Case Summaries

A recent case from the District Court of Colorado demonstrates problems that can arise without a written agreement. Similar to a contract, partnership agreements should include the name of the parties involved, the terms of partnership, and each partners’ duties. In this “he said, he said” case, a written agreement might have averted some problems, or at least made them easier to resolve.

Background

The plaintiff was a farmer and producer of specialty hemp seeds. The farmer alleged that he and the partner entered into an oral partnership agreement for the purpose of growing, selling, and distributing specialized hemp starts (young plants) across the United States using the farmer’s expertise and nationwide distribution network for the benefit of the partnership. The two agreed that the partner would pay the farmer a 10 percent management fee for overseeing the growing of the starts. The farmer soon determined that this was a “very bad choice” and brought this lawsuit claiming that the partner breached the agreement. The partner filed a motion to dismiss claiming that the farmer failed to join necessary parties and failed to state a claim.

At this early stage of litigation, the district court, without a written agreement, relied on the farmer’s verified complaint to determine whether the lawsuit must be dismissed. In the complaint, the farmer stated that after he entered into the agreement with the partner personally, the partner ordered for himself, for distribution to related entities, nearly $4.6 million worth of the partnership’s hemp starts and then did not pay for those plants. Additionally, the farmer alleged that the partner failed to pay the $406,621.45 management fee.

Failure to Join Indispensable Parties

The partner claimed that he was not liable for these debts because his LLC had entered into the partnership. Because of that, he argued that the LLC must be joined as a necessary party under Rule 19. Despite the farmer’s original complaint alleging that the starts were sold to both the partner and his LLC, there was no reason to believe the LLC was a necessary party. Accepting the farmer’s verified complaint as true, the court found that the partnership was solely between the farmer and the partner, not the LLC.

Failure to State a Claim

The partner claimed that the farmer failed to state a claim for breach of the partnership agreement, breach of fiduciary duties, and for promissory estoppel. Under Colorado law, a plaintiff cannot sue for breach of a partnership without first providing an accounting. Because the verified complaint claimed an accounting was provided, this claim was adequately pled. The court determined that, at this early stage, the allegations were to be taken as true and the claims should survive the motion to dismiss.

Leago v. Ricks, 2021 WL 1192939 (D. Colo. March 30, 2021).

Additional Hemp Resources

For an update on current hemp regulations, read Iowa Outdoor Hemp License Applications Due May 1.

Potential growers should also carefully consider whether there is a profitable market for hemp. For further reading, see Iowa State Extension article “The Opportunities and Challenges with Hemp” by Dr. Chad Hart.

For more information on the federal regulation of hemp, visit: https://www.usda.gov/topics/hemp.

For more information on growing hemp in Iowa, applying for a state license, and hemp in animal food, visit https://iowaagriculture.gov/hemp. All questions about applying for a hemp license or seed permit should be directed to hemp@iowaagriculture.gov or (515) 725-1470.

For questions about consumable hemp products, contact the Department of Inspection and Appeals at hemp-registration@dia.iowa.gov or 515.829.8899.


United States farm laborers brought claims against a farmer and his agricultural business for breach of contract, civil conspiracy, and violations of the Migrant and Seasonal Agricultural Worker Protection Act (AWPA). The defendant entered into an agreement with an agricultural labor contractor to hire seasonal workers on his behalf under the H-2A work-visa program. Because many domestic workers expressed interest in the job, the contractor was obligated to prioritize them in the hiring process under the H-2A program requirements. The contractor hired the plaintiffs at the rate specified in the work contract submitted during the H-2A application process. This rate was higher than both the state and federal minimum wage. The defendant then fulfilled his seasonal labor needs through a different contractor paying minimum wage to the laborers and did not provide any work to the plaintiffs.

The district court granted summary judgment in favor of the agricultural business on all claims finding that the defendant did not have control over the contractor and was therefore not liable for the actions of an independent contractor. The Tenth Circuit reasoned that because this was a contract claim rather than a tort claim, control was not the crucial element, but whether an agency relationship existed between the defendant and the contractor. Because there was a genuine issue of material fact whether contractor had actual or apparent authority to enter into contracts with the plaintiffs on the defendants behalf, the court reversed the grant of summary judgment.

The AWPA prohibits an agricultural employer from violating the terms of the working arrangement with a migrant agricultural worker. The plaintiffs claimed the defendant violated this regulation as both an agricultural employer and joint employer with the contractor when he failed to provide the plaintiffs with work as specified in the work contract. The defendant agreed he was an agricultural employer, but argued he did not enter into a contract with the plaintiffs or jointly employ them with the contractor. The court found that the defendant was not a joint employer with the contractor because he did not actually employ the plaintiffs at any time. However, the court found that whether an agency relationship existed with contractor was the “threshold issue” in determining if the agricultural business could be accountable. Therefore, the court reversed the grant of summary judgment on the breach of contract and AWPA claims. The court affirmed the grant of summary judgment on the conspiracy claim because there was no evidence of an agreement between the defendant and the contractor.

Alfaro-Huitron v. Cervantes Agribusiness, 2020 WL 7295709 (10th Cir. 2020).


The plaintiff is an energy company that owns numerous oil and gas leases.  The defendant entered into a contract with the plaintiff to buy numerous of the plaintiff's leases for $35 million plus wells, pipelines and related property.  The defendant placed $3.5 million in escrow.  The plaintiff provided the defendant with a list of assets and title limitations related to the leases, and the defendant found title defects in 40 percent of the leases that they claimed lowered the value of the leases being purchased by 55 percent.  The defendant did not seek dispute resolution as specified in the contract and unilaterally terminated the contract.  The plaintiff attempted to invoke the dispute resolution process, but the defendant didn't respond.  The plaintiff sued and the trial court awarded the plaintiff the escrow funds, plus interest.  On appeal, the court affirmed noting that the parties were sophisticated and that the contract did not provide for unilateral termination based on the defendant's own determination of title defects and impact on lease value.  Broad St. Energy Co. v. Endeavor Ohio, LLC, No. 14-4278, 2015 U.S. App. LEXIS 19751 (6th Cir Nov. 13, 2015).


The plaintiff leased land from the defendant, a company that his father owned and operated.  A one-year lease was signed in 2003 for rice and soybean and crawfishing rights.  Another one year lease was signed for 2004.  The plaintiff claimed that he made improvements to the property in 2004 in exchange for the promise of a new five-year lease.  A five-year lease was never drafted, but one year leases were drafted for 2005, 2006 and 2007, but were never signed.  The plaintiff was evicted from the land in 2006, before the 2007 crawfish harvest.  The plaintiff sued for damages and the defendant sought damages for the plaintiff's failure to pay fees for rice storage and drying, fuel expenses, off-loading expenses and rental expenses.  The trial court dismissed the claims and the plaintiff appealed, claiming that a five-year lease began in 2004 via the oral modification and that he was entitled to the 2007 crawfish harvest.  On appeal, the court affirmed.  The court noted that there was no ambiguity in the parties' intent to create an annual lease and that the failure to agree to a lease term meant that the lease was for one year under state (LA) law.  Once the tenant was properly evicted from the property, the tenant lost any ability to claim entitlement to an unharvested crop such as the crawfish.  McCraine v. Voyellesland Farms, Inc., No. 15-396, 2015 La. App. LEXIS 2165 (La. Ct. App. Nov. 4, 2015).


The plaintiffs are various landowners that entered into oil and gas leases with the defendant.  Two leases at issue contained the same provision that allowed the leases to consolidate the land involved into a single development area with all royalties from wells in the area to be divided between all of the lessors proportionally based on any particular lessor's acreage in the consolidated area.  The consolidated area was comprised of 228 acres with five wells being drilled in the area from 1954 through 1980 and two more being drilled between 2007 and 2012.  The plaintiffs' acreages were where the 2007-2012 wells were drilled which was within the consolidated area.  Some lessors, however, were not included in the well permit application that the defendant submitted to the state (OH) Department of Natural Resources (DNR).  The plaintiffs claimed that, as a result, the consolidated area was abrogated and that the plaintiffs were entitled to 100 percent of the royalty amount.  The trial court disagreed, granting the defendant's motion for judgment on the pleadings, based on the unambiguous lease language, and because a well permit application cannot abrogate or modify an oil and gas lease.  The court also held that any damages resulting from the calculation and distribution of royalties were pure economic losses barred by the economic loss doctrine.  K and D Farms, Ltd., et al. v. Enervest Operating, LLC, et al., No. 2015CA00038, 2015 Ohio App. LEXIS 4364 (Ohio Ct. App. Oct. 26, 2015).


