Peterson v. Ferrell, 107,359.
| Decision Date | 16 November 2012 |
| Docket Number | No. 107,359.,107,359. |
| Citation | 288 P.3d 870 |
| Parties | Steve PETERSON, Sam Eilert, and Randy Hlad, Appellees, v. Garland P. FERRELL, III, d/b/a 4L Grazing, LLC, Appellant. |
| Court | Kansas Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Butler District Court; Charles M. HART, judge. Opinion filed November 16, 2012. Affirmed in part, reversed in part, and remanded with directions.
Tim Connell, of Connell & Connell, of El Dorado, for appellant.
Richard E. Dietz, of Dietz & Hardman, of Osborne, for appellees.
Before MALONE, P.J., PIERRON and BRUNS, JJ.
Oak Creek Land and Cattle Company, Inc., MPK Land & Livestock, LLC, Sam Eilert, and Randy Hlad entered into separate grazing contracts with Garland P. Ferrell doing business as 4L Grazing, LLC (Ferrell), in 2008. Steve Peterson was the primary shareholder of Oak Creek Land and Cattle Company, Inc. and the managing member of MPK Land & Livestock, LLC. Because Peterson, Eilert, and Hlad were not satisfied with the condition of the cattle at the end of the summer grazing season, they filed a lawsuit against Ferrell for breach of contract. After a 4–day trial, the district court determined that Ferrell had breached the grazing contracts, and it entered a judgment in favor of the plaintiffs for $240,416.90.
On appeal, we find that Peterson was not a party to the contracts and, as such, had no standing to bring this action in his personal capacity. Although there is sufficient evidence in the record to support the district court's conclusion that Ferrell breached his contracts with Eilert and Hlad, we find that the district court failed to determine the specific amount of damages incurred with respect to each of those contracts. In addition, we find that the evidence in the record does not support several of the district court's conclusions as to damages. Thus, we reverse the district court's judgment in favor of Peterson, we affirm the district court's conclusion that Ferrell breached his contracts with Eilert and Hlad, and we remand this case to the district court for a determination of the amount of damages to be awarded to Eilert and Hlad consistent with this opinion.
Oak Creek Land and Cattle Company, Inc., MPK Land & Livestock, LLC, Eilert, and Hlad entered into separate grazing contracts with Ferrell in 2008. In June or July, 2008, Eilert and Hlad signed summer custom grazing contracts with Ferrell in their personal capacities. Peterson, however, signed a summer custom grazing contract as representative of Oak Creek Land and Cattle Company, Inc ., and he signed a stocker custom grazing contract as representative of MPK Land & Livestock, LLC.
Each of the grazing contracts stated that Ferrell would “provide adequate grass and water for Owner's cattle as nature shall provide.” In addition, the contracts stated that Ferrell would “provide feed and mineral to the Owner's cattle according to the seasonal, nutritional needs of Owner's livestock.” Further, the contracts stated that Ferrell would “routinely monitor the condition of Owner's cattle and provide prudent veterinary care when necessary.” Additionally, the contracts stated that Ferrell would “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.” Notwithstanding, the contracts did not promise any specific weight gain or pregnancy rates.
Some of the cattle covered by the contracts had wintered on Ferrell's ranch, while others were brought to his ranch at the beginning of the summer grazing season. Because Ferrell utilized a rotational grazing method to feed cattle, he divided his ranch with fences and rotated cattle between different paddocks. Generally, Ferrell would not give supplemental feed to the cattle unless the paddocks were covered with snow or ice.
On July 10, 2008, Ferrell fired James Nelson as his ranch manager. But on July 17, 2008, Ferrell asked Nelson to come back to finish out the summer grazing season. Although Nelson returned to Ferrell's ranch, he only worked for about a week before quitting. According to Nelson, although the cattle should have been moved to a different paddock on the day he was fired, he discovered that this had not been done upon his return to Ferrell's ranch.
In mid-August 2008, Ferrell hired Keith Long as his ranch manager. At the time Long was hired, he noted that “the cows were somewhat thin.” Similarly, Ferrell noted the cattle were thin when Long began working for him. Additionally, Peterson called Ferrell in late July or early August because he was not satisfied with the weight of some cattle that had been returned to him.
