Credit Institute v. VETERINARY NUTRITION

• Decision Date: 27 November 2002
• Docket Number: No. 22,255.,22,255.
• Citation: 62 P.3d 339,133 N.M. 248,2003 NMCA 10
• Parties: The CREDIT INSTITUTE, a California corporation d/b/a Attorney's Business Services, Plaintiff-Appellee, v. VETERINARY NUTRITION CORPORATION, a New Mexico corporation, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

62 P.3d 339

133 N.M. 248

2003 NMCA 10

The CREDIT INSTITUTE, a California corporation d/b/a Attorney's Business Services, Plaintiff-Appellee, v. VETERINARY NUTRITION CORPORATION, a New Mexico corporation, Defendant-Appellant.

No. 22,255.

Court of Appeals of New Mexico.

November 27, 2002.

D. Lyle Wood, D. Lyle Wood, P.C. Las Cruces, NM, for Appellee.

Jeffrey M. Croasdell, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, NM, for Appellant.

OPINION

ROBINSON, Judge.

{1} In this appeal, we address whether the trial court may sua sponte award equitable relief to a party on the basis of unjust enrichment in an action based solely on express contract under Article 2 of the Uniform Commercial Code, NMSA 1978, §§ 55-2-101 to — 725 (1961, as amended through 2001) (the UCC). We hold that the trial court erred in awarding restitution to Plaintiff where Defendant did not have actual notice of the theory of unjust enrichment, did not consent to the trial of the issue, and did not have a fair opportunity to defend against such a claim. We reject Plaintiff's contention that the trial court found partial acceptance of the goods by Defendant under Article 2 of the UCC. We further hold that the trial court erred in awarding attorney fees to Plaintiff. We therefore reverse the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

{2} In September 1999, Defendant Veterinary Nutrition Corporation (Buyer) ordered labels for its dog food products from Capitol Litho, a printing company (Seller). The purchase order set forth the quantity, price, and description of the labels that Buyer wanted to buy from Seller. Specifically, Buyer sought 20,000 labels from Seller for the price of $7,976. Each label was to be 19 ¼" by 36 ¼ "in size. The labels were to be printed in black, burgundy, and gold.

{3} At Seller's request, Buyer also signed and completed a New Account Application form. The application included the following language: "Applicant agrees to pay amounts owed [Seller] within 30 days of the date of the invoice and any indebtedness not paid when due shall bear interest at the maximum legal rate. Applicant promises to pay reasonable attorney fees if it is necessary to retain the services of an attorney to collect any indebtedness owed [Seller] by applicant."

{4} Seller and Buyer exchanged proofs of the labels. Buyer did not at any time request changes to either the size or the color of the labels as stated in the purchase order. Without sending a final color match to Buyer or receiving Buyer's final approval on any proof, Seller proceeded to print up labels for Buyer. Seller delivered 20,000 labels to Buyer on September 29, 1999.

{5} Neither the color nor the size of the labels matched the description of the labels in the purchase order. In particular, the labels were not burgundy, but pink. The labels also did not have the measurements stated in the purchase order and did not fit Buyer's dog food boxes.

{6} After the delivery, Buyer promptly contacted Seller by phone and informed it that the labels did not conform to the purchase order and requested that the labels be picked up by Seller. On October 5, 1999, Buyer sent a letter to Seller rejecting the labels. Seller instructed Buyer to use the defective labels until it could remedy the problem. In accordance with Seller's instructions, Buyer used approximately 4,000 to 4,500 of the defective labels it received from Seller. To make use of the labels, however, Buyer had to cut or modify the labels and its dog food boxes. Buyer also had to obtain new boxes in order to use the nonconforming labels, and ultimately switched to packaging its dog food in bags instead of boxes.

{7} Seller never retrieved the labels from Buyer and did not redress any of the problems with the labels. Instead, Seller continued to bill Buyer for the full price of the contract, including interest. Seller eventually turned the matter over to Plaintiff The Credit Institute, a collection agency, for collection.

{8} The complaint alleged two counts against Buyer based on the express contract between Buyer and Seller: one for money allegedly due on an open account and the other for money allegedly due on accounts stated. Buyer filed an answer to the complaint, denying that it had an open account with Seller and asserting the affirmative defense that the goods delivered by Seller were defective and nonconforming to the contract, that Buyer timely notified Seller of the defect and nonconformance with the contract and attempted to return the goods, but that Seller refused to accept return of the goods. Plaintiff later filed an amended complaint, adding factual allegations concerning the New Account Application signed by Buyer. No answer to the amended complaint was ever filed.

