Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 04AS04095
RAYE, J.Defendants Steve Mooney and Mary Mooney, doing business as Mooney Farms (Mooney), entered into a contract with plaintiff Culinary Farms (Culinary) to purchase 135,000 pounds of California sun-dried tomatoes. Culinary delivered the sun-dried tomatoes to Mooney, who never inspected or paid for them. After Culinary regained possession of the sun-dried tomatoes, Culinary filed suit against Mooney for breach of contract and conversion. Subsequently, Culinary was able to resell the 135,000 pounds of sun-dried tomatoes to other purchasers.
Culinary filed a motion for summary judgment, which the trial court granted. Mooney appeals, arguing the trial court erred in finding, as a matter of law, Culinary was a volume seller entitled to recover damages for the lost profit on the 135,000 pounds of sun-dried tomatoes. Mooney also challenges the court’s calculation of the per-pound price. Finally, Mooney argues the value of the sun-dried tomato bins underlying the conversion claim raises a triable issue of fact. We shall remand for a recalculation of Culinary’s damages at $2.60 per pound. In all other respects, we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Culinary sells agricultural products, including sun-dried tomatoes. Mooney is a large processor of sun-dried tomatoes. Since 1999 Culinary has sold sun-dried tomatoes to Mooney under written contracts annually.
In the summer of 2003, Culinary and Mooney entered into negotiations for a new contract. In a letter dated July 30, 2003, Culinary informed Mooney that it would agree to reduce the purchase price of sun-dried tomatoes from $2.75 to $2.60 per pound. However, if Mooney failed to perform under the contract, the price would revert to $2.75 per pound.
That fall, Culinary and Mooney executed a contract in which Culinary agreed to deliver 135,000 pounds of sun-dried tomatoes to Mooney’s cold storage facility in four separate installments several months apart at a price of $2.60 per pound. Mooney never inspected or paid for any of the sun-dried tomatoes shipped by Culinary. Culinary subsequently regained possession of the tomatoes and sold the 135,000 pounds to other customers.
In addition, over the years Culinary had shipped its sun-dried tomatoes to Mooney in large wooden bins. Mooney failed to return 177 bins.
Culinary filed a complaint against Mooney alleging breach of contract and conversion. Culinary sought damages equal to the contract price for the 135,000 pounds of sun-dried tomatoes, plus interest. In addition, Culinary requested damages for the unreturned bins in the amount of the replacement value of the bins.
Summary Judgment Motion
Culinary filed a motion for summary judgment on both the breach of contract and conversion claims.
Breach of Contract Damages
Mooney’s breach of contract was undisputed. Culinary’s motion for summary judgment addressed the issue of damages. Culinary acknowledged that the usual measure of damages resulting from a buyer’s breach of contract for the sale of goods is the difference between the contract price and the resale price but noted that an award of lost profits is permitted to a seller who qualifies as a “lost volume seller.” To qualify, the seller must establish the substitute buyer would have purchased the goods regardless of the buyer’s breach, so that the seller would have realized profits from two sales instead of only one.
In support of its claim to volume seller status, Culinary submitted the declaration of its president, Kirk Bewley, who stated: “Had Mooney not breached the 2003 Contract, Culinary would have been able to sell to both Mooney and the resale purchasers, and would have thereby realized two profits instead of one. Culinary could have easily obtained 135,000 pounds of additional tomatoes from its numerous suppliers, including Valley Sun Products of California . . . so as to have a sufficient supply to complete both the sale to Mooney and its resale customers. In fact, during the numerous years that I have been in the sun[-]dried tomato business, I do not recall ever having to turn a customer away due to an inability to obtain tomatoes.”
In addition, Culinary submitted deposition testimony by Steve Mooney in which Mooney stated: “There’s always a surplus [of sun-dried tomatoes]. Like starting out this dry season, between the dryers there was a surplus of 900,000 pounds this year, give or take 100,000 pounds[] and they’re still out drying, and we said that we would use five or six hundred thousand pounds. There was about 900 out there, and the dryers still went out and dried just to be on spec.”
