Mutual Service Cas. Ins. Co., Inc. v. Armbrecht, C99-3099 MWB.

• Court: U.S. District Court — Northern District of Iowa
• Writing for the Court: Bennett
• Citation: Mutual Service Cas. Ins. Co., Inc. v. Armbrecht, 142 F.Supp.2d 1101 (N.D. Iowa 2001)
• Decision Date: 29 May 2001
• Docket Number: No. C99-3099 MWB.,C99-3099 MWB.
• Parties: MUTUAL SERVICE CASUALTY INSURANCE CO., INC. as Subrogee of Land O' Lakes, Inc., Plaintiff, v. Paul J. ARMBRECHT, D.V.M., Defendant.

142 F.Supp.2d 1101

MUTUAL SERVICE CASUALTY INSURANCE CO., INC. as Subrogee of Land O' Lakes, Inc., Plaintiff, v. Paul J. ARMBRECHT, D.V.M., Defendant.

No. C99-3099 MWB.

United States District Court, N.D. Iowa, Central Division.

May 29, 2001.

Webb L. Wassmer, Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, IA, for plaintiff.

Patrick J. McNulty, Grefe & Sidney, P.L.C., Des Moines, IA, for defendant.

MEMORANDUM OPINION AND ORDER REGARDING PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT

BENNETT, Chief Judge.

TABLE OF CONTENTS
                I. INTRODUCTION ........................................................... 1103
                     A. Procedural and Factual Background ................................... 1103
                     B. MSI's Claim ......................................................... 1105
                     C. MSI's Motion For Summary Judgment ................................... 1109
                 II. LEGAL ANALYSIS ......................................................... 1109
                     A. Standards for Summary Judgment ...................................... 1109
                     B. MSI's Breach of Contract Claim ...................................... 1110
                        1. Terms and conditions of the oral contract ........................ 1110
                        2. Dr. Armbrecht's alleged breach of the contract ................... 1111
                III. CONCLUSION ............................................................. 1117
                

I. INTRODUCTION

In this action, plaintiff Mutual Service Casualty Insurance Co. ("MSI"), as subrogee of Land O' Lakes ("LOL"), Inc., seeks to recover $125,000.00 for the settlement of a related lawsuit that was litigated previously in state court, plus $42,325.69 in attorneys fees and expenses that it expended in that lawsuit, against defendant Paul J. Armbrecht, D.V.M. ("Dr.Armbrecht"). The theory upon which MSI has moved to recover these monies is based on a claim for breach of contract. MSI contends that it is entitled to judgment as a matter of law on its claim for breach of contract, and filed a Motion for Summary Judgment on February 26, 2001. Shortly thereafter, on February 28, 2001, Dr. Armbrecht filed a Motion for Summary Judgment, however, the claim upon which Dr. Armbrecht has moved for summary judgment is not based on the claim that MSI pled. Rather, Dr. Armbrecht contends that MSI's claim is really a claim for indemnification, and, therefore, urges this court to analyze MSI's claim accordingly. Consequently, before considering the parties' summary judgment motions, the court must determine what claim MSI set forth in its Complaint, and whether that claim, in light of the circumstances here, is cognizable under Iowa law.

A. Procedural and Factual Background

In late 1994 and early 1995, LOL owned pigs located at the Jerome Monahan ("Monahan") swine finishing facility in Greene County, Iowa. LOL contracted with Monahan to raise the pigs to market weight for eventual sale. Dr. Armbrecht, a veterinarian, was retained and compensated by LOL to advise LOL regarding veterinary services, including control of pseudorabies.¹ Dr. Armbrecht's services were retained by LOL under an oral contract. In early January of 1995, some of the pigs at the Monahan facility tested positive for the pseudorabies virus ("PRV"). On January 21, 1995, in response to the pigs testing positive for PRV, Dr. Armbrecht prepared a herd investigation report and a herd cleanup plan² pursuant to IOWA CODE § 166D.8, which was signed by Dr. Armbrecht, Jay Flora, the LOL supervisor with responsibility for the Monahan herd, and Dr. Michael Hartzell, the State of Iowa District Veterinarian. Following the completion of the herd cleanup plan, on February 6, 1995, Jay Flora advised Dr. Armbrecht that LOL wanted to move the pigs. Although exactly who "approved" the transportation of the pigs is in dispute, the parties agree that on February 13, 1995, approximately 450 head of swine, all of which had been diagnosed with PRV, were transported from the Monahan facility to a hog production facility in Calhoun County, Iowa, that was owned by the Ehn Brothers ("Ehn"). Significantly, the Ehn facility was located across a road from a "farrow to finish" hog production facility owned by Loren Hoag. The Hoag facility, which was housed a breeding herd, was located approximately 300 yards across the road from the Ehn facility. The LOL pigs remained at the Ehn facility until June of 1995, when they attained market weight and were sold to slaughter.

