In Alexin, LLC v. Olympic Metals, LLC, 53 N.E.3d 1184, 89 U.C.C. Rep. Serv. 2d 608 (Ind. Ct. App. 2016), the Plaintiff Alexin, LLC (“Alexin”) ordered scrap aluminum from the defendant Olympic Metals, LLC (“Olympic Metals”), specifying the scrap to be of a certain quality designated as “2024 aluminum.” The scrap delivered by Olympic Metals was both 2024 and 2090 aluminum, clearly identified with stamps and segregated into separate pallets. Alexin’s shipping clerk stamped “received” on the delivery documents and subsequently melted down the metal. Alexin thereafter claimed they had to discard the ingots because the 2090 aluminum tainted the entire batch and filed suit for breach of warranty. Olympic Metals counterclaimed for attorney’s fees and argued the claim was frivolous. Alexin dismissed its complaint, leaving only the counterclaim.
In finding for Olympic Metals, the court agreed Alexin’s claims were unsupported. The court held the evidence showed there were three types of aluminum scrap in the shipment: 2024 aluminum sheets, 2024 extruded aluminum, and 2090 aluminum sheets. While the bill of lading and purchase order stated only 2024 sheets were delivered, there was a hand written note accompanying the shipment that indicated 2090 aluminum was included, and all three types of aluminum were clearly stamped and segregated on separate pallets.
The court further concluded that the evidence showed that Alexin’s acceptance of the nonconforming goods was not reasonably induced either by the difficulty of discovering the nonconformity or by any assurances from Olympic Metals. As such, Alexin did not rightfully revoke its acceptance of the nonconforming aluminum under Indiana’s code (interpreting a similar prior statute under the Uniform Sales Act to prohibit revocation of acceptance where the buyer did not allege latent defects in the product accepted). The court further noted it is well settled the UCC limits a non-breaching party’s damages to those that are proximately caused by the breach, and where the injury involved follows the use of goods without discovery of the defect causing the damage, the question of “proximate” cause turns on whether it was reasonable for the buyer to use the goods without such inspection as would have revealed the defects. Where it is not reasonable to do so, or if the buyer did in fact discover the defect prior to use, the injury would not proximately result from the breach of warranty.