Orica Australia Pty Ltd v. Aston Evaporative Services, LLC
Filing
92
ORDER DENYING 66 Motion for Summary Judgment by Judge William J. Martinez on 07/28/2015.(cthom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 14-cv-0412-WJM-CBS
ORICA AUSTRALIA PTY LTD, an Australian proprietary limited company,
Plaintiff,
v.
ASTON EVAPORATIVE SERVICES, LLC, a Colorado limited liability company,
Defendant.
ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
In this lawsuit, Plaintiff Orica Australia Pty. Ltd. (“Orica”) sues Defendant Aston
Evaporative Services, LLC (“Aston”) to recover the amount Orica paid to purchase
allegedly defective equipment from Aston. (ECF No. 1.) Currently before the Court is
Aston’s Motion for Summary Judgment. (ECF No. 66.) For the reasons explained
below, Aston’s motion is denied.
I. LEGAL STANDARD
Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if the
movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986). A fact is “material” if, under the
relevant substantive law, it is essential to proper disposition of the claim. Wright v.
Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir. 2001). An issue is “g enuine” if
the evidence is such that it might lead a reasonable trier of fact to return a verdict for
the nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).
In analyzing a motion for summary judgment, a court must view the evidence
and all reasonable inferences therefrom in the light most favorable to the nonmoving
party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In
addition, the Court must resolve factual ambiguities against the moving party, thus
favoring the right to a trial. See Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th
Cir. 1987).
II. FACTS
The following facts are undisputed unless otherwise noted.
A.
General Background1
Orica is an Australian company that services the mining industry. (ECF No. 66
at 2.)2 At some point in 2011 or early 2012, an opportunity arose for Orica to supply an
Australian coal mine known as the Oaky Creek mine with technology that speeds up the
process of evaporation, thus permitting Oaky Creek to rid itself of wastewater (or at
least the water portion of wastewater) by sending it into the air. (Id.) Orica then began
negotiating with Aston, a company based in Grand Junction, Colorado, that
manufactures such evaporation technology. (Id.) Specifically, Orica and Aston began
1
The narrative in this Part II.A does not derive from the parties’ statements of material
fact or summary judgment exhibits, but from general background information stated elsewhere
in their filings. Nonetheless, it does not appear that these matters are in dispute, or at the very
least, that any dispute is material to the outcome of this motion. The Court therefore includes
this information to provide context for the subsequent narrative.
2
All ECF page citations are to the page number in the ECF header, which does not
always match the page number inserted by the filer’s word processing program.
2
negotiating terms by which Orica would acquire an Aston Tempest 1600 SS316
evaporation unit (“Tempest 1600”), which Orica would then supply to Oaky Creek on a
trial basis. (ECF No. 1 ¶¶ 8–9.)
B.
The Contract for Unit 1
On November 14, 2011, Aston e-mailed Orica a “terms sheet,” proposing terms
by which Aston would supply one Tempest 1600 to Orica. (ECF No. 66-2.) Apparently
Orica proposed a different deal, because on March 13, 2012, Aston em ployee Kevin
King e-mailed Orica employee Brendan Murray with a “counter” to some previous Orica
offer that is not in the record. (ECF No. 71-6 at 3.) King’s March 13 counteroffer
addressed price, shipping, payment, certain warranty issues, and other specific terms
relating to the sale of a Tempest 1600. (Id.)
On March 19, 2012, Murray responded by countering the counteroffer. (Id. at
2–3.) The next day, March 20, King replied, “Will agree to terms if unit ordered by
March 30th, 2012!” (Id. at 2.) Orica did not order a Tempest 1600 by March 30, 2012.
(ECF No. 74 at 3, ¶ 9.)
Discussions apparently continued, however. On May 10, 2012, Murray e-mailed
King to inform King that Orica “will be ordering a [Tempest 1600] unit. Can you please
go ahead and get this underway and try to fast-track this delivery ASAP[?] PO [i.e.,
purchase order] from Orica will be sent to you tomorrow.” (ECF No. 71-7 at 4–5 (line
breaks omitted).) That same day, King replied, “Got it and will press as fast as
possible!” (Id. at 4.)
