Alaska Pacific Trading Co. v. Eagon Forest Products, Inc.

• Decision Date: 10 February 1997
• Docket Number: No. 37581-4-I,37581-4-I
• Citation: 85 Wn.App. 354,933 P.2d 417
• Court: Washington Court of Appeals
• Parties: , 34 UCC Rep.Serv.2d 672 ALASKA PACIFIC TRADING CO., a Washington corporation, Appellant, v. EAGON FOREST PRODUCTS, INC., a Washington corporation, Respondent.

Page 354

85 Wn.App. 354

933 P.2d 417, 34 UCC Rep.Serv.2d 672

ALASKA PACIFIC TRADING CO., a Washington corporation, Appellant, v. EAGON FOREST PRODUCTS, INC., a Washington corporation, Respondent.

No. 37581-4-I.

Court of Appeals of Washington,

Division 1.

Feb. 10, 1997.

Bruce E. Larson and Dennis W. Steams, Karr Tuttle Campbell, Seattle, for Appellant

Scott A. Milburn and J. Michael Philips, Preston Gates & Ellis, Seattle, for Respondent.

AGID, Judge.

Alaska Pacific Trading Company (ALPAC) and Eagon Forest Products, Inc. (Eagon) contracted to sell and buy raw logs. After months of communications between the parties, the delivery date passed with no shipment. Eagon canceled the contract, alleging that ALPAC had breached. ALPAC brought an action for breach. The trial court found that ALPAC breached the contract by failing to timely deliver the logs and that there was no modification of the delivery date and Eagon did not repudiate. It granted Eagon's motion for summary judgment. ALPAC contends that failure to timely deliver the goods is not a material breach and that the parties modified the delivery date. Alternately, it argues that Eagon breached the contract by failing to provide adequate assurances or repudiating the contract. We affirm the trial court because ALPAC's failure to timely deliver goods is a material breach and the parties did not modify the delivery date.

Further, ALPAC did not request assurances, and Eagon did not repudiate the contract.

FACTS

ALPAC and Eagon are both corporations engaged in importing and exporting raw logs. In April 1993, Setsuo Kimura, ALPAC's president, and C.K. Ahn, Eagon's vice president, entered into a contract under which ALPAC would ship about 15,000 cubic meters of logs from Argentina to Korea between the end of July and the end of August 1993. Eagon agreed to purchase the logs. In the next few months, the market for logs began to soften, making the contract less attractive to Eagon. ALPAC became concerned that Eagon would try to cancel the contract. Kimura and Ahn began a series of meetings and letters, apparently in an effort to assure ALPAC that Eagon would purchase the logs.

At Eagon, the home office was troubled by the drop in timber prices and initially withheld approval of the shipment. Ahn sent numerous internal memoranda to the home office to the effect that the corporation may not wish to go through with the deal, given the drop in timber prices, but that accepting the logs was "inevitable" under the contract. On August 30, Ahn sent a letter to the home office stating that he would attempt to avoid acceptance of the logs, but that it would be difficult and suggesting that they hold ALPAC responsible for shipment delay.

On August 23, Eagon received a faxed latter from ALPAC suggesting that the price and volume of the contract be reduced. Eagon did not respond to the fax. During a business meeting soon after, Kimura asked Ahn whether he intended to accept the logs. Ahn admitted that he was having trouble getting approval. Kimura thereafter believed that Eagon would not accept the shipment.

ALPAC eventually canceled the vessel that it had reserved for the logs because it believed that Eagon was canceling the contract. The logs were not loaded or By September 27, ALPAC had not shipped the logs. It sent a final letter to Eagon stating that Eagon had breached the contract because it failed to take delivery of the logs. Eagon's president, L.R. Haan, responded to the letter, stating that there was "no contract" because ALPAC's breach excused Eagon's performance. ALPAC filed a complaint for breach of contract in King County Superior Court. Eagon brought a motion for summary judgment, arguing that it did not breach, but that ALPAC breached by failing to deliver the logs. The trial court granted the motion and dismissed ALPAC's claims. ALPAC's motion for reconsideration was denied.

shipped by August 31, 1993, but Ahn and Kimura continued to discuss the contract into September. On September 7, Ahn told Kimura that he would continue to try to convince headquarters to accept the delivery. Ahn also indicated that he did not want Kimura to sell the logs to another buyer. The same day, Ahn sent a letter to Eagon's head office indicating that "the situation of our supplier is extremely grave" and that Eagon should consider accepting the shipment in September or October. ¹

DISCUSSION

ALPAC appeals from the trial court's order granting Eagon's motion for summary judgment.

