Keller Farms P'ship v. Brigitte Holmes Livestock Co. Inc., Cause No. 1:08-CV-243.

• Decision Date: 25 June 2010
• Docket Number: Cause No. 1:08-CV-243.
• Citation: 722 F.Supp.2d 1015
• Parties: LDT KELLER FARMS, LLC, and Keller Farms Partnership, Plaintiffs, v. BRIGITTE HOLMES LIVESTOCK CO., INC., Brigitte Holmes, Samuel Stephen Holmes, and Mervin Mishler, Defendants.
• Court: U.S. District Court — Northern District of Indiana

722 F.Supp.2d 1015

LDT KELLER FARMS, LLC, and Keller Farms Partnership, Plaintiffs,

v.BRIGITTE HOLMES LIVESTOCK CO., INC., Brigitte Holmes, Samuel Stephen Holmes, and Mervin Mishler, Defendants.

Cause No. 1:08-CV-243.

United States District Court, N.D. Indiana,Fort Wayne Division.

June 25, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Matthew W. Chapel, Attorney at Law, Celina, OH, for Plaintiffs.

James R. Schrier, Kevin J. Riley, Reiling Teder & Schrier LLC, Lafayette, IN, for Defendants.

OPINION AND ORDER

ROGER B. COSBEY, United States Magistrate Judge.

This matter is before the Court on the Defendants' Motion for Partial Summary Judgment. ¹ (Docket # 60.) Defendants Brigitte Holmes Livestock Company (“BHLC”), Steve Holmes (“Steve”), and Mervin Mishler (“Mervin”) seek summary judgment on Counts II, IV, VIII, and X of the Plaintiffs' Second Amended Complaint, while Defendant Brigitte Holmes (“Brigitte”) seeks summary judgment on Counts II, IV, VI, VIII, and X. ² For the following reasons, the motion will be GRANTED IN PART and DENIED IN PART.

I. FACTUAL AND PROCEDURAL HISTORY ³

LDT Keller Farms, LLC and the Keller Farms Partnership (collectively, “the Plaintiffs”) operate a dairy farm in Northwest Ohio. Luke Keller, Daniel Keller, and Timothy Keller are the sole members of LDT Keller Farms, LLC and each have an equal share in the Keller Farms Partnership. (Second Am. Compl. ¶ 1.) BHLC is an Indiana corporation and registered commercial dealer of livestock. (Second Am. Compl. ¶ 2.) Brigitte Holmes is the sole shareholder and President of BHLC. (Second Am. Compl. ¶ 3.) Steve Holmes, Brigitte's husband, is employed by BHLC. (Second Am. Compl. ¶ 4.) Mervin Mishler is also employed by BHLC as a sales agent and to provide stockyard services. (Second Am. Compl. ¶ 5.)

Between October 27, 2006, and January 31, 2007, the Plaintiffs purchased a total of 197 calves from BHLC, ⁴ ostensibly for use in their dairy operation. The sales contracts provided that the Plaintiffs were purchasing “Holstein heifers.” ( See Docket # 61, pgs. 40-49.) Holstein is a breed of cattle that is well known for its ability to produce milk. See Painter v. State, 157 Md.App. 1, 848 A.2d 692, 695 n. 1 (Md.Ct.Spec.App.2004). A heifer is a female calf that has not yet reproduced. See E. Dillingham, Inc. v. United States, 70 Cust.Ct. 141, 150, 358 F.Supp. 1295 (Cust.Ct.1973).

After the Plaintiffs took possession of the calves and as they matured and were able to be more thoroughly examined, the Plaintiffs discovered that nearly all the calves were freemartins. A freemartin is a sterile heifer (that is, it has not, and will never reproduce) and is therefore useless as a dairy cow. ⁵ Because the calves would never be able to reproduce and produce milk, their intended purpose, the Plaintiffs sold them for slaughter.

Accordingly, on October 17, 2008, the Plaintiffs filed suit against BHLC, Brigitte, Steve, and Mervin, alleging breach of contract (Count II), breach of the implied warranty of fitness for a particular purpose (Count IV), violation of the Packers and Stockyards Act, 7 U.S.C. § 213 (Count VI), fraud and fraudulent concealment (Count VIII), and constructive fraud (Count X). ⁶ (Second Am. Compl. ¶¶ 88-117.) The Plaintiffs assert that the Defendants represented that the calves were “dairy replacement Heifers” and could reproduce and produce milk for their dairy operation. The Defendants responded that the Plaintiffs knew the calves were being sold simply as “Holstein heifers” with no guarantee of breedability and the Plaintiffs assumed the risk that they would not be able to produce any milk. (Answer ¶ 8.) On February 26, 2010, the Defendants filed the present Motion for Partial Summary Judgment. BHLC, Steve, and Mervin ask for summary judgment on Counts II, IV, VIII, and X, while Brigitte asks for summary judgment on all counts. ⁷ With the briefing on the motion complete, the Court will address each of the Defendants' arguments in turn.

