Sunfresh, Inc. v. Bean Acres, Inc.
| Citation | 180 F.Supp.2d 1224 |
| Decision Date | 19 December 2001 |
| Docket Number | No. 99-4154-SAC.,99-4154-SAC. |
| Parties | SUNFRESH, INC., Plaintiff, v. BEAN ACRES, INC., Ronald L. Meyers, First National Bank, and Twenty-First Century Bean Processing Cooperative, Defendants. |
| Court | U.S. District Court — District of Kansas |
Randall J. Forbes, Clinton E. Patty, Friedman, Haynes & Forbes, Topeka, KS, for Plaintiff.
Evelyn Z. Wilson, Thomas E. Wright, Wright, Henson, Somers, Sebelius, Clark & Baker, LLP, Topeka, KS, Ronald S. Shalz, Colby, KS, Michael J. Day, Kite & Day, St. Francis, KS, for Defendants.
This diversity case comes before the court on motions for summary judgment filed by two of the four defendants, First National Bank, ("FNB"), and Twenty-First Century Bean Processing Cooperative ("Twenty-First Century"). This case involves the disappearance of over 10,0001 hundredweight (hereinafter "cwt"), of pinto beans originally entrusted to defendant Bean Acres, Inc. ("Bean Acres")2 by the plaintiff, Sunfresh, Inc., for storage. Plaintiff alleges that all defendants are liable for the shortage of beans under theories of joint venture, bailment, and conversion.
A court grants a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure if a genuine issue of material fact does not exist and if the movant is entitled to judgment as a matter of law. The court is to determine "whether there is the need for a trial—whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will ... preclude summary judgment." Id. There are no genuine issues for trial if the record taken as a whole would not persuade a rational trier of fact to find for the non-moving party. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "[T]here are cases where the evidence is so weak that the case does not raise a genuine issue of fact." Burnette v. Dow Chemical Co., 849 F.2d 1269, 1273 (10th Cir.1988).
The initial burden is with the movant to "point to those portions of the record that demonstrate an absence of a genuine issue of material fact given the relevant substantive law." Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.), cert. denied, 506 U.S. 1013, 113 S.Ct. 635, 121 L.Ed.2d 566 (1992). If this burden is met, the nonmovant must "come forward with specific facts showing that there is a genuine issue for trial as to elements essential to" the nonmovant's claim or position. Martin v. Nannie and Newborns, Inc., 3 F.3d 1410, 1414 (10th Cir.1993) (citations omitted). The non-movant's burden is more than a simple showing of "some metaphysical doubt as to the material facts," Matsushita, 475 U.S. at 586, 106 S.Ct. 1348; it requires "`present[ing] sufficient evidence in specific, factual form for a jury to return a verdict in that party's favor.'" Thomas v. International Business Machines, 48 F.3d 478, 484 (10th Cir.1995) (quoting Bacchus Industries, Inc. v. Arvin Industries, Inc., 939 F.2d 887, 891 (10th Cir.1991)).
The court views the evidence of record and draws all reasonable inferences in the light most favorable to the nonmovant. Id. A party relying on only conclusory allegations cannot defeat a properly supported motion for summary judgment. White v. York Intern. Corp., 45 F.3d 357, 363 (10th Cir.1995).
More than a "disfavored procedural shortcut," summary judgment is an important procedure Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). At the same time, a summary judgment motion does not empower a court to act as the jury and determine witness credibility, weigh the evidence, or choose between competing inferences. Windon Third Oil and Gas Drilling Partnership v. Federal Deposit Ins. Corp., 805 F.2d 342, 346 (10th Cir. 1986), cert. denied, 480 U.S. 947, 107 S.Ct. 1605, 94 L.Ed.2d 791(1987).
The parties have provided the court with an abundance of evidence and memoranda which the court has carefully reviewed.3 The vast majority of the facts set forth by the parties are uncontested, and the dispute is as to the legal effect of such facts.4 The court will not endeavor to include herein all the uncontested facts established by the parties. Rather, the court will set forth in this section certain facts summarizing the events which transpired, and will include additional facts crucial to resolution of the issues in the analysis which follows.
Plaintiff Sunfresh, Inc. is a Washington corporation involved in raising and marketing various agricultural products. Defendant Bean Acres was a business located in Sharon Springs, Kansas, which purchased dry edible beans from farmers, processed them, and sold them to third parties. Defendant Ronald Meyers was the president of Bean Acres. Defendant FNB is a national bank that loaned money to Bean Acres for the purchase and operation of its business.
In the fall or early winter of 1996-1997, Sunfresh purchased 1995 and 1996 crop pinto beans from Bean Acres and stored them at the Bean Acres facility. Bean Acres issued Sunfresh a federally approved warehouse receipt for the majority of those beans.
Subsequently, due to financial events unrelated to this lawsuit and unrelated to the quantity or quality of the stored beans, Bean Acres' federal warehouse license was suspended by the USDA. Thereafter, Bean Acres and Meyers negotiated an agreement with FNB for the voluntary foreclosure of the bean processing facility and other secured assets. The Foreclosure Agreement between Bean Acres and FNB, dated July 1, 1998, was followed by a sales agreement between Twenty-First Century and FNB, dated July 13, 1998. These two agreements were designed to effect the sale of the facility and other assets from Bean Acres to FNB, which in turn would sell them free of any liens to Twenty-First Century, which would continue the physical operation of the facility.5
Between July 1st and July 13th, Bean Acres, through Meyers, continued to operate the facility, with the "consent and approval" of FNB. On or about July 13, 1998, Twenty-First Century took over the facility and its operations, and Meyers became the plant manager for Twenty-First Century. In mid-July, Meyers told plaintiff that plaintiff needed to move all of its beans out of the Bean Acres facility within two weeks because Twenty-First Century had purchased the assets and wanted to start the new bean crop year with an empty, clean facility. On some date not reflected in the record, Twenty-First Century processed, i.e., cleaned and bagged, the beans remaining in storage and FNB paid for such processing.6
On July 21, 1998, a USDA warehouse examiner with 21 years' experience measured the inventory of pinto beans at the facility, and found them to be 1% less than the total obligations of the warehouse. This percentage of difference is not unusual, and was no cause for alarm. In mid-July, Bean Acres requested termination of its federal warehouse license. The sales agreement between FNB and Twenty-First Century closed on August 19, 1998. On August 24, 1998, the same USDA warehouse examiner again measured the inventory of pinto beans at the facility. The August examination found the beans to be 28% less than the total obligations of the warehouse (28,228 cwt inventoried, and 38,956 cwt obligated). This percentage of difference is remarkable. Meyers' explanation for this shortage is that it must have been caused by his failure to take into account the shrinkage of the beans for six years at the facility, and/or by some mistake in the inventory calculations of the warehouse examiner in August.
Plaintiff received some beans from Bean Acres at its close out in August of 1998, rejected other beans as being inferior, and recovered approximately $120,000 from Bean Acres' bond. Plaintiff continues to seek $611,562.00, which it contends is the amount it is damaged by having been shorted over 10,000 cwt of pinto beans. Plaintiff generally contends that because of the nature of the relationship between the defendants, they are all liable for the missing beans, relying upon the theories of bailment, joint venture, and conversion.
Defendants seek summary judgment on plaintiff's allegation that FNB and Twenty-First Century are liable under a bailment theory. This theory recognizes that Bean Acres and/or Meyers were actual bailees of the beans, but contends that the "mere act of Twenty-First Century and FNB exercising control over the pinto beans in storage and the subsequent disappearance while they were in control of the Bean Acres facility makes both defendants either substitute bailees or liable third parties to the bailor/plaintiff." (Dk.154, p. 35).
The law of the forum state governs the substantive legal issues surrounding plaintiffs' bailment claim. See Moore v. Subaru of America, 891 F.2d 1445, 1448 (10th Cir.1989). It is well established under Kansas law that a bailee in a bailment for mutual benefit must use ordinary care and diligence in the safeguarding of the bailor's property, and he is answerable for loss or injury resulting from failure to exercise such ordinary care and diligence. M. Bruenger & Co., Inc. v. Dodge City Truck Stop, Inc., 234 Kan. 682, 675 P.2d 864 (1984). This general principle has been codified as to warehousemen at K.S.A. § 84-7-204, which states:
(1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances...
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