Renna v. Henry Company, C054131 (Cal. App. 11/24/2008)

• Decision Date: 24 November 2008
• Docket Number: C054131
• Court: California Court of Appeals Court of Appeals
• Parties: RALPH RENNA, Plaintiff and Appellant, v. THE HENRY COMPANY, Defendant and Respondent.

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RALPH RENNA, Plaintiff and Appellant, v. THE HENRY COMPANY, Defendant and Respondent.

C054131

Court of Appeal of California, Third Appellate District, San Joaquin

November 24, 2008

Not to be Published

Appeal from the Super. Ct. No. CV025164.

CANTIL-SAKAUYE, J.

Plaintiff Ralph Renna used 124 TreeCure, a product sealant sold by defendant The Henry Company (THC), to seal grafts on approximately one-half of the apple trees in his orchard. Relying on information obtained at THC's booth at an agricultural show, Renna applied only one coat of 124 TreeCure to the grafts. After the sealant cracked and a number of grafts failed, Renna removed his entire orchard. He sued THC for strict products liability, negligence and negligent misrepresentation. On the negligent misrepresentation cause of action the jury verdict favored Renna, set damages and apportioned fault between Renna and THC. Dissatisfied with the damage award, Renna moved for a new trial. The court denied Renna's motion for new trial and because the jury award was less than THC's Code of Civil Procedure 998 settlement offer,¹ Renna's recovery was reduced by THC's costs. The net result was a judgment for THC.

Renna appeals from the judgment asserting that prejudicial attorney misconduct and trial court error excluding certain evidence negatively impacted the jury's award of damages. We shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Because Renna does not challenge the jury's finding and apportionment of liability, our factual summary highlights evidence relevant to his damage claim. The story begins with Renna's January 1997 purchase of a 37-acre orchard and contiguous three-acre home site in Lodi. Renna had retired from a successful career as a small business owner and was looking for a place to build a retirement home. He had no experience growing apples. However, Renna set out to learn the business from more experienced people in order to supplement his retirement income. The previous owner told Renna that the orchard generated between $125,000 and $150,000 in net profits each year. Because the land was close to the town of Lodi, Renna hoped to develop it at some time in the future.

The orchard contained three varieties of apples — Fuji, Pink Lady and Gala. The varieties were interspersed throughout the orchard so that a single row might contain all three. The orchard's configuration posed maintenance challenges for Renna because each apple variety was sprayed or chemically thinned at a different time.

When Renna purchased the orchard in 1997, he was unaware that the price of apples was dropping. The drop in price continued through the period involved in this case. The new market trend in California favored the Gala apple which got redder and ripened faster than other apple varieties. In late 2002, after consulting Dean Devine and other experts at the apple packing house, Renna decided to graft the Fuji and Pink Lady apple trees — but not the Galas — with the Buckeye Gala variety.

Apples are ordinarily grafted from January through April, depending on the weather. Renna hired Brad Ruble, a professional grafter, to do the grafting in January and February 2003. Ruble grafted approximately 7,000 trees, which included 6,531 limb grafts and 927 stump grafts on trees located throughout the orchard. He applied a single coat of 124 TreeCure to all the grafts. Ruble was aware that the product was not recommended for use where temperatures fell below 50 degrees and had learned over the years to apply multiple coats to prevent it from cracking. He told Renna that additional coats would be required.

In February 2003, Renna attended an agricultural show in Tulare where he came upon a booth operated by THC. Renna told the person at the booth that 124 TreeCure was a nice product, but every additional application was costly. The THC representative responded that only one application was required. He showed Renna the product brochure which confirmed that multiple coats were not needed. However, the "SINGLE APPLICATION" bullet point on the brochure referred expressly to a "vineyard." Another part of the brochure cautioned: "Do not apply TREECURE when the temperature is below 50°F. or if there is a threat of rain or temperatures below 50°F. within 24 hours. TREECURE is only waterproof when thoroughly dry."

Renna told the man in the THC booth that he was applying the second coat of 124 TreeCure to the grafts in his apple orchard at that very moment and intended to stop. Renna telephoned Leonel Sandoval, his labor contractor, and told him to stop the second application because THC said they did not have to do it. Sometime later, Ruble informed Renna that a second and third application was needed. Renna responded that the manufacturer was the highest authority. Sandoval and Devine also advised that it was accepted practice to apply multiple coats of 124 TreeCure.

