Kgm Harvesting Co. v. Fresh Network

36 Cal.App.4th 376 (1995)

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Nature of the Case

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Facts

KGM (P) had a contract to deliver lettuce each week to Fresh Network (D). The parties had been doing business since 1989. By May of 1991, the terms were for 14 loads of lettuce each week for 9 cents per pound. Fourteen loads would weigh 616,000 pounds. D sold all its lettuce to a lettuce broker, Castellini Company, who in turn sold to Club Chef who supplied the fast food business. Both Castellini and Chef dealt on a cost-plus basis for their purchases. In May 1991 the price of lettuce took a dramatic increase and P refused to sell at 9 cents per pound. D refused to pay for lettuce already received and then D went to the open market and purchased. Castellini covered all of D’s extra expenses except for $70,000. Castellini passed the costs onto Chef. Both D and P filed complaints under PACA. P sought $233,000 for invoices due and D sought its cover price less the 9 cents per pound or $700,000. P then filed suit and D cross-complained for his damages. A directed verdict was stipulated to P’s invoices. The jury determined that P breached the contract and it was not excused and that D was entitled to $655,960.22 the cost of cover. The jury also determined that the award would not result in a windfall to D as D was liable to Castellini. The court awarded D a final amount of $422,960.22 after subtracting the invoices due. P appealed.