Peterson v. Ferrell

• Decision Date: 05 June 2015
• Docket Number: 107,359.
• Citation: 349 P.3d 1269,302 Kan. 99
• Parties: Steve PETERSON, Sam Eilert, and Randy Hlad, Appellees, v. Garland P. FERRELL, III, d/b/a 4L Grazing, LLC, Appellant.
• Court: Kansas Supreme Court

302 Kan. 99

349 P.3d 1269

Steve PETERSON, Sam Eilert, and Randy Hlad, Appellees

v.Garland P. FERRELL, III, d/b/a 4L Grazing, LLC, Appellant.

107,359.

Supreme Court of Kansas.

June 5, 2015.

Tim Connell, of Connell & Connell, of El Dorado, argued the cause and was on the briefs for appellant.

Richard E. Dietz, of Dietz & Hardman, of Osborne, argued the cause and was on the briefs for appellees.

Opinion

The opinion of the court was delivered by STEGALL, J.:

The Plaintiffs in this case—Steve Peterson, Sam Eilert, and Randy Hlad—sued Garland P. Ferrell, III, doing business as 4L Grazing, LLC (Ferrell), alleging Ferrell breached numerous grazing contracts while the Plaintiffs' cattle (including bulls, cows, and stocker cattle intended for the meat market) were supposed to be calving, fattening, and breeding on Ferrell's pastures during 2008. The Plaintiffs claimed that Ferrell failed in his duty to adequately feed, care for, and supervise their cattle.

The Plaintiffs further alleged that Ferrell's breach caused damages in the form of: (1) a higher than expected number of open, unbred cows; (2) bulls and cows with deteriorated body conditions; (3) bulls that either died or were so deteriorated that they had to be sold for salvage; and (4) stocker cattle that did not gain the expected weight. The matter proceeded to a bench trial, and the district court found Ferrell had breached the grazing contracts. The court awarded a total of $240,416.90 of damages to compensate the Plaintiffs for the reduced value of the unexpected open cows, the lost expectation value of calves never conceived, the costs associated with rehabilitating the body condition of the bulls and cows, the lost value of dead and salvaged bulls, and the reduced value of stocker cattle that did not put on expected weight.

Ferrell appealed the matter to the Court of Appeals, arguing that the district court erred by refusing to dismiss Peterson's claims, by finding that Ferrell breached the contracts, and by relying on erroneous methods of damage calculation and awarding damages not supported by sufficient evidence. A panel of the Court of Appeals found that Peterson did not have standing and dismissed his claims. The panel affirmed the district court's finding of a breach of the grazing contracts and affirmed the district court's damage award in most respects. The panel did, however, remand the damage award to the district court to correct three errors: (1) to limit the damages for unexpected open cows to the difference in value between a bred cow and an open cow without also awarding the lost expectation value of calves never conceived; (2) to conform the award for rehabilitation costs to the competent evidence presented below; and (3) to determine the exact amount of damages properly attributable to the cattle owned by Eilert and Hlad individually and to limit and itemize the award accordingly. Peterson v. Ferrell, No. 107,359, ––– Kan.App.2d ––––, 2012 WL 5869622 (Kan.App.2012) (unpublished decision), rev. granted December 27, 2013.

The parties timely appealed from the decision of the Court of Appeals. The Plaintiffs asked us to review the question of Peterson's standing and the question of awarding damages for calves never conceived. Ferrell sought review on the questions of breach and damages. We granted both petitions pursuant to K.S.A. 20–3018(b). We exercise jurisdiction pursuant to K.S.A. 60–2101(b) and affirm the judgment of the Court of Appeals affirming in part, reversing in part, and remanding to the district court with directions. The judgment of the district court is affirmed in part, reversed in part, and remanded with directions.

Factual Background

We begin by summarizing the evidence presented at trial. Some of the Plaintiffs' cattle had spent the 2007 winter on Ferrell's ranch. In the early spring 2008, the cattle began experiencing a difficulty known as “going down”—describing an inability to stand up. Ferrell's ranch manager, Jamie Nelson, called in veterinarian Dr. Roger Bechtel who diagnosed malnutrition and prescribed a magnesium solution and more food. Nelson followed Dr. Bechtel's recommendation, and the cattle seemed to improve.

In May 2008, the Plaintiffs transported additional cattle to the ranch; but by July, new problems emerged. An outbreak of pneumonia

afflicted the calves and was only partially treated. Nelson left Ferrell's employment on July 10 but returned briefly between July 17 and 23. On his return, Nelson noted that the stocker cattle were in the same paddock as the day he left. In Nelson's opinion, Ferrell's failure to rotate grazing paddocks left the cattle stressed and without grass, causing significant weight loss.

