Kropp v. Ziebarth

• Decision Date: 12 July 1979
• Docket Number: No. 78-1182,78-1182
• Citation: 601 F.2d 1348
• Parties: Robert P. KROPP, Appellant, v. Sylvester A. ZIEBARTH, a/k/a Silver A. Ziebarth, and Carol A. Ziebarth, husband and wife, and Cleon Striegel, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1348

601 F.2d 1348

Robert P. KROPP, Appellant, v. Sylvester A. ZIEBARTH, a/k/a Silver A. Ziebarth, and Carol

A. Ziebarth, husband and wife, and Cleon Striegel,

Appellees.

No. 78-1182.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 19, 1978.

Decided July 5, 1979.

Rehearing Denied July 12, 1979.

John R. Davidson, Davidson, Veeder, Baugh & Broeder, Billings, Mont., argued, for appellant; Fred E. Whisenand, McIntee & Whisenand, Williston, N. D., on brief.

Robert Edd Lee, Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Mont., argued, for appellees; David L. Peterson, Wheeler, Wolf, Wefald & Peterson, Bismarck, N. D., on brief.

Before GIBSON, Chief Judge, and BRIGHT and STEPHENSON, Circuit Judges.

ORDER GRANTING PETITION FOR REHEARING, WITHDRAWING PRIOR

OPINION, AND SUBSTITUTING OPINION OF THE COURT.

Robert P. Kropp, in seeking a rehearing, contends essentially that the district court erred in admitting into evidence exhibits 51 and 92 of the Buyers (Sylvester Ziebarth, Carol Ziebarth, and Cleon Striegel), because the exhibits lack foundation and impermissibly reflect gross rather than net losses in value to Buyers stemming from Kropp's breach of contract. The exhibits in question illustrate the losses allegedly suffered by Buyers on the sale of the herd of exotic cattle bought from Kropp and, additionally, projected losses on the sale of that herd's 1973 calf crop as a result of Kropp's failure to deliver documents enabling Buyers to register the herd as exotic cattle. The exhibits also describe the amounts Buyers expended for the care and maintenance of the cattle and their progeny from November 8, 1972 (the date of delivery) to July 12, 1976 (the date the receiver took possession of the remaining cattle). In exhibit 51, Buyers add the loss in sales value and the cost of care and keep to demonstrate the total loss they allegedly sustained as a result of Kropp's breach of contract.

In response to Kropp's petition for rehearing, we have carefully reexamined the exhibits in question and now conclude that the exhibits contain excessive and duplicative items of damage. Accordingly, the petition for rehearing is granted, and the court withdraws its prior opinion dated February 28, 1979, and substitutes the attached opinion as the opinion in this case.

PER CURIAM.

Robert P. Kropp (Seller) appeals from the judgment and order of the district court, ¹ following a jury verdict, dismissing his complaint and the counterclaim of the appellees, Sylvester Ziebarth, Carol Ziebarth, and Cleon Striegel (Buyers), and directing Kropp to pay Buyers $88,218.51 for attorney's fees and/or costs and expenses. ² This action arose out of a contract for the sale of cattle between the aforementioned parties. Federal court jurisdiction rests upon diversity of citizenship and the requisite amount in controversy. The law of Montana, the state in which the parties agreed to performance of the contract, governs this controversy.

On appeal Kropp alleges the following incidents of error by the district court:

(1) failure to grant Kropp a directed verdict at the completion of Buyers' case; ³

(2) permitting Buyers to prove their alleged damages with improper evidence;

(3) improperly instructing the jury on waiver of contractual provisions;

(4) construing the jury's verdict as requiring that receiver's deposit be paid to Buyers; and

(5) finding that under the contract terms and Montana law Buyers were entitled to recover costs, expenses, and attorney's fees.

We find no merit in Kropp's allegations numbered 1, 3, and 4. We agree in part with Kropp's claim concerning damages (item 2), and we remand the case to the district court with directions to enter a remittitur of $60,000 on the counterclaim, with the consent of Buyers, or grant a new trial.

We believe the trial court erred in its assessment of attorney's fees and costs (item 5), as the record discloses no reasonable basis for its order that Kropp pay attorney's fees. Moreover, in light of our order directing a remittitur or a new trial, costs, if assessed, must abide the final outcome of the action upon a new trial.

