FMC CORPORATION, INC. v. Helton

• Decision Date: 03 February 2005
• Citation: 360 Ark. 465,202 S.W.3d 490
• Parties: FMC CORPORATION, INC., and Agro Distribution, LLC, Appellants; v. Roy HELTON, d/b/a Helton Farms; Joyce Clifton and Ricky Clifton, d/b/a Clifton Farms Joint Venture; Riddell Flying Service, Inc.; Gibbons Flying Service, Inc., Appellees; and Roy HELTON, D/B/A HELTON FARMS; JOYCE CLIFTON AND RICKY CLIFTON, D/B/A CLIFTON FARMS JOINT VENTURE, Cross-Appellants; v. AGRO DISTRIBUTION, LLC, AND LAND O'LAKES, INC., Cross-Appellees
• Court: Arkansas Supreme Court

202 S.W.3d 490

360 Ark. 465

FMC CORPORATION, INC., and Agro Distribution, LLC, Appellants; v. Roy HELTON, d/b/a Helton Farms; Joyce Clifton and Ricky Clifton, d/b/a Clifton Farms Joint Venture; Riddell Flying Service, Inc.; Gibbons Flying Service, Inc., Appellees; and Roy HELTON, D/B/A HELTON FARMS; JOYCE CLIFTON AND RICKY CLIFTON, D/B/A CLIFTON FARMS JOINT VENTURE, Cross-Appellants; v. AGRO DISTRIBUTION, LLC, AND LAND O'LAKES, INC., Cross-Appellees;

04-215

Supreme Court of Arkansas

Opinion Delivered February 3, 2005

DONALD L. CORBIN, Associate Justice.

This case arises from a jury verdict awarding damages resulting from the application of the insecticide Fury to the wheat crops of two farms located in Phillips County, Arkansas. Appellants raise numerous points on appeal. There are questions involving interpretation of our statutes; hence, our jurisdiction of this case is pursuant to Ark. Sup. Ct. R. 1-2(b)(6). We reverse and remand for a new trial.

Before setting forth the necessary facts, it is helpful to review the parties in this case, as well as their roles in the instant litigation. Appellants are FMC Corporation, Inc., and Agro Distribution, LLC. FMC is the manufacturer of Fury. Agro is a distributor of chemical products, including Fury. Land O'Lakes, Inc., is a fifty percent owner of Agro and is the subject of the cross-appeal. Appellees in this case include Roy Helton, d/b/a Helton Farms and Joyce Clifton and Ricky Clifton, d/b/a Clifton Farms Joint Venture. It was these two farming operations that were growing the wheat on which Fury was sprayed. Also included as Appellees are two flying services who are licensed under Arkansas law to spray pesticides on crops, Riddell Flying Service, Inc., and Gibbons Flying Service, Inc. These two flying services were the ones who sprayed Fury on the wheat crops.¹

In March 2001, Tyrus Teague, a salesman for FMC, made a routine sales call to Doug Davidson, manager of Agro's facility in Holly Grove, Arkansas. They discussed the FMC line of products. They also discussed the fact that FMC had applications pending before the Environmental Protection Agency to expand the legal uses of Fury to additional products, including wheat.

At the end of April 2001, J.R. Davidson, a salesman for Agro, detected a heavy concentration of armyworms in the Helton and Clifton wheat fields. Armyworms can be devastating to a wheat crop because they eat the leaves on wheat and ring the head causing it to fall off. J.R. contacted his manager at Agro's Holly Grove location, Doug Davidson, to determine what products Agro would sell for use on wheat. In turn, Doug contacted some manufacturers' sales representatives to get a product recommendation and the recommended rate of application. One such call was to Teague who recommended the use of Fury and provided an application rate. Doug reported this recommendation to J.R., and the Fury was loaded and delivered to Riddell Flying Service and Gibbons Flying Service. J.R. wrote the rate of application on the receipt tickets left with the flying services. The pesticide was applied to the wheat crops of the two farms and killed the armyworm infestations. A few days later, however, Doug received a phone call from a pilot, informing him that Fury had not yet been approved for use on wheat. Agro, in turn, notified Appellees, as well as other farmers who had recently purchased Fury.

It was soon discovered that similar incidents involving the use of Fury on wheat occurred in Mississippi and that the Mississippi Department of Agriculture had begun an investigation. The Arkansas Plant Board subsequently launched its own investigation in May 2001, and a quarantine was instituted on all wheat that had been sprayed with Fury. As a result of the quarantine, Appellees were initially prevented from harvesting their wheat. They finally received approval to cut the wheat, but had to locate storage for the adulterated wheat until the quarantine was resolved.

Upon learning of the quarantine, Agro employees, along with Kevin Conrad, an employee of parent company, Land O'Lakes, held a conference call. They decided that Doug Davidson would be responsible for assisting affected customers in locating storage facilities for the quarantined wheat. At some point, Appellees were told that either FMC or Agro would be responsible for the transportation and storage costs of the adulterated wheat.

