Unicover World Trade Corporation, Plaintiff/counter-Defendant-Appellee/cross-Appellant v. Tri-State Mint, Inc., Defendant/counter-Claimant-Appellant/cross-Appellee

Citations: 24 F.3d 1219; 1994 U.S. App. LEXIS 10912Docket: 93-8019

Court: Court of Appeals for the Tenth Circuit; May 17, 1994; Federal Appellate Court

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In the case of Unicover World Trade Corporation v. Tri-State Mint, Inc., the Tenth Circuit Court addresses a contract dispute resulting in a judgment favoring Unicover. Tri-State contends that Unicover's actions constituted a material breach of contract, hindering its recovery. Unicover, a direct mail marketer of numismatic items, had a contractual arrangement with Tri-State, which took over certain obligations from Medallic Art Company after it faced financial issues.

The master agreement formed between Tri-State and Unicover involved the production of specific commemorative coins, including a five-dollar coin related to the space shuttle Columbia and a series of World War II aircraft coins. Following the failure to establish a successful business relationship, Unicover declared a material breach and terminated the agreement in August 1991. Tri-State subsequently indicated its wish to terminate the agreement as well.

Prior to declaring Tri-State's breach, Unicover entered into a contract with Sunshine Bullion Company to mint the coins, aiming to mitigate customer communication issues regarding delivery delays. Unicover then initiated arbitration as stipulated in their contracts, while Tri-State sought to block the arbitration through state court, claiming the master agreement's termination voided the arbitration requirement.

Unicover filed a federal lawsuit in Wyoming for damages, replevin of coining devices, and an injunction against Tri-State's unauthorized minting. The district court ruled in favor of Unicover, ordering damages, the shipment of coining devices, and preventing Tri-State from unauthorized activities. Tri-State's argument centers on Unicover's negotiations with Sunshine and its alleged failure to give Tri-State the chance to remedy its performance shortfalls.

Tri-State did not raise the issue of whether its contract negotiation with Sunshine breached the master agreement in the district court, as it was absent from the pretrial order and proposed findings. An unpreserved issue can only be considered on a showing of manifest error, which the court found was not met in this case. Tri-State argued that Unicover materially breached the agreement by terminating it without allowing a 30-day cure period. Under Wyoming law, substantial performance is a factual question, and the court reviews findings of fact for clear error.

Wyoming's doctrine of substantial performance states that a minor breach does not excuse a party from performing its material obligations. The district court ruled that Unicover's breach was non-material due to its substantial performance under the agreement. The court's application of state law is reviewed de novo. Evidence indicated that Tri-State had committed multiple breaches prior to Unicover’s termination, including late deliveries and failure to provide necessary reports.

Tri-State's own admission in a South Dakota court that it terminated the contract undermines its claim of being wrongfully deprived of an opportunity to cure. Consequently, the district court correctly interpreted Unicover's lack of a written demand for Tri-State to cure its nonperformance as a nonmaterial breach. Furthermore, the contracts did not mandate a cure opportunity, allowing Unicover discretion in this respect.

Unicover has the right to seek alternative delivery methods if Medalloc fails to deliver ordered coins within two weeks, allowing Unicover to have the order minted elsewhere due to the time-sensitive nature of its business. Unicover is appealing the district court's refusal to grant attorney's fees, asserting that the contracts entitle them to such fees only if disputes are arbitrated. The court found that the contract stipulates arbitration for disputes, and only the prevailing party in arbitration may be awarded fees, contingent upon the arbitrator's decision. Since both parties opted for civil litigation instead of arbitration, the general rule applies where each party bears its own legal costs unless explicitly stated otherwise in the contract. The court affirmed this decision, noting that the prevailing party's entitlement to attorney's fees in litigation is not implied by the contract's silence on the matter. The excerpt also references specific mail order regulations that Unicover must adhere to, including notification of delays and offering refunds.