MOORE v. BASEPOINT


MOORE & MOORE
GENERAL CONTRACTORS, INC.
v.
BASEPOINT, INC


April 18, 1997
Record No. 961324

MOORE & MOORE GENERAL CONTRACTORS, INC.
v.
BASEPOINT, INC.

J. Peyton Farmer, Judge
Present: All the Justices
OPINION BY JUSTICE A. CHRISTIAN COMPTON
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY


The parties to this dispute agree that its outcome is
controlled by the Uniform Commercial Code ___ Sales
(UCC), Code ‘ 8.2-101 et seq. The central
issues on appeal are whether, under the facts, a buyer’s
acceptance of nonconforming goods can be revoked because of the
nonconformity, and whether, notwithstanding the inability to
revoke, the buyer is entitled to recover from the seller the cost
of substitute goods.

This controversy stems from a contract between a subcontractor
and a general contractor in connection with construction of a Red
Lobster restaurant in Spotsylvania County. Basepoint, Inc., the
subcontractor, entered into an agreement with Moore & Moore
General Contractors, Inc., the general contractor, to supply
casework, including cabinets, and interior trim items for the
facility, which was owned by General Mills Restaurants, Inc.

Moore & Moore, the buyer, refused to pay for cabinets
delivered by Basepoint, the seller. Thereafter, the seller timely
filed a memorandum of mechanic’s lien in the sum of $28,080 and
the present bill of complaint to enforce the lien. Named as
defendants to the bill were the buyer and the owner.

In its answer, the buyer denied indebtedness to the seller,
claiming the materials supplied were defective. In addition, the
buyer filed a cross-bill seeking recovery of approximately
$47,000 to cover the cost of removing the "defective"
casework, rebuilding the casework, and finishing the remaining
work under the seller’s contract.

Subsequently, by order, the property was released from the
lien upon the filing of an appropriate bond as provided by Code
‘ 43-70. The owner then was dismissed from the suit.

The cause was referred to a commissioner in chancery, who
conducted an evidentiary hearing. The facts were presented
through ore tenus testimony, a de bene esse deposition, and
documentary exhibits.

The commissioner submitted a report finding that the lien was
valid, that the seller was entitled to judgment against the buyer
in the sum claimed, and that the buyer was not entitled to
judgment on its cross-claim.

The trial court overruled the buyer’s exceptions to the
commissioner’s report and confirmed it. The buyer appeals from
the March 1996 final decree.

Upon appellate review, a commissioner in chancery’s factual
findings based on ore tenus evidence that are confirmed by the
trial court are given great weight. These findings will be
reversed only if they are plainly wrong or without evidence to
support them. Cooper v. Cooper, 249 Va. 511, 518,
457 S.E.2d 88, 92 (1995).

The commissioner made the following factual findings. In
connection with the bidding process for the Red Lobster project,
the buyer provided the seller, which makes and sells woodwork,
with plans and specifications prepared by Vision III, an
architect, dated in November 1990. The seller made a proposal in
December 1990 to the buyer "to furnish millwork items in
accordance with plans and specifications, prepared by Vision III,
dated 11-30-90." These items included custom-made cabinets
such as bar cabinets, food service cabinets, overhead office
cabinets and restroom vanity cabinets. Shop drawings then were
prepared and accepted by the parties.

The Vision III plans provided that all cabinets would be made
of wood. The approved shop drawings made reference to the use of
"melamine." There was a dispute in the evidence over
the meaning of "melamine." The seller offered evidence
to show that "melamine," as used in the shop drawings,
referred to a composite product with a particular type of hard
finish. The buyer presented evidence that the word
"melamine" referred only to a finish, which can be
placed on composite material or wood. According to the buyer,
reference in the shop drawings to "melamine" meant that
the seller was authorized to provide wood covered with
"melamine," not a composite material covered with a
hard surface.

In making his factual findings, the commissioner principally
relied upon the ore tenus testimony of Donnie Ray Hall. Called as
a witness by the seller, Hall had been the buyer’s job
superintendent for the Red Lobster project. Hall, a contractor
who was experienced in millwork and carpentry, worked under the
buyer’s field superintendent, Allen L. Lyle.

According to Hall, he and Lyle were aware of the reference to
"melamine" in the shop drawings and that the Vision III
plans called for the use of plywood cabinets. Describing
"melamine" as "a product with a particle board
core in it," Hall testified that Lyle "knew" that
particle board was to be used instead of plywood, that he and
Lyle concluded the owner "would not know the
difference" were it used in place of plywood, and that the
particle board was a product that would perform "just as
well" as wood in these circumstances.