Mooney also testified that it would use about 600,000 pounds of sun-dried tomatoes and that about 1.2 million pounds were currently in cold storage. This surplus, according to Mooney, was “[f]or anyone that wants it. I mean, Culinary has some. . . . There’s about 1 million to 1.2 million pounds of surplus out there right now that isn’t spoken for, where I can use it. Valley Sun [another grower].”
Culinary also supplied the declaration of Robert Benech, the sole shareholder of Valley Sun, a corporation specializing in the sale of sun-dried tomatoes. Benech stated that from 2003 through 2005, Valley Sun sold millions of pounds of sun-dried tomatoes annually and “at all times retained a surplus inventory on hand exceeding one million pounds of sun dried tomatoes.”
Benech also stated he maintained contact with Culinary Farms, which always had the option to purchase sun-dried tomatoes when needed from Valley Sun. Benech concluded: “To the extent that Culinary Farms requested to purchase 135,000 pounds of sun[-]dried tomatoes at any time between January 1, 2004, through February[] 2005, Valley Sun would have had more than sufficient inventory on hand to accommodate such request and would have sold the tomatoes to Culinary Farms for immediate shipment.”
In opposition to the motion, Mooney offered a declaration by Steven Mooney. Steven Mooney stated there was an important distinction between sun-dried tomatoes from California and those of other provenance. In response to the Benech declaration submitted by Culinary, Steven Mooney stated: “There is a limited quantity of California sun-dried tomatoes available on an annual basis based on the number of dry yards, amount of trays and drying season.” Steven Mooney stated he was “familiar” with Valley Sun and its operation and it processed “approximately 3,000,000 pounds of tomatoes per season of which approximately 80% come from Chili [sic] and Turkey with approximately 20% of tomatoes from California[.]”
According to Steven Mooney, Mooney uses only California tomatoes, which are priced one dollar higher per pound than non-California tomatoes. He also stated, “I know that on an annual basis Valley Sun runs out of California sun-dried tomatoes, having to purchase from other dryers appropriate California sun-dried tomatoes.”
Therefore, according to Mooney, based on Steven Mooney’s familiarity with the percentage of available tomatoes from other sources, Culinary did not have access to sufficient quantities of California tomatoes to meet both its obligations to Mooney under the contract and to sell an additional 135,000 pounds to other buyers.
In reply, Culinary submitted a declaration by David O’Connor, controller of Valley Sun. Based on O’Connor’s review of Valley Sun’s inventory records, he stated Valley Sun could have provided Culinary with at least 135,000 pounds of California grown sun-dried tomatoes from June 2004 through February 2005, the period during which Culinary resold the contract tomatoes to other buyers. During this time period, O’Connor stated California tomatoes comprised approximately 80 percent of Valley Sun’s inventory.
Culinary also submitted a supplementary declaration by Bewley. Bewley stated some companies, such as Mooney, require only California-grown tomatoes; most companies do not. During the period in question, only one other customer required California-grown tomatoes, and Culinary had sufficient inventory to meet this need. All other customers would accept tomatoes grown in California or elsewhere.
Culinary also filed written objections to Steven Mooney’s declaration, arguing his testimony was speculative and lacked foundation as to the number and provenance of sun-dried tomatoes produced by companies other than Mooney.
Conversion Claim
As to the claim of the 177 missing wooden bins, Bewley’s declaration stated the bins at issue were in excellent condition when sent to Mooney. Attached to Bewley’s declaration is a quote provided by International Wood Industries, Inc., stating the retail value of new bins is $108.75 each. Bewley also stated similar used bins retail for about $30 but are difficult to find. Most businesses use their bins until they deteriorate, so unless a company is going out of business, used bins in good condition do not generally come on the market.
Mooney, in opposition, admitted failing to return 177 bins belonging to Culinary. As for damages, Mooney proposes paying Culinary $30 for any of the 177 bins not returned by February 22, 2007.
Trial Court’s Ruling
The trial court sustained Culinary’s objections, based on lack of foundation, to Steve Mooney’s declaration. The court also found Mooney failed to submit any evidence to support its dispute of Culinary’s separate statement of undisputed facts, and “thus the facts are treated by the court as undisputed.”
The court found Culinary established that it was a volume seller, entitled to recover for the 135,000 pounds of sun-dried tomatoes it provided Mooney pursuant to the breached contract. The court considered Mooney’s opposition and concluded: “[D]efendant asserts that plaintiff cannot show that it had available California sun[-]dried tomatoes (which were required by the contract, as opposed to tomatoes from another country). Steve Mooney attempts to submit information without foundation as to the amount of California tomatoes available from each of the processors. The Court has sustained the evidentiary objections to these portions of the Steve Mooney Declaration. [¶] Plaintiff submits the declaration of O’Connor of Valley Sun (a dried tomato processor) that they had more than sufficient California tomatoes to supply plaintiff.” (Original italics.)
The court granted summary adjudication on the action for breach of contract, finding the price was $2.75 per pound. It awarded damages of $126,974.16, which included accrued prejudgment interest at the legal rate.
The court also granted summary adjudication on the conversion cause of action. The court cited Civil Code section 3336 and reasoned: “Defendant has conceded it has not returned the bins, and plaintiff asserts that good used bins are difficult to obtain, defendant shall pay the cost of new bins at $108.75 for each of the 177 bins it does not return in reasonably good condition.”
Following entry of judgment, Mooney filed a timely notice of appeal.
The record includes a declaration by Mooney’s counsel regarding what transpired during oral argument on the summary judgment motion. No reporter’s transcript of the hearing appears in the record. The declaration is dated after the court issued its tentative ruling. Mooney refers to statements set forth in this declaration in its brief. However, the declaration bears no file stamp, and there is no indication the declaration was ever presented to the trial court.
DISCUSSION
Standard of Review
A motion for summary judgment must be granted if the submitted papers show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The moving party, whether plaintiff or defendant, initially bears the burden of making “a prima facie showing of the nonexistence of any genuine issues of material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 845.) “A prima facie showing is one that is sufficient to support the position of the party in question.” (Id. at p. 851.) “Thus, if a plaintiff who would bear the burden of proof by a preponderance of evidence at trial moves for summary judgment, he must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not--otherwise, he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.” (Ibid., italics omitted.) Once the moving party has met its burden, the burden shifts to the opposing party to show the existence of a triable issue of material fact. (Code Civ. Proc., § 437c, subds. (c), (p)(2).)
We review the record and the determination of the trial court de novo. First, we identify the issues raised by the pleadings, since it is these allegations to which the motion must respond. Second, we determine whether the moving party’s showing has established facts negating the opponent’s claims and justifying a judgment in the moving party’s favor. When a summary judgment motion prima facie justifies a judgment, the final step is to determine whether the opposition demonstrates the existence of a triable issue of fact. (Barclay v. Jesse M. Lange Distributor, Inc. (2005) 129 Cal.App.4th 281, 290.)
Breach of Contract Damages
Damages caused by a buyer’s breach of contract are generally measured by the difference between the market price of the goods at the time of breach and the contract price. (Cal. U. Com. Code, § 2708, subd. (1).) If the goods are resold, the market price is determined by the resale price. (§ 2706, subd. (1).)
All further statutory references are to the California Uniform Commercial Code unless otherwise indicated.
However, if this measure of damages is inadequate to put the seller in as good a position as performance would have done, then the measure of damages is the profit the seller would have made from full performance by the buyer. (§ 2708, subd. (2).) When buyers have repudiated a fixed-price contract to purchase goods, courts award the lost profits under the contract to a seller who establishes that it is a lost volume seller.
A lost volume seller is one who proves that even though it resold the goods, that sale to the third party would have been made regardless of the buyer’s breach. (National Controls, Inc. v. Commodore Business Machines (1985) 163 Cal.App.3d 688, 697-698 (National).) To recover damages under the lost volume theory, a seller must establish that had the breaching buyer performed, the seller would have realized profits from two sales. (Id. at p. 697.)
Mooney contends the trial court erred in determining, as a matter of law, that Culinary is a volume seller of California sun-dried tomatoes. Mooney insists that the evidence offered by Culinary in support of its claim to volume seller status relates to the sale of generic sun-dried tomatoes, not California sun-dried tomatoes, the specific commodity required by the contract between the parties. Thus while Culinary may have been a volume seller of sun-dried tomatoes generally, it failed to establish that it could profitably have sold 135,000 pounds of California sun-dried tomatoes to both Mooney and other buyers.
