Pieper, Inc. v. Land O'Lakes Farmland Feed

• Decision Date: 09 December 2004
• Docket Number: No. 04-2387.,04-2387.
• Citation: 390 F.3d 1062
• Parties: PIEPER, INC., Appellant, v. LAND O'LAKES FARMLAND FEED, LLC, a Delaware limited liability corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

390 F.3d 1062

PIEPER, INC., Appellant, v. LAND O'LAKES FARMLAND FEED, LLC, a Delaware limited liability corporation, Appellee.

No. 04-2387.

United States Court of Appeals, Eighth Circuit.

Submitted: November 4, 2004.

Filed: December 9, 2004.

Rehearing Denied January 18, 2005.

Counsel who presented argument on behalf of the appellant was Sean P. Moore, Des Moines, Iowa. Also appearing on the brief is Brian P. Rickert, Des Moines, Iowa.

Counsel who presented argument on behalf of the appellee was Jonathan C. Miesen, Minneapolis, Minnesota.

Before RILEY, MELLOY, and COLLOTON, Circuit Judges.

RILEY, Circuit Judge.

This appeal arises out of Pieper, Inc.'s (Pieper) breach of contract action against Land O'Lakes Farmland Feed, LLC (LOLFF). Pieper appeals the district court's¹ grant of summary judgment to LOLFF on its affirmative defense of frustration of purpose. Frustrating Pieper, we affirm.

I. BACKGROUND

Pieper and LOLFF entered into a Weaned Pig Purchase Agreement (Agreement), in which LOLFF agreed to purchase weaner pigs, i.e., weaned piglets, from Pieper. LOLFF intended to sell these pigs to third-party finishers, who would raise the pigs to market weight. Farmland Industries, Inc. (Farmland) then would buy market hogs from third-party finishers under the terms of an existing contract between Farmland and Pieper.

Recital D of the Agreement explains LOLFF was to buy Pieper's weaner pigs only while Farmland purchased market hogs from third-party finishers:

LOLFF will purchase such pigs from [Pieper] only while its Customers have the ability to market such pigs utilizing the Farmland America's Best Pork Marketing Agreement No. 8073 dated November 14, 2000 and originally assigned to Pieper, Inc.

In a deposition, Pieper's president, Michael Pieper (Mr. Pieper), testified the Agreement depended on Farmland's purchase of market hogs from third-party finishers:

Q: Farmland had to take the pigs in order for this whole arrangement to work [,] right?

A: Farmland had to take the pigs to make this whole agreement work.

Q: Because the hogs that were raised by [third-party finishers] had to go to Farmland. Otherwise [Pieper] would be in trouble under [its] contract [with Farmland,] right?

A: Yes, that's right. We required [LOLFF] to sell the pigs back to Farmland.

Q: And this deal was dependent upon [third-party finishers] being able to sell the market hogs to Farmland under Pieper's... contract [with Farmland,] right?

A: Yes.

Q: Because the hogs had to go to Farmland[,] right?

A: Yes, they had to be delivered to Farmland.

Farmland subsequently refused to buy market hogs from third-party finishers, declining to consent to an assignment of the Pieper and Farmland contract. Without the ability to sell weaner pigs to third-party finishers for sale to Farmland, LOLFF had no reason to buy pigs from Pieper. As a result, LOLFF advised Pieper "it will no longer purchase pigs from Pieper under the [Agreement], and such Agreement shall be terminated effective immediately."

Pieper filed suit against LOLFF, alleging LOLFF breached the Agreement by failing to buy Pieper's weaner pigs. In its answer, LOLFF asserted frustration of purpose as an affirmative defense. The parties filed cross motions for summary judgment. Pieper argued summary judgment was appropriate, because there was no genuine issue of material fact that LOLFF had breached the Agreement. LOLFF argued it was excused from performing, because its principal purpose behind the Agreement had been frustrated.

The district court first determined LOLFF had breached the Agreement; however, the district court later granted summary judgment to LOLFF on its affirmative defense of frustration of purpose. The district court relied on Recital D and Mr. Pieper's testimony to determine LOLFF's principal purpose in entering into the Agreement. The district court determined LOLFF's principal purpose was to sell Pieper's pigs to third-party finishers who then would sell market hogs to Farmland, and the principal purpose had been frustrated by Farmland's refusal to buy market hogs from third-party finishers.

On appeal, Pieper argues the district court erred in relying on extrinsic evidence to determine LOLFF's principal purpose in entering into the Agreement. Pieper contends (1) the Agreement is clear and unambiguous, (2) Recital D creates no legal obligation, and (3) LOLFF's primary purpose was to sell feed to third parties purchasing weaner pigs LOLFF acquired from Pieper.²

II. DISCUSSION

We review de novo a district court's grant of summary judgment. Schoolhouse, Inc. v. Anderson, 275 F.3d 726, 728 (8th Cir.2002). When considering a motion for summary judgment, we view the evidence in the light most favorable to the nonmoving party. Id. Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Lambert v. City of Dumas, 187 F.3d 931, 934 (8th Cir.1999).

Under Minnesota law,³ frustration of purpose will excuse contract performance when: "(1) [t]he party's principal purpose in making the contract is frustrated; (2) without that party's fault; (3) by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made." City of Savage v. Formanek, 459 N.W.2d 173, 176 (Minn.Ct.App.1990) (citation omitted). "The principal purpose: `must be so completely the basis of the contract that, as both parties understand, without it the transaction would make little sense.'" Id. (quoting Restatement (Second) of Contracts § 265, cmt. a (1981)).

Pieper argues the district court erred in relying on Recital D and on Mr. Pieper's testimony to determine LOLFF's principal purpose behind the Agreement. Pieper contends the district court should have relied on only the operable terms of the Agreement and should have found the principal purpose of the Agreement was to merely buy and sell pigs, with LOLFF supplying feed for third parties purchasing the weaner pigs LOLFF purchased from Pieper.

Pieper correctly notes that, under Minnesota law, recitals do not create legal obligations. Berg v. Berg, 201 Minn. 179, 275 N.W. 836, 841-42 (1937). However, in this case, the district court did not create any legal obligation beyond the operative provisions of the Agreement. Instead, the district court relied on extrinsic evidence to...