The district court heard testimony that the average conception rate for a herd of cows like the Plaintiffs' herd was between 90 and 96 percent. By October 2008, however, Dr. Bechtel had determined that the overall conception rate for the Plaintiffs' cows was 83 percent. Dr. Bechtel noted during the October check that the cattle were underweight with body condition scores of threes and fours, with some twos. Body condition score is a rating between one and nine to assess the degree of flesh on a cow, with five being optimal. An animal with a less than optimal body score is less likely to conceive a calf. Dr. Bechtel testified that in 2006 and 2007 the cows at Ferrell's ranch had conceived at normal conception percentage rates in the mid- to low–90s and had body scores of 5s and 6s.

Many other witnesses testified the cattle were malnourished and afflicted with a variety of health deficits. Two bulls died soon after leaving Ferrell's ranch, and two others had to be sold for salvage value. The remaining cattle required significant rehabilitation. Additional facts will be added when relevant to our discussion of the various arguments made by the parties.

Analysis

I. Peterson Does Not Have Standing

The Court of Appeals found Peterson lacked standing because he was not the true owner of the cattle. The panel dismissed Peterson's claims and reversed the damages awarded to him. Peterson, 2012 WL 5869622, at *4. Peterson disputes this holding.

Standing is a component of subject matter jurisdiction, and whether a party has standing is a question of law over which appellate review is unlimited. See Gannon v. State, 298 Kan. 1107, 1122, 319 P.3d 1196 (2014) (citing Cochran v. Kansas Dept. of Agriculture, 291 Kan. 898, 903, 249 P.3d 434 [2011] ). As it is a component of subject matter jurisdiction, it may be raised at any time and on an appellate court's own motion. Ternes v. Galichia, 297 Kan. 918, 921, 305 P.3d 617 (2013).

In order to establish standing, a litigant must “ ‘ “demonstrate that he or she suffered a cognizable injury and that there is a causal connection between the injury and the challenged conduct.” ’ ” Gannon, 298 Kan. at 1123, 319 P.3d 1196 (quoting Cochran, 291 Kan. at 908, 249 P.3d 434 ). To demonstrate a cognizable injury, “[t]he injury must be particularized, i.e., it must affect the plaintiff in a ‘ “personal and individual way.” ’ ” Gannon, 298 Kan. at 1123, 319 P.3d 1196 (quoting Sierra Club v. Moser, 298 Kan. 22, 35, 310 P.3d 360 [2013] ). Similarly, “[a] party generally must assert its own legal rights and interests and may not base its claim to relief on the legal rights or interests of third parties.” Ternes, 297 Kan. at 922, 305 P.3d 617.

Peterson's claims arise out of two different contracts. The first is between Ferrell and “STEVE PETERSON d.b.a. Oak Creek Land and Cattle Company, Inc.,” while the second is between Ferrell and “MPK Land & Livestock, LLC.” Peterson testified that Oak Creek Land and Cattle was actually a limited liability company that owned the cattle subject to the first contract. As to the second contract, Peterson testified that a partnership, not MPK Land & Livestock, actually owned those cattle. Most importantly, Peterson never testified that he owned any of the cattle in his personal capacity—he affirmatively admitted he was not personally the owner.

Regardless of the corporate or partnership form used, Oak Creek Land and Cattle, MPK Land & Livestock, and an unnamed partnership are all legal entities separate and distinct from Peterson. See K.S.A. 17–7673(b) ; K.S.A. 56a–201(a). As such, Peterson cannot show the injury affected him in a personal way, and he cannot assert the claims of another. Because Peterson has failed to come forward with any evidence that he personally owned any of the cattle in question, he cannot meet his burden to demonstrate a cognizable injury personal to him. The Court of Appeals correctly found that Peterson has no standing.

II. Ferrell Breached the Grazing Contract

Each remaining contract (following the dismissal of Peterson's claims) contained the following identical language:

“GRAZER'S DUTIES: Grazer shall provide adequate grass and water for Owner's cattle as nature shall provide. Grazer shall provide feed and mineral to Owner's cattle according to the seasonal, nutritional needs of Owner's livestock. Grazer shall send a copy of the monthly pasture log to Owner with the monthly billing.

“Grazer agrees to routinely monitor the condition of Owner's cattle and provide prudent veterinary care when necessary. Grazer agrees to maintain reasonable vigilance over Owner's cattle and manage the grazing of said cattle so as to optimize the quality of grass available to them. Grazer shall also provide, at his expense, labor for handling Owner's cattle including, but not limited to, receiving, spring calf working, pre-conditioning, weaning (on to a truck), and seasonal shipping arranged by Owner.”

Ferrell argues the lower courts erred in finding he breached the grazing contracts. He argues the contracts only required that he supply water and grass as nature availed. The Court of Appeals disagreed and held that Ferrell was also obligated to provide veterinary care, to monitor the condition of the cattle, to provide food and minerals according to the cattle's needs,...