Indiana Glass Co. v. Indiana Michigan Power Co.
| Decision Date | 11 March 1998 |
| Docket Number | No. 27A02-9707-CV-479,27A02-9707-CV-479 |
| Parties | 37 UCC Rep.Serv.2d 332 INDIANA GLASS COMPANY, Appellant-Plaintiff, v. INDIANA MICHIGAN POWER COMPANY, Appellee-Defendant. |
| Court | Indiana Appellate Court |
Indiana Glass Company ("Indiana Glass") appeals the trial court's grant of summary judgment in favor of Indiana Michigan Power Company ("I & M") on Indiana Glass's claim for attorney's fees as incidental or consequential damages under the Indiana Uniform Commercial Code (the "UCC"). We affirm.
Whether a buyer may recover attorney's fees as incidental or consequential damages under the UCC for breach of the implied warranties of merchantability and fitness for a particular purpose.
Indiana Glass is an Indiana corporation that manufactures glassware at its plant located in Dunkirk. I & M contracted to supply electricity to Indiana Glass pursuant to a written agreement. On several occasions between January 25, 1989, and September 25, 1990, I & M allegedly supplied electricity to Indiana Glass's Dunkirk facility at a diminished or an increased voltage which caused damage to Indiana Glass's manufacturing processes. Accordingly, on January 23, 1991, Indiana Glass filed its complaint against I & M and alleged that I & M was negligent, or in the alternative, that I & M breached the UCC's implied warranties of merchantability and fitness for a particular purpose when it sold and delivered "defective" electricity. Indiana Glass sought damages for lost machine hours, extraordinary maintenance costs, the cost of repairing machinery which was damaged due to voltage fluctuations, and for "all other just and proper relief."
Following a motion for partial summary judgment filed by Indiana Glass, on November 18, 1993, the trial court entered partial summary judgment in favor of Indiana Glass and concluded, as a matter of law, that electricity is a "good" under the UCC and that I & M had not disclaimed the UCC implied warranties of merchantability and fitness for a particular purpose in the parties' agreement. Thus, the trial court determined that Indiana Glass could pursue its UCC claims against I & M.
The parties thereafter entered into a confidential settlement agreement resolving all issues between the parties except Indiana Glass's claim for attorney's fees as incidental or consequential damages under the UCC. The parties filed cross-motions for summary judgment asking for a determination, as a matter of law, on the issue of whether Indiana Glass would be entitled to recover attorney's fees as incidental or consequential damages under the UCC in the event Indiana Glass could establish I & M's breach of the implied warranties. Following a hearing, the trial court granted summary judgment in favor of I & M and concluded that Indiana Glass could not recover attorney's fees as incidental or consequential damages under the UCC. Indiana Glass appeals that determination of law.
The purpose of summary judgment is to terminate litigation about which there can be no factual dispute and which may be determined as a matter of law. Ind.Trial Rule 56(C); Kottlowski v. Bridgestone/Firestone, Inc., 670 N.E.2d 78, 82 (Ind.Ct.App.1996), trans. denied. Where, as here, relevant facts are not in dispute, construction of a statute presents a pure question of law for which summary judgment is appropriate. Indiana Patient's Compensation Fund v. Anderson, 661 N.E.2d 907, 908 (Ind.Ct.App.1996), trans. denied. On appeal, we must determine whether the law has been correctly applied by the trial court. City of Elkhart v. Agenda: Open Government, 683 N.E.2d 622, 625 (Ind.Ct.App.1997), trans. denied. The party appealing the grant of summary judgment has the burden of persuading the court on appeal that the trial court's ruling was improper. Jordan v. Deery, 609 N.E.2d 1104, 1107 (Ind.1993).
In this appeal, we are asked to resolve a pure question of law. Indiana Glass contends that the trial court erred when it concluded, as a matter of law, that a buyer may not recover attorney's fees as incidental or consequential damages under Indiana's UCC. The parties agree that the issue presented is one of first impression in Indiana.
We begin with our well-settled rule that each party to litigation is responsible for his or her own attorney's fees absent statutory authority, agreement, or rule to the contrary. Crowl v. Berryhill, 678 N.E.2d 828, 831 (Ind.Ct.App.1997). The contract between I & M and Indiana Glass makes no provision for the recovery of attorney's fees in the event of breach. 1 Accordingly, we address Indiana Glass's argument that Indiana Code § 26-1-2-715 provides statutory authority for its proposition that a buyer is entitled to recover attorney's fees in the event of the seller's breach of the implied warranties. That section provides:
(1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, and commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
(2) Consequential damages resulting from the seller's breach include
(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty.
IND.CODE § 26-1-2-715. Although no Indiana court has had occasion to address this statutory argument under Indiana law, we have encountered this argument under Kentucky law. In Landmark Motors v. Chrysler Credit Corp., 662 N.E.2d 971, 976-77 (Ind.Ct.App.1996), this Court considered whether attorney's fees were recoverable as incidental or consequential damages pursuant to Kentucky Revised Statutes § 355.2-715, a provision identical to Indiana Code § 26-1-2-715. We held that Kentucky law did not provide for the recovery of attorney's fees as incidental or consequential damages. Specifically, we relied on the Kentucky Court of Appeals decision in Nick's Auto Sales, Inc. v. Radcliff Auto Sales, Inc., 591 S.W.2d 709, 711 (Ky.Ct.App.1979).
In Nick's Auto Sales, the court addressed the question of whether attorney's fees should be included as incidental or consequential damages under the UCC and held that, in accordance with the overwhelming weight of authority from other states, attorney's fees are not recoverable under § 2-715. Nick's Auto Sales, 591 S.W.2d at 711 2. The Kentucky Court of Appeals went on to note that White and Summers, a leading authority on the UCC, has suggested that "[t]he recovery of legal fees is probably available in rare circumstances only." Id. (quoting JAMES J. WHITE AND ROBERT S. SUMMERS, HANDBOOK OF THE LAW UNDER THE UNIFORM COMMERCIAL CODE at 302 n. 57 (1972)).
Despite the overwhelming weight of authority from other jurisdictions indicating that attorney's fees are not recoverable under § 2-715, Indiana Glass urges us to review the specific language of that section and hold differently. First, Indiana Glass points to § 2-715(1) which provides that incidental damages include "any other reasonable expense incident to the delay or other breach." Indiana Glass argues that this language indicates that the legislature contemplated broad recovery on the part of the buyer in the event of the seller's breach, and that such recovery should include attorney's fees. Contrary to Indiana Glass's position, the commentary to subsection (1) indicates that incidental damages are the reasonable expenses incurred by the buyer in connection with the handling of rightfully rejected goods or goods whose acceptance may be justifiably revoked, or those expenses incurred in connection with effecting cover where goods are non-conforming or have not been delivered. IND.CODE § 26-1-2-715(1), cmt. 1. Attorney's fees were clearly not contemplated as recoverable under this subsection.
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