Sunrise Foods International, Inc. v. Ryan Hinton Inc.

Filing 41

MEMORANDUM DECISION AND ORDER granting 30 Motion for Summary Judgment. Plaintiff may make application for entry of default judgment in accordance with the Court's memorandum decision and Fed. R. Civ. P. 55(b)(2). Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (klw) (8/8/2019) (Main Document 41 replaced on 8/8/2019) (jp). Modified on 8/8/2019 to replace image & regenerate (jp).

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

SUNRISE FOODS INTERNATIONAL
INC.,

Case No. 1:17-CV-00457-CWD
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
RYAN HINTON INC.,
Defendant.

INTRODUCTION
Currently pending before the Court is Plaintiff’s motion for summary judgment,
filed on April 3, 2019. (Dkt. 30.) Defendant did not respond to the motion and it is ripe
for the Court’s determination. Having reviewed the record, the Court finds the facts and
legal arguments are adequately presented in the brief and record. Accordingly, in the
interest of avoiding delay, and because the Court conclusively finds that the decisional
process would not be significantly aided by oral argument, the motion will be decided on
the record before this Court. Dist. Idaho L. Rule 7.1(d). For the reasons that follow, the
Court will grant Plaintiff’s motion for summary judgment. 1

1

All parties have consented to the jurisdiction of a United States Magistrate Judge to hear and
decide all matters in this case. (Dkt. 11.)
MEMORANDUM DECISION AND ORDER - 1

PROCEDURAL HISTORY
On November 3, 2017, Sunrise Foods International, Inc. (Sunrise) filed a
complaint against Ryan Hinton Inc. (Hinton). (Dkt. 1.) The complaint alleges Hinton
breached its contract with Sunrise by not accepting and paying for a specified amount of
certified organic corn. (Id.) Hinton filed an answer on November 28, 2017. (Dkt. 6.) On
April 13, 2019, Sunrise filed its motion for summary judgment. (Dkt. 30.)
Shortly thereafter, Hinton’s attorney of record requested to withdraw. (Dkt. 31.)
The Court granted the motion to withdraw, notified Hinton of its obligation to secure
counsel in accordance with D. Idaho L. Rule 83.4(d), and informed Hinton that its failure
to appear through newly-appointed counsel would be grounds for entry of default against
it without further notice. (Dkt. 32-35.) Hinton did not respond. The Clerk entered a notice
of default against Hinton on May 21, 2019. (Dkt. 38.) The Clerk entered default on May
21, 2019, per Fed. R. Civ. P. 55(a), and notice of the same was mailed to Hinton’s last
known mailing address. (Dkt. 36 - 40.) The Court now considers Sunrise’s motion for
summary judgment. (Dkt. 36.)
FACTS
1. Contract Formation
Sunrise is a Canadian corporation with its principal place of business in
Saskatoon, KS, Canada. Compl. ¶ 1. Hinton is an Idaho corporation owned by Mr. Ryan
Hinton. Bolinger Decl. Ex. A, Hinton Dep. 12. (Dkt. 30-2 at p. 6.) Hinton is primarily a
trucking company, delivering agricultural commodities and animal feed to area farmers.

MEMORANDUM DECISION AND ORDER - 2

Bolinger Decl. Ex. 9. (Dkt. 30-3 at p. 22.) Sunrise sells certified organic corn. Pl.[s] Mot.
Summ. J. (Dkt. 30-1 at p. 2.)
Hinton entered into a contract with Sunrise in November of 2015, specifying
Hinton agreed to purchase 6,000 short tons of certified organic corn from Sunrise. (Dkt.
30-3 at p. 22.) Under the terms of the contract, Hinton would send a truck to load 500
tons of corn from ports in the Pacific Northwest each month. 2 Id. Each short ton of corn
was worth $415.00. Id. The contract totaled $2,490,000.00. Id. The contract period began
the week of October 1, 2015, and ended on September 30, 2016. 3 Id. Because Hinton was
in turn selling the corn to organic dairy farmers to be used as cattle feed, the contract
specified the vomitoxin level in the corn purchased from Sunrise could not exceed two
parts per million. (“2 ppm”). 4 (Dkt. 30-2 at p. 8.)
2. Vomitoxin Found in the Corn
On December 15, 2015, Sunrise’s chief executive officer, Mr. Jacob Neufeld,
notified Ryan Hinton, the owner and President of Hinton, Inc., that some of the corn at
Sunrise’s Longview, Washington pickup site contained vomitoxin, but that the exact
levels were unknown. 5 (Dkt. 30-2 at p. 17.) Mr. Neufeld informed Mr. Hinton that

