Stone's Farm Supply, Inc. v. Deacon

• Decision Date: 11 February 1991
• Docket Number: No. 89SC574,89SC574
• Citation: 805 P.2d 1109
• Parties: STONE'S FARM SUPPLY, INC., Petitioner/Cross-Respondent, v. S.G. DEACON, Hildron, Inc., Bond Metz Farms, Inc., Kenneth Metz, Robert Metz, and Ronald Peterson, Respondents/Cross-Petitioners, and American Plant Food Corporation, Respondent.
• Court: Colorado Supreme Court

Page 1109

805 P.2d 1109

STONE'S FARM SUPPLY, INC., Petitioner/Cross-Respondent, v. S.G. DEACON, Hildron, Inc., Bond Metz Farms, Inc., Kenneth Metz, Robert Metz, and Ronald Peterson Respondents/Cross-Petitioners and American Plant Food Corporation, Respondent.

No. 89SC574.

Supreme Court of Colorado,

En Banc.

Feb. 11, 1991.

Rehearing Denied March 11, 1991.

Retherford, Mullen, Rector & Johnson, Michael R. Waters, Colorado Springs, for petitioner/cross-respondent.

Lucero, Kadinger & Lester, Carlos F. Lucero, Helen Sigmond, Alamosa, for respondents/cross-petitioners.

Sherman & Howard, Joseph J. Bronesky, Denver, for respondent.

Justice ERICKSON delivered the Opinion of the Court.

We granted certiorari to review Deacon v. American Plant Food Corp., 782 P.2d 861 (Colo.App.1989). The court of appeals affirmed the trial court judgment against Stone's Farm Supply, Inc. (Stone), but reversed the judgment against American Plant Food Corporation (American) predicated on lack of jurisdiction under section 13-21-402, 6A C.R.S. (1987). The court of appeals concluded that American was not strictly liable for damages for the sale of a contaminated fertilizer component because American was not the manufacturer of the component and the plaintiffs had not shown that jurisdiction could not be obtained over the manufacturer of the component. We also agreed to determine whether the court of appeals erred in reversing the trial court's judgment against American for damages on the theory of negligent manufacturing. We now reverse and remand to the court of appeals with directions to reinstate the judgment entered by the trial court against American.

The pleadings in this multiple party action consist of a number of complaints by farmers, ¹ answers by the defendants, and a myriad of motions. All of the farmers' claims for damages were consolidated for trial. The complaints made by the different farmers were not identical, but in general contained alternative claims for negligence, breach of express warranty, implied warranty of merchantability and implied warranty of fitness for a particular purpose, together with separate claims for false representation, negligent manufacturing, strict liability, and res ipsa loquitur. American's answer demonstrates the complexity of the issues. The answer of American includes general denials of nearly all of the allegations in the complaint with affirmative defenses of the statute of limitations, waiver and estoppel, contributory negligence, damages chargeable to unidentified parties not before the court, misuse of the product by the plaintiffs, and failure to state a claim on which relief can be granted. It is significant, however, that American did not assert as an affirmative defense in its answer, or in any other pleading, that it was the distributor and not the manufacturer of the contaminated component in the fertilizer and sought the protection afforded by section 13-21-402, 6A C.R.S. (1987), for the first time on appeal. ² The claim of lack of jurisdiction under the statute was raised by American for the first time on appeal.

Following an extended trial to the court, extensive findings of fact and conclusions of law were entered, and the defendants, Stone and American, were found liable for the damages incurred by the plaintiff farmers on the strict liability and negligence claims. The trial court entered judgment in favor of all other defendants. Both Stone and American appealed to the court of appeals, which affirmed the judgment against Stone but reversed the judgment against American. ³

I

The plaintiffs are farmers that grow potatoes on irrigated land in Rio Grande County, Colorado. Stone is in the business of providing farm supplies and services to farmers in the area and the greater part of Stone's business centers on the distribution and sale of custom fertilizer. In the fall of each year, Stone obtained soil samples from the fields of its regular customers for analysis and for the recommendation of a customized fertilizer for the following year's crop. Stone prepared a "blend sheet" for each farmer, which provided the percentage of nitrogen (N), phosphorus (P), and potassium (K) (N-P-K) that is required for the crop the farmer intends to grow. The components for the fertilizer are purchased from various manufacturers and are mixed by Stone to create the recommended fertilizer for a particular crop on specified land.

