Corcoran v. Land O'Lakes, Inc.
| Citation | 39 F.Supp.2d 1139 |
| Decision Date | 12 February 1999 |
| Docket Number | No. C 96-3135-MWB.,C 96-3135-MWB. |
| Parties | Edward C. CORCORAN and Susan Corcoran, Plaintiffs, v. LAND O' LAKES, INC., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
William G. Enke, C. Joseph Coleman, Coleman & Enke, Fort Dodge, IA, for plaintiffs.
John F. Lorentzen, Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., Des Moines, IA, for defendant.
TABLE OF CONTENTS
I. INTRODUCTION .....................................................1141
A. Procedural Background .........................................1141
B. Factual Background ............................................1142
II. LEGAL ANALYSIS ...................................................1144
A. Standards For Summary Judgment ................................1144
B. Foreclosure Of The Corrorans' Right To Prosecute ..............1147
1. Security interest in a lawsuit .............................1147
2. The state court's foreclosure judgment .....................1148
C. Tortious Interference .........................................1149
1. Theories and elements of the tort ..........................1149
2. The distinction between the theories .......................1152
3. The record on "improper purpose" here ......................1152
D. Breach Of Fiduciary Duty ......................................1154
1. Fiduciary relationships under Iowa law .....................1154
2. Arguments of the parties ...................................1154
3. Inferences of a fiduciary relationship .....................1155
E. Punitive Damages ..............................................1155
III. CONCLUSION .......................................................1156
With as much spirit, and indeed with as much courtesy, as knights might have entered the lists for a tournament, counsel for the parties presented their arguments on the defendant's motion for summary judgment in this case. Counsel jousted over a variety of issues, including whether a third party's foreclosure of a security interest in personal property foreclosed the plaintiff's right to pursue tort and contract claims against the defendant; the requirements for proof of "improper purpose" to support claims of tortious interference with existing and prospective contracts; indicia of a fiduciary relationship; and availability of punitive damages. For every well-aimed attack there seemed to be a prompt parry and riposte, making the question of whether the defendant should prevail on its motion for summary judgment a very close one.
Plaintiffs Edward and Susan Corcoran filed their complaint in this matter on September 16, 1996, and an amended and substituted complaint on May 27, 1998, against defendant Land O' Lakes, Inc., asserting claims arising from the breakdown of an "Independent Contractor Farrow to Feeder Pig Agreement" between the parties. Count I of the Corcorans' complaint asserts breach of contract; Count II alleges intentional interference by Land O' Lakes with contracts and prospective contractual relationships that the Corcorans had with their lender, Norwest Bank of Fort Dodge, Iowa; and Count III alleges breach of fiduciary duty by Land O' Lakes. In addition, in "Count IV" of their complaint, the Corcorans pray for punitive damages on their claims of tortious interference and breach of fiduciary duty.
Land O' Lakes answered the original complaint on November 27, 1996, then filed an amended and substituted answer and counterclaim on May 27, 1998. Land O' Lakes ultimately filed an answer to the Corcorans' amended and substituted complaint on June 18, 1998. In its answer to the amended and substituted complaint Land O' Lakes denied each of the Corcorans' claims, asserted several affirmative defenses, and also alleged a counterclaim for breach of contract by Edward Corcoran. Edward Corcoran answered Land O' Lakes' counterclaim on June 25, 1998, denying the counterclaim and asserting various affirmative defenses.
Now before the court is Land O' Lakes' August 26, 1998, motion for summary judgment on the Corcorans' claims. First, Land O' Lakes seeks summary judgment on the Corcorans' tortious interference claim on the ground that there is "insufficient evidence" of an improper purpose to support the claim. Land O' Lakes next seeks summary judgment on the Corcorans' breach-of-fiduciary-duty claim, on the ground that there is "insufficient evidence" of a fiduciary relationship between the parties to support that claim. Land O' Lakes also argues that, as a matter of law, the Corcorans cannot recover punitive damages in the absence of viable tort claims. Finally, Land O' Lakes attempts to deal a coup de grâce to the Corcorans' entire complaint by asserting that Norwest Bank's foreclosure of its security interest in the Corcorans' collateral on certain loans — which collateral Land O' Lakes contends included the Corcorans' claims in this litigation — deprived the Corcorans of the right to prosecute this action. Land O' Lakes does not, however, seek summary judgment on its own breach-of-contract counterclaim. The Corcorans resisted summary judgment on each of the grounds asserted on September 24, 1998, and filed various addenda to their resistance, including a supplemental brief filed on January 25, 1999. Although Land O' Lakes resisted the Corcorans' request for leave to file the supplemental brief as an untimely attempt to assert new legal arguments, the court will permit the filing of the supplemental brief, recognizing that Land O' Lakes had the opportunity to address any "new" legal arguments during oral arguments on the motion for summary judgment.
The court heard oral arguments on Land O' Lakes' motion for summary judgment on February 5, 1999. Plaintiffs Edward and Susan Corcoran were represented by William G. Enke, who presented the Corcorans' arguments, and C. Joseph Coleman, Jr., of Coleman & Enke in Fort Dodge, Iowa. Land O' Lakes was represented by John F. Lorentzen of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C., in Des Moines, Iowa. The arguments were unusually spirited, informative, and compelling. This matter is now fully submitted.
The court will discuss here only the nucleus of undisputed facts pertinent to the present motion for summary judgment. In its legal analysis, the court will address where necessary the Corcorans' assertions of genuine issues of material fact that may preclude summary judgment on their claims.
The parties agree that on December 12, 1991, Edward Corcoran and Land O' Lakes entered into an "Independent Contractor Farrow to Feeder Pig Agreement" (the Agreement) under which Land O' Lakes owned swine breeding stock and placed it with Corcoran. Corcoran was to service the stock and their offspring for the purpose of rearing feeder pigs. In addition to the stock, Land O' Lakes provided the feed, veterinarian services and medical supplies, and a service manager to work with Corcoran for "technical support." Corcoran owned the premises and facilities at which Land O' Lakes' stock was kept and provided the labor to care for the stock. Corcoran also provided utilities, maintenance and repairs, taxes, insurance, and waste disposal. Corcoran was to be paid according to the number of pigs he raised to feeder weight. The Agreement was for a term of ten years. The parties agree further that there was no negotiation of terms of the Agreement or of the price per pig Corcoran was to be paid; Corcoran simply had the option to accept or reject the contract at the price offered.
Land O' Lakes maintains, and the Corcorans do not dispute, that its relationship with producers such as Corcoran was contractual, not a partnership. On this point, the Agreement specifically provides as follows:
[Corcoran] is an independent contractor as contemplated by the Agreement and nothing herein or hereunder shall be construed to make [Corcoran] a servant, agent, employee, partner or joint venturer of or with [Land O' Lakes].
Agreement, p. 11, ¶ 8. The Agreement granted Land O' Lakes certain rights with regard to management of the livestock in Corcoran's care. For example, Land O' Lakes had the right to direct Corcoran with respect to all matters relating to the care of the livestock; Land O' Lakes was required to "provide continuing counsel and advice in the care and production of the livestock," Agreement, p. 3, ¶ 3; and Corcoran was required to "take any action reasonably requested by [Land O' Lakes] to raise the livestock in accordance with the standards of [Land O' Lakes] which may be in effect from time to time." Agreement, p. 6, ¶ D. 1.
Although the parties dispute precisely how much Corcoran was expected to rely upon them, Land O' Lakes provided Corcoran with some cash flow projections prior to his entering into the Agreement. Land O' Lakes also provided layout specifications. Corcoran obtained financing for his performance of the Agreement from Norwest Bank in Fort Dodge, Iowa. Land O' Lakes guaranteed part of Corcoran's loan, approximately $28,000.
Land O' Lakes was obligated to deliver to Corcoran a herd of approximately 312 breeding sows and 17 boars and was to maintain approximately those numbers of animals throughout the contract term. Land O' Lakes has two other facilities built about the same time as Corcoran's, to the same specifications, also involving farrow to feeder pig operations of approximately 300 head. The parties agree that improper breeding, sow condition, over-feeding, or underfeeding could result in long-term damage to the productivity of a herd.
Land O' Lakes did not select or transport the hogs to Corcoran's facility. Nor was Corcoran involved in buying, selecting, or shipping the hogs....
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