2

The pick-up location later changed from Portland, Oregon to Longview, Washington. (Dkt. 302 at p. 9.)
3
Due to Sunrise’s difficulties unloading the corn at the port, Hinton began picking up the corn
after October of 2015. Id.
4
Vomitoxin is a type of mold present in almost all grain products. Neufeld Decl. ¶ 5. (Dkt. 30-7
at p. 2.) The Food and Drug Administration (FDA) has issued advisory levels for vomitoxin that
set an acceptable threshold for dairy cattle feed at 10 ppm, with the total ratio of feed to not
exceed 5 ppm. Id. at p. 3. A vomitoxin level of 2 ppm is within the FDA advisory guidelines. Id.
5
The results of tests taken in January of 2015 showed the vomitoxin levels contained in the corn
were less than 0.02 ppm. Id. at p. 12.
MEMORANDUM DECISION AND ORDER - 3

additional testing had been ordered. (Id. at p. 18.) He gave Mr. Hinton the option to wait
for the test results, or, Sunrise could provide Hinton with different corn from the
“Midwest”. 6 (Id.) Mr. Hinton elected to delay the corn pickup. (Dkt. 30-3 at p. 23.)
On December 16, 2015, Mr. Neufeld offered to supply corn from another area of
the storage facility, and suggested the industry custom of blending corn with higher
vomitoxin levels with corn that had lower levels to “hide” the vomitoxin. (Id. at p. 33.)
Mr. Hinton responded that his customers were “scared to death of [vomitoxin].” Id.
On December 22, 2015, Mr. Hinton visited Sunrise’s Longview storage facility
and visually inspected the corn. (Dkt. 30-2 at p. 21.) He decided he did not want the corn
because of visible mold on the piles of corn. (Id. at p. 24.) The next day, Sunrise received
the test results for vomitoxin which showed only some areas at its Longview facility had
vomitoxin levels higher than 2 ppm. (Dkt. 30-7 at p. 4.) There were also areas of corn
where the vomitoxin levels met the FDA standard for blending, which would have made
it possible for Sunrise to supply Hinton with corn below the contract threshold of 2 ppm.
(Id. at p. 3.) Afterward, Hinton picked up four loads of corn from the Longview storage
facility on January 4, 11, 13, and 19, 2016. Id.
3. Breach of Contract
After January 19, 2016, Hinton stopped picking up corn from Sunrise. (Id.)
Around the same time, Hinton contracted to purchase 5,000 tons of organic corn from
High Caliber Transloading & Storage, Inc. (“High Caliber”). Zuidema Decl. ¶¶ 6-7. (Dkt.

6

The contract contained a provision where Sunrise could substitute corn from its Canadian
locations with corn from domestic sources if needed. (Dkt. 30-3 at p. 22.)
MEMORANDUM DECISION AND ORDER - 4

30-10 at p. 2.) Hinton paid High Caliber between $350 and $410 per short ton of organic
corn. Bolinger Decl. Ex. C-1. (Dkt. 30-4 at p. 2-25; 1-24.) The pickup period began in
December of 2015 and ended in October of 2016. (Id.) Sunrise attempted to contact
Hinton multiple times during this same period, leaving voicemails where Sunrise offered
different pickup locations, to adjust the price of the corn, to discuss Hinton’s
dissatisfaction, and eventually, to notify Hinton of its outstanding account balance owed
to Sunrise. 7 Harris Decl. ¶ 2. (Dkt. 30-8 at p. 5.)
On September 22, 2016, Mr. Hinton left Mr. Neufeld a voice message stating he
wanted to “discuss the corn deal.” (Dkt. 30-7 at p. 39.) On September 30, 2016, the
contract term ended. (Dkt. 30-3 at p. 22.) On October 4, 2016, Mr. Neufeld left Mr.
Hinton a voice message, saying “we still expect you to take the tonnage. Specifically, we
had very little communication from about I think January onward from you despite trying
to get ahold of you....” (Dkt. 30-7 at p. 41.) On November 29, 2016, Sunrise received a
letter from Hinton via its attorney, stating it did not take delivery of the remaining corn
under the contract because the corn did not meet the specified vomitoxin levels. (Dkt. 306 at p.2-3.)

