Kelomar

Hebberd-Kulow Enterprises, Inc. (HKE), sold agricultural supplies to Kelomar, Inc. (Kelomar), for 20 years. HKE brought suit against Kelomar when Kelomar refused to pay for certain goods shipped under 33 separate invoices. Kelomar filed a cross-complaint alleging damages arising from HKE’s delivery of nonconforming labels, provided under a contract that did not involve the 33 invoices.

The matter proceeded to trial where the jury awarded HKE damages in the amount of $439,792.99, consisting of $259,120.50 of principal and $180,672.49 of interest. The jury also awarded Kelomar $27,769.94 on its cross-complaint.

Kelomar appeals, contending the court erred as a matter of law in interpreting the various contracts between the parties to include interest charges on late payments. In the alternative, Kelomar argues that even if the parties agreed that Kelomar would pay interest on any late payment, the amount of interest was improperly calculated because the principal awarded HKE was subject to a setoff. We conclude the trial court erred in ruling that the parties’ contracts included an interest charge for late payments (the interest provision). As we discuss below, the court…