A motion for summary judgment may be granted only if, "after viewing all the pleadings, affidavits, depositions, admissions and all reasonable inferences drawn therefrom in favor of the nonmoving party", the trial court finds, "(1) that there is no genuine issue as to any material fact, (2) that all reasonable persons could reach only one conclusion, and (3) that the moving party is entitled to a judgment as a matter of law".

Higgins v. Stafford, 123 Wash.2d 160, 168-69, 866 P.2d 31 (1994). The appellate court reviews the trial court's decision de novo. Tollycraft Yachts, Corp. v. McCoy, 122 Wash.2d 426, 431, 858 P.2d 503 (1993).

ALPAC Breached by Failing to Timely Deliver Logs

ALPAC's first contention is that it did not breach the contract by failing to timely deliver the logs because time of delivery was not a material term of the contract. ALPAC relies on common law contract cases to support its position that, when the parties have not indicated that time is of the essence, late delivery is not a material breach which excuses the buyer's duty to accept the goods. See Cartozian & Sons, Inc. v, Ostruske-Murphy, Inc., 64 Wash.2d 1, 390 P.2d 548 (1964); Scott Paper Co. v. City of Anacortes, 90 Wash.2d 19, 578 P.2d 1292 (1978). ² However, as a contract for the sale of goods, this contract is governed by the Uniform Commercial Code, Article II (UCC II) which replaced the common law doctrine of material breach, on which ALPAC relies, with the "perfect tender" rule. Under this rule, "if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may ... reject the whole." RCW 62A.2-601(a). Both the plain language of the rule and the official comments clearly state that, if the tender of the goods differs from the terms of the contract in any way, the seller breaches the contract and the buyer is released from its duty to accept the goods. Moulton Cavity & Mold, Inc. v. Lyn-Flex Indus., Inc., 396 A.2d 1024 (Me.1979) (holding that the "perfect tender" rule applies to time of tender). ALPAC does not dispute that the contract specified a date for shipment or that the logs were not shipped by that date. Thus, under the applicable "perfect tender" rule, ALPAC breached its duty under the contract and released Eagon from its duty to accept the logs.

Parties Did Not Waive or Modify Delivery Date

ALPAC next contends that, even if failure to timely deliver is a breach, the parties modified the delivery date or Eagon waived timely delivery. The UCC II changed the common law of contracts to eliminate the need for consideration in contract modifications but did not otherwise alter the common law. RCW 62A.2-209(1). Mutual assent is still required and one party may not unilaterally modify a contract. In re Relationship of Eggers, 30 Wash.App. 867, 638 P.2d 1267 (1982) (mutual assent and a meeting of the minds is required to modify a contract). ALPAC argues that Eagon agreed to modify the delivery date because it did not object to ALPAC's proposed changes in the amount and delivery time. It asserts that, if Eagon had not been silent during the discussions about the contract, the logs would have been shipped. Because the law requires mutual assent, Eagon's mere silence is not sufficient to establish a material issue of fact about modification. ³

ALPAC also argues that Eagon waived the shipping date because it failed to comment on its passage and continued to discuss the contract after the shipping date had passed. Waiver is a factual question. Davis v. Pennington, 24 Wash.App. 802, 604 P.2d 987 (1979). Like all factual questions, a waiver issue may be resolved on summary judgment if, given the evidence in the record, a court could reach only one reasonable result. Higgins, 123 Wash.2d at 168-69, 866 P.2d 31.

If both parties to a contract allow the reasonable time for delivery to pass without complaint, a court may infer that the parties have extended the time for performance. Davis v. Suggs, 10 Ohio App.3d 50, 460 N.E.2d 665, 667 (1983). Ahn and Kimura continued to negotiate until September 7, at least a week after the shipment date. Thus, Eagon may initially have waived the original shipment date as negotiations continued. However, by the end of September, when they exchanged their final correspondence, ALPAC still had not shipped the logs. Thus, even if the parties did waive the original date, ALPAC still had a duty to deliver the logs within a reasonable time. Its failure to ship the logs for an additional 20 days, while the price of logs continued to drop, was unreasonable and a breach.

ALPAC Did Not Request Assurances

ALPAC's third contention is that summary judgment was inappropriate because a material factual issue exists about whether it requested assurances from Eagon and Eagon failed to respond. The UCC II provides that:

A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.

RCW 62A.2-609(1). ALPAC argues both that written requests are not necessary and that it provided a written request for assurance.

Washington courts have not directly determined whether a 2-609...