3
The next day (Friday, May 11, 2012), Murray sent another e-mail stating that he
was “having some trouble with the PO” and he would send it “on Monday morning,” but
“[y]ou have our commitment to purchase the unit as per our agreement below.” (Id. at
3.) The “agreement below” was his March 19 counter-counteroffer. (Id. at 3–4.)
On Tuesday, May 15, 2012, King responded to Murray as follows:
We have the order in place on the [Tempest 1600] and it
looks like they can expedite the delivery [in] just under 2
weeks. We have a skid ready but I have our programmer
Tony checking on meeting AUS specs for all panel wiring.
Let me know when you can push through the PO on your
end?
(Id. at 3.) Later that day, Murray responded that “an IT issue” was holding up the PO
but another Orica employee (presumably senior to Murray) “can send[,] through email[,]
confirmation of our commitment to proceed if this would assist. Please advise how you
would prefer to proceed. The most important thing is we do not want to incur any
delays as we need to meet our delivery dates.” (Id. at 2.) The record does not reveal
whether King replied to this e-mail. On May 21, 2012, however, Murray e-mailed King
“the official PO” (id.), which the Court will refer to as the “Unit 1 Purchase Order.”
The Unit 1 Purchase Order is, technically speaking, an eight-page document.
(Id. at 7–14.) Functionally, however, it is more like a four-page document, with
customized terms on one face of each sheet and preprinted terms on the back face of
each sheet. As relevant here, the most important customized term was that Aston’s
Tempest 1600 unit would be designed to meet an Australian mining safety standard
known as “MDG 41.” (Id. at 13.)
As for the preprinted terms, the Purchase Order refers to them as the “Orica
4
Conditions of Purchase overleaf,” and states that those Conditions “apply unless stated
elsewhere on this order.” (Id. at 7.) The Conditions of Purchase impose various
warranties and arguably shift most of the risk relating to the product to the “Seller” (in
this case, Aston). (Id. at 8.) At a later deposition, King (Aston’s Rule 30(b)(6)
designee) stated that he could not recall if Aston communicated any disagreement with
the Conditions of Purchase to Orica (ECF No. 71-3 at 10), and there is no evidence in
the record of any such communication.
On July 4, 2012, Aston invoiced Orica for the amount due under the Unit 1
Purchase Order. (ECF No. 71-10 at 2–3.)
C.
The Contract for Units 2–4
On July 18, 2012, Murray e-mailed King another purchase order, this one for
three additional Tempest 1600s (“Units 2–4 Purchase Order”). (ECF No. 71-11 at
2–10.) For present purposes, the Units 2–4 Purchase Order is m aterially
indistinguishable from the Unit 1 Purchase Order, including the standardized Conditions
of Purchase and the customized requirement for MDG 41 compliance. (Id. at 3–4.)
According to King, the Units 2–4 Purchase Order resulted from additional conversations
with Orica employees:
. . . that conversation, I think, was verbal, and when I was in
Australia, you know, we need to get these next three
coming. This first one has gone real well. We’re ready for
the next three. Let’s get them coming. Let’s get them
expedited. And so there was some verbal there, and then
the POs came through . . . .
(ECF No. 71-3 at 5.)
On July 20, 2012, Aston invoiced Orica for the amounts due under the Units 2–4
5
Purchase Order. (ECF No. 71-10 at 4–6.)
D.
Inspections & Deployment
Before deployment at the Oaky Creek mine, Orica inspected Units 1–4. (ECF
No. 66 at 3, ¶¶ 4–5.) Orica contends that it f ound numerous problems with all four units
(including non-compliance with MDG 41), but it deployed all four units anyway subject
to an agreement with Aston to continue attempting to work out the problems. (ECF
No. 71 at 4, ¶ 6.) Unit 1 began operating at Oaky Creek in August or September 2012;
the remaining units began operating in December 2012. (ECF No. 66 at 4, ¶¶ 8–9.)
Oaky Creek rented all four units from Orica. (Id. at 3–4, ¶¶ 7, 13.) Orica claims
that Oaky Creek intended to buy the units from Orica assuming they operated
satisfactorily. (ECF No. 86-1 at 3, ¶ 26.)
