## Facts

- Cliffstar Corporation contracted with Riverbend Products, Inc., a processor of tomato paste and frozen citrus products.
- On July 14, 1988, Cliffstar ordered 3.2 million pounds of tomato paste for delivery through June 30, 1989, and sought an option for an additional 500,000 pounds.
- Riverbend accepted the 3.2 million-pound order in writing on July 25, 1988, but expressly rejected any option for additional quantities due to uncertainty about incoming tomato tonnage.
- Riverbend had forecast sales for the 1988 crop and contracted with growers for significant tomato supply, expecting to supplement with spot-market purchases; it later received orders substantially exceeding its forecasted sales.
- After contracting, the 1988 tomato crop yielded poorly in Arizona and later projections for California declined, creating a supply shortage.
- Riverbend notified Cliffstar it would reduce production and allocate available tomato paste among customers based on needs and sales history, ultimately delivering less than one million pounds to Cliffstar.
- Separately, Riverbend shipped ten boxcars of lemon concentrate to Cliffstar, for which Riverbend sought payment; Cliffstar disputed payment and asserted defenses and setoffs tied partly to the tomato paste dispute.
- The contract had no force-majeure clause; Riverbend relied on California Commercial Code § 2615 (U.C.C. § 2-615) to excuse partial nonperformance.

## Issues

1. Whether Riverbend was excused under California Commercial Code § 2615 (U.C.C. § 2-615) from delivering the full tomato paste quantity due to an alleged unforeseen crop failure and resulting shortage.
2. Whether Riverbend’s allocation of reduced tomato paste supply among customers was “fair and reasonable,” and whether Cliffstar assented to a reduced allocation.
3. Whether Riverbend’s alleged over-contracting (commitments exceeding capacity even in a good year) would bar reliance on § 2-615 as self-created impracticability.
4. Whether Cliffstar was liable as a matter of law to pay for (a) the ten boxcars of lemon concentrate and (b) the tomato paste actually delivered and accepted.

## Decision

- Cliffstar’s motion for summary judgment on damages for nondelivery of the tomato paste balance was denied.
- Riverbend’s cross-motion for summary judgment on the tomato paste nondelivery dispute was denied because material factual disputes remained as to foreseeability, assumed risk, capacity/over-contracting, allocation fairness, and Cliffstar’s assent.
- Riverbend’s cross-motion was granted in part, requiring Cliffstar to pay for the ten boxcars of lemon concentrate delivered and for the tomato paste actually delivered and accepted.

## Legal Principles

- Under U.C.C. § 2-615 (as adopted in California), a seller’s nonperformance may be excused only if performance has become impracticable due to a contingency whose nonoccurrence was a basic assumption of the contract and the seller did not assume the risk.
- A seller may not invoke § 2-615 where the claimed impracticability is self-induced, including where the seller’s over-commitment or over-contracting created or materially contributed to the shortfall.
- When partial performance is possible under § 2-615(b), the seller must allocate available supply among customers in a “fair and reasonable” manner; whether an allocation meets this standard is often fact-dependent.
- Under the U.C.C., a buyer that accepts delivered goods generally must pay the contract price for those goods; disputed claims relating to nondelivery do not automatically excuse payment for accepted deliveries absent a legally sufficient defense on the record.
- Summary judgment is improper where material facts concerning foreseeability, allocation conduct, and parties’ communications or course of dealing are genuinely disputed.

## Conclusion

The court left for trial the parties’ competing claims regarding nondelivery of most of the tomato paste and Riverbend’s asserted § 2-615 impracticability and allocation defense, but ordered Cliffstar to pay for the lemon concentrate and tomato paste that Riverbend delivered and Cliffstar accepted.


Cliffstar Corp. v. Riverbend Prods., Inc., 750 F. Supp. 81 (W.D.N.Y. 1990)