I. Factual Background.

In October 1972, Carol and Sylvester Ziebarth and Cleon Striegel purchased thirty-seven head of unregistered half-blood exotic cattle ⁴ from Robert Kropp of Montana for $30,000. Buyers accepted and transported these cattle to their North Dakota ranches by early November 1972. On November 8, 1972, Kropp contracted to sell Buyers 1,078 head of commercial and exotic cattle for $815,000. The contract provided that payments for the cattle would be made in the following manner: a $115,000 down payment and four annual installments of $204,337 from 1973-1976, which included annual interest of 6.5 percent on the unpaid principal balance. Kropp retained a security interest in the cattle and their progeny ⁵ and, to further secure the amount of the unpaid contract, received a second mortgage on the Ziebarth ranch. For the maintenance and care of the cattle while they remained on Kropp's land, Buyers agreed to pay Kropp $15,000 annually. The contract further provided that if the exotic cattle were not registered with respective exotic breed associations at the time of sale, Kropp would do everything necessary to register them.

Buyers received all the livestock on November 8, 1972, and they immediately commenced transporting some of the cattle from the Kropp ranch in Montana to North Dakota, where the contract cattle were commingled with other livestock owned by Buyers. By May 1973, Buyers had removed all of the contract cattle to North Dakota.

Buyers purchased the exotic cattle for use as breeding stock in an upgrading program designed to produce a domestic herd of foreign breed cattle. The upgrading program consists of artificially inseminating domestic cows with the bull semen of exotic breeds, then repeating the insemination process with the ensuing progeny until, after four generations, the domestic breeder develops a "purebreed" exotic strain for registration purposes. As the registerability of the exotic animals with breed associations depends on the quality of the breeder's records, meticulous records preserving each animal's pedigree are essential to the exotic upgrading program.

Kropp delivered all breeding and calving records to Buyers by March 1973, but Buyers encountered difficulty in matching the cattle with the records. Believing the records to be inadequate, Buyers undertook a blood-typing program to facilitate the identification and registration of the cattle. On August 5, 1973, Kropp and the Buyers entered into an oral agreement never reduced to writing that Kropp would pay the expenses for animals that had to be bled for registration purposes.

Realizing the inadequacy of Kropp's registration papers, Buyers began selling the cattle in February 1973. By 1976 Buyers had sold most of the contract cattle. None of the sales were made with Kropp's prior approval, and Buyers retained all of the sales proceeds. After a down payment and a first installment payment, Buyers refused to make further payments on their contract with Kropp.

In October 1975, Kropp filed this action to recover the balance due under the contract, $655,100, and his costs for the care and maintenance of the cattle while they remained on his property. He also sought foreclosure of his liens on the cattle and on the Ziebarth ranch. Buyers answered that Kropp breached the contract because he failed to do everything necessary to register the cattle and because not all of the cattle were qualified for registration as exotic breeds as warranted. Buyers filed a counterclaim for $1.5 million in damages. In their counterclaim, Buyers alleged that, due to Kropp's breach, they lost sales during the peak exotic cattle market and were forced to accept lower prices for the cattle because of suspect registration and delays in registration. The district court appointed a receiver in 1976 who sold the remaining cattle in Buyers' possession and deposited the resulting fund with the court.

Following an order by the district court on October 15, 1976, dismissing Kropp's complaint pursuant to Fed.R.Civ.P. 37(b)(2) for prolonged "thwarting" of the discovery process, this court set aside the judgment dismissing the complaint and remanded the case to the district court for trial. Kropp v. Ziebarth, 557 F.2d 142 (8th Cir. 1977). At the conclusion of trial, the jury returned a verdict exactly offsetting the parties' claims against each other and dismissing the complaint and the counterclaim. The district court denied Kropp's motion for judgment n.o.v. or for a new trial and entered the following order and judgment:

(1) Kropp's complaint and Buyers' counterclaim are dismissed;

(2) The real estate mortgage held by Kropp against the North Dakota ranch of Buyers Carol and Sylvester Ziebarth is satisfied;

(3) The clerk withdraw the monies on passbook deposit and pay the total sum to Sylvester Ziebarth; and

(4) Kropp pay Buyers the sum of $88,218.51 for attorney's fees and/or costs and expenses.

From this judgment, Kropp appeals.

II. Issues on Appeal.

A. Directed Verdict.

In determining whether a verdict should be directed, we utilize the same standard applied by the trial court in originally passing on the motion: was the evidence sufficient to create an issue of fact for the jury? 9 Wright & Miller, Federal Practice and Procedure: Civil § 2524 at 541, § 2536 at 595 (1971). In answering this question of law, the evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the party opposing the motion. In addition, the evidence must not be susceptible to reasonable inferences sustaining the position of the nonmoving party, that is, a directed verdict is inappropriate where the evidence supports more than one reasonable conclusion. In the instant case, the district court denied Kropp's motion for a directed verdict and placed the...