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American Seating Co. v. Archer Plastics Inc.

United States District Court, D. New Jersey, Camden Vicinage

September 26, 2014

AMERICAN SEATING COMPANY, Plaintiff,
v.
ARCHER PLASTICS INC., Defendant.

MEMORANDUM OPINION WITH FINDINGS OF FACT AND CONCLUSIONS OF LAW

JOEL SCHNEIDER, Magistrate Judge.

This Memorandum Opinion with findings of fact and conclusions of law will serve as the Court's decision with regard to the non-jury trial of this matter that was held on December 9, 2013, January 17, 2014, and February 21, 2014. Pursuant to 28 U.S.C. ยง 636(c), the parties consented to the jurisdiction of this Court to hear this matter. [Doc. No. 73]. Jurisdiction is based on diversity of citizenship. For the reasons to be discussed, the Court will enter Judgment in plaintiff's favor in the amount of $151, 109.90, plus prejudgment interest running from January 5, 2011.

The basic facts and background of the case are straightforward. Defendant entered into separate contracts with plaintiff to purchase and remove seats from the Camden Yards ("CY") Baseball Stadium in Baltimore, Maryland, and Foley Field at the University of Georgia. After plaintiff paid for and removed a substantial number of seats from CY, it informed plaintiff it could not afford to pay for and remove the remaining seats at CY, and none of the seats at Foley Field. Plaintiff then sold the remaining seats and thereafter sued defendant for damages. As to CY, up until the very end of the trial plaintiff pursued a common law breach of contract claim. At the tail end of the trial plaintiff changed course and is now pursuing damages under the Uniform Commercial Code ("UCC").

At trial plaintiff presented the testimony of Mr. Bruce Weener, an employee of American Seating Company for 27 years who is currently its Vice President of Customer Satisfaction. At the time of the contracts at issue Weener was employed as plaintiff's Vice President of Project Management. Plaintiff also called as an adverse or hostile witness Mr. Steven Archer ("Archer"), President of defendant Archer Plastics, Inc. Defendant presented the testimony of Archer.

Viewing the record in totality, at bottom what happened here is that defendant entered into two bad contracts. Unfortunately for defendant, it was not as successful as it hoped for in selling CY seats. As a result, defendant did not have money to pay for the Phase 2 seats which left it no alternative but to repudiate the remaining work it contracted to perform at CY and Foley Field. This situation was not totally within defendant's control, however. It is no secret that the general economic climate and memorabilia market collapsed at or about the time of defendant's contracts. These developments, however, are no defense to plaintiff's right to recover damages on account of defendant's contract breaches.

FINDINGS OF FACT

On January 5, 2011, plaintiff filed this breach of contract lawsuit. Plaintiff American Seating Company designs and builds seating and office furniture for, among others, educational institutions, government entities, corporations and individuals. See Joint Final Pretrial Order, Stipulated Fact 1, Doc. No. 63. Plaintiff sells seats in the office, auditorium and classroom markets, as well as transportation seating and seating in the sports entertainment market. Trial Transcript ("Tr.") 21:20-25(1).[1] Although on occasion plaintiff has sold used seats, it has only done this sporadically. The Court finds that the focus of plaintiff's business and the majority of its sales involves new seats. Plaintiff is plainly not in the business of selling the quantity of used seats that remained at CY after plaintiff breached its contract. Tr. 25:21 to 26:9(1); 32:7-11(1). Defendant's main business is setting up memorabilia sales for sports teams, which includes sales of used seating. Defendant also sells used stadium seating and related memorabilia. Tr. 156:20 to 157:6(1).

In or about the early summer of 2009 (Tr. 45:6-10(1)), the Maryland Stadium Authority contracted with Gilbane to reseat CY and to do concrete work at the stadium. Tr. 26:15 to 27:13(1). Plaintiff was a subcontractor to Gilbane and its role was to remove all the seats and to install new seats. Tr. 27:21-22(1). When plaintiff made its proposal to Gilbane, it took into account the price defendant agreed to pay plaintiff for the CY seats. Tr. 45:3-22(1). The actual disassembly of the CY seats was done by Harriott Contracting (Tr. 28:19-23(1)), a subcontractor to plaintiff. Tr. 29:1(1). Harriott charged plaintiff $6.50 per chair for removal. Tr. 30:24 to 31:1(1). The reseating work took place from the fall of 2009 through the spring of 2011. Tr. 28:1-4(1). In January 2010, plaintiff contracted to install new benches and seats at Foley Field. Exh. N.

In order to install new seats at CY the old seats obviously had to be removed. As noted, plaintiff contracted with Harriott to disassemble and box the seats that had to be removed at CY. Defendant came into the picture when it contracted in November 2009 to pay plaintiff a set price per seat to purchase and cart away the CY seats. Defendant intended to resell the seats at a profit. Since plaintiff was responsible for removing the CY seats, plaintiff viewed defendant's contract as profit. In other words, not only was plaintiff going to be paid to remove CY seats, but it was going to earn income by selling the seats it contracted to remove.

On July 18, 2012 [Doc. No. 35], the Honorable Robert B. Kugler entered summary judgment in plaintiff's favor. Judge Kugler ruled that after the exchange of two proposals in October 2009 (see Exh. C, G), plaintiff and defendant contracted for defendant to remove all the seats at CY. The contract is memorialized in a November 5, 2009 purchase order (Exh. K) which provided that defendant would pay plaintiff $8.50 per seat and $18.18 per logo end removed. Opinion at 5-6. The purchase order was emailed by defendant to plaintiff on November 19, 2010. Exh. J. The purchase order called for the removal of an estimated 45, 000 stadium seats and 5, 500 logo ends for a total contract price of $482, 500. Judge Kugler's Opinion noted that the parties' contract language strongly suggested that the final contract price was to be adjusted based on the final seat count at CY. Id. at 8-9.[2]

As to Foley Field, on January 19, 2010 defendant sent a letter to plaintiff agreeing to remove the seats at no cost to plaintiff. Exh. N. In exchange defendant could keep the seats for resale. Judge Kugler's Opinion held that plaintiff's letter was a binding contract. Opinion at 13. As it turned out there were 1, 800 seats and 1, 200 bleachers to be removed form Foley Field. Tr. 82:23 to 83:11(1). Unlike CY, defendant contracted to actually disassemble the seats at Foley Field. Tr. 84:9-11(1). Under both contracts at issue, defendant was entitled to keep all seating and logo ends that it removed for resale to third parties. Stipulated Fact 7.

As a matter of clarification, defendant did not agree to actually disassemble the CY seats. As noted, plaintiff subcontracted with Harriott to do this work. What defendant agreed to do was pay for and cart away from CY the old seats that had been disassembled and boxed up by Harriott. Per plaintiff, "under the agreement, [Archer was] purchasing the seats at the price specified, and they were required to remove the seats. Once they were disassembled, put into containers [Archer was] to remove [the seats] from the site." Tr. 30:1-4(1).

Although plaintiff and defendant only entered into one contract for the CY seats, the work had to be performed in two phases so that the work would not interfere with the Orioles baseball season. Tr. 28:5-18(1). Phase 1, to be done in 2009/2010, involved all the lower bowl seats with the exception of centerfield. Phase 2, to be done in 2010/2011, involved centerfield and all of the upper bowl. Tr. 28:16-18(1); 38:17-20(1). Defendant performed Phase I of the CY contract and made a payment of $187, 266.66 to plaintiff. Tr. 38:21 to 39:1(1); see also Exh. NNN. Plaintiff paid for 17, 561 seats and 2, 090 logo ends. Tr. 109:413(1); Exh. DDD. After the payment a balance of $295, 233.34 remained on the contract. Tr. 40:2-4(1).

As early as April 19, 2010, defendant gave plaintiff every indication that it could no longer perform the CY contract. Exh. S. The reason defendant gave for why it could not complete the contract was that the market crashed and there was not a market for the used seats. Tr. 40:12-16(1). Defendant reiterated on several occasions it would not perform the remainder of the CY contract and the Foley Field contract. See June 2, 2010 email from defendant to plaintiff, Exh. S; June 4, 2010 email from Fritz Owen to B. Weener, Exh. V; June 6, 2010 email from defendant to plaintiff, Exh. W; July 14, 2010 email from defendant to plaintiff, Exh. AA ("I don't have the money to buy the seats...."); July 17, 2010 email from defendant to plaintiff, Exh. AA; August 19, 2010 email from defendant to plaintiff, Exh. EE ("[T]he money is not here to do anything anymore"); August 25, 2010 email from defendant to plaintiff, Exh. FF ("It ain't gonna' happen, we aren't able to take any seats or pay for any seats."). In the same email defendant informed plaintiff it would not remove the seats from Foley Field "for free." The short answer to why defendant breached its contracts is because it "couldn't afford to buy them [seats]." Tr. 7:24(3).

On August 5, 2010, plaintiff advised defendant that the remaining removal at CY should start on October 18, 2010, Exh. GG. Plaintiff advised defendant on August 30, 2010, that it considered defendant to have repudiated the contract and that if defendant did not assure plaintiff that it would perform the contract, plaintiff would "proceed to exercise all of [its] rights and remedies" against defendant due to its breach. Exh. KK. At the time plaintiff was "panicking" because it did not have a way to handle the Phase 2 seats. Tr. 47:9-14(1). After the letter was sent defendant never gave plaintiff any indication that it changed its positon that it would not and could not complete the work it contracted to do.

Since Judge Kugler's ruling on plaintiff's motion for summary judgment decided that defendant breached its two contracts with plaintiff, it is left to this Court to decide whether plaintiff is entitled to damages and if so how much. Plaintiff seeks damages pursuant to 2-709 of the UCC, i.e., "Action for the Price." As an alternative, plaintiff seeks damages under 2-708. Plaintiff claims it is entitled to a damage award of $173, 665.90. The Court will summarize plaintiff's calculation which will be discussed in more detail infra. Plaintiff claims it is entitled to $482, 500 under the CY agreement, plus the $6, 200 that it paid to have the stadium seating removed from Foley Field. These two amounts total $488, 700. From this total plaintiff deducted the following amounts: defendant's payment of $187, 266.66, a $60, 200.00 credit from plaintiff's sale of seats to the Madison Mallards, a $47, 986.44 credit on account of the seats plaintiff sold to a facility in Sarasota, Florida, [3] and $19, 581.00 plaintiff received from the sale of the remaining CY seats for salvage. Thus, in summary, plaintiff claims it is entitled to $173, 665.90.

Defendant argues it did not "accept" the Phase 2 seats, that plaintiff did not act in a commercially reasonable manner to reduce its losses, and/or plaintiff failed to appropriately mitigate its damages, and that plaintiff did not "hold" the seats that defendant did not pay for. Defendant also argues that 6, 000 of the seats at CY were not fit for their intended use because the cushions could not be removed properly and/or the bolts had seized tight and could not be removed. Defendant also argues that 4, 000 of the CY seats were redirected seats which could not be easily sold. Defendant argues it did not contract to pay for these 10, 000 seats that it could not use or re-sell. Tr. 20:16-25(1). Another way of saying this is that defendant argues that it only agreed to pay for the seats that it could use or re-sell.

As to defendant's misdirected and "cushioned" seat argument, defendant ignores the fact that when Judge Kugler ruled on plaintiff's summary judgment motion he decided that these seats were not exempt from the parties' contract. Judge Kugler ruled that without exception defendant agreed to remove all the seats at CY. Opinion at 9 (holding that there was no genuine issue defendant "agreed to remove all existing seats...."). Further, even if this Court ruled on the issue independently of Judge Kugler's Opinion, it would rule the same way. The Court finds that defendant contracted to remove and pay for all the seats at CY even if the seats could not be re-sold. The Court rules this way for a number of reasons. First, the November 5, 2009 purchase order provided that defendant would remove all the seats at CY. Exh. K. No provision was made in the parties' contract to exclude redirected seats or "cushioned" seats. The existence of these seats was no secret to defendant. Defendant visited CY in 2004 and one time in 2009 before his contract with plaintiff. Tr. 173:5-13(1). Further, the Court finds that defendant had the opportunity to thoroughly inspect the CY seats before it entered the November 2009 contract. In addition, prior to the execution of the CY contract defendant knew it would be difficult to remove cushions from some seats. Exh. CCC. Also, the presence of redirected seats was open and obvious. Indeed, defendant testified he knew there were thousands of redirected seats. Tr. 181:10-12(1); 29:15-17(3). Defendant's November 4, 2009 email even estimated the number of padded and redirected seats in CY. Exh. H. Thus, defendant knew or should have known that some of the seats that it removed at CY were not useable or sellable. If, as defendant argues, the parties intended to exclude unusable or unsellable seats from their contract, this would have been specifically mentioned. Further, although the parties' purchase order provided that 45, 000 seats were to be removed, the quantities were subject to correction after a final tally of the removed seats was done. Exh. K. This further evidences that the parties knew how to exclude seats from their contract if they so intended.

Another reason defendant's argument as to the redirected and cushioned seats is rejected is because defendant acknowledged that it had to pay for seats that were not sellable. This is documented in Archer's November 2009 e-mail to Chuck Bailey, wherein Archer acknowledged he had to pay to remove some seats that he could not use. Exh. CCC; see also Defendant's November 16, 2009 email to plaintiff, Exh. I. Although Archer's testimony at trial contradicts these emails, the Court finds that the contemporaneous emails Archer sent in November 2009 are more credible than his trial testimony on this topic.

Although not clear, defendant is also apparently arguing that the parties' contract was contingent on the Orioles helping to market its old seats as memorabilia. Tr. 86:21-24(2). The Court rejects this argument. If this was a condition or material term in the parties' contract, it would have been specifically mentioned. There is no record in the parties' contract or their email communications that conditioned defendant's duty to perform on defendant receiving help from the Orioles to sell the used seats.

As to its commercial reasonableness or mitigation defense, defendant makes several arguments, including: (1) plaintiff did not act diligently to sell the Phase 2 CY seats after defendant notified plaintiff that it would not buy or remove any more seats, (2) plaintiff should have used its own sales force to try and sell the remaining seats at CY that defendant did not remove, (3) that the seats and benches at Foley Field could have been sold, (4) plaintiff should not have "trashed" any seats because they eventually could have been sold, and (5) plaintiff failed to give it required notice before plaintiff sold for salvage the CY and Foley Field seats it could not sell.

CONCLUSIONS OF LAW

As noted, Judge Kugler has already decided that defendant breached its contracts. In addition, the Court has noted that if it had to look at the issue independently it would rule the same way as Judge Kugler. Thus, since it has been decided that defendant breached its contracts, the Court's role is to decide the amount of plaintiff's damages, if any. The parties agree that damages for the CY breach should be decided ...


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