{9} Following a trial on the merits, the trial court found that Seller delivered goods to Buyer that were defective and nonconforming to the contract, that Buyer timely notified Seller of its rejection of the goods, and that Seller refused to accept the return of the goods. However, the trial court further found that Buyer was "enriched" to the extent that it had used 4,500 of the 20,000 labels. Based upon that finding, the trial court sua sponte awarded restitution to Plaintiff in the amount of $2,051.63, plus interest, attorney fees, and costs, for a total judgment of $3,476.57. This was the first time restitution or unjust enrichment had ever been mentioned in these proceedings.

{10} Buyer timely moved to amend the judgment, arguing that although the trial court properly denied Plaintiff legal relief, it improperly granted Plaintiff equitable relief where Plaintiff did not request such relief in its complaint, did not argue the theory of unjust enrichment at trial, and did not seek to amend its complaint to conform to the evidence. Buyer further argued that the award of restitution was improper where there was no evidence that its use of the nonconforming labels was unjust. Plaintiff filed a response opposing the motion and requesting that the complaint be amended to conform to the evidence. The motion to amend the judgment was deemed denied by operation of law. This appeal followed.

DISCUSSION

Preservation

{11} Initially, we address whether Buyer's claims on appeal were properly preserved for review. Plaintiff argues that Buyer waived its right to challenge the trial court's decision because it (1) did not file an answer to the amended complaint, and (2) did not submit requested findings of fact and conclusions of law following the trial. We conclude that Buyer's claims of error were adequately preserved for review.

{12} First, we reject Plaintiff's claim that Buyer's failure to file an answer to the amended complaint amounted to waiver. The amended complaint differs from the original complaint in only one respect: paragraph five of the amended complaint refers to and incorporates the New Account Application which is attached to the amended complaint as Exhibit B. In all other respects, the amended complaint is identical to the original complaint.

{13} As noted above, Buyer filed an amended answer to the original complaint. By not filing a separate answer to the amended complaint, Buyer, at most, admitted only the new factual allegations contained in paragraph five of the amended complaint. See Rule 1-008(D) NMRA 2002 ("Averments in a pleading to which a responsive pleading is required, other than those as to the amount of damage, are admitted when not denied in the responsive pleading."). There is no reason to believe, however, that Buyer renounced any of the denials or affirmative defenses set forth in its answer to the original complaint. Most importantly, those affirmative defenses were actually litigated by the parties at trial which supersedes the pleadings preceding trial. See Rule 1-015(B) NMRA 2002. Because the amended complaint did not add any new claims or legal theories, and Buyer's answer to the original complaint included affirmative defenses that were actually litigated by the parties, we conclude that Buyer's failure to file a second amended answer cannot be deemed to be a waiver of its claims on appeal. See Rule 1-015(B) NMRA 2002.

{14} Second, we conclude that Buyer's failure to tender requested findings and conclusions does not preclude appellate review. As Buyer points out in its reply brief, it is not contesting the trial court's findings of fact or seeking a review of the evidence on appeal. Instead, it is challenging only the trial court's legal conclusions that Plaintiff is entitled to equitable relief and attorney fees. Although the failure to request findings and conclusions may bar sufficiency of the evidence review, we "may still review the trial court's decision to determine whether it is legally correct, and whether it is supported by findings of fact, if any, made by the trial court." Blea v. Sandoval, 107 N.M. 554, 556-57, 761 P.2d 432, 434-35 (Ct.App.1988).

{15} In any event, we conclude that Buyer sufficiently alerted the trial court's attention to the issues raised on appeal in its motion to amend the judgment. Within ten days after the entry of the trial court's judgment, Buyer filed a motion to amend the judgment specifically challenging the trial court's award of restitution and attorney fees to Plaintiff on the same grounds advanced on appeal. Rule 1-052(D) NMRA 2002 provides: "Upon motion of a party made not later than ten (10) days after entry of judgment, the court may amend its findings or conclusions or make additional findings and conclusions and may amend the judgment accordingly." Thus, although Buyer waived requested findings and conclusions following trial, it preserved its claims on appeal in its motion to amend the judgment. See Cockrell v. Cockrell, 117 N.M. 321, 322, 324, 871 P.2d 977, 978, 980 (1994) (clarifying that a request for findings is not the only means of preserving error and recognizing that motion to amend under Rule 1-052 is sufficient to...