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contractdamagesattorneyappealtrialwill

Related Cases

Kenco Homes, Inc. v. Williams, 94 Wash.App. 219, 972 P.2d 125, 40 UCC Rep.Serv.2d 479

Facts

Kenco Homes, Inc. entered into a contract with Dale E. Williams and Debi A. Williams for the sale of a mobile home that had not yet been ordered from the factory. The contract included conditions regarding financing and site improvements, which were met by the Williamses. However, after providing a check for an appraisal, the Williamses stopped payment and repudiated the contract, claiming they found a better deal elsewhere. Kenco had not yet ordered the mobile home and subsequently did not incur significant expenses related to the transaction.

On September 27, 1994, Kenco and Williams signed a written contract whereby Kenco agreed to sell, and Williams agreed to buy, a mobile home that Kenco had not yet ordered from the factory. The contract called for a price of $39,400, with $500 down.

Issue

Did the trial court use the correct measure of damages when it awarded Kenco only the down payment instead of lost profits?

Rule

Under the Uniform Commercial Code, a nonbreaching seller may recover damages for non-acceptance from a breaching buyer, which can include lost profits if the standard measure of damages is inadequate to put the seller in as good a position as performance would have done.

Under the Uniform Commercial Code (UCC), a nonbreaching seller may recover 'damages for non-acceptance' from a breaching buyer.

Analysis

The court found that Kenco was a lost volume seller, as they had a virtually unlimited supply of mobile homes and chose not to order the home after the Williamses' breach. Since Kenco could not resell the home on the open market, the standard measure of damages was inadequate, and thus Kenco was entitled to recover lost profits of $11,133.

In this case, Kenco did not order the breached goods before Williams repudiated. After Williams repudiated, Kenco was not required to order the breached goods from the factory; it rightfully elected not to do so; and it could not resell the breached goods on the open market.

Conclusion

The Court of Appeals reversed the trial court's decision and directed that Kenco be awarded its lost profits and reasonable attorney's fees.

Reversed with directions to enter an amended judgment awarding Kenco its lost profit of $11,133; reasonable attorneys' fees incurred at trial and on appeal; and any ancillary amounts required by law.

Who won?

Kenco Homes, Inc. prevailed in the appeal because the court determined that the trial court had applied an incorrect measure of damages, and Kenco was entitled to lost profits.

Kenco is the prevailing party. On remand, the trial court shall award Kenco reasonable attorneys' fees incurred at trial and on appeal.

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