Volentine v. Raeford Farms of La., LLC

• Court: Court of Appeal of Louisiana
• Writing for the Court: CARAWAY, J.
• Citation: Volentine v. Raeford Farms of La., LLC, 201 So.3d 325 (La. App. 2016)
• Decision Date: 15 August 2016
• Docket Number: No. 50,698–CA.,50,698–CA.
• Parties: Dan and Diane VOLENTINE, Plaintiffs–Appellees v. RAEFORD FARMS OF LOUISIANA, LLC, et al., Defendant–Appellant.

201 So.3d 325

Dan and Diane VOLENTINE, Plaintiffs–Appellees

v.RAEFORD FARMS OF LOUISIANA, LLC, et al., Defendant–Appellant.

No. 50,698–CA.

Court of Appeal of Louisiana, Second Circuit.

Aug. 15, 2016.

On Rehearing in Part Sept. 23, 2016.

Gold, Weems, Bruser, Sues & Rundell, by Randall L. Wilmore, Steven M. Oxenhandler, Michael J. O'Shee, for Appellant.

Colvin, Smith & McKay, by James H. Colvin, Cole B. Smith, Taunton Melville, Newell & Newell, by Daniel Newell, for Appellees.

Before WILLIAMS, CARAWAY and MOORE, JJ.

CARAWAY, J.

This case involves the chicken breeder contract between a breeder farmer and a large chicken manufacturing company which was the subject of this court's prior opinion in Volentine v. Raeford Farms of La., L.L.C., 48,219 (La.App.2d Cir.7/24/13), 121 So.3d 742, writ denied, 13–2493 (La.1/17/14), 130 So.3d 948 (“Volentine I ”). Upon remand of the case and trial, the trial court determined that the company had terminated the plaintiffs' breeder contract in bad faith, violating the terms of the contract and the Louisiana Unfair Trade Practices Act (La. R.S. 51:1405 ) (hereinafter “LUTPA”). The court awarded damages for, among other things, plaintiffs' loss of income, the loss of the family farm and mental anguish. The defendant company appeals the trial court's ruling on the contract termination and the damages awards. We affirm in part and reverse in part.

Facts

Facts of this case can be found in our previous consideration of the parties' contract in Volentine I, supra. After remand, the case proceeded to a bench trial. The following chronology and overview of facts are set forth for purposes of the issues raised on appeal.

The Parties' Entry into the Contract—2004

In 1992, Dan Volentine (“Volentine”) gave his two children property for the purpose of building four breeder houses.¹ In the late 1990s Dan and his wife Dianne managed these farms because their children both held jobs. At that time, Raeford Farms was not the integrator for the area. By 2002, Dan's son desired to go into the broiler side of the business. To that end, Dan gave his son more land to build broiler houses, and Dan and Dianne purchased the breeder house property from their children in 2002. The Volentines' debt by 2002 was $1,361,511.

On January 20, 2004, Volentine entered into two hatching egg production contracts (hereinafter the “Contract”) with Raeford Farms of Louisiana, LLC (“Raeford”), covering two units containing two houses each (two farms). Under the Contract, Raeford furnished breeding hens, feed and medication and agreed to provide technical advice, catching and marketing, feed delivery and egg pick-up. The trial court's opinion recognized that “at all times pertinent, Raeford was essentially Volentine's only source of supply of chickens.”

Under the Contract, Volentine agreed to provide, at his cost, all labor, utilities, litter and supplies and to “provide housing and equipment well maintained and fully equipped as required by Company specifications.” Additionally, Volentine agreed to “cooperate with the Company in adopting and/or installing new proven management practices and equipment,” and to “properly dispose of dead birds, manure and poultry litter in accordance with government regulations and Raeford Farms of Louisiana, LLC, recommendations.”

The specific events of default under the Contract included “failure of the Producer to properly care for and protect any of the Company's property,” “the occurrence of any event which in the opinion of the Company endangers or impairs the Company's property,” “failure of the Producer to comply with any provision of this contract,” and “failure of the Producer to consistently produce hatching eggs in an efficient competitive manner.”

The trial testimony revealed that Volentine received 32¢ per dozen for the eggs produced. The Contract additionally contained provisions for “hatchability” and “feed conversion” bonuses paid by Raeford after the flocks were sold. These bonuses were calculated on a 36–week period and provided working capital for the growers between flocks. Generally speaking, hatchability bonuses were awarded to any grower who had greater than an 81.49% hatch rate and the feed bonuses were awarded to anyone who used less than 6.91 pounds of feed per dozen eggs.

Volentine received his first flocks (RR5) on December 17, 2004, and January 21, 2005. For these flocks, he received $8,035.35 and $10,341.03 hatch bonuses and $14,463.63 and $13,295.61 feed bonuses. He received flocks (RR7) again on December 15, 2005, and January 15, 2006. For those flocks, he received $8,996.40 and $8,845.20 in hatch bonuses and $2,570.40 and $2,527.20 in feed bonuses.

