Allied Grape Growers v. Bronco Wine Co.

Opinion

Introduction

Bronco Wine Company crushes grapes for use as wine. Allied Grape Growers is a cooperative corporation consisting of many grape growers in the business of supplying grapes to wineries. In 1981, Bronco and Allied entered into a contract for the supply and purchase of approximately 30,000 tons of red and white grapes per year for use in bulk wines.

A major dispute arose in 1982 when Bronco allegedly breached the contract by not accepting grapes or by downgrading grapes and paying lower prices for them. Allied eventually won its lawsuit with a jury award of approximately $3.4 million for its breach of contract claims. The jury was unable to reach a verdict on Allied’s two fraud claims.

In a separate hearing conducted by the trial court on Allied’s claim of unfair business practices, the trial court granted injunctive relief for Allied pursuant to Business and Professions Code section 17200. (Bronco’s requests for a judgment non obstante veredicto and for a new trial were denied.)

On appeal Bronco contends that there is insufficient evidence to support the jury verdicts and that the trial court erred in not granting its motions for judgment non obstante veredicto or for a new trial. Bronco claims that there was juror misconduct and that the trial court erred in applying Business and Professions Code section 17200 as a matter of law. Allied cross-appeals on the theory that it was entitled to special late charges pursuant to Agricultural Code section 55881 for Bronco’s late payment for those portions of the contract that it did honor.

Facts and Proceedings Below

Because most of Bronco’s contentions on appeal involve the sufficiency of evidence, we have abbreviated this statement of facts and discuss the pertinent facts in far greater detail below as they bear upon that particular issue.

*438 Bronco and Allied first entered into a contractual relationship in 1978. In June of 1981 the contract was renewed for another three-year term. Under the terms of the agreement, Allied was to supply approximately 20,000 tons of Thompson seedless grapes and somewhere between 10,000 and 13,000 tons of other varieties each season between 1981 and 1984. Through the first year of the contract neither party had any complaints about the other’s performance.

In 1982, however, two events tremendously undermined the expectations of the parties. First, the grape crop and crush were the largest to date in California history and there also was a glut of wine from foreign producers. Second, rainfall in the San Joaquin Valley during late September caused damage to the crop.

Bronco complained that the quality of the grapes being delivered in late September and early October was far below its standards. Bronco further complained that the grapes were below its sugar-content standards.

Allied contended at trial that Bronco had substantially overcontracted for Thompson seedless grapes in 1982. Allied complained that Bronco deliberately did not open its winery in Fresno until September 20 and did not open its winery in Ceres until September 28, despite its repeated pleas for Bronco to open its wineries earlier. When Bronco finally did open its plants, over half the grapes statewide had already been crushed. Also, according to Allied, rain in September was highly probable and everyone in the wine business knew that it would cause damage. Allied’s president, Robert Mclnturf, was concerned at the late opening of the Bronco plants because it would take up to 30 days to harvest, transport and crush a 30,000-ton contract.

Allied contended at trial that Bronco’s three-tiered quality program, initiated by Bronco in 1982, and Bronco’s practice of downgrading its grapes breached the general contract standards agreed to by the parties. Allied contended that the practices were totally arbitrary, that its grapes met contract standards including sugar content, and that Bronco’s purpose in engaging in these practices was that it had purchased more grapes to crush than it had contracts to sell to other wineries.

Allied succeeded in delivering approximately 17,500 tons of Thompson grapes under the contract. Bronco paid an average price of $103 per ton. Allied contended that its grapes met contract standards and that it was entitled to $150 per ton because the Thompson grapes averaged 21.1 degrees Brix.

*439 On March 16, 1983, Bronco repudiated its contract with Allied. Because there was no other market for its grapes, other than the Bronco contract, Allied formed a subsidiary corporation called ISC to purchase the grapes. Allied contended that the market value of its grapes in 1983 was $100 per ton and that ISC could only purchase the grapes for $85 per ton, for a loss of $15 per ton.

