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

• Decision Date: 18 July 1995
• Docket Number: No. 9209-06143,LOUISIANA-PACIFIC,9209-06143
• Citation: 894 P.2d 470,133 Or.App. 633
• Parties: , 26 UCC Rep.Serv.2d 316 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, v.CORPORATION, a Delaware Corporation, Appellant. ; CA A81171.
• Court: Oregon Court of Appeals

Page 470

894 P.2d 470

133 Or.App. 633, 26 UCC Rep.Serv.2d 316

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, v. LOUISIANA-PACIFIC CORPORATION, a Delaware Corporation, Appellant.

No. 9209-06143; CA A81171.

Court of Appeals of Oregon.

Argued and Submitted Oct. 28, 1994.

Decided April 12, 1995.

Review Allowed July 18, 1995.

John F. Neupert, Portland, argued the cause, for appellant. With him on the briefs were James N. Westwood and Miller, Nash, Wiener, Hager & Carlsen.

Jay W. Beattie, Portland, argued the cause, for respondents. With him on the brief was Lindsay, Hart, Neil & Weigler.

Before RIGGS, P.J., ^* and De MUNIZ and LEESON, JJ.

De MUNIZ, Judge.

Plaintiffs are three separate wood products corporations owned and operated by members of the Clarke family, in British Columbia, Canada. Plaintiffs sued Louisiana-Pacific Corporation (L-P) to recover lost profits on alleged agreements by plaintiffs to sell 88 truckloads of cedar shakes to L-P. The jury returned a verdict for plaintiffs for the maximum amount of each plaintiff's prayer, and L-P appeals.

Plaintiffs Scott Cedar Products (Scott Cedar) and Blackhawk Forest Products, Ltd. (Blackhawk), manufacture and sell raw shakes and shingles. Plaintiff GPL Treatment, Ltd. (GPL), buys raw shakes, treats them, and sells them as "Class C" shakes. Treated shakes are packaged into bundles, with five bundles constituting a "square," and are often sold by the truckload. The price for cedar shakes fluctuates widely with market demand.

In early spring of 1992, a series of hailstorms in the Midwest caused an increased demand for cedar shakes and a concomitant increase in the price of Class C shakes. Plaintiffs' principal sales person, Gerry Feaver, visited with Dan Cunnally, a shake and shingle trader for L-P. Feaver testified that telephone conversations between the two led to a May 6, 1992, deal for L-P to purchase 66 truckloads of Class C shakes. He testified that he filled out and signed six of plaintiffs' "Confirmation Form" documents and sent to L-P the two top copies of each of six four-part documents.

In contrast, Cunnally testified that he made no commitment for L-P to purchase any product in any of the telephone conversations with Feaver; that he had told Feaver that the price was too high; and that L-P would not allow him to buy the volume of shakes that Feaver was offering to sell. Cunnally testified that he told Feaver that L-P would buy some shakes later and that Feaver understood that arrangement. Cunnally testified that he did not receive plaintiffs' "Confirmation Form" documents.

According to plaintiffs' evidence, plaintiffs became concerned in June 1992, when Cunnally did not ask for delivery of the shakes. Feaver testified that Cunnally had told him that L-P's customer in Dallas, Texas, was not using shakes as fast as anticipated. In the meantime, the market price for shakes had dropped. Feaver testified that plaintiffs and Cunnally had additional conversations and negotiations about adjusting the volume and price of the order. Cunnally denied any such negotiations.

On about June 30 or July 1, Feaver was on personal business in eastern Canada, and Scott Clarke was in Portland visiting the office of Scott Cedar. Clarke testified that he took it upon himself to "finalize the deal with Mr. Cunnally." According to his testimony, he wrote a new order, revising prices and quantities for materials to be sold by plaintiffs to L-P. Clarke testified that the new order was firm, to accommodate L-P's needs. Clarke testified that Cunnally was "elated" with the new arrangement because it reduced the price.

Cunnally's testimony gives a different version of the conversation. He testified that Clarke called to try to sell more shakes to L-P, at specific quantities and lower prices than had been offered by Feaver, but that otherwise the arrangement was to be the same as it had been. Cunnally testified that he did not commit L-P to the purchase of shakes.

Clarke testified that, after working out the details of the revised order with Cunnally, he immediately telephoned Rick Sherneck in Canada and told Sherneck "to phone Dan Cunnally and confirm the order, then follow up with an order confirmation." Sherneck testified that Clarke instructed him, "We have a deal with L-P. I want you to write this down and then I want you to phone Dan Cunnally and confirm it with him."

Sherneck testified that he telephoned Cunnally, and confirmed the volumes and prices for the revised order in exact detail. He testified that he filled out order confirmation forms and put the top two copies of each form into the out basket for mailing to L-P. Cunnally testified that he remembers no such telephone call from Sherneck. He testified that he did not receive any writing from plaintiffs confirming any orders.

