Brooks Peanut Co. v. Great S. Peanut, LLC.

• Decision Date: 11 July 2013
• Docket Number: No. A13A0633.,A13A0633.
• Citation: 746 S.E.2d 272,322 Ga.App. 801
• Parties: BROOKS PEANUT COMPANY, INC. v. GREAT SOUTHERN PEANUT, LLC.
• Court: Georgia Court of Appeals

322 Ga.App. 801

746 S.E.2d 272

BROOKS PEANUT COMPANY, INC.

v.GREAT SOUTHERN PEANUT, LLC.

No. A13A0633.

Court of Appeals of Georgia.

July 11, 2013.

R. Edgar Campbell, Albany, Nowell Donald Berreth, Atlanta, for Appellant.

Charles Edward Peeler, for Appellee.

ELLINGTON, Presiding Judge.

Brooks Peanut Company, Inc. (“Brooks Peanut”) appeals from an order of the Superior Court of Lee County granting summary judgment to Great Southern Peanut Company, LLC (“GSP”) on Brooks Peanut's claims for breach of contract, promissory estoppel, negligent misrepresentation, fraud, and attorney fees arising out of a commodities transaction. The superior court found that GSP's alleged promise to sell peanuts to Brooks Peanut was unenforceable under the Statute of Frauds, OCGA § 11–2–201. Brooks Peanut also appeals from the order denying its motion to compel arbitration. For the following reasons, we reverse the court's grant of summary judgment to GSP; however, we affirm the court's order denying Brooks Peanut's motion to compel arbitration.

1. Brooks Peanut contends that it produced evidence showing that a writing sufficient to satisfy the Statute of Frauds exists; therefore the trial court erred in concluding that GSP's Statute of Frauds defense bars Brooks Peanut's claims as a matter of law. We agree.

Summary judgment is appropriate when the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. On appeal from the grant or denial of summary judgment, we conduct a de novo review, construing the evidence and all reasonable inferences most favorably to the nonmoving party.

(Citation and punctuation omitted.) Daniel Mill, LLC v. Lyons, 283 Ga.App. 604, 605, 642 S.E.2d 226 (2007). So viewed, the record reveals the following relevant facts.

Brooks Peanut is a peanut shelling company operating in Samson, Alabama. GSP is a competing peanut sheller located in Lee County, Georgia. Because there is no established peanut commodities market, peanut shellers and other businesses handling peanut products often use brokers to buy and sell peanuts. Typically, the broker's fee is paid by the seller. The commodities transaction at issue in this case was brokered by Mazur & Hockman, Inc. (“M & H”). Brooks Peanut and GSP have both used M & H, as well as other brokers, to buy and sell peanut products on their behalf.

In mid-September 2010, Barrett Brooks, president of Brooks Peanut, called Richard Barnhill and Jay Strother, peanut brokers with M & H, and asked them to find peanuts for his company to buy and to have delivered to his shelling facility. Brooks requested that Brooks Peanut not be identified as the buyer when M & H contacted potential sellers. According to Brooks and Strother, that is not an unusual practice. M & H solicited offers from several peanut shellers, including GSP, and conveyed them to Brooks. After reviewing the offers, on September 20, Brooks asked Strother to communicate a counteroffer to GSP's manager, Doug Wingate. Specifically, the counteroffer was an offer to buy 3,168,000 pounds of 2010 crop medium runner shelled peanuts for $.4675 per pound, to be delivered monthly throughout 2011.

According to Strother, Wingate accepted the counteroffer that same day, September 20. After Wingate accepted these terms, Strother revealed that Brooks Peanut was the buyer. According to Strother, Wingate “sighed” upon learning that a competitor was involved in the transaction; however, he did not reject the deal. Wingate testified that, although he initially accepted the deal, he declined to consummate it when he learned that Brooks Peanut was the buyer.

On the same day, M & H prepared and then faxed to GSP and Brooks Peanut a written confirmation of the sale of peanuts. The confirmation stated: “We confirm a Sale and Purchase Transaction as described below[.]” The confirmation was printed on M & H letterhead and listed the names and addresses of the seller and the buyer, as well as terms covering price, quantity, quality, crop year, delivery schedule, and payment method. Spaces for the seller's contract number and the buyer's purchase order number were left blank. The confirmation stated that “[t]his confirmation is subject to the following condition[ ]: Seller's contract and Buyer's purchase order to follow [.]” Next to the term “Quality,” the confirmation noted that the “American Peanut Shellers AssociationTrading Rules” applied to the transaction. The confirmation was signed by M & H's Strother.

