Koviack Irrigation & Farm Servs. v. Maple Row Farms, LLC - Nos. 331327, 331445, 2017 Mich. App. LEXIS 1505 (Ct. App. Sep. 21, 2017)

Rule:

Rejection of goods and revocation of acceptance under the UCC are statutory remedies and, unlike rescission, are not based on the discretion of the court. A remedy under the UCC is classified as an action at law, not equity.

Facts:

Plaintiff sold defendant component parts for an irrigation system for defendant's farm, which included a pump for distributing water from a retention pond. Plaintiff also helped design and install the system. Because the pump was delivered late in the harvest season, defendant waited until the following spring to install it. At that time, plaintiff was unwilling to assist in installing the pump because defendant had not paid for it or its operating panel. Defendant was unwilling to pay for the pump and panel until they were installed, and defendant could confirm that they would work as intended with the irrigation system. Defendant therefore hired another irrigation specialist to install the pump; he was then advised that the pump would not work with defendant’s retention pond. Defendant then purchased another type of pump that was compatible with its retention pond and irrigation system. Plaintiff sued defendant for breach of contract, account stated, and unjust enrichment. Defendant filed a counterclaim, alleging that plaintiff had not provided a proper pump for the irrigation system, and that plaintiff refused to correct the problem. The trial court ruled in favor of the defendant, finding that the latter properly rejected the pump and its panel. Consequently, the trial court held that the plaintiff was not entitled to recover the costs of the items under the parties’ agreement. The court, however, ordered the defendant to return the goods at its own expense. On appeal, the plaintiff argued that the trial court erred in ruling that the defendant properly rejected the pump and operating panel under the Uniform Commercial Code (UCC), MCL 440.1101 et seq.

Issue:

Under the circumstances, did the district court err in ruling that defendant properly rejected the pump and operating panel?

Answer:

No.

Conclusion:

The Court noted that where goods were rejected, what would constitute a reasonable time to act depended on the nature, purpose, and circumstances of the case. In the case at bar, the Court held that under the circumstances, it was reasonable for defendant to wait until the pump was actually installed to see if it would work before deciding whether to reject it, particularly considering that defendant relied on plaintiff's expertise in selecting a pump appropriate for its intended use. The trial court did not clearly err in finding that defendant rejected the goods within a reasonable time when it determined the following spring that the pump was not appropriate for defendant's irrigation system. During the interim period, the pump sat in its original packaging until it could be installed to determine if it would work as intended for defendant's purposes. The Court further held that the case evaluation award for the return of the pump to the plaintiff was consistent with the ICC; therefore it should not be considered a separate award of equitable relief. Accordingly, the case evaluation award did not violate MCR 2.403(K)(3).