Openaire, Inc. v. L.K. Rossi Corp.

• Decision Date: 25 October 2007
• Docket Number: No. 06-123.,06-123.
• Citation: 940 A.2d 724,2007 VT 120
• Court: Vermont Supreme Court
• Parties: OPENAIRE, INC. v. L.K. ROSSI CORP.

940 A.2d 724

2007 VT 120

OPENAIRE, INC. v. L.K. ROSSI CORP.

No. 06-123.

Supreme Court of Vermont.

October 25, 2007.

Present: JOHNSON, SKOGLUND, BURGESS, A.J., GIBSON III, Associate Justice (Ret.), Specially Assigned and COOK, District Judge (Ret.), Specially Assigned.

ENTRY ORDER

¶ 1. This case arises out of a contract dispute between contractor L.K. Rossi Corporation and subcontractor Openaire, Incorporated. Contractor appeals from the Washington Superior Court's denial of its motion to dismiss or for summary judgment and its grant of subcontractor's cross-motion for summary judgment. We affirm.

¶ 2. The undisputed facts are as follows. Contractor was hired to complete renovations, including the addition of a retractable swimming-pool enclosure, on a home in Stowe. In 1998, the architect for the project contacted subcontractor to discuss design and manufacture of the enclosure. Contractor and subcontractor signed a contract in January 1999 in which subcontractor agreed to design, fabricate, deliver, and install a retractable pool enclosure for an outdoor, in-ground swimming pool for a price of $239,900. The contract required subcontractor to supply a set of specifications and shop drawings for the architect's approval prior to any manufacturing. Attached to the contract were drawings that provided the design concept, dimensions, and other details for the construction of the project. The contract stated that "[p]rices, specifications (subject to approved, shop drawings), terms and conditions listed herein are satisfactory and are hereby accepted." The contract provided that contractor would pay 10% of the contract price with a letter of intent, 15% upon receipt of shop' drawings, 50% upon delivery of materials, and the remaining 25% upon substantial completion of the project. Subcontractor began work on the enclosure in January 1999.

¶ 3. Subcontractor sent the first invoice in January 1999 and was paid 10% of the contract price. The second invoice was sent on April 30, 1999, and 15% of the contract price was then paid in May. Between the time of the first and second invoices, a change order was approved by contractor adding $41,100 to the contract price for alterations to subcontractor's shop drawings that reflected the architect's modifications thereto.

¶ 4. On July 22, 1999, subcontractor faxed contractor confirming that the "materials [were] shipping July 30, 1999 as requested." At that time, there was some concern that installation might be delayed again. In July 1999, it became public that the owner of the home was the subject of an FBI investigation. FBI presence at the job site terminated the renovation project. One of contractor's representatives called subcontractor to relay this news, and subcontractor responded with a letter to contractor confirming the conversation—which apparently included an assurance to subcontractor that the last invoice would be settled within two weeks—and agreeing to delay the delivery by two weeks. Eventually, contractor told subcontractor not to ship the enclosure at all. Subcontractor has been storing the enclosure materials since that time.

¶ 5. On July 12, 2005, subcontractor brought this action for payment. Contractor moved to dismiss or for summary judgment on statute-of-limitation grounds. Subcontractor opposed the motion and filed a cross-motion for summary judgment. Contractor did not respond to subcontractor's cross-motion. The court denied contractor's motions and granted subcontractor's motion for summary judgment, ordering judgment to be entered for subcontractor. This appeal followed.

¶ 6. Contractor contends that the trial court erred in applying 12 V.S.A. § 511, a six-year statute of limitations for breachof-contract actions, instead of applying the four-year statute of limitations set out in the Uniform Commercial Code (UCC). 9A V.S.A. § 2-725. Contractor also claims that the court erred in finding that a letter from contractor reaffirmed the debt, tolling the UCC statute of limitations, and in concluding that the complaint would therefore have been timely filed even under the UCC. Contractor argues further that the affidavit subcontractor submitted to support its motion for summary judgment was insufficient as a matter of law, and therefore, that summary judgment was improperly granted. Finally, contractor complains that the trial court should have granted summary judgment in its favor because subcontractor either voided the contract or breached it by failing to meet a condition precedent. We address each of these arguments in turn.

¶ 7. We review a trial court's grant of summary judgment de novo, applying the same standard that the trial court applies. Mellin v. Flood Brook Union Sch. Dist., 173 Vt. 202, 211, 790 A.2d 408, 417 (2001). "When a motion for summary judgment is made and supported ... an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." V.R.C.P. 56(e). We affirm summary judgment grants when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, ... show that there is no genuine issue as to any material fact and that any party is entitled to judgment as a matter of law." V.R.C.P. 56(c)(3) (emphasis added).

¶ 8. We turn first to contractor's claim that the UCC statute of limitations should apply in this case. Contractor contends that the contract was one for the sale of specially manufactured goods, and that therefore it is governed by the UCC, and in particular 9A V.S.A. § 2-725(1), which requires that an action for breach of contract for sale must be commenced within four years after the cause of action has accrued. We recently addressed a similar issue in Lamell Lumber Corp. v. Newstress International, Inc., 2007 VT 83, ___ Vt. ___, 938 A.2d 1215. In that case, we noted that it was well settled that where a transaction contains elements of both sales and service, application of the UCC turns on whether the transaction "predominantly," or essentially, relates to goods or services. Id. ¶ 13. We concluded that a contract to design, manufacture, truck, and install precast concrete panels was predominantly a contract for services and not subject to the UCC. Id. 1¶¶ 3-15.

¶ 9. To determine the essential or predominant aspect of any contract, we look to several factors, but chief among these is the language of.the contract and the circumstances of its making and performance. Id. ¶ 14. In this case, the contract calls for the subcontractor to produce a freestanding enclosure with two sidewalls that will sit on foundation walls to be built by another party. The contract lists the items and materials included in the structure, such as an extruded aluminum frame, one-inch clear insulating glass, and twelve motorized roof panels. It also specifically identifies those aspects of the construction that are not included: the supporting foundation, heating and dehumidifying systems, the installation of wiring, a chimney, a walkway, and a solarium. The contract provides for "[d]elivery of material to...