Opinion
No. 33210-8-II, Consolidated with: No. 33520-4-II
August 29, 2006
Appeal from Lewis County Superior Court, Docket No: 02-2-01429-0, Judgment or order under review, Date filed: 04/22/2005, Judge signing: Honorable Richard Lynn Brosey.
William Alan Kinsel, Law Offices of William A. Kinsel PLLC, 2025 1st Ave Ste 440, Seattle, WA, 98121-2158, Counsel for Petitioners.
George M. Shumsky, Shumsky Backman, 2011 St Johns Blvd, Vancouver, WA, 98661-3738, Counsel for Plaintiffs.
E. Pennock Gheen III, Bullivant Houser Bailey PC, 1601 5th Ave Ste 2300, Seattle, WA, 98101-1618,
Jerret E. Sale, Bullivant Houser Bailey PC, 1601 5th Ave Ste 2300, Seattle, WA, 98101-1618.
Deborah Lynn Carstens, Bullivant Houser Bailey PC, 1601 5th Ave Ste 2300, Seattle, WA, 98101-1618.
Shawnmarie Yates, Bullivant Houser Bailey PC, 1601 5th Ave Ste 2300, Seattle, WA, 98101-1618.
Mark Carl Dean, Kingman, Peabody, Fitzharris, Ringer P, 505 Madison St Ste 300, Seattle, WA, 98104-1123.
Matthew Taylor Boyle, Mitchell Lang Smith, 1001 4th Ave Ste 3714, Seattle, WA, 98154-1119.
Roy Andrew Umlauf, Forsberg Umlauf, 900 4th Ave Ste 1700, Seattle, WA, 98164-1039.
Kenneth M. Roessler, Attorney at Law, 900 4th Ave Ste 1700, Seattle, WA, 98164-1050, Counsel for Respondents.
OPINION PUBLISHED IN PART
TransAlta Centralia Generation, LLC, et al. (TransAlta) appeal from two grants of summary judgment in favor of Sicklesteel Cranes, Inc. (Sicklesteel), et al. for TransAlta's failure to mitigate damages and foreign exchange losses. TransAlta sued Sicklesteel, et al. for negligence, violation of the Washington Products Liability Act, breach of contract, and foreign exchange losses resulting from a construction accident at a power plant in which a large crane rolled over and damaged the plant's conveyor belts. The damaged conveyor belts forced the plant to be shut down. TransAlta incurred monetary losses because it purchased power on the open market to meet its contractual obligations during the shut down period. The trial court found that TransAlta failed to mitigate its damages by not enforcing a force majeure clause in the parties' contract. The trial court also found that TransAlta's economic damages for foreign exchange losses were unrecoverable in tort. We reverse and remand in part and affirm in part.
A contractual provision allocating the risk if performance is rendered impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled. Blacks Law Dictionary 674 (8th ed. 2004).
FACTS
TransAlta's Corporate Structure
TransAlta Centralia Generation, LLC, (the LLC) and TransAlta Energy Marketing, Inc. (TEMUS) are both wholly owned subsidiaries of TransAlta Corporation (TAC).
The LLC and TEMUS are sister entities and entered into a contract in which the LLC agreed that it desired to sell to TEMUS all available energy, capacity, and ancillary services generated at the Centralia Power Plant (the plant). TEMUS is a power marketer authorized to buy and sell electric power at wholesale negotiated rates. Under the contract, TEMUS agreed that it would resell the LLC's energy output on the open market.
The LLC and TEMUS agreed that the LLC would provide TEMUS with energy output and that TEMUS would pay the LLC the net power revenue (NPR) minus TEMUS's marketing fees. NPR is:
the total aggregate net power revenue from all transactions for the sale of [energy] Output by TEMUS minus the sum of all costs incurred by TEMUS in connection with the sale of the [energy] Output, including without limitation: i) the total aggregate net cost of all energy or capacity purchase transactions by TEMUS that were required to fulfil [sic] the outstanding contractual commitments due to Centralia having been derated for any reason. . . .
Clerk's Papers (CP) at 722.
Further, the parties agreed that:
(a) Unless otherwise agreed, on or before the tenth (10th) day of each calendar month, TEMUS will provide the LLC with a statement of payment covering the prior calendar month. The statement of payment will set forth the Sale Price, the quantity of [energy] Output and ancillary services that were sold, together with any other relevant transactions.
. . . .
(c) To the extent that the Sale Price is a negative number (such negative Sale Price to be defined as the "Deficit Amount"), then the LLC will within 10 Business Days following LLC's receipt of a statement from TEMUS for such Deficit Amount, remit to TEMUS the Deficit Amount by wire transfer pursuant to instructions for such wire transfer provided by TEMUS.
CP at 725.
The contract also included a force majeure clause, providing that the LLC's and TEMUS's performance under the contract could be suspended during a force majeure event, or an event outside the parties' control. It read:
(a) Except with regard to a Party's obligation to make payments under this Agreement, in the event either Party hereto is rendered unable, wholly or in part, by Force Majeure to carry out its obligations, upon such Party's giving notice and full particulars of such Force Majeure as soon as reasonably possible, such notice to be confirmed in writing or by facsimile to the other Party, such obligations of said Party will, to the extent they are affected by such Force Majeure, be suspended during the continuance of said inability.
