Jorgensen Farms, Inc. v. Country Pride Coop., Inc.

• Decision Date: 20 November 2012
• Docket Number: 26161.,Nos. 26154,s. 26154
• Citation: 824 N.W.2d 410,2012 S.D. 78
• Court: South Dakota Supreme Court
• Parties: JORGENSEN FARMS, INC., d/b/a Jorgensen Land & Cattle Partnership, Plaintiff, v. COUNTRY PRIDE COOPERATIVE, INC., a South Dakota Corporation, Defendant, Third–Party Plaintiff and Appellant, v. Agriliance, LLC; Dakota Gasification Company, and Agrium U.S. Inc., Third–Party Defendants and Appellees, and Charles Baker Trucking Company, and Spaans Trucking, Inc., Third–Party Defendants.

824 N.W.2d 410

2012 S.D. 78

JORGENSEN FARMS, INC., d/b/a Jorgensen Land & Cattle Partnership, Plaintiff,

v.COUNTRY PRIDE COOPERATIVE, INC., a South Dakota Corporation, Defendant, Third–Party Plaintiff and Appellant,

v.Agriliance, LLC; Dakota Gasification Company, and Agrium U.S. Inc., Third–Party Defendants and Appellees,andCharles Baker Trucking Company, and Spaans Trucking, Inc., Third–Party Defendants.

Nos. 26154, 26161.

Supreme Court of South Dakota.

Considered on Briefs March 19, 2012.

Decided Nov. 20, 2012.

Amy Amundson, Thomas D. Jensen of Lind, Jensen, Sullivan & Peterson, PA, Minneapolis, Minnesota, Attorneys for defendant, third-party plaintiff and appellant.

Margo D. Northrup of Riter, Rogers, Wattier & Brown, LLP, Pierre, South Dakota and Emily Murphy, Stillwater, Minnesota, Attorneys for third-party defendant and appellee Agriliance N.O.R. # 26161.

Paul E. Bachand of Schmidt, Schroyer, Moreno, Lee & Bachand, PC, Pierre, South Dakota, Todd Langel of Faegre & Benson, LLP, Des Moines, Iowa and Kristin R. Eads of Faegre & Benson, LLP, Minneapolis, Minnesota, Attorneys for third-party defendant and appellee Agrium.

Steven J. Oberg of Lynn, Jackson, Shultz & Lebrun, PC, Rapid City, South Dakota, Attorneys for third-party defendant and appellee Dakota Gasification.

WILBUR, Justice.

[¶ 1.] Jorgensen Farms (Jorgensen) sued Country Pride Cooperative (Country Pride) alleging that Country Pride sold Jorgensen fertilizer contaminated with rye damaging its 2007 wheat crop. Country Pride settled with Jorgensen but preserved its claims against third-party defendants Agriliance, Agrium, and Dakota Gasification Co. (Dakota Gas). The trial court granted the third-party defendants' motions for summary judgment. We affirm.

FACTS AND PROCEDURAL BACKGROUND

[¶ 2.] Jorgensen grows certified and registered winter wheat seed. During late spring or early summer 2007, rye plants contaminated Jorgensen's winter wheat crop. According to Jorgensen's expert, Jorgensen suffered a loss of $556,070 as a result of the rye contamination as Jorgensen was unable to sell the crop as certified seed, and instead, sold the wheat for a lower price as commodity grain.

[¶ 3.] Jorgensen, who believed the source of the contamination was fertilizer it purchased from Country Pride, brought suit against Country Pride to recover damages. Subsequently, Country Pride brought third-party complaints against a number of parties alleging that, if Jorgensen proved that the fertilizer it purchased from Country Pride was contaminated, the rye contamination must have occurred in the chain of fertilizer distribution. ¹ Country Pride alleges that the third-party defendants' negligence, breach of contract, and/or breach of warranty entitles Country Pride to indemnification or contribution.²

[¶ 4.] Country Pride settled with Jorgensen and the two carriers named as third-party defendants: Charles Baker Trucking (Baker Trucking) and Spaans Trucking, Inc. The only remaining issue is whether Country Pride is entitled to indemnification or contribution from any or all remaining third-party defendants: Agriliance, Agrium, or Dakota Gas.

[¶ 5.] The remaining third-party defendants were involved in selling either, or both, ammonium sulfate and urea, the two chemicals used in mixing the fertilizer. Agriliance, a sales broker, and Country Pride entered into a verbal agreement whereby Country Pride would purchase ammonium sulfate from Agriliance. As the intermediate seller, Agriliance never possessed or handled the ammonium sulfate. Rather, Agriliance purchased the ammonium sulfate from third-party defendant Dakota Gas. Agrium is a producer of both ammonium sulfate and urea. Country Pride dismissed its claim based on Agrium's sale of ammonium sulfate but, on appeal, is pursuing a claim for the urea sold by Agrium.

