Peri & Sons Farms, Inc. v. Jain Irrigation, Inc.
| Decision Date | 15 January 2013 |
| Docket Number | No. 3:11–cv–00757–VPC.,3:11–cv–00757–VPC. |
| Citation | 933 F.Supp.2d 1279 |
| Court | U.S. District Court — District of Nevada |
| Parties | PERI & SONS FARMS, INC., a Nevada corporation, Plaintiff, v. JAIN IRRIGATION, INC., a corporation, and Agri–Valley Irrigation, Inc., a corporation, Defendants. |
OPINION TEXT STARTS HERE
Brad M. Johnston, Peri & Sons Farms, Inc., Yerington, NV, Jeremy J. Nork, Holland & Hart LLP, Reno, NV, for Plaintiff.
Daniel T. Hayward, Laxalt & Nomura, Ltd., Reno, NV, for Defendants.
Before the court is defendant Jain Irrigation, Inc.'s motion for partial summary judgment regarding plaintiff's tort claims and prayer for punitive damages (# 86).1 Plaintiff opposed (# 100) and defendant replied (# 115). The court has thoroughly reviewed the record and grants defendant Jain Irrigation, Inc.'s motion for partial summary judgment (# 86).
In 2010, plaintiff Peri & Sons Farms, Inc. (“plaintiff”) purchased irrigation drip tape to irrigate its commercial onion crop in Mason Valley, Nevada during the 2011 growing season (# 86, p. 2). Plaintiff ordered approximately 8,967 rolls of irrigation drip tape, which were manufactured by defendant Jain Irrigation, Inc. (“Jain”) (# 86, p. 2; # 100, p. 3). Plaintiff placed the order with defendant Agri–Valley Irrigation, Inc. (“Agri–Valley”), an independent distributor of Jain's products (# 86, p. 2). Jain manufactured the irrigation drip tape and delivered it directly to plaintiff in Yerington, Nevada (# 100, pp. 10, 20).2
Irrigation drip tape is similar to a flat tube and contains small openings known as “emitters.” (# 86, p. 2 fn. 1; # 100, p. 4). The drip tape is buried in the seed beds before planting. After the onions are planted, irrigation water is pumped into the drip tape and exits the tape through the emitters, allowing for a designated rate of flow to irrigate the planted onions below the ground's surface. Id. Plaintiff alleges that the drip tape it received from Jain in 2011 was defective because the emitters, or slits in the drip tape, were misplaced so that the slits were blocked or partially blocked. Thus, the drip tape failed to emit water at the designated rate and failed to sufficiently irrigate plaintiff's onion crops (# 64, p. 23; # 100, pp. 3, 21). Plaintiff also alleges that Jain knowingly shipped drip tape which failed to satisfy Jain's written specifications and which should have been scrapped or at least set aside for further testing (# 100, p. 14).3
Jain admits that portions of its irrigation drip tape contained slits that were blocked or partially blocked by the tape's glue seam due to a manufacturing defect and admits that those portions of the drip tape failed to function properly (# 86, p. 2; # 94, p. 8). Jain also admits that the root cause of the manufacturing defect was machine instability at Jain's manufacturing facility in Watertown, New York (# 94, p. 8). However, Jain maintains that mitigation efforts were largely successful, and that plaintiff was able to harvest a good onion crop with only a small decrease in quality compared to the previous two-year average, and with no decrease in overall pack-out yield compared to the previous two-year average. Id. Plaintiff asserts that it experienced a larger reduction in quality (misshaped or undersized onions), as well as a reduction in yield, each of which translated into lost profits, and that it also incurred mitigation expenses (# 94, p. 8; # 100, p. 23).
On May 21, 2012, plaintiff filed its First Amended Complaint, alleging the following claims: (1) breach of contract against Agri–Valley; (2) breach of the implied covenant of good faith and fair dealing against Agri–Valley; (3) breach of express warranty against Agri–Valley and Jain; (4) breach of the implied warranty of merchantability against Agri–Valley and Jain; (5) breach of the implied warranty of fitness for a particular purpose against Agri–Valley and Jain; (6) fraudulent concealment against Jain; (7) strict products liability against Jain; (8) negligence against Jain; (9) promissory estoppel against Jain; and (10) breach of oral contract against Jain (# 64).