The defendant raised hogs that he received from the plaintiff via a hog production contract.  The plaintiff paid for the feed, transportation and veterinary services for the hogs and the defendant cared for the hogs until they reached market weight.  The plaintiff paid the defendant a monthly fee for his services, but retained ownership of the hogs.  The defendant accounted for the hogs and unaccounted-for hogs would be charged against the defendant's next monthly payment.  The defendant could only keep the plaintiff's hogs at the facility where they were raised.  The plaintiff was alerted by a third party that inventory counts did not match and some hogs might be missing.  The defendant claimed that some hogs were put in a "slush pen"  rather than being marketed because of slow weight gain, and that no inventory was kept of them.  The following year, the defendant filed bankruptcy and the plaintiff contacted the hog buyer and over 3,000 hogs could not be accounted for based on what had been supplied and what had been marketed.  The defendant claimed the difference was attributable to the defendant also marketing his own hogs at the same time to the buyer.  The plaintiff sued for conversion, and the trial court awarded $290,000 to the plaintiff for the hogs plus interest and $50,000 in punitive damages and court costs.  On appeal, the court affirmed.  The court noted that the defendant's personal income tax returns showed no income from the sale of livestock and no other documentation that would have supported the notion that the defendant was raising his own hogs.  On financial statements provided to his bank, the defendant reported that he had no "market livestock or poultry" and no "breeding stock."  The court also determined that the trial court properly admitted the weekly calendar and farm book that the plaintiff maintained and the summary exhibits that relied on those exhibits.  Pruisner v. Ballhagen, No. 14-1431, 2015 Iowa App. LEXIS 912 (Iowa Ct. App. Oct. 14, 2015). 


The parties entered into a contract involving the removal of chicken manure from egg-laying facilities.  Under the contract, the plaintiff agreed to pay the defendant for the transfer of manure ownership with tonnage to be tracked and billed according to the quantities listed on a manure management manifest.  The specific quantity of manure was to be determined by and mutually agreeable to both parties.  A dispute arose and the trial court denied the plaintiff's motion for preliminary injunction, concluding that the plaintiff did not prove by clear and convincing evidence that it was likely to prevail on its claim of breach of contract because it failed to prove that the contract required the defendant to provide any specific amount of chicken manure.  Ultimately, the trial court returned a verdict for the plaintiff.  On appeal, a primary question was whether the contract was a goods contract (sale of chicken manure) governed by the Uniform Commercial Code (UCC) or one for the sale of services (removal of chicken manure) governed by state (OH) common law.  The appellate court determined that the contract was one for the sale of goods - the transfer of manure ownership.  Thus, the contract was one for the sale of goods - chicken manure.  Supporting this finding, the court noted that the plaintiff did not bargain for any services to be provided by the defendant.  Instead, the plaintiff was responsible for the removal of manure which it would then resell and spread.  As such, the plaintiff's ultimate goal was to acquire a product rather than to procure a service.  As a contract subject to the UCC, the plaintiff argued that it was enforceable because it provided a sufficient quantity term ("all available tonnage per year of manure") or that it was a requirements contract.  The court determined that the contract was not a requirements contract because the contract was for the sale of the output of manure rather than the manure requirements of the plaintiff, and nothing in the contract barred the defendant from selling manure to another party or preclude the plaintiff from buying manure from another seller.  On the quantity issue, which is critical for the contract to be valid under the UCC, the court noted that the parties bargained to reserve quantity for the future agreement of both parties in accordance with future negotiations.  Thus, the contract did not contain an enforceable quantity term as quantity was subject to future agreement, and the contract was unenforceable as a matter of law.  As such, the appellate court reversed the trial court and remanded the case.  H & C Ag Services, LLC v. Ohio Fresh Eggs, LLC, et al., No. 6-15-02, 2015 Ohio App. LEXIS 3615 (Ohio Ct. App. Sept. 14, 2015).


The plaintiffs, a married couple, claimed that the defendant, an oil and gas company, failed to pay a lease bonus payment of $144,000 that the parties had agreed to.  The defendant delivered a "letter agreement" to the plaintiffs stating that the parties would execute and additional "Option to Exercise Oil and Gas Lease" and that the defendant would pay $100.00 per mineral acre and a 1/8th mineral owner's royalty with a primary term of four years.  The plaintiffs did not execute the letter agreement or the additional option agreement.  A final contract with different terms was ultimately entered into that stated that it became effective when the oil and gas lease described in it was approved and on approval of title.  Ultimately, the plaintiffs claimed that the defendant breached the lease and the letter agreement when it did not pay the bonus payment of $100/acre.  The plaintiffs also claimed that they incurred over $15,000 of expenses in clearing title defects and confirming marketable title and that by obtaining the recording the lease the defendant blocked the plaintiffs from entering into agreements with other potential oil and gas companies.  The defendant motioned to dismiss on the basis that no contract was formed between the parties.  The court agreed with the defendant on the basis that there was never any offer that the plaintiffs accepted and that there was no meeting of the minds on all points that left nothing for negotiation.  The court noted that there was no evidence that the plaintiffs accepted the letter agreement and the facts did not support an inference of acceptance.  Instead, the negotiations over several months resulted in a lease with a different party (the plaintiffs' farming operation) with different terms.  The plaintiffs never executed the agreement and the facts did not support the argument that the letter agreement had been incorporated into the parties' final contract.  there simply was no mutual manifestation of assent as to key contract terms.  The option agreement also never materialized.  Norberg, et al. v. Cottonwood Natural Resources, LTD, No. 8:15CV71, 2015 U.S. Dist. LEXIS 122057 (D. Neb. Sept. 14, 2015).


Nine years after the purchase, the plaintiffs claimed that they purchased defective windows.  The plaintiffs tried to recover the replacement cost of the windows.  The plaintiffs claimed that the defendant breached an implied warranty of merchantability and the warranty of fitness for a particular purpose.  The plaintiff also sued the supplier for breach of an express limited warranty.  The trial court dismissed the claim against the supplier as time-barred.  On appeal, the plaintiffs claimed that the statute of limitations was not triggered until the problem with the windows was discovered.  However, the court pointed out that Iowa Code Sec. 554.2725(2) applies the "discovery rule" only to a warranty that explicitly extends to future performance of the goods.  Here, the court noted that the allegation was that the supplier only provided implied warranties.  As such, the statute of limitations was tolled at the time of delivery.  The court affirmed the trial court decision.  Kopp v. American Builders & Contractors Supply Co., Inc., No. 14-1868, 2015 Iowa App. LEXIS 770 (Iowa Ct. App. Aug. 19, 2015). 


The plaintiff sold a six acre tract of land to the defendant.  After obtaining possession, the defendant obtained a commercial disposal permit for the tract and drilled a commercial disposal well.  The plaintiff claimed that the defendant had orally represented before the sale that the defendant would use the property as an equipment yard to store pipe and other oilfield equipment, and that the property would not have been sold had the plaintiff known that a commercial disposal well was going to be drilled on the property.  The plaintiff claimed damages as a result of the alleged fraud.  The court refused to rescind the contract, finding that the plaintiff failed to establish a material misrepresentation and that the negotiation was at arm's-length and the defendant was not notified of any objection the plaintiff might have concerning particular uses of the property.  The court noted that the plaintiff could have protected its interests by including a use restriction in the contract for deed and the deed, but failed to do so.  Stinson Farm and Ranch, L.L.C. v. Overflow Energy, L.L.C., No. CIV-14-1400-R, 2015 U.S. Dist. LEXIS 108661 (W.D. Okla. Aug. 18, 2015).


The plaintiff farmed until 2007 when he leased his property to the defendant under a written cash lease.  In the early fall of the next year, the defendant paid a "bonus" of over $60,000 to the plaintiff with a detailed accounting of how the bonus was calculated.  The bonus was paid to help ensure that the plaintiff would continue to lease the ground to the defendant.  A new written lease was signed later that fall with nearly identical provisions, but higher per acre rent.  Again, a bonus payment was paid to the plaintiff under an alleged oral agreement that the parties had that the defendant would share profits with the plaintiff.  Another new lease was signed for the next year, but no bonus was paid that year because the crop did not generate a profit.  The defendant continued to farm the property for two more years under an oral arrangement.  In August of 2011, the plaintiff gave notice of lease termination to the tenant effective March 1, 2012.  In the fall of 2011, the defendant did an accounting for the 2010 crop year and offered to pay a bonus of $19,218.  The plaintiff refused.  In November of 2011, the plaintiff gave written notice to the defendant not to market the plaintiff's grain without permission, and filed a financing statement perfecting a landlord's lien.  The plaintiff also chopped and chiseled corn stalks.  The defendant paid all remaining cash rent obligations and paid for crop storage.  The checks were returned with the plaintiff claiming that the parties were farming on a 50/50 crop share basis with a minimum of $200/acre.  The plaintiff sued for a declaratory judgment and accounting, claiming that the written lease was not the full agreement between the parties and that the defendant owed rent under the 50/50 crop share lease.  The defendant denied the existence of an oral agreement and sought damages for lost value of the unharvested corn stover.  The trial court ruled for the plaintiff, determining that an oral crop share agreement supplemented the written lease, and entered judgment of $204,072.08 for the plaintiff.  On appeal, the court reversed.  The court held that the additional payments were simply discretionary bonus payments and that the defendant was entitled to the corn stover.  Also, the court noted that the written lease provided for full payment of some expenses by the defendant which contradicted the existence of a profit-sharing agreement.  In addition, a crop-share lease would have violated FSA rules.  The plaintiff's net judgment was reduced to $80,548.70.  Peck v. Four-Acre Farms, Inc., No. 14-1482, 2015 Iowa App. LEXIS 696 (Iowa Ct. App. Aug. 5, 2015).       


