CNJ Distrib. Corp. v. D&F Farms, Inc.
| Decision Date | 17 September 2013 |
| Docket Number | No. DA 13–0068.,DA 13–0068. |
| Citation | 372 Mont. 28,309 P.3d 1002 |
| Court | Montana Supreme Court |
| Parties | CNJ DISTRIBUTING CORP. dba Fairview Angus Ranch, Plaintiff and Appellant, v. D & F FARMS, INC., Defendant and Appellee, v. Circle S Seeds Of Montana, Inc., Third Party Defendant. |
OPINION TEXT STARTS HERE
For Plaintiff and Appellant: Rodd A. Hamman, Calton Hamman & Wolff, P.C.; Billings, Montana.
For Appellee: Edward J. Guza, Guza, Williams & Nesbitt; Bozeman, Montana.
[372 Mont. 29]¶ 1 CNJ Distributing Corp. (CNJ) appeals from the Order of the Sixth Judicial District, Sweet Grass County, denying and dismissing with prejudice CNJ's breach of contract claim against D & F Farms, Inc. (D & F).
¶ 2 We restate the issues on appeal as follows:
¶ 3 Did the District Court err in finding D & F did not materially breach the contract by failing to object to rocky field conditions or by failing to achieve consistent depth of seed placement?
¶ 4 Did D & F's failure to get the seed to the proper depth prevent CNJ from harvesting the crop during harvest season and proximately cause CNJ's damages?
¶ 5 This controversy arose after CNJ hired D & F as a custom seeder to seed a barley crop grown under contract with Circle S Seeds of Montana, Inc. (Circle S). CNJ sued D & F for breach of contract, alleging the crop did not ripen and could not be harvested on time because of improper seed placement. D & F sued Circle S alleging failure to instruct. After a bench trial, Circle S settled with D & F. The District Court, in an Order filed December 20, 2012, denied and dismissed with prejudice CNJ's breach of contract claim. CNJ appealed.
¶ 6 The uncontested findings of fact are as follows:
¶ 7 CNJ owns and operates the Fairview Ranch in Sweet Grass County, Montana. George Frank (Frank) is the owner and President of CNJ. CNJ purchased the Fairview Ranch in 1984. Since that time, the Fairview Ranch has been operated as a registered Angus ranch with irrigated hay and pasture. CNJ has hired a full-time ranch manager to run the Fairview Ranch. Kenny Lee (Lee) started as manager of the Fairview Ranch on May 1, 2009.
¶ 8 D & F is a Montana corporation doing business out of Manhattan, Montana. Matt Flikkema (Flikkema) owns D & F. D & F is a “custom seeder.” This means landowners, like CNJ, hire D & F to plant crops. D & F supplies the seeding equipment, in this case a John Deere 1890 pulled by a tractor, and provides qualified individuals to operate the equipment. Casey Hamilton (Hamilton), an experienced and qualified operator, works for Flikkema doing the seeding.
¶ 9 Circle S is a Montana corporation doing business out of Three Forks, Montana. Circle S is a supplier of seeds, and per the agreement entered into with CNJ, a beneficiary to the crop that was to be produced on CNJ land in fall 2009. Steve McDonnell (McDonnell) is one of the owners of Circle S. Don Heck (Heck) is an agronomist/Certified Crop Advisor for Circle S and personally visited and inspected the field at issue at least six times.
¶ 10 In the fall of 2008, Circle S contracted with Montsago to produce a barley crop known as BG 46e for food purposes. WestBred, LLC of Bozeman, Montana developed BG 46e. Dr. Dan Biggerstaff (Biggerstaff), one of the developers of BG 46e, is an expert on BG 46e.
¶ 11 Pivot 2 is a “very rocky” section of field comprising 550 net irrigated acres, located on the Fairview Ranch. In the fall of 2008, CNJ hired Dwight Dyk (Dyk) of Dyk Enterprises, Inc., to chem fallow Pivot 2 to kill the existing vegetation so CNJ could reseed the next spring.
¶ 12 McDonnell knew that CNJ was going to reseed Pivot 2. McDonnell telephoned Frank in the winter of 2009 about contracting to grow BG 46e in that field and set up a meeting to discuss seeding options. Before meeting with Frank, McDonnell called Flikkema about seeding BG 46e at the Fairview Ranch in a custom no-till seed job to obtain a price quote. McDonnell told Flikkema the fields at Fairview Ranch had a lot of rocks. Flikkema did not express any concerns and gave McDonnell a price. McDonnell did the same with other input providers and put together a written proposal with a cost and income projections. McDonnell faxed the proposal to Frank on March 10, 2009.
¶ 13 D & F and Circle S had formed a relationship over the years where Circle S would recommend D & F to its customers for custom seeding and then contact D & F to discuss details of the job. Details discussed generally included how the land was to be seeded (till or no-till), what was being seeded, and when the land was to be seeded. Typically, Circle S would come out to the property being seeded on the day of seeding to ensure the instructions were conveyed to Flikkema and would stay around for a couple of passes to make sure there were no problems. The land owner would typically pay D & F directly.
¶ 14 On March 11, 2009, McDonnell and Heck traveled to Billings and met with Frank. Frank agreed to the proposal, knowing no-till seeding would be used. McDonnell and Frank executed the Grain Production Agreement. Pivot 2 would have been seeded with alfalfa grass had McDonnell and Frank not agreed otherwise.
¶ 15 As Biggerstaff explained in his Deposition, BG 46e is a type of waxy barley characterized by a shrunken endosperm. The endosperm is the starch portion of the seed which provides the energy for the seed to germinate. When the plant emerges from the soil, sunlight provides the energy needed for it to continue growing. Because the endosperm is small, if the seed is planted too deep, it will not have enough energy to reach the surface and will die. Also, if the soil is too cold it will hamper the seed's ability to germinate and emerge. BG 46e should be planted from 3/4 to 1 1/2 inches deep.
¶ 16 McDonnell concluded no-till seeding, the predominant seeding method in Montana, was the best option for BG 46e because a tilled field would be too soft to maintain the required planting depth. There had not been no-till seeding on the Fairview before 2009. The decision to use no-till was made by McDonnell and Frank, not D & F. McDonnell and Frank decided seeding would occur on May 20, 2009.
¶ 17 Because of the length of time it takes to till a field as rocky and hard as Pivot 2, testimony revealed that by May 20, no-till seeding was the only option left to plant the crop in the spring of 2009.
¶ 18 Seeding occurred on May 20, 2009. As was their custom, Flikkema and McDonnell met at the field on the day work was to occur.
¶ 19 Before Flikkema left, he walked about 50 feet out into the field and Lee pointed out the large amount of rocks in the field. Because of the rocky ground, Lee asked McDonnell whether the ground needed to be torn up first or no-till. McDonnell stated that the drill was capable of planting the crop. McDonnell told Lee that he did not feel the rocks would pose a problem for planting. McDonnell did not express any problems with the field conditions to Flikkema.
¶ 20 McDonnell instructed D & F to plant the seeds at a depth of one and a half inches. Hamilton and Flikkema set the depth setting on the 1890 to one and a half inches and set the down pressure to “medium green.”
¶ 21 Immediately, when Hamilton began planting, he heard the 1890's disks chattering as they rolled over rock in the field. The chattering of the disks means that the 1890 does not have enough pressure to keep contact with the soil and/or is driving too fast. He increased the down pressure from green to orange. He also reduced his speed to make the best possible contact with the ground, to about two to three miles per hour.
¶ 22 As he was seeding, Hamilton made several visual checks for seed placement, which included taking a pocketknife and digging to uncover seeds. The seeds that made contact with solid rock, or were planted after the drill rolled off the edge of a rock, or were planted on top of buried rocks, would be anywhere from the surface to one inch deep. When the drill pulled out of the ground for any reason, large amounts of seed would dump out.
¶ 23 Either the first day or the morning of the second day of seeding, Hamilton contacted Flikkema. He reported to Flikkema the field condition and the changes he made to the drill and his speed. Flikkema told Hamilton he had done everything that Flikkema would have done under the conditions. Flikkema told Hamilton to tell Lee what he was experiencing. Hamilton told Lee over supper that “the field conditions were bad.” Lee did not inspect the field or take any other steps after Hamilton's report.
¶ 24 The following facts are necessary context for the current action:
¶ 25 McDonnell returned to the Fairview to inspect the crop a few weeks after seeding and noted a large amount of seed on the ground. Lee characterized the amount of seed on the ground as “tremendous.” McDonnell called Flikkema and told him the seeding job was bad and he needed to get in touch with CNJ.
¶ 26 On July 16, 2009, Dyk returned to spray the field for weeds. He stated about 50 percent of the crop had emerged properly and was approximately 10 to 12 inches tall. Other plants were substantially behind and were about six inches tall, with other areas where seeds were lying on the ground. He believed this disparity was due to improper seed placement; but had never seeded a waxy barley, nor operated a John Deere 1890.
¶ 27 Heck, who is a certified crop specialist, asserted the amount of seeds on the surface was comparable to other similar rocky fields.
[372 Mont. 33]¶ 28 Circle S planned to complete harvest by mid-September. However, because the less mature plants remained green, the crop could not be harvested on schedule. By October, the plants still had not been harvested; and a heavy snow destroyed the crop. As a result, CNJ had to swath and bail the barley for cattle feed and made no profit on the crop.
¶ 29 CNJ sued D & F for breach of...
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