The jury awarded $2.65 million for Bronco’s breach of contract in 1982. It awarded another $744,658 for Bronco’s breach of contract in 1983. The trial court further awarded prejudgment interest and granted an injunction on Bronco’s business practices pursuant to Business and Professions Code section 17200 after a court hearing without a jury.

Discussion

I.-IIL *

IV.

Estoppel and the Statute of Frauds Under the California Uniform Commercial Code.

Bronco contests the jury’s award of damages for undelivered Carnelian grapes. The original written contract between the parties does not include Carnelians. Allied claims there was an oral contract for delivery of 850 tons of Carnelians. Bronco accepted and paid for one load of Carnelian grapes and rejected deliveries of the rest. Bronco argues, however, that under the California Uniform Commercial Code it is obligated to pay for only those grapes delivered and accepted. Allied replies that partial performance takes the case outside the statute of frauds.

California Uniform Commercial Code section 2201 (hereafter section 2201) creates a statute of frauds for the sale of all goods with the value of $500 or more. This changed the common law rule of many jurisdictions that prevented operation of the statute of frauds in contracts for the sale of goods. (See Varnell v. Henry M. Milgrom, Inc. (1985) 78 N.C.App. 451 [337 S.E.2d 616, 618-619]; Maryland Supreme Corp. v. Blake Co. (1977) 279 Md. 531 [369 A.2d 1017, 1028, fn. 5].) Without a written memorandum between the parties, the California Uniform Commercial Code’s statute of frauds *440 will still not bar enforcement of an oral contract under two instances set forth in subdivision (3) of section 2201, which reads: “(3) A contract which does not satisfy the requirements of subdivision (1) but which is valid in other respects is enforceable [|J] (a) If the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of the seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer, has made either a substantial beginning of their manufacture or commitments for their procurement; or []j] (c) With respect to goods for which payment has been made and accepted or which have been received and accepted (Section 2606).” {Note: Subdivision (b) was not enacted in California.)

Allied’s assertion that partial performance takes an oral contract outside the statute of frauds is not supported by any California case authority. The California Uniform Commercial Code was not operative until June 1, 1965, and it does not have retroactive application. (Cal. U. Com. Code, § 10101.) The disputes in the three authorities cited by Allied predate the California Uniform Commercial Code and rely upon the California Civil Code as authority for the proposition that partial performance takes an oral contract outside the statute of frauds even if the partial performance does not complete the performing party’s obligations under the contract. (Nelson v. Specialty Records, Inc. (1970) 11 Cal.App.3d 126, 141 [89 Cal.Rptr. 540]; Sloan v. Hiatt (1966) 245 Cal.App.2d 926, 933 [54 Cal.Rptr. 351]; Price v. McConnell (1960) 184 Cal.App.2d 660, 667 [7 Cal.Rptr. 695].)

In fact, the Sloan case actually indicates that partial performance is limited in application under section 2201, subdivision (3)(c), and the Official Code Comments. (245 Cal.App.2d at p. 933.) Official comment No. 2 limits the buyer’s obligation to make a payment under the oral contract to only those goods which are actually received. Comment No. 2 states: “2. ‘Partial performance’ as a substitute for the required memorandum can validate the contract only for the goods which have been accepted or for which payment has been made and accepted.

“Receipt and acceptance either of goods or of the price constitutes an unambiguous overt admission by both parties that a contract actually exists. If the court can make a just apportionment, therefore, the agreed price of any goods actually delivered can be recovered without a writing or, if the price has been paid, the seller can be forced to deliver an apportionable part of the goods. The overt actions of the parties make admissible evidence of the other terms of the contract necessary to a just apportionment. This is true even though the actions of the parties are not in themselves inconsis *441 tent with a different transaction such as a consignment for resale or a mere loan of money.