7

In his declaration, Mr. Neufeld indicates he also emailed Mr. Hinton on September 1, 2016,
offering to provide corn from an alternate location, to deliver corn to a location of Hinton’s
choosing, and to discuss solutions if Mr. Hinton was dissatisfied. (Dkt. 30-7 at p. 37.) Yet, the
exhibit referred to is a May 2, 2016 email from Jesse Strom about the outstanding balance on the
contract. (Id.) Mr. Neufeld states that he warned Mr. Hinton that if he did not get a response
before the contract term ended on September 30, 2016, Sunrise would be left with no choice but
to sell the corn on the market and pursue legal remedies against Hinton. (Id.) This statement is
absent in Dkt. 30-7.
MEMORANDUM DECISION AND ORDER - 5

4. Damages
Hinton picked up and paid for 334 tons of corn from Sunrise’s storage facilities.
(Dkt. 30-8 at p. 2.) Sunrise sold the remaining 5,666 tons of corn specified under the
contract to other customers at a loss of $113,806.00, because the market price for organic
corn dropped after the contract with Hinton was consummated. 8 (Id. at p. 2-3.) Sunrise
states that it structures its prices to make a profit of $30.00 per short ton sold. (Id.) Based
on these facts, Sunrise moved for summary judgment and an award of damages in the
amount of $453,766.00.
Sunrise argues that, because its price structure ensures a profit of $30.00 per short
ton sold, it is entitled to receive additional damages for lost profits in the amount of
$169,980.00. 9 (Dkt. 30, at p. 10.) Sunrise also argues it qualifies as a “lost volume seller,”
because it would have made a profit of $169,980.00 on the corn sold to the other diaries
had it not sold the corn originally intended for Hinton to them. (Id.) In total, Sunrise
argues it suffered damages in the amount of $453,766.00 as a direct and proximate result
of Hinton’s breach of contract. (Id. at p. 16.) 10

8

Specifically: 1,200 short tons to Bar Ale, Inc. at $380 per ton; (Dkt. 30-8 at p. 15); 4,000 short
tons to Sunrise Organic Dairy at $399 per ton; and another 136 tons at $394 per ton a few
months later. (Id. at pp. 12, 14) The last 330 short tons were sold to Conway Feed, Inc at $400
per ton. (Id. at p. 13.)
9
5,666 x $30.00 = $169,980.00
10
$113,806.00 + $169,980.00 + $169,980.00 = $453,766.00
MEMORANDUM DECISION AND ORDER - 6

STANDARD OF REVIEW
1. Summary Judgment Standard
Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, and other
matters presented to the court show that there is no genuine issue of material fact and that
the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). A genuine issue of material fact will be absent if, upon
“viewing the evidence and inferences which may be drawn therefrom in the light most
favorable to the adverse party, the movant is clearly entitled to prevail as a matter of
law.” James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008); see
also, Mutual Fund Investors, Inc. v. Putnam Management Co., 563 F.2d 391, 393 (9th
Cir. 1077)).
Local Rule 7.1(e), governing motion practice in this Court, provides, “[i]n the
event an adverse party fails to file any response documents required to be filed under this
rule in a timely manner, such failure may be deemed to constitute a consent
to the . . . granting of said motion.” When a party does not have legal representation, the
Court of Appeals for the Ninth Circuit has held “an ordinary pro se litigant, like other
litigants, must comply strictly with the summary judgment rules.” Soto v. Sweetman, 882
F.3d 865, 872 (9th Cir. 2018).
However:
[a] district court may not grant a motion for summary judgment simply
because the nonmoving party does not file opposing material, even if the
failure to oppose violates a local rule. However, when the local rule does
MEMORANDUM DECISION AND ORDER - 7

not require, but merely permits the court to grant a motion for summary
judgment, the district court has discretion to determine whether
noncompliance should be deemed consent to the motion.
Brydges v. Lewis, 18 F.3d 651, 652 (9th Cir. 1994) (internal citations omitted). The Ninth
Circuit has also determined that such “discretion, however, is necessarily abused when
exercised to grant a motion for summary judgment where the movant’s papers are
insufficient to support that motion or on their face reveal a genuine issue of material
fact.” Henry v. Gill Industries, Inc., 983 F.2d 943, 949 (9th Cir. 1993).
The Court, in the exercise of its discretion, determines that an examination of the
merits of Sunrise’s claims, and its entitlement to the damages it seeks, is warranted under
Fed. R. Civ. P. 56(a). What follows is the Court’s examination of all materials filed in the
record to date in its determination of Sunrise’s motion for summary judgment.
DISCUSSION
1.

