Gaynor Electric Co. v. Hollander

618 A.2d 532, 29 Conn. App. 865, 19 U.C.C. Rep. Serv. 2d (West) 791, 1993 Conn. App. LEXIS 9, 1993 WL 1008
CourtConnecticut Appellate Court
DecidedJanuary 5, 1993
Docket10903
StatusPublished
Cited by16 cases

This text of 618 A.2d 532 (Gaynor Electric Co. v. Hollander) is published on Counsel Stack Legal Research, covering Connecticut Appellate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gaynor Electric Co. v. Hollander, 618 A.2d 532, 29 Conn. App. 865, 19 U.C.C. Rep. Serv. 2d (West) 791, 1993 Conn. App. LEXIS 9, 1993 WL 1008 (Colo. Ct. App. 1993).

Opinion

Lavery, J.

The defendant appeals from the trial court’s judgment in favor of the plaintiff on the defendant’s counterclaim for incidental damages. The defendant asks that we reverse the judgment of the trial court because (1) the trial court incorrectly determined that certain contractual terms added by the plaintiff to the backs of its invoices were incorporated into the contract between the parties by virtue of the Uniform Commercial Code (UCC), and (2) the trial court incorrectly ruled that the added terms barred the defendant from recovering incidental damages. Because the added terms of the contract did not, as a matter of law, bar the defendant from seeking incidental damages, we need not reach the merits of the defendant’s first claim. We reverse the judgment of the trial court and remand the case for a new trial on the issue of incidental damages.

The trial court found the following facts. The plaintiff, a Connecticut corporation that manufactures electromagnetic switches, and the defendant, who makes heated handlebar grips for snowmobiles, began a business relationship in 1986, when the plaintiff agreed to supply the defendant with a large quantity of switches in 1987. Thereafter, agreements were reached for supplying switches to the defendant for 1988 and 1989 as well.

In July, 1989, the defendant discovered a defect that caused a large number of the switches to jam and therefore to become unusable in its product. After being notified of the problem and inspecting the switches, the plaintiff requested that the defendant return all of the switches in its inventory. Between August and November of 1989, the defendant packed up and shipped 29,000 switches back to the plaintiff. Meanwhile, the plaintiff supplied the defendant with 6000 higher quality switches, and endeavored to repair and replace the returned switches in order to fill the remainder of the defendant’s order.

[867]*867A dispute arose between the parties when the defendant did not pay for additional and previously replaced switches, and the plaintiff brought an action to recover the debt. Just prior to trial, the parties stipulated that judgment would enter in favor of the plaintiff on the indebtedness claim of $17,900.58. The issues remaining before the trial court were those raised by the defendant in a four count counterclaim relating to its claims for incidental damages.

We note that the defendant reiterated at oral argument, in response to questions from the court, that he was seeking only incidental damages on appeal, and, although consequential damages were alleged at trial, there was no attempt to prove them.1 In its memorandum of decision, the trial court wrote: “It is Hollander’s claim that, as a result of the faulty product supplied, he incurred substantial expense in unpacking, repacking, and shipping the 29,000 switches recalled by the plaintiff. Furthermore, he alleges losses of goodwill and market share as a result of the defective switches that reached Hollander’s customers, as well as other related [868]*868expenditures.” At oral argument, when discussing this passage, counsel for the defendant noted that the “$15,000 figure,” or claim for damages, comes from the expenses of unpacking, repacking, and shipping the 29,000 defective switches, and further said, “We acknowledged in our trial brief below that we had been unable to put any price tag on [the loss of goodwill, market share, and related expenditures].” The record shows, therefore, that the defendant made no attempt to prove, and made no monetary claim for, consequential damages.

The trial court determined that the contract terms on the back of the plaintiffs invoices, barring recovery for consequential damages, did constitute part of the contract between the parties. The defendant argues on appeal that these terms are not part of the contract, and therefore do not limit his remedies. We need not determine whether the trial court correctly ruled that the invoice terms were part of the contract because, even if we assume that the trial court ruled correctly, those terms do not bar the incidental damages that the defendant seeks.

The contractual terms written on the reverse side of the plaintiffs invoices, by their plain language, do not bar the recovery of incidental damages, and in fact allow for their recovery. The section of the invoice entitled “Limitation of Liability,” reads: “The liability of the Seller to the Buyer arising out of the manufacture, sale, delivery, use or resale of the goods, whether based on warranty, contract, negligence or otherwise, shall not exceed the cost of correcting defects in the goods as herein provided. Upon the expiration of the warranty period, all such liability shall terminate. The Seller shall not be liable to the Buyer or ultimate users of the equipment into which the goods are incorporated for loss of anticipated profits, loss by reason of plant shutdown or service interruption, nonoperation or [869]*869increased expense of operation of other equipment, loss of use of revenue, cost of capital or other consequential loss or damage of any nature arising from any cause whatsoever by reason of the manufacture, sale, delivery, use or resale of the goods covered hereunder.” The terms do not mention incidental damages.

The UCC makes a clear distinction between incidental and consequential damages. General Statutes § 42a-2-715,2 which corresponds to UCC § 2-715, provides that incidental damages include expenses incidental to the seller’s breach, while consequential damages includes damages resulting from the seller’s breach. “Because consequential damages are defined in a separate subsection, there is no question that these expenses are distinct from consequential damages.” S & R Metals, Inc. v. C. Itoh & Co., 859 F.2d 814, 818 (9th Cir. 1988). As the official comment to § 2-715 of the UCC notes, incidental damages are intended to “provide reimbursement for the buyer who incurs reasonable expenses in connection with the handling of rightfully rejected goods or goods whose acceptance may be justifiably revoked . . . .” These damages are clearly distinguishable from consequential damages, and therefore “may be recovered even when consequential damages are excluded.” Carbontek Trading Co. v. Phibro Energy, Inc., 910 F.2d 302, 308 (5th Cir. 1990).

[870]*870The plaintiff argues that incidental damages are covered by the language of paragraph six of the invoice terms which states that the seller shall not be liable for “consequential loss or damage of any nature arising from any cause whatsoever by reason of the manufacture, sale, delivery, use or resale of the goods covered hereunder.” In its brief, the plaintiff emphasizes the words “or damage of any nature” to claim that the document excludes incidental damages. Both grammatically and contextually, the plaintiff’s argument fails upon close examination of the contractual language.

Paragraph six begins by listing several forms of consequential damage: loss of anticipated profits, loss by reason of plant shutdown or service interruption, nonoperation or increased expense of operation of other equipment, loss of use of revenue, and cost of capital. This list is followed by the words “or other consequential loss or damage of any nature . . .

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Bluebook (online)
618 A.2d 532, 29 Conn. App. 865, 19 U.C.C. Rep. Serv. 2d (West) 791, 1993 Conn. App. LEXIS 9, 1993 WL 1008, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gaynor-electric-co-v-hollander-connappct-1993.