GPL Treatment, Ltd. v. Louisiana-Pacific Corp.

894 P.2d 470, 133 Or. App. 633

• Court: Court of Appeals of Oregon
• Decided: July 18, 1995
• Docket: 9209-06143; CA A81171
• Status: Published

Opinions

De MUNIZ, J.

Plaintiffs are three separate wood products corporations owned and operated by members of the Clarke family, in British Columbia, Canada. Plaintiffs sued Louisiana-Pacific Corporation (L-P) to recover lost profits on alleged agreements by plaintiffs to sell 88 truckloads of cedar shakes to L-P. The jury returned a verdict for plaintiffs for the maximum amount of each plaintiffs prayer, and L-P appeals.

Plaintiffs Scott Cedar Products (Scott Cedar) and Blackhawk Forest Products, Ltd. (Blackhawk), manufacture and sell raw shakes and shingles. Plaintiff GPL Treatment, Ltd. (GPL), buys raw shakes, treats them, and sells them as “Class C” shakes. Treated shakes are packaged into bundles, with five bundles constituting a “square,” and are often sold by the truckload. The price for cedar shakes fluctuates widely with market demand.

In early spring of 1992, a series of hailstorms in the Midwest caused an increased demand for cedar shakes and a concomitant increase in the price of Class C shakes. Plaintiffs’ principal sales person, Gerry Feaver, visited with Dan Cunnally, a shake and shingle trader for L-P. Feaver testified that telephone conversations between the two led to a May 6, 1992, deal for L-P to purchase 66 truckloads of Class C shakes. He testified that he filled out and signed six of plaintiffs’ “Confirmation Form” documents and sent to L-P the two top copies of each of six four-part documents.

In contrast, Cunnally testified that he made no commitment for L-P to purchase any product in any of the telephone conversations with Feaver; that he had told Feaver that the price was too high; and that L-P would not allow him to buy the volume of shakes that Feaver was offering to sell. Cunnally testified that he told Feaver that L-P would buy some shakes later and that Feaver understood that arrangement. Cunnally testified that he did not receive plaintiffs’ “Confirmation Form” documents.

According to plaintiffs’ evidence, plaintiffs became concerned in June 1992, when Cunnally did not ask for delivery of the shakes. Feaver testified that Cunnally had told him that L-P’s customer in Dallas, Texas, was not using shakes as fast as anticipated. In the meantime, the market price for shakes had dropped. Feaver testified that plaintiffs and Cunnally had additional conversations and negotiations about adjusting the volume and price of the order. Cunnally denied any such negotiations.

On about June 30 or July 1, Feaver was on personal business in eastern Canada, and Scott Clarke was in Portland visiting the office of Scott Cedar. Clarke testified that he took it upon himself to “finalize the deal with Mr. Cunnally.” According to his testimony, he wrote a new order, revising prices and quantities for materials to be sold by plaintiffs to L-P. Clarke testified that the new order was firm, to accommodate L-P’s needs. Clarke testified that Cunnally was “elated” with the new arrangement because it reduced the price.

Cunnally’s testimony gives a different version of the conversation. He testified that Clarke called to try to sell more shakes to L-P, at specific quantities and lower prices than had been offered by Feaver, but that otherwise the arrangement was to be the same as it had been. Cunnally testified that he did not commit L-P to the purchase of shakes.

Clarke testified that, after working out the details of the revised order with Cunnally, he immediately telephoned Rick Sherneck in Canada and told Sherneck “to phone Dan Cunnally and confirm the order, then follow v. with an order confirmation.” Sherneck testified that Clarke instructed him, “We have a deal with L-P. I want you to write this down and then I want you to phone Dan Cunnally and confirm it with him.”

Sherneck testified that he telephoned Cunnally, and confirmed the volumes and prices for the revised order in exact detail. He testified that he filled out order confirmation forms and put the top two copies of each form into the out basket for mailing to L-P. Cunnally testified that he remembers no such telephone call from Sherneck. He testified that he did not receive any writing from plaintiffs confirming any orders.

L-P took delivery of 13 truckloads of shakes in July 1992. Accordingto plaintiffs, when L-P failed to give shipping instructions for an additional 75 truckloads of shakes, it became concerned. Feaver testified that he spoke to Cunnally every day about why the shakes were not being delivered. Cunnally testified that he had no such conversations with Feaver, and that he was, in fact, out of town on vacation during that period of time.

On about August 1, 1992, plaintiffs inquired of L-P about a shipment schedule for an additional 75 truckloads of shakes that had allegedly been ordered by L-P. Plaintiffs sent a letter to L-P asserting an agreement for the delivery of 75 additional truckloads of shakes over a three-week period. L-P responded that the parties had no such agreement.

Plaintiffs brought this action to recover their respective profit losses on an alleged agreement to sell a total of 88 truckloads of cedar shakes to L-P. L-P claimed that it was responsible for only 13 truckloads, which were shipped and paid for. Plaintiffs claimed that L-P breached its agreement to accept the remaining 75 truckloads. L-P asserted as an affirmative defense that plaintiffs’ claims are barred by the Statute of Frauds. The jury returned a verdict for the maximum amount of each plaintiffs prayer: $500,921 for GPL; $134,372 for Scott Cedar; and $106,984 for Blackhawk.