Applicable Law – The United Nations Convention on Contracts for the
International Sale of Goods (“CISG”)
Sunrise, a Canadian corporation, asserts that the provisions of the CISG apply to

its agreement with Hinton. The CISG applies if the parties are incorporated in signatory
countries, the contract does not explicitly opt out of the CISG, and the contract is for the
sale of goods. CISG, Art. 1, 6, (April 1980). 11 Hinton was incorporated in Idaho. The
United States became a signatory to the CISG in 1988, and Canada became one in

11

The CISG has been reprinted at 15 U.S.C. App'x (1998).

MEMORANDUM DECISION AND ORDER - 8

1992. 12 The contract does not opt out of the CISG, and it was for the sale of a good—
organic corn—purchased for commercial use. See CISG Art. 2 (A good under the CISG
cannot be a product purchased for “personal, family, or household use.…”) Sunrise has
therefore established that the CISG applies. 13
The United States Court of Appeals for the Ninth Circuit has not had occasion to
consider disputes arising under contracts governed by the CISG, but other circuit courts
have, analogizing it as the “international analogue to Article 2 of the Uniform
Commercial Code.” Chicago Prime Packers, Inc. v. Northam Food Trading Co., 408
F.3d 894, 898 (7th Cir. 2005); Dingxi Longhai Dairy, LTD. v. Becwood Technology
Group L.L.C., 635 F.3d 1106, 1107 (8th Cir. 2011); Delchi Carrier Spa v. Rotorex Corp.,
71 F.3d 1024, 1107 (2d Cir. 1995). Therefore, “caselaw interpreting analogous provisions
of Article 2 of the [U.C.C.], may… inform a court where the language of the relevant
CISG provision tracks that of the U.C.C.” Dingxi, 635 F.3d at 1107. In addition, Article 7
of the CISG provides that a court may consider case law applying the UCC when
interpreting corresponding provisions of the CISG. On the other hand, “UCC caselaw is
not per se applicable.” Chicago Prime, 408 F.3d at 898.
12

President Reagan submitted the Convention to the Senate, which ratified it. (See Public Notice
1004, U.S. Ratification of 1980 United Nations Convention on Contracts for the International
Sale of Goods; Letter of Transmittal from President Reagan to the Senate of the United States
(Sept. 21, 1983)); “There is no doubt that the Convention is valid and binding federal law.”
Chateau des Charmes Wines Ltd. v. Sabate USA Inc., 328 F.3d 528, 530 (9th Cir. 2003).
13
According to 28 U.S.C. § 1331(a), the Court has subject matter jurisdiction over civil actions
that arise under a treaty of the United States such as the CISG. The Court also has diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a)(2), in that this is a civil action between Sunrise, a
Canadian citizen, and Hinton, an Idaho citizen, and the amount in controversy exceeds
$75,000.00, exclusive of interest and costs.
MEMORANDUM DECISION AND ORDER - 9

2. Contract Formation Under the CISG
Under the CISG, a claimant must plead the traditional four elements of a breach of
contract claim: formation, performance, breach, and damages. Dingxi, 635 F. 3d at 1108.
Article 14(1) provides that a contract is enforceable if it is “sufficiently definite and
indicates the intention of the offeror to be bound in case of acceptance.” An offer is
sufficiently definite if it includes a description of the goods and expressly fixes quantity
and price. CISG Art. 14(1).
Here, the contract between Sunrise and Hinton included a description of the goods
(certified organic corn), a fixed quantity of 6,000 short tons, and a price of $415 per short
ton. (Dkt. 30-3 at p. 22.) “A statement made by or other conduct of the offeree indicating
assent to an offer is acceptance.” CISG Art. 18(1). Here, both parties expressed their
intent to be bound and indicated assent respectively when they executed the contract and
later performed. (Dkt. 30-3 at p. 22.) Therefore, Sunrise has established that an
enforceable contract was formed.
3. Wrongful Rejection of Corn
Under Article 35(1)-(2)(a) of the CISG, “the seller must deliver goods which are
of the quantity, quality and description required by the contract,” and “the goods do not
conform with the contract unless they are fit for any particular purpose expressly or
impliedly made known to the seller at the time of the conclusion of the contract.…”
Article 36 further provides “[t]he seller is liable in accordance with the contract and this
Convention for any lack of conformity.”

