Case Summaries

Plaintiff Picazo contracted in 2020  with Aptos Berry Farms, Inc. (“Aptos”) to farm strawberries in 2021 that Driscoll's, Inc. (“Driscoll's”) later sold. Initially the contract was oral, but a written contract was executed in July 2021 stating an effective date of October 1, 2020. Driscoll’s was identified as a third-party beneficiary to the contract. However, Driscoll’s delivered the strawberries and routinely inspected Picazo’s operation. The payment terms were not a set price per crate, instead Picazo would receive a portion of the sale proceeds which was influenced by a pooling arrangement with other growers’ strawberries. Several months after harvest of the strawberries, Picazo had not received a full accounting and was unsure of how Aptos and Driscroll’s calculated his payments. Picazo did eventually receive an accounting, but only after he sent a demand letter in December 2022.  Picazo was not satisfied with the accounting and brough suit against Aptos and Driscoll’s alleging violations of the Perishable Agricultural Commodities Act (PACA) and bringing claims for an accounting and conversion.  Aptos filed a 12(b)(6) motion to dismiss.

The court granted the motion to dismiss, but allowed plaintiff leave to amend. The PACA claims relied on Section 499b(4) which makes it illegal for a “merchant, dealer, or broker” to not pay or make an accounting under an agricultural goods contract. The court found that Aptos is not a merchant, dealer or broker because it does not market or sell the strawberries. Further, the court found that Aptos was not an agent of Driscoll’s. Therefore, PACA does not apply to Aptos. The court found that Driscoll’s is subject to PACA. However, PACA requires contractual privity between plaintiff and defendant and there was no contract between plaintiff and Driscoll’s. Driscoll’s status as a third-party benefit was irrelevant. Ultimately, no PACA claim survived. On the issue of the conversion claim, the court found that the “[p]laintiff does not sufficiently allege a right to receive the payment he seeks” since contractual rights cannot lead to a conversion claim under California law. Finally, the court found that accounting claim moot since an accounting was provided to Plaintiff in December 2022.

Picazo v. Aptos Berry Farms, Inc., No. 23-cv-02735-SVK (N.D. Cal. Nov. 2, 2023).

Defendant was a sales agronomist in South Dakota for the plaintiff until March 23, 2023, and then began working for a competitor of the plaintiff. The plaintiff is Wilbur-Ellis, a company that sells agricultural products including seed, fertilizer, and pesticides. The parties entered into an employment agreement signed in March 2015. There were three relevant paragraphs within the agreement: (1) the auto renewal of the contract, (2) restrictive covenants that included a non-compete and non-solicitation for two years and within 100 miles, and (3) a survival clause. The survival clause did not expressly state that restrictive covenants survived the termination of employment agreement.

On April 19, the plaintiff brought suit against defendant for violating the restrict covenants in the employment agreement and asked the court for an injunction. The court will grant the injunction if the plaintiff can prove they have “a fair chance of prevailing.” The court found that the existence of the survival clause shows the parties intended certain terms to continue after termination. There were no provisions within the contract that expressly stated the survival clause applied to that term, and rules of interpretation require a court to prefer an interpretation that gives effect to all clauses within a contract. Therefore, the restrictive covenants continued to be in effect after defendant’s employment ended and the employment agreement was terminated. The court ordered that the defendant abide by the parameters found in the employment agreement’s restrictive covenants.  

Federal court rules require that a bond is posted when an injunction is ordered. This is to protect the financial interests of the party enjoined, especially if later proceedings determine they were wrongful enjoined from income producing activity. The court ordered the plaintiff to post a $350,000 bond based on loss revenue and lost customers to defendant’s new employer while awaiting trial. The new employer will only receive this money if defendant is found to be successful at trial.

Willbur-Ellis Co. v Erickson, No. 4:23-CV-04058-LLP (D.S.D. June 13, 2023). 

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 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 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 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).

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 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).   

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).

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 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 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).

 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 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). 

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 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).

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 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).

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’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).

(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).    

(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).

(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).

(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).