E.
Operation & Eventual Rejection
Through May 2013, Unit 1 operated for 2,228 hours; Unit 2 operated for 777
hours; Unit 3 operated for 1,608 hours; and Unit 4 operated for 488 hours. (ECF No. 66
at 4, ¶ 10.) On June 3, 2013, Orica sent a letter to Aston dem anding a refund of the
purchase price and that Aston pay to send all four units back to the United States.
(ECF No. 66-11 at 3–4.) The letter claimed that all units had significant design defects,
and that Aston had not been helpf ul in resolving those defects. (Id.) As the existence
of this lawsuit demonstrates, Aston refused Orica’s demand. Aston denies Orica’s
claim that its units were defective and instead alleges that any problems were caused
by Oaky Creek’s failure to properly maintain the units. (ECF No. 66 at 4, ¶ 14.)
6
III. ANALYSIS
A.
UCC vs. CISG
The parties agree that the contract in dispute was a contract for the sale of
goods. (ECF No. 71 at 5, ¶ 1.) Normally, Article 2 of the UCC (Colo. Rev. Stat. §§
4-2-101 to -725) would govern such a transaction. But given the international character
of the transaction, another body of law might govern instead: the United Nations
Convention on Contracts for the International Sale of Good (“CISG”).3
The CISG “applies to contracts of sale of goods between parties whose places of
business are in different States * * * when the States are Contracting States.” CISG,
art. (1)(a). Here, Aston’s place of business is in the United States and Orica’s place of
business is in Australia. (ECF No. 71 at 5, ¶¶ 2–3.) Both Australia and the United
States are CISG signatories. See http://www.uncitral.org/uncitral/en/uncitral_texts/
sale_goods/1980CISG_status.html (last visited July 22, 2015). Thus, by its terms, the
CISG appears to apply.
Although the CISG allows parties to opt out of its provisions, see CISG, art. 6, no
party has presented this Court with any evidence or argument that they intended to opt
out.4 Accordingly, the Court holds that the CISG, not the UCC, applies to this
3
The CISG’s complete text may be found at http://www.uncitral.org/pdf/english/texts/
sales/cisg/V1056997-CISG-e-book.pdf.
4
The Conditions of Purchase, which Orica believes to be a part of the parties’ contract,
contain a choice-of-law provision that could require application of Australian law. (ECF No.
71-7 at 8, § 20.) However, Orica argues for application of the CISG, not Australian law. (ECF
No. 71 at 11–12.) In any event, a number of American courts have held that simply selecting a
particular forum’s laws is not enough to opt out of the CISG when the CISG is itself part of the
laws of that forum. See, e.g., Travelers Prop. Cas. Co. of Am. v. Saint-Gobain Technical
Fabrics Canada Ltd., 474 F. Supp. 2d 1075, 1081–82 (D. Minn. 2007); Asante Techs., Inc. v.
PMC-Sierra, Inc., 164 F. Supp. 2d 1142, 1149–50 (N.D. Cal. 2001).
7
transaction.
B.
When Was the Contract Formed for Unit 1?
Aston asks this Court to hold as a matter of law that its contract with Orica for
Unit 1 does not include the terms of the Unit 1 Purchase Order. (ECF No. 66 at 6–9.)
This raises the question of precisely when the contract for Unit 1 formed.
The record shows that, in early 2012, there was:
•
some sort of offer by Orica,
•
a March 13 counteroffer by Aston,
•
a March 19 counter-counteroffer by Orica, and
•
a March 20 communication from Aston that is effectively a
counter-counter-counteroffer, accepting Orica’s March 19 terms but
conditioning the deal on Orica placing an order by March 30, 2012.
(See Part II.B, supra.) Orica did not place such an order by March 30, 2012, so Aston’s
March 20 offer expired by its own terms. Cf. CISG, art. 18(2) (“An acceptance is not
effective if the indication of assent does not reach the offeror within the time he has
fixed . . . .”).
Then, about six weeks later (May 10), Orica told Aston that it would be ordering a
Tempest 1600, that a purchase order was on the way, and that it wanted Aston to
“fast-track [the] delivery.” (ECF No. 71-7 at 4–5.) King replied, “Got it and will press as
fast as possible!” (Id. at 4.) No party argues that this exchange created a contract.