Coinciding with his receipt of his first flocks in late 2004, Volentine expended $200,000 in improvements to the farm including new nesting systems. He borrowed $145,000 in late 2004. By January 2005, Volentine's level of debt was $1,515,950. Volentine testified at trial that Raeford insisted on the investments for his houses in 2004, contrary to his understanding of the Contract.

New Raeford Management/Catastrophic Bird Losses—2007

Sam LeNarz became live operations manager of Raeford in February of 2007. The live operations manager supervises the breeder manager. In September of 2007, near the end or in between flocks, Kelly Garris became breeder manager for Raeford and was responsible for two service technicians who visited the breeder farms. She supervised service technicians Ike Lipstom and Chris Ovitt. Ovitt serviced Volentine's farm in 2007–2008. The service technicians visited the farms three times per week and prepared service reports.

Volentine's third flock arrived on November 21, 2006, and December 15, 2006. For those flocks, he received $7,374.24 and $7,441.24 in hatch bonuses and $9,832.22 and $8,681.45 in feed bonuses. The flocks were sold on September 4 and 19, 2007. On May 11 and June 8, 2007, however, Volentine experienced catastrophic bird losses (4,000–6,000 chickens) for these flocks due to electrical outages caused by overheated breakers which were destroyed.

After the losses, Raeford “asked him” to replace all the main breakers on the farm. A meeting was held on June 22, 2007, to address the problems with Volentine. The Volentines, LeNarz, Garris, Chris Perry (former breeder manager) and Ovitt attended this meeting. Raeford expressed dissatisfaction with the feed system, bird disposal issues, waterline issues, and dirty eggs. A letter followed, documenting for Volentine the problems Raeford had with his farm. The need for a new alarm system was raised. Specifically, LeNarz indicated that “the farm alarm is a priority item.”

In a letter sent to Volentine by LeNarz, on August 22, 2007, Volentine was informed that “there has not been any progress” since the June meeting. By August of 2007, photographs of the farm were taken by Raeford in an attempt to document deficiencies.

Placement of Volentine's next flock of birds was delayed due to the requested “routine maintenance items” that were not corrected by Volentine at the time of scheduled delivery of birds on October 19, 2007. Additionally, no alarm system was installed at that time. Volentine called LeNarz on October 18, 2007, and the two engaged in a heated discussion about the delayed bird delivery. On October 19, 2007, Garris and LeNarz visited the farm and determined the farm was “not ready for birds.” A letter of November 13, 2007, from Garris to Volentine indicated that issues still needed to be addressed.

Ultimately, Volentine alleged that he was required to expend $116,000 in improvements before getting his last flocks of birds on November 30, 2007 and January 4, 2008. To raise money for the improvements, Volentine sold a tract of land and all of his cattle. LeNarz and Garris visited the farm prior to the two bird placements.

Termination of Contract—2008

In February of 2008, Volentine admitted to having labor problems. Dan and Dianne began to perform the work needed on the farm. Issues arose between Volentine and Raeford regarding certain farm bills that Raeford paid on behalf of Volentine. By July 28, 2008, LeNarz sent a memo to Dennis Beasley, a principal owner of House of Raeford Farms, Inc., the parent entity of Raeford. LeNarz informed Beasley that Volentine was “currently our worst producing farm.” LeNarz also reported alleged deficiencies on Volentine's farm and proposed to “either buy him out or lease his farm,” to “avoid a potential lawsuit.”

On August 1, 2008, a meeting with Volentine was held. Volentine, his son, Kevin, Wade Holloway (Volentine's banker), Garris, Ovitt and LeNarz were present. At the meeting, Volentine was told by Raeford that his Contract was being terminated. LeNarz refused to allow Volentine to sell or lease his farm to Kevin and gave him two weeks to determine if he “had a buyer or a lessee.” Volentine followed up with a letter to Garris, requesting that he not be taken out of the rotation for the next flock. An October 2, 2008 letter from Raeford to Volentine formally terminated the Contract based upon Volentine's alleged breach of contract. These final flocks were sold on September 3, 2008, and October 13, 2008. Volentine received feed bonuses of $4,734.72 and $3,545.10 and one hatch bonus of $4,734.72.

On July 24, 2009, Volentine sold his farm to Jeremy Wayne Gantt for $1,297,834.25.

Trial Court Ruling

After considering the evidence and testimony, the trial court ruled in favor of Dan and Dianne Volentine, against House of Raeford Farms, Inc., and Raeford Farms of Louisiana, L.L.C., jointly and in solido, in the amount of $3,996,773.00 Additionally, the court awarded $391,219.40 in attorney fees. Generally, the court ruled that “Raeford abused its extensive power by using the obligation to provide flocks of chickens as a ‘carrot’ to force Volentine to meet its ever-evolving, unwritten ‘company specifications' which caused significant financial distress to the Volentines.” The Court noted that “after utilizing this unscrupulous...