GSP and Brooks Peanut each received the faxed confirmation from M & H. It is undisputed that GSP did not issue a contract and that Brooks Peanut did not issue a purchase order. After Strother sent the confirmation to GSP and Brooks Peanut, he continued communicating with the parties to finalize the logistics of the deliveries. For example, on September 21, he told Brooks that GSP had offered to haul the peanut loads. They also discussed increasing the monthly shipments, but Wingate stated that he wanted “to stay at 6 loads a month on the [B]rooks [Peanut] contract for right now[.]”

GSP did not raise any objection to the fax confirmation until late January 2011, almost four months after M & H sent it. Wingate testified that he “did not see the need” to object to the confirmation. Beginning in January 2011, GSP took the position that, despite the confirmation, GSP and Brooks Peanut had not entered into that particular transaction because Wingate had rejected the sale when he learned that it involved his company's competitor, that M & H was not authorized to confirm the sale or to send the confirmation, and that a condition precedent had not occurred because GSP had not issued a written contract.

The evidence adduced shows that M & H had routinely brokered thousands of peanut sales between other peanut companies, shellers, and manufacturers using the same form of trade confirmation at issue here. Further, it is undisputed that GSP agreed to sell peanuts to Brooks Peanut in June 2009 and April 2010 and that such agreements were memorialized solely by M & H sending the parties confirmations that were substantially similar to the one at issue in this case.

The formal requirements of the Statute of Frauds in the context of the Georgia's Commercial Code appear in OCGA § 11–2–201, which corresponds to Section 2–201 of the Uniform Commercial Code. That Code section provides, in relevant part:

(1) Except as otherwise provided in this Code section a contract for the sale of goods for the price of $500.00 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

(2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) of this Code section against such party unless written notice of objection to its contents is given within ten days after it is received.

Section 2–201(1) is the UCC's general Statute of Frauds provision. Section 2–201(2), sometimes referred to as the “merchant confirmation rule,” “the reply doctrine,” or the “merchant's exception,” has somewhat modified requirements concerning oral agreements between merchants, ¹ primarily dispensing with the necessity of the confirmation recipient's signature.² As one treatise explains, While § 2–201(2) stands as an exception to the UCC's general statute of frauds, § 2–201(1), it is not entirely separatefrom that provision. The courts have generally held that the language in § 2–201(1) to the effect that a writing relied upon to satisfy the statute of frauds must be “sufficient to indicate” a contract is equally applicable to § 2–201(2), although there is authority to the contrary. Similarly, the condition stated in § 2–201(1) to the effect that a contract is not enforceable under the code beyond the quantity stated in the writing used to overcome the statute of frauds has been expressly held applicable to § 2–201(2), as well as by implication.³

The record demonstrates that Brooks Peanut and GSP are merchants ⁴ within the meaning of the UCC and that the transaction at issue is one “between merchants.” ⁵ Thus, we resolve this claim of error with reference to both subsections (1) and (2) of OCGA § 11–2–201.

The confirmation in this case indicates that the parties entered into a transaction for the sale of a specific quantity of goods ⁶ for a price exceeding $500 as required by OCGA § 11–2–201(1). As the Supreme Court of Georgia has explained:

The required writing need not contain all the material terms of the contract and such material terms as are stated need not be precisely stated. All that is required is that the writing afford a basis for believing that the offered oral evidence rests on a real transaction.... Only three definite and invariable requirements as to the memorandum are made by this subsection. First it must evidence a contract for the sale of goods; second, it must be “signed,” a word which includes any authentication which identifies the party to be charged; and third, it must specify a quantity.

(Citation omitted.) Harris v. Hine, 232 Ga. 183, 186(1), 205 S.E.2d 847 (1974).⁷ The confirmation at issue also puts the recipient on notice that it confirms a prior oral agreement concerning the sale of goods sufficient to trigger a response by the recipient and, thus, is sufficient under OCGA § 11–2–201(2).

GSP argues, however, that the confirmation is insufficient to show that the parties had reached a final...