Data

Date:: 06-07-2010
Country:: USA
Number:: Civil Action No. 09-cv-01763-WYD-KMT
Court:: United States District Court for the District of Colorado
Parties:: Alpha Prime Development Corporation, Plaintiff, v. Holland Loader Company, LLC; and Steven Michael Svatek, Defendants

Keywords

TIME OF DELIVERY (ART. 33 CISG) - TIME NOT FIXED IN THE CONTRACT - DELIVERY WITHIN REASONABLE TIME AFTER CONCLUSION OF THE CONTRACT (ART. 33(C) CISG)

PASSING OF RISK - BUYER BOUND TO TAKE OVER GOODS AT PLACE OTHER THAN PLACE OF BUSINESS OF SELLER - RISK PASSES UPON PLACING GOODS AT BUYER'S DISPOSAL AT THAT PLACE (ART. 69(2) CISG)

Abstract

Between May and July 2008, a U.S. seller and a Mexican buyer entered into negotiations for the sale of a refurbished piece of coal mining equipment (hereinafter the “loader”). Upon payment and delivery of the machinery in August 2008, the buyer sued the seller seeking summary judgment and asserting that the loader was not refurbished and thus non-conforming.

Both parties agreed that the claim was governed by CISG pursuant to its Art. 1(1)(a). In addressing and interpreting the contract at issue, the Court noted that a writing between the parties is not conclusive of the terms of their agreement (Art. 11 CISG). The court also noted that the CISG requires consideration of a party’s statement and other actions, including its conduct subsequent to the conclusion of the contract (Art. 8 CISG).

In support of its motion for summary judgment, the buyer relied on Arts. 35 and 36 CISG, under which a seller is required to deliver conforming goods and is liable in accordance with the contract for any lack of conformity which exists at the time when the risk passes to the buyer. While denying the buyer’s motion, the Court ruled that there were genuine issues of material fact about when the loader was to be refurbished, i.e., whether the loader was to be refurbished before it was sent to Mexico or after that time. Indeed, the parties offered contradicting evidence in this respect. Thus, according to the Court, there were also genuine issues of material fact to be decided by the jury regarding the non-conformity of the loader at the time it arrived in Mexico.

In denying the buyer’s motion, the Court also found that there were genuine issues of material fact as to whether the risk had ever passed to the buyer. Looking at Art. 69(2) CISG, the Court found that there were genuine issues of material fact as to where the buyer was bound to take over the loader (i.e., at its point of origin in Montana or in Monclova, Mexico), and when it was required to do so, i.e., before or after the loader was refurbished.

Finally, striking down the buyer’s argument that summary judgment was still appropriate in view of Art. 33 CISG's failure to fix a particular date or period of time for delivery of the goods other than a “reasonable period of time,” the court ruled that a jury could find that, under the circumstances of the case, the seller’s delay in delivering the loader was reasonable.

Fulltext

United States District Court for the District of Colorado
Alpha Prime Development Corporation, Plaintiff, v. Holland Loader Company, LLC; and Steven Michael Svatek, Defendants
Civil Action No. 09-cv-01763-WYD-KMT

6 July 2010

OPINION

ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT

I. Introduction

THIS MATTER is before the Court on Plaintiff's Motion for Partial Summary Judgment and Supporting Memorandum filed October 2, 2009. This motion seeks summary judgment on the first claim for relief for delivery of nonconforming goods against Defendant Holland Loader Company, LLC ["HLC"].

Plaintiff Alpha Prime Development Corporation ["APDC"] asserts that summary judgment on the first claim is proper based on HLC's admitted failure to deliver a refurbished piece of coal mining equipment -- termed a "Holland 610 Loader" ["Loader"] - that APDC purchased from HLC and HLC's admitted refusal to refund APDC's money. APDC seeks judgment in the amount of $ 552,344.50 plus prejudgment interest, which includes the purchase price of the equipment ($ 475,000) and costs associated with delivery.

Defendant HLC filed a response to the summary judgment motion on October 26, 2009, and APDC filed a reply on November 13, 2009. Also pending is Defendant HLC's Motion to Strike Declaration of Joseph Havlin in Support of Plaintiff's Motion for Summary Judgment ["motion to strike].

For the reasons stated below, HLC's motion to strike is granted in part and denied in part and Plaintiff's Motion for Partial Summary Judgment is denied.

II. Analysis

A. Motion to Strike Havlin Declaration

[...]

B. Plaintiff's Motion for Partial Summary Judgment

As discussed previously, APDC seeks summary judgment based on HLC's admitted failure to deliver the Holland 610 Loader and HLC's refusal to refund APDC's money. I find that summary judgment must be denied on this claim because there are genuine issues of material fact that preclude the entry of judgment as a matter of law.