“Part performance by the buyer requires the delivery of something by him that is accepted by the seller as such performance. Thus, part payment may be made by money or check, accepted by the seller. If the agreed price consists of goods or services, then they must also have been delivered and accepted.”

The express language of subdivision (3)(c) of section 2201 also appears to limit recovery to payment for those goods actually received and accepted. The number of reported decisions in California interpreting section 2201, subdivision (3)(c), are few. In Dairyman’s Cooperative Creamery Assn. v. Leipold (1973) 34 Cal.App.3d 184, 188 [109 Cal.Rptr. 753], this court recognized that the doctrine of part performance applied where a broker acted on behalf of a buyer who received and accepted a specific quantity of powdered milk.

In Lockwood v. Smigel (1971) 18 Cal.App.3d 800 [96 Cal.Rptr. 289], the court recognized that partial payment for a single automobile evidenced the existence of an oral agreement between the parties. The Lockwood court, however, clearly held that it was because partial payment was made for a single unit (one automobile), that the doctrine of partial performance took the case outside the statute of frauds. The Lockwood court carefully quoted and considered Official Uniform Commercial Comment No. 2, in footnote 3 of the opinion. (18 Cal.App.3d at p. 803.) The court then went on to observe that: “The policies of the law are well served by enforcement of the contract which is alleged in this case. Where there is a part payment instead of a memorandum, this fact evidences the existence of a contract and identifies the party to be charged—i.e., the seller who received the money. Where the buyer is claiming to have purchased no more than one unit, there can be no dispute over quantity. The possibility that other terms of the bargain may be disputed is not a ground for nonenforcement, since a memorandum which satisfies the statute need not state all of the terms fully or accurately. The statutory policy which under the old law permitted the enforcement of oral contracts upon proof of part payment is equally sound under the new code, as applied to the sale of an indivisible unit.” (18 Cal.App.3d at p. 804.)

Lockwood did not have to confront the issue of payment for one load of grapes where the oral contract called for a much larger quantity than actually delivered and accepted. Lockwood’s dictum, however, clearly acknowledges the distinction between partial performance under the Civil Code and partial performance under the California Uniform Commercial Code. Hence, partial performance under the California Uniform Commer *442 cial Code entitles the seller to payment only for those goods received and accepted by the buyer.

Other jurisdictions also limit the doctrine of partial performance under the Uniform Commercial Code to only that part of the oral agreement actually performed by the parties. (Howard Const. Co. v. Jeff-Cole Quarries, Inc. (Mo.App. 1983) 669 S.W.2d 221, 230-231; Colorado Carpet Installation v. Palermo (Colo.App. 1982) 647 P.2d 686, 687-688; In re Estate of Nelsen (1981) 209 Neb. 730 [311 N.W.2d 508, 509-510].) Before concluding, however, that Allied’s damage claim is limited by the statute of frauds to only those Carnelian grapes actually delivered and accepted, there is another exception to the statute of frauds in the Uniform Commercial Code we must consider.

California Uniform Commercial Code section 1103 states that principles of law and equity not otherwise covered by the code shall supplement the code’s provisions. 8 In their Commercial Code treatise, James White and Robert Summers propose that the equitable principle of promissory estoppel survives in the California Uniform Commercial Code through section 1103. Estoppel can act as one further exception to imposition of the statute of frauds. They argue that section 1203, which imposes an obligation on every contract to act in good faith, further supports their contention that equitable estoppel survives enactment under the Uniform Commercial Code. 9 Where a party to an oral agreement misleads another, even innocently, sections 1103 and 1203 can be used to impose equitable estoppel against the transgressing party. (White & Summers, Uniform Com. Code (2d ed. 1980) § 2-6, pp. 68-70.)

No California case directly applies the doctrine of promissory estoppel as an additional exception to the statute of frauds provision found in California Uniform Commercial Code section 2201. One federal case interpreting California law concluded that California courts would not apply an estoppel theory to defeat the statute of frauds.

