Urschel Farms, Inc. v. Dekalb Swine Breeders, Inc., 3:93cv0211 AS.

• Decision Date: 14 February 1994
• Docket Number: No. 3:93cv0211 AS.,3:93cv0211 AS.
• Citation: 858 F. Supp. 831
• Parties: URSCHEL FARMS, INC., Harding Farms, Plaintiffs, v. DEKALB SWINE BREEDERS, INC., Defendant.
• Court: U.S. District Court — Northern District of Indiana

858 F. Supp. 831

URSCHEL FARMS, INC., Harding Farms, Plaintiffs, v. DEKALB SWINE BREEDERS, INC., Defendant.

No. 3:93cv0211 AS.

United States District Court, N.D. Indiana, South Bend Division.

February 14, 1994.

Diana C. Bauer, Milford M. Miller, Miller Carson Boxberger and Murphy, Fort Wayne, IN, for plaintiffs.

Douglas F. Fuson, Sidley and Austin, Chicago, IL, James R. Byron, Thorne Grodnik Ransel Duncan Byron and Hostetler, Elkhart, IN, for defendant.

MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

I. Procedural History

On March 2, 1993, the plaintiffs, Urschel Farms, Inc., and Harding Farms (hereinafter referred to jointly as "Urschel Farms"), filed a complaint in Wabash Circuit Court against Dekalb Swine Breeders, Inc. ("Dekalb"), alleging fraudulent misrepresentations. On March 29, 1993, the defendant filed its notice of removal with this court, which has diversity jurisdiction pursuant to 28 U.S.C. § 1332. On November 29, 1993, the defendant filed its motion for summary judgment. On January 3, 1994, the plaintiffs filed their memorandum in opposition to the defendant's motion. The defendant filed its response to the plaintiffs' memorandum on January 21, 1994. Oral argument was heard in South Bend on February 11, 1994.

II. Facts

Urschel Farms owns and operates a hog farm in Urbana, Wabash County, Indiana. Dekalb operates an incorporated swine breeding business in Illinois. Between July 9, 1990, and February 19, 1992, the plaintiffs bought twenty-one boars from Dekalb. Defendant's Memorandum in Support of Motion for Summary Judgment ("Defendant's Memorandum") at 4. The parties executed five contracts in total during these transactions, all of which were signed by William P. Urschel. The plaintiffs allege that during the period between 1990 and 1992, their representative repeatedly inquired about rhinitis problems in Dekalb breeding stock. Plaintiffs' Complaint ¶¶ 8-18. The plaintiffs claim that the defendant's representatives denied any problems with rhinitis in its herd. Urschel Farms claims to have detected an increase of rhinitis symptoms in its herd during this two-year period. Id. On April 9, 1992, a snout check for acute rhinitis on a boar purchased from the defendants tested positive with "extreme terbinate damage." Id. ¶ 20.

III. Standard of Review

Summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there exists no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Russo v. Health, Welfare & Pension Fund, Local 705, 984 F.2d 762 (7th Cir.1993).

A thorough discussion of Rule 56 by the Supreme Court of the United States can be found in a trilogy of cases decided in 1986. See, Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)¹; and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Celotex addressed the initial burdens of the parties under Rule 56, and Anderson addressed the standards under which the record is to be analyzed within the structure of Rule 56.

The initial burden is on the moving party to demonstrate, "with or without supporting affidavits," the absence of a genuine issue of material fact and that judgment as a matter of law should be granted in the moving party's favor. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56). A material question of fact is a question which will be outcome determinative of an issue in the case. The Supreme Court has instructed that the facts material in a specific case shall be determined by the substantive law controlling the given case or issue. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.

Once the moving party has met the initial burden, the opposing party must "go beyond the pleadings" and "designate `specific facts showing that there is a genuine material issue for trial.'" Id. The nonmoving party cannot rest on its pleadings, Hughes v. Joliet Correctional Center, 931 F.2d 425, 428 (7th Cir.1991), or upon conclusory allegations in affidavits. Cusson-Cobb v. O'Lessker, 953 F.2d 1079, 1081 (7th Cir.1992). "The days are gone, if they ever existed, when the nonmoving party could sit back and simply poke holes in the moving party's summary judgment motion." Fitzpatrick v. Catholic Bishop of Chicago, 916 F.2d 1254, 1256 (7th Cir.1990).