The defendants owned mineral rights which they leased in 2004.  The plaintiff subsequently acquired the lease.  With respect to oil production, the lease provided for a 25 percent royalty for the "market value at the well of all oil and hydrocarbons." As for gas production, the lease provided for a 25 percent royalty "of the price actually received by Lessee" from gas produced under the lease that was marketed.  The plaintiff owned the wells, but then sold oil and gas production from the wells to a third party that owned the gathering lines and transported the production through pipelines for ultimate sale to customers.  The plaintiff was paid based on a weighted average selling prices received by the third party buyer.  Downstream production costs were factored in when computing the amount that the plaintiff received.  The plaintiff based its royalty computation for purposes of determining the amount paid to the defendants by taking into account those downstream production costs.  Such calculation made sense because the plaintiff and, in turn, the defendants would benefit from the higher value of the market-ready oil and gas.  The defendants claimed that they amount of royalty paid to them shouldn't bear any post-production (post-extraction) costs (except for their portion of production taxes).  An overriding royalty clause granted the plaintiff production from wells bottomed on neighboring properties that were reached by horizontal wells drilled on the defendants' properties.  The defendants were granted a 5 percent royalty on this production.  The defendants also argued for no reduction for post-production costs on this royalty because it referred to a "perpetual cost-free...overriding royalty of 5 percent (5%) of gross production obtained."  The court held that the oil royalty clause language ("market value at the well") meant that the defendants shared in post-production expenses, but that the gas royalty clause language ("of the price actually received by Lessee") meant that the plaintiff solely bore the post-production expenses.  The overriding royalty language ("perpetual cost-free...overriding royalty), the court held, could reasonably be interpreted to bar the deduction for post-production expenses when computing the defendants' royalty.  Four justices dissented on the construction of the overriding royalty clause.  Chesapeake Exploration, L.L.C., et al. v. Hyder, et al., No. 14-0302, 2015 Tex. LEXIS 554 (Tex. Sup. Ct. Jun. 12, 2015).   


The parties to a farm lease that was entered into in 2004 for a 10-year term.  For several months before the end of the termination date of the lease, the tenant had failed to pay the specified rent.  After the termination date, the tenant held over in possession, and was served a notice of termination.  The tenant claimed he had tried to pay the rent, but it was refused because of a discrepancy in the legal description contained in the lease and the owners of the property.  The tenant was given instructions as to how to correctly pay the rent, but did not follow those instructions.  While there was a mutual mistake as to the legal description of the leased premises, the court noted that the tenant drafted the lease and could not use that mistake as an excuse for non-payment of rent or to holdover after the lease terminated.  The court determined that the trial court had given the tenant a full opportunity to present evidence, rebut evidence and be heard.  The court upheld the trial court's ruling that the tenant be evicted from the leased premises and that the landlord be granted damages for unpaid rent.  Dobbs v. Trost, No. 2014AP2816, 2015 Wisc. App. LEXIS 500 (Wisc. Ct. App. Jul. 9, 2015). 


This case involved construction of a clause contained in oil and gas leases that computed the royalty owed to lessors in a class action suit.  The producer, Oil Producers, Inc. of Kansas (OPIK) is a small producer that produces gas in areas served by midstream companies (third-party purchasers).  OPIK owns the well and the midstream companies own the gas gathering and processing facilities.  Thus, OPIK sells the gas at the wellhead to the midstream companies who process the natural gas for eventual delivery into the interstate pipeline system.  The price that OPIK receives for the raw gas it sells to the midstream companies is based on a formula that allows OPIK (and royalty owners) to jointly share in "downstream" market values as the gas gets closer to the consumer after deduction for expenses to account for services provided by the midstream companies to process the gas and transport it from the wellhead to the downstream resale location.  OPIK pays the royalty owners a percentage of what OPIK receives, thus the royalty owners share in the expenses incurred to get the gas to consumers.  Many of the leases contained a provision stating that, "The lessee shall pay lessor as royalty 1/8 of the proceeds from the sale of gas at the mouth of the well where gas only is found."  Another lease document provided for "one-eighth (1/8) of the proceeds if sold at the well...".  The royalty owners claimed that they should not have to share in the production expenses because the duty to market the minerals produced was on OPIK and that duty meant that OPIK solely bore the burden of the expenses necessary to make the gas marketable.  The trial court and court of appeals agreed with the royalty owners, effectively negating the "at the well" language of the oil and gas leases.   The lower courts held that OPIK had to take the proceeds it received from the midstream companies and add to it the amounts that the midstream companies spent to make the gas marketable so as to obtain higher prices downstream.  This had the effect of making OPIK pay a royalty on selling prices of gas that it did not receive.  On further review, the Kansas Supreme Court reversed.  The Court noted that prior Kansas caselaw held that the term "proceeds" in a royalty clause similar to the clause involved in this case referred to gross sale price in the contract between the first purchaser and the operator (except for the statutorily withheld conservation fee which is borne by the operator as a mill levy on gas the operator sells).  The Court held that OPIK satisfied its duty to market minerals by entering into the purchase agreements with the midstream companies for sale of gas at the wellhead.  That is when gas has been "marketed."  Thus, where, as in this case, the lease provides for royalties based on a share of proceeds from the sale of gas at the well, the post-production, post-sale processing expenses deducted by the third-party are taken into account when computing the "proceeds" paid to OPIK and impact the amount of the royalty paid to the lessors.  Fawcett v. Oil Producers of Kansas, No. 108,666, 2015 Kan. LEXIS 376 (Kan. Sup. Ct. Jul. 2, 2015).


The plaintiff is a chicken grower that owned poultry barns and provided janitorial services with respect to raising chicks that the defendant supplied.  The plaintiff typically had chicks for five to six weeks when the defendant would then pick up the chickens and pay the plaintiff for the services provided.  The plaintiff would then prepare the facility for the next batch of chickens to be delivered.  The defendant retained the power under the contract to determine how many chickens to be delivered and could terminate the relationship with the plaintiff at any time for any reason on 90-days written notice.  In 2011, the defendant required its growers to upgrade their facilities to meet certain, heat, ventilation and other standards.  Consequently, the defendant sent the plaintiff two written notices describing the upgrade requirement and asking the plaintiff to reply concerning its intent.  However, the plaintiff never responded, claiming that it never received the notices.  No further chickens were delivered and the plaintiff's growing contract was placed on its "inactive" list.  The plaintiff sued for breach of contract and the defendant moved for summary judgment.  The trial court denied the motion.  At trial, the defendant moved for directed verdict which was denied.  The defendant renewed the motion at the close of all evidence, which was denied.  The jury ruled for the plaintiff finding that the defendant breached the contract for non-performance, that the plaintiff did not breach via repudiation, and that the plaintiff was entitled to $42,235.96 in damages.  The defendant motioned for judgment notwithstanding the verdict, which was denied.  The defendant appealed.  On appeal, the court affirmed.  The court noted that the contract stated that the defendant "agrees to deliver the FLOCKS (number and breed of which are to be determined by [defendant] in its sole discretion) to [plaintiff]."  As such, the court determined that it was not optional for the defendant to not deliver any chicks.  The court also reasoned that if the defendant had the right to not deliver any birds, that right would render other contract language meaningless - such as the language the gave the defendant the right to terminate the contract for with or without cause on 90 days notice.  The court also determined that the plaintiff did not breach the contract by repudiation (other growers also testified as to not receiving letters about the required upgrades) and that the defendant never gave 90-days notice to terminate.  The damage award was also upheld on the basis that the plaintiff was a top grower, could reasonable anticipate profits on chicks delivered to it and the jury award was based on the plaintiff's past performance.  Brock v. Johnson Breeders, Inc., No. COA14-914, 2015 N.C. App. LEXIS 549 (N.C. Ct. App. Jul. 7, 2015).