C.R. Fedrick, Inc. v. Borg-Warner Corp. (9th Cir. 1977) 552 F.2d 852, 856-858, found that application of equitable estoppel to the statute of frauds would nullify the statute of frauds. Somewhat inconsistently, the case then *443 analyzed estoppel as applied in California and concluded that under the facts of that case the seller had not suffered an unconscionable injury.

The C.R. Fedrick decision completely failed to consider the effect of California Uniform Commercial Code section 1103 and the fact that estoppel survives as a doctrine under the California Uniform Commercial Code. In conclusory fashion, the decision finds that the statute of frauds is eviscerated if a court applies estoppel. The C.R. Fedrick court’s conclusion is not supported by at least one California authority that it failed to consider in its analysis.

Distribu-Dor, Inc. v. Karadanis (1970) 11 Cal.App.3d 463 [90 Cal.Rptr. 231] held that an oral contract for the sale of mirrors that had been cut and prepared for a specific job was not barred by the statute of frauds. {Id. at p. 471.) The court analyzed the problem under section 2201, subdivision (3)(a), the statute of frauds exception for goods specially produced for a specific buyer. Although it did not expressly rely upon California Uniform Commercial Code section 1103, the Distribu-Dor court reasoned that equitable principles survived enactment of the Uniform Commercial Code in California: “Commercial Code section 2201, subdivision (3)(a), is clearly a codification of one aspect of the general rule which does not permit a party to plead the bar of the statute of frauds if he represents to another that he intends to enter an oral contract, and the other person changes his position in reliance. [Citations.]

“Strict adherence to the statute of frauds has been abandoned in favor of certain limited exceptions to promote equity and fair dealing between parties. Plaintiff had a valid contract for sale of the mirrors.” (11 Cal.App.3d at p. 469, fn. omitted.)

Furthermore, the great weight of authority from sister state jurisdictions holds that estoppel can be applied to overcome the Uniform Commercial Code’s statute of frauds provision as long as a court is not enforcing a mere oral promise. There must be some form of detrimental reliance. We have found 14 jurisdictions that recognize estoppel as an additional exception to the statute of frauds. (See Potter v. Hatter Farms, Inc. (1982) 56 Ore.App. 254, [641 P.2d 628, 632-633]; Northwest Potato Sales, Inc. v. Beck (1984) 208 Mont. 310, [678 P.2d 1138, 1140-1141]; Ralston Purina Co. v. McCollum (1981) 271 Ark. 840 [611 S.W.2d 201, 203]; Farmers Elevator Co. of Elk Point v. Lyle (1976) 90 S.D. 86 [238 N.W.2d 290, 293-294]; Farmers Cooperative Ass’n. of Churches Ferry v. Cole (N.D. 1976) 239 N.W.2d 808, 812-813; Meylor v. Brown (Iowa 1979) 281 N.W.2d 632, 635; Sacred Heart Farms Cooperative Elevator v. Johnson (1975) 305 Minn. 324 [232 N.W.2d 921, 923]; Citizens State Bank v. Peoples Bank (Ind.App. 1985) 475 N.E.2d *444 324, 327; Atlantic Wholesale Co. v. Solondz (1984) 283 S.C. 36 [320 S.E.2d 720, 722-724]; Porter v. Wertz (1979) 68 App.Div. 141 [416 N.Y.S.2d 254, 258], affirmed Porter v. Wertz (1981) 53 N.Y.2d 696 [439 N.Y.S.2d. 105, 106-107, 421 N.E.2d 500]; Varnell v. Henry M. Milgrom, Inc., supra, 337 S.E.2d 616, 618-619; Decatur Cooperative Association v. Urban (1976) 219 Kan. 171, 176-180 [547 P.2d 323, 329-330]; Maryland Supreme Corporation v. Blake Co., supra, 279 Md. 531, 548-550 [369 A.2d 1017, 1027-1029]; Fairway Mach. Sales Co. v. Continental Motors Corp. (1972) 40 Mich.App. 270, 272 [198 N.W.2d 757, 757-758].)

