Case Information
*1 Before MURPHY, MELLOY, and GRUENDER, Circuit Judges.
____________
GRUENDER, Circuit Judge.
Rаzorback Concrete Company (“Razorback”) sued Dement Construction Company (“Dement”) for breach of contract and fraud based on disputes over performance of a concrete supply contract. The district court granted summary *2 judgment to Dement on the fraud claim and partial summary judgment to Dement as to the measure of damages for the breach of contract clаim, holding that Razorback was not entitled to recover damages under a lost profits theory. After obtaining a judgment on the contract claim that it deems inadequate, Razorback appeals the grants of summary judgment. We affirm.
I. BACKGROUND
Dement was the prime contractor on a bridge construction project, and Razorback was its concrete provider. Pursuant to a written contract requiring paymеnt by Dement within thirty days of receiving monthly statements, Razorback was to supply concrete that met the requisite strength level for the bridge. However, some of the concrete failed strength tests after a specified twenty-eight-day interval (occurrences the parties describe as “low breaks”). As a result, Dement had to allow extra time for the concrete to strengthen to an acceptable level for the project. Dement sent a letter to Razorback on April 4, 2007 noting that the project had a time charge of $5,000 for each day that it took Dement to complete the project and that Dement considered “that thirty (30) days of time charged for [Razorback’s] account would be equitable.” Razorback responded in writing that the concrete was not substandard, but rather that the tests—which were not conducted by Razorback—were flawed. Additionally, Razorback inquired of Dement
whether it is your intention to attempt to set off payments due [Razorback] for future deliveries of concrete with your claim for damages. . . . [U]nless we are told to the contrary, [Razorback] will assume that you will pay for material as it is delivered to the site. If this assumption is unwarranted you need to say so, because [Razorback] will *3 rely upon your failure to correct this assumption in order to make future deliveries of concrete to the site.
After receiving no response from Dement, Razorback wrote another letter on May 8 stating that it would rely on Dement’s failure to respond as a representation that no amount due Razorback would be withheld as an offset. Razorback also statеd that should Dement later try to offset moneys due Razorback, Razorback would have claims for breach of contract, fraud, deceit, and misrepresentation.
Dement responded on May 9 that, to Dement’s knowledge, there were no more low breaks after Razorback had changed its mix design for the concrete. It also noted that it had never intended “to unilaterally deduct monies due Razorback based on this issue” and that it would continue to pay all invoices in a timely manner. In reliance on Dement’s assurances, Razorback continued to supply concrete to Dement.
On May 18, Dement learned that concrete used in a “critical zone” of what it described as “probably the most critical pier in the structure” had substandard strength-test results. Furthermore, Dement was informed on June 8 that the Federal Highway Administration (“FHWA”) might require concrete to be replaced if a low break were to occur in a certain area of the construction. According to Razorback, Dement’s payments in June and August withheld some of the amount owed for delivered concrete and Dement stopped making any payments after August 2007. In light of what it viewed as a breach of contract by Dement, Razorbaсk terminated the contract and refused to supply any additional concrete.
In its suit against Dement, Razorback asserted that it was entitled to $318,767, representing lost profits that it would have earned by supplying concrete for the remainder of the project. Razorback also asserted that Dement was liable for fraud because it withheld payments after promising Razorback that it would not. The district court granted summary judgment to Dement as to Razorback’s fraud claim, *4 holding that Razorback’s evidence was insufficient for a reasonable jury to find fraud. The district court granted partial summary judgment to Dement on the issue of lost profits as the measure of damages on Razorback’s breach of contract claim because Razorback’s evidence did not create a material question of fact regarding whether Razorback was entitled to that measure of damages under the Uniform Commercial Code (“U.C.C.”). The case proceeded to trial on the remaining breach of contract claim, and Razorback obtained a jury verdict in its favor. Razorback now appeals the grants of summary judgment as to the fraud claim and the lost profits measure of damages on the contraсt claim.
II. DISCUSSION
“As a federal court sitting in diversity jurisdiction, we apply the law that the
forum state would apply.”
Winthrop Res. Corp. v. Stanley Works
,
We review
de novo
a district court’s grant of summary judgment and its
interpretation of state law.
Best Buy Stores, L.P. v. Benderson-Wainberg Assocs.,
L.P.
,
A. Fraud Claim
Under Arkansas law, fraud consists of the following five elements: (1) “a fаlse
representation of a material fact,” (2) “knowledge that the representation is false or
that there is insufficient evidence upon which to make the representation,” (3) “intent
to induce action or inaction in reliance upon the representation,” (4) “justifiable
reliance on the representation,” and (5) “damage suffered as a result of the
representation.”
Bomar v. Moser
,
This case turns on whether Razorback produced sufficient evidence to create
a genuine issue of material fact regarding whether Dement, at the time it assured
Razorback that it would not withhold payments (a statement relating solely to future
events), knew that the reprеsentation was false.
See Goforth
,
B. Lost Profits Measure of Damages
When Razorback filed suit against Dement, it requested “the monies it is owed”
as damagеs for its breach of contract claim. However, Razorback conceded at oral
argument that it was clear from its subsequent computation of damages, submitted in
accordance with Federal Rule of Civil Procedure (“FRCP”) 26, that it was seeking
lost profits under Arkansas Code Annotated (“ACA”) section 4-2-708(2), the analog
of U.C.C. section 2-708(2), although it did not include a specific citation to section
4-2-708(2). While section 4-2-708(1) provides a measure of compensatory damages
to an injured seller—the difference between the unpaid contract price and the market
price—premised on the seller’s ability to resell the same goods at market price,
section 4-2-708(2) provides for lost profits damages but only to sellers who can show
that the section 4-2-708(1) damages are inadequate to placе them in as good a
position as performance by the buyer would have. One way to make this showing
*8
is for the seller to prove it “has the capacity to perform the contract which was
breached as well as other potential contracts, due to their unlimited resources or
production capacity.”
Bill’s Coal Co. v. Bd. of Pub. Utils.
,
On appeal, Razorback first argues that the trial court acted sua sponte in ruling that Razorback was not a lost volume seller because Dement never argued that Razorback was not a lost volume seller or that Razorback failed to mitigate its damages. Thus, Razorback claims that it did not have the opportunity to present evidence and argument regarding these issues. The record belies this argument. After Razorback’s FRCP 26 damages calculation made clear that it was seeking lost profits, Dement, in seeking summary judgment, made multiple argumеnts claiming that Razorback was not entitled to lost profits, including that “[t]he U.C.C. does not permit a seller to recover consequential damages such as lost profits” and that Razorback’s claim for lost profits was speculative. Razorback opposed summary then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this chapter (§ 4-2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
Ark. Code Ann. § 4-2-708. Because Razorback does not provide any developed argument that it is entitled
to lost profits under a different provision of the Arkansas code, we address its argument that it is entitled to lost profits by examining ACA section 4-2-708(2). Furthermore, we assume without deciding that the facts of this case constitute “non- acceptance or repudiation” by Dement. See Ark. Code Ann. § 4-2-708(1). *9 judgment by quoting section 4-2-708(2) in support of its position that a seller can recover lost profits under the U.C.C. and asserting that its lost profits—which it calculated as the contract price minus the cost of performance—were not speculative. Razorback further asserted that “to the extent that [Dement] may be arguing that Razorback [could not] have supplied concrete on other jobs if it had continued supplying concrete on the Dement job, . . . Razorback’s high-capacity plants permitted Razorback to meet all the requirements of the Dement job as well as being able to supply concrete on other jobs.” Thus, we cоnclude that the issue was properly before the district court.
Razorback next argues that the issue of whether it was a lost volume seller
would only be relevant if Dement had argued that Razorback failed to mitigate its
damages. We disagree. Section 2-708(2) generally is interpreted as placing upon the
seller the burden of demonstrating that it should be compensated as a lost volume
seller if that is a theory by which the seller seeks to show that damages under section
2-708(1) are inadequate.
See, e.g.
,
Bill’s Coal Co.
,
Razorback next argues that the district court erred by concluding that no
reasonable jury could find that Razorback was a lost volume seller. Again, we
disagree. The testimony of Razorback’s general manager, Keith Wetsell, shows that
Razorback would have had a limited capacity to perform other contracts if Dement
had not breached. According to Wetsell, Razorback “probably turned away оr didn’t
bid [on] some work that had come along during the time we were doing the Dement
project . . . because we knew we were kind of at maximum peak there with their job.”
Although Wetsell later indicated that Razorback “could have done plenty of other
work” if the opportunity were there, he specified that it would have had to be a size
that Razorback could handle. Given this testimony that Razorback was operating at
near peak capacity, the absence of contrary evidence indicating that Wetsell
understated Razorback’s capacity to supply concrete, and the lack of evidence
regarding whether the additional jobs that Razorback took after ending its
relationship with Dement were of a size it could have handled if it were still
supplying Dement under the contrаct, the district court did not err in determining that
Razorback failed to create a genuine issue of fact as to its status as a lost volume
seller.
See Bill’s Coal Co.
,
Finally, Razorback contends that it is entitled to lost profits under Arkansas law
based on
Capital Steel Co. v. Foster & Creighton Co.
,
We conclude that Razorback failed to supply evidence creating a fact issue regarding whether it was a lost volume seller or whether the dаmages provided for under section 4-2-708(1) were otherwise inadequate and that such evidence was necessary for Razorback to show successfully that lost profits under section 4-2- 708(2) were potentially appropriate. Therefore, the district court did not err by granting partial summary judgment to Dement on Razorback’s claim for lost profits under section 4-2-708(2).
III. CONCLUSION
For the foregoing reasons, we affirm.
______________________________
Notes
[1] The Honorable Susan Webber Wright, United States District Judge for the Eastern District of Arkansas.
[2] The facts in this opinion are stated in the light most favorable to Razorback, the party resisting the grant of summary judgment. See Smith v. Arrington Oil & Gas, Inc. ,664 F.3d 1208 , 1212 (8th Cir. 2012).
[3] Instead, Razorback suggests that Dement’s explanation is not to be trusted by arguing that Dement demonstrated a lack of candor by claiming in its April 2007 letter “that the negative test[] results caused a delay of 30 days” because Charles Capps, Dement’s vice president, admitted at his deposition that he “pulled the 30 day figure out of the air.” However, rather than stating as fact that there was a delay of thirty days, the letter merely said “[w]e feel that thirty (30) days of time charged for your account would be equitable.” Moreover, Capps testified at his deposition that there was probably more than a thirty-day delay attributable to Razorback. This testimony does not show that Dement is not credible, and it does not raise a material question of fact regarding whether Dement knew that its representation about future payments was false at the time of the representation.
[4] Section 4-2-708 provides: (1) Subject to subsection (2) and to the provisions of this chapter with respect to proof of market price (§ 4-2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this chapter (§ 4-2-710), but less expenses saved in consequence of the buyer's breach. (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done