Having failed to make a prima facie showing in the first instance of its status as a volume seller, Culinary could not prevail on its summary judgment motion.
Mooney also attempted to establish a triable issue of fact through Steve Mooney’s declaration that Culinary lacked access to a sufficient supply of California sun-dried tomatoes. As noted, the trial court sustained Culinary’s objections to the declaration and Mooney does not challenge the ruling in this appeal.
We are not persuaded.
The question in the first instance is whether Culinary established that it would have realized profits from two sales had Mooney performed. Culinary’s president, Kirk Bewley, unequivocally declares that dual profits would have been realized and explained that he had easy access to tomatoes from numerous suppliers; historically, he could never recall having to turn a customer away because of an inability to obtain tomatoes. Robert Benech, the owner of Valley Sun, a supplier of sun-dried tomatoes to Culinary, supported Bewley’s assessment. Valley Sun had over a million pounds of surplus sun-dried tomatoes, which Culinary always had the option to purchase as needed.
There is no suggestion in the evidence offered by Culinary that its sales of any particular variety of sun-dried tomatoes were constrained by supply issues. It is reasonable to infer from Bewley’s statement that he could not recall “ever having to turn a customer away” that ample supplies of sun-dried tomatoes of every description were always available, including supplies of California sun-dried tomatoes.
This assessment of the market was shared by Steve Mooney, who in deposition testimony insisted that there is always a surplus of sun-dried tomatoes. Mooney’s statement is of particular significance because Mooney deals exclusively in California sun-dried tomatoes.
Mooney argues Steve Mooney’s deposition testimony does not support the inference that California sun-dried tomatoes were available to Culinary. According to Mooney, the deposition testimony implies only that there was a surplus of California tomatoes available at Mooney’s level of distribution, not at Culinary’s supplying level.
However, a review of Steve Mooney’s testimony does not support this assertion. Steve Mooney testified: “There’s about 1 million to 1.2 million pounds of surplus out there right now that isn’t spoken for, where I can use it . . . . I mean anyone. I mean, we just call a dryer and send us a truckload.” Nothing in this testimony limits the available sun-dried tomatoes to any particular level of distribution; Steve Mooney simply stated that there was a very large surplus of sun-dried tomatoes on the market at any time. Since Mooney uses only California sun-dried tomatoes, Steve Mooney’s comments about available sun-dried tomatoes necessarily refers to a surplus of California sun-dried tomatoes. Steve Mooney’s testimony, coupled with Bewley’s declaration that Culinary could easily have obtained 135,000 additional pounds of sun-dried tomatoes, and would have been able to realize two profits through sales to other purchasers, provided undisputed evidence that Culinary was a volume seller of sun-dried tomatoes.
At oral argument, Mooney’s counsel asserted that the concept of lost volume seller presumes that Culinary could find another buyer for its tomatoes at the contract price. Mooney cites no authority for this proposition and we have found none. Rather, the authorities require a showing that the additional sale would be profitable, a fact supported in the present case by Bewley’s uncontradicted declaration. Whatever the price of California sun-dried tomatoes, it appears from the record that Culinary could have sold them at a profit and thus earned profits from two sales instead of one. Given Mooney’s failure to offer any competent evidence in rebuttal, the trial court properly found summary judgment in Culinary’s favor.
Mooney objects to the timing of Culinary’s reply to Mooney’s opposition to summary judgment. Specifically, Mooney argues we should not consider the declaration of O’Connor, the controller of Valley Sun. However, even without considering O’Connor’s declaration, we find Culinary submitted undisputed evidence it was a volume seller of California sun-dried tomatoes.
Price of Tomatoes
Mooney also challenges the trial court’s measure of damages under the contract. According to Mooney, the court erred as a matter of law in finding that the July 30, 2003, letter raising the price to $2.75 per pound in the event of Mooney’s breach was incorporated into the contract between the parties.
