Deerfield Commodities, Ltd. v. Nerco, Inc.
| Decision Date | 10 May 1985 |
| Citation | 696 P.2d 1096,72 Or.App. 305 |
| Parties | DEERFIELD COMMODITIES, LTD., a New York corporation, Appellant-Cross-Respondent, v. NERCO, INC., an Oregon corporation, and Nerco Coal Sales Company, a Tennessee corporation, Respondents-Cross-Appellants, v. James WELSH and William J. O'Hare, individuals, William J. O'Hare, P.C., a New York professional corporation, and Colleen Coal Company, a Pennsylvania corporation, Third-Party Defendants-Cross-Respondents. A8105-03087; A27718. |
| Court | Oregon Court of Appeals |
Robert B. Hopkins, Portland, argued the cause for appellant-cross-respondent and third-party defendants-cross-respondents. With him on the briefs were Richard L. Sadler, Randall L. Dunn, David N. Goulder and Copeland, Landye, Bennett & Wolf, Portland.
Barnes H. Ellis, Portland, argued the cause for respondents-cross-appellants. With him on the briefs were Stephen S. Walters, Charles F. Adams and Stoel, Rives, Boley, Fraser & Wyse, Portland.
Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.
Plaintiff brought this action for damages for breach of contract, material misrepresentation and fraud. Defendants filed counterclaims for breach of contract and fraud, as well as third-party claims based on those theories. After a jury trial, the court entered judgment on a special verdict awarding plaintiff a lump sum of $27,107,000 in damages for breach of contract and material misrepresentation. The jury rejected plaintiff's fraud claim and all of defendants' counter-and third-party claims. Thereafter, defendants filed alternative motions for judgment notwithstanding the verdict or a new trial. Although the court denied the motion for judgment n.o.v., it concluded that the contract between the parties was unambiguous and was limited to a one-year term, and that it had erred in permitting the jury to decide the duration of the contract. Accordingly, it granted a new trial limited to the issue of plaintiff's damages for one year.
On appeal, plaintiff seeks reversal of that order and reinstatement of the judgment. On cross-appeal, defendants seek a retrial of all claims, counterclaims and third-party claims. Because we conclude that the court erred in limiting the new trial to the issue of plaintiff's damages, we reverse and remand for further proceedings not inconsistent with this opinion.
This case involves a contract between plaintiff Deerfield Commodities, Ltd. (Deerfield) and defendant Nerco Coal Sales Company (Nerco), by which Deerfield agreed to supply quantities of anthracite coal silt to Nerco for ultimate sale to certain Korean businesses. Deerfield was organized in the summer of 1980 when its principals learned that Korean companies sought to buy large quantities of coal silt for the production of fuel. During the same period, Nerco, Inc., a large producer of bituminous coal, organized a new Tennessee corporation, Nerco Coal Sales Company, 1 to develop Far Eastern markets for anthracite and bituminous coal.
In November, 1980, Nerco began discussions with both Deerfield and the Korean companies regarding the execution of long term, multi-year contracts for the sale and purchase of coal silt. During negotiations on December 5, 1980, Nerco told Deerfield that it would be responsible for ocean transportation and arrangements with the Koreans. Deerfield stated that it would supply coal silt f.o.b.t. (free on board trimmed), but indicated that moisture specifications outlined in previous Korean contracts were unrealistic and that it would not proceed with specifications requiring less than 12 percent.
On January 19, 1981, after Nerco had obtained two Korean contracts, the parties' representatives met in Chicago and signed a seven-page "Coal Supply Agreement," which provides in "Section III--Term of Agreement":
"This Agreement shall be effective from the date hereof and shall terminate on December 31, 1981 or upon delivery of 200,000 tons of coal, whichever occurs first, except that the term and quantities may be extended and/or increased pursuant to Section IV and XXI."
Sections IV and XXI provide:
The agreement also contained an integration clause and a prohibition on oral modification:
On the same day, 2 the parties executed a single written supplement to the Coal Supply Agreement, entitled "Addedum [sic] to Contract No. 1." The addendum was prepared by Nerco's counsel at Deerfield's request and provides, in pertinent part:
Both the Dai Han and the Hyosung contracts mentioned in the Coal Supply Agreement and the addendum contain a "quantity" provision stating that the amount purchased is 200,000 metric tons (5 percent more or less at the seller's option), and a one-year schedule showing shipments beginning in March and ending in December, 1981. Those contracts also provide for liquidated damages keyed to the agreed shipping schedule and 200,000 metric tons, and require Nerco to post a performance bond which "shall be released upon instruction of the Buyer after satisfactory completion of the contract or its expiry [sic] date, whichever may be sooner." Each Korean contract also has an attachment, providing:
Deerfield presented testimony at trial that one of the principal purposes of the addendum to the Coal Supply Agreement was to clarify that "Nerco was bound to Deerfield for the full five years of the Korean contracts."
The "Coal Supply Agreement" also provides:
Notwithstanding that both Korean contracts specified 7 percent moisture as the beginning point for penalties, Nerco allegedly assured Deerfield that the beginning point agreed upon by the Koreans and...
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