USCA1 Opinion
[Not for Publication]
[Not for Publication]
United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
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No. 93-2322
TOBE PRODUCTS OF AMERICA, INC.,
Plaintiff, Appellee,
v.
MURRAY SHAPIRO D/B/A
VINTAGE CREATIONS LTD, INC.,
Defendants, Appellants,
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VINTAGE CREATIONS, LTD, INC.
Defendants, Appellants.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
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Before
Cyr and Stahl, Circuit Judges,
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and Zobel,* District Judge.
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David B. Wechsler with whom Hirsch Weinig was on brief for
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appellants.
Thomas A. Tarro, III with whom Fortunato & Tarro was on brief for
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appellee.
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August 29, 1994
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*Of the District of Massachusetts, sitting by designation.
STAHL, Circuit Judge. Following a two-day bench
STAHL, Circuit Judge.
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trial, the district court entered judgment in the amount of
$55,944.76, plus interest and costs, in favor of plaintiff-
appellee Tobe Products of America, Inc., ("Tobe") on its
breach of contract claim against defendant-appellant Vintage
Creations, Ltd., Inc. ("Vintage"). Vintage challenges this
order, asserting that the court erred in making certain
underlying factual and mixed fact/law findings. Vintage also
argues that the court committed sundry legal errors. We
affirm.
I.
I.
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BACKGROUND
BACKGROUND
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Tobe is a Rhode Island importer of glass stones
used in the manufacture of jewelry. Vintage is a New Jersey
jewelry manufacturer. In early 1991, Vintage entered into a
licensing agreement with the New York fashion designer
Kenneth Cole in which Cole agreed to lend his name to a new
jewelry line Vintage would manufacture and sell. Shortly
thereafter, Vintage identified Tobe as a possible source of
the stones to be used in this new line. Representatives from
Tobe visited Vintage, bringing specimen boards showing the
various shapes, sizes, and colors of handmade stones which
Tobe could procure from Germany.
On April 24, 1991, Vintage contracted with Tobe to
purchase approximately 40,000 stones, in various sizes,
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styles, and colors, for a price of roughly $100,000. The
contract provided for a 5% defect rate, and Tobe agreed to
credit Vintage for any defective stones over and above this
rate. The parties agreed that Tobe would ship the stones to
Vintage in lots whenever Vintage requested shipment, and that
Vintage would pay for each shipment within forty-five days.
The contract also permitted Vintage to maintain an
outstanding credit balance of up to $15,000. On October 31,
1991, Tobe was to ship to Vintage any stones on which
delivery had not yet been taken.
Throughout the spring, summer, and early fall of
1991, Vintage requested and accepted shipments of stones from
Tobe. It paid its bills on these shipments in a timely
manner. Vintage returned a portion of one of these shipments
because it did not need the stones until later in the
production run and because it had not yet requested that
these stones be shipped. Tobe issued Vintage a credit on the
returned stones. During this same time period, Vintage
informed Tobe on at least one occasion that more than 5% of
the stones it had received were of insufficient quality. It
did not, however, return any of the allegedly defective
stones for credit or replacement.
On October 31, 1991, pursuant to the terms of the
contract, Tobe shipped to Vintage all of the stones it then
had on hand, together with an invoice for $33,359.63.
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Vintage made partial payments on this invoice from December
1991 through February 1992, but failed to pay $20,621.85. On
November 15, 1991, Tobe received from Germany a late-
arriving, final shipment of stones. Upon receiving this
shipment, Tobe invoiced Vintage for an additional $35,322.91
and requested delivery instructions. Vintage failed to pay
any portion of this invoice, and never responded to the
request for delivery instructions. Tobe never shipped these
stones to Vintage.
All told, Tobe shipped Vintage approximately 32,000
stones. In April 1992, Vintage returned approximately 12,000
of these stones to Tobe, claiming that they were defective.
It continued to possess approximately 19,000 stones received
pursuant to the contract. At trial, Vintage claimed that
because of the alleged defects, it was able to use only
between six hundred and one thousand of the stones in the
manufacture of the jewelry.
In May 1992, Tobe instituted this suit against
Vintage to recover the $55,944.76, plus interest and costs,
allegedly due it under the contract. In November 1993, the
case was tried by Judge Torres. Tobe presented its case
through two witnesses. Its sales manager, Alexandra Rainer,
testified to the negotiations and course of business between
Tobe and Vintage. She further testified that the stones at
issue were unique, that they conformed to contract
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specifications, and that Tobe had made efforts to resell
them. Tobe also produced an expert witness, Donald Donnelly,
who testified that the stones were unique, conforming, and of
very high quality.
Vintage's only witness was its vice president, Drew
Shapiro. Shapiro testified that he had personally inspected
each of the shipped stones and found that 85-90% of them were
defective. He also testified that he had not returned the
stones because he had reached an oral agreement with Tobe's
director, Jurgen Feix, to retain all of the defective stones
for a final accounting once each side had completed
performance of the contract. Shapiro claimed that continuing
to accept and pay for the stones was his only real option; he
had invested approximately $300,000 in the jewelry into which
the stones were to be set, and risked losing that investment
entirely unless he continued to perform under the contract.
He therefore relied on Feix's alleged repeated, oral
assurances that Tobe ultimately would provide Vintage with a
sufficient number of quality stones to meet production needs.
On November 4, 1993, Judge Torres issued a bench
decision awarding Tobe the full amount of damages sought. In
so doing, he specifically found that the disputed stones were
unique goods identified to the contract, and that they
conformed to contract specifications. He also found that
Tobe had made reasonable efforts to resell the stones and
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that Tobe did not act improperly by failing to deliver the
last shipment. Judgment entered on November 10, 1993. This
appeal followed.
II.
II.
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DISCUSSION
DISCUSSION
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The primary thrust of Vintage's appellate brief is
that the trial court erred in finding that Tobe had carried
its burden of proving that (1) the stones were unique goods;
(2) the stones conformed to contract specifications; and (3)
it had made commercially reasonable efforts to resell the
stones it continues to possess. Vintage also takes issue
with the court's determination that Tobe acted reasonably in
failing to forward the final shipment of stones to Vintage.
Finally, Vintage contends that Tobe's failure to provide
evidence of market price and/or lost profits requires
reversal of the district court's decision. After reciting
the relevant standard of review, we discuss each argument in
turn.
A. Standard of Review
A. Standard of Review
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Insofar as Vintage is challenging the district
court's legal rulings, our review is, of course, plenary.
E.g., Williams v. Poulos, 11 F.3d 271, 278 (1st Cir. 1993).
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We will not set aside a court's factual finding, however,
unless it is shown to be clearly erroneous. Fed. R. Civ. P.
52(a); Poulos, 11 F.3d at 278. Nor will we overturn a trial
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court's determination of a fact-dominated mixed law/fact
question unless we are persuaded that the determination
constituted clear error. Poulos, 11 F.3d at 278 and n.11.
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And, in cases like this one where the challenged findings
"are based on determinations regarding the credibility of
witnesses, Rule 52 demands that the appeals court accord even
greater deference to the trial court's findings." Rodriguez-
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Morales v. Veterans Admin., 931 F.2d 980, 982 (1st Cir.
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1991); see also Fed. R. Civ. P. 52(a).
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B. Factual Findings Regarding Burden of Proof
B. Factual Findings Regarding Burden of Proof
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The parties agree that Rhode Island law governs
this dispute and that R.I. Gen. Laws 6A-2-709(1), which
codifies 2-709(1) of the Uniform Commercial Code, applies
to this action for the contract price of the stones.* The
parties also agree that, as a prerequisite to recovery of the
contract price under 6A-2-709(1), Tobe had to establish
that the stones were unique, that they conformed to contract
specifications, and that it had made commercially reasonable
efforts to resell them. See Taft-Peirce Mfg. Co. v. Seagate
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*.
In relevant part, R.I. Gen. Laws 6A-2-709(1) provides:
Action for the price.- (1) When the buyer fails to
Action for the price.-
pay the price as it becomes due the seller may
recover . . . the price,
(a) Of goods accepted . . .; and
(b) Of goods identified to the contract
if the seller is unable after reasonable
effort to resell them at a reasonable
price . . . .
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Technology, Inc., 789 F. Supp. 1220, 1228 (D.R.I. 1992)
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(setting forth conditions precedent to recovery under 6A-2-
709(1)). Their only disagreement is over whether the
districtcourt erred in concludingthat Tobe hadmet its burden.
Certainly, Tobe did not overwhelm the court with
evidence tending to establish the conditions precedent to
recovery under 6A-2-709(1). Mindful of the deference we
must accord both the district court's resolution of fact-
dominated mixed fact/law questions and its credibility
determinations, however, we cannot say that the court
committed clear error in making its rulings. With regard to
whether the stones were unique, the court heard and credited
testimony from Tobe's sales manager, Alexandra Rainier, that
Tobe did not carry the stones at issue in stock, but rather
ordered them specially from German manufacturers. Moreover,
the court heard and credited testimony from plaintiff's
expert, Donald Donnelly, that the stones had unique and
uncommon shapes and colors.** Finally, the court
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**.
In a footnote, Vintage makes a half-hearted argument that the
court committed reversible error in allowing Mr. Donnelly to
testify as an expert pursuant to Fed. R. Evid. 702. It is
well settled that a court's admission of expert testimony
under Rule 702 will be reversed only for an abuse of
discretion. See, e.g., Navarro de Cosme v. Hospital Pavia,
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922 F.2d 926, 931 (1st Cir. 1991). We have reviewed the
trial transcript and are of the view that the court did not
abuse its discretion in determining that Mr. Donnelly, by
virtue of his twenty-eight years of experience in importing
glass stones from Germany, would provide testimony that would
assist it in "understand[ing] the evidence or . . .