We have found only four jurisdictions that have declined to apply equitable estoppel as an exception to the Uniform Commercial Code’s statute of frauds. (Lige Dickson Co. v. Union Oil Co. of Cal. (1981) 96 Wn.2d 291 [635 P.2d 103, 107]; C. G. Cambell & Son, Inc. v. Comdeq Corp. (Ky.App. 1979) 586 S.W. 2d 40, 41; Anderson Const. Co., Inc. v. Lyon Metal Prod. (Miss. 1979) 370 So.2d 935, 937; Cox v. Cox (1974) 292 Ala. 106 [289 So.2d 609, 613].)

The majority rule is the better-reasoned rule. It does not nullify the statute of frauds because the elements of equitable estoppel must still be proven. In California, the doctrine of estoppel is proven where one party suffers an unconscionable injury if the statute of frauds is asserted to prevent enforcement of oral contracts. (Irving Tier Co. v. Griffin (1966) 244 Cal.App.2d 852, 863-864 [53 Cal.Rptr. 469].) Unconscionable injury results from denying enforcement of a contract after one party is induced by another party to seriously change position relying upon the oral agreement. It also occurs in cases of unjust enrichment. (Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623-624 [220 P.2d 737].)

The jury in the instant action did hear evidence that Bronco breached its oral agreement to purchase Carnelian grapes from Allied. Allied also showed that it changed position to its detriment when it entered into the oral contract for the sale of Carnelians. Allied originally had a contract with United Vintners who agreed to purchase 850 tons of Carnelians from Allied. Allied had to receive special permission from Bob Rossi of United Vintners to sell its Carnelian grapes to Bronco instead. By the time Bronco started to reject loads of Carnelians, it had already rained heavily and grapes were rotting in the fields. Bronco refused to schedule the delivery of Carnelian grapes to its plants.

The jury was carefully instructed that it had to find that Allied was induced by Bronco to change its position in reliance on the oral contract for the sale of Carnelians and that Allied would suffer unconscionable injury if enforcement of the contract against Bronco was denied. The jury was also *445 instructed that it had to find all the elements of a contract, whether it was oral or written, before it could award damages.

The jury had more than substantial evidence from which it could infer both a change of position and unconscionable injury. Allied switched its position with regard to its original contract with United Vintners relying upon Bronco’s assurances. Given the weather conditions, the highly perishable nature of the grapes, and Bronco’s last-minute changes in scheduling, the jury could easily infer that it was too late for Allied to resell the Carnelians to United Vintners or others. This was especially true given the glut of grapes on the market in 1982. (See Mosekian v. Davis Canning Co. (1964) 229 Cal.App.2d 118, 123-124 [40 Cal.Rptr. 157].)

There is substantial evidence that Allied’s loss was unconscionable given these facts. The statute of frauds should not be used in this instance to defeat the oral agreement reached by the parties in this case. The verdict awarding damages for Bronco’s rejection of Carnelian grapes was appropriate.

V.

Damages for 1983 Crop.

Bronco repudiated its contract with Allied in March of 1983. Allied, unable to find any purchaser for its grapes, created a subsidiary corporation called ISC to purchase the 1983 grape crop. The prevailing price for grapes in 1983 was $100 per ton. The value of the grapes to ISC was only $70 per ton. To minimize damage to growers and to ISC, the loss of $30 per ton was split between ISC and the growers. ISC bought the grapes for $85 per ton. Its loss was the same as the growers’ loss, or $15 per ton.

Bronco makes three contentions on appeal. It claims that Allied and ISC operated as a single entity, making a resale to itself legally impossible under California Uniform Commercial Code section 2706. Bronco also claims that the resale of the 1983 Thompsons to ISC was not commercially reasonable. Finally, Bronco contends that Allied failed to comply with the notification requirements of section 2706.

