R&b Appliance Parts, Inc., Doing Business as Adasen Distributing v. Amana Company, L.P., Doing Business as Amana Appliances

Citations: 258 F.3d 783; 2001 U.S. App. LEXIS 17266Docket: 01-1090

Court: Court of Appeals for the Eighth Circuit; August 3, 2001; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Amana Company, L.P. sued R&B Appliance Parts, Inc. for payment under a contract for microwave parts, while R&B counterclaimed, alleging breach of a prior Distribution Agreement due to Amana's failure to repurchase inventory. The district court granted summary judgment to Amana on its claim but the jury favored R&B on its counterclaim. Amana's post-verdict motions for judgment as a matter of law on the counterclaim and for prejudgment interest at 18% were denied, while the court awarded a lower interest rate. Amana appealed both rulings, and the appellate court reversed the district court's decisions. The Distribution Agreement, initially between R&B and Caloric Corporation, allowed for yearly renewal with a termination notice provision and required Caloric to repurchase inventory upon termination, provided R&B made a written request within 30 days. Following a consolidation of Raytheon’s appliance subsidiaries in 1992, Amana began selling Caloric parts and installed competing distributors, adversely impacting R&B's sales and leaving it with excess inventory. R&B's president's letter to Amana in 1992 requested inventory adjustments, which Amana did not act upon. The appellate court reviewed the denial of Amana's judgment as a matter of law under Iowa law, emphasizing that such judgment is only appropriate when evidence is insufficient to support the verdict.

R&B must demonstrate that all conditions precedent to Amana’s obligation to repurchase inventory were met for its breach of contract claim to succeed. Specifically, R&B needed to terminate the Distribution Agreement and exercise the repurchase option, both of which Amana disputes occurred. The court finds, as a matter of law, that the Distribution Agreement was not terminated because R&B failed to comply with its termination provisions, which required certified written notice—a requirement that was not fulfilled.

R&B argues that despite not following the proper termination protocol, a jury could still find the agreement had terminated. However, Mr. Burggraf's belief that the agreement terminated when Amana took over the sale of Caloric parts is unfounded, as Caloric’s delegation of its duties to Amana was permissible under contract law. R&B had no substantial interest in having Caloric perform instead of Amana, thus nullifying this argument.

Additionally, R&B cites Ronald Schnack’s testimony, where he initially stated the agreement terminated when Amana assumed sales responsibility. However, Schnack later corrected this statement at trial, and R&B contends that Amana should be bound by his earlier deposition. While Amana is bound by Schnack's testimony, witnesses can provide different accounts, and R&B's argument of estoppel lacks merit, as there is no threat to the integrity of the judicial process. Consequently, Amana was entitled to assert that the Distribution Agreement remained in effect.

Mr. Schnack's testimony regarding the termination of the Distribution Agreement was deemed a legal conclusion rather than a factual assertion, leading to the conclusion that the agreement remained intact. Consequently, Amana was not required to repurchase parts from R&B, and was entitled to judgment on R&B's counterclaim. R&B acknowledged a debt of $225,000 to Amana for parts acquired under the Microwave Agreement executed in 1997. After the district court granted summary judgment to Amana, it requested prejudgment interest based on the agreement's terms, which included an 18% service charge on overdue amounts. However, the district court awarded interest at Iowa's statutory rate of 8.241%. Under Iowa Code Ann. § 668.13.2, interest must align with the contractual rate when specified. The case parallels Carson Grain Implement, Inc. v. Dirks, where a similar situation resulted in an award of 18% interest. The district court's application of the lower statutory rate was thus an error of law and an abuse of discretion. The judgment is reversed and remanded for recalculation of prejudgment interest at the correct rate.