Armco Steel Corp. v. Isaacson Structural Steel Co., s. 3138
| Decision Date | 09 May 1980 |
| Docket Number | Nos. 3138,3139 and 3140,s. 3138 |
| Citation | 611 P.2d 507 |
| Parties | 28 UCC Rep.Serv. 1249 ARMCO STEEL CORPORATION, Appellant, v. ISAACSON STRUCTURAL STEEL COMPANY, Appellee. ISAACSON STRUCTURAL STEEL COMPANY, a Division of Isaacson Corporation, Appellant, v. CHRISTIANSON CONSTRUCTION CO., INC., Appellee. CHRISTIANSON CONSTRUCTION CO., INC., Cross-Appellant, v. ISAACSON STRUCTURAL STEEL COMPANY, a Division of Isaacson Corporation, Cross-Appellee. |
| Court | Alaska Supreme Court |
Carl J. D. Bauman, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, for appellant Armco.
Hugh G. Wade, Barokas & Martin, Anchorage, for appellee and cross-appellant Christianson.
John M. Conway and Robert J. Dickson, Atkinson, Conway, Young, Bell & Gagnon, Anchorage, for appellant and cross-appellee Isaacson.
Before BOOCHEVER, C. J., and RABINOWITZ, CONNOR, BURKE and MATTHEWS, JJ.
This case involves two appeals and a cross-appeal from a judgment entered by the superior court in a suit for breach of contract. Isaacson Structural Steel Corporation brought an action against Christianson Construction Company to recover the contract price for steel that Isaacson had purchased, fabricated and supplied to Christianson. Christianson counterclaimed for damages it had suffered because of Isaacson's late delivery of the steel. After a year of litigation between Isaacson and Christianson, Isaacson filed a third-party action against Armco Steel Corporation, Isaacson's steel supplier, claiming that Armco was responsible for any delay in delivery.
The superior court found that Isaacson was entitled to recover the price of the steel from Christianson, $274,827.68, plus interest. That amount was offset by Christianson's recovery of.$201,668.60, plus costs and attorney's fees, from Isaacson for damages due to late delivery. The net judgment in favor of Isaacson was $33,835.45. The court further found that Isaacson was entitled to recover $183,668.60, plus interest, from Armco for delay damages, in addition to the costs and attorney's fees incurred by both Isaacson and Christianson, for a total judgment against Armco of $303,347.93. We affirm the judgment against Christianson in favor of Isaacson, and we reverse the judgments against Armco and Isaacson.
On July 16, 1973, Christianson entered into a contract with the State of Alaska for the construction of the Nenana River Bridge at Windy, Alaska. State specifications called for specialized steel for the structural box girder and floor beam portions of the bridge. Isaacson, a Seattle-based steel fabricator, submitted a bid to Christianson on June 27, 1973, for the structural steel required for the bridge. Isaacson's bid was accepted on approximately August 2, 1973. The Isaacson-Christianson contract 1 required delivery of the steel to Cantwell, Alaska, by February 20, 1974. This was the latest date Christianson believed would permit construction of the bridge from the ice, and Christianson wished to save the added cost of a work bridge, which would be required if the river thawed.
When Isaacson entered into its contract with Christianson, it apparently relied on certain communications with Phoenix Steel Company regarding the supply of the specially fabricated steel required for the project. Because of increasing demand for steel and consequent problems in obtaining timely shipments of steel, Isaacson placed two orders. It first placed an order with Phoenix for the specialized steel on August 23, 1973. Isaacson then placed an order with Armco for the same type of steel on August 30, 1973. Because of the February 20, 1974, delivery commitment to Christianson, the delivery date was a primary factor in Isaacson's negotiations with steel producers. Isaacson therefore planned to cancel whichever order produced the later delivery date.
On September 17, 1973, Armco advised Isaacson that it had scheduled shipment from its Houston mill for the week of December 3, 1973. Armco's shipping dates were earlier than those which Phoenix had quoted Isaacson. Accordingly, Isaacson forwarded its written purchase order for the steel to Armco on September 18, 1973. After receiving additional verbal assurances from Armco of a December delivery, Isaacson cancelled the Phoenix order on October 5.
On October 15 and 23, 1973, Armco sent acknowledgments to Isaacson. 2 On December 18, 1973, Armco advised Isaacson by telephone that the order was scheduled for shipment the week beginning January 6, 1974. On January 2, 1974, Armco's Los Angeles office wrote Isaacson indicating the shipping status of the order. Armco completed the Isaacson order in four separate shipments. The first was on December 31, 1973; the second, on January 2, 1974; the third, on January 21, 1974; and the final shipment, on February 18, 1974.