A. Commercial reasonableness of resale to an affiliated entity.

Prominent commentators note that California Uniform Commercial Code section 2706 basically requires that all resales be conducted in a commercially reasonable manner and that sellers act in good faith. (White & Summers, Uniform Com. Code, supra, § 7-6, pp. 265-266.) The express *446 provisions of the code section and the official comments to the section do not prohibit resales of goods to affiliated entities and they do not state that such sales are per se commercially unreasonable.

Bronco relies on only two authorities interpreting California Uniform Commercial Code section 2706 for the proposition that all resales to affiliated entities are commercially unreasonable. In Afram Export Corp. v. Metallurgiki Halyps, S.A. (7th Cir. 1985) 772 F.2d 1358, a seller of scrap metal sold scrap to its affiliate after the buyer backed out of the transaction. The resale turned out to be nothing more than a bookkeeping transaction. The evidence at trial showed that the scrap was sold at a higher price several months later than the sale price to the affiliate. The court found that the sale price on the open market was a better indicator of the true market value and the seller’s actual loss than the seller’s resale to its own affiliate. (Id. at pp. 1367-1368.)

In Coast Trading Co. v. Cudahy Co. (9th Cir. 1979) 592 F.2d 1074, a grain seller resold approximately one-half of a 10,000-ton grain contract rejected by the buyer to a Montana merchandiser. The evidence showed that although the market price was $105 per ton, the resale was for only $100 per ton to the Montana merchandiser. Nine days later the Montana company resold the grain back to the original seller for a profit of only 25 cents per ton. The plaintiff seller eventually sold the grain for a $133,566 profit. The seller’s transaction with the Montana company was held to be commercially unreasonable and in bad faith. (Id. at pp. 1080-1081.)

Neither case holds that the resale of goods to an affiliate is commercially unreasonable. Both cases find that the resale to an affiliate or closely related company was a sham because the transactions were purely paper transactions and because the sellers eventually sold their goods at higher prices on the open market than they received from the initial resale. The sellers in the Afram and Coast Trading cases were not acting in good faith during resale. Rather than mitigating their damages, they were inflating their damages with the phony transfer of goods to obtain a dual recovery of damages. The sellers were first receiving extra funds from the more profitable resale of goods after sham transfers, and then by way of judgment from the defaulting buyer based on the price obtained from the sham resale.

The substantial evidence tendered by Allied at trial showed that the prevailing market price for Allied’s 1983 crop was $100 per ton. The grapes were sold to ISC, which was the only buyer Allied could find, for $85 per ton. Although the grapes only had a value to ISC of $70 per ton, Allied did not seek damages calculated at the total loss, which was $30 per ton. It limited its damage claim to the growers’ loss based on the difference be *447 tween what its contract would have been with Bronco ($100 per ton) and what it actually received from ISC ($85 per ton).

The sale to ISC was consummated only as a last resort. Allied tried a number of times to sell its grapes to other wineries. It searched extensively for other buyers but there was no market for grapes not already under contract. Allied tried several times to get Bronco to honor its contract. In mid-August of 1983 Bronco adamantly refused to accept any Allied grapes. Because of the glut of grapes from 1982, there was no market for unsold grapes. Without the ISC transaction, Allied’s only options were to let its grapes rot in the field, causing a loss of $100 per ton, or to sell its grapes to an alcohol distiller which would not even cover picking and harvesting costs.

Without any other outlet, Allied’s only other option was to create ISC and to attempt to market its own wines. ISC had no marketing plan for bulk wines when it was created. It was originally conceived as a producer of finer bottle wines.

This transaction is not even remotely comparable to those found in Afram and Coast Trading. In those cases, there was an actual market for the goods being sold. Here, in sharp contrast, there was no market for Allied’s product outside its contract with Bronco unless it could sell its product to an affiliate.