On May 11, Orica e-mailed Aston to announce its “commitment to purchase the
unit as per our agreement below,” referring to Orica’s March 19 terms. (See ECF No.
8
71-6 at 2–3; ECF No. 71-7 at 3–4.) Orica said the purchase order w ould be
forthcoming after the weekend. (ECF No. 71-7 at 3.)
Aston asks this Court to hold as a matter of law that Aston’s contract with Orica
for Unit 1 formed as of this May 11 e-mail, comprising the terms of the May 11 e-mail
along with the “terms sheet” that opened the deal negotiations back in November 2011.
(ECF No. 66 at 6–7.) Invoking language from UCC § 2-207 (Colo. Rev. Stat.
§ 4-2-207), Aston characterizes this as “an agreement [that] has been reached . . . by
informal correspondence,” and characterizes the Unit 1 Purchase Order (which came
ten days later) as a “formal memorand[um] embodying the terms so far as agreed upon
and adding terms not discussed,” particularly the Conditions of Purchase on the back of
each page. See Colo. Rev. Stat. § 4-2-207, official cmt. 1. Under § 2-207, such
additional terms “become part of the contract unless * * * [t]hey materially alter it.” Id.
§ 4-2-207(2)(b). Aston, of course, contends that the Conditions of Purchase materially
altered the deal, and therefore argues that the Conditions of Purchase did not become
part of the contract. (ECF No. 66 at 7–9.)
Orica responds (correctly) that the CISG, not the UCC, governs the transaction.
(ECF No. 71 at 11–12.) Orica then invokes article 19 of the CISG, which differs
markedly from UCC § 2-207. Whereas § 2-207 might dictate that the parties indeed
formed a contract but without the Conditions of Purchase (assuming they are material
alterations), article 19 of the CISG treats the presence of materially different terms as a
rejection and counteroffer: “A reply to an offer which purports to be an acceptance but
contains additions, limitations or other modifications is a rejection of the offer and
constitutes a counter-offer.” CISG, art. 19(1). Under this scenario, says Orica, Aston
9
accepted the counteroffer (i.e., the Unit 1 Purchase Order) by performing (i.e.,
subsequently invoicing, accepting payment, and supplying Unit 1). (ECF No. 71 at
12–13.) See also CISG, art. 18(3) (treating performance as a means of manifesting
acceptance). Although Orica asserts this argument, it has not cross-moved for
summary judgment and therefore has not asked this Court to endorse the argument as
a matter of law. It asserts it only to defeat Aston’s argument for judgment as a matter of
law.
The Court agrees that it cannot hold in Aston’s favor as a matter of law. Aston’s
position hinges on characterizing Orica’s May 11 e-mail and preceding correspondence
as “an agreement [that] has been reached . . . by informal correspondence.” Colo. Rev.
Stat. § 4-2-207, official cmt. 1. But the May 11 e-mail was a resurrection of specific
terms first urged by Orica in its March 19 e-mail, on which the parties had agreed
subject to placement of an order by March 30. Because Orica placed no such order, its
re-urging of the March 19 terms on May 11 created a new offer.
To the extent Aston intends to characterize the May 11 e-mail as Orica’s
acceptance of Aston’s March 20 offer (see ECF No. 74 at 3, ¶ 9), such acceptance
would obviously be long after the March 30 deadline. The CISG permits an offeror
such as Aston to ratify a late acceptance only “if without delay the offeror orally so
informs the offeree [Orica] or dispatches a notice to that effect.” CISG, art. 21(1).
Aston does not cite this standard and does not point the Court to any evidence that
might otherwise fulfill it.
The record does contain Aston’s May 15 e-mail response: “We have the order in
place on the [Tempest 1600] and it looks like they can expedite the delivery [in] just
10
under 2 weeks. . . . Let me know when you can push through the PO on your end?”