Jain has now filed a motion for partial summary judgment on plaintiff's tort claims (strict products liability, negligence, and fraudulent concealment) and on plaintiff's prayer for punitive damages (# 86). Jain opines that when a commercial product, such as irrigation drip tape, fails to function properly and causes anticipated damages—here, lost profits due to decreased onion quality and yield—the remedy lies in contract or warranty law, not tort law. Id. at 3. Jain asks the court to grant partial summary judgment in its favor on the grounds that: (1) the economic loss doctrine bars plaintiff's tort recovery; (2) plaintiff's fraudulent concealment claim fails as a matter of law because plaintiff and Jain did not have a “special relationship,” and Jain had no duty to disclose its quality control information; and (3) plaintiff's prayer for punitive damages is not supported by plaintiff's remaining claims for relief (# 86, p. 1).
Plaintiff asserts that this lawsuit is not “a run of the mill commercial case” involving a product which simply failed to work properly, but a case involving deceit (# 100, p. 2). Plaintiff contends that Jain agreed to produce the specified irrigation drip tape in a “blatant attempt to profit from the intentional distribution of a defective product it cannot make.” Id. Thus, plaintiff argues it is entitled to pursue its tort claims and prayer for punitive damages. Id. Specifically, plaintiff opposes Jain's motion for partial summary judgment on the grounds that: (1) the economic loss doctrine does not preclude plaintiff's tort claims (# 100, pp. 24–34); (2) Jain represented that it could produce irrigation drip tape to meet plaintiff's specifications; Jain had a duty to disclose the problems and defects it experienced while manufacturing plaintiff's drip tape; plaintiff relied on Jain to specially manufacture the drip tape; Jain knew that plaintiff was relying on its representations; and plaintiff suffered damages as a result of Jain's fraudulent conduct (# 100, pp. 34–38); and (3) plaintiff is entitled to pursue its prayer for punitive damages (# 100, pp. 38–41).
1. Summary Judgment
Summary judgment allows courts to avoid unnecessary trials where there are no factual disputes. Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir.1994). The court will grant summary judgment if no genuine issues of material fact remain in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court must view all evidence and any inferences arising from the evidence in the light most favorable to the nonmoving party. Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996). Where reasonable minds could differ on the material facts at issue, however, summary judgment should not be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The moving party bears the burden of informing the court of the basis for its motion, and submitting authenticated evidence to demonstrate the absence of any genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see Orr v. Bank of America, 285 F.3d 764, 773–74 (9th Cir.2002). Once the moving party has met its burden, the party opposing the motion may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts showing the existence of a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505.Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and upon which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322–23, 106 S.Ct. 2548.
On summary judgment the court is not to weigh the evidence or determine the truth of the matters asserted, but must only determine whether there is a genuine issue of material fact that must be resolved by trial. See Summers v. A. Teichert & Son, Inc., 127 F.3d 1150, 1152 (9th Cir.1997). Nonetheless, in order for any factual dispute to be genuine, there must be enough doubt for a reasonable trier of fact to find for the plaintiff in order to defeat a defendant's summary judgment motion. See Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000).
As a preliminary matter, the court notes that it must apply the substantive law of Nevada. Where the Nevada Supreme Court has not decided an issue, it is the task of this court to predict how the Nevada Supreme Court would resolve that issue. See Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir.1986) (as amended). In answering that question, this court may look to “well reasoned decisions from other jurisdictions.” Id.
“The economic loss doctrine marks the fundamental boundary between contract law, which is designed to enforce the expectancy interests of the parties, and tort law, which imposes a duty of reasonable care and thereby encourages citizens to avoid causing physical harm to others.” Calloway v. City of Reno, 116 Nev. 250, 256, 993 P.2d 1259 (2000) (citation omitted), overruled on other grounds by Olson v. Richard, 120 Nev. 240, 241–44, 89 P.3d 31 (2004). In the words of the United States Supreme Court, the economic loss doctrine exists to prevent contract law from drowning in a “sea of tort.” East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 866, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986).
In Nevada, the economic loss doctrine bars unintentional tort claims when a plaintiff seeks to recover “purely economic losses.” Calloway, 116 Nev. at 257, 993 P.2d 1259 (citing American Law of...
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