996 F.3d 354
7th Cir.2021Background
- Rexing Quality Eggs (owned by Joseph and Leo Rexing) entered a September 2, 2016 Purchase Agreement with Rembrandt for 12 loads/week of cage‑free eggs, with payment Net‑21 and 1%/month on past‑due invoices; contract governed by Iowa law.
- Quality issues and an MG outbreak at Tipton farms led Rembrandt to source and later resell non‑Tipton eggs; Rexing refused deliveries in June 2017 and repudiated the contract after losing its intended buyer.
- Rembrandt removed the case to federal court, obtained summary judgment on liability (Rexing not excused), and proceeded to a jury trial on damages only.
- The jury awarded Rembrandt $1,268,481 (resale damages) and $193,752 (market damages for unsold loads). Rexing did not file a postverdict Rule 50(b) or Rule 59 motion.
- The district court denied Rembrandt contractual prejudgment interest and attorneys’ fees, finding the contract’s interest term usurious; Rembrandt appealed that ruling.
- The Seventh Circuit affirmed the jury verdict on damages (finding the resale remedy and commercial‑reasonableness issues properly submitted to the jury and Rexing’s sufficiency challenges waived), reversed the denial of contractual interest and fees (holding the contract falls within Iowa’s Business Credit Exception), and remanded for calculation and fee proceedings.
Issues
| Issue | Rexing's Argument | Rembrandt's Argument | Held |
|---|---|---|---|
| Availability and measure of resale damages under Iowa UCC for future, fungible goods | Substitution of non‑Tipton goods improperly lets seller inflate damages; resale remedy shouldn’t allow substitute transactions when original goods never existed | UCC § 554.2706 permits resale for future or non‑identified goods; fungible goods may be substituted if resales are commercially reasonable | Affirmed: resale remedy applies to future/fungible goods; commercial reasonableness is a jury question |
| Conformity of resold eggs to contract (case‑weight/specifications) | Resold eggs did not meet contract case‑weight/specifications so cannot underpin § 554.2706 damages | Evidence supported conformity and fungibility; in any event Rexing waived challenge by not renewing Rule 50(b) motion | Waived: sufficiency challenge forfeited for failure to move under Rule 50(b); jury’s finding stands |
| Market‑price damages for eggs Rembrandt used itself (unsold loads) | No adequate market evidence to compute market‑price damages | Trial evidence supported market‑price calculation; Rexing again failed to preserve challenge | Waived: Rexing did not file postverdict motions; verdict affirmed |
| Whether contractual 1%/month interest was usurious or exempt under Iowa’s Business Credit Exception | The agreement is a sale breach claim, not an extension of credit; interest term is usurious so contract interest/fees forfeited | Paragraph E creates forbearance/extension of credit and falls within Iowa Code § 535.2(2)(a)(5) (business credit exception) | Reversed for interest/fees: contract falls within Business Credit Exception; remand to calculate contractual interest and consider attorneys’ fees |
Key Cases Cited
- Servbest Foods, Inc. v. Emessee Indus., Inc., 403 N.E.2d 1 (Ill. App. Ct. 1980) (allows substitution and resale damages for fungible goods when commercially reasonable)
- Apex Oil Co. v. Belcher Co. of New York, 855 F.2d 997 (2d Cir. 1988) (resale remedy can apply to future or nonidentified goods; approves substitution for fungible goods)
- Firwood Mfg. Co. v. Gen. Tire, Inc., 96 F.3d 163 (6th Cir. 1996) (persuasive authority permitting substitution of fungible goods for resale damages)
- Nobs Chem., U.S.A., Inc. v. Koppers Co., 616 F.2d 212 (5th Cir. 1980) (distinguishes UCC remedies where seller never acquires contract goods)
- Kaiser Agricultural Chems., Inc. v. Peters, 417 N.W.2d 437 (Iowa 1987) (usury analysis hinges on contract terms at inception; post‑contract performance irrelevant)
- State ex rel. Turner v. Younker Bros. Inc., 210 N.W.2d 550 (Iowa 1973) (forbearance—giving time to pay—constitutes extension of credit for usury analysis)
- Power Equip., Inc. v. Tschiggfrie, 460 N.W.2d 861 (Iowa 1990) (Iowa permits business‑credit exception for transaction‑style sales with finance‑charge clauses)
- Unitherm Food Sys., Inc. v. Swift‑Eckrich, Inc., 546 U.S. 394 (U.S. 2006) (Rule 50(b) renewal requirement; failure to renew forfeits sufficiency review)
- Stegall v. Saul, 943 F.3d 1124 (7th Cir. 2019) (failure to file post‑verdict Rule 50(b) motion waives challenge to sufficiency of evidence)