(ECF No. 71-7 at 3.) But Aston does not argue that this e-mail fulfills the CISG
requirement for ratifying a late acceptance. Moreover, commentary on the relevant
requirement suggests that the offeror’s ratification must make clear that the offeror is
accepting an offer that had already expired. See John O. Honnold, Uniform Law for
International Sales under the 1980 United Nations Convention § 174 (3rd ed. 1999)
(discussing an example in which the offeror stated, “Your June 29 letter was mailed too
late to reach me by the June 30 limit set in my offer but I am treating it as an
acceptance.”), reprinted at http://www.cisg.law.pace.edu/cisg/biblio/ho21.html (last
visited July 23, 2015). Thus, the Court cannot hold as a matter of law that Orica’s
May 11 e-mail constituted an acceptance of any offer from Aston.
Nonetheless, Aston’s May 15 e-mail might qualify as an acceptance of the offer
made in Orica’s May 11 e-mail, thus creating a contract as of May 15. Cf. CISG, art. 23
(“A contract is concluded at the moment when an acceptance of an offer becomes
effective in accordance with the provisions of this Convention.”). And if a contract
existed as of May 15, then the Unit 1 Purchase Order (transmitted over a week later)
would not be “[a] reply to an offer which purports to be an acceptance but contains
additions, limitations or other modifications.” CISG, art. 19(1). The Unit 1 Purchase
Order would instead be a proposal to amend the already-formed contract, taking it
outside of article 19. See, e.g., VLM Food Trading Int’l, Inc. v. Ill. Trading Co., 748 F.3d
780, 786 (7th Cir. 2014); Chateau des Charmes Wines Ltd. v. Sabate USA Inc., 328
F.3d 528, 531 (9th Cir. 2003); Solae, LLC v. Hershey Canada, Inc., 557 F. Supp. 2d
11
452, 457 (D. Del. 2008). For several reasons, however, the Court cannot at this time
hold as a matter of law that Aston’s May 15 e-mail was in fact an acceptance sufficient
to form a contract.
First, neither Aston nor Orica addresses the potential ef fect of the May 15 e-mail.
Thus, the Court cannot be certain the parties have placed into the record all the
evidence they feel is necessary to understand the May 15 e-mail in context.
Second, the e-mail is ambiguous in a number of ways. Consider the first
sentence: “We have the order in place on the [Tempest 1600] and it looks like they can
expedite the delivery [in] just under 2 weeks.” Does “we have the order in place” mean
that Aston had logged the order in its own system specifically in response to Orica’s
May 11 offer? This would suggest acceptance. Or, does it mean that Aston already
had an order in place (e.g., in anticipation of an expected offer)? This might suggest
acceptance, or simply Aston’s belief since before May 11 that a deal with Orica was
imminent.
The May 15 e-mail’s last sentence also creates an ambiguity: “Let me know
when you can push through the PO on your end?” This sentence prompted the
following exchange at King’s deposition:
Q. So you’re asking Brendan Murray for a purchase order?
A. Correct.
Q. Why?
A. Well, that kind of consummates the deal.
(ECF No. 71-3 at 7.) Orica also points to Aston’s interrogatory responses, verified by
King, in which Aston stated that the agreement to sell Unit 1 was “reached on May 21,
12
2012,” the same day that Orica transmitted the Unit 1 Purchase Order. (ECF No. 71-1
at 3.) Orica interprets all of this to mean that Aston itself considered the Unit 1
Purchase Order to be the “acceptance.” (ECF No. 71 at 12–13.)
A reasonable jury could adopt Orica’s interpretation of the evidence, but
reasonable jury could also conclude that Aston’s May 15 e-mail closed the deal. This is
a question of subjective intent and the parties’ interpretations of their own and the other
side’s communications, which the CISG places in the realm of fact. See CISG, art. 8(3)
(“In determining the intent of a party or the understanding a reasonable person would
have had, due consideration is to be given to all relevant circumstances of the case
including the negotiations, any practices which the parties have established between
themselves, usages and any subsequent conduct of the parties.”); id., art. 11 (“A
contract of sale . . . may be proved by any means, including witnesses.”); see also
MCC-Marble Ceramic Ctr., Inc. v. Ceramica Nuova D’Agostino, S.P.A., 144 F.3d 1384,
1387 (11th Cir. 1998) (“The plain language of the [CISG], therefore, requires an inquiry
into a party’s subjective intent as long as the other party to the contract was aware of
that intent.”). Accordingly, a genuine dispute of material fact exists over the point at
which the parties believed the contract was formed, and summary judgment for Aston
must be denied on this point.