MEMORANDUM DECISION AND ORDER - 10

The buyer also has a duty under Article 35 to “pay the price for the goods and take
delivery of them as required by the contract and this convention.” A buyer breaches the
contract when it refuses delivery or refuses to pay for conforming goods. BP Oil Intern.,
Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 338 (5th Cir. 2003).
Further, under Article 35(2), the buyer bears the burden of demonstrating the
nonconformity of the goods as an affirmative defense to non-payment. Chicago Prime
Packers, Inc. v. Northram Food Trading Co., 408 F.3d 894, 898 (7th Cir. 2005).
If a breach of contract is considered “fundamental” under Article 49, the injured
party may seek damages. A breach of contract is fundamental “if it results in such
detriment to the other party as substantially to deprive him of what he is entitled to expect
under the contract, unless the party in breach did not foresee and a reasonable person of
the same kind in the same circumstance would not have foreseen such a result.” CISG
Art. 25.
The evidence in the record indicates the corn at the Longview Storage Facility
contained vomitoxin. However, the evidence indicates Sunrise offered Hinton certified
organic corn that would have met the 2 ppm stipulated in the contract in three ways: by
providing corn from a different location in the storage facility; by blending in accordance
with industry custom; or, providing corn from a different storage facility altogether. (Dkt.
30-7 at p. 3.) Therefore, the undisputed facts establish that the goods offered by Sunrise
to Hinton conformed to the contract terms.
The undisputed facts further establish that Hinton failed to fulfill its obligations
under the contract, because it took delivery of and paid for only 334 tons of corn, not the
MEMORANDUM DECISION AND ORDER - 11

6,000 tons specified in the contract. (Dkt. 30-8 at p. 2.) Hinton has not offered facts
establishing that the remaining 5,666 tons of corn were nonconforming. Last, Sunrise has
established a fundamental breach because Sunrise did not receive what it was entitled to
expect under the contract, and there are no facts in the record establishing Hinton would
not have foreseen such a result.
4. Wrongful Rejection of Attempts to Cure
There is some evidence in the record suggesting that Hinton may have rejected
delivery of the remaining corn because it did not conform to the terms of the contract
requiring vomitoxin levels of less than 2ppm. Bolinger Decl. Ex. A, Hinton Dep. at 95:996:2. 14 Article 37 of the CISG states “the seller . . . may…deliver goods in replacement
of any non-conforming goods delivered or remedy any lack of conformity in the goods
delivered, provided that . . . this . . . does not cause the buyer unreasonable inconvenience
or unreasonable expense. . . .” Similarly, the U.C.C. states “where any tender or delivery
by the seller is rejected because nonconforming and the time for performance has not yet
expired, the seller may seasonably notify the buyer of his intention to cure and may then
within the contract time make a conforming delivery.” U.C.C. § 2-508(1).
Even if the corn offered to Hinton in December of 2015 was nonconforming
because of high levels of vomitoxin, Sunrise had the option to cure and offer conforming

