688 F.3d 346
8th Cir.2012Background
- Razorback sued Dement for breach of contract and fraud over a concrete supply contract for a bridge project.
- The district court granted Dement summary judgment on Razorback's fraud claim and partial summary judgment on damages (lost profits under U.C.C. 2-708(2)).
- Dement was the prime contractor; Razorback supplied concrete and some tests showed low breaks, delaying the project and prompting time charges by Dement.
- Dement assured Razorback in May 2007 that it would not withhold payments; Razorback continued supplying concrete based on that assurance.
- By June 2007 Dement began withholding payments, stopped in August 2007, and Razorback terminated the contract, seeking lost profits of $318,767.
- The court applied Arkansas law, addressing fraud elements and whether Razorback could recover lost profits under ACA 4-2-708(2) as a lost-volume seller.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dement knew its future-payment assurance was false. | Razorback asserts Dement intended to withhold payments despite assurances. | Dement argues withholding was based on new facts; not knowing falsity at time of promise. | Summary judgment for Dement; no genuine issue on knowledge of falsity. |
| Whether Razorback may recover lost profits under ACA 4-2-708(2). | Razorback contends lost profits were recoverable when 4-2-708(1) damages were inadequate. | Dement contends Razorback failed to prove lost profits; no lost-volume basis. | 4-2-708(2) not applicable; damages inadequate not shown; affirmed summary judgment. |
| Whether Razorback was a lost-volume seller. | Razorback argues capacity to perform further contracts supports lost-volume status. | Dement contends Razorback lacked capacity or evidence of profitable additional production. | No genuine issue; testimony shows near-peak capacity and no proof of additional profitable contracts. |
| Whether Capital Steel applies to award lost profits here. | Razorback cites Capital Steel for lost profits on multiple transactions. | Capital Steel distinguished and not controlling; facts differ here. | Capital Steel not applicable; failed to show capacity for profits on additional contracts. |
Key Cases Cited
- Bill’s Coal Co. v. Bd. of Pub. Utils., 887 F.2d 242 (10th Cir. 1989) (lost-volume burden on seller to prove capacity and profitability)
- Goforth v. Smith, 991 S.W.2d 579 (Ark. 1999) (misrepresentation as knowing false at time of statement; future event statements)
- Interstate Freeway Servs., Inc. v. Houser, 835 S.W.2d 872 (Ark. 1992) (fraud burden; affirming need to prove fraud elements)
- Marine Servs. Unlimited, Inc. v. Rakes, 918 S.W.2d 132 (Ark. 1996) (burden of proving damages rests on claimant; facts, not speculation)
- Capital Steel Co. v. Foster & Creighton Co., 574 S.W.2d 256 (Ark. 1978) (lost profits under ACA 4-2-708(2) not always available)