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Alaska Pacific Trading Co. v. Eagon Forest Products Inc.

February 10, 1997

ALASKA PACIFIC TRADING CO., A WASHINGTON CORPORATION, RESPONDENT,
v.
EAGON FOREST PRODUCTS, INC., A WASHINGTON CORPORATION, APPELLANT.



Appeal from Superior Court of King County. Docket No: 94-2-02058-7. Date filed: 07/07/95. Judge signing: Hon. Faith Enyeart Ireland.

Order Granting Motion to Publish Opinion March 24, 1997. Petition for Review Denied September 3, 1997,

Authored by Susan R. Agid. Concurring: William W. Baker, Walter E. Webster.

The opinion of the court was delivered by: Agid

AGID, J. -- Alaska Pacific Trading Company (ALPAC) and Eagon Forest Products, Inc. (Eagon) contracted to sell and buy raw logs. After months of communications between the parties, the delivery date passed with no shipment. Eagon canceled the contract, alleging that ALPAC had breached. ALPAC brought an action for breach. The trial court found that ALPAC breached the contract by failing to timely deliver the logs and that there was no modification of the delivery date and Eagon did not repudiate. It granted Eagon's motion for summary judgment. ALPAC contends that failure to timely deliver the goods is not a material breach and that the parties modified the delivery date. Alternately, it argues that Eagon breached the contract by failing to provide adequate assurances or repudiating the contract. We affirm the trial court because ALPAC's failure to timely deliver goods is a material breach and the parties did not modify the delivery date. Further, ALPAC did not request assurances, and Eagon did not repudiate the contract.

FACTS

ALPAC and Eagon are both corporations engaged in importing and exporting raw logs. In April 1993, Setsuo Kimura, ALPAC's president, and C.K. Ahn, Eagon's vice president, entered into a contract under which ALPAC would ship about 15,000 cubic meters of logs from Argentina to Korea between the end of July and the end of August 1993. Eagon agreed to purchase the logs. In the next few months, the market for logs began to soften, making the contract less attractive to Eagon. ALPAC became concerned that Eagon would try to cancel the contract. Kimura and Ahn began a series of meetings and letters, apparently in an effort to assure ALPAC that Eagon would purchase the logs.

At Eagon, the home office was troubled by the drop in timber prices and initially withheld approval of the shipment. Ahn sent numerous internal memoranda to the home office to the effect that the corporation may not wish to go through with the deal, given the drop in timber prices, but that accepting the logs was "inevitable" under the contract. On August 30, Ahn sent a letter to the home office stating that he would attempt to avoid acceptance of the logs, but that it would be difficult and suggesting that they hold ALPAC responsible for shipment delay.

On August 23, Eagon received a faxed latter from ALPAC suggesting that the price and volume of the contract be reduced. Eagon did not respond to the fax. During a business meeting soon after, Kimura asked Ahn whether he intended to accept the logs. Ahn admitted that he was having trouble getting approval. Kimura thereafter believed that Eagon would not accept the shipment.

ALPAC eventually canceled the vessel that it had reserved for the logs because it believed that Eagon was canceling the contract. The logs were not loaded or shipped by August 31, 1993, but Ahn and Kimura continued to discuss the contract into September. On September 7, Ahn told Kimura that he would continue to try to convince headquarters to accept the delivery. Ahn also indicated that he did not want Kimura to sell the logs to another buyer. The same day, Ahn sent a letter to Eagon's head office indicating that "the situation of our supplier is extremely grave" and that Eagon should consider accepting the shipment in September or October. *fn1

By September 27, ALPAC had not shipped the logs. It sent a final letter to Eagon stating that Eagon had breached the contract because it failed to take delivery of the logs. Eagon's president, L.R. Haan, responded to the letter, stating that there was "no contract" because ALPAC's breach excused Eagon's performance. ALPAC filed a complaint for breach of contract in King County Superior Court. Eagon brought a motion for summary judgment, arguing that it did not breach, but that ALPAC breached by failing to deliver the logs. The trial court granted the motion and dismissed ALPAC's claims. ALPAC's motion for reconsideration was denied.

Discussion

ALPAC appeals from the trial court's order granting Eagon's motion for summary judgment.

A motion for summary judgment may be granted only if, "after viewing all the pleadings, affidavits, depositions, admissions and all reasonable inferences drawn therefrom in favor of the nonmoving party", the trial court finds, "(1) that there is no genuine issue as to any material fact, (2) that all reasonable persons could reach only one Conclusion, and (3) that the moving party is entitled to a judgment as a matter of law". Higgins v. Stafford, 123 Wash. 2d 160, 168-69, 866 P.2d 31 (1994). The appellate court reviews the trial court's decision de novo. Tollycraft Yachts, Corp. v. McCoy, 122 Wash. 2d 426, 431, 858 P.2d 503 (1993). ALPAC Breached by Failing to Timely Deliver Logs ALPAC's first contention is that it did not breach the contract by failing to timely deliver the logs because time of delivery was not a material term of the contract. ALPAC relies on common law contract cases to support its position that, when the parties have not indicated that time is of the essence, late delivery is not a material breach which excuses the buyer's duty to accept the goods. See Cartozian & Sons, Inc. v, Ostruske-Murphy, Inc., 64 Wash. 2d 1, 390 P.2d 548 (1964); Scott Paper Co. v. City of Anacortes, 90 Wash. 2d 19, 578 P.2d 1292 (1978). *fn2 However, as a contract for the sale of goods, this contract is governed by the Uniform Commercial Code, Article II (UCC II) which replaced the common law doctrine of material breach, on which ALPAC relies, with the "perfect tender" rule. Under this rule, "if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may . . . reject the whole." RCW 62A.2-601(a). Both the plain language of the rule and the official comments clearly state that, if the tender of the goods differs from the terms of the contract in any way, the seller breaches the contract and the ...


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