Eagle Signal Controls v. Midwestern Electric, Inc.
Docket: No. 45A03-8611-CV-321
Court: Indiana Court of Appeals; April 21, 1988; Indiana; State Appellate Court
Eagle Signal Controls (Eagle) is appealing a judgment from a bench trial in which Electric Supply Corp. (Electric) was awarded $144,200 in consequential damages, while Eagle's request for prejudgment interest on its own award of $180,895.61 was denied. The case involves a contract awarded by the Indiana State Highway Commission (ISHC) to Midwestern Electric, Inc. (Midwestern) for the installation of traffic signal controls, which included a liquidated damages clause of $200 per day for delays. Eagle was to supply equipment to Midwestern, but due to prior issues, Electric was involved as an intermediary through Bell. Gustus, acting as Eagle's agent.
During negotiations, Electric's manager acknowledged the liquidated damages clause and agreed that any back charges incurred would be the responsibility of Eagle. Eagle provided a quotation that included conditions related to liquidated damages, partial shipments, and standard terms of sale, with a shipment estimate of 180 days after receipt of approved orders. On July 21, 1981, Eagle sent a letter to Electric confirming receipt of an order and clarifying terms, including responsibility for liquidated damages only if delays were due to Eagle's fault.
Electric did not respond to this letter, interpreting it as a modification attempt to the existing agreement. Subsequently, Electric modified its order, reducing the total from $243,000 to $187,100, which Eagle accepted.
The project was completed after delays, leading ISHC to assess $52,000 in liquidated damages against contractor Midwestern. Eagle then filed a lawsuit against Midwestern and Electric, who subsequently filed cross claims, with Electric counterclaiming against Eagle. The trial court ruled as follows: 1) Eagle was awarded $180,985.61 from Electric; 2) Midwestern was granted incidental damages of $144,200 from Electric, which included the $52,000 paid to ISHC; 3) Electric received $144,200 in consequential damages from Eagle; and 4) Electric was awarded $198,988.60 from Midwestern. The primary legal issue was whether the agreement between Eagle and Electric allowed for the award of consequential damages, which Eagle disputed. Eagle referenced Electric's purchase order and its own standard terms, which excluded liability for consequential damages. The court's general judgment was presumed supported by evidence, and under the Uniform Commercial Code, a contract may be established through the conduct of the parties, even if not all terms are defined. The determination hinges on whether Electric's reference to "standard terms and conditions of sale" includes Eagle's terms from the July 21 letter. If so, Eagle could prevail as the law permits parties to limit consequential damages through agreement.
The court determined that it was unnecessary to interpret the agreement in question, as Electric's account of negotiations demonstrated a clear intent to safeguard against consequential damages due to late or defective performance by the parties involved. Evidence supporting this included Electric's role as a middleman and Eagle's attempts to modify the contract. The court could reasonably conclude that the term "standard terms and conditions of sale" did not negate Electric's protection against consequential damage claims. Additionally, the court found that Eagle's proposed modification in its July 21 letter was a material alteration, and Electric's lack of response did not imply acceptance under IC 26-1-2-207(2). The court's award of consequential damages to Electric was deemed appropriate based on the evidence presented.
Eagle argued that it was entitled to prejudgment interest on its judgment against Electric, totaling $180,895.61. Under Indiana law, claimants on open accounts or written contracts are entitled to 8% interest per annum for unreasonable delays in payment unless otherwise specified. The court referenced prior rulings affirming that prejudgment interest is recoverable only on the balance due when offsets are involved. It was established that final payment was due on October 24, 1982, allowing Eagle to claim prejudgment interest at 8% from that date on the amount of $86,695.61 due from Electric. The judgment was remanded for the trial court to adjust the award to include this interest, while affirming all other aspects of the judgment. Costs were allocated with three-fourths to Eagle and one-fourth to Electric. Judge Staton dissented and filed a separate opinion, with no challenges raised against the accuracy of the sums involved or other issues not addressed in the opinion.