14

Taking all evidence in the record in a light most favorable to Hinton, an inference can be
drawn that Hinton refused the corn because his customers had informed Hinton not to bring them
Sunrise’s product once they heard about the vomitoxin levels. Id. Sunrise received also a letter
from Hinton via its attorney, stating Hinton did not take delivery of the remaining corn under the
contract because it exceeded the specified vomitoxin levels. (Dkt. 30-6 at p.2-3.) There is,
however, no evidence in the record that the vomitoxin levels in the corn were excessive.
MEMORANDUM DECISION AND ORDER - 12

goods prior to the expiration of the contract term. Sunrise offered Hinton corn which
conformed to the contract terms on three separate occasions, but Hinton did not accept
any of these offers. (Dkt. 30-7 at p. 3.) These undisputed facts establish Hinton
wrongfully rejected Sunrise’s attempts to cure. See T.W. Oil, Inc. v. Consol. Edison Co.
of New York, 443 N.E.2d 932, 937 (Ny. Ct. App. 1982) (holding under U.C.C. § 2-508
that a seller who tenders nonconforming goods to a buyer who then properly rejects them
may avail itself of the cure provision within a reasonable amount of time after rejection).
Sunrise has established there is no genuine dispute as to any material fact that
Hinton breached the terms of an enforceable contract to purchase 6,000 tons of organic
corn at the price of $415.00 per short ton. The remaining issue is the measure of damages
that will compensate Sunrise for its loss.
5. Damages
An award of damages is meant to “place the injured party in the same economic
position he would have been in if the contract had been performed.” Secretariat
Commentary on the CISG 1978 Draft; U.C.C. § 1-305(a). The Ninth Circuit is in accord
with this general principle. S & R Metals, Inc. v. C. Itoh & Co. (Am.), 859 F.2d 814, 818
(9th Cir. 1988).
Under the CISG, damages are calculated under Articles 74 through 76. Article 74
awards actual losses and loss of profits to the aggrieved party:
Damages for breach of contract by one party consist of a sum
equal to the loss, including loss of profit, suffered by the other
party as a consequence of the breach. Such damages may not
exceed the loss which the party in breach foresaw or ought to
have foreseen at the time of the conclusion of the contract, in
MEMORANDUM DECISION AND ORDER - 13

the light of the facts and matters of which he then knew or
ought to have known, as a possible consequence of the breach
of contract.
See also U.C.C. § 2-708 (“the measure of damages is the profit . . . which the seller
would have made from full performance by the buyer. . . .”).
Once actual loss, including lost profits, are calculated under Article 74, the Court
next looks to either Article 75 or 76. Article 75 applies when the seller has resold the
goods within a reasonable time, akin to the concept of cover under the U.C.C. See U.C.C.
§ 2-706. Article 76 applies when there has been no resale of the product. Here, Sunrise
resold the goods, and therefore the Court must apply Article 75, which provides:
If the contract is avoided and if, in a reasonable manner and within a 
reasonable time after avoidance, . . . the seller has resold the goods, the
party claiming damages may recover the difference between the contract
price and the price in the substitute transaction as well as any further
damages recoverable under Article 74.
Here, Hinton contracted to purchase 6,000 tons of corn at $415.00 per short ton,
for a total price of $2,490,000.00. (Dkt. 30-3 at p. 22.) Hinton purchased 334 tons, and
paid Sunrise $138,610.00. (Dkt. 30-8 at p. 2.) $2,351,390.00 remained owing under the
contract. 15 (Id.)

15

$2,490,000-$138,610 = $2,351,390.00

MEMORANDUM DECISION AND ORDER - 14

Sunrise “covered” and sold the 5,666 tons of corn meant for Hinton to other
buyers, receiving $2,237,584.00. (Dkt. 30-8 at p. 15.) Applying Article 74 and 75 results
in an amount of loss of $113,806.00. Sunrise has established this amount in damages. 16
Sunrise argues, however, that it is entitled to additional damages in the form of
lost profits, based upon its profit margin of $30.00 per short ton. (Dkt. 30-8 at p. 3.) In
other words, had Hinton purchased the entire 6,000 short tons of corn, Sunrise expected a
profit of $180,000.00. According to its logic, Sunrise received a profit of $10,020.00
from the corn Hinton actually purchased, and Sunrise is therefore entitled to the
difference of $169,980.00 in damages for the breach of contract.
Sunrise’s logic does not comply with the CISG, however, because it has not
explained why the measure of damages provided for by Articles 74 and 75 is inadequate
to put Sunrise in the position that it would have been in had the contract with Hinton been
performed fully. An injured party cannot be put in a better position than it would have
enjoyed if the contract had been properly performed. CISG-AC Opinion No. 6,
Calculation of Damages under CISG Article 74, Cmt. 9; CISG-AC Opinion No. 8,
Calculation of Damages under CISG Articles 75 and 76. Sunrise expected to make a
profit of $30.00 per short ton, which was accounted for in the $415.00/ton price Hinton
agreed to pay. That same $30.00 per short ton is accounted for in the loss calculation,