. . . .
(c) "Force Majeure" means an event that (i) is not within the control of the Party relying thereon and (ii) could not have been prevented or avoided by such Party through the exercise of due diligence.
CP at 724 (emphasis added).
The Crane Accident and Resulting Lawsuit
TransAlta purchased an agreement in which a construction and engineering consortium had been hired to install equipment at the plant. The consortium subcontracted with PSF Industries, Inc. (PSF) to perform the work, and PSF subcontracted with Sicklesteel.
On February 27, 2001, Sicklesteel employees were operating a crane at the plant when the crane rolled over and damaged two conveyor belts. The conveyor belts were essential to the plant's operation because they transported coal into the plant that was used to generate the plant's energy.
The plant was shut down from February 27 to March 3, while the conveyor belts were repaired. During this time, the LLC's contractual obligation to provide power to TEMUS continued. The LLC did not attempt to evoke the force majeure clause in the LLC and TEMUS'S agreement and did not make any other attempt to halt its contractual obligation to provide power to TEMUS. Instead, the LLC purchased replacement power on the open market to sell to TEMUS. It incurred substantial costs in purchasing the replacement power. If the LLC had not provided TEMUS with power, it could have been in breach of its contractual obligation to sell power to TEMUS and would have left TEMUS with a deficient power supply. TEMUS, then, would likely have been unable to meet its contractual obligations with other entities outside the TransAlta corporate structure.
After incurring the costs of the replacement power, the LLC, TAC, and TransAlta Energy Corporation (TEC), sued Sicklesteel, et al. for negligence, violations of the Washington Products Liability Act, breach of contract, and foreign exchange losses resulting from the crane damage at the plant. TEMUS is not a party to this action.
Sicklesteel, et al. moved for partial summary judgment, arguing that TransAlta failed to mitigate its damages because the LLC could have invoked the force majeure clause in the LLC and TEMUS'S contract. If it had done so, Sicklesteel, et al. argued, TransAlta would not have had to purchase the replacement power and would not have incurred the damages for suspension of the power supply when the plant was shut down. The trial court granted summary judgment in favor of Sicklesteel, et al. regarding force majeure and dismissed TransAlta's damage claims related to the cost of the replacement power.
Next, Sicklesteel, et al. moved for partial summary judgment, arguing that TransAlta's claims for damages based on foreign exchange losses were improper and should have been dismissed. The trial court granted summary judgment in favor of Sicklesteel, et al. regarding foreign exchange losses and dismissed TransAlta's claims based on foreign exchange loss. TransAlta now appeals both summary judgment rulings.
ANALYSIS
I. Standard of Review
On review of an order for summary judgment, we perform the same inquiry as the trial court. Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004). The standard of review is de novo and we consider all facts in the light most favorable to the nonmoving party. Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wn.2d 16, 26, 109 P.3d 805 (2005). We affirm summary judgment if the pleadings, affidavits, depositions, and admissions on file demonstrate that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c). Because TransAlta appeals the trial court's grant of summary judgment, we review this appeal de novo.
II. Mitigation of Damages
TransAlta argues that it did not fail to mitigate its damages because it acted reasonably in allocating to the LLC the cost of the replacement power to meet its contractual obligation to TEMUS. TransAlta claims it acted reasonably because it complied with the contracting parties' agreed understanding that the LLC would pay for any needed replacement power. TransAlta argues that TEMUS had the contractual right to charge the LLC for the cost of replacement power.
Sicklesteel, et al. counter that TransAlta failed to mitigate its damages by not enforcing the force majeure clause. Sicklesteel, et al. argue that TransAlta's interpretation of the force majeure clause would render the clause meaningless and is not correct.
The doctrine of mitigation of damages, or avoidable consequences, prevents an injured party from recovering damages that the injured party could have avoided if it had taken reasonable efforts after the wrong was committed. Bernsen v. Big Bend Elec. Coop., 68 Wn. App. 427, 433, 842 P.2d 1047 (1993) (citing Young v. Whidbey Island Bd. of Realtors, 96 Wn.2d 729, 733-34, 638 P.2d 1235 (1982)). A person who has been injured by another's wrongdoing is given wide latitude and is only required to act reasonably in mitigating her damages. Hogland v. Klein, 49 Wn.2d 216, 221, 298 P.2d 1099 (1956) (citing Charles T. McCormick, Handbook on the Law of Damages § 35, at 134 (1935)).
Accordingly, whether a party properly mitigated her damages turns on a determination of reasonableness. An issue about which reasonable minds could differ is a jury question. Christen v. Lee, 113 Wn.2d 479, 514, 780 P.2d 1307 (1989) (citing Shelby v. Keck, 85 Wn.2d 911, 541 P.2d 365 (1975)).