At issue in this case was a lease of 175 acres of farmland among family members.  Dad died in 2003 and Mom died in 2007, and their beneficiaries were their five children.  At the time of Dad's death, it was believed that Mom and Dad owned the farmland in joint tenancy.  Accordingly, Mom put the farmland in a trust and retained a life estate.  The land was leased to a daughter and the land was managed by another child of the parents.  The daughter ultimately terminated the lease and the land was then leased to other family members.  After Mom's death, it was discovered that the land was actually owned by Mom and Dad as tenants in common rather than in join tenancy.  The existing lease continued, but then other family members sued for higher rent on the basis that the lease had actually terminated upon Mom's death.  Under state (IL) law an exception from the statutorily-required notice of termination applies when the landlord dies holding merely a life estate.  However, the court held that the exception did not apply because the trust owned the land, not the decedent.  Thus, due to lack of termination notice being given under state law (at least four months before end of the lease calendar year), the lease had not been terminated.  Lower v. Appel, No. 2-13-1288, 2015 Ill. App. Unpub. LEXIS 1458 (Ill. Ct. App. Jun. 29, 2015).


The plaintiff is a farming/ranching partnership consisting of brothers.  The defendant owns about 33,000 acres of farmland.  The parties entered into a cash lease in 2009 for over 10,000 acres and the lease terminated after the 2009 crop harvest, but required the defendant to  give the plaintiff a first opportunity to rent the leased premises before renting it out for the 2010 crop year.  The parties again entered into a leasing arrangement involving two leases for separate tracts totaling over 29,000 acres.  One lease said the plaintiff again had the first opportunity to rent for the next crop year, and the other lease said the plaintiff had the option to rent for the '13, '14 and '15 crop year.  In April of 2012, the defendant informed the tenant of the right of first refusal and inquired as to whether the plaintiff wanted to rent the land for the future.  The parties met in person in late July after the plaintiff said they wanted to rent on the same terms as the previous year, but the defendant wanted to raise the cash rent amount.  The plaintiff was told that a decision had to be made by August 1, 2012.  The plaintiff did agree to the higher cash rent on August 1 by calling the defendant.  The plaintiff then made financial commitments and purchases in anticipation of leasing the land.  Just over a week later, the defendant sold the land and sought a court determination that the lease to the plaintiff had not been extended and told the plaintiff to cease farming operations.  The defendant then served the plaintiff with notice to quit and vacate the property.  A third party then took possession of the land and planted winter wheat on over 12,000 acres at a cost of over $1 million.  The trial court found that the parties had an enforceable contract and that the plaintiff had exercised its option to lease the property for the '13-'15 crop years.  A second trial resulted in a finding that the plaintiff was not damaged, was not unjustly enriched by receiving the proceeds of the winter wheat crop that the third party planted, and that the defendant had unclean hands.  On appeal, the court affirmed.  Dowling Family Partnership v. Midland Farms, LLC, No. 27114, 2015 S.D. LEXIS 82 (S.D. Sup. Ct. Jun. 17, 2015).


The plaintiffs entered into a grazing contract with the defendant to graze the plaintiffs' cattle on the defendant's ranch.  The contract required the defendant to provide adequate grass and water "as nature shall provide" as well as feed and mineral according to the nutritional needs of the cattle.  The contract also required the defendant to monitor the condition of the cattle and provide veterinary care as needed, and otherwise optimize the quality of the grass for the cattle.  The defendant also was required to provide labor for handling the cattle.  However, the cattle started to be unable to stand and the defendant's ranch manager had a veterinarian check the cattle.  The veterinarian diagnosed malnutrition and prescribed a magnesium solution and more food.  The ranch manager followed the instruction and the cattle improved.  The plaintiffs placed additional cattle on the ranch, but there was a pneumonia outbreak that afflicted the calves that was only partially treated.  In addition, the cattle were not rotational grazed, had insufficient grass and lost significant weight.  The plaintiffs sued for damages and the trial court determined, based on the evidence, that the average conception rate for the cows would have been 92 percent, but that the rate for the plaintiffs' cows was 83 percent.  The body scores of the cattle (degree of flesh on a cow) was also well below average.  Two bulls died after leaving the ranch and two others had to be sold for salvage value.  The trial court determined that the defendant breached the grazing contract and awarded $240,416.90 in damages as compensation for the reduced value of the open cows, the lost value of calves never conceived, the costs associated with rehabilitating the body condition of the bulls and cows, the lost value of dead and salvaged bulls and the reduced value of stocker cattle that did not put on the expected weight.  On appeal, the Court of Appeals, dismissed one of the plaintiffs for lack of standing because that plaintiff's cattle were actually owned by his entities, not by him personally.  In all other respects the court upheld the trial court's determinations.  On further review, the Supreme Court affirmed.  The court flatly rejected the defendant's claim that all the grazing contract required him to do was "supply water and grass as nature availed."  Instead, the contract clearly required the defendant to provide veterinary care, monitor the condition of the cattle and provide food and minerals according to the needs of the cattle, and manage the grazing to optimize grass quality.  The Court upheld the damage award as determined by the Court of Appeals, after dismissing one of the plaintiffs for lack of standing.   Damages were awarded for the difference in value between an open and bred cow (the market calf after factoring for risk and costs) at the lower than expected conception rate, but not for calves that were never conceived.  The damage award also included an amount for costs associated with rehabilitating the body condition of the cattle (i.e., putting on weight).  The plaintiff was also entitled to damages reflecting the cost of virgin 2 year-old bulls because there was no market for used bulls due to the risk of spreading venereal disease.  Eilert, et al. v. Ferrell, No. 107,359, 2015 Kan. LEXIS 356 (Kan. Sup. Ct. Jun. 5, 2015).

 


The plaintiffs ordered samples of hardwood flooring from the defendant through the defendant's website.  They later followed up with a telephone where they bought over $8,000 of flooring from the defendant.  The defendant emailed a two-page written purchase contract to the plaintiffs which included a bullet point that said that the order was subject to the defendant's "terms of sale."  After installing the flooring, the plaintiffs had an infestation of wood-boring insects that so damaged their home that caused it to be subject to quarantine and possible destruction by the USDA.  The plaintiffs sued for fraud, breach of contract, negligence, trespass, breach of implied warranties of merchantability and fitness for a particular purpose, deceptive trade practices, products liability  and nuisance.  The defendant moved to compel arbitration as required by the terms of sale which were available on the defendant's website and that the terms of sale had been incorporated into the purchase contract by reference.  The court disagreed.  It was insufficient, the court reasoned, for the defendant to merely place quotation marks around the phrase "terms of sale."  The multitude of terms, the court noted, were contained in the four corners of the purchase contract.  A clear reference needed to be made to the terms of sale on the defendant's website.  Walker v. BuildDirect.com, Inc., No. 112075, 2015 Okla. LEXIS 41 (Okla. Sup. Ct. May 5, 2015).


The defendants wanted a recreational pond constructed on their property, and hired the plaintiff to build it.  After selecting a site, the pond was built at a cost of over $87,000 which the defendants paid.  Within a year, however, the pond failed to hold water.  A second round of work on the pond resulted in a bill of over $93,000.  The defendants refused to pay this amount and the plaintiff filed a petition to foreclose a mechanic’s lien.  The defendants countered that the plaintiff was negligent in the construction of the pond and failed to perform the construction in a workmanlike manner which caused damages.  The trial court held that the plaintiff had engaged in a second round of work voluntarily and refused to foreclose the lien.  The trial court also rejected the defendants’ claim for damages because the oral agreement between the parties did not involve any express or implied warranties or guarantees.  On appeal, the court reversed on the contract issues.  The court found that the plaintiff had expressly warranted that the pond would hold water even though there was no written contract between the parties because the statement that the plaintiff made that he would “do a pond” expressly meant that the pond would hold water.  The court also determined that the implied warranty of fitness for a particular purpose had been breached, and that the plaintiff had failed to construct the pond in a workmanlike manner due to miscalculating the soil conditions of the site selected for the pond.  The court also held that the defendants had not assumed the risk that the pond would not hold water.  However, the court did affirm the trial court’s determination that the mechanic’s lien should not be foreclosed.  Reilly Construction Co., Inc. v. Bachelder, Inc., No. 14-0817, 2015 Iowa App. LEXIS 261 (Iowa Ct. App. Mar. 25, 2015).


