Rothing v. Kallestad

• Decision Date: 08 May 2007
• Docket Number: No. 05-186.,05-186.
• Citation: 337 Mont. 193,159 P.3d 222,2007 MT 109
• Parties: Peter and Tanya ROTHING, d/b/a Diamond R. Enterprises, Inc., Plaintiffs and Appellants, v. Arnold KALLESTAD, Defendant and Respondent.
• Court: Montana Supreme Court

159 P.3d 222

2007 MT 109

337 Mont. 193

Peter and Tanya ROTHING, d/b/a Diamond R. Enterprises, Inc., Plaintiffs and Appellants, v. Arnold KALLESTAD, Defendant and Respondent.

No. 05-186.

Supreme Court of Montana.

Argued February 1, 2006.

Submitted February 14, 2006.

Decided May 8, 2007.

Rehearing Denied June 6, 2007.

For Appellant: Calvin J. Stacey (argued), Stacey & Funyak, Billings, Montana.

For Respondent: James R. Halverson (argued), Herndon, Sweeney & Halverson, Billings, Montana.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Peter and Tanya Rothing (the Rothings) brought this action to recover damages resulting from the death of nineteen horses owned by the Rothings that they alleged were fed botulism contaminated hay purchased from Arnold Kallestad (Kallestad). The Rothings sought recovery under theories of strict liability in tort, negligence and breach of contract. The District Court for the Eighteenth Judicial District, Gallatin County, granted Kallestad's Motions for Summary Judgment thereby dismissing the Rothings' Amended Complaint. The court also granted two Motions to Compel filed by Kallestad, awarded Kallestad his attorney's fees and granted Kallestad's Motion for a Protective Order regarding the determination of attorney's fees. The Rothings appeal. We affirm in part, reverse in part and remand for further proceedings consistent with this Opinion.

¶ 2 The Rothings raise several issues on appeal which we have restated as follows:

¶ 3 1. Whether the District Court erred in concluding that hay is not a "product" for purposes of a strict liability in tort cause of action.

¶ 4 2. Whether the District Court erred in concluding that the Rothings' negligence claim against Kallestad fails because it was unforeseeable that the hay could cause injury and death to the Rothings' horses, thus no duty of care existed.

¶ 5 3. Whether the District Court erred in concluding that the Rothings' breach of contract claim against Kallestad fails because it was unforeseeable that the hay could cause injury and death to the Rothings' horses.

¶ 6 4. Whether the District Court erred in imposing discovery sanctions against the Rothings.

¶ 7 5. Whether the District Court erred in awarding attorney's fees to Kallestad and denying the Rothings a hearing in respect to the calculation of attorney's fees.

¶ 8 Because we find the Rothings' breach of contract claim dispositive of this case, we do not address the Rothings' strict liability and negligence claims.

Factual and Procedural Background

¶ 9 The Rothings conducted business near Belgrade, Montana, under the name Diamond R Enterprises which included Diamond R Stables, Diamond R Kennels and Diamond R Cattle Company. Diamond R Stables is involved in the breeding, training and selling of horses; Diamond R Kennels is involved in the breeding of Labrador Retrievers; and Diamond R Cattle Company is involved in breeding, raising and selling miniature heifers.

¶ 10 Kallestad owns a ranch in Gallatin County where he primarily raises hay and a small amount of grain. He also raises Red Angus cattle on the ranch. Each year since he began ranching in 1984, Kallestad has sold some of the hay he raised, and at times, he has advertised his hay for sale in the Bozeman Daily Chronicle. Kallestad estimated that he sells between 300 and 1,000 tons of hay annually.

¶ 11 Tanya Rothing's father, Steven Howells, is in the trucking business and, from time to time, he purchased and transported hay from North Dakota to the Rothings in Belgrade. In April 2001, the Rothings needed hay for their horses. Because Howells did not have time to go to North Dakota to get the hay that he had planned to deliver to the Rothings, the Rothings purchased hay from Kallestad for $90.00 a ton.

¶ 12 Kallestad later testified that this hay was a second-cutting of alfalfa taken from a field that had been re-seeded approximately two years earlier. The hay was cut with a swather and allowed to dry for two to four days depending on the temperature. The hay was then twin-raked (wherein two rows are turned and combined so that the bottom portion can also dry) and baled with a mid-size square baler a day or two after being raked. The bales were then stacked outside on a raised bed of gravel and fly ash from August 2000 until April 2001 when it was sold to the Rothings.

¶ 13 Kallestad further testified that the hay was exposed to moisture during the winter months and that, one winter, a ditch near the stacked hay overflowed causing water to go along the west side of the stack of hay and then onto a road. Kallestad was unsure whether the ditch water came in contact with the hay, but he indicated that the water "may have been up there an inch or so."

