Flynn v. Gold Kist, Inc., 73477

• Decision Date: 16 January 1987
• Docket Number: No. 73477,73477
• Citation: 353 S.E.2d 537,181 Ga.App. 637
• Parties: FLYNN et al. v. GOLD KIST, INC.
• Court: Georgia Court of Appeals

Page 537

353 S.E.2d 537

181 Ga.App. 637

FLYNN et al. v. GOLD KIST, INC.

No. 73477.

Court of Appeals of Georgia.

Jan. 16, 1987.

Rehearing Denied Jan. 29, 1987.

Certiorari Denied March 4, 1987.

Frank C. Vann, Camilla, for appellants.

Jay D. Bennett, G. Conley Ingram, John E. Stephenson, Jr., Atlanta, for appellee.

DEEN, Presiding Judge.

Lewis and Diane Flynn entered into a three-year "Output and Requirements Contract and Security Agreement," effective February 1, 1980, with Gold Kist under which the company was to furnish all the supplies, materials, labor, advice, etc., needed to produce and harvest pecans from pecan groves owned and leased by the Flynns. Gold Kist also agreed to market all the pecans produced from the groves. In return, Gold Kist was to receive a fee of 20% above the cost of all materials, equipment, and labor furnished. The Flynns had the right to terminate the contract upon thirty-days' notice of a breach of contract if the breach described in the notice was not cured within the thirty-day period.

Under the contract Gold Kist was granted the exclusive right to manage the Flynn groves, and during the three-year contract period Gold Kist sent the Flynns thirteen checks totalling $199,312.61 for the sale of their pecans. The evidence further showed that the Flynns lost $8,000 in 1979 when they managed their own groves. In September 1983, however, the Flynns filed an action for damages and accounting against Gold Kist contending that it had damaged them under the contract by reason of the wrongful, negligent, fraudulent, and tortious conduct of the company and its employees in various stated ways and sought damages for breach of contract, fraud and tort, punitive damages, and attorney fees for bad faith.

The case was tried before a jury, and after the plaintiffs rested their case the court granted Gold Kist's motion for a directed verdict. The Flynns appeal.

1. " 'A directed verdict is proper only where there is no conflict in the evidence as to any material issue and the evidence introduced together with all reasonable deductions or inferences therefrom demands a particular verdict. OCGA § 9-11-50(a). [Cits.]' " Walker v. Housing Auth. of Atlanta, 174 Ga.App. 585, 330 S.E.2d 729 (1985).

The appellants contend that it was error to grant a directed verdict as to the issue of damages for breach of contract because the evidence showed that Gold Kist did not use either "good faith" or its "best efforts" in its performance under the contract. They contend that they were wrongfully charged for chemicals that were not necessary or proper or were not used, that they were charged with supplies that went to other Gold Kist patrons, that Gold Kist made excessive charges for labor and failed to make the workers they hired work properly, that Gold Kist charged them with supplies that were not used or had no beneficial value to the pecan groves, that the company permitted its employees to play games with the equipment and then charged them with repair costs, that Gold Kist concealed certain "under the table" payments made to employees from another patron, that they were charged for gasoline used for the employees' personal use, that Gold Kist allowed the farm manager to steal pecans from their groves, that the company failed to keep rental equipment in proper working order thereby failing to harvest the pecans in time to receive the best possible price, and that it commingled their pecans with those of other patrons which were smaller in size and therefore paid the Flynns a lower price for theirs.

Appellees contend that Gold Kist's performance under the contract must be judged against the "good faith" standard implicit in OCGA § 13-4-20 which requires performance to "be substantially in compliance with the spirit and the letter of the contract and completed within a reasonable time." See Crooks v. Chapman Co., 124 Ga.App. 718, 185 S.E.2d 787 (1971). Appellants argue that OCGA § 11-2-306 which pertains to output, requirements, and exclusive dealings and is found in the sales provisions of the UCC is controlling and requires Gold Kist to use its "best efforts" in the performance of the contract to be controlling. The Official Comments to this provision state that "the parties to such contracts are held to have ... bound themselves to use reasonable diligence as well as good faith in their performance of the contract." We therefore find that regardless of which provision of the code that this contract falls under, Gold Kist had a duty to perform in good faith.

At trial, the Flynns sought to prove, through the testimony of the Georgia Extension Services Director for Mitchell County, that the application of certain chemicals to their pecan groves was unnecessary. This testimony did contain the opinion that certain chemicals in certain amounts were not really necessary, but after the witness examined the yield and price per pound that Gold Kist's methods obtained he admitted that "the management part is no problem here." The contract gave Gold Kist the discretion to purchase all materials, including insecticides, that it deemed necessary for pecan production and in "performing, hereunder, Gold Kist shall act in accordance with current industry standards ..." There was no evidence that Gold Kist's spraying program, while it differed from the recommendations of the extension service, was an abuse of its discretion under the contract with the exception of the use of an illegal chemical. The farm manager, Crosby, however, testified that certain chemicals were charged to the Flynns' account which were never received or used by him. There was also a question of when or if a certain amount of lime was applied to the pecan groves. Accordingly, as to these items a jury could find that the Flynns were wrongly billed...