Lundstrom v. Homolka
| Decision Date | 12 February 2022 |
| Docket Number | 1:19-CV-01006-CBK |
| Parties | LOWELL LUNDSTROM, JR., Plaintiff, v. DANIEL M. HOMOLKA, PA, DANIEL M. HOMOLKA, AND WATTS GUERRA LLP, Defendants. |
| Court | U.S. District Court — District of South Dakota |
Defendant Watts Guerra LLP ("defendant") renewed its motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) on December 22, 2021. Doc. 197. Defendant argues that (1) because plaintiff Lundstrom ("plaintiff) did not plead a theory of agency liability in his Complaint, it was not a proper theory of liability to be considered by the jury; and (2) that neither actual nor ostensible agency can bind Watts Guerra for the broken promises made by Mr. Daniel Homolka that are at the crux of the oral breach of contract in this matter, thus requiring a judgment as a matter of law against the decision of the jury. Mr. Lundstrom filed his response brief on January 12, 2022 doc. 201, which Watts Guerra replied to on January 26, 2022 doc. 203. This matter, and the end of this litigation before the Court, is ripe for adjudication.
The issues in this case were many. For brevity's sake, this Court discusses those facts most relevant to this motion. At the heart of this dispute is another bout of litigation, the multi-district litigation ("MDL") concerning Syngenta and its 2011 decision to commercialize genetically modified corn seed in the absence of Chinese approval to import corn with the modified trait, causing corn prices to drop dramatically in the United States. See In re Syngenta AG MIR162 Corn Litig., 65 F.Supp.3d 1401 (J.P.M.L. 2014). The Judicial Panel on Multistate Litigation condensed the flurry of suits around the country into the District Court for the District of Kansas. But that did not stop Syngenta-related litigation elsewhere.
Watts Guerra LLP and Mikal Watts ("Watts defendants"), lawyers with a focus on mass tort litigation, decided mass tort lawsuits against Syngenta would be more advantageous than taking part in the MDL, and proceeded in finding potential plaintiffs elsewhere. These other lawsuits were filed in Minnesota state court, where Syngenta's North American seed business is based. The Syngenta MDL rejected removing these state proceedings into the Kansas-based federal proceedings. Instead, these state suits were consolidated in Hennepin County, Minnesota. Watts defendants would eventually file nearly 60, 000 suits in state court against Syngenta.
On December 7, 2018, the MDL Court certified a settlement class and approved a global settlement of claims against Syngenta, including claims that had been pending in the MDL, in the consolidated proceeding in Minnesota state court, and in federal court in Illinois. In re Syngenta AG MIR 162 Corn Litig.. 357 F.Supp.3d 1094 (D. Kan. 2018). The litigation was settled for $1.5 billion.
As part of its project to market the Syngenta litigation, the Watts defendants contacted hundreds of attorneys in many states, entering into agreements to act as co-counsel on behalf of the affected farmers and grain shippers, agreeing to split attorneys' fees. The attorneys orchestrated town hall meetings where interested plaintiffs could learn about the litigation and sign contingency fee agreements with the Watts defendants and local counsel. One such local law firm with whom the Watts defendants entered into a joint representation agreement was the firm Daniel M. Homolka, P. A.
In November 2014, the Watts defendants and Daniel M. Homolka, P.A. and Mr. Daniel Homolka ("Homolka defendants") entered into a fee-sharing agreement where they agreed to share attorneys' fees recovered on behalf of any farmer who agreed to participate in litigation against Syngenta and hire the Watts and Homolka defendants as their attorneys. Homolka in turn contacted attorneys James Hovland and Dan Rasmus, inviting them to participate in the project. In December 2014, Rasmus contacted Lundstrom to see if he would be interested in helping to market the Syngenta corn litigation project to farmers. Lundstrom, a farmer, also had marketing experience.
On December 15, 2014, Lundstrom, Rasmus, Hovland, Homolka, and Hector Eloy Guerra met in a law office in Minnesota to discuss enlisting Lundstrom to assist in marketing the Syngenta corn litigation. Lundstrom alleged that Homolka asked Lundstrom how much money he would require per month to free him up to work on the project. Plaintiff also alleged that Homolka agreed to pay Lundstrom $10, 000 per month "through the end of the project," that is, until the litigation was dismissed or settled, to lease the web site LostCornIncome.com and for Lundstrom's services in brokering and placing media on the site. The question of when these web-leasing payments were agreed to end were heatedly debated in the November 2021 jury trial and a centerpiece of this litigation.
