Sunland Dairy LLC v. Milky Way Dairy LLC

• Decision Date: 18 March 2021
• Docket Number: No. 1 CA-CV 20-0057,1 CA-CV 20-0057
• Citation: 251 Ariz. 64,484 P.3d 643
• Parties: SUNLAND DAIRY LLC, Plaintiff/Appellee/Cross-Appellant, v. MILKY WAY DAIRY LLC, et al., Defendants/Appellants/Cross-Appellees.
• Court: Arizona Court of Appeals

251 Ariz. 64

484 P.3d 643

SUNLAND DAIRY LLC, Plaintiff/Appellee/Cross-Appellant,

v.MILKY WAY DAIRY LLC, et al., Defendants/Appellants/Cross-Appellees.

No. 1 CA-CV 20-0057

Court of Appeals of Arizona, Division 1.

FILED March 18, 2021

Warner, Angle, Hallam, Jackson & Formanek, PLC, Phoenix, By Chris R. Baniszweski, Andrea Simbro, Counsel for Plaintiff/Appellee/Cross-Appellant

Mesch, Clark & Rothschild, PC, Tucson, By Michael McGrath, D. Alexander Winkelman, Counsel for Defendants/Appellants/Cross-Appellees

Presiding Judge James B. Morse Jr. delivered the opinion of the Court, in which Judge Maria Elena Cruz and Judge Paul J. McMurdie joined.

MORSE, Judge:

¶1 A jury found Milky Way Dairy, LLC, Arie De Jong, and Jane Doe De Jong (collectively "Milky Way") liable under A.R.S. §§ 3-1304 and -1307 for converting 519 dairy cows owned by Sunland Dairy, LLC ("Sunland"). Milky Way appeals and argues the superior court made numerous errors of law. Sunland cross-appeals, arguing the superior court erred in calculating attorneys' fees and failing to award prejudgment interest. We hold that A.R.S. §§ 3-1304 and -1307 provide private rights of action. We also find that the superior court did not err in instructing the jury to award damages based on the cows' highest intermediate market value. For those reasons and the others stated herein, we affirm.

FACTS AND PROCEDURAL BACKGROUND¹

¶2 Sunland and Milky Way are dairy companies that operate in Arizona. They entered a contract under which Sunland would transfer newborn calves to Milky Way, which would buy the bull calves and temporarily raise the heifers for Sunland. Sunland would pay Milky Way the costs of caring for the newborn heifers, less the amount Milky Way owed for the bull calves. Sunland tagged the ears of all the livestock it transferred to identify the animals as Sunland's property. Milky Way removed the tags, foreclosing any way of identifying which of the animals belonged to Sunland. Additionally, due to Milky Way's accounting problems, Sunland failed to reimburse Milky Way for the heifers' care.

¶3 Sunland demanded that Milky Way return its heifers. When Milky Way failed to return 519 of them, Sunland filed suit. Among other claims, Sunland alleged Milky Way converted the 519 heifers and was liable for treble damages under A.R.S. §§ 3-1304 (providing a tortfeasor is "liable to the owner of the animal for three times the value thereof") and -1307 (similar damages provision), two statutes addressing conversion of livestock. The parties both moved for summary judgment. Milky Way argued that neither A.R.S. §§ 3-1304, nor -1307, provide for a private right of action. The superior court found that they did, denied Milky Way's motion, partially granted Sunland's motion, and allowed the claims to proceed to trial.

¶4 The court held a six-day jury trial. Sunland proposed a jury instruction using the "highest intermediate value" method for calculating damages, which measured damages based on the highest market value of the cattle from the time they were converted until the time Sunland discovered the conversion. Milky Way objected and asserted the only proper measure of damages was the heifer's market value at the time they were converted. The superior court largely agreed with Sunland's proposed instruction and instructed the jury to base damages on the heifers' highest market value during the period between their conversion and Sunland's discovery of the conversion.

¶5 Ultimately, the jury found that Milky Way had converted Sunland's heifers and was liable under A.R.S. §§ 3-1304 and -1307. The jury separately found that Sunland owed Milky Way an offset for the costs for feeding, vaccinating, and breeding the heifers. The jury found the total value of the converted heifers was $1,304,075.73. The court trebled that amount to $3,912,227.19, pursuant to A.R.S. §§ 3-1304 and -1307(C). The court then subtracted $948,991.50—the costs the jury found Sunland had failed to pay Milky Way—added other damages amounting to $39,156, and arrived at a final damage calculation of $3,002,391.69. The court denied Sunland's request for pre-judgment interest.

¶6 The court also awarded Sunland attorneys' fees under A.R.S. § 12-341.01. Though Sunland requested a total fee award of $1,501,195.85, the court found the requested amount unreasonable and instead awarded $630,031.50 in attorneys' fees.

