Peace River Seed Co-Operative, Ltd. v. Proseeds Marketing, Inc.

322 P.3d 531 (2014)

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Nature of the Case

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Facts

Peace River (P) is a Canadian company that buys grass seed from and sells grass seed for grass seed producers. Proseeds (D) purchases grass seed from various sources to resell to end users. P and D agreed to multiple contracts for D to purchase the total production of grass seed from a certain number of acres for a fixed price over a period of two years. D was to provide shipping and delivery instructions during the contract period. D eventually refused to provide shipping instructions for delivery of the seeds in that the price of seeds had fallen dramatically. P canceled the contracts. Over the next three years, P was able to sell at least some of the seed to other buyers. Following an arbitrator's award in P's favor, P sought to enforce the award in court, and the trial court entered judgment for P. D appealed, and the Court of Appeals remanded for trial after concluding that the arbitration was not binding. The court held that D breached the contracts and that plaintiff had been entitled to cancel the contracts and seek damages. It held that P had an 'obligation to mitigate damages' and was 'not entitled to recover damages in an amount greater than actually incurred.' The court awarded P the lesser of two measures of damages: the difference between the unpaid contract price and the market price (2-708 (1)) or the difference between the contract price and the resale price (2-706). The evidence at trial showed that the contract price for contract 1874 was $0.72 per pound. P sought damages of $3,736.00 for that contract based on a market price of $0.64 per pound. The difference of $0.08 per pound for 46,700 pounds of seed gives you $3,736.00. D argues that P had resold at least some of that seed for $0.75 per pound, $0.03 per pound above the contract price and $0.11 per pound above P's market price calculation. Therefore P did not have any damages by reselling the seed for more than the contract price. D claims that if P recovers $0.08 per pound in market price damages, plus the $.03 premium on resale it would come out $0.11 more than the contract price. D noted that some of the seed had been resold for $0.60 per pound. The market price damage calculation would lead to a larger award, but that, with regard to other seed, the resale price damage calculation would lead to a larger award. D wants P to receive a smaller amount of damages using the resale price measure of damages and P more damages using the market price measure of damages. The trial court used the resale price measure in that P had not calculated damages as ordered by the court. P appealed in that the trial court erred did not award Ps its market price damages under 2-708 (1) or its attorney fees. The Court of Appeals reversed and remanded. It held that the UCC allows a seller to recover damages as calculated under either 2-706 (contract price less resale price) or 2-708(1) (contract price less market price). The court explained that, once the buyer breaches, the buyer loses any right to control the goods or to 'insist upon a different measure of damages.' The court concluded that the intent of the UCC is to allow an aggrieved seller to recover market price damages, even if the seller has resold the goods. The court remanded the case. D sought review and now urges the court to reverse the Court of Appeals and affirm the trial court on both issues.