Autonumerics, Inc. v. Bayer Industries, Inc., 1

• Court: Court of Appeals of Arizona
• Writing for the Court: JACOBSON; MEYERSON, P.J., and OGG
• Citation: 144 Ariz. 181,696 P.2d 1330
• Parties: , 39 UCC Rep.Serv. 802 AUTONUMERICS, INC., a New York corporation, Plaintiff-Appellee, v. BAYER INDUSTRIES, INC., an Arizona corporation, Defendant-Appellant. 6327.
• Docket Number: CA-CIV,No. 1,1
• Decision Date: 04 September 1984

Page 1330

696 P.2d 1330 144 Ariz. 181, 39 UCC Rep.Serv. 802 AUTONUMERICS, INC., a New York corporation, Plaintiff-Appellee,
v.
BAYER INDUSTRIES, INC., an Arizona corporation, Defendant-Appellant. No. 1 CA-CIV 6327. Court of Appeals of Arizona,
Division 1, Department B. Sept. 4, 1984.
Reconsideration Denied Nov. 23, 1984.
Review Denied Feb. 5, 1985.

Page 1332

[144 Ariz. 183] William F. Behrens, Phoenix, for defendant-appellant.

Murphy & Posner by K. Bellamy Brown, Phoenix, for plaintiff-appellee.

OPINION

JACOBSON, Chief Judge.

The issues in this appeal are (1) whether the parties entered into an "installment contract" as defined in A.R.S. § 47-2612(A) , (2)^* whether the trial court's instructions and evidentiary rulings on the measure of damages were correct and (3) whether prejudgment interest was properly awarded.

Autonumerics, Inc. (Autonumerics) filed a complaint on April 28, 1977 for breach of contract against Bayer Industries, Inc. (Bayer); Bayer filed an answer and counterclaim for breach of warranties. The trial court granted Autonumerics' second motion for partial summary judgment on the issue of Bayer's liability for breach of contract. The counterclaim and the issue of damages were tried before a jury which rendered a verdict for Autonumerics in the sum of $116,570.00. Bayer filed a motion

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[144 Ariz. 184] for new trial. On October 28, 1981, the trial court entered an amended judgment on the verdict, awarding prejudgment interest, attorney's fees and costs and denying Bayer's motion for new trial. Bayer then filed a timely notice of appeal.

This litigation arose out of a contract entered into between Autonumerics as seller and Bayer as buyer for the sale of numerical controls for electronic equipment. This contractual agreement is set forth in several documents. Central to the issues on appeal is whether these documents constitute an "installment contract" within the meaning of § 2-612 of the Uniform Commercial Code (A.R.S. § 47-2612(A).) Bayer argues alternatively that the documents reflect that there was a contract for the purchase of two numerical controls or that there were issues of fact with respect to the intent of the parties which precluded summary judgment. Autonumerics argues that the documents are unambiguous and constitute an installment contract for the purchase of twenty-six numerical controls.

THE RECORD FOR PURPOSES OF SUMMARY JUDGMENT

The evidence before the trial court at the time summary judgment was granted discloses the following undisputed facts. Autonumerics and Bayer had been negotiating over Bayer's purchase of numerical controls for incorporation into a milling machine manufactured by Bayer. Initially, Bayer was interested in purchasing only one or two controls but discovered it could receive a substantial discount if it purchased a larger number of controls. Bayer sent a written purchase order on its own stationery dated October 17, 1974 for a total of twenty-six controls. This document, purchase order number 3260, states that the order is for twenty-six basic systems and lists a per unit price for the components of each system and a twenty percent discount. It further provides that "if quantity exceeds fifty-one units in twelve month period," a twenty-five percent discount would apply. The purchase order also contains the statement that it is subject to a five percent price increase on non-shipped items.

Autonumerics responded with a written form acknowledgment to purchase order number 3260. The acknowledgment reiterates the quantity and the per unit component prices stated in purchase order 3260 and contains a quantity discount schedule which provides:

NOTE:

A quantity discount in accordance with the following schedule will apply to all units released for immediate shipment within one year.

Delivery schedule:

Quantity Price

1-5 list per above

6-25 list less 15%

26-50 list less 20%

51 & over list less 25%

If the release quantity exceeds 50 units within the one year time period, a 25% discount shall apply to all units shipped.

Bayer sent two other documents also entitled purchase orders, numbered respectively 3260-1 and 3260-2. Each called for release of a basic system control plus certain additional items at stated prices. Autonumerics responded to these documents with form acknowledgments. The acknowledgments set forth the discounts which Bayer would receive based on its volume order for twenty-six controls.