II. STANDARD OF REVIEW

Summary judgment is proper when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P 56(c); Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.2003). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Ballance v. City of Springfield, 424 F.3d 614, 617 (7th Cir.2005).

When ruling on a motion for summary judgment, “a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts; these are jobs for a fact finder.” Payne, 337 F.3d at 770. The only task in ruling on a motion for summary judgment is “to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Id.; Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). If the evidence is such that a reasonable fact finder could return a verdict in favor of the nonmoving party, summary judgment may not be granted. Payne, 337 F.3d at 770.

A court must construe the record in the light most favorable to the nonmoving party and avoid “the temptation to decide which party's version of the facts is more likely true,” as “summary judgment cannot be used to resolve swearing contests between litigants.” Id. However, “a party opposing summary judgment may not rest on the pleadings, but must affirmatively demonstrate that there is a genuine issue of material fact for trial.” Id. at 771.

III. DISCUSSION

The Defendants advance several theories in support of granting them summary judgment on Counts II, IV, VI, VIII, and X. The Court will consider each argument seriatim.

A. Count II: Breach of Contract. 1. BHLC's Request for Summary Judgment.

BHLC claims that it is entitled to summary judgment because it did not breach the sales contracts. It argues that the contracts unambiguously obligated it to only sell the Plaintiffs “Holstein heifers,” as opposed to “breedable, or non-freemartin, heifers.” (Br. in Supp. 9.) The Plaintiffs offer several cursory arguments in favor of denying summary judgment that largely miss the mark. On the other hand, the Plaintiffs' argument that the contract is ambiguous as to the precise nature of the calves to be sold has merit. Accordingly, summary judgment on Count II must be denied and the issue tried before a jury.

Under Indiana law, the goal of contract interpretation is to ascertain the intent of the parties. MPACT Constr. Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 906 (Ind.2004). ⁸ In the case of a written contract, the parties' intent is determined by looking first to the plain and ordinary meaning of the contract language. USA Life One Ins. Co. v. Nuckolls, 682 N.E.2d 534, 538 (Ind.1997). If the language of a contract is “clear and unambiguous,” the court shall give that language “its plain and ordinary meaning.” Barclay v. State Auto Ins. Cos., 816 N.E.2d 973, 975 (Ind.Ct.App.2004). If, however, reasonable people could come to different conclusions about the meaning of the language, the contract is ambiguous. Ind. Mills & Mfg., Inc. v. Evenflo Co., Inc., No. 1:04-cv-540, 2005 WL 3150164, at *5-6 (S.D.Ind. Nov. 22, 2005). “Whether a contract is ambiguous is a question of law for the court.” W. Ohio Pizza, Inc. v. Clark Oil & Refining, 704 N.E.2d 1086, 1091 (Ind.Ct.App.1999).

There are two types of contract ambiguity: patent or latent. Patent ambiguity is apparent on the face of the instrument and arises from inherently contradictory or nonsensical language that either conveys no definite meaning or a confused meaning. Bradley v. W. & S. Fin. Group, No. 2:05-cv-39, 2005 WL 2709282, at *6-7 (N.D.Ind. Oct. 20, 2005); Oxford Fin. Group, Ltd. v. Evans, 795 N.E.2d 1135, 1143 (Ind.Ct.App.2003). Conversely, a latent ambiguity, “arises not upon the face of the instrument by virtue of the words used but emerges in attempting to apply those words in the manner directed in the instrument.”

Hauck v. Second Nat'l Bank of Richmond, 153 Ind.App. 245, 286 N.E.2d 852, 862 (Ind.Ct.App.1972).

Extrinsic evidence is admissible to explain the meaning of latent ambiguity, but is not admissible to explain patent ambiguity. Eckart v. Davis, 631 N.E.2d 494, 498-99 (Ind.Ct.App.1994). Patent ambiguity presents a pure question of law, while the jury resolves latent ambiguity as a question of fact. Felker v. Sw. Emergency Med. Serv., Inc., 521 F.Supp.2d 857, 867 (S.D.Ind.2007). See also Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1133 (Ind.1995) (“[If] the contract is [latently] ambiguous and uncertain in its terms, we believe that the meaning of the contract may well need to be determined by extrinsic evidence. As such, its construction is a matter for the fact-finder. Rules of contract construction and extrinsic evidence need to be employed to determine and give effect to the parties' reasonable expectations. Under such circumstances, resolution of this issue is inappropriate for summary judgment.”).

In its motion for summary judgment, BHLC argues that the contract unambiguously requires it to only deliver “Holstein heifers” to the Plaintiffs. According to BHLC's interpretation of the contract term “Holstein heifer,” the calves need not be “breedable, or nonfreemartin heifers” or otherwise suitable for milk production. (Br. in Supp. 9.) Rather, as BHLC sees it, a “Holstein heifer” simply means a female calf of the breed Holstein that has not yet reproduced. Because the Plaintiffs did technically receive Holstein heifers, BHLC claims it did not breach the sales agreement, even though nearly all of the calves they sold were freemartins and were thus biologically incapable of reproducing and producing milk. In response, the Plaintiffs...