A group of farmers contracted to deliver cotton grown during the 2010 and 2011 crop years to the U.S. Cotton Growers Association (USCGA), a marketing pool that the appellant owned.  A dispute arose concerning performance under the contracts ultimately resulting in the farmers suing the appellant and the USCGA.  The farmers alleged breach of contract, fraud, violations of the state (TX) Deceptive Trade Practices Act, conversion, negligent misrepresentation, breach of fiduciary duty, conspiracy and civil fraud.  Each contract contained a provision stating that "any and all disputes arising between" the parties "shall be resolved...exclusively by binding arbitration pursuant to the arbitration rules of the American Cotton Shippers Association."  The appellant and the USCGA sought an order compelling arbitration, but the trial court held that the arbitration clause was unconscionable, unenforceable and void.  On appeal, the court reversed.  The appellate court noted that after the case had been briefed and submitted, the TX Supreme Court had decided Venture Cotton Coop v. Freeman, 435 S.W.3d 222 (Tex. 2014) in which the Court noted that an unconscionable or illegal contract provision could be severed if it does not constitute the essential purpose of the agreement.  The appellate court noted, based on the TX Supreme Court's analysis, that numerous factors had to be considered to determine unconscionablity, including whether the farmers knew of the ramifications of agreeing to arbitrate before signing the contracts.  Other factors to be considered are the commercial atmosphere in which the agreement was made, the available alternatives, and the ability of the farmers to bargain.  Accordingly, the court reversed the trial court's decision and remanded for further proceedings in light of the TX Supreme Court's 2014 opinion.  Ecom USA, Inc., et al. v. Clark, et al., No. 07-14-00240-CV, 2015 Tex. App. LEXIS 1817 (Tex. Ct. App. Feb. 25, 2015).


 The parties executed a cash rent farm lease with one-half due after wheat harvest of by July 15 and the other half due by December 15 annually.  The lease specified that it ran from May 2, 2006 to December 31, 2011.  In the spring of 2011, the surviving spouse landlord notified the tenant in writing that the lease was ending on December 31, 2011 and that no fall-seeded crop should be planted.  The written lease, however, contained language stating that the landlord gave the tenant "peaceable possession of any land upon which crops are growing in the year of termination through and including the harvest thereof...".  The tenant planted wheat in the fall of 2011 harvested the crop in June of 2012.  The landlord sued on the basis that the lease terminated at the end of 2011 and the tenant was on notice not to plant a fall crop.  Thus, the landlord argued that the landlord was entitled to the wheat crop.  The trial court agreed.  On further review, the appellate court (in an unpublished opinion) disagreed.  The court held that the lease clearly stated that the tenant had the discretion to plant whatever crops they wanted during the term of the lease ("Tenants... shall have the right to plant the leased land to any crop they determine advantages [sic]...") and be able to harvest those crops.  The evidence also was insufficient to support an extension of the lease.  Meairs v. Watson, No. 111, 114, 2015 Kan. App. Unpub. LEXIS 52 (Kan. Ct. App. Jan. 23, 2015).           


The landlord entered into identical leases with different tenants for separate farms in the spring of 2011.  The leases specified that, "The term of this lease shall be five (5) years.  An annual review of rental rates and terms will be completed in January of each year.  The final year of this contract shall be 2015."  The leases set for the initial rent that was to be paid, but one of the tenants did not agree to the rental rate for 2013 that the landlord desired.  Thus, they paid the same rent as they had for 2012 and continued to farm the land.  The landlord sued, claiming that the tenants failed to negotiate in good faith the terms for 2013 and that the leases were invalid.  The trial court disagreed.  On appeal, the court affirmed, holding that the rental amount, as expressly specified in cash, was an essential contract term and, as such, the agreement to agree on it in the future was not enforceable.  The court determined that the lease language was clear in that the rental rate were to be reviewed annually.  The lease said nothing about coming to an agreement on rental rates.  Thus, the lease was for a 5-year term rather than being an annual lease, and the rental rate initially specified applied for the entire term unless the parties agreed otherwise.  The court also upheld the trial court's application of the parol evidence rule to exclude extrinsic evidence.  Gibbons Ranches, L.L.C. v. Bailey, et al., 289 Neb. 949 (2015).


 The plaintiff had been a farmer for 54 years and needed a tractor with more horsepower to use in his farming operation.  The plaintiff saw the defendant's online ad for a 1994 John Deere tractor which stated that the tractor was in "excellent condition."  The defendant also told the plaintiff over the phone and in person that the tractor was "field ready."  The plaintiff inspected the tractor and was informed that the engine had been rebuilt and the tractor repainted.  The plaintiff operated the tractor down the road for a mile and informed the defendant that a hose and hydraulic plug needed replaced.  The repairs were made and the plaintiff bought the tractor for $47,000.  The day after delivery, the plaintiff discovered a major oil leak and a mechanic's inspection revealed major mechanical malfunctions and that the tractor needed numerous repairs before it could be used.  The defendants refused to take the tractor back or refund the purchase price.  The plaintiff sued for breach of express warranty and breach of implied warranty of fitness for particular purpose.  The trial court ruled for the defendant on the basis that neither an express warranty nor an implied warranty of fitness had been created.  On appeal, the court affirmed.  No express warranty became a part of the basis of the bargain because the plaintiff inspected the tractor, determined it was in need of some repairs and was familiar with tractors based on his experience.  Likewise, no implied warranty of fitness existed because the plaintiff was an experienced farmer and had inspected the tractor and demanded that repairs be made before delivery.  Thus, the plaintiff did not rely on the defendant's skill or judgment in furnishing the tractor.  Chinn v. Fecht, No. 3-14-0320, 2015 Ill. App. Unpub. LEXIS 20 (Ill. Ct. App. Jan. 9, 2015). 


This case involved contractual negotiations concerning a 190-acre tract of land near Houston, TX.  The defendant, owner of a Houston area logistics company, was the first to enter into an option contract to buy the tract.  Other options were also entered into by the owner with other parties.  That lead to litigation, and a developer with whom the defendant had previous business dealings, became interested in the property, but couldn't acquire the property with the litigation concerning the tract pending.  The developer (the plaintiff in this case), acting through its agent, offered to pay the defendant's attorney's fees in the pending litigation because, as the agent stated, the plaintiff and the defendant were going to become partners concerning the development of the property.  The defendant received $10,000 from the plaintiff for the defendant's attorney's fees.  The litigation ultimately settled and the plaintiff agreed to purchase the property when all other parties agreed to release their rights.  In exchange for the defendant's agreement to settle which would allow the plaintiff to buy the tract, the plaintiff's agent orally promised the defendant that the defendant would become a partner in the development of the tract and that the defendant would receive $1 million plus an interest in the profits from future development and sale of the property.  Upon the plaintiff's sale of 20 acres of the tract, the defendant asked for his $1 million, but the plaintiff's agent stated that the plaintiff could only pay $500,000 "right now", implying that the balance would be paid later.  Upon being presented the $500,000 check, the plaintiff's agent presented the defendant with a document that the agent said was a "receipt" and that, "It's nothing.  You don't have to worry about it."  The agent also told the defendant that he would get the balance of the $1 million when the property was further developed.  The defendant did not read the document, because he was "in a hurry" and didn't have his glasses or use his magnifying glass, which he needed to read. The document turned out to be a carefully drafted release under which the defendant gave up any and all interest in the tract and all claims against the plaintiff.  The defendant sued for breach of contract, breach of partnership fiduciary duties and fraud.  The plaintiff claimed that the oral contract was unenforceable under the statute of frauds.  The trial court jury found for the defendant on all claims but determined that the defendant did not suffer damages.  The trial court determination was affirmed on appeal that there was an oral contract that the plaintiff had breached that was supported by the plaintiff's payment of $500,000 as consideration.  The appellate court awarded costs to the defendant and remanded for a new trial on attorney's fees.

On further review, the TX Supreme Court reversed.  The Court determined that the defendant could not have justifiably relied on the agent's statements concerning the content of the "receipt" which was actually a release.  The Court noted that the document was obvious on its face that it was a release, and that reliance on the agent's misrepresentations concerning the document was not reasonable where the defendant had a reasonable chance to review the document.  Thus, there was no fraudulent inducement which would negate the validity of the release.  The Supreme Court also determined that the partial performance to the Statute of Frauds did not apply because the $500,000 payment was made to avoid performance of the oral contract under the terms of the release, rather than to perform obligations under the contract.  The Court also determined that there could be no oral agreement to form a partnership under the Statute of Frauds.  National Property Holdings, L.P., et al. v. Westergren, No. 13-0801, 2015 Tex. LEXIS 1, rev'g., in part and aff'g., in part Westergren v. National Property Holdings, L.P., 409 S.W.3d 110 (Tex. Ct. App. 2013).         


