Bonebrake v. Cox

Donald and Claude Cox (defendants) closed their fire-gutted bowling alley and contracted with Woodrow Simek for the purchase and installation of new and replacement equipment and flooring. Simek died before work could be completed. The Coxes informed Frances Bonebrake (plaintiff), the administratrix of Simek’s estate, that they had discovered significant nonconformities in Simek’s materials and installation work. Bonebrake made it clear that she knew nothing of Simek’s business and had no idea how to remedy the nonconformities or carry on Simek’s work. The Coxes notified Bonebrake that because they were quickly losing customers to competing bowling alleys, the Coxes would have to hire third parties to repair the nonconformities and complete the contracts, with third-party expenses deducted from contract payment. Bonebrake filed a diversity suit under Iowa’s version of the Uniform Commercial Code (UCC) to collect full contract payment. The Coxes counterclaimed for anticipatory contract repudiation. The court-appointed special master found that: (1) the Coxes waived some of their warranty rights by failing to comply with the nonconformity-notification requirements of UCC §§ 2-605(1) and 2-607(3)(a); (2) other contract provisions constituted a mixed goods-and-services agreement to which the UCC did not apply; and (3) the Coxes forfeited their anticipatory-repudiation counterclaim by precluding Bonebrake from retracting whatever repudiation there might have been. The special master concluded that these findings led to the admittedly harsh result of judgment in Bonebrake’s favor. The Coxes appealed to the Eighth Circuit.