## Facts

- CHS, Inc. sold bulk farm fertilizers to distributors, including East Lynn Fertilizers, Inc., which resold fertilizer to local farmers.
- In July 2008, CHS and East Lynn entered into a written “Sale Agreement” for East Lynn to purchase 360 tons of anhydrous ammonia at \$1,180 per ton.
- East Lynn could take delivery (“pull” the product) between April 1, 2009 and May 30, 2009, and the remaining contract balance was due March 1, 2009.
- After the contract was signed, the market price of anhydrous ammonia dropped significantly.
- East Lynn notified CHS that it wanted to modify or cancel the contract and failed to pay the contract balance by the March 1 deadline.
- East Lynn did not take delivery during the April–May delivery window.
- CHS disposed of the ammonia by selling part of it in two transactions (without giving East Lynn advance notice of the resales) and using the remaining ammonia in CHS’s own operations.
- One sale price was \$295 per ton, which was below a contemporaneous market-price range reported for the region by the Green Markets Report.
- The Green Markets Report was a weekly industry publication that reported regional anhydrous-ammonia price ranges based on information gathered from dealers and distributors; it reported ranges including $320–$345 per ton during the relevant period, and the June 1 edition listed $340–$370 for the region.
- East Lynn sued to recover a down payment, and CHS counterclaimed for breach of contract and sought attorney’s fees under the contract.
- The court previously granted summary judgment for CHS on liability; the remaining dispute concerned the correct measure and proof of CHS’s damages.

## Issues

1. After East Lynn’s nonpayment and failure to take delivery, could CHS recover seller’s damages under UCC § 2-708(1) based on the market price at the time and place for tender rather than limiting itself to resale-based damages under UCC § 2-706?
2. Was the Green Markets Report competent evidence of “market price at the time and place for tender” for purposes of UCC § 2-708(1)?
3. Did East Lynn’s arguments about the report and the existence of a below-range resale price create a genuine dispute of material fact that would bar summary judgment on damages?

## Decision

- The court granted CHS’s motion for summary judgment on damages under UCC § 2-708(1).
- The court accepted CHS’s use of the Green Markets Report to establish the relevant market price for anhydrous ammonia in the proper region and time frame.
- The court rejected East Lynn’s attempt to avoid summary judgment because East Lynn offered no competing market-price evidence and no developed evidentiary basis showing the report was untrustworthy.
- The court entered judgment for CHS on its counterclaim, awarding \$254,520 in damages and \$86,898.63 in attorney’s fees (for a total of \$341,418.63).

## Legal Principles

- Under UCC § 2-708(1), an aggrieved seller may recover the difference between the unpaid contract price and the market price at the time and place for tender, plus incidental damages, less expenses saved because of the breach.
- A seller is not forced to use UCC § 2-706 resale damages simply because it resold some goods after the buyer’s breach; market-price damages under § 2-708(1) remain available when properly proved.
- Trade publications and other market reports can be used to prove market price when they reflect pricing information for the relevant product, time, and geographic market, and the opposing party offers no concrete contrary proof.
- On summary judgment, a party opposing a supported damages calculation must come forward with evidence creating a genuine dispute; attorney argument alone does not create a fact issue.
- Contractual attorney-fee provisions may be enforced in favor of the prevailing party when valid under applicable law and supported by the record.

## Conclusion

The court enforced a fixed-price fertilizer contract after the market fell and awarded CHS market-price damages under UCC § 2-708(1), holding that the Green Markets Report provided adequate evidence of market price and that East Lynn’s unsupported objections and reliance on an isolated lower resale price did not prevent summary judgment; CHS also recovered attorney’s fees under the parties’ agreement.


East Lynn Fertilizers, Inc. v. CHS, Inc., 76 UCC Rep. Serv. 2d 270 (2011)