Plaintiffs, representative association members, sought a rehearing for the court to reconsider its reversal of an award of liquidated damages in favor of plaintiffs in plaintiffs’ suit for damages based upon the delivery of the substandard crops by defendants, farmers and association members, to defendant cooperative marketing association.

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Overview

Plaintiffs, representative association members, challenged, in a petition for rehearing, the court’s reversal of an award of liquidated damages to plaintiffs. Plaintiffs alleged that the delivery of wet raisins by defendants, farmers and association members, was a breach of the cooperative marketing agreement. A rehearing was granted and the court adopted its former decision to reverse the award. Plaintiffs failed to prove a breach of any conditions enumerated under Cal. Agric. Code § 1209 as a premise for recovery of liquidated damages. The court held that § 1209 authorized liquidated damages for deficiencies in the quantity of crops delivered to a cooperative marketing association, not the quality. As plaintiffs’ complaint addressed quality, plaintiffs had to prove that calculation of damages was impracticable in order to justify liquidated damages. However, the damages were ascertainable, according to the degree of default, under the ordinary rules of the law of damages, and therefore plaintiffs were not entitled to liquidated damages. Additionally, the marketing agreement failed to evidence that the parties had contemplated liquidated damages for any defects in quality.

Outcome

The court granted a rehearing and adopted their prior reversal of the award of liquidated damages, as the provisions of the Agricultural Code did not authorize a contract for liquidated damages for delivery of an inferior quality of crops, and such damages were not contemplated by the parties under the cooperative marketing agreement.