BMC Industries, Inc. v. Barth Industries, Inc.
160 F.3d 1322 · U.S. Court of Appeals · 1998
Facts
BMC Industries, Inc. contracted with Barth Industries, Inc. for the design, manufacture, and installation of automated equipment to produce eyeglass lenses for $515,200. The initial delivery date was June 1987, later amended to October 1987. Barth experienced significant technical problems and delays, failing to deliver the equipment by the revised deadline. Despite the delays, BMC executives encouraged Barth to continue working, collaborated on solutions, and did not terminate the contract. In August 1988, Robert Tomsich, president of Nesco, Inc. (Barth's parent company), orally promised BMC that Nesco would commit its resources to ensure Barth's completion. In May 1989, Barth notified BMC that a mold assembly filling machine was completed and offered delivery, but BMC refused and filed a lawsuit.
Procedural history
BMC sued Barth for breach of contract and Nesco for promissory estoppel, while Barth counterclaimed for breach. The district court dismissed fraud claims by both parties and ruled the contract was for services, applying Florida common law. A jury found Barth breached the contract, awarding BMC $3,001,879, and found Nesco liable on promissory estoppel, awarding BMC $2,137,453, while rejecting Barth's counterclaims. The district court denied Barth's and Nesco's motions for judgment as a matter of law and for a new trial, leading to their appeal to the Eleventh Circuit.
Issue
The legal questions presented were whether the contract was predominantly for goods, thus governed by the Uniform Commercial Code (UCC), or for services, governed by common law. Additionally, the court considered whether BMC waived the October 1987 delivery date through its conduct. Finally, the court addressed whether BMC's promissory estoppel claim against Nesco, based on an oral promise, was barred by Florida's statute of frauds.
Holding
The court held that the contract was predominantly a transaction in goods, making UCC Article 2 applicable. It further held that BMC waived the October 1987 delivery date as a matter of law, but remanded for a new trial on whether Barth tendered delivery within a reasonable time. The court concluded that BMC's promissory estoppel claim against Nesco was barred by the statute of frauds.
Rule
The "predominant factor" test determines if a hybrid contract is for goods (UCC) or services (common law), considering contractual language (e.g., "purchase order," "buyer/seller"), billing methods, and the mobility of the goods. UCC waiver (Fla. Stat. ch. 672.209) requires the existence of a waivable right, knowledge of that right, and an intent to relinquish it, but does not require detrimental reliance or consideration. Florida's statute of frauds (Fla. Stat. ch. 725.01) requires a written promise to answer for the debt, default, or miscarriage of another person, especially for past-due debts, unless the "leading object" rule applies where the guarantor's main purpose is to benefit itself.
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