L-P took delivery of 13 truckloads of shakes in July 1992. According to plaintiffs, when L-P failed to give shipping instructions for an additional 75 truckloads of shakes, it became concerned. Feaver testified that he spoke to Cunnally every day about why the shakes were not being delivered. Cunnally testified that he had no such conversations with Feaver, and that he was, in fact, out of town on vacation during that period of time.

On about August 1, 1992, plaintiffs inquired of L-P about a shipment schedule for an additional 75 truckloads of shakes that had allegedly been ordered by L-P. Plaintiffs sent a letter to L-P asserting an agreement for the delivery of 75 additional truckloads of shakes over a three-week period. L-P responded that the parties had no such agreement.

Plaintiffs brought this action to recover their respective profit losses on an alleged agreement to sell a total of 88 truckloads of cedar shakes to L-P. L-P claimed that it was responsible for only 13 truckloads, which were shipped and paid for. Plaintiffs claimed that L-P breached its agreement to accept the remaining 75 truckloads. L-P asserted as an affirmative defense that plaintiffs' claims are barred by the Statute of Frauds. The jury returned a verdict for the maximum amount of each plaintiff's prayer: $500,921 for GPL; $134,372 for Scott Cedar; and $106,984 for Blackhawk.

L-P assigns error to the trial court's denial of its motion to withdraw from the jury GPL's claim for lost profits, on the ground that there was an insufficient basis for estimating the amount of net profit with reasonable certainty. To recover for lost profits, a plaintiff must establish, with reasonable certainty, both the existence and amount of lost profits. Pearson v. Schmitt, 259 Or. 439, 442, 487 P.2d 84 (1971). Only net lost profit may be recovered. As the Supreme Court said in Cont. Plants v. Measured Mkt., 274 Or. 621, 624, 547 P.2d 1368 (1976), and Husky Lbr. v. D.R. Johnson Lbr. Co., 282 Or. 481, 579 P.2d 235 (1978), "reasonable certainty" signifies nothing more than "probability" and is found to refer to the kind of evidence required rather than the quantum of proof. In reviewing the trial court's denial of the motion to withdraw the issue of lost profits from the jury, the question is whether there was evidence in the record to permit a finding of some net lost profits. Rennick v. Jackson & Coker, 95 Or.App. 72, 74, 767 P.2d 478 (1989); see also Frogge v. U.S. West Communications, Inc., 120 Or.App. 619, 620, 853 P.2d 1323, on recon. 124 Or.App. 669, 863 P.2d 1313 (1993), rev. den. 319 Or. 36, 876 P.2d 782 (1994).

GPL claims that its lost profit on unshipped orders was $500,921. It supports that claim with testimony of its chief financial officer and two exhibits tracking his calculations, which were based on GPL's costs and the alleged agreed sale price for the unshipped shakes. L-P argues that GPL's listed costs for raw materials are grossly understated, that they are, in fact, Scott Cedar's cost for the raw logs. Yet, L-P contends, GPL's own cost of sales records reveal that Scott Cedar charged GPL market price for the shakes it sold to GPL for the L-P deal. L-P argues that, by plaintiffs' own computations, Scott Cedar's market prices for raw shakes were $118 per square for heavy shakes and $95 per square for light shakes, not the listed $54.56 and $47.01 per square. In its closing argument to the jury, L-P argued that the market cost was the appropriate raw material cost to be used in calculating any alleged lost profit.

It was for the jury to decide the exact amount of the lost profits, and we conclude that there was ample evidence from which the jury could make that determination, either by use of the figures provided by GPL or based on the market price, as argued by L-P. The trial court did not err in denying L-P's motion to take the issue of GPL's lost profits from the jury.

Before trial, L-P made a request for production of documents from plaintiffs. Inadvertently, when plaintiffs' legal counsel filed his response to the request, he also sent to L-P's counsel a facsimile cover sheet with a hand written note by Sherneck to plaintiffs' legal counsel. The note stated:

"Attached find a page from [Feaver's] journal re the booking of the original orders and a page from my journal detailing [Scott Clarke's] call re the deal with L.P and J.E.H. Co."

L-P argues that, because Sherneck makes no mention in the note of his own alleged conversation with Cunnally, the inference is that he had no such conversation. L-P sought to introduce that note as evidence that Sherneck never called Cunnally. The trial court excluded the note as a privileged attorney-client communication protected from disclosure by OEC 503. ¹ L-P concedes that the note is a privileged communication but argues that, by producing the note, although inadvertently, in the normal course of discovery, plaintiffs waived any attorney-client privilege pursuant to OEC 511. ²

Whether a party has waived the...