Koviack Irrigation and Farm Services v. Maple Row Farms LLC
UNPUBLISHED September 21, 2017 (2017)
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Rule of Law:
Under the Uniform Commercial Code (UCC), a buyer may properly reject nonconforming goods if notice is given within a reasonable time after delivery or discovery of nonconformity, with 'reasonable time' and 'seasonable notice' being fact-dependent inquiries considering the nature of the goods, buyer's reliance on seller expertise, and circumstances such as late delivery and seller's refusal to communicate or assist.
Facts:
- Koviack Irrigation and Farm Services, Inc. (Koviack Irrigation) sold Maple Row Farms, LLC (Maple Row Farms) component parts for an irrigation system, including a pump, and helped design and install the system for Maple Row Farms' farm.
- The pump was delivered late in the harvest season, which prevented Maple Row Farms from installing and testing it immediately.
- The following spring, Koviack Irrigation was unwilling to assist in installing the pump because Maple Row Farms had not yet paid for it or its operating panel.
- Maple Row Farms was unwilling to pay for the pump and panel until they were installed and it could confirm they would work as intended with the irrigation system.
- Maple Row Farms hired another irrigation specialist, Mark Ackerman, to install the pump.
- Ackerman advised Maple Row Farms that the pump supplied by Koviack Irrigation was not compatible with its retention pond and overall irrigation system.
- Maple Row Farms subsequently purchased a different type of pump that was compatible with its retention pond and irrigation system.
- Koviack Irrigation’s salesman met with Maple Row Farms’ owner in April 2014, where the owner stated he would not pay until the system worked, and the pump and panel were still in their original packaging; Koviack Irrigation's owner then refused to do any more work on the project until paid and ceased communications with Maple Row Farms.
Procedural Posture:
- Koviack Irrigation and Farm Services, Inc. (Plaintiff) sued Maple Row Farms, LLC (Defendant) in Lenawee Circuit Court for breach of contract, account stated, and unjust enrichment.
- Maple Row Farms, LLC (Defendant) filed a counterclaim, alleging that Koviack Irrigation had not provided a proper pump for the irrigation system and refused to correct the problem.
- Following a two-day bench trial, the Lenawee Circuit Court found that Maple Row Farms properly rejected the pump and its panel and was therefore not liable for their cost under the parties' agreement, ordering Maple Row Farms to return the goods at its own expense.
- The Lenawee Circuit Court also awarded Maple Row Farms, LLC, case evaluation sanctions of $11,362.50.
- Koviack Irrigation and Farm Services, Inc. (Plaintiff/Counter-Defendant-Appellant) appealed the trial court’s judgment in favor of Maple Row Farms, LLC, and the award of case evaluation sanctions to the Michigan Court of Appeals.
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Issue:
Did Maple Row Farms, LLC, properly reject agricultural irrigation equipment under the Uniform Commercial Code by providing timely and seasonable notice, given the complex nature of the goods and its reliance on Koviack Irrigation and Farm Services, Inc.'s expertise?
Opinions:
Majority - Per Curiam
Yes, Maple Row Farms properly rejected the pump and its operating panel under the Uniform Commercial Code (UCC). The court affirmed the trial court's finding that Maple Row Farms' rejection was within a reasonable time and that it provided seasonable notice, as required by MCL 440.2602(1). Regarding reasonable time, the court reasoned that because the pump was delivered late in the harvest season and was a complex item for which Maple Row Farms relied on Koviack Irrigation's expertise, it was reasonable to wait until the following spring for installation and testing to determine its conformity. During this interim, the pump remained in its original packaging. As for seasonable notice, the court found that Koviack Irrigation was on notice in April 2014 of Maple Row Farms' intent to reject if the pump did not work as planned, based on the conversation between their representatives. Although Maple Row Farms did not send a formal letter, the court deemed its actions reasonable given that Koviack Irrigation had refused to provide further assistance or communicate. The court clarified that remedies under the UCC, such as the return of goods, are legal remedies, not equitable, and therefore the case evaluation sanctions were properly applied. The court did not address the issue of revocation of acceptance.
Analysis:
This case provides important guidance on the practical application of UCC Article 2 provisions regarding the rejection of goods, specifically the 'reasonable time' and 'seasonable notice' requirements. It establishes that these elements are highly fact-dependent, particularly for complex goods where the buyer relies on the seller's expertise and where external factors (like delayed delivery) impact the ability to test. The ruling reinforces that a seller's refusal to communicate or assist can impact the required formality of a buyer's notice of rejection, and it clarifies that remedies involving the return of property under the UCC are generally considered legal, not equitable, for procedural purposes.