One of the controls was constructed and shipped pursuant to Bayer's instructions and Bayer received a discount of $5,070.00. However, Bayer refused to accept the second control which Autonumerics had already constructed, and refused to take any other controls.

Initially, it was Autonumerics position that since Bayer had taken only one of the numerical controls during the twelve month period following the original order, it was not entitled to a volume discount. Thus, in December, 1975, Autonumerics sent an invoice to Bayer "back charging" it for the $5,070.00 discount which it had received on the first control. Bayer refused to pay this amount and in July of 1976,

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[144 Ariz. 185] Autonumerics filed suit against Bayer in the state of New York for the amount of the discount. That action was subsequently dismissed for lack of jurisdiction and Autonumerics brought the instant action seeking damages for breach of a contract to purchase all 26 controls.

SECOND MOTION FOR SUMMARY JUDGMENT

Before considering the major issues involved in this appeal, we first address Bayer's contention that Autonumerics' second motion for summary judgment was a "horizontal appeal" and improperly considered by the trial judge. Autonumerics had filed a motion for partial summary judgment on December 19, 1977 before the Honorable Howard Peterson. Judge Peterson denied the motion. Autonumerics filed a second motion for partial summary judgment on August 25, 1980, approximately two and one-half years later. That motion was granted by Judge Cecil B. Patterson.

Bayer argues that it was improper for Judge Patterson to grant the second motion for summary judgment, citing Chanay v. Chittenden, 115 Ariz. 32, 563 P.2d 287 (1977), in which our supreme court disapproved the practice of a trial judge redeciding a motion for summary judgment where no new discovery had taken place. Id. at 34, 563 P.2d at 289. See also Engineers v. Sharpe, 117 Ariz. 413, 573 P.2d 487 (1977). Bayer argues that the second motion for summary judgment presented nothing new except a reference to Bayer's admission that until the lawsuit was filed it had not informed Autonumerics of its intention not to complete the purchase order.

The parties had engaged in extensive discovery during the two and one-half year period between the first and second motions for summary judgment. The fact that both motions raised the same issues concerning interpretation of the contract documents did not make consideration of the second motion improper. While the two motions were similar, the second motion did raise new arguments demonstrating an absence of factual issues concerning abandonment of the contract. Given the long period of time between the filing of the motions, the extensive discovery conducted in the interim and the differences between the motions, the trial court did not err by ruling on the second motion. We turn therefore to the substance of this appeal.

WAS THERE A CONTRACT?

The first issue we must decide is whether Bayer's purchase order number 3260 and Autonumerics' acknowledgment of that purchase order constituted an "installment contract" for the sale of twenty-six basic system controls.

Before discussing the legal issues raised, we pause to explain the concept of an "installment contract" as utilized by the Uniform Commercial Code. As discussed in 2 Anderson, Uniform Commercial Code, (2d Ed) § 2-612:4 at 278:

An installment contract is one providing for the delivery of goods in lots and the separate acceptance of each lot as delivered.

* * *

* * *

The Code employs the term installment with reference to any contract in performance of which the seller may make deliveries in parts or segments. Many installment contracts will contemplate a fixed pattern of delivery, such as the purchase of 100 tons of coal to be delivered in monthly installments of five tons each on the first working day of each month. The Code does not, however, limit the term installment contracts to such regular or repeating installment contracts, so that if the contract permits or requires the seller to deliver less than all of the goods at one time, the contract is to be classified as an installment contract, without regard to the inequality of the several shipments.

In a nutshell then, the issue decided by the trial court on summary judgment was that the contract between Bayer and Autonumerics was an installment contract for the purchase of twenty-six controls, the

Page 1335

[144 Ariz. 186] breach of which allowed Autonumerics to seek damages for the lost profits from that total sale. Bayer, in response, contends that an installment contract, as so defined, was not entered into, or because of ambiguities in the contract documents themselves and factual disputes, this issue cannot be resolved by summary judgment.

Whether a contract is ambiguous is initially a question of law for the court to decide. Watson Construction Co. v. Reppel Steel & Supply Co., 123 Ariz. 138, 598 P.2d 116, (App.1979); Slater v. Westland, 27 Ariz.App. 227, 553 P.2d 1212 (1976). Ambiguity is not established by the mere fact that the parties disagree as to the meaning of its terms. Giovanelli v. First Federal Savings and Loan Association, 120 Ariz. 577, 587 P.2d 763 (App.1978); Bekins Van Lines Co. v. Hartford Insurance Group, 27 Ariz.App. 655, 557 P.2d 1087 (1976).

It is undisputed that both Bayer and Autonumerics are merchants as defined in A.R.S. § 47-2104 ¹ and that their transactions were governed by the Arizona's version of...