Saturday, December 6, 2008

Sun-Dried Tomatoes, Anyone? Seller Recovery on Buyer Breach: Damages Based on A Lost-Volume Seller Theory UCC 2-702(2)

Culinary Farms, Inc. v. Mooney, 2008 WL 4889621 (Cal. App 3 Distr. Nov. 13, 2008) (Not Officially Published- Non Citable)

This case concerned the appropriate measure of damages where a buyer failed to complete the purchase of sun-dried tomatoes. Although the seller was able to recover possession and resell the tomatoes, it claimed damages as a “lost-volume seller” under Section 2708(2) of the Commercial Code.

A lost-volume seller is one who can establish that the buyer’s breach meant a lost sale that was not recouped by a resale of the product to another buyer, because the seller would have sold product to the other buyer in any event. Under these circumstances, the seller is allowed to recover its lost profits under Commercial Code Section 2708(2), because the seller would not otherwise be able to recover the economic damages suffered when the buyer refused to purchase.

In this case the defaulting buyer asserted that although the seller may have been a lost-volume seller for dried tomatoes generally, the particular product at issue was California sun-dried tomatoes, and the seller was not a lost-volume seller of this type of tomatoes. This was a good theory, and may have worked, but unfortunately for the seller, the facts got in the way. The court found that the breaching seller had not actually proved its contention, and in fact cited the defendant’s own deposition testimony against the defendant.

No comments: