Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 04CC07510, Clay M. Smith, Judge.
William R. Kennon & Associates, William R. Kennon for Defendant and Appellant.
Andrade & Associates, Richard B. Andrade and Scott A. Kron for Plaintiff and Respondent.
OPINION
O’LEARY, J.
Diversified Product Industries (DPI), appeals from a judgment entered in favor of SEMA Construction, Inc. (SEMA), in their breach of contract dispute. DPI acknowledges the underlying facts in this case are undisputed, but argues the trial court misapplied the law. We disagree and affirm the judgment.
FACTS
SEMA, a general contractor, purchased steel beams from DPI, a steel broker, to be used in the “false work” of a bridge construction project on Crown Valley Parkway. In early January 2004, an agreement was reached between John Ellis, on behalf of SEMA, and Jack Pryor, on behalf of DPI. The oral agreement was memorialized by DPI’s invoice dated January 8, and SEMA’s purchase order dated January 9.
The invoice showed SEMA agreed to purchase 295,200 pounds of steel, at a unit price of $0.235 per pound, for a total price of $83,280.11. DPI agreed to supply the steel. On the preprinted form, Pryor wrote the words “will advise” inside the “ship to” box. This notation reflected the parties’ understanding SEMA had not yet obtained access to the Crown Valley construction site or an appropriate “lay-down” area to stockpile the large beams. DPI understood SEMA wanted to avoid taking delivery of the steel at another location and then later having to pay to transport the steel to the Crown Valley site. The parties agreed SEMA would later advise DPI of a delivery date.
SEMA’s purchase order restated the same contract terms. It provided the “ship to” address was the “Crown Valley Parkway Project” and also included the notation “will advise.” Within the week, SEMA paid DPI for all the steel.
At the end of January, SEMA still did not have access to the Crown Valley site and advised DPI to deliver the steel beams to an alternative storage site in Laguna Canyon. DPI delivered beams on February 2, 3, 4, and 5. During its inventory of the delivered material, SEMA discovered 18 beams were missing.
In April, DPI advised SEMA the steel beams had been stolen and SEMA would receive a $30,370.38 credit. In a letter, SEMA replied it expected immediate payment because DPI had received all the money for the materials in advance. SEMA advised, “As a result of your breach, we will incur additional damages to cover our requirement at today’s prices. Please furnish payment within 5 days to avoid further liability.”
A few days later, DPI wrote SEMA a letter stating payment would “be made in due course.” DPI reminded SEMA that upon receipt of the purchase order, Ellis was advised the steel had to ship immediately “due to the fact that the requested steel had come off of a job in San Diego where the contractor had limited space or time to house this material.” DPI claimed its dispatcher tried on numerous occasions to obtain delivery instructions and due to the delay, the beams were either stolen or sold by the San Diego contractor to others. DPI stated it was “not in the storage business” and it was “inappropriate for . . . Ellis to insist that DPI take on the responsibility of guarding over steel reserved for SEMA in some other company’s facility.” It closed the letter by stating DPI is not trying to place blame and it will “take responsibility for the missing steel . . . . [¶] . . . This unfortunate circumstance, however, should serve as a valuable lesson learned for us both.”
At the end of June, two months after the first credit memo, SEMA received a “corrected credit invoice.” DPI increased the credit amount due SEMA from $30,370 to $31,161. Meanwhile, SEMA bought replacement steel from a different company for $0.29 per pound. By July, SEMA had still not received a refund from DPI for the undelivered steel and it filed a breach of contract claim seeking to recover (1) the amount it overpaid to DPI, and (2) the amount it spent on substitute beams.
DPI filed a cross-complaint for breach of contract and interference with prospective economic advantage. It claimed SEMA breached the agreement by not immediately providing a delivery date and sought damages. In January 2005, the court ordered the case to mandatory arbitration, and the arbitrator awarded SEMA $32,496.30 for damages. The court granted DPI’s subsequent request for a trial de novo and heard the matter in May 2006. It issued a detailed statement of decision finding SEMA had established DPI breached the contract, and it awarded SEMA $38,985.32. The court also concluded SEMA was the prevailing party and was entitled to recover costs, but attorney fee recovery would be determined “pursuant to motion.”
II
STANDARD OF REVIEW
“Our decision is based on our construction and application of statutory law, and not on any disputed issue of fact. Questions of law, such as statutory interpretation or the application of a statutory standard to undisputed facts, are reviewed de novo. [Citation.]” (Wilson v. Brawn of California, Inc. (2005) 132 Cal.App.4th 549, 554 (Wilson).)
III
DISCUSSION
In its statement of decision, the trial court concluded, “The primary issue here, which represents both [DPI’s] defense to the breach of contract claim and the basis for its cross-complaint, is that [SEMA] breached the agreement by not making immediate arrangements to accept delivery of the material. As a result of this alleged breach, the beams became unavailable and [DPI] was prevented from performing. There are several problems with this position.” We agree.
First, as the trial court concluded, DPI’s contention there was a breach “is inconsistent with the text of the contract documents.” The invoice and purchase order reflect the parties’ understanding the delivery was to be delayed to give SEMA the ability to accept delivery at the Crown Valley site. The evidence showed the project was indeed delayed, and as a result, SEMA accepted delivery at an alternative site. We agree with the trial court’s conclusion, “SEMA’s delay in designating a time and place of delivery, although troublesome to [DPI], was consistent with the contract and not a breach thereof.”
California Uniform Commercial Code section 2311, subdivision (1), provides, “An agreement for sale which is otherwise sufficiently definite . . . to be a contract is not made invalid by the fact that it leaves particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.” Here, the contract lacked a specific delivery date, leaving those particulars to be specified later by one of the parties, i.e., it was agreed SEMA “will advise” when the steel could be delivered to the Crown Valley site. The evidence shows SEMA requested delivery within 30 days, which under the circumstances of this case, was a commercially reasonable time.