During its analysis, this court must construe the facts and draw all reasonable inferences in the light most favorable to the nonmoving party. Brennan v. Daley, 929 F.2d 346, 348 (7th Cir.1991). Furthermore, it is required to analyze summary judgment motions under the standard of proof relevant to the case or issue. Anderson, 477 U.S. at 252-255, 106 S.Ct. at 2512-2514.

The 1986 Supreme Court trilogy was recently re-examined in Eastman Kodak v. Image Technical Services, ___ U.S. ___, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), a case born in the context of antitrust law. The most that can be said for Kodak is that it did not tinker with Celotex and Anderson, and possibly involves an attempt to clarify Matsushita. This view is well supported by an in-depth academic analysis in Schwarzer, Hirsch, and Barrans, The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441 (1992).

IV. Analysis

In this case, the defendant claims that it is entitled to summary judgment as a matter of law. Dekalb argues that its agreements, which limit all warranties and remedies, disclose the presence of disease in its herd, and contain a valid integration clause, are the final expression of the parties' intentions. Thus, the defendant claims this court should find that the parol evidence rule bars admission of any oral representations made to the plaintiffs. The plaintiffs allege that the oral representations became part of the contract as guarantees that the breeding stock was disease free. Alternately, Urschel claims that the oral representations were fraudulent, and thus admissible as an exception to the parol evidence rule. In its analysis, this court must first determine whether these agreements were fully integrated and, if so, whether an exception to the parol evidence rule applies.

A. Whether the parol evidence rule bars admission of oral statements.

In Merk v. Jewel Food Stores, 945 F.2d 889 (7th Cir.1991), Judge Cudahy aptly formulated the parol evidence rule:

The parol evidence rule provides that evidence of prior or contemporaneous agreements or negotiations may not be introduced to contradict the terms of a partially or completely integrated writing. See Restatement (Second) of Contracts § 215. A writing is deemed fully integrated if the parties intend it to be the expression of their entire agreement. If they intend the writing to be the final expression of the terms it contains but not a complete expression of all the terms agreed upon — some terms remaining unwritten — the agreement is termed partially integrated. See E. Farnsworth, Contracts 452 (1982). If a writing is only partially integrated, evidence of prior or contemporaneous agreements is admissible to supplement its terms though not to contradict it. If an agreement is completely integrated, however, not even evidence of a "consistent additional term" may be introduced to elucidate the writing. See id.; Restatement (Second) of Contracts § 215.

945 F.2d at 892-893.

In this case, the transactions involved the sale of goods, pursuant to Ind.Code Ann. § 26-1-2-105; thus, this court's analysis is governed by the Uniform Commercial Code as codified in Indiana.² The statutory language is concise on its restriction of parol evidence:

Final written expression; parol or extrinsic evidence

Sec. 202. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:

(a) by course of dealing or usage of trade or by course of performance; and (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

Ind.Code Ann. § 26-1-2.1-202 (Supp.1993).

As Judge Cudahy stated in Jewel, the determination regarding the validity of an integration clause is a question of law:

Whether a writing is fully integrated is generally a question of law to be resolved by a court. See Calder v. Camp Grove State Bank, 892 F.2d 629, 631-32 (7th Cir. 1990); E. Farnsworth, Contracts 460. A judge and not a jury should ordinarily answer this threshold question because it often requires going beyond the four corners of the written document and scrutinizing the very extrinsic evidence whose admissibility is at issue. See E. Farnsworth, Contracts 456 n. 25 ("If there seems to be some circularity in examining the very evidence whose admissibility is at stake in order to determine its admissibility, it may help to keep in mind that this examination is made as a matter of law in order to determine whether the evidence shall go to the trier of fact.")

945 F.2d 889 (1991). This determination is properly at issue on a motion for summary judgment:

In absence of ambiguity, it is not within the function of the courts to look outside the instrument to arrive at the intention of the parties. Kincaid v. Lazar (1980), Ind. App., 405 N.E.2d 615, 620. Words of particular meaning will control general terms where both cannot stand together. Fineberg v. Clark (1965), 137 Ind.App. 528, 209 N.E.2d 528, 534, reh. denied, 137 Ind.App. 528, 210 N.E.2d 260. In most cases, construction of a written contract is a question of law for the

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