Although ISC was an affiliated entity, its sole purpose was to attempt to mitigate the growers’ losses. Without ISC’s purchase of Allied’s 1983 grape crop, growers would have lost $100 per ton (less their saved harvesting and transportation costs) rather than a loss of $15 per ton. If the ISC resale was truly a sham, one is left to wonder why Allied did not bring suit to recover $30 per ton for the grapes since the actual value of the grapes to ISC was only $70 per ton.

Unlike the transactions in Afram and Coast Trading, Allied’s resale to ISC actually worked to mitigate Bronco’s damages. The sale, under the depressed conditions existing for grapes in 1983 was commercially reasonable and executed in good faith. 10

*448 B. Notice of resale.

To receive damages pursuant to section 2706 based on the difference between the contract price and the actual resale price, the seller must notify the buyer of its intent to resell if the sale is a private sale. 11 Bronco argues that even though it repudiated the contract, Allied was still obligated to notify Bronco of a private resale pursuant to subdivision (3) of section 2706. Bronco’s authority for this contention is Anheuser v. Oswald Refractories Co., Inc. (Mo.App. 1976) 541 S.W.2d 706.

The Anheuser decision did not reach or discuss the issue of whether the buyer who repudiates a contract is still entitled to notice of a resale under section 2706, subdivision (3). Anheuser merely follows the great weight of authority holding that the seller must plead and prove compliance with the notice requirements of section 2706. (541 S.W.2d at pp. 711-712.)

We need not resolve here the issue of whether a defaulting buyer repudiating a contract is entitled to notice of resale by the seller under section 2706. One vital fact remains absolutely undisputed. Allied sent Bronco notice in a legal pleading related to this litigation that it intended to resell the 1983 crop. Bronco received notice before the crop was resold. 12 Bronco does not dispute that it received sufficient notice that satisfied the requirements of section 2706, subdivision (3). Instead, it argues that it is entitled to a retrial because the jury did not hear evidence that *449 Bronco received actual notice and that Allied failed to plead and prove compliance with subdivision (3) of section 2706.

This argument must unequivocally fail under California law. No purpose would be served in retrying this case so that Allied’s counsel could submit evidence to the jury that Bronco received actual notice of Allied’s intent to resell the 1983 crop. Because Bronco received the notice, it was not prejudiced by Allied’s failure to actually prove the point at trial. A retrial based on harmless error violates the requirement of prejudice set forth in California Constitution, article VI, section 13. (Mosesian v. Pennwalt Corporation (1987) 191 Cal.App.3d 851, 859, 865-866 [236 Cal.Rptr. 778].) Given the overwhelming weight of evidence in support of the verdict, in conjunction with the fact that Bronco received actual notice of Allied’s intent to resell, the only conceivable purpose that would be served in reversing and remanding this issue to the trial court for a new trial would be to greatly increase litigation expense and unnecessarily burden the judicial system. This ground for appeal is rejected.

VI. *

VII.

Violation of Business and Professions Code Section 17200.

Allied’s eighth cause of action against Bronco was based on section 17200 of the Business and Professions Code. Allied alleged that Bronco’s practice of downgrading certain grapes in 1982 constituted an “unlawful, unfair or fraudulent business practice.” Business and Professions Code section 17200 (hereafter section 17200) provides as follows: “As used in this chapter, unfair competition shall mean and include unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.”

Bronco contends that the 1982 grape purchase transaction between Allied and Bronco does not constitute a violation of section 17200 because Bronco is a mere buyer and not a seller. Bronco further claims that its downgrading activity was not fraudulent within the meaning of section 17200 because there was no evidence that its activity had any tendency to *450 induce Allied or others to enter sales transactions. Bronco claims that its activity is not unfair because no reported case has found that the activity is unfair. Finally, Bronco contends that its violation of section 17200 is not a “business practice” because the activity herein is the isolated act of one contract with Allied Grape Growers.

Bronco’s first and third contentions border on the frivolous. First, nothing in section 17200 limits that section from being applied to a buyer or anyone else. (See People v. Toomey (1985) 157 Cal.App.