The defendant, as part of her estate plan transferred two quarter sections of land to each of two of her children via quitclaim deeds and reserved a life estate.  The following year, the defendant granted an option to buy the two quarter sections to one of the two children, the plaintiff in this case.  The option said that it was granted in consideration of $10 and other good, valuable and legally sufficient consideration, and that it would remain in force until the end of 2015.  The option also specified that it was exercisable upon the plaintiff tendering the full purchase price of $200/acre ($64,000) before the end of 2015.  The plaintiff was not informed of the option until several days after it was executed, and never paid anything for the option.  In 2012, the plaintiff wrote the defendant a letter stating an intent to exercise the option, but not tendering the full purchase price (or any amount, for that matter).  The defendant notified the plaintiff that she was terminating the option, and the plaintiff sued for specific performance of the option.  The trial court ruled for the defendant and, on appeal, the court affirmed.  The court noted that the plaintiff never tendered the full purchase price to the defendant and, thus, never exercised the option before it was terminated.  The court also noted that the defendant could terminate the option at any time before acceptance because it was a gratuitous option that the plaintiff never paid anything for.  Deckert v. McCormick, No. 20140151, 2014 N.D. LEXIS 226 (N.D. Sup. Ct. Dec. 18, 2014).


 The plaintiff entered into a contract with the defendant to buy real estate that the defendant owned.  After moving onto the property, several of the plaintiff's livestock became sick and died.  After moving to the property, the plaintiff discovered that the defendant had operated a septic tank septic business and had dumped raw sewage and other unknown contents onto the property.  The plaintiff claimed that the seller and the seller's real estate agent fraudulently concealed this information from the plaintiff during negotiations for the sale of the property.  As a result, the plaintiff stopped making monthly payments and the defendant filed a foreclosure action.  No response was filed with the court within the appropriate timeframe (the plaintiff claimed that the County Court Clerk were deliberately lost by the Court Clerk) and the court entered a default judgment against the plaintiff.  The court ordered that the plaintiff's livestock be seized and sold at auction in satisfaction of the plaintiff's debt.  The plaintiff brought a pro se action in federal court claiming that their federal civil rights were violated due to "illegal proceedings in a circuit court hearing."  The court denied the plaintiff's motion and granted the defendant's motion to dismiss for lack of subject matter jurisdiction.  The court held that it lacked subject matter jurisdiction over challenges to state court judgments where, as here, the plaintiff's claim was "inextricably intertwined" with the state court claim because the relief requested would effectively reverse or void the state court's decision, and that such jurisdiction rested solely with the U.S. Supreme Court.    Morse v. Ozark County, No. 14-03348-CV-S-GAF, 2014 U.S. Dist. LEXIS 151381 (W.D. Mo. Oct. 24, 2014).


The defendant had been leasing the plaintiff’s property. When the plaintiff decided to sell the property through an auction, it created a brochure which incorrectly stated that the water right granted to the property (being sold in three parcels) was for 1,100 acres. The brochure also listed an incorrect Department of Ecology permit number. The water right for the three parcels was actually limited to 825 acres. The defendant alleged that he read the brochure, but did not do other research to discover the errors. The plaintiff had discovered the error before the auction, but the brochures were still available at the auction. There was a spiral notebook with the correct information available at the auction, but the defendant allegedly did not see it. All bidders were required to sign a statement that they were purchasing the property “AS-IS WHERE IS with no warranty expressed or implied except as to the merchantability of the title.” The defendant was the successful bidder on two of the three parcels. When he discovered the reduced water right, however, he refused to sign the purchase agreement. The plaintiff sold the property to someone else and then sued the defendant for damages. The lower court granted summary judgment to the defendant on the basis that there was no meeting of the minds since the defendant did not know and consent to the reduced water rights. On appeal, the court reversed, finding that questions of fact existed as to whether the defendant knew or should have known this information. It was for the trier of fact to determine the reason the defendant did not consummate the purchase.  Custom AG Serv. v. Watts, No. 32010-3-III, 2014 Wash. App. LEXIS 2455 (Wash. Ct. App. Oct. 14, 2014).

 


Plaintiffs leased their property to the defendant for the 2009 crop year. During the summer of 2009, the plaintiffs informed the defendant that the plaintiffs would be leasing the property to a new tenant for the 2010 crop year because the plaintiffs would receive a higher rent from the new tenant, who raised vine crops. The plaintiffs did not send a formal termination notice to the defendant. In the fall of 2009, the defendant sprayed Pursuit herbicide on the field, knowing that the prospective tenant could not plant his vine crops if the field had been sprayed with Pursuit. In early 2010, the plaintiffs informed the defendant that they were cancelling the lease because the defendant had failed to pay rent for the 2009 crop year. The prospective tenant refused to enter into a lease with the plaintiffs, contending that the Pursuit had made the field unsuitable for his vine crops. The plaintiffs filed a breach of contract and tortious interference with a business relationship action against the defendant. The trial court found that the defendant was not credible when he denied spraying Pursuit on the field and ruled in favor of the plaintiffs. In affirming the judgment, the appellate court ruled that the plaintiffs had shown the existence of a valid business expectancy, knowledge by the defendant of that expectancy, intentional interference by the defendant causing the termination of that expectancy, and damage to the plaintiffs. The plaintiffs had properly been awarded $38,908.58 in damages for the tortious interference claim.  Anglers, LLC v. Oakridge Farms, LLC, No. 309741, 2014 Mich. App. LEXIS 1285 (Mich. Ct. App. Jul. 8, 2014).


Members of a family farming partnership filed an action against one of its managing partners, alleging that the partner had entered into a series of grain contracts on behalf of the partnership without the authority to do so, resulting in significant losses to the partnership. The district court, in a bench trial, ruled in favor of the plaintiffs, and the defendant appealed. The partnership agreement required decisions to be made by a majority of the three managing partners. In 2008 and 2009, the defendant entered into a series of “focal point” contracts with a corn processor, “unlocking” the price of hedge contracts the partnership had previously entered into and allowing it to float with the market based upon the increase or decrease in the market between the opening and closing dates. The defendant entered into these contracts on behalf of the partnership, without consulting the others. After the partnership dissolved, the remaining partners alleged that they suffered $867,000 in damages as a result of the focal point contracts. In affirming the district court judgment in favor of the plaintiffs, the court found that because the defendant’s actions in entering into the contracts was not authorized or ratified by the partnership, he was liable for damages to the remaining partners. The limitation of liability clause in the partnership agreement did not shield the defendant from liability because that clause only protected activity that was authorized by the partnership. Elting v. Elting, No. S-13-551, 288 Neb. 404, 2014 Neb. LEXIS 98 (Neb. Sup. Ct. Jun. 27, 2014).


The plaintiff purchased property and the sellers reserved a one-half mineral interest in the property. This interest was reserved by contract and warranty deed. The contract also specified that the plaintiff was to have executive leasing rights (the exclusive right to execute oil and gas leases), but the deed did not mention the executive leasing rights. When the sellers transferred a portion of their oil and gas interest to third parties, the plaintiff filed its action against the sellers and the transferees, alleging that the sellers breached their contract in making the transfer because the plaintiff was granted exclusive executive leasing rights. In granting partial summary judgment to the defendants on the question, the court ruled that the contract did not provide exclusive executive leasing rights to the plaintiff. As such, the sellers retained executive or leasing rights in their undivided one-half interest in the mineral estate. Rainbow Trout Farms, Inc. v. Kuntz, No. 12-01260, 2014 U.S. Dist. LEXIS 79946 (D. Kan. Jun. 12, 2014).


The cotton cooperative-marketing association operated a pool for the exclusive sale and marketing of its members' cotton production. The association solicited farmers to join this pool and sign marketing and membership agreements, which required farmers to designate the acreage committed to the pool. After the price of cotton rose significantly, a dispute arose over the number of acres committed to the pool, and two large farming operations filed an action against the association alleging fraud, negligent misrepresentation, and other claims. The association filed a motion to stay the litigation and compel arbitration under the Federal Arbitration Act, alleging that the agreements compelled arbitration. The farmers asserted that the agreement was unconscionable and should not be enforced because it deprived the farmers of statutory remedies and provided only the association with the right to recover attorney fees. The trial court and court of appeals agreed, denying the motion, but the Texas Supreme Court reversed. The Court ruled that court of appeals erred in declining to sever any objectionable limitation on the farmers’ statutory rights. Unconscionable provisions in a contract can generally be severed so long as they do not constitute the essential part of the contract. Because the agreement’s central purpose was to provide for a speedy and efficient resolution of disputes, the agreement’s peripheral impact on statutory rights and remedies were of peripheral concern. The Court also found that the agreement was not unconscionable per se because it failed to provide the farmers with reciprocal rights to attorney fees. The Court remanded to the Court of Appeals for further consideration. Texas Venture Cotton Coop. v. Freeman, 7 Tex. Sup. Ct. J. 730 (June 13, 2014).