Upon delivery of the cabinets to the jobsite between
March 19, 1991 and April 12, 1991, Hall and Lyle inspected
them and "did see it was particle boards." Hall found
the product to be "in A-1 shape . . . other than
. . . what it was made of." According to Hall,
Lyle "had to get" the exposed ends of the work
"covered up" with drop cloths before installation so
that the owner’s inspector would not see "these products
prior to" installation. Hall testified that Lyle
"thought he was saving money" by accepting the cabinets
as delivered.

Lyle then directed installation of all the cabinets and every
one was installed prior to the inspection by the owner’s
representative. On May 1, 1991, the owner’s inspector examined
the installed millwork. He rejected the cabinets, stating they
did not conform to the plans and specifications. On May 2, 1991,
the buyer sent a letter to the seller stating, "On
Wednesday, May 1, 1991, it was discovered that most of your
casework is constructed of particle board. Since the plans [] we
provided you for the above referenced job [] call for plywood,
all of the casework that has particle board does not conform and
must be replaced." In the letter, the buyer set the
following Tuesday as the deadline for delivery of the replacement
material, noting that the seller already had notified the buyer’s
field superintendent it could not meet the deadline.

Later, Hall was told by one of the buyer’s executives
"that Allen Lyle had made a big mistake and they had used
the wrong products, they had approved the wrong products to be
used in the cabinets." According to Hall, the executive
"felt that his man was really at fault and had made a
mistake in this."

Upon removal of the cabinets made of particle board, the buyer
immediately procured plywood replacements from another
subcontractor. The new cabinets were installed promptly and the
project was completed nearly on time.
UCC ‘ 8.2-601, dealing with a buyer’s rights on improper
delivery, provides, as pertinent, that if "goods
. . . fail in any respect to conform to the contract,
the buyer may (a) reject the whole; or (b) accept the whole; or
(c) accept any commercial unit or units and reject the
rest."

UCC ‘ 8.2-606, dealing with what constitutes acceptance
of goods, provides, as pertinent, that "(1) Acceptance of
goods occurs when the buyer . . . (c) does any act
inconsistent with the seller’s
ownership. . . ."

The buyer’s installation of the nonconforming cabinets
constituted an "act inconsistent with the seller’s
ownership" and thus amounted to an acceptance of the goods
under ‘ 8.2-606(1)(c). The buyer does not dispute this
conclusion. Instead, the buyer contends that it properly revoked
its acceptance of the cabinets because of their nonconformity to
the plans and specifications.

The buyer had no right, however, to revoke the acceptance. The
buyer, through its field superintendent and job superintendent,
had full knowledge that the cabinets supplied by the seller did
not conform to the plans and specifications. The consequences of
an "acceptance" under these circumstances is clearly
set forth in UCC ‘ 8.2-607(2). The statute provides that a
buyer’s acceptance of goods "precludes rejection of the
goods accepted and if made with knowledge of a nonconformity
cannot be revoked because of it. . . ." In
other words, revocation is unavailable for a nonconformity known
to the buyer at the time of acceptance, except under
circumstances not present here. See Official Comment 2.

But ‘ 8.2-607(2) also provides that "acceptance does
not of itself impair any other remedy provided by this title for
nonconformity." The buyer contends that while acceptance of
the cabinets entitles the seller to payment of the contract price
of approximately $28,000, the nonconformity of the goods entitles
the buyer to judgment on its cross-bill for approximately $47,000
for the cost incurred to remove and replace the nonconforming
cabinets. Thus, the issue arises whether the buyer is entitled to
recover under its cross-bill.

The buyer based its cross-bill on only the "cover"
remedy available under UCC ” 8.2-711 and -712, which allow
a buyer to recover for procurement of substitute goods. Under
‘ 8.2-711, the "cover" remedy is available in four
situations: when the seller "fails to make delivery;"
when the seller "repudiates" the contract; when the
buyer "rightfully rejects" the goods; and when the
buyer "justifiably revokes acceptance" of the goods.
None of those situations exists in this case, as the commissioner
and the trial court properly ruled in denying the cross-bill.

Finally, we summarily reject the buyer’s contention that the
mechanic’s lien was unenforceable. The buyer contends that
because the materials were removed from the building before the
memorandum was filed, the goods did not enhance the value of the
building, thus making the lien invalid.

Code ‘ 43-3 authorizes a lien in favor of "[a]ll
persons performing labor or furnishing materials . . .
for the construction . . . or improvement of any
building." The seller furnished materials for this building
project, and the cabinets were delivered, accepted, installed,
and added value to the structure. The fact that the cabinets were
removed before the memorandum was filed is irrelevant. The
legislature could not have intended that a supplier’s mechanic’s
lien may be avoided simply by removing from the building the
materials furnished and incorporated in it.

Consequently, we hold that the commissioner’s factual findings
confirmed by the trial court are not plainly wrong but are
supported by credible evidence, and that the court’s conclusions
of law are correct. Thus, the judgment of the trial court will be

Affirmed.

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