American Laminates, Inc. v. J.S. Latta Co.
| Decision Date | 01 September 1998 |
| Docket Number | No. WD,WD |
| Citation | 980 S.W.2d 12 |
| Parties | AMERICAN LAMINATES, INC., Respondent, v. J.S. LATTA COMPANY, Appellant. 54288. |
| Court | Missouri Court of Appeals |
Barry Pickens, Kansas City, for Appellant.
Charles William Fairchild, Kansas City, for Respondent.
J.S. Latta Company 1 is arguing with American Laminates, Inc., 2 over whether their contracts, memorialized in a dealer agreement and in purchase orders, obligated American Laminates to pay disputed backcharges on four school projects in Iowa and one project in Kansas City and whether American Laminates was entitled to lost profits for a New York project which Latta cancelled. The circuit court awarded American Laminates $38,059 in damages, including prejudgment interest, and Latta appeals.
We issued an opinion on June 23, 1998, affirming the circuit court's judgment in part and reversing in part. We granted Latta's motion for rehearing filed on July 8, 1998, to reconsider issues involving the contract doctrines of commercial frustration and commercial impracticability. We again affirm the
circuit court's judgment in part and reverse it in part. We remand the case for further proceedings.
On November 23, 1994, American Laminates received a letter from Todd Ellison, Latta's contract manager, claiming backcharges which Latta had incurred on various projects:
Backcharge from Iowa Precision installation for Ballard $ 807.20
Elementary Schools
Backcharge from Iowa Precision Installation for Prairie $ 1,772.00
Valley Elementary School
Backcharge from Iowa Precision Installation for West Liberty $ 1,713.20
Middle School
Backcharge from Unzeitig Construction for Maquoketa $ 3,229.54
Community Schools
Bill from GPJS Architects at Prairie Valley to take window $ 225.00
out due to music cabinet to [sic] big
Rejection of nurse's desk (elevation 7) by GPJS at Prairie $ 150.00
Valley
Charge from R.E. Simon for not fulfilling contract at Nathan $ 3,000.00
Weiner project
Backcharges from R.E. Simon for Nathan Weiner project $ 1,068.33
Backcharges from R.E. Simon for poor quality of conference $ 1,609.07
table top
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Backcharge Total-- $13,574.34
Ellison reported that Latta was subtracting the $13,574.34 backcharge total from the $14,761.80 which Latta owed American Laminates because of outstanding invoices on other projects.
American Laminates sued Latta, alleging that Latta's claim of backcharges was without merit. The circuit court agreed and held that the supporting documentation for the backcharges was incomplete, untimely and without merit. The circuit court found, however, that Latta was entitled to a $750 offset for American Laminates' failure to furnish decorative wood coverings for a conference room table for the Nathan Weiner project. The circuit court awarded American Laminates $12,825 and nine percent prejudgment interest.
Latta appeals, claiming that American Laminates had an obligation to indemnify it for all the backcharges assessed against it by American Laminates' dissatisfied customers. Latta relies on its purchase order to support its contention. The indemnity clause in the purchase order provides that American Laminates "agrees to indemnity 3 and holds [Latta] harmless from and against all claims, damages and expenses on account of ... any defect in the merchandise shipped on this order and subsequently sold by us." 4
Neither the dealer agreement 5 nor the purchase order defined backcharges. We found no definition of the term in any of the parties' documents. They apparently operated with an assumption that each understood what the term meant.
The circuit court found, 6 In its brief, American Laminates defined backcharges as "repair expenses that result from damages caused to Most of the backcharges claimed by Latta involved problems with the casework, such as replacing doors, installing missing hardware, laminating cabinets which were not finished, cleaning glue from cabinets, leveling casework, trimming casework, and removing and replacing counter tops. The circuit court did not question whether these items were indeed backcharges. Instead, it concluded that the backcharges were "incomplete, untimely and without merit."
finished work by other trades. Typical [American Laminates] related backcharges could include damage to walls or paint during the process of installing casework. Back charges may or may not be the responsibility of [American Laminates], and must therefore be properly documented." The only definition we could find in the record regarding backcharges was provided by Matthew Barksdale, American Laminates' president, who said that backcharges were "problems that weren't anticipated on the job initially or things basically to make the job complete. Additional items that need to be sent to make the job complete and make it acceptable for the owner."
Latta seems to argue that the circuit court's finding was erroneous because American Laminates was obligated to pay its backcharge claims caused by any defect in the casework regardless of the time the damages or expenses arose. 7 Latta rests its argument solely on its purchase orders' indemnity clauses in which American Laminates agrees to indemnify and to hold Latta harmless "from and against all claims, damages and expenses." We reject this contention as manifestly unreasonable.
Section 400.2-607(3)(a), RSMo 1994, says, "Where tender has been accepted ... the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy [.]" Concerning reasonable time, § 400.1-204, RSMo 1994, says:
(1) Whenever this chapter requires any action to be taken within a reasonable time, any time which is not manifestly unreasonable may be fixed by agreement.
(2) What is reasonable time for taking any action depends on the nature, purpose and circumstances of such action.
Latta received and accepted all the casework for the school projects. American Laminates became aware of the backcharges for the school projects only after receiving Ellison's letter on November 23, 1994, nearly a year or so after American Laminates had been paid in full. We agree with the circuit court that Latta did not notify American Laminates of the backcharges within a reasonable time.
Moreover, we also agree with the circuit court that Latta's supporting documentation for the school projects was incomplete. Reasonableness seems to dictate that the more time which passes between Latta's acceptance and its claim for a backcharge, the more detailed supporting documentation has to be. American Laminates had a right to be assured in a claim made after a long passage of time that a defect was its fault and not caused by others. The documentation submitted by Latta established little about the cause for the defects.
As to the Nathan Weiner project, the evidence established that American Laminates and Latta executed an initial purchase order for $26,012 for the manufacture and installation of laminated casework, including 15 work stations, a desk surface and a round table. American Laminates received a second purchase order from Latta on October 26, 1993, for the manufacture and installation of window sills, and a third purchase order on November 11, 1993, for $2732 for the manufacture and installation of a conference room table. American Laminates billed the project on January 31, 1994, and on April 21, 1994, and all but $3252 was paid. Latta claimed backcharges totalling $5677.40 on November 23, 1994.
The first claim, for $3000, concerned lack of decorative wood coverings for a conference room table's steel legs. The circuit court concluded that the $3000 backcharge for American Laminates' failure to furnish decorative wood coverings for the legs was unreasonable because the purchase order for the entire table totaled $2732, and the backcharge would be more than the whole table's worth. Evidence established that the wood coverings had a value of $420 and that American Laminates offered a credit of $750 for the legs.
The second claim, for $1068.33, concerned
1.) RDF Furniture--Temporary furniture rental= $ 311.88
2.) RDF Furniture--Delivery of temporary furniture= $ 75.00
3.) Feingold & Associates--Extra time trying to help $ 212.50
American Laminates=
4.) Firebaugh Construction Company--One fourth of cost due $ 198.75
to poor installation. Balance paid for by Nathan
Weiner due to uneven walls=
5.) Owens Enterprises
a.) Cost to trim countertops and pillars= $ 176.00
b.) Cost to level synthetic marble= $ 443.00
c.) Cost of leveling systems for counters and desks= $ 435.00
d.) Cost to level and stabilize round table= $ 368.20
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TOTAL CHARGE BACKS $ 2,220.33
Off Set Amounts--
Steel base for conference table= ("970.00)
Extra hardware for Larry's cabinet ("182.00)
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