Under the September 24, 2003 contract, Mooney was to pay $2.60 per pound. However, the court awarded Culinary $2.75 per pound, based on the letter dated July 30, 2003, from Culinary to Mooney. The letter provided that Culinary agreed to lower the contract price from $2.75 to $2.60 per pound provided that if Mooney failed to perform under the 2003 contract, the price would revert to $2.75 per pound. The trial court determined the letter and the 2003 contract were to be construed together, and therefore Mooney’s breach of the contract entitled Culinary to lost profit based on $2.75 per pound.
We disagree with the trial court’s calculation of Culinary’s damages. Civil Code section 1625, which provides that the execution of a contract in writing supersedes all negotiations or stipulations that preceded or accompanied the execution of the instrument, is in effect a merger provision that makes the writing, rather than prior oral discussions or agreements, the controlling agreement. (Tomlinson v. Qualcomm, Inc. (2002) 97 Cal.App.4th 934, 945, fn. 14.) Under the parol evidence rule, the act of executing a written contract supersedes all the negotiations that preceded or accompanied the execution of the instrument. “‘[E]xtrinsic evidence cannot be admitted to prove what the agreement was, not for any of the usual reasons for exclusion, but because as a matter of law the agreement is the writing itself. [Citation.]’” (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 344.)
Here the contract unambiguously states: “PRICING: Base priced [sic] of $2.60 for all purchases through 09/1/04.” In addition, the contract states: “By their respective signatures below, Seller agrees to sell and Buyer agrees to purchase, based on quantity, specifications, and terms outlined above.” The contract appears to be the complete and final expression of the parties’ agreement regarding the purchase and sale of sun-dried tomatoes. Extrinsic evidence of prior negotiations cannot be introduced to vary or alter the terms of the written agreement. (Homes & Land Publ., Ltd. v. ApartmentNet Corp. (S.D. Cal. 2000) 100 F.Supp.2d 1248, 1253.) Therefore, we remand for a recalculation of Culinary’s damages based on the contract price of $2.60 per pound.
Culinary argues Mooney waived the right to contest the contract price because Mooney failed to raise the issue in the trial court. However, we may consider a legal issue based on undisputed facts for the first time on appeal. (Waller v. Truck Ins. Exchange (1995) 11 Cal.4th 1, 24.)
Wooden Bins
Finally, Mooney argues the trial court erred in awarding damages to Culinary on the conversion cause of action. Mooney contends there is a factual dispute as to the amount of damages per bin for the 177 wooden bins.
The trial court, citing Civil Code section 3336, determined the damages for conversion of the wooden bins. The court stated: “The value of the property at the time of the conversion, with the interest from that time, or, an amount sufficient to indemnify the party injured for the loss which is the natural, reasonable and proximate result of the wrongful act complained of and which a proper degree of prudence on his part would not have averted.”
The court noted Culinary asserted that good used bins were difficult to obtain and determined that Mooney should pay the cost of new bins at $108.75 for each of the bins Mooney failed to return in reasonably good condition.
On appeal, Mooney contends there is a clear factual dispute as to the amount of damages Culinary suffered. As Mooney points out, the replacement cost of a used wooden bin was $30 per bin. However, Culinary presented Bewley’s declaration in which he stated although used wooden bins sell for $30, good quality used bins can only be found on rare occasions. Businesses use wooden bins until they deteriorate, so unless a business is shutting down and selling off its assets, good quality used bins are extremely difficult to find on the market. Bewley also stated Culinary should not be forced to wait for the rarely available used bins and therefore requested damages sufficient to purchase new bins at $108.75 per bin.
Mooney offered no evidence to contradict or call into question Bewley’s statements as to the availability of used bins. Given the dearth of opposition, the court properly determined the conversion damages of $108.75 per bin. Civil Code section 3336 provides that damages for conversion include either the value of the property at the time of conversion, or an amount sufficient to indemnify the party for the proximate and foreseeable loss suffered. Here, the court awarded an amount sufficient, under the circumstances described in Bewley’s declaration, to indemnify Culinary for the loss it suffered.
DISPOSITION
The judgment is remanded to the trial court for a recalculation of Culinary’s damages at $2.60 per pound. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal.
We concur: BLEASE , Acting P.J., BUTZ , J.