United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
December 28, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 06-60588
Summary Calendar
AGFA CORPORATION,
Plaintiff-Appellant,
v.
LAWRENCE PRINTING COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Mississippi
4:02CV297P-B
Before DAVIS, BARKSDALE, and BENAVIDES, Circuit Judges.
PER CURIAM:*
AGFA Corporation(“AGFA”) challenges the district court’s
dismissal of its complaint against Lawrence Printing Company
(“Lawrence”) for breach of contract, and the court’s award of
$22,427.34 plus interest in damages against AGFA for failure to
furnish acceptable goods under the contract. We AFFIRM.
Lawrence, a commercial printing business, purchased printing
*
Pursuant to 5th Cir. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
equipment through a distributor, Heartland Imaging Company
(“Heartland”), for several years. In 2000, Heartland’s
representative recommended Lawrence replace its old processor with
a new AGFA processor. Lawrence heeded its distributor’s advice and
entered into an agreement with AGFA to purchase specified volumes
of AGFA printing plates for a five-year term running from April 1,
2000, to March 31, 2005. The contract also provided for AGFA’s
recovery of liquidated damages in the event of early termination of
the agreement.
In February, 2001, Lawrence began experiencing considerable
difficulty using the AGFA plates, resulting in extensive downtime;
the images disappeared off the plates, and the plates transferred
ink in unwanted portions of the images. Lawrence complained to its
Heartland representative, who initially replaced several boxes of
the plates and returned them to AGFA. The problems persisted.
Heartland’s representative made several unsuccessful
troubleshooting attempts, then solicited AGFA’s input on April 26,
2001. Two AGFA service technicians visited Lawrence, performed a
general maintenance check, and advised Lawrence to stop recycling
developer. Lawrence followed the technician’s advice, but the
problems continued.
After numerous, increasingly futile communications between the
Heartland representative and AGFA, AGFA sent additional personnel
to the Lawrence plant on June 11-12, 2001. The technicians
conducted another inspection and suggested Lawrence use a different
2
fountain solution. Again, Lawrence heeded AGFA’s suggestion
without success. Technicians returned to Lawrence a month later,
but did not suggest any corrective action.
Finally, as a last resort, Lawrence tried using plates by a
different manufacturer. The plates performed flawlessly. Lawrence
changed to another processor, and Heartland notified AGFA of the
necessary change. AGFA responded by sending a letter to Lawrence
acknowledging that Lawrence intended to “default” on its remaining
contractual obligation to purchase AGFA plates, and demanded
payment of liquidated damages.
In the ensuing litigation, the district court found that AGFA
had failed to furnish acceptable goods under the contract,
dismissed AGFA’s claims with prejudice, and awarded Lawrence
damages based on AGFA’s repeated failure to furnish acceptable
goods under the contract. We review the district court’s factual
findings for clear error, and its legal conclusions de novo. See
Employers Ins. of Wasau v. Suwannee River Spa Lines, Inc., 866 F.2d
752, 758 (5th Cir. 1989).
We affirm the district court for the reasons stated in its
well-reasoned opinion. The outcome of this case turns entirely on
which of the two parties breached the contract. Under New Jersey’s
version of Article 2 of the UCC, which controls the construction of
contracts in this case, Lawrence had the right to reject or revoke
acceptance of nonconforming goods. N.J.S.A. 12A:2-601, 602, 603.
3
As demonstrated by the facts of this case, AGFA’s goods failed
their essential purpose. AGFA’s failure to provide acceptable
goods to Lawrence and its failure to correct the problems within a
reasonable time precludes AGFA from recovering on its breach of
contract claim.
AGFA argues that the limited remedy provision in the contract,
which specifies replacement product as the exclusive remedy,
shields AGFA from liability. New Jersey law, however, provides
that “[w]here circumstances cause an exclusive or limited remedy to
fail of its essential purpose,” as is the case here, “remedy may be
had as provided in this act.” N.J.S.A. 12A: 2-719(2).
Specifically, the act provides for Lawrence to recover the
difference between the cost of cover and the contract price as
damages. N.J.S.A. 12A:2-712(2).
For the foregoing reasons, we AFFIRM the district court.
4