During this time, a meeting was held in Mississippi, at which several FMC employees and representatives of various state and federal agencies explained that a program was being created to allow FMC to purchase the adulterated wheat and reimburse the farmers for the additional transportation and storage charges. Doug Davidson attended this meeting and reported what he learned to Appellees.

Donald Wilkinson and Keith Wilkinson, who were customers of Agro, agreed to store the Appellees' wheat in their on-site storage facilities of their farms. As part of their agreement, the wheat was to be removed by August 1, so that they could store their own rice and corn crops once they were harvested.

During the pendency of the quarantine, the United States Department of Agriculture determined that farmers who had sprayed their crops with Fury would not be eligible for their loan deficiency payments (LDP), which amounted to approximately $. 37 per bushel. At that time, Helton had 37,200 bushels of wheat, and the Cliftons had 28,600 bushels. In the meantime, FMC finalized its arrangement to purchase the quarantined wheat. An offer to purchase the wheat was made on or about June 21, 2001. As part of the agreement, the farmers had to sign a release of liability. Appellees refused to sign the release and sell their wheat to FMC. By August 1, Appellees had not sold their wheat and had also failed to remove it from the Wilkinsons' storage facilities. At this time, the wheat was still quarantined. Appellees refusal to sell their wheat to FMC or to otherwise remove it from the Wilkinsons' storage facilities led to a dispute between Appellees and Conrad. Conrad eventually notified Appellees that their wheat was going to be removed from the Wilkinsons' storage bins and dumped onto the ground at their farms. Appellees obtained an injunction, preventing Conrad from removing and dumping their wheat.

The wheat subsequently remained in the Wilkinsons' storage bins until December 27, 2001, when it was sold. The proceeds from the sale of the wheat were deposited with the clerk of the court in Phillips County. The Wilkinsons attempted to assert a lien against the proceeds to cover the costs of storage. The court, however, entered an order in October 2002, directing that the proceeds be paid to Appellees, after determining that there was no basis for the Wilkinsons' lien.²

Appellees filed their original complaint on August 9, 2001, against numerous parties for damages they sustained as a result of Fury being used on their wheat. A second amended complaint was filed on October 9, 2002. As is pertinent to the current appeal, Appellees alleged: (1) fraud/misrepresentation on the part of FMC and Agro; (2) negligence on the part of FMC, Agro, Riddell Flying Service, and Gibbons Flying Service; (3) breach of express warranty by FMC and Agro; (4) breach of implied warranty of fitness for a particular purpose by FMC and Agro; (5) violation of the Arkansas Deceptive Trade Practices Act ("ADTPA") by FMC and Agro; and (6) outrage by FMC, Agro, and Land O'Lakes, Inc.

Prior to trial, FMC and Agro filed motions for summary judgment. Appellees dismissed their claims for breach of express and implied warranties against FMC and Agro. They also dismissed their claim for outrage against FMC. Appellees subsequently nonsuited their claims against Riddell Flying Service and Gibbons Flying Service. FMC and Agro had filed cross-claims against both flying services, but the flying services filed a pretrial motion to sever. The trial court granted the motion to sever.

The case was tried before a Phillips County jury on May 13-21, 2003. At the close of Appellees' case, both FMC and Agro moved for directed verdicts on all claims. The trial court granted Agro's and Land O'Lakes's directed-verdict motions on the claim of outrage, thus dismissing Land O'Lakes from the action. The remainder of the motions were denied. The directed-verdict motions were renewed at the close of all evidence and again were denied by the trial court. The case was then submitted to the jury on interrogatories.

The jury returned verdicts in favor of Appellees, apportioning fault as 10% to each Appellee; 40% to Agro; and 50% to FMC. Clifton was awarded damages totaling $527,017.16. This award consisted of economic damages of $27,017.16; damages for mental anguish of $250,000.00; and punitive damages of $ 250,000.00. Helton was awarded total damages of $554,085.95, which included economic damages of $54,085.95; damages for mental anguish of $125,000.00; and punitive damages of $375,000.00.

Following the trial, Appellees filed a petition requesting attorneys' fees of $217,507.50, as well as costs and postjudgment interest. Appellees argued that they were entitled to fees as they prevailed on their claim under the ADTPA. The petition sought payment for 1,242.90 hours of work performed at an hourly rate of $175.00. A supplemental petition was filed on September 22, 2003, seeking additional fees for work performed after the filing of the initial petition. The trial court awarded Appellees attorneys' fees totaling $233,572.50, as well as taxable costs totaling $1,006.67. This appeal followed.

I. Severance

Although not raised as the first point on appeal, we will address the issue of severance first because it was reversible error for the trial court to grant Riddell's and Gibbons' motion to sever the cross-claims filed against them by FMC and Agro. In its brief to this court, FMC argues that the trial court erred in granting severance because they were...