Plaintiff also claims that he agreed to engage in a host of other marketing related activities in exchange for further compensation. In addition to establishing and maintaining a web domain (lostcornincome.com), plaintiff claims he produced a 30-minute-long infomercial ("LOST CORN INCOME: Special Report"), arranged and managed a toll-free telephone number for prospective clients to call, managed all media buys (for formats including radio, newspapers, and television), prepared fact sheets to give prospective agricultural clients, and prepared budgets for all of the above. Plaintiff also participated in town hall meetings used to solicit and attract Syngenta litigation clients.
In addition to the question of how much Lundstrom was owed for these web-leasing payments, namely, when were they agreed to cease, two other promises were alleged to have been made. Plaintiff asserted that a promise was made by Mr. Homolka that he would be reimbursed for his traveling to participate in these town hall meetings with $50, 000 for a new truck. Finally, and most importantly to Lundstrom, he argued before this Court and a jury of his peers that defendant Homolka promised him a $3.4 million bonus if he could sign up plaintiff farms whose claims totaled six million acres, i.e., that this bonus was non-discretionary. The theory presented by Lundstrom was that he was told by Homolka that if he accepted less money monthly "up front," he would receive a higher bonus at the end of the project. Whether this promise of a multi-million-dollar bonus existed and was non-discretionary posed a critical question at trial. Despite the serious financial stakes at hand, no written agreement was ever drafted, because of purported concerns by defendants about fee-sharing between the defendants and Lundstrom, a non-lawyer. Without such an agreement on paper, the oral contract made by Homolka and what exactly it entailed, was the crux of this litigation.
On November 12, 2021, a jury of eight found that Daniel M. Homolka P.A and Watts Guerra LLP were liable to the plaintiff for a breach of contract made by Mr. Homolka. However, the jury did not find that the fourth defendant, Mikal Watts, was culpable because Mr. Homolka was not acting as agent of Watts, but rather only Watts' limited liability partnership. The jury also did not find that Mr. Homolka - and thus, any of the defendants - had fraudulently induced Mr. Lundstrom. Accordingly, the jury awarded Lundstrom $175, 000 in compensatory damages and decided that he was not entitled to prejudgment interest. The Court entered an amended judgment in favor of Mr. Lundstrom against defendants Daniel M. Homolka, P.A. and Watts Guerra LLP jointly and severally.[1]
The critical inquiry in this Memorandum and Opinion is first, whether this theory of agency liability was properly before the jury, and second, whether Watts Guerra can be bound by the broken promises made by Mr. Homolka, under either an actual or ostensible agency theory. To invade the province of the jury should only be done in the rarest of occasions. This case does not rise to the high bar to disrupt the place of the jury in our civil justice system.
Watts Guerra argues that this Court should not even entertain theories of agency liability because Lundstrom failed to plead such a theory in his Complaint. See FED. R. Civ. P. 8(a)(2) (). In turn, plaintiff contends the matter was tried with the explicit or implicit content of the defendant, thus satisfying Federal Rule of Civil Procedure 15(b)(2)'s exception to the general requirement of pleading all theories in the party's Complaint. Rule 15(b)(2) states:
When an issue not raised by the pleadings is tried by the parties' express or implied consent, it must be treated in all respects as if raised in the pleadings. A party may move-at any time, even after judgment-to amend the pleadings to conform them to the evidence and to raise an unpleaded issue. But failure to amend does not affect the result of the trial of that issue
"The goal of Rule 15(b) is to promote the objective of deciding cases on the merits rather than on the relative pleading skills of counsel." Am. Family Mut. Ins. Co. v Hollander, 705 F.3d 339, 348 (8th Cir. 2013). See also Baker v. John Morrell & Co., 266 F.Supp.2d 909, 927 (N.D. Iowa 2003) ajfd, 382 F.3d 816 (8th Cir. 2004) ("The intent of Rule 15(b) is to 'provide the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties.'") (quoting Hardin v. Manitowoc-Forsythe Corp., 691 F.2d 449, 456 (10th Cir. 1982)). Here, the question is whether, within the liberal construction of the Federal Rules favoring...
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