L-P assigns error to the trial court’s denial of its motion to withdraw from the jury GPL’s claim for lost profits, on the ground that there was an insufficient basis for estimating the amount of net profit with reasonable certainty. To recover for lost profits, a plaintiff must establish, with reasonable certainty, both the existence and amount of lost profits. Pearson v. Schmitt, 259 Or 439, 442, 487 P2d 84 (1971). Only net lost profit may be recovered. As the Supreme Court said in Cont. Plants v. Measured Mkt., 274 Or 621, 624, 547 P2d 1368 (1976), and Husky Lbr. v. D. R. Johnson Lbr. Co., 282 Or 481, 579 P2d 235 (1978), “reasonable certainty” signifies nothing more than “probability” and is found to refer to the kind of evidence required rather than the quantum of proof. In reviewing the trial court’s denial of the motion to withdraw the issue of lost profits from the jury, the question is whether there was evidence in the record to permit a finding of some net lost profits. Rennick v. Jackson & Coker, 95 Or App 72, 74, 767 P2d 478 (1989); see also Frogge v. U S West Communications, Inc., 120 Or App 619, 620, 853 P2d 1323, on recon 124 Or App 669, 863 P2d 1313 (1993), rev den 319 Or 36 (1994).

GPL claims that its lost profit on unshipped orders was $500,921. It supports that claim with testimony of its chief financial officer and two exhibits tracking his calculations, which were based on GPL’s costs and the alleged agreed sale price for the unshipped shakes. L-P argues that GPL’s listed costs for raw materials are grossly understated, that they are, in fact, Scott Cedar’s cost for the raw logs. Yet, L-P contends, GPL’s own cost of sales records reveal that Scott Cedar charged GPL market price for the shakes it sold to GPL for the L-P deal. L-P argues that, by plaintiffs’ own computations, Scott Cedar’s market prices for raw shakes were $118 per square for heavy shakes and $95 per square for light shakes, not the listed $54.56 and $47.01 per square. In its closing argument to the jury, L-P argued that the market cost was the appropriate raw material cost to be used in calculating any alleged lost profit.

It was for the jury to decide the exact amount of the lost profits, and we conclude that there was ample evidence from which the jury could make that determination, either by use of the figures provided by GPL or based on the market price, as argued by L-P. The trial court did not err in denying L-P’s motion to take the issue of GPL’s lost profits from the jury.

Before trial, L-P made a request for production of documents from plaintiffs. Inadvertently, when plaintiffs’ legal counsel filed his response to the request, he also sent to L-P’s counsel a facsimile cover sheet with a handwritten note by Sherneck to plaintiffs’ legal counsel. The note stated:

“Attached find a page from [Feaver’s] journal re the booking of the original orders and a page from my journal detailing [Scott Clarke’s] call re the deal with L.P and J.E.H. Co.”

L-P argues that, because Sherneck makes no mention in the note of his own alleged conversation with Cunnally, the inference is that he had no such conversation. L-P sought to introduce that note as evidence that Sherneck never called Cunnally. The trial court excluded the note as a privileged attorney-client communication protected from disclosure by OEC 503.¹ L-P concedes that the note is a privileged communication but argues that, by producing the note, although inadvertently, in the normal course of discovery, plaintiffs waived any attorney-client privilege pursuant to OEC 511.²

Whether a party has waived the attorney-client privilege is a question of fact to be determined by the trial court pursuant to OEC 104.³ Goldsborough v. Eagle Crest Partners, Ltd., 314 Or 336, 342, 838 P2d 1069 (1992). Factors the court may consider include whether the disclosure was inadvertent, whether any attempt was made to remedy any error promptly and whether preservation of the privilege will occasion unfairness to the proponent. 314 Or at 342. The record indicates that the trial court considered statements from plaintiffs’ counsel that the note had been inadvertently attached to other documents sent to L-P and that plaintiffs’ counsel was not aware that the note had been sent or that L-P intended to offer it at trial until the day it was to be offered. The court found that there had been no voluntary disclosure. We conclude that the record supports the trial court’s finding and its determination that there was no waiver of the attorney-client privilege, and that it did not err in excluding the handwritten note.

In its third assignment of error, L-P contends that the trial court erred in denying its motions in limine and for a directed verdict on the ground that the alleged contract for the sale of shakes fails for noncompliance with Oregon’s Uniform Commercial Code Statute of Frauds. Specifically, the motions sought to exclude evidence of the written order confirmations that plaintiffs allegedly sent to L-P.

ORS 72.2010 provides, in relevant part:

“(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by the authorized agent or broker of the party. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.

“(2) Between merchants, if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) of this section against such party unless written notice of objection to its contents is given within 10 days after it is received.” (Emphasis supplied.)