If TransAlta acted reasonably in shifting the cost of the replacement power to the LLC, not TEMUS, then it properly mitigated its damages. This inquiry involves balancing multiple factors, including the contractual obligations between the LLC and TEMUS, the factors contributing to TransAlta's business decision to have the LLC purchase replacement power, the parties' ongoing and future business relationship, and the parties' corporate structure of risk allocation.
A. TransAlta's Contractual Obligations
The parties focus their arguments on the interpretation of the force majeure clause and whether it could have protected the LLC during the time the plant was shut down. TransAlta claims the force majeure clause would not have protected them; Sicklesteel, et al. claim the force majeure clause would have protected the LLC.
Interpretation of a contract provision is a question of law appropriate for summary judgment only when (1) the interpretation does not depend on the use of extrinsic evidence or (2) only one reasonable inference can be drawn from the extrinsic evidence. Scott Galvanizing, Inc. v. Nw. EnviroServices, Inc., 120 Wn.2d 573, 582, 844 P.2d 428 (1993) (citing Berg v. Hudesman, 115 Wn.2d 657, 668, 801 P.2d 222 (1990)).
Reasonable minds could differ as to whether the LLC and TEMUS intended that the force majeure should apply to the cost of replacement power that the LLC bought when the plant was shut down. Therefore we cannot, as a matter of law, determine if TransAlta's actions were reasonable, because reasonableness is a jury question. Christen, 113 Wn.2d at 514. As stated above, there were multiple factors that went into TransAlta's decision that the LLC would purchase the replacement power? risk allocation within TransAlta's corporate structure, which entity had the financial reserves to purchase the replacement power, and the LLC and TEMUS's continuing business relationship. TransAlta's arguments fail to demonstrate that only one reasonable inference can be drawn regarding the intent of the force majeure clause and the reasonableness of its decision. We therefore hold that summary judgment was not proper.
B. TransAlta's Business Decision
We also hold that it is for the jury to determine if TransAlta acted reasonably in reaching its business decision to apply the cost of the replacement power to the LCC. Sicklesteel, et al. should not be able to use the force majeure language to shield them from liability unless they can establish that TransAlta's business decision not to invoke force majeure was unreasonable given the contractual language, the corporate structure, and the parties' relationship as sister entities.
Summary judgment was not proper in this case. We reverse and remand to the trial court to determine whether TransAlta acted reasonably in interpreting the contractual language and in reaching its business decision to allocate the cost of replacement power to the LLC, not TEMUS.
A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.
III. Foreign Exchange Losses
TransAlta asserts that it suffered foreign exchange losses because TAC and TEC exchanged Canadian currency to United States currency to lend the LLC funds to purchase the replacement power. Sicklesteel, et al. counter that the foreign exchange losses are economic losses and are unrecoverable in tort. Further, they explain that the parties are companies from the United States, the contract on which the foreign exchange claims is based was negotiated and performed in the United States, and the accident allegedly causing the foreign exchange claim occurred in the United States and thus foreign exchange losses are irrelevant.
Purely economic damages are not recoverable under tort law. Carlson v. Sharp, 99 Wn. App. 324, 994 P.2d 851 (1999). We affirm the trial court's grant of summary judgment on the foreign exchange losses because there is no basis for TransAlta's foreign exchange loss claims. Any damages due to foreign exchange rates are unrecoverable economic losses in this tort action.
TransAlta relies heavily on Aker Verdal A/S v. Neil F. Lampson, Inc., 65 Wn. App. 177, 828 P.2d 610 (1992), but this case does not apply here. In Aker Verdal A/S v. Neil F. Lampson, Inc., the court allowed foreign currency exchange losses on a judgment award. Aker Verdal A/S, 65 Wn. App. at 188. TransAlta is not requesting foreign exchange losses on the trial court's judgment award. TransAlta's alleged foreign currency losses are merely an economic, consequential loss due to the crane accident and are purely economic damages, unrecoverable in tort. We affirm.
IV. Motion to Stay
TransAlta also argues that the trial court erred by not staying TransAlta's case against Sicklesteel, et al. to allow TransAlta to bring claims against TEMUS. However, TransAlta never moved for a stay at the trial court. During oral argument, TransAlta stated, "if you're [the court] going to dismiss that claim, then I would ask that I think you put this case on stay and we sue TEMUS and find out." Report of Proceedings (RP) (Apr. 22, 2005) at 62. However, TransAlta filed no formal motion to stay, there is no order regarding a request for a stay, and no order from which to appeal. If a party fails to properly raise or preserve an issue in the trial court, we will not consider it for the first time on appeal. Pappas v. Hershberger, 85 Wn.2d 152, 154, 530 P.2d 642 (1975). Thus, we do not address this argument on appeal.
V. Dismissal of TransAlta Corporation and TransAlta Energy Corporation
Finally, TransAlta argues that the trial court erred in dismissing TAC and TEC from the lawsuit. It provided no argument relating to this alleged error. Since this assignment was not argued, we deem it abandoned and decline to address it. Smith v. King, 106 Wn.2d 443, 451-52, 722 P.2d 796 (1986).
Affirmed in part, reversed and remanded in part.
We concur: DAVID H. ARMSTRONG and ELAINE HOUGHTON.