¶7 The parties timely appealed and cross-appealed, raising numerous issues. We have jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

I. Milky Way's Appeal.

¶8 Milky Way argues the superior court erred in: 1) ruling that A.R.S. §§ 3-1304 and -1307 provide private rights of action; 2) trebling the jury's conversion damages before applying the offset for the unpaid costs of care; 3) instructing the jury to use the "highest intermediate value" theory of damages; and 4) awarding Sunland its attorneys' fees under A.R.S. § 12-341.01. We address each argument in turn.

A. The superior court did not err in finding A.R.S. §§ 3-1304 and -1307 provide private rights of action.

¶9 Statutory interpretation is a question of law, which we review de novo. McNamara v. Citizens Protecting Tax Payers , 236 Ariz. 192, 194, ¶ 5, 337 P.3d 557, 559 (App. 2014). Our goal in interpreting a statute is to ascertain the legislature's intent. ABCDW, LLC v. Banning , 241 Ariz. 427, 434, ¶ 29, 388 P.3d 821, 828 (App. 2016).

¶10 As always, we begin with the text of the relevant statutory provisions. A.R.S. § 3-1304 states:

A person who brands or marks an animal with a brand other than the recorded brand of the owner, or who effaces, defaces, alters or obliterates any brand or mark upon any animal, with intent to convert the animal to his own use, is guilty of a class 4 felony and is liable to the owner of the animal for three times the value thereof.

And A.R.S. § 3-1307 reads, in relevant part:

A. A person who knowingly kills or sells livestock of another, the ownership of which is known or unknown, or who knowingly purchases livestock of another, the ownership of which is known or unknown, from a person not having the lawful right to sell or dispose of such animals, is guilty of a class 5 felony.

[...]

C. In addition to any other penalty imposed by this section, a person depriving the owner of the use of his animal or animals under subsection A or B of this section shall be liable to the owner for damages equal to three times the value of such animal or animals.

[...]

¶11 We reject Milky Way's argument that these statutes do not provide for a private cause of action. Though the statutes do not explicitly reference a "cause of action," they both provide that any individual who converts, kills, or sells, another's animal is "liable to the owner of the animal" for three times the value of the animal converted, killed, or sold. A.R.S. §§ 3-1304, -1307(C). Though Milky Way asserts this phrase refers to criminal liability, a statute establishing only criminal liability generally will not refer to liability to an individual . See, e.g. , A.R.S. § 13-1802 et seq. (defining and establishing penalties for the crime of theft). Likewise, the criminal code requires one convicted of a crime to make restitution to the victim "in the full amount of the economic loss," see A.R.S. § 13-603(C), but does not contemplate statutory treble damages as a component of any such calculation, see Paroline v. United States , 572 U.S. 434, 455-56, 134 S.Ct. 1710, 188 L.Ed.2d 714 (2014) (noting that restitution in amounts exceeding the harm caused by a defendant may implicate the Constitution's Excessive Fines Clause). Accordingly, the most natural reading of "liable to the owner" is that A.R.S. §§ 3-1304 and -1307(C) provide for a civil cause of action. Accordingly, we affirm the superior court's determination that A.R.S. §§ 3-1304 and -1307 provide express private rights of action.

¶12 Moreover, even if the statutes were read as not expressly contemplating a private right of action, the statutes imply a private right of action. In determining whether a statute implies a private right of action, "we consider ‘the context of the statutes, the language used, the subject matter, the effect and consequences, and the spirit and purpose of the law.’ " Napier v. Bertram , 191 Ariz. 238, 240-41, ¶ 9, 954 P.2d 1389, 1391-92 (1998) (quoting Sellinger v. Freeway Mobile Home Sales, Inc. , 110 Ariz. 573, 576, 521 P.2d 1119, 1122 (1974) ). The statutes in question are designed to protect the owner of livestock and hold a tortfeasor "liable to the owner." Their spirit and purpose is to allow punishment—both criminal, through felony designation, and civil, via treble damages—of anyone who unlawfully converts, kills, or sells another's livestock. We cannot read the remedies outlined in A.R.S. §§ 3-1304 and -1307 as limited to establishing criminal liability for the prohibited conduct. We affirm the superior court's holding that these statutes provide a private right of action.

B. The superior court did not err in trebling Sunland's damages before applying Milky Way's offset.

¶13 Milky Way argues the superior court erred by trebling Sunland's gross damages rather than net damages. Again, this is a matter of statutory interpretation, which we review de novo. McNamara , 236 Ariz. at 194, ¶ 5, 337 P.3d at 559.

¶14 We agree with the superior court that this issue is resolved by the statutes' plain language. Both A.R.S. §§ 3-1304 and -1307(C) provide that the owner of the converted, killed or sold animals is entitled to "three times the value thereof." The jury found each of the 519 converted heifers was worth $2,512.67. Therefore, the proper measure of Sunland's damages for each converted heifer is triple that amount. If the offset were applied before trebling the damages, then the offset would be trebled as well, and deny Sunland recovery of "three times the value" of the animals to which it is statutorily entitled. A.R.S. §§ 3-1304, -1307.

C. The superior court did not err in instructing the jury...