In October 2008, a veterinarian, Dr. Roger Bechtel, performed a pregnancy check on the breeding cows being grazed on Ferrell's ranch. While the pregnancy rate on the ranch had been in the mid to low 90% range in 2006 and 2007, Dr. Bechtel found the pregnancy rate to be only about 80% in 2008. Because Ferrell thought the pregnancy rate might have been a mistake, the cows were rechecked and 12 more bred cows were discovered. All totaled, 136 cows were open (not bred) out of 791, which came to a pregnancy rate of about 83%.
Dr. Bechtel also noted the cows were thinner than in the past with body scores ranging from 3s to 4s, with a few 2s. Bodying scoring is a common method used in the cattle industry to judge the nutritional needs of cattle. Although body scoring is subjective, a 1 represents cattle that are extremely emaciated and a 9 represents cattle that are extremely obese. It is generally recognized that a score of 3 or below is too low and that a score of 7 or above is too high.
After the cattle were returned to their owners, Peterson, Eilert, and Hlad filed a lawsuit against Ferrell for breach of contract. In the petition, the plaintiffs alleged that Ferrell's breach of the grazing contracts had resulted in low pregnancy rates, underweight bred cows and bulls, and inadequate weight gain on the yearling cattle. In addition, the plaintiffs sought to recover damages for four bulls that they claimed were no longer serviceable. In response, Ferrell denied that he breached the grazing contracts, and he asserted a counterclaim against the plaintiffs for the amount still due and owing under the grazing contracts.
On April 19, 2011, the district court held a 4–day bench trial. After reviewing a variety of exhibits and hearing numerous witnesses, both expert and lay, the district court granted judgment against Ferrell and in favor of the plaintiffs. The district court also granted Ferrell judgment on his counterclaim. After offsetting the amount of damages owed to Ferrell on the counterclaim, the district court granted judgment to the plaintiffs in the amount of $240,416.90.
Ferrell subsequently filed a motion to amend judgment, in which he challenged the district court's calculation of damages. Ferrell also alleged that the district court had failed to specify how he had breached the grazing contracts. On December 12, 2011, the district court reduced the amount of the judgment by $5,024, which was the amount of a credit that Ferrell had given under the stocker grazing contract. Thereafter, Ferrell timely appealed to this court.
In the present case, Peterson—in his personal capacity—has asserted claims against Ferrell for breaches of two contracts, one a summer grazing contract and the other a grazing contract for stocker cattle. Ferrell argues that Peterson is not a real party in interest. We, however, find the more appropriate inquiry to be whether Peterson had standing to bring a breach of contract action against Ferrell.
Although neither party addressed standing in their briefs, we can raise the issue sua sponte because it involves a jurisdictional question. See Mid–Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, Syl. ¶ 2, 106 P.3d 483 (2005). It is well settled that whether jurisdiction exists is a question of law subject to unlimited review. See Kansas Medical Mut. Ins. Co. v. Svaty, 291 Kan. 597, 609, 244 P.3d 642 (2010).
Unfortunately, issues of standing and real party in interest are often confused. See 6A Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 1542 (2010). Because standing is an issue involving subject matter jurisdiction, it cannot be waived and it can be raised at any time. See Mid–Continent Specialists, Inc., 279 Kan. 178, Syl. ¶ 2. On the other hand, whether a party is a real party in interest does not involve jurisdiction, and it can be waived. See 13A Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 3d § 3531 (2008).
In Kansas, “a corporation is considered to be a separate legal entity, a person, not a mere extension of its owner.” Brownback and Wadley, Kansas Agricultural Law, pp. 121–22 (2d ed.1994). “Shareholders do not have standing to sue for harms to the corporation or even for the derivative harm to themselves that might arise from a ... wrong to the corporation.” Lightner v. Lightner, 46 Kan.App.2d 540, Syl. ¶ 3, 266 P.3d 539 (2011). Similarly, K.S.A. 17–7673(b) provides that a limited liability company is “a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company's articles of organization.” (Emphasis added.) See Brownback and Wadley, Kansas Agricultural Law, pp. 138–40.
In the present case, because the parties could not find a copy of the 2008 summer grazing contract, they stipulated that the one Peterson signed was identical to the 2007 summer grazing contract. Moreover, Peterson admits in his brief that “[t]he 2007 cow contract was signed as Steve Peterson, President, Oak Creek Land & Cattle, Inc.” We take judicial notice that Oak Creek Land & Cattle, Inc. is a contraction of the corporation's registered name, which is Oak Creek Land & Cattle Company, Inc. See American Fence Co. v. Gestes, 190 Kan. 393, 402, 375 P.2d 775...
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