In March 2003, Ruble told Renna about cracks in the grafts. Two months later, Renna's pest control advisor Jim Colyn advised him to put membrane on cracks in grafts of low branches so moisture from irrigation would not get into them. In July or August, Colyn showed Renna where some of the grafts were failing. Renna contacted THC sometime in August to complain that his grafts had failed.

There was no evidence at trial to show that THC's product had itself failed. Testimony from witnesses on both sides suggested that the grafts failed because Renna applied only one coat of 124 TreeCure. Both Ruble and THC's expert John Bahme, a plant pathologist, testified that neighboring orchards grafted at the same time as Renna's experienced a success rate between 93 percent and 95 percent with at least three applications of the sealant.

Renna initially removed 300 trees throughout the orchard "that were either dead, or they were on their way out." These trees could not be re-grafted because the wood was cut too short. He pulled out 1,100 trees by the end of 2003.

Bahme evaluated the grafting failure after Renna had removed 1,100 trees. He testified that the success rate in the south end of the orchard averaged between 93 percent and 94 percent. The north end of the orchard, which contained older and weaker trees, had an average success rate between 78 percent and 87 percent. The percentage would have been lower if Bahme had been able to include the trees Renna had already removed from the north area. Overall, 86 percent of the limb grafts were successful and 87 percent of the stump grafts were successful. A grower needs a success rate of at least 90 percent to make grafting worthwhile.

The grafting failure presented Renna with at least four alternative courses of action: re-coat the grafts, re-graft the trees where grafts had failed, plant new Buckeye Gala trees to replace the ones he had removed, or take out the entire orchard. Ruble testified that Renna could have saved the grafts by repainting the grafts in March 2003 when Ruble first pointed out the cracks. It would have cost Renna "a few thousand dollars" to repaint. THC's economic expert testified that it would have cost Renna only $2,100 to re-apply the 124 TreeCure. Ruble also stated that Renna had grafting wood and could have re-grafted in March 2003. He would not have charged Renna to re-graft at that stage. In September 2003, Ruble advised Renna that he could save the cracked grafts by re-grafting the following year. He showed the labor contractor Sandoval how to prepare the trees for re-grafting.

Renna stated that he could not replant because he was unable to find Buckeye Gala trees available from the nursery he used in Washington State. However, THC's expert Bahme testified that an apple nursery in California, which was known to Renna, had enough Buckeye Gala trees to replace the ones Renna had removed.

After consulting other growers and experts, Renna decided to remove the entire orchard and start over. He testified that it was economically unfeasible to farm what had become a patchwork of trees of varied ages, sizes and stages of development. "I listened to other experts in the field, growers; I listened to my heart because I knew it had to come out; and I also know you can't farm a few trees here . . . and a few over there. You've still got to irrigate the whole orchard, and you're only getting revenue off of one-third of it."

At trial, the court declined to qualify Renna as an expert witness, but permitted him to testify on his belief with regard to the amount of damages he suffered, including lost profits. Renna prepared a written calculation of the damages he sustained "related to the loss or need to remove the 7[,]500 apple trees from [his] orchard related to the graft failure." He offered two damage figures: $423,107 which included among other things the original cost to graft, cost for the removal and disposal of 7,500 trees, and the cost to replant; and the "top range analysis" of $1.3 million representing a loss per tree in the amount of $176.

THC cross-examined Renna regarding a year-to-year summary of profits prepared by Renna which showed his profits between 1997 and 2002 to be much less than the $125,000 to $150,000 in net profits cited by the previous owner. Renna claimed that he had earned $121,000 in net profits in 1997, but that figure included a $45,000 payment from Merck Chemical which did not represent monies from the sale of apples, and a $75,000 payment from Sierra Hills only a portion of which was for the sale of fruit. In 1998, Renna cited a loss of $48,404.72, but that included a government subsidy in the amount of $39,018.76. Renna's 1999 profit of approximately $67,000 included $82,000 in crop insurance money and a $36,000 government subsidy. Again, the 2000 reported profits of $68,906.16 included a crop insurance payment of $106,000 and a $66,000 government subsidy, creating an actual loss of approximately $104,000. Renna provided no net profit figure for 2002.

Renna had designated Dr. Mark...