the record reveals the following facts.
In early 1986, the defendant contacted various television tower builders, including the plaintiff, concerning manufacture and erection of a television tower near Huttig, Arkansas. The plaintiff and defendant subsequently conducted substantial negotiation by telephone, through correspondence and in person, culminating in a meeting of their representatives in Albany, Georgia, on June 20, 1986. According to the plaintiff, they reached an oral agreement during that meeting that the plaintiff was to provide the defendant's tower for a total price of $1,485,368.
On June 24, B.H. Kline, the plaintiff's chairman, wrote the defendant a letter which stated as follows:
Documents attached to Requests for Admission, Interrogatories and Requests for Production, filed October 11, 1988, ("Documents") at 84. On the same day, David E. Monts, sales manager for the plaintiff's tower division, sent the defendant a written "proposal" accompanied by the following letter:
Documents at 85. The "proposal" consists of five pages of typewritten terms, setting forth specifications for the manufacture, assembly and erection of a television tower and related items and four pages of pre-printed "Terms and Conditions of Sale." See Documents at 73-81.1 The printed portion includes the following relevant terms:
Documents at 78. At the bottom of the final page appear the following signature spaces:
KLINE IRON & STEEL CO., INC. By ________________________________________ Its (Seller) ACCEPTED APPROVED _________________________________ KLINE IRON & STEEL CO., INC. By ______________________________ By ________________________________________ Its (Buyer) Its DATE ____________________________ DATE ______________________________________
Documents at 81. The first signature line is signed on the plaintiff's behalf by David E. Monts. No other signatures are affixed.
On June 30, Russ Abernathy, the defendant's then Director of Engineering, telephoned David Monts advising him that the defendant had received a lower quote from another tower company and asking that the plaintiff justify its higher price. Documents at 63; Deposition of David E. Monts, Exh. 10 at 17. In this and other calls between June 30 and July 14, 1986, the defendant's representatives indicated they felt there was no contract. Deposition of Bernard Herman Kline at 103. Finally, on July 14, Perley E. Eppley, Sr., the defendant's Vice President of Engineering, wrote the plaintiff a letter which stated in part:
As there is no contract or money has transferred and your competition is discussing the tower situation with our people, it has gotten into a very embarrassing situation as you have elected not to address this particular problem. If this continues much longer, a decision will have to be made and I feel it will not be favorable to Kline.
Documents at 62. In a subsequent letter dated August 7, 1988, Mr. Eppley informed the plaintiff: "At this time senior management has made a decision to go another direction and not go with your proposal." Documents at 56. Since that time, the plaintiff has continued to maintain that an agreement was reached at the June 20, 1986 meeting and the defendant has continued to deny the existence of any contract.
On March 4, 1988, the plaintiff commenced this action seeking damages of $297,072 for breach of the alleged oral contract. The defendant now moves for summary judgment on the following grounds: (1) enforcement of the alleged oral contract is barred by the statute of frauds; (2) the parties never entered into a contract; (3) the plaintiff has suffered no damages; (4) the plaintiff cannot recover consequential damages; and (5) the plaintiff cannot recover damages incurred before the alleged contract existed or after it knew the defendant contended no contract existed. Because the Court finds the action is barred by the statute of frauds, it grants the defendant's motion on that basis without reaching the alternative grounds.
The defendant asserts the alleged oral contract is unenforceable under section 36-2-201(1), the Uniform Commercial Code ("UCC") statute of frauds, as codified by the South Carolina General Assembly. Section 36-2-201(1) provides:
Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
It is undisputed that no writing exists memorializing the alleged oral agreement and satisfying the requirements of section 36-2-201(1). The plaintiff asserts, however, that the agreement is not rendered unenforceable by this provision because (1) the contract is not for the sale of goods and therefore not subject to the writing requirement of section 36-2-201(1), (2) section 36-2-201(1) does not apply to a contract for the sale of goods which are not in existence and (3) the contract falls within the "merchant's exception" to the statute of frauds set forth in section 36-2-201(2). The Court addresses each of the plaintiff's arguments separately.
First, the plaintiff asserts that the alleged oral contract is not subject to the writing requirement in section 36-2-201(1) because it is a contract for services rather than for the sale of goods. The Court disagrees and finds the contract is one "for the sale of goods" within the purview of section 36-2-201.
The UCC definition of "goods" is very broad. Computer Servicenters, Inc. v. Beacon Mfg. Co., 328 F.Supp. 653, 655 (D.S.C.1970), aff'd, 443 F.2d 906 (4th Cir. 1971). Section 36-2-105(1) provides:
"Goods" means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Title 36, Chapter 8) and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (§ 36-2-107).
Construing this language, the South Carolina Supreme Court has held that a contract for the sale of a mobile home was a transaction in goods because the mobile home was "moveable at the time of sale." See Long v. Quality Mobile Home Brokers, Inc., 271 S.C. 482, 248 S.E.2d 311 (1978). This Court perceives no reason not to characterize the television tower and other items to be provided under the contract as goods under section 36-2-105(1) since they would be movable at the time of identification to the contract.2 Nevertheless, the plaintiff asserts this particular contract is an agreement to provide services rather than to sell goods. In support of its argument, the...
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