The appellant purchased a utility tractor and a rotary cutter from an implement dealer for a combined total of $13,600. She made a $3,000 cash down payment and signed a bill of sale. When the implement company delivered the equipment to the appellant, she was incarcerated. Another party, acting pursuant to a power of attorney signed a retail installment contract obligating the appellant to pay the creditor $275 per month under the contract.  The appellant made payments for three years, but stopped paying when the remaining balance was $4,788.45. The creditor filed a breach of contract action, seeking the balance due, attorney fees, and permission to foreclose on the equipment. The trial court entered summary judgment in favor of the creditor, and the court affirmed. Although the appellant argued that she had not granted a valid power of attorney to the person who signed the contract, the court disagreed. There was sufficient evidence to establish that the signatory acted under proper authority. The trial court also did not err in finding that appellant’s purchase of the equipment was for commercial purposes and thus was outside the scope of the arbitration clause in the agreement.  Morris v. Deere & Co., No. 11-12-00079-CV, 2014 Tex. App. LEXIS 5574 (Tex. Ct. App. May 22, 2014).


One thoroughbred horse breeder filed an action against another horse breeder, alleging that the defendant had breached their agreement specifying how the parties would reproduce, care for and sell racehorses in their ongoing relationship. The district court granted summary judgment for the plaintiff and the United States Circuit Court of Appeals for the Sixth Circuit affirmed. The court found that the purchase and sale agreement between the parties came with a duty to do everything necessary to carry the agreement out. This included an implied covenant of good faith and fair dealing, which the defendant breached when it blocked the sale of one of its fillies. The defendant secretly bid on the filly and effectively set a reserve price that prevented a willing buyer from purchasing the horse. The court also ruled that the district court did not abuse its discretion in awarding $272,486 in attorney fees to the plaintiff. The contract included a prevailing party provision, and the district court did not reasonably find a 20 percent reduction of the lodestar amount to be an appropriate fee. Crestwood Farm Bloodstock v. Everest Stables, Nos. 13-5688/13-5689, 2014 U.S. App. LEXIS 8751 (6th Cir. May 9, 2014).

 


Plaintiff and defendant entered into a written feedlot agreement under which plaintiff agreed to feed defendant’s cattle on plaintiff’s property for a six-month period. The parties  renewed the contract , and defendant fell behind in his payments. Plaintiff filed an action against defendant, seeking $115,568.07 in damages. Defendant admitted that he owned money to plaintiff, but denied the amount. Plaintiff filed an amended complaint, asserting the he had a lien on defendant’s livestock and seeking damages in the amount of $185,883.62. When defendant failed to timely answer, plaintiff filed a motion for a default judgment. The next day, defendant filed a motion for leave to file an answer to the amended complaint. Two days later, he sought through an emergency motion to enjoin the plaintiff from selling defendant’s cattle. The court denied plaintiff’s motion for a default judgment, allowed defendant to answer the amended complaint, and ordered defendant to pay reasonable attorney fees to plaintiff for plaintiff’s costs associated with the motion for default. Finding that defendant could not show irreparable harm, the court denied defendant’s emergency motion, but did order plaintiff to retain only $60,000 from the proceeds of the sale of the cattle and place the remainder of the sale price in escrow with the clerk of court. Kraemer v. Hoffman, No. 13-cv-860-wmc, 2014 U.S. Dist. LEXIS 46280 (W.D. Wis. April 3, 2014).


Plaintiff’s business involved purchasing hay from local farmers, storing it in three different storage yards, and compressing it and shipping it around the world. Defendant was an insurer that issued plaintiff a commercial output program policy. During the policy period, two fires occurred in February in one of plaintiff’s hay yards, destroying a number of haystacks. A third fire occurred in March at a different hay yard. The insurer denied coverage for nearly all of the hay loss, asserting that plaintiff had breached the “clear space requirements contained in the storage distance warranty” of the baled hay endorsement. The insurer, however, did pay $4,509,849.71 for loss of business personal property, loss of business income, and losses stemming from trans-loading. Plaintiff filed an action against the insurer, asserting claims of breach of contract and breach of duty to indemnify. Finding that there were disputed issues of material fact, the court denied the insurer’s motion for summary judgment on the question of plaintiff’s failure to strictly comply with the warranty. The court denied the plaintiff’s motion for partial summary judgment for the same reason. The court also denied the insurer’s motion to strike new evidence, stating that the parties’ (particularly defendant’s) objections were “voluminous, superfluous, and repetitive.” All-Star Seed v. Nationwide Agribusiness Insurance, No. 12cv146L, 2014 U.S. Dist. LEXIS 44798 (S.D. Cal. Mar. 31, 2014).


A bank’s assignor loaned money to a development company to purchase and develop subdivision property. The loan was secured by real property, and the owner of the company executed a personal guaranty on the loan. The company defaulted on the loan, the owner defaulted on the guaranty, and the bank filed an action to collect the debt. In affirming the trial court’s grant of summary judgment for the bank, the court ruled that the bank’s assignor did not violate its duty of good faith and fair dealing. The company could not modify the note by imposing conditions not apparent on the face of the agreements. The company’s contention that the loan was for a lesser amount than it had expected (and thus prevented it from developing the subdivision as planned) was to no avail, because the company executed the loan document after knowing the true amount, and even renewed the loan thereafter.  There was nothing in the record to indicate that the bank’s conduct made the company’s performance useless or impossible. L. D. F. Family Farm, Inc. v. Charterbank, No. A13A2478, 2014 Ga. App. LEXIS 181 (Ga. Ct. App. Mar. 19, 2014).


(plaintiff, a peanut company, hired defendants to fumigate its peanut storage dome; plaintiff filed an action against defendants, alleging that it sustained almost $20 million in damages from a fire it asserts was caused by defendants' improper application of pesticide; plaintiff asserted claims of negligence and breach of contract, and the defendants asserted a defense of contributory negligence; defendants then filed a motion to exclude the testimony from two of plaintiff’s expert witnesses, and a motion for summary judgment; the court denied the motion to exclude, finding that there was a valid scientific foundation for their testimony as to the piling and ignition theories; the court granted summary judgment for defendants on the breach of contract claim, finding that the agreement barred recovery for consequential damages, which comprised plaintiff’s entire loss in the fire; the court denied summary judgment as to the negligence claims, finding that the damage exclusions in the application agreement did not bar recovery; the court also denied summary judgment to defendants on the question of whether the plaintiff could pierce the corporate veil; fact questions remained).    


(plaintiff was a tenure-track law professor earning $100,000 per year; defendant father owned substantial tracts of ranchland that was mismanaged by his son; the father asked the daughter to assess the status of his operation; she cleaned up many financial problems and oversaw a civil action against her brother, who had embezzled from the business; after the daughter began devoting more and more time to managing the business, she alleged that her father told her that if she moved to the ranch, he would bequeath her property worth more than one million dollars; the daughter alleged that she left her job and moved her family to the ranch in reliance on that promise; several years later, a dispute arose and the father told the daughter that her services were no longer needed; after the father disinherited the daughter, she filed a promissory estoppel claim against him, seeking damages stemming from leaving her job in reliance upon the promise of a substantial inheritance; in reversing the trial court’s grant of summary judgment in favor of the father, the court ruled that a reasonable fact finder could have found that the daughter reasonably relied on the father’s promise and that the father could have reasonably anticipated that reliance; the court also held that there need not be misrepresentation for promissory estoppel).


(a Wisconsin grain producer entered into a number of contracts under which he sold grain to an Illinois-based grain buyer; after a nine-year relationship, the buyer alleged that the producer repudiated several oral agreements, entitling the buyer to $ 1 million in damages; when the producer refused to arbitrate the dispute, the buyer filed an action in Illinois state court, seeking an order compelling the producer to arbitrate; the trial court dismissed the action on the grounds that it lacked personal jurisdiction over the producer; on appeal, the court affirmed; the producer, who lived, worked, and purchased all equipment in Wisconsin, lacked sufficient minimum contacts with the State of Illinois such that the State could—consistent with the due-process clause of the Fourteenth Amendment—exercise personal jurisdiction over the producer; contracting with an out-of-state party could not alone establish sufficient minimum contacts; the buyer always traveled to Wisconsin to meet with the producer; indeed the producer had only set foot in Illinois once—to attend a seed corn meeting where he met the representative from the buyer, some nine years before the buyer filed its action; the producer did not purposefully avail himself of the privilege of conducting business in Illinois).


(plaintiff, real estate broker, had contract with ranch owner to sell 22,720-acre ranch; contract was exclusive sale listing agreement entitling plaintiff to 7 percent commission; defendants, agents for different real estate broker, contacted ranch owner about potential buyers; plaintiff’s listing agreement expired on June 27, 2009, and extension not signed; a defendant bought ranch on July 1, 2009 and then sold portion of it on August 18, 2009, for over $8.2 million at time when extension clause in plaintiff’s agreement valid and enforceable which entitled plaintiff to compensation for sale of ranch; trial court awarded plaintiff $437,649 based on 7 percent commission less commission due defendant; appellate court affirmed; present action involves plaintiff’s claim of tortious interference of contract by defendants; court had diversity jurisdiction and ruled that two-year statute of limitations barred action; present action filed on August 1, 2013, but plaintiff not only ascertained injury caused by owner’s breach it also ascertained injury caused by alleged tortious interference of ranch owner at same time, which was in 2009; plaintiff could have filed present action without knowing amount of damages it would be awarded in lawsuit against ranch owner).