Stone obtained ammonium sulfate from American to supply 21% of the nitrogen required. ⁴ International Minerals and Chemical Company supplied Stone with sulphate of potash to provide 50% of the recommended amount of potassium. Phosphorus was obtained from monoammonium phosphate, which provided 52% phosphorus and 11% nitrogen, purchased from J.R. Simplot, Inc. Stone mixed the components and provided a customized fertilizer mix to each of the plaintiff farmers.

The fertilizer was applied in a preplant band six to eight inches below the ground. Potato seedlings were then planted immediately above the band to permit the roots to draw the nutrients from the fertilizer. A second application of the fertilizer, known as top dress, was made over the plants shortly after the potatoes commenced growing. Not long after the top dress was applied, the farmers discovered that their potato crops were developing in an abnormal manner. The leaves were crinkled, cupped, and distorted, vines displayed excessive growth, and the tubers (potatoes) were misshaped and malformed. The farmers advised Stone of the condition of their potato crop and a number of agronomists and other experts were called in to determine the cause of the crop damage. The experts all concluded that the farmers' potato crops had suffered chemical damage.

The fertilizer supplied by Stone contained four substances that have no place in a potato field: 2,4-Dichlorophenoxyacetic acid (2,4-D), Banvel, Dinoben, and Caprolactum, all were present in the fertilizer and are phenoxy-type herbicides generally referred to in the industry as post-emergent herbicidal weed killers. All four of the herbicides are extremely harmful to broad-leaved plants such as potatoes.

The herbicide that the trial court found, based upon competent evidence, to be the cause of the damage to the potato crops was 2,4-D contained in American's ammonium sulfate utilized in part of Stone's customized fertilizer. ⁵ A five-week trial to the court ended with judgment for the farmers against American and Stone for $665,761.83 with interest in the amount of $287,843.43. Liability against Stone was predicated upon claims for negligence per se and breach of implied warranty. Judgment against American was based upon claims of strict liability and negligent manufacturing.

II

The court of appeals relied on section 13-21-402, 6A C.R.S. (1987), to reverse the trial court's finding that American was strictly liable for the damage caused to the farmers' potato crops. On appeal, American for the first time raised the statutory defense in section 13-21-402, which provides:

(1) No product liability action based on the doctrine of strict liability in tort shall be commenced or maintained against any seller of a product which is alleged to contain or possess a defective condition unreasonably dangerous to the buyer, user, or consumer unless said seller is also the manufacturer of said product or the manufacturer of the part thereof claimed to be defective. Nothing in this part 4 shall be construed to limit any other action from being brought against any seller of a product.

(2) If jurisdiction cannot be obtained over a particular manufacturer of a product or a part of a product alleged to be defective, then that manufacturer's principal distributor or seller over whom jurisdiction can be obtained shall be deemed, for the purposes of this section, the manufacturer of the product.

The court of appeals, relying on section 13-21-402, determined that American was merely a distributor and not a manufacturer of ammonium sulfate. Therefore, the court of appeals held that the protection afforded by section 13-21-402 was available to American and the trial court did not have jurisdiction to hold American strictly liable absent a showing that the farmers could not obtain personal jurisdiction over Badische, which manufactured the ammonium sulfate.

We must first determine whether the issue is that of personal jurisdiction over the parties or jurisdiction of the subject matter. People In Interest of Clinton 762 P.2d 1381, 1386 (Colo.1988); In re Marriage of Stroud, 631 P.2d 168, 170 (Colo.1981). The defense of lack of personal jurisdiction is waived if it is not raised in the defendant's pleadings. Clinic Masters, Inc. v. District Court, 192 Colo. 120, 123, 556 P.2d 473, 475 (1976); Board of County Comm'rs v. District Court, 172 Colo. 311, 313, 472 P.2d 128, 129 (1970). However, the absence of subject matter jurisdiction may be raised at any stage of the proceedings. Paine, Webber, Jackson & Curtis v. Adams, 718 P.2d 508, 513 (Colo.1986); Peaker v. Southeastern Colo. Water Conservancy Dist., 174 Colo. 210, 213, 483 P.2d 232, 233 (1971). Both Stone and the farmers contend that section 13-21-402 creates a limitation on the court's personal jurisdiction over distributors, and that the defense was waived by American's failure to raise the issue in its answer or other pleadings. American contends that section 13-21-402 creates a limitation on the trial court's subject matter jurisdiction over strict liability claims against distributors and that the issue may properly be raised for the first time on appeal.

Personal jurisdiction is the power to subject a particular defendant to the decisions of the court. A court may exercise personal jurisdiction if fair and adequate notice is provided to the defendant, and if the defendant has sufficient minimum contacts with the state seeking jurisdiction. ⁶ International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed....