DJ COLEMAN, INC. v. NUFARM AMERICAS, INC.

• Decision Date: 12 March 2010
• Docket Number: Case No. 1:08-cv-051.
• Citation: 693 F. Supp.2d 1055
• Parties: DJ COLEMAN, INC., Plaintiff, v. NUFARM AMERICAS, INC., Defendant.
• Court: U.S. District Court — District of North Dakota

693 F. Supp.2d 1055

DJ COLEMAN, INC., Plaintiff, v. NUFARM AMERICAS, INC., Defendant.

Case No. 1:08-cv-051.

United States District Court, D. North Dakota, Southwestern Division.

March 12, 2010.

Scott K. Porsborg, Smith Bakke Porsborg & Schweigert, Bismarck, ND, for Plaintiff.

Thomas R. Olson, Michelle C. Eichler, Jeffries, Olson & Flom, PA, Fargo, ND, Gary W. Callahan, Gary W. Callahan, P.C., Ft. Collins, CO, Joel A. Flom, Jeffries, Olson & Flom, P.A., Moorhead, MN, for Defendant.

ORDER ON DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

DANIEL L. HOVLAND, District Judge.

Before the Court are the Defendant's "Motion for Summary Judgment" and "Renewed Motion for Summary Judgment and Reply to Plaintiffs Reply to Defendant's Summary Judgment Motion" filed on July 1, 2009 and August 26, 2009. See Docket Nos. 28 and 40. The Plaintiff filed responses in opposition to the motions on July 31, 2009 and January 20, 2010. See Docket Nos. 38 and 75. The Defendant filed a reply brief on August 26, 2009. See Docket No. 44. For the reasons set forth below, the Defendant's motion for summary judgment and renewed motion for summary judgment are granted in part and denied in part.

I. BACKGROUND

The plaintiff, DJ Coleman, Inc. ("DJ Coleman"), is a farm corporation that is incorporated in the State of North Dakota and conducts farming operations in Burleigh County, North Dakota. DJ Coleman's principal, Clark Coleman, is responsible for DJ Coleman's commercial farming operations. Clark Coleman is a licensed pesticide purchaser and applicator. The defendant, Nufarm Americas, Inc. ("Nufarm"), is an Illinois corporation. Between May 10, 2007 and May 24, 2007, Clark Coleman planted different varietals of sunflowers. Clark Coleman used pre-emergent chemicals, Mad Dog®, a generic glyphosate broad-spectrum herbicide, and Spartan®, a herbicide, prior to planting the sunflowers. Between June 21, 2007 and June 24, 2007, Clark Coleman sprayed his post-emergent sunflower crops with a tank mix of Assert®,¹ Scoil®,² and Asana®.³ Nufarm is the manufacturer of Assert® and the wholesale distributor to United Agri Products, Inc. ("UAP"), the direct North Dakota retail seller to Clark Coleman. Clark Coleman did not contact Nufarm for approval before tank mixing Assert®, Scoil®, and Asana® in 2007. DJ Coleman alleges that Assert® caused severe damage to its 2007 sunflower crop by producing stunted and deformed heads, and seeks economic and non-economic damages.

This action was originally filed in Burleigh County District Court in April 2008. Nufarm removed the action to federal district court on May 7, 2008. See Docket No. 1. DJ Coleman alleges claims of products liability, negligence, failure to warn, breach of warranties, and violations of N.D.C.C. chs. 51-12⁴ and 51-15 for false and deceptive advertising. Nufarm now moves for summary judgment on each claim.

II. STANDARD OF REVIEW

Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir.2007); see Fed.R.Civ.P. 56(c). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of material fact is genuine if the evidence would allow a reasonable jury to return a verdict for the non-moving party.

The Court must inquire whether the evidence presents a sufficient disagreement to require the submission of the case to a jury or whether the evidence is so one-sided that one party must prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir.2005). The moving party bears the burden of demonstrating an absence of a genuine issue of material fact. Simpson v. Des Moines Water Works, 425 F.3d 538, 541 (8th Cir.2005). The nonmoving party "may not rely merely on allegations or denials in its own pleading; rather, its response must ... set out specific facts showing a genuine issue for trial." Fed. R.Civ.P. 56(e)(2).

This action is based on diversity jurisdiction. Therefore, the Court will apply the substantive law of North Dakota. See Paracelsus Healthcare Corp. v. Philips Med. Sys., 384 F.3d 492, 495 (8th Cir. 2004).

III. LEGAL DISCUSSION

DJ Coleman raises claims of products liability, negligence, failure to warn, breach of warranties, and violations of N.D.C.C. chs. 51-12 and 51-15. Nufarm contends that it is entitled to summary judgment on each of the claims.

A. NEGLIGENCE AND STRICT LIABILITY CLAIMS

DJ Coleman alleges claims of products liability, negligence, and failure to warn which are tort claims grounded in negligence or strict liability. "Products liability grew out of a public policy judgment that people need more protection from dangerous products than is afforded by the law of warranty." East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 866, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986). Under principles of products liability, a manufacturer of a defective product may be liable for personal injury and property damage. "Under the economic loss doctrine, economic loss resulting from damage to a defective product, as distinguished from damage to other property or persons, may be recovered in a cause of action for breach of warranty or contract, but not in a tort action." Steiner v. Ford Motor Co., 606 N.W.2d 881, 884 (N.D.2000). The economic loss doctrine is not a fixed rule and there are numerous exceptions across the jurisdictions. "The economic loss doctrine is based on the understanding that contract law, and the law of warranty in particular, is better suited for dealing with purely economic loss in the commercial arena than tort law, because it permits the parties to specify the terms of their bargain and to thereby protect themselves from commercial risk." Dakota Gasification Co. v. Pascoe Bldg. Sys., 91 F.3d 1094, 1098 (8th Cir.1996).

In East River, the plaintiffs sued the manufacturer of four ships whose turbines failed as a result of a product defect and caused damage solely to the turbines. The plaintiffs alleged tortious conduct and sought damages for the costs of repairing the ships and for lost income while the ships were out of service. At issue was whether the plaintiffs could recover in tort for the damage to the "product itself," i.e., the turbines. The United States Supreme Court considered the three main approaches that courts were following at that time: (1) the "majority approach" which denied tort recovery when the defective product caused damage to itself, and did not cause damage to other property or personal injury; (2) the "minority approach" which allowed tort recovery when the defective product damaged only itself; and (3) the "intermediate approach" which allowed tort recovery when the defective product damaged only itself under certain circumstances. The United States Supreme Court adopted the majority approach, and determined that the plaintiffs were not entitled to recover in tort for the defective turbines damaging only themselves. The Supreme Court said:

The tort concern with safety is reduced when an injury is only to the product itself. When a person is injured, the "cost of an injury and the loss of time or health may be an overwhelming misfortune," and one the person is not prepared to meet. In contrast, when a product injures itself, the commercial user stands to lose the value of the product, risks the displeasure of its customers who find that the product does not meet their needs, or, as in this case, experiences increased costs in performing a service. Losses like these can be insured. Society need not presume that a customer needs special protection. The increased cost to the public that would result from holding a manufacturer liable in tort for injury to the product itself is not justified.

Damage to a product itself is most naturally understood as a warranty claim. Such damage means simply that the product has not met the customer's expectations, or, in other words, that the customer has received "insufficient product value." The maintenance of product value and quality is precisely the purpose of express and implied warranties. Therefore, a claim of a nonworking product can be brought as a breach-of-warranty action. Or, if the customer prefers, it can reject the product or revoke its acceptance and sue for breach of contract.

East River, 476 U.S. at 871-72, 106 S.Ct. 2295 (internal citations omitted). The Supreme Court determined that recovery by the plaintiffs on a warranty theory would entitle them to the costs of the repair and lost profits, and would place them in the position that they would have been in had the turbines worked properly.

In East River, the United States Supreme Court did not consider whether a plaintiff could recover in tort when the defective product injures "other property" or persons. The Supreme Court considered this issue in Saratoga Fishing Co. v. J.M. Martinac & Co., 520 U.S. 875, 117 S.Ct. 1783, 138 L.Ed.2d 76 (1997). In Saratoga Fishing, the owner of a fishing vessel brought an admiralty tort action against the manufacturer of the vessel and the designer of the vessel's hydraulic system, alleging that the hydraulic system was defectively designed. The case arose from an engine room fire and flood that led to the sinking of the fishing vessel. The Supreme Court described the owner of the vessel at the time of the fire as the "Subsequent User," as compared to the "Initial User," who had purchased the vessel from the manufacturer. The Initial User added certain equipment (skiff, net, and various spare parts) to the vessel upon purchase from the manufacturer. The issue was whether the added equipment was "other property" under the...