All further statutory references are to the California Uniform Commercial Code, unless otherwise indicated.
DPI argues delivery should have occurred sooner. It focuses on the fact its preprinted invoice contains several “conditions,” which include the requirement the delivery of the steel could not be delayed more than 30 days, unless “written consent of the Seller [is] first obtained.” It argued below, and on appeal, SEMA’s delay of “just more than 30 days” was a breach of this contract term. The record belies this contention. SEMA began accepting deliveries on February 2–just 26 days after the agreement was memorialized by DPI’s invoice dated January 8. This was also less than three weeks after SEMA paid for the materials on January 15. DPI offers no reason why a shorter time period than the 30-day limit included on its own invoice would be more commercially reasonable. To the contrary, the evidence suggests a longer time limit was contemplated by the parties. The 30-day preprinted condition is inconsistent with the handwritten “will advise” provision included by the parties on both the invoice and the purchase order. “Where a contract is partly written and partly printed . . . the written parts control . . . .” (Civ. Code, § 1651.)
Alternatively, DPI contends SEMA bore the risk of loss either after paying for the steel on January 15, or after DPI advised the beams were ready for delivery. SEMA and the trial court concluded SEMA would not have assumed the risk of loss until after all the materials were delivered to either the carrier or the construction site. We agree with the latter contention.
Section 2401, subdivision (1), governs when and where title passes between seller and buyer. (See also § 2106, subd. (1), which cross-references the definition of “sale” to § 2401.) However, risk of loss is not necessarily dependent on the transfer of title. (Wilson, supra, 132 Cal.App.4th at p. 556.) “[S]ection 2509 sets forth the general rules for determining which party bears the risk of loss of goods in transit when there has been no breach of contract.” (Id. at pp. 554-555.)
Section 2509, subdivision (1)(b), describes what is often referred to as a destination contract. These kinds of contracts require the seller to ship the goods by carrier to a particular destination and the seller bears the risk of loss until arrival. Section 2509, subdivision (1)(a), describes what is called a shipment contract, which does not require the seller to ship to a particular destination. The risk of loss passes to the buyer when the goods are delivered to the carrier for shipment.
Section 2509, subdivision (1), provides in relevant part: “(1) Where the contract requires or authorizes the seller to ship the goods by carrier [¶] (a) If it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier . . .; but [¶] (b) If it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.”
There is a general presumption in favor of shipment contracts. (See Official Comments on U. Com. Code com. 5, 23A pt. 1 West’s Ann. Cal. U. Com. Code (2002 ed.) § 2503, p. 458 [“under this Article the ‘shipment’ contract is regarded as the normal one and the ‘destination’ contract as the variant type”].) “The seller is not obligated to deliver at a named destination and bear the concurrent risk of loss until arrival, unless he has specifically agreed so to deliver or the commercial understanding of the terms used by the parties contemplates such delivery.” (Ibid.) “Of course, a seller will have to provide the carrier with shipping instructions. It follows that a contract is not a destination contract simply because the seller places an address label on the package, or directs the carrier to ‘ship to’ a particular destination.” (Wilson, supra, 132 Cal.App.4th at p. 555.)
DPI declares the contract was a shipment contract. Without deciding this issue, if we assume it was a shipment contract, we nevertheless conclude all the legal conditions were not satisfied in this case to shift the loss to SEMA. As expressed above, with a shipment contract, “the risk of loss passes to the buyer when the goods are duly delivered to the carrier . . . .” (§ 2509, subd. (1)(a).) In this case, the evidence failed to establish two requirements of section 2509: (1) a delivery to the carrier; and (2) loss occurring after delivery to the carrier. Pryor testified at trial the steel beams were missing “before any carrier had an opportunity to load it and deliver it[.]” It was undisputed the loss occurred sometime while the steel beams were being stored unprotected at the San Diego construction site. There is no evidence suggesting the beams disappeared from the carrier’s trucks. As stated by the trial court, “When [DPI] was called upon to deliver the beams to SEMA, there was an insufficient number available at that site to satisfy [DPI’s] obligation to SEMA. It is unclear from . . . Pryor’s testimony and from the documents . . . whether the missing beams were stolen or were simply sold by the contractor to a third party. Why a sufficient number of beams [were] unavailable is simply unknown. Thus, there is no ‘loss’ in the technical sense.” Simply stated, a portion of the goods were “lost” before delivery to the carrier.
DPI argues that its readiness to tender delivery of the materials necessarily shifted the risk of loss to SEMA. But, section 2509, subdivision (1)(a), plainly states the risk of loss shifts only when the “goods are duly delivered to the carrier” not simply available for delivery to the carrier. We found no authority, and DPI cites to none, to support its argument a delivery occurs as soon as shipping arrangements have been announced, but not made.
Without citing to any authority, DPI argues that because the goods were in the hands of a bailee, the risk of loss passed when SEMA paid for the steel and received title. We recognize section 2509, subdivision (2), provides the risk of loss passes to the buyer for goods held by a bailee: “(a) On his receipt of possession or control of a negotiable document of title covering the goods; or (b) On acknowledgement by the bailee of the buyer’s right to possession of the goods . . . .” However, this provision also clearly specifies it applies only when the goods being held by the bailee are “to be delivered without being moved[.]” (§ 2509, subd. (2), italics added.) Consequently, we find the provision is inapt. The parties bargained for the delivery of the steel beams by a carrier to the Crown Valley site. Although DPI argues it was a shipment contract, and SEMA argues it was a destination contract, in either situation it was clear the materials were to be moved.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., FYBEL, J.