¶ 14 On April 23, 2001, the Rothings received 45 to 48 large bales of hay from Kallestad. Some of the hay was fed to the Rothings' horses the same day it was delivered. On May 2, 2001, nine days after the delivery of the hay, one of the Rothings' yearling colts was found "down." That afternoon, the colt was taken to the Hardaway Veterinary Hospital in Belgrade where the colt had to be euthanized. The following day, two other yearling colts exhibited similar signs as the first colt. One of these yearling colts also had to be euthanized. The body was transported to the Marsh Laboratory at Montana State University where a post mortem was performed by Dr. Bill Layton. The other yearling colt was treated with charcoal, but died two days later.

¶ 15 On May 3, 2001, Dr. Layton contacted Dr. Robert Whitlock at the University of Pennsylvania. Dr. Whitlock is an Associate Professor of Medicine and the Director of the Botulism Laboratory at the University. Dr. Layton inquired about sending diagnostic samples to be tested for botulism.

¶ 16 On May 4, 2001, three mares with foals exhibited symptoms similar to the others. They were taken to the Hardaway Veterinary Hospital and treated with charcoal and other medications. One of the foals died during the night. The treating veterinarians, Dr. Gordon Hardaway and Dr. Thomas Jakob, suspected that the hay purchased from Kallestad may be the cause of the problem, hence the remaining hay was removed from the feeding area.

¶ 17 Shortly thereafter, Dr. Whitlock shipped botulism antitoxin to the Rothings and their veterinarians, but by the time the outbreak was over, nineteen animals had died. Dr. Whitlock concluded that the hay purchased from Kallestad and fed to the Rothings' horses was contaminated with botulism. He based his opinion on diagnostic studies and testing which he performed on numerous samples taken from the Rothings' property as well as the location where the hay had been stored on Kallestad's property. Some of the hay samples that were tested showed evidence of preformed Clostridium botulinum type B toxin.

¶ 18 The Rothings filed suit against Kallestad on July 26, 2001. In their suit, the Rothings pursued theories of recovery based upon strict liability, negligence and breach of contract. As a result of this incident, the Rothings claimed that they suffered significant damages, including veterinarian bills for services and antitoxin in the amount of $38,549.28; the value of the nineteen dead horses in the amount of $40,000; and the loss of income as a result of the deaths of the nineteen horses in excess of $100,000. They also sought damages for emotional distress from watching their horses die and the resulting economic devastation to their business.

¶ 19 In addition, Dr. Whitlock advised the Rothings that, as a result of this incident on their property, they are at a greater risk of a reoccurrence of botulism poisoning in their horses and they should vaccinate all of their horses yearly for as long as they own the property. Dr. Whitlock also recommended that the Rothings warn all individuals who might bring mares to be bred on their property of this incident and that if the Rothings ever sell their property, they should disclose this incident. As a consequence, the Rothings maintained that the value of their property has diminished. They also claimed that they have incurred expenses for cleaning up their property as a result of the contaminated hay and for additional feed costs.

¶ 20 Kallestad filed two separate Motions for Summary Judgment. In his first motion, filed May 13, 2003, Kallestad argued that, under Montana law, hay is not a product and he is not a manufacturer; therefore, he was entitled to summary judgment on the Rothings' strict products liability claim. In his second motion, filed June 22, 2004, Kallestad argued that the Rothings' remaining theories of negligence and breach of contract should be dismissed because, if botulism was present, it was in no way foreseeable.

¶ 21 The District Court granted both of Kallestad's Motions for Summary Judgment in orders filed on January 28, 2004, and August 18, 2004. In addition, the court granted Kallestad's several Motions to Compel; awarded Kallestad attorney's fees incurred in preparing the Motions to Compel; granted Kallestad's Motion for Protective Order; and sanctioned the Rothings by excluding evidence including Dr. Whitlock's report.

¶ 22 The Rothings appeal all of the orders entered by the District Court including the court's January 28, 2004, and August 18, 2004 orders on Kallestad's Motions for Summary Judgment; the court's June 29, 2004 order excluding evidence and awarding expenses; and the court's orders on Kallestad's various Motions to Compel.

Standard of Review

¶ 23 We review a district court's grant of summary judgment de novo, applying the same evaluation under M.R. Civ. P. 56, as the district court. Cole ex rel. Cole Revocable Trust v. Cole, 2003 MT 229, ¶ 8, 317 Mont. 197, ¶ 8, 75 P.3d 1280, ¶ 8 (citing Vivier v. State Dept. of Transp., 2001 MT 221, ¶ 5, 306 Mont. 454, ¶ 5, 35 P.3d 958, ¶ 5). In this regard, we have stated that

[t]he movant must demonstrate that no genuine issues of material fact exist. Once...