GPL Treatment, Ltd. v. Louisiana-Pacific Corp.

• Decision Date: 18 June 1996
• Docket Number: LOUISIANA-PACIFIC
• Citation: 323 Or. 116,914 P.2d 682
• Parties: , 29 UCC Rep.Serv.2d 719 GPL TREATMENT, LTD., a corporation; Scott Cedar Products, a division of Green River Log Sales, Ltd., a corporation; and Blackhawk Forest Products, Ltd., a corporation, Respondents on Review, v.CORPORATION, a Delaware corporation, Petitioner on Review. CC 9209-06143; CA A81171; SC S42285.
• Court: Oregon Supreme Court

Page 682

914 P.2d 682

323 Or. 116, 29 UCC Rep.Serv.2d 719

GPL TREATMENT, LTD., a corporation; Scott Cedar Products, a

division of Green River Log Sales, Ltd., a

corporation; and Blackhawk Forest

Products, Ltd., a corporation, Respondents on Review, v. LOUISIANA-PACIFIC CORPORATION, a Delaware corporation,

Petitioner on Review.

CC 9209-06143; CA A81171; SC S42285.

Supreme Court of Oregon,

In Banc.

Argued and Submitted Nov. 3, 1995.

Decided April 11, 1996.

Reconsideration Denied June 18, 1996.

[323 Or. 117-A] On review from the Court of Appeals. ^*

John F. Neupert, of Miller, Nash, Wiener, Hager & Carlsen, Portland, argued the cause for petitioner on review. With him on the briefs was William H. Walters.

Jay W. Beattie, of Lindsay, Hart, Neil & Weigler, Portland, argued the cause and filed the briefs for respondents on review.

VAN HOOMISSEN, Justice.

This case involves the so-called "merchant's exception" to the statute of frauds in the Oregon Uniform Commercial Code (UCC). ORS 72.2010(2). ¹ Plaintiffs (GPL) ² sued defendant Louisiana-Pacific (L-P) seeking damages for breach of an alleged oral contract to buy 88 truckloads of cedar shakes. L-P denied the alleged contract and asserted the UCC statute of frauds, ORS 72.2010(1), as an affirmative defense. GPL relied on the merchant's exception. ORS 72.2010(2). The trial court denied L-P's motions in limine to exclude evidence of the "writing" that GPL sent to L-P and for a directed verdict concerning GPL's alleged noncompliance with ORS 72.2010(1). After a jury verdict for GPL, the trial court entered judgment for GPL. The Court of Appeals affirmed. GPL Treatment, Ltd. v. Louisiana-Pacific Corp., 133 Or.App. 633, 894 P.2d 470 (1995). For the reasons that follow, we also affirm.

On appeal from the denial of L-P's motion for a directed verdict based on GPL's alleged noncompliance with the UCC statute of frauds, the court reviews for errors of law, accepting all facts and inferences in the light most favorable to GPL. ³

The GPL companies manufacture and sell cedar shakes. L-P has bought shakes from all three GPL companies in the past. The parties are "merchants" within the meaning of ORS 72.2010(2). See ORS 72.1040(1) (defining "merchant"). ⁴ In the spring of 1992, Feaver, GPL's sales representative, met with Cunnally, a shake trader for L-P. In May 1992, Feaver and Cunnally reached an oral agreement for L-P to buy a large quantity of cedar shakes from GPL. Feaver filled out and signed six of GPL's four-part order confirmation forms. Each form stated the prices and quantities of product being sold to L-P. Feaver sent L-P the top two copies of each of the six four-part order confirmation forms.

Because of the nature of this case, it is necessary to describe GPL's order confirmation form in detail. It contains four pages, each of which bears the words "ORDER CONFIRMATION" in the upper right hand corner. Pages one and two of the form are sent to a customer who places an order with GPL. The text at the bottom of pages one and two is different. The relevant text at the bottom of page one reads:

                "CONDITIONS OF SALES:                             GPL LTD
                "All orders accepted subject to strikes
                  labor troubles, car shortages or other
                  contingencies beyond our power to
                  control.
                Any freight rate increases, sales, or
                  use taxes is for buyers account.
                

                "SIGN CONFIRMATION COPY AND RETURN        BY:  ____________________
                                                                    THANK YOU"
                    -
                ---------
                

Page two does not contain the "Conditions of Sales" wording or the "sign-and-return" clause found on page one. Instead, the relevant text at the bottom of page two reads:

                "ORDER ACCEPTED BY:  _________________          GPL LTD.
                                         FIRM NAME
                ______________________________________  BY:  ___________________
                "SIGNATURE & TITLE                DATE           THANK YOU"
                ----------
                

Thereafter, the price of shakes dropped and L-P's needs for shakes changed. Feaver and Cunnally continued to negotiate. In June or early July 1992, GPL's Clarke also negotiated with Cunnally about the same matters. After talking with Cunnally, Clarke wrote a new order, revising the prices and quantities of product being sold to L-P. Clarke then telephoned GPL's employee, Sherneck, and told him to send written confirmations of the new orders to L-P. Sherneck did so, using GPL's order confirmation forms, which he signed. Each form stated the prices and quantities of product being sold to L-P. L-P did not give written notice of objection within 10 days.

In July 1992, L-P accepted delivery of 13 truckloads of shakes from GPL. When L-P did not request delivery of the remainder of the order, GPL became concerned and contacted L-P, asserting that it had a contract to deliver 75 additional truckloads of shakes. L-P responded that it had agreed to purchase only the 13 truckloads that it had already received. The GPL companies then brought this action to recover their respective profit losses on the alleged agreement to sell L-P 88 truckloads of shakes. In addition to denying GPL's claim, L-P asserted as an affirmative defense that GPL's claims were barred by ORS 72.2010(1), the UCC Statute of Frauds.

Before trial, L-P moved in limine to prevent GPL from introducing its order confirmation forms into evidence, arguing that, as a matter of law, they did not satisfy the merchant's exception to the UCC Statute of Frauds, because, L-P asserted, GPL's forms required L-P to sign and return a copy indicating L-P's acceptance of GPL's offer. ⁵ Thus, L-P argued, by instructing L-P to sign and return the confirmation copy on the "order accepted by" line, GPL indicated its intention that the contract is to become final only after L-P's approval of the quoted terms. The trial court denied L-P's motion holding, as a matter of law, that GPL's order confirmation forms were sufficient confirmations of an oral agreement to satisfy ORS 72.2010(2). At the close of GPL's case, L-P moved for a directed verdict, again arguing that GPL's order confirmation forms did not satisfy the merchant's exception. The trial court also denied that motion. A jury later found that L-P had breached an oral contract to buy 88 truckloads of shakes from GPL. L-P appealed.

The Court of Appeals affirmed. GPL Treatment, Ltd., 133 Or.App. at 642, 894 P.2d 470. Judge Leeson dissented, concluding that GPL's order confirmation forms unambiguously required L-P to sign and return page two, acknowledging that the orders were "accepted." Therefore, according to the dissent, GPL's writings were merely offers to L-P to enter into a contract that did not satisfy the merchant's exception. Id. at 646, 894 P.2d 470. We allowed L-P's petition for review.

L-P contends that the Court of Appeals erred in affirming the trial court's ruling denying its motions in limine and for a directed verdict on the ground that the alleged oral contract for the sale of shakes fails to comply with the statute of frauds. L-P argues that, as a matter of law, GPL's order confirmation forms do not satisfy the merchant's exception, because they require a signed acceptance by L-P. L-P further argues that the Court of Appeals' decision is contrary to case law from other jurisdictions that have adopted the UCC. See ORS 71.1020(2)(c) (one of the purposes of the Oregon UCC is "[t]o make uniform the law among the various jurisdictions"). GPL responds that the rule advocated by L-P is inconsistent with the official commentary and existing case law interpreting the relevant UCC provisions, and that adoption of the rule advocated by L-P would offend settled contract law and contradict the stated policy of the UCC. The question thus presented is: When a merchant seller sends to a merchant buyer a writing labeled "ORDER CONFIRMATION" that contains a "sign and return" clause, does the writing constitute a "writing in confirmation of the contract and sufficient against the sender" under ORS 72.2010(2)?

Whether a writing in confirmation of an oral contract satisfies the statute of frauds is an issue of law for the court. See Can-Key Industries, Inc. v. Industrial Leasing Corp., 286 Or. 173, 183-84, 593 P.2d 1125 (1979) (determination of whether UCC provision applies, given undisputed facts, was a question of law); Commercial Credit Corp. v. Marden, 155 Or. 29, 39-40, 62 P.2d 573 (1936) (same rule before adoption of UCC). In contrast, questions about whether a party received the writing, whether it was received within a reasonable time, whether the receiver had reason to know its contents, sent objections, or the like, are questions of fact. See Ronald A. Anderson, 2 Uniform Commercial Code, § 2-201:146 (3rd ed. 1982 and Supp. 1995).

The statute of frauds is generally considered to be an affirmative defense, which must be specially pleaded. The party raising the statute of frauds defense also has the burden of proving it. If the defense fails because of the merchant's exception, the proponent of the oral contract still has the burden of proving that in fact a contract was made before the proponent issued the written confirmations. See Willamette-Western Corp. v. Lowry, 279 Or. 525, 531-32, 568 P.2d 1339 (1977) (the proponent of the contract has the burden of persuading the trier of fact that in fact an oral contract was made before the written confirmation); Tripp v. Pay 'N Pak Stores, Inc., 268 Or. 1, 7, 518 P.2d 1298 (1974) (so stating under statute of frauds applicable to the sale of investment securities).

To avoid a statute of frauds defense under ORS 72.2010(1), there must be some writing sufficient to indicate that a contract for sale has been made between the parties. The writing must be signed by the party against whom enforcement is sought, state a quantity, and evidence a contract for the sale of goods. UCC § 2-201 official comment 1 (1993); see Roboserve, Ltd. v. Tom's Foods, Inc., 940 F.2d 1441, 1448 (11th Cir.1991) (so stating in applying Georgia stat...