Lickley v. Max Herbold, Inc.

984 P.2d 697, 133 Idaho 209, 42 U.C.C. Rep. Serv. 2d (West) 104, 1999 Ida. LEXIS 78
CourtIdaho Supreme Court
DecidedJuly 21, 1999
Docket24615
StatusPublished
Cited by18 cases

This text of 984 P.2d 697 (Lickley v. Max Herbold, Inc.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lickley v. Max Herbold, Inc., 984 P.2d 697, 133 Idaho 209, 42 U.C.C. Rep. Serv. 2d (West) 104, 1999 Ida. LEXIS 78 (Idaho 1999).

Opinions

TROUT, Chief Justice.

This appeal involves a contract dispute. Lonnie Lickley (Lickley), a potato grower, entered a preseason potato growing contract with Max Herbold, Inc. (Herbold). After harvest, a dispute arose as to the price to be paid. Following a bench trial, the court awarded Lickley $33,000 in damages. The trial court found that because a substantial portion of the potatoes delivered failed to meet agreed upon standards, the contract required the parties to renegotiate a price. However, the parties could not agree, so the trial court set the price for the substandard potatoes at $7.55 per cwt., the market price at the time of delivery. Herbold appeals and Lickley cross-appeals.

I.

FACTUAL AND PROCEDURAL HISTORY

In 1995, Lickley entered a “One Year Potato Growing and Sales Contract” with Her-bold. Lickley agreed to plant, cultivate, harvest, and deliver 12,000 cwt. of Russet Burbank potatoes. The contract set a base price of $6.15 per cwt. Then, depending on the quality of the potatoes delivered, the contract provided for price adjustments.

To determine the quality of each load and establish a purchase price, the contract provided for inspection by the “Federal-State Inspection Service.” Paragraph (C)(4)(b) of the contract set minimum quality standards providing:

Any load or combination of loads inspecting below fifty percent (50%) well shaped U.S. NO. 1, two inch or 4 ounce minimum will be rejected under the contract.

[211]*211The contract also contemplated that an inspection might not be completed until after a load had been delivered and the potatoes commingled. In such instances, paragraph (C)(4)(e) provides:

The price for any load or combination of loads already delivered and placed in Company storage subsequently determined by inspection to be rejectable under this contract will have to be renegotiated between Grower and Company.

Over six days, Lickley delivered twenty-three truckloads totaling just over 12,000 cwt. of potatoes. Herbold accepted the shipments and commingled the potatoes with deliveries from other growers. Results from the inspections showed that the combination of loads delivered on each of the first four days failed to meet the minimum standards. Viewing all six days deliveries as a whole, eighty-five percent of the potatoes graded below the “U.S. No 1 two inch or 4 ounce minimum” standard.

Herbold notified Lickley that the potatoes were substandard and calculated a net price of $8.22 per cwt. using the pricing formula set out in the contract. Because a number of the accepted potatoes were “rejectable,” Lickley sought to renegotiate the price under the contract insisting upon $8.00 per cwt. Herbold rejected the offer. At a second meeting, Lickley requested $5.00 per cwt. and Herbold countered offering to waive the freight charges of $4,096 or to increase the initial $3.22 per cwt. offer to reflect that amount. Lickley refused, and this litigation ensued.

In January 1996, Lickley filed a complaint alleging that Herbold breached the contract by failing to renegotiate a price for the “rejectable” potatoes. Lickley asserted that he suffered more than $80,000 in damages, the market value of the potatoes at the time of delivery. Herbold answered claiming that Lickley failed to deliver conforming potatoes. While it accepted the goods, Herbold argues that Idaho law only requires that it pay the contract price.

Following a bench trial, the late Judge Granata found that the contract only required Lickley to deliver 12,000 cwt. of “field run potatoes” and that Lickley fully performed his obligations under the agreement. Herbold accepted all shipments. Because Herbold accepted “rejectable” potatoes, the contract required the parties to renegotiate a price for those potatoes. Judge Granata ultimately concluded that Herbold failed to negotiate in good faith and, as a result, determined that a reasonable price would be $7.55 per cwt., the market price at the time.1 The lower court awarded Lickley damages based on the market price for the rejectable potatoes and $4.11 per cwt. for the conforming potatoes — less costs, freight, and an amount previously tendered. The lower court also awarded costs and attorney fees to Lickley but denied Lickley’s request for prejudgment interest.

Both parties appeal.

II.

STANDARD OF REVIEW

Herbold brings this appeal asking this Court to review the district judge’s interpretation of the potato growing contract. Where the language of the contract makes clear the intentions of the parties, the interpretation and legal effect of the contract are questions of law over which we exercise free review. First Security Bank of Idaho v. Murphy, 131 Idaho 787, 791, 964 P.2d 654, 658 (1998). When interpreting any one contract provision, we must view the entire agreement as a whole to discern the parties’ intentions. Id. However, this Court will not set aside findings of fact unless they are clearly erroneous. Hunter v. Shields, 131 Idaho 148, 151, 953 P.2d 588, 591 (1998). If the district court’s factual determinations are supported by substantial and competent, albeit conflicting, evidence, we will not disturb [212]*212those findings. Marshall v. Blair, 130 Idaho 675, 679, 946 P.2d 975, 979 (1997).

III.

DISCUSSION

The Contract. This dispute involves a contract for sale of goods governed by the Uniform Commercial Code. See I.C. §§ 28-2-102, 105(1). There is no dispute as to the existence or validity of the contract, only the purchase price. Lickley agreed to plant, cultivate, harvest, and deliver 12,000 cwt. of Russet Burbank potatoes. Lickley delivered twenty-three loads over six days totaling just over 12,000 cwt. The purchase price depended upon the quality of the potatoes delivered. Under the contract’s terms, Herbold could reject any load or combination of loads that failed to meet specific minimum requirements, that is, “fifty percent (50%) well shaped U.S. NO. 1, two inch 4 ounce minimum.” The Federal-State Inspection Service examined the combined loads from each day, but did not return the results until Herbold had accepted each delivery by commingling the potatoes in its storage facilities. See I.C. § 28-2-606. Only the deliveries over the last two days met the contract requirements. In fact, viewing all shipments as a whole, eighty-five percent fell below the contract standard. Neither party challenges the inspection results.

The contract contemplated just this event, providing the following:

The price for any load or combination of loads already delivered and placed into Company storage subsequently determined by inspection to be rejeetable under this contract will have to be renegotiated between Grower and Company.

Using the contract’s pricing formula for conforming potatoes, Herbold calculated the purchase price for each day’s deliveries. The net result was $3.22 per cwt. for all the potatoes delivered. Lickley rejected Her-bold’s initial offer for this amount. The parties met twice and failed to agree upon a price.

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Lickley v. Max Herbold, Inc.
984 P.2d 697 (Idaho Supreme Court, 1999)

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Bluebook (online)
984 P.2d 697, 133 Idaho 209, 42 U.C.C. Rep. Serv. 2d (West) 104, 1999 Ida. LEXIS 78, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lickley-v-max-herbold-inc-idaho-1999.