Summary judgment may be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the ... moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The burden of showing that no genuine issue of material fact exists is borne by the moving party. E.E.O.C. v. Horizon/CMS Healthcare Corp., 220 F.3d 1184, 1190 (10th Cir. 2000).

In reviewing a summary judgment motion, the court must view the evidence in the light most favorable to the nonmoving party. Anaya v. Crossroads Managed Care Sys., Inc., 195 F.3d 584 (10th Cir. 1999). All doubts must be resolved in favor of the existence of triable issues of fact. Boren v. Southwestern Bell Tel. Co., 933 F.2d 891, 892 (10th Cir. 1991).

As to the legal analysis regarding the first claim for relief, both parties agree that the claim is governed by the treaty of the United Nations Convention on Contracts for the International Sales of Goods ["CISG"], art. 40, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), 19 I.L.M. 671 (1983), reprinted at 15 U.S.C. app. (entered into force Jan. 1, 1988)). The CISG applies to contracts of sale of goods between parties whose places of businesses are in different countries and each country is a signatory to the treaty. CISG Art. 1(1)(a). Here, the Holland 610 Loader was sold and shipped from HLC's locations in the United States to Mexico, each of which is a signatory country. See Treaties in Force 460 (2009).

The interpretation of a contract for the sale of goods under the CISG must look at the circumstances surrounding the contract. The text of and commentary to the CISG show that a writing between the parties is not conclusive of the terms of their agreement. See, e.g., CISG Art. 11 ("A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses."); CISGAC Opinion No. 3, Parol Evidence Rule, Plain Meaning Rule, Contractual Merger Clause and the CISG, 23 October 2004, § 2.2, available at http://www.cisgac.com/default.php ("[A] writing is one, but only one, of many circumstances to be considered when establishing and interpreting the terms of a contract.").

The CISG requires consideration of a party's statements and other actions, including its conduct subsequent to the conclusion of the contract. CISG Art. 8. Those statements and actions should be analyzed in light of the parties' common intent or, when there is no common intent, in light of the objective, "reasonable person" standard. Id.; U.S. State Dep't Analysis of CISG Art. 8, reprinted at 2 Guide to the Int'l Sale of Goods Convention 20-145 (West 2009). Under the CISG, testimony of the parties may also contradict the written terms of an agreement. See MCC-Marble Ceramic Ctr. v. D'Agostino, 144 F.3d 1384, 1391-92 (11th Cir. 1998) (reversing summary judgment premised on written contract based on non-movant's affidavits); Mitchell Aircraft Spares, Inc. v. European Aircraft Serv., 23 F. Supp. 2d 915, 922 (N.D. Ill. 1998)(same).

APDC first relies on Articles 35 and 36 of the CISG to support its summary judgment motion. Under CISG Art. 35(1), a seller is obligated to "deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract." Under Art. 35(2), "the goods do not conform with the contract unless they...(a) are fit for the purposes for which goods of the same description would ordinarily be used, []...and (c) possess the qualities of goods which the seller has held out to the buyer as a sample or model . . . ." CISG § 35(2). "[T]he 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." CISG Art. 36(1); see also Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1028 (2nd Cir. 1995).

I find after analyzing the parties' positions on this issue that summary judgment should be denied to the extent APDC relies on Articles 35 and 36 of the CISG. First, APDC asserts that when the Holland 610 Loader was delivered in August 2008, it was not refurbished and thus was nonconforming. I find that there are genuine issues of material fact about when the Loader was to be refurbished, i.e., whether the Loader was to be refurbished before it was sent to Mexico or after. While APDC presents evidence in support of its argument that the Loader was to be refurbished prior to its shipment to Mexico, HLC has presented evidence which contradicts that and which shows that the parties agreed it would be refurbished in Mexico.

Indeed, APDC in its summary judgment motion asserts that when it discovered the Holland 610 Loader was inoperable after its delivery in Mexico, HLC then promised to complete refurbishment but did not. This shows that even if the Loader was to initially have been refurbished prior to its shipment to Mexico, there are genuine issues of material fact about whether the parties agreed that it could be refurbished in Mexico once it was delivered there. Thus, there are also genuine issues of material fact as to whether the Holland 610 Loader was nonconforming when it arrived in Mexico.

I also find that there are genuine issues of material fact as to whether the risk ever passed to APDC. As noted above, APDC premises its claim for delivery of nonconforming goods on Article 36(1) of the CISG which provides that the seller is liable "for any lack of conformity [in the goods] which exists at the time when the risk passes to the buyer." Article 69(2) of the CISG governs the passage of risk "if the buyer is bound to take over the goods at a place other than a place of business of the seller." It provides that "the risk passes [to the buyer] when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place." Id.