[¶ 6.] The trial court granted summary judgment in favor of Agriliance, Agrium, and Dakota Gas, reasoning that Country Pride failed “to provide a specific fact upon which a jury could find a party responsible without resorting to speculation.” Country Pride appeals. We review Country Pride's remaining claims against each Agriliance, Agrium, and Dakota Gas separately to determine whether summary judgment was appropriate as to each.³

STANDARD OF REVIEW

[¶ 7.] In reviewing a trial court's grant or denial of summary judgment under SDCL 15–6–56(c), we must view evidence in the light most favorable to the non-moving party and decide both “ ‘whether the moving party has demonstrated the absence of any genuine issue of material fact’ ” and whether the trial court correctly decided all legal questions. Bertelsen v. Allstate Ins. Co., 2011 S.D. 13, ¶ 15, 796 N.W.2d 685, 692 (quoting Advanced Recycling Sys., L.L.C. v. Se. Prop., Ltd., 2010 S.D. 70, ¶ 10, 787 N.W.2d 778, 783). We make these determinations de novo, with “ ‘no deference to the [trial] court's ruling.’ ” Highmark Fed. Credit Union v. Hunter, 2012 S.D. 37, ¶ 7, 814 N.W.2d 413, 415 (quoting Adrian v. Vonk, 2011 S.D. 84, ¶ 8, 807 N.W.2d 119, 122).

ANALYSIS AND DECISION

[¶ 8.] On appeal, the parties dispute whether Country Pride has set forth sufficientevidence to survive summary judgment. Country Pride concedes that it has not provided direct evidence as to which of the three third-party defendants, if any, are responsible for the rye contamination. However, Country Pride argues, despite the absence of direct evidence, it has provided sufficient circumstantial evidence to survive summary judgment.

[¶ 9.] Country Pride's position at the summary judgment hearing was that circumstantial evidence of “inspection negligence” established that rye entered the ammonium sulfate due to Baker Trucking's negligence in its failure to properly inspect its delivery trucks. With this backdrop in mind, we examine the evidence presented in this case, viewing it “in [the] light most favorable to the nonmoving part[ies][.]” Cashman v. Van Dyke, 2012 S.D. 43, ¶ 6, 815 N.W.2d 308, 311.

[¶ 10.] 1. Agriliance is not liable as a matter of law under either a breach of contract or negligence theory.

[¶ 11.] Country Pride presents alternative theories under which Agriliance could be liable for the damages to Jorgensen's wheat crop. First, Country Pride argues that a September 17, 2006 delivery of ammonium sulfate by Baker Trucking, which Country Pride ordered from Agriliance, contained the rye contamination. Second, Country Pride argues that Agriliance supplied approximately 65.3% of Country Pride's ammonium sulfate prior to September 2006 and that this supply contained the contamination.

[¶ 12.] There are disputed facts regarding the date the first load of ammonium sulfate was delivered to Country Pride by Baker Trucking.⁴ In addition, Country Pride offered the testimony of former Baker Trucking employee, David Sherman, regarding the presence of rye in Baker Trucking's trucks.⁵ When the evidence is viewed in the light most favorable to Country Pride, the non-moving party, the date of delivery, and whether the trailer used by Baker Trucking was contaminated are disputed facts that should ordinarily be decided by a jury. In this case, however, resolution of those disputed facts is not determinative as to any liability on the part of Agriliance.

[¶ 13.] Country Pride is suing Agriliance for breach of warranty ⁶ and negligence. Country Pride conceded that the ammonium sulfate was defect-free when it was manufactured and shipped from Dakota Gas. In light of this concession, Agriliance cannot be liable as a matterof law for breach of warranty because the goods were as warranted from the manufacturer when the goods were shipped. See Shaffer v. Honeywell, Inc., 249 N.W.2d 251, 256 (S.D.1976)overruled on other grounds by First Premier Bank v. Kolcraft Enters., Inc., 2004 S.D. 92, 686 N.W.2d 430 (stating that, in a case with claims for breach of warranty, negligence, and strict liability involving a valve manufactured by Honeywell, “plaintiff [injured homeowner] has the burden of showing that the defect existed when the product left the manufacturer's hands”).

[¶ 14.] Additionally, Country Pride's negligence claim against Agriliance is based upon its failure to inspect the shipper's, Baker Trucking, trucks. Agriliance, however, cannot be liable for negligence because it is the carrier's duty, under state law, to inspect its truck.⁷Berry v. Chicago, M. & St. P. Ry. Co., 24 S.D. 611, 124 N.W. 859, 862–63 (1910). Country Pride has settled with and dismissed Baker Trucking from this lawsuit. Based on the undisputed material fact that the ammonium sulfate was defect-free when manufactured and shipped, as conceded by Country Pride, and that Agriliance did not have a duty to inspect the carrier, Agriliance is entitled to summary judgment as a matter of law.

[¶ 15.] Country Pride offered the possibility that the doctrine of alternative liability could apply in this case.⁸ However, because Country Pride did not join all potential defendants, i.e., all parties who produced, shipped, manufactured, or sold ammonium sulfate or urea to Country Pride in 2006, even if this Court were to consider adopting the doctrine, it would not be applicable for that reason. See Bradley v. Firestone Tire and Rubber Co., 590 F.Supp. 1177, 1179 (D.S.D.1984) (quoting Starling v. Seaboard Coast Line R.R. Co., 533 F.Supp. 183, 188 (S.D.Ga.1982) (stating that “[u]nder alternative liability, however, all the possible wrongdoers responsible for the injury must be before the Court, and the negligent acts must have been committed simultaneously”)).

[¶ 16.] 2. Country Pride's claims against Agrium are barred by (a) Country Pride's failure to give notice, (b) the economic loss doctrine, and (c) the statute of limitations.

[¶ 17.] Country Pride argues, in the alternative, that if the ammonium sulfate it purchased from Agriliance was not the source of the rye contamination, the urea Country Pride purchased from Agrium in fall 2006 caused the contamination. Country Pride concedes...