C.
When Was the Contract Formed for Units 2–4?
Although Aston admits that Orica’s May 11 e-mail only addressed Unit 1 (ECF
No. 74 at 3, ¶ 16), Aston applies its foregoing argument indiscriminately to Units 1–4.
(See ECF No. 66 at 6.) Considering that Units 2–4 came by way of later discussions
13
and a later purchase order (see Part II.C, supra), this position potentially fails as a
matter of law. But Orica has not moved for such relief and this Court may not grant it
without notice and an opportunity to respond. See Fed. R. Civ. P. 56(f). At the very
least, a genuine dispute of material fact prevents summary judgment in Aston’s favor
regarding Units 2–4.
D.
Did Orica Timely Revoke Acceptance?
As noted above, Orica demanded a refund and return in June 2013. (See Part
II.E, supra.) Aston claims that this demand was ineffective for at least three reasons:
(1) Orica knew before accepting the units that they did not comply with MDG 41, and so
waived any objection on that account; (2) Orica’s revocation was unreasonably tardy;
and (3) Orica forfeited its opportunity to revoke because the units’ condition had
materially deteriorated in the meantime. (ECF No. 66 at 10–14.) The Court will
address each contention in turn.
1.
MDG 41
The CISG states that a seller is not liable for a product’s failure to conform to
expectations “if, at the time of the conclusion of the contract, the buyer knew or could
not have been unaware of such lack of conformity.” CISG, art. 35(3). This provision
does not conform precisely to the situation presented here because both parties ag ree
that “the conclusion of the contract” was sometime in May 2012 and the inspection
(which supposedly revealed lack of MDG 41 compliance) took place later.
Nonetheless, the Court is comfortable presuming that the same principle applies. Thus,
Aston may validly claim that Orica waived any objection based on MDG 41 compliance
14
if Orica discovered lack of compliance before accepting the units but accepted them
anyway.
Nonetheless, a material dispute of fact prevents summary judgment. Orica
claims, based on competent evidence, that it and Aston agreed to continue to work on
the units, hopefully to resolve their deficiencies, after deployment. (ECF No. 71 at 4, ¶
6.) In addition, Orica claims that “[m]any of the ways in which the evaporation units
were non-compliant with MDG 41 were not discovered until after [the inspection].” (Id.
at 8, ¶ 21.) Assuming a jury believes Orica’s story, it could conclude that Orica did not
waive its MDG 41 compliance objection. See, e.g., CISG, art. 36(1) (“The seller is liable
in accordance with the contract and this Convention for any lack of conformity which
exists at the time when the risk passes to the buyer, even though the lack of conformity
becomes apparent only after that time.”). Consequently, summary judgment is not
appropriate on this issue.
2.
Timeliness of Orica’s Revocation
According to the CISG, “The buyer loses the right to rely on a lack of conformity
of the goods if he does not give notice to the seller specifying the nature of the lack of
conformity within a reasonable time after he has discovered it or ought to have
discovered it.” CISG, art. 39(1). Aston has presented evidence from which a jury could
conclude that Orica failed this standard. Orica received the Tempest 1600 units
between August and December 2012, and, through May 2013, operated them for
between approximately 500 to 2,200 hours. Orica did not demand a refund until June
2013. (See Parts II.D–E, supra.)
But, again, Orica has presented countervailing evidence, i.e., that it and Aston
15
attempted for several months to solve the various problems cooperatively. (ECF No. 71
at 4, ¶ 6.) In these circumstances, it is for a jury to decide whether Orica revoked its
acceptance within a reasonable time. See, e.g., CMI Corp. v. Leemar Steel Co., 733
F.2d 1410, 1415 (10th Cir. 1984) (“The question of whether a buyer’s revocation of an
acceptance is timely is, as with rejections, a question of fact.”).5
3.