Isaacson commenced fabrication after the final shipment arrived in Seattle on March 4, 1974, and expected to ship the steel to Christianson on April 4 and April 6, 1974. On April 1, 1974, however, a strike shut down the Isaacson plant. The strike ended on May 20, but the work force did not return completely until about June 1, 1974. The steel arrived in Cantwell between June 4, 1974, and August 22, 1974. The trial court concluded that, if Armco had delivered the steel on time, Isaacson could have completed the order in time to ship prior to the strike. The court further concluded, however, that, even if Armco had delivered on time, Isaacson could not have shipped the steel in time to permit winter erection from the ice. The court based its conclusion on the fact that off-ice construction would have been impossible due to the recurrence of a lead in the ice. The steel arrived too late in the summer to permit summer construction. Christianson, therefore, decided to erect the steel from the ice in the winter of 1974-1975, one year behind schedule.
Christianson withheld approximately $280,000 from Isaacson for the price of the steel, claiming damages from the delayed delivery. It asserted these damages as a defense to Isaacson's action to recover the purchase price. Isaacson commenced its action on February 25, 1975. Prior to the commencement of the action, Christianson notified Isaacson by letter of its claim of damages predicated on delay of delivery. 3 Armco, however, received no notice of breach. Isaacson paid Armco's full purchase price of approximately $79,000 upon receipt of Armco's shipments in 1974. The filing of the third-party complaint against Armco on February 6, 1976, was the first information Armco received about a suit arising out of the transaction.
On appeal, Armco alleges numerous grounds for reversal. We address only one of the issues raised by Armco since we find it to be dispositive: Did the superior court err in holding that lack of prejudice to Armco excused Isaacson's failure to notify Armco of breach, as required by AS 45.05.174(c) (1)? 4 We hold that Isaacson's failure to notify Armco of the breach was not excused and that this failure discharges Armco of any liability. 5
The superior court concluded that the Armco-Isaacson contract was formed pursuant to AS 45.05.062(c). 6 Accordingly, it found the terms of AS 45.05 to be implied terms of the contract. Among these terms is the notice requirement contained in AS 45.05.174(c)(1). 7
At no time did Isaacson give Armco notice of breach as required by AS 45.05.174(c)(1). 8 Isaacson was notified of Christianson's intention to hold it in breach of the Christianson-Isaacson contract as early as July 1974. Armco, however, did not receive any communication from Isaacson regarding any problem arising from the Armco-Isaacson contract until Isaacson filed its third-party complaint against Armco on February 6, 1976. The trial court, while suggesting that absence of prejudice is not conclusive, did in fact rely solely on that factor in deciding that Isaacson's failure to give notice was excused. 9
On its face the language of AS 45.05.174(c)(1) allows for no alternative to timely notice. The statute states that the "buyer must . . . notify the seller of the breach or be barred from any remedy . . . ." (Emphasis added.) It provides for no excuse from notice such as lack of prejudice.
Several of our decisions support a strict construction of AS 45.05.174(c)(1). In Prince v. LeVan, 486 P.2d 959 (Alaska 1971), we pointed out that "a buyer who has accepted goods . . . has no remedy at all unless he notifies the sellers of breach within a reasonable time as required by AS 45.05.174(c) (1)." Id. at 963 (footnotes omitted). Similarly, in A & G Construction Co. v. Reid Brothers Logging Co., 547 P.2d 1207 (Alaska 1976), a construction company failed to object to the late delivery of construction materials. We held: "Since A & G accepted the goods, and since there was no notification to Reid that the deliveries were insufficient or late, A & G must pay for the accepted goods at the contract price, and A & G is barred from any subsequent remedy . . . ." Id. at 1219 (footnotes omitted). Our recent decision in Kelly v. Miller, 575 P.2d 1221 (Alaska 1978), also supports strict construction of the notice requirement. In Kelly we stated:
The UCC does not cover every aspect of contract law and where a situation arises which calls for application of legal or equitable principles not displaced by Code provisions, courts are free to use these supplemental principles. AS 45.05.006. However, where the UCC does provide a specific and complete remedy for an actionable wrong, we will view its provisions as exclusive. See Prince v. LeVan, 486 P.2d 959, 962 (Alaska 1971) ().
Id. at 1224 (footnote omitted). Although Kelly refers to remedies, its rationale applies equally to the notice requirement in AS 45.05.174(c)(1).
Isaacson has not cited any case law supporting the trial court's decision that lack of prejudice to the...
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