On August 15, 1995, approximately six of Loren Hoag's thirty sows in his swine herd were diagnosed PRV positive. On August 22, 1995, seven of Hoag's twenty-one pigs in the finishing herd were also diagnosed PRV positive. On July 31, 1996, Loren Hoag initiated an action against LOL wherein Hoag alleged that LOL negligently shipped hogs, infected with PRV, to a facility across the road from Hoag's hog facility, which resulted in the infection of Hoag's pigs with PRV. On November 10, 1997, a mediation took place between LOL and Loren Hoag in an attempt to settle the matter, however, the parties were unsuccessful in reaching an agreement. On November 19, 1997, LOL offered to settle the Hoag litigation for $65,000.00, and on November 20, 1997, Hoag counter-offered with $140,000.00. The parties could not reach a settlement and the case proceeded to trial. Trial began on December 9, 1997, and Dr. Armbrecht was the second witness called to testify at trial. On the second day of trial, LOL settled the case with Loren Hoag for $125,000.00, and on December 30, 1997, Loren Hoag released LOL, MBA Veterinary Clinic and Paul Armbrecht from any and all liability relating to the claims asserted in the underlying Hoag lawsuit.

MSI, as subrogee of LOL, initiated this action against Dr. Armbrecht on December 23, 1999. In its Complaint, MSI alleges that the contract between LOL and Dr. Armbrecht obligated Dr. Armbrecht to perform his duties as a veterinarian for LOL with the degree of skill, care and learning ordinarily possessed and exercised by other veterinarians in similar circumstances. MSI alleges that Dr. Armbrecht breached his contractual duty based on the following: (1) failure to obtain authorization to move the pigs from the State of Iowa District Veterinarian; (2) failure to prepare and comply with a proper Heard Cleanup Plan as required by Iowa law; (3) failure to obtain a Certificate of Inspection permitting the movement of pigs as required by Iowa law; and (4) moving the pseudorabies infected pigs to premises which did not qualify as approved premises under Iowa law. MSI contends that Dr. Armbrecht's breach of contract proximately caused damage to LOL and to MSI, as subrogee of LOL. In his Answer, Dr. Armbrecht generally denies these allegations and asserts several affirmative defenses.

A hearing on the parties' cross-motions for summary judgment was held on May 16, 2001. Plaintiff MSI was represented by Webb. L. Wassmer of Simmons, Perrine, Albright & Ellwood, P.L.C., Cedar Rapids, Iowa. Defendant Paul J. Armbrecht, D.V.M., was represented by Patrick J. McNulty of Grefe & Sidney, P.L.C., Des Moines, Iowa.

B. MSI's Claim

As indicated previously, MSI and Dr. Armbrecht have moved for summary judgment on different claims, and both parties contend that the other party has misconstrued the nature of the claim pled by MSI. The court, therefore, must initially determine what claim MSI pled in its Complaint, and the effect that such a claim has on the respective motions for summary judgment filed by the parties.

Dr. Armbrecht asserts that in this action MSI seeks to recoup the $125,000.00 that it paid to Loren Hoag in the settlement reached between LOL and Hoag. Dr. Armbrecht argues that irrespective of the theory that MSI invokes to recoup its losses here, its damages are indisputably indemnity in nature, and, therefore, the court must analyze MSI's claim based on a theory of indemnification. MSI disagrees and argues that the standard applicable to recovery based on a theory of indemnification is entirely different than the standard applicable to recovery based on a theory of breach of contract under Iowa law. MSI contends that it clearly pled a subrogated claim for breach of contract as its theory of recovery here, and, thus, its claim should be analyzed accordingly.

First, the court notes that there is no dispute between the parties that MSI is LOL's subrogee. Therefore, the question becomes what causes of action can LOL properly assert against Dr. Armbrecht? The court finds that LOL can assert a breach of contract claim against Dr. Armbrecht, and, therefore, as LOL's subrogee, MSI can also assert a breach of contract claim against Dr. Armbrecht. Although Dr. Armbrecht argues otherwise, he has failed to establish that the only legally cognizable theory of recovery that MSI can assert against him is a theory based on indemnification. In fact, as MSI points out, in Ke-Wash Co. v. Stauffer Chemical Co., 177 N.W.2d 5 (Iowa 1970), the Iowa Supreme Court recognized the two theories of recovery based on a claim for breach of contract and a claim for indemnification and ultimately concluded that the theories were, indeed, separate and distinct. The court finds that an examination of the Iowa Supreme Court's decision in Ke-Wash would be beneficial here.

Ke-Wash involved an action brought by a distributor of a chemical known as "Knoxweed 42" against the chemical manufacturer to indemnify it for expenditures made in settling an earlier action in which both parties were named defendants. The distributor of "Knoxweed 42" was the Ke-Wash Company ("Ke-Wash") and the manufacturer of "Knoxweed 42" was Stauffer Chemical Company ("Stauffer"). "Knoxweed 42" was a pre-emergence weed killer. In the Spring of 1965, Ke-Wash sold "Knoxweed 42" to a farmer. Use of that chemical resulted in crop damage to the farmer, and the farmer complained to Ke-Wash. Ke-Wash referred the farmer's complaint to Stauffer, which in turn advised Ke-Wash by letter that the complaint was Stauffer's responsibility....