16

Under Article 74, if there has been a breach of contract and the aggrieved party enters into a
reasonable substitute transaction, the aggrieved party may recover damages equating to "the
difference between the contract price and the substitute transaction." CISG-AC Opinion No. 6,
Calculation of Damages under CISG Article 74.
MEMORANDUM DECISION AND ORDER - 15

above, just as it was in the $415.00/ton price. Therefore, Sunrise cannot establish its
entitlement to an additional $169,980.00 in damages.
Next, Sunrise claims additional damages due to its status as a lost volume seller. A
lost volume seller is “one who would have sold its goods to the original buyer, as well as
alternative buyers due to a surplus of goods.” Sunrich Inc. v. Pac. Foods of Oregon, Inc.,
2004 WL 1124495, at *1 (D. Or. May 20, 2004). Sunrise claims that it would have
realized further profits of $169,980.00 because, had there been no breach by Hinton,
Sunrise could and would have had the benefit of both the original contract and the resale
contract. A seller such as Sunrise has the burden to show “it could have supplied both the
breaching purchaser and the resale purchaser.” Islamic Republic of Iran v. Boeing Co.,
771 F.2d 1279, 1290 (9th Cir. 1985). In addition, Sunrise bears the burden of proving it
would have “completed sales to alternative buyers that [it] would have completed even in
the absence of a breach.” Id. In such a case, the measure of damages “should be the
dealer’s profit on one sale.” CISG-AC Opinion No. 6, Calculation of Damages under
CISG Article 74, Cmt. 3.20, 3.21.17
Sunrise has not met its burden of proof. While Sunrise may have had access to
surplus corn, nothing in the record establishes Sunrise would have sold corn to other
dairies in the absence of a breach by Hinton. (Dkt. 30-8 at pp. 12-15.) Further, if the
Court were to award the lost profit damages Sunrise claims for both the Hinton contract

17

The CISG provides, however, that “an aggrieved party may not recover lost profits for lost
volume under Article 74 and, in addition, damages under Article 75’'s substitute transaction
formula because, in that circumstance, the aggrieved party would receive double recovery.” Id.,
Cmt. 3.22.
MEMORANDUM DECISION AND ORDER - 16

and the secondary contracts, Sunrise would be placed in a better position than it would
have been upon full performance of the contract by Hinton. See CISG-AC Opinion No. 6,
Calculation of Damages under CISG Article 7 4, Cmt. 3 .22.
Sunrise has not established entitlement to an award of damages greater than its
actual damages in the amount of $113,806.00.
6. Agency/Contract Modification Defense
There is some evidence in the record suggesting Mr. Hinton was under the
impression his company satisfied the contract with Sunrise by purchasing corn from High
Caliber. (Dkt. 30-2 at p. 13.) 18 However, there is no factual basis for this defense.
Nothing in the record establishes that High Caliber was acting on Sunrise’s behalf, and
the undisputed facts indicate High Caliber was a separate entity. (Dkt. 30-10 at p. 2.)
And, all invoices sent to Hinton identified High Caliber, not Sunrise, as the seller. (Dkt.
30-4 at p. 2-25.)

18

Mr. Hinton testified that he “assumed” High Caliber, a separate entity from Sunrise, was
providing the corn on behalf of Sunrise.
MEMORANDUM DECISION AND ORDER - 17

CONCLUSION
Based upon a thorough review of the record, the Court finds no genuine dispute as
to any material fact upon which Sunrise seeks summary judgment. Sunrise has
established the requisite elements for breach of contract under the CISG, including actual
damages in the amount of $113,806.00. However, Sunrise has not established entitlement
to any further award of damages, either in the form of additional lost profits or as a lost
volume seller.

ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Plaintiff’s Motion for Summary Judgment (Dkt. 30) is GRANTED.

2)

Plaintiff may make application for entry of default judgment in accordance
with the Court’s memorandum decision and Fed. R. Civ. P. 55(b)(2).

DATED: August 8, 2019
_________________________
Honorable Candy W. Dale
United States Magistrate Judge

MEMORANDUM DECISION AND ORDER - 18