Deterioration
Under the CISG, “[t]he buyer loses the right to declare the contract avoided . . . if
it is impossible for him to make restitution of the goods substantially in the condition in
which he received them,” unless “the impossibility of making restitution of the goods or
of making restitution of the goods substantially in the condition in which the buyer
received them is not due to his act or omission.” CISG, art. 82(1), (2)(a). This presents
another material dispute of fact. Aston claims that the Tempest 1600 units deteriorated
due to Oaky Creek’s lack of maintenance. (ECF No. 66 at 13.) Orica claims that any
damage to the units came through their own defective design, not through any lack of
maintenance by Oaky Creek. (ECF No. 71 at 20.) A jury must decide which position to
believe. Summary judgment is therefore inappropriate.
E.
May Orica Seek Lost Profits Damages?
Finally, Aston asks for summary judgment on Orica’s claim for lost profits
damages of roughly $500,000, allegedly attributable to Orica’s inability to sell the units
5
The CMI case interprets the UCC, not the CISG. However, “[c]aselaw interpreting
analogous provisions of Article 2 of the [UCC], may also inform a court where the language of
the relevant CISG provisions tracks that of the UCC.” Delchi Carrier SpA v. Rotorex Corp.,
71 F.3d 1024, 1028 (2d Cir. 1995). CISG, art. 39(1)’s timeliness requirement is analogous to
UCC § 2-608. See Colo. Rev. Stat. § 4-2-608(2) (“Revocation of acceptance must occur within
a reasonable time after the buyer discovers or should have discovered the ground for it . . . .”).
16
to Oaky Creek. (ECF No. 66 at 14.) Aston largely relies on cases applying Colorado
common law, which require “(1) proof of the fact that damages will accrue in the future,
and (2) sufficient admissible evidence which would enable the trier of fact to compute a
fair approximation of the loss.” Pomeranz v. McDonald’s Corp., 843 P.2d 1378, 1382
(Colo. 1993). Aston contends that it is “complete speculation and conjecture on Orica’s
part” whether it would have sold any of the units to Oaky Creek, and Orica’s claim for
future damages fails as a matter of law. (ECF No. 66 at 15.)
Here, the CISG, not Colorado common law, will govern damages. Whether that
is a distinction with a difference is unclear. The CISG permits damages “equal to the
loss, including loss of profit, suffered by the other party as a consequence of the
breach.” CISG, art. 74. Courts applying this have often imported lost-profits standards
similar to Colorado’s. See, e.g., Delchi Carrier, 71 F.3d at 1029; Topp Paper Co., LLC
v. ETI Converting Equip., 2013 WL 5446341, at *7 (S.D. Fla. Sept. 28, 2013); TeeVee
Toons, Inc. v. Gerhard Schubert GmbH, 2006 WL 2463537, at *9 (S.D.N.Y. Aug. 23,
2006). Moreover, Orica does not explicitly argue for a different standard, but instead
focuses on showing that it has evidence to satisfy the Colorado standard. (ECF No. 71
at 21–24.) Accordingly, the Court will assume that the Colorado lost-profits
requirements apply equally well in the CISG context. Thus, Orica must have enough
evidence to go to a jury on the fact of lost profits and a reasonable method for
calculating such lost profits. Pomeranz, 843 P.2d at 1382.
Concerning the fact of lost profits, Orica has submitted testimony from an Oaky
Creek representative stating that Oaky Creek generally intended to buy the Tempest
1600 units leased from Orica, assuming those units performed well. (ECF No. 86-1 at
17
3, ¶ 26.) Thus, the possibility of future profits is not mere speculation.
As for a method of calculating lost profits, Orica has submitted testimony from
Murray that it had already agreed with Oaky Creek on a purchase price, subject to a
successful trial. (ECF No. 71 at 10, ¶ 30.) Assuming a jury believes that testimony, the
Court finds it would be adequate to calculate lost profits with sufficient certainty. Thus,
summary judgment for Aston on the lost-profits question is inappropriate.
IV. CONCLUSION
For the reasons set forth above, Aston’s Motion for Summary Judgment (ECF
No. 66) is DENIED.
Dated this 28th day of July, 2015.
BY THE COURT:
William J. Martínez
United States District Judge
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