I find that there are genuine issues of material fact as to where APDC was bound to "take over" the Loader, i.e., at its point of origin in Montana or in Monclova, Mexico, and when it was required to "take over" the Loader, i.e., before or after it was refurbished. Accordingly, I find that there are genuine issues of material fact as to whether the risk passed to APDC. Further, there are genuine issues of material fact as to whether the goods (the Holland 610 Loader) were ever placed at APDC's disposal. Thus, I find that summary judgment is properly denied to the extent APDC relies on Article 36 of the CISG.

APDC claims, however, that even if the parties agreed that the Loader was to be refurbished in Mexico, summary judgment is still appropriate. It relies on the provision that when a contract governed by the CISG does not fix a particular date or period of time for delivery of goods, "[t]he seller must deliver the goods . . . within a reasonable time after the conclusion of the contract." CISG Art. 33. APDC asserts that in no way can it be a reasonable time for delivery of the goods since the Loader was purchased in July 2008 and was still not delivered in May 2009 when APDC asserts that it exercised its right to avoid the contract (and in fact, the Loader has still not been delivered).

Turning to my analysis, "[w]hat is a reasonable time depends on what constitutes acceptable commercial conduct in the circumstances of the case." Official Commentary to 1978 Draft of CISG Art. 33, P 8, reprinted at 2 Guide to the Int'l Sale of Goods Convention 20-240 (West 2009). Again, I find that there are genuine issues of material fact that preclude entry of judgment as to this issue, i.e., whether under the circumstances of this case HLC acted within a reasonable time frame as to delivery of the Loader. There is evidence in the record that the refurbishing would take some time (120 to 180 days) and that APDC had indicated to HLC that it had no immediate need for the Loader due to a purported lack of commercially viable surface mineable coal in its Mexican concessions. Under these circumstances, a reasonable jury could find that HLC's delay in refurbishing the Loader was reasonable. There is also the fact that in May 2009 APDC indicated that it rejected the goods; if this is the case HLC arguably no longer had a duty to deliver the Loader to APDC. Accordingly, I also deny summary judgment on this issue. See, e.g., Gonzales v. Duran, 590 F.3d 855, 861 (10th Cir. 2009) (a jury question exists "'when a disputed issues of material fact concerning the objective reasonableness of the defendant's actions exists'") (quotation omitted); Trout v. Nationwide Mut. Ins. Co., 316 Fed. Appx. 797, 2009 WL 721551, at *5 (10th Cir. 2009) (reasonableness of defendant's conduct "is a quintessential jury question which we would expect to survive summary judgment"); Yumukoglu v. Provident Life & Acc. Ins. Co., 36 Fed. Appx. 378, 2002 WL 1150814, at *3 (10th Cir. 2002) (reasonableness is generally a question for the jury).

III. Conclusion

Based upon the foregoing, it is

ORDERED that Defendant HLC's Motion to Strike Declaration of Joseph Havlin in Support of Plaintiff's Motion for Summary Judgment (doc. # 14) is GRANTED IN PART AND DENIED IN PART consistent with this Order. It is

FURTHER ORDERED that Plaintiff's Motion for Partial Summary Judgment (doc. # 8) is DENIED.

Dated this 6th day of July, 2010.

BY THE COURT:

/s/ Wiley Y. Daniel
Wiley Y. Daniel
Chief United States District Judge

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FOOTNOTE

1. See also Fleming v. Evans, No. CIV-05-690-C, 2010 U.S. Dist. LEXIS 2965, 2010 WL 199647, at *5-6 (W.D. Okla. Jan. 14, 2010) (rejecting argument that the affiant obtained personal knowledge "by virtue of his 'conversations and learning'"); West Ridge Group, L.L.C. v. First Trust Co. of Onaga, No. 07-cv-01587-WYD-BNB, 2009 U.S. Dist. LEXIS 18177, 2009 WL 641258, at *3 (D. Colo. March 10, 2009) (statements in affidavit were inadmissible which began "I am informed that. . ." as they were "clearly not based on the affidavits personal knowledge"; also, while the affidavit referred to terms in a note and deed of trust and his interpretation of same, it was unclear whether affiant actually reviewed these documents as he stated that he "talked" to others about the terms contained in those documents); Warren v. Liberty Mut. Fire Ins. Co., 505 F. Supp. 2d 770, 779 (D. Colo. 2007) (officer's statement that "[a]t the time of renewal of the Policy in March 2002, defendant sent the [Insureds] a copy of the Policy" was inadmissible under Rule 56(e) as he did not begin working for the defendant until after the accident and thus had no personal knowledge of the interaction between the parties), aff'd in part, rev'd in part on other grounds, 555 F.3d 1141 (10th Cir. 2009).}}

Source

Original in English:

- available at the University of Pace website, http://cisgw3.law.pace.edu}}