S & P Brake Supply, Inc. v. STEMCO LP
2016 MT 324
| Mont. | 2016Background
- S&P Brake Supply (Montana remanufacturer) and STEMCO LP (manufacturer) met March 2011; S&P signed a STEMCO "Program Agreement" to become an authorized remanufacturer.
- S&P alleges an additional oral promise by STEMCO guaranteeing S&P a five-year right to sell remanufactured brakes to STEMCO-authorized distributors (including Kenworth locations in UT/ID); S&P invested substantially in reliance.
- For ~18 months S&P sold to Kenworth; Kenworth later switched to Gorilla Brake (another STEMCO remanufacturer). S&P sued STEMCO for breach of the alleged oral five-year agreement.
- STEMCO moved for summary judgment arguing the UCC statute of frauds and the parol evidence rule barred enforcement of any oral agreement; the District Court denied summary judgment and submitted part performance and promissory estoppel to the jury.
- The jury awarded S&P $344,532; STEMCO won a counterclaim for unpaid inventory. The District Court denied STEMCO costs for prevailing on its counterclaim; both rulings were appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the alleged oral five-year contract is barred by the UCC statute of frauds | S&P: the written Program Agreement was not a final integrated writing; exceptions (promissory estoppel or part performance) apply | STEMCO: the Program Agreement is the final expression; statute of frauds and parol evidence bar the oral term | Court: Program Agreement not clearly final; statute of frauds did not bar contract because promissory estoppel could apply (part performance exception was inapplicable under UCC) |
| Whether promissory estoppel could be used to avoid the UCC statute of frauds | S&P: promissory estoppel applies under UCC §1-103 principles; reliance and injury demonstrated | STEMCO: promissory estoppel not available unless promisor intended to mislead (per non-UCC cases) | Court: Promissory estoppel may supplement the UCC and does not require intent to mislead; jury could consider it |
| Whether part performance excused the lack of a writing under the UCC | S&P: investments and reliance constitute part performance | STEMCO: part performance does not apply here under the UCC’s limited exception | Court: UCC limits part performance to goods received/paid for; S&P’s investments did not qualify — submission to jury on this theory was error |
| Admissibility of evidence re: "core credits" and Gorilla Brake sales to Kenworth | S&P: (implicit) such disputes with Kenworth are collateral and not central to breach by STEMCO | STEMCO: evidence shows S&P’s loss of Kenworth was due to S&P’s poor performance, rebutting damages and causation | Court: District Court did not abuse discretion excluding that collateral evidence; STEMCO could present other evidence of service issues but excluded material was rightly excluded |
Key Cases Cited
- Norwest Bank Billings v. Murnion, 684 P.2d 1067 (Mont. 1984) (parol evidence inquiry: court must determine whether writing was intended as final expression)
- N.W. Potato Sales v. Beck, 678 P.2d 1138 (Mont. 1984) (UCC §1-103 permits estoppel principles to supplement the UCC and defeat statute of frauds defenses)
- Turner v. Wells Fargo Bank, N.A., 291 P.3d 1082 (Mont. 2012) (elements of promissory estoppel under Montana law)
- Schwedes v. Romain, 587 P.2d 388 (Mont. 1978) (under general contract law promissory estoppel is limited where statute of frauds would otherwise perpetuate fraud)
- Keil v. Glacier Park, Inc., 614 P.2d 502 (Mont. 1980) (discussing doctrines of estoppel and related equitable principles)