Under subsection (2), the “merchants’ exception” to the Uniform Commercial Code Statute of Frauds applies, when both parties to the transaction are merchants, if one merchant receives written confirmation of an oral contract from another merchant “sufficient against the sender,” the contract becomes enforceable unless the recipient objects within 10 days. L-P argued to the trial court, and argues on appeal, that the order confirmations that plaintiffs allegedly sent to L-P áre inadmissible as proof of the agreements and in satisfaction of the Statute of Frauds, because, as a matter of law, they are insufficient under ORS 72.2010 to constitute written confirmations of the contracts. The trial court held, as a matter of the law, that the documents were confirmations. The court submitted to the jury the factual questions of whether the confirmations were received by L-P, whether L-P knew their contents and whether L-P sent written notice of objection to plaintiffs. The assignment of error relates only to the trial court’s ruling concerning the legal effect of the documents, i.e., that they are, as a matter of law, sufficient to constitute “confirmations” under ORS 72.2010.

The printed order confirmation forms consist of four pages, one original page and three copies. The original and first copy are sent to the buyer. Those two pages are, for the most part, identical. At the top left of both, in large print, is the name and address of the selling company. At the top right are boxes for the date and the seller’s order number. Directly underneath those boxes, in large bold print, are the words “ORDER CONFIRMATION.” The form contains two address blocks of three single-spaced lines each, encaptioned “SOLD TO” and “SHIP TO.” Underneath those address blocks are three slim, long boxes of one line each for shipping instructions, terms of payment and the customer number. The largest part of the form, filling approximately one half the page, is for a description of the product, with a place to note FOB mill, freight and delivery price. At the bottom right of the form is the name of the selling company, and underneath it a signature line following the word “BY.” Underneath that line are the words “THANK YOU.”

The original and first copy differ in one respect. At the bottom left of the original, in small print, are the words:

“CONDITIONS OF SALES;

“All orders accepted subject to strikes, labor troubles, car shortages or other contingencies beyond our power to control. Any freight rate increases, sales or use taxes is for buyers account.”

Then, beneath that block, in smaller print but highlighted, are the words: “SIGN CONFIRMATION COPY AND RETURN.” At the bottom left of the first copy, the “confirmation copy,” in small print, are the words: “ORDER ACCEPTED BY:,” followed by a line for firm name. Below that is a line for a signature and the title of the person signing, and the date.

L-P concedes that the documents contain all the elements necessary to confirm an order. However, L-P contends that, by instructing the buyer to sign the confirmation copy on the “order accepted by” line and return that copy to plaintiffs, plaintiffs have indicated an intention that the agreement is to become final only after L-P’s approval of the quoted terms.

Considering the document in its entirety, we conclude that it cannot reasonably be read as L-P suggests. The form is captioned “ORDER CONFIRMATION,” boldly and in large print. Unlike the forms involved in the cases relied on by the dissent, see, e.g., Great Western Sugar Co. v. Lone Star Donut Co., 567 F Supp 340 (ND Tex), aff’d 721 F2d 510 (5th Cir 1983); Kline Iron & Steel Co., Inc. v. Gray Com. Consultants, Inc., 715 F Supp 135 (DSC 1989), there is no language on this form, either on the original or the first copy, indicating that the parties are in the course of negotiations, that plaintiffs are merely proposing terms or that L-P must approve the terms. Every feature of the form suggests that it is what it is labeled, a confirmation and not a mere offer. We conclude that the sign and return instruction does not alter the apparent purpose of the document, to confirm in writing a completed agreement for the sale of shakes.⁴ The trial court did not err in denying L-P’s motions in limine and for a directed verdict.

Affirmed.

1 OEC 503(2)(a) provides, in part:

“A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client:

“(a) Between the client * * * and the client’s lawyer or representative of the lawyerf.]”

2 OEC 511 provides, in part:

“A person upon whom [OEC 503 to 514] confer a privilege against disclosure of the confidential matter or communication waives the privilege if the person * * * voluntarily discloses or consents to the disclosure of any significant part of the matter of communication. This [rule] does not apply if the disclosure is itself a privileged communication.”

3 OEC 104(1) provides:

“Preliminary questions concerning the qualifications of a person to be a witness, the existence of a privilege or the admissibility of evidence shall be determined by the court * * *. In making its determination the court is not bound by the rules of evidence except those with respect to privileges.”

4 If there is anything uniform about the way courts have decided the question presented here, it is that each document must be evaluated independently and in the light of its contents, and that there is no single correct answer to the question of the effect of a “sign and return” provision. Contrary to the view expressed by the dissent, our opinion is consistent with that analysis and does not create an Oregon exception.

The dissent disapprovingly suggests that our opinion holds that the form sent to L-P is a confirmation because it is labeled “ORDER CONFIRMATION.” That certainly is one significant consideration. It is not the exclusive one, however, the primary inquiry being whether the contents of the form show that it is what it is labeled. It seems that the dissent would cast aside those considerations in favor of a rule that when a form contains a “sign and return” clause it cannot, as a matter of law, be an order confirmation. That is most clearly wrong.