LIPHARDT v. AMERICAN FENCE CO., 791 N.W.2d 430 (Iowa App. 2010)

No. 0-684 / 10-0254.Court of Appeals of Iowa.
Filed October 6, 2010.

Appeal from the Iowa District Court for Clinton County, Paul L. Macek, Judge.

American Fence Company of Iowa appeals the district court’s ruling in this breach of contract action. AFFIRMED INPART, REVERSED IN PART, AND REMANDED.

Gregory G.T. Ervanian of Graham, Ervanian Cacciatore, L.L.P., Des Moines, for appellant.

David M. Pillers of Pillers and Richmond, Dewitt, for appellee.

Considered by SACKETT, C.J., and POTTERFIELD and TABOR, JJ.

POTTERFIELD, J.

Brian Liphardt, doing business as American Fence and Pool (Liphardt), filed this action for breach of contract and unjust enrichment arising from Liphardt’s purchase of fencing, materials, and supplies from American Fence Company of Iowa, Inc. (American). American answered and counterclaimed for breach of contract.

Following a bench trial, the district court found a contract existed between the parties. The court found Liphardt purchased fencing materials from American, for which he paid $81,471.73 two months before actually receiving those materials. There was to be no charge for freight. Before receiving the materials first ordered, Liphardt placed a second and third order, both of which he understood would be included in the delivery of the first order and thus there would be no freight charge. The materials were delivered in separate shipments, however, and American billed Liphardt for shipping.

The court found American breached the contract “by not providing merchantable goods” and that Liphardt remained in possession of nonconforming materials, which should be returned, having a value of $20,491.60. When added to a credit in the amount of $10,659.92 for goods previously returned, Liphardt was entitled to a total credit of $31,151.52. The court further found Liphardt owed American $4741.43 for the second and third orders, but not for shipping of those orders.

The district court ordered judgment in favor of Liphardt in the sum of $26,137.97[1] with interest at the rate of five percent per annum. The court also ordered Liphardt to allow American, at its own expense, to pick up the nonconforming goods.

American appeals, complaining the district court erred in applying the Uniform Commercial Code as an improper “legal theory,” which was neither pleaded by Liphardt, nor to which American had consented at trial.

Our review of this law action is for errors at law See Iowa R. App. P. 6.907. We are bound by the trial court’s findings of fact if supported by substantial evidence Flanagan v. Consol. Nutrition, L.C., 627 N.W.2d 573, 577 (Iowa Ct. App. 2001). However, we are not bound by the trial court’s application of legal principle or its conclusions of law. Id.

American relies upon the cases of Gibson Elevator, Inc. v. Molynuex, 668 N.W.2d 565 (Iowa 2003) (finding defendant waived an affirmative defense, which had not been specially pleaded as required by Iowa Rule of Civil Procedure 1.419), [2] and Gosha v. Waller, 288 N.W.2d 329, 331-32 (Iowa 1980) (finding the district court erred in entering judgment upon a theory of breach of implied warranty where the plaintiff had alleged only violation of express warranties, but remanding to allow the plaintiffs to move to amend to conform to the proof). American’s problem, however, lies in its characterization of the Uniform Commercial Code as a legal theory, when it is the applicable law.

This case involves the sale of goods, and thus, is governed by the Iowa Uniform Commercial Code (UCC). See Iowa Code § 554.2102 (2009) (“Unless the context otherwise requires, this Article [Uniform Commercial Code — Sales] applies to transactions in goods; . . .”); Flanagan, 627 N.W.2d at 577 (“The UCC undoubtedly applies in this case. Article 2 of the UCC applies to `transactions in goods.'”); cf. Speight v. Walters Dev. Co., Ltd., 744 N.W.2d 108, 116 (Iowa 2008) (noting that where claim is not based on sale of goods the UCC does not apply). American could no more refuse to “consent” to the applicability of the UCC than it could any other area of Iowa law.[3]

American does not otherwise dispute the trial court’s findings of fact or conclusions of law. We reverse for entry of an amended judgment in the correct amount of $26,410.09, but otherwise affirm the district court. See Iowa Ct. R. 21.29(1)(a), (e). Costs are assessed to American.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.