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specifically noted that it found Ms. Rainier and Mr. Donnelly
to be credible witnesses, and that it did not find Drew
Shapiro, the only person who testified on behalf of Vintage,
to be a credible witness. No more was required to support
its uniqueness determination.***
With regard to whether the stones were conforming
and whether Tobe made commercially reasonable efforts to
resell them, the evidence, though thin, also was sufficient.
The court heard and credited testimony from Ms. Rainier that
(1) she randomly inspected the shipments of stones when they
came from Germany; (2) the stones she inspected were
conforming;**** (3) the stones returned by Vintage in
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determin[ing] a fact in issue . . . ." See Fed. R. Evid.
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702. Accordingly, we reject Vintage's claim of reversible
error.
***.
Vintage also argues that the court, in allowing Tobe to argue
at trial that the stones were unique, effectively (and
prejudicially) allowed Tobe to amend its complaint at the
eleventh hour. The complaint, however, seeks contract-price
damages (the recovery of which requires a uniqueness showing
under the Uniform Commercial Code) and refers to the stones
as "specific goods and merchandise." In our view, this was
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sufficient to put Vintage on notice that the uniqueness of
the stones would be an issue at trial. Generally speaking,
no more is required under Fed. R. Civ. P. 8. See Boston &
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Maine Corp. v. Town of Hampton, 987 F.2d 855, 865 (1st Cir.
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1993) (discussing the "minimal" requirements of notice
pleading under Rule 8). Tobe's uniqueness argument therefore
should not be regarded as a de facto amendment to the
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complaint.
****.
In its brief and at oral argument, Vintage asserted that
there was a complete absence of evidence that the shipment
which Tobe received in November 1991 but never forwarded to
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April 1992 were conforming; (4) many of the boxes of these
allegedly non-conforming stones had never been opened by
anyone at Vintage; and (5) she had attempted to resell the
stones to other customers, but had been unsuccessful because
they were very expensive and came in unusual colors. It also
heard and credited testimony from Mr. Donnelly that many of
the boxes of stones returned in April 1992 had never been
opened and that the allegedly non-conforming stones he
inspected were not defective. Finally, the court
specifically rejected the only evidence offered by Vintage
which tended to indicate that the stones were not conforming:
the testimony of Mr. Shapiro.***** In our view, this is
enough to insulate its conformity and commercial
reasonableness rulings from reversal on appeal.
C. Other Matters
C. Other Matters
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The other issues raised by Vintage can be disposed
of summarily. Vintage's first argument, that the court
committed reversible error in ruling that Tobe acted
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Vintage (as distinct from the stones Vintage returned to Tobe
in April 1992) was conforming. This simply is not so. In
the course of stating her opinion that the stones conformed
to contract specifications, Ms. Rainier gave the following
testimony: "I randomly inspected the shipments when they
come [sic] from Germany and I also randomly inspected the
merchandise that came back from Vintage just to make sure."
*****.
Vintage offered no evidence which either tended to undermine
Ms. Rainier's testimony that she had been unable to resell
the stones or which tended to show that her efforts were not
commercially reasonable.
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reasonably in failing to forward to Vintage the final lot of
stones, is premised entirely upon a contention that the court
erroneously interpreted the contract's $15,000 credit limit.
We need not reach the merits of this contention, however,
because the court also based its reasonableness determination
on a supportable, alternative finding that Vintage never
responded to Tobe's request for shipping instructions
regarding the final lot. And, upon carefully reviewing the
record, we can discern no clear error in either the finding
that Vintage did not respond to the instructions or in the
determination that this failure to respond provided a
reasonable basis for Tobe's failure to ship.
Vintage's second argument, that reversal is
required because Tobe failed to provide any evidence of
market price and/or lost profits, is specious. The argument
is based entirely upon an incorrect reading of Karen v. Cane,
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578 N.Y.S.2d 85 (Cir. Ct. 1991). Karen notes the need for a
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seller to establish market price in order to prevail on a
claim under Uniform Commercial Code 2-708; it does not
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establish this as a requirement in the context of an action
for the price under 2-709(1). Such a requirement would make
no sense in the context of 2-709(1), which, by its very
nature, allows a seller to recover damages established by a
previously agreed-upon sale price when certain conditions are
met.
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III.
III.
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CONCLUSION
CONCLUSION
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For the reasons stated above, we affirm the
district court's entry of judgment in favor of Tobe on its
breach of contract claim.
Affirmed. Costs to appellee.
Affirmed. Costs to appellee.
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