(a potato grower and a potato processing company entered into a joint venture under which the grower agreed to supply the company with potatoes for use in manufacturing frozen potato products; the agreement granted the company shared control over the grower’s operation, and the grower was entitled to share in the profits; after harvest and before transport, a broken light bulb was discovered in one of the grower’s potato cellars, and a number of potatoes from that cellar were destroyed; but a worker on the company’s potato processing line found a broken light bulb encased in a Tuff-Skin sack; the company conducted an investigation, alleged that the bulbs were intentionally broken by an employee of the grower who was throwing potatoes, and terminated the parties’ agreement, refusing to process any more of the grower’s potatoes; the company did not provide formal notice of nonrenewal , as required under the contract, and the grower filed a breach of contract action; the trial court entered summary judgment for the company, but, on appeal, the court reversed, finding that the grower was entitled to a finding that the company breached the notice-and-cure provision of the contract; a genuine issue of material fact existed, however, as to whether the asserted glass contamination breach was incurable, thereby excusing the company from providing to the grower notice and an opportunity to cure).


(plaintiff, a farm company, and defendant, a cooperative, entered into 10 contracts for the sale of grain; each contract contained a provision requiring dispute resolution through arbitration by defendant, the National Grain and Feed Association (NGFA); when a dispute arose regarding the contracts, the cooperative obtained a default judgment in the amount of $2.5 million against the plaintiff through arbitration; the plaintiff filed a motion to set aside the judgment with the NGFA and signed three arbitration service contracts to reopen the dispute; the NGFA reopened the arbitration and it was pending when plaintiff filed its complaint against defendants asking the trial court to stop arbitration, arguing that the NGFA did not have jurisdiction to arbitrate the dispute; the trial court dismissed the action and the appellate court affirmed, also allowing NGFA’s motion for sanctions against the plaintiff; the court found that the plaintiff agreed to arbitrate any disputes arising under the contracts and that its action against the NGFA was frivolous since the NGFA was immune from suit).


(defendant, a feed company, entered into a contract with plaintiff, a global dairy supplier, for the purchase and delivery of whey protein concentrate (WPC); the parties continued their arrangement for several years until they attempted to negotiate a new contract; plaintiff sent an email to defendant, attaching a proposed sales confirmation, requesting a signature and stamp for acceptance; the proposal included a term requiring defendant to pay for the pallets upon which the WPC would be delivered; defendant did not sign or stamp the proposal, but objected via email to the pallet charge; plaintiff then emailed defendant a revised confirmation, which also included the pallet charge provision; defendant again objected  to the provision and did not sign or stamp the confirmation; defendant did not purchase any more WPC from plaintiff, and plaintiff sued defendant for breach of contract; the court granted summary judgment to defendant, finding that defendant had properly objected to the written confirmation’s contents within 10 days of receipt, as was required by Massachusetts’ version of UCC § 2-201(2)(applicable to merchants); defendant was not required in its objection to deny the existence of a contract, as argued by plaintiff; rather, it was sufficient that defendant gave some written objection to the confirmation’s terms).


(in 2005, plaintiffs leased the mineral rights in their property to defendants’ predecessor; one defendant had obtained all of the approvals necessary to commence drilling and had engaged in actual on-site construction activity preparatory to drilling before the expiration of the primary lease terms; actual drilling, however, did not begin until six days after the expiration of the primary lease term; plaintiffs sought judgment declaring that the leases had been extinguished and monetary damages for the wrongful extraction of oil and gas; defendants alleged that the development activity that took place before the end of the primary terms, followed by the drilling and ultimate completion of the well, were sufficient to extend the leases under the “engaged in drilling or re-working operations” language in the habendum clause; relying on Anderson v. Hess Corp., 733 F. Supp. 2d 1100 (D.N.D. 2010), aff'd, 649 F.3d 891 (8th Cir. 2011), the court agreed; the material facts in the cases were materially indistinguishable; “drilling operations” was a more expansive term than “drilling”;  it encompassed the pre-drilling activities in which the defendant had engaged, thereby extending the leases).


(the plaintiff sued a cantaloupe grower, grocers, an auditing company, and others, seeking damages for injuries he suffered after eating a cantaloupe contaminated by listeria; before the listeria outbreak, the grower had contracted with the auditing company to provide auditing services related to its food safety practices; plaintiff alleged that the auditing company was negligent in issuing the grower a “superior” rating, thereby failing to prevent the alleged failures that led to the outbreak; in granting the auditing company’s motion to dismiss, the court ruled that the auditing company owed no duty to the plaintiff when it conducted its safety audit; plaintiff’s allegations were insufficient to establish that his injuries were the foreseeable result of a negligent audit; the connection between the audit and plaintiff’s illness one month later was too remote in time and circumstance; plaintiff was not a third-party beneficiary to the auditing contract because he did not establish that the performance of the contract was expressly for his benefit; plaintiff also failed to show a causal connection between the allegedly negligent audit and his injury).


(plaintiff, cotton grower, leased land from an irrigation district and then entered into an agreement with a farming company to plant and harvest cotton; the farming company  entered into a joint venture with a lender’s sister company to obtain financing; the plaintiff, irrigation district, and joint venture company then signed a subordination agreement granting the lender first priority in the cotton and proceeds thereof; after the cotton was harvested and sent to the processing company, the plaintiff, lender and joint venture company all claimed an interest in the proceeds; the processing company filed an interpleader action, and the trial court ordered the release of the funds to the lender; plaintiff appealed, and the court affirmed, finding that the lender was not required to file a claim in the interpleader action to get relief and that the security agreement was enforceable, even though the plaintiff did not sign it because the plaintiff had executed the subordination agreement that granted the lender a first priority lien).


(plaintiffs granted an oil and gas lease to defendant’s assignor, which drilled several nonproductive gas wells on the property; after the assignment of the lease to defendant, defendant inadvertently failed to pay an annual “shut-in fee” required to extend the lease; believing it still had a valid lease on the property, defendant tested a well and constructed a gravel pit; upon discovering that defendant was still working on the property, plaintiffs attempted to renegotiate the lease; when the negotiations failed, plaintiffs filed an action alleging trespass, nuisance, unjust enrichment, and conversion of natural gas; the trial court granted compensation to the plaintiffs for the amount of natural gas flared off while defendant tested the well, but granted summary judgment for defendant on the majority of the claims; in affirming, the court ruled that plaintiffs had failed to present any evidence supporting its claims of unjust enrichment and trespass and nuisance stemming from the alleged dumping of thousands of gallons of brine water on plaintiffs’ property). 


(plaintiffs were inter-related companies in the business of processing corn and feed ingredients and brokering grain between buyers and sellers; defendant grain company entered into a written corn marketing agreement (CMA) with one of the plaintiff companies, which was 98% owned by another of the plaintiff companies; plaintiffs, alleging that defendant breached the agreement by failing to provide profit and loss statements and depriving plaintiffs of profits, sued defendant for breach of contract, breach of fiduciary duty and other claims; defendant filed seven counterclaims, also alleging breach of contract; on cross-motions for summary judgment, the court ruled that, as a matter of law, a joint venture existed between the plaintiff party to the CMA and defendant; the fact that the parties called their agreement a “merchandising agreement” rather than a partnership did not preclude them from possibly forming a partnership as well; the court bifurcated plaintiff’s accounting claim (equity claim) from the remaining issues at law and set a bench trial for the accounting claim first, followed by a jury trial on the breach of contract and breach of good faith and fair dealing claims). 


(plaintiffs entered into an oral lease agreement with defendant  under which plaintiffs used defendant’s property to operate a cow-calf operation; the parties also entered into an oral agreement under which plaintiffs cared for defendant’s cattle, in exchange for one-half of the net calf sale proceeds ; when a dispute arose between the parties and defendant refused to allow the October sale of his cattle, plaintiffs served upon defendant an agister’s lien for continuing to care for the cattle; plaintiffs obtained a court order to sell the cattle in February, and the district court ruled that although plaintiffs entitled to ½ of the sales amount, the agister’s lien was “invalid as under the terms of [an] implied contract”; in reversing, the South Dakota Supreme Court ruled that the plaintiffs acquired a valid agister’s lien when defendant refused to sell his cattle in October, as he had always done; under SDCL 40-27-1, plaintiffs were entitled to impose a lien, retain possession of the cattle, and continue caring for them until the February sale; prejudgment interest was also mandatory,  not discretionary). 


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