Ward v. Intermountain Farmers Ass'n

• Decision Date: 15 November 1995
• Docket Number: No. 940109,940109
• Parties: Earl WARD, Plaintiff and Appellant, v. INTERMOUNTAIN FARMERS ASSOCIATION, a Utah corporation, Defendant and Appellee.
• Court: Utah Supreme Court

Page 264

907 P.2d 264

Earl WARD, Plaintiff and Appellant, v. INTERMOUNTAIN FARMERS ASSOCIATION, a Utah corporation Defendant and Appellee.

No. 940109.

Supreme Court of Utah.

Nov. 15, 1995.

Thompson E. Fehr, Ogden, for plaintiff.

John R. Lund, Julianne Blanch, Salt Lake City, for defendant.

DURHAM, Justice:

Plaintiff Earl Ward appeals from the district court's grant of summary judgment in favor of defendant Intermountain Farmers Association ("IFA"). We reverse.

"Before we recite the facts, we note that in reviewing a grant of summary judgment, we view the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Higgins v. Salt Lake County, 855 P.2d 231, 233 (Utah 1993). "We state the facts in this case accordingly." Id.

IFA is a Utah corporation that conducts business in both Utah and Idaho. In March 1988, Ward contracted with IFA, at its place of business in Cache County, Utah, to purchase three types of fertilizer and the herbicide Treflan. As part of the contract, IFA agreed to apply the fertilizers and Treflan to Ward's nineteen-acre field of safflower. The safflower field is located near Ward's residence immediately across the Idaho border in Dayton, Idaho.

On March 25, 1988, Robert Evans, an IFA employee residing in Utah, sprayed Ward's safflower field. Evans holds a Utah commercial applicator's license which, through a reciprocity agreement between Idaho and Utah, allows Evans to work as an applicator in Idaho. Prior to spraying Ward's safflower, Evans had used the sprayer apparatus to apply Velpar L, a powerful herbicide, to a field in Utah. Evans did not properly clean the sprayer tank before filling it with the chemicals that Ward had ordered. As a result, the Velpar L residue in the tank mixed with the fertilizer and the Treflan, and the mixture was sprayed on Ward's safflower.

Sometime after Evans sprayed Ward's crop, Ward noticed that a significant amount of the safflower was dying. Ward contacted IFA immediately. Representatives of IFA repeatedly assured Ward that IFA "would take care" of him. After tests conducted by Utah State University revealed that the injury to the safflower was consistent with exposure to Velpar L, representatives of IFA told Ward that they would spray the field to neutralize the Velpar L. IFA later asserted, however, that the potential harm was so slight that it didn't justify the cost of neutralization.

Ward and IFA eventually entered into settlement negotiations. At the conclusion of the negotiations, IFA representatives presented the following release agreement to Ward:

AGREEMENT

Upon payment of $4901.27, receipt of which is hereby acknowledged ($900.00 check and $4001.27 credit to my account), I, Earl H. Ward, hereby agree to release and hold harmless Intermountain Farmers Association for any and all damages caused Ward testified via affidavit that he originally refused to sign the release agreement because he was concerned about the lingering effects of the Velpar L on the beans which would be planted in the field the following spring. Upon hearing this concern, IFA representatives told Mr. Ward not to worry because they were sure there would be no problem. They further indicated that if a problem arose, they would address it at that time. According to Ward, the IFA representatives indicated that "they had to settle one year at a time; so, we needed to reach a settlement on the safflower." IFA representatives also brought Du Pont representative Robert M. Jencks to Ward's home. ¹ Jencks told Ward that if he were Ward, "he would go ahead and plant beans in the field." Ward ultimately signed the release on November 28, 1988.

by the spraying of my approximate nineteen acres of safflower.

After the beans which Ward planted in the spring of 1989 began to die, representatives of IFA again visited Ward's field. Ward testified via affidavit that IFA representative Brent Kunz stated: "Earl, this is not your problem; it is our problem. We told you we would take care of you, and we will." Despite these representations, IFA refused to compensate Ward for the damage to his beans.

Ward filed suit against IFA on March 23, 1992, to recover for the damages to his bean crop and for crop damage consistent with the application of Velpar L that has appeared every year since IFA sprayed the safflower.

IFA moved for summary judgment on the following grounds: (i) Ward's action was barred by Idaho's products liability statute of limitations, Idaho Code § 6-1407; (ii) Ward's action was barred by Idaho's professional malpractice statute of limitations, id. § 5-219; and (iii) the release agreement precluded Ward's claim. In response, Ward argued that Utah law governed this action and that no Utah statute of limitations barred his claim. Ward also asserted that even if Idaho law applied, his action was not barred by any Idaho statute of limitations. Finally, Ward contended that the release agreement was ambiguous and extrinsic evidence demonstrated that it applied only to the damage to the safflower crop.

The district court granted IFA's motion for summary judgment. According to the district court, Ward's action was governed by Idaho law and was time-barred under Idaho's products liability and professional malpractice statutes of limitations. The district court also held that, in the alternative, the release agreement unambiguously released IFA from all claims for future damages. Ward appeals.

We first state the applicable standard of review. Summary judgment is appropriate only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Utah R.Civ.P. 56(c); Higgins, 855 P.2d at 235. Because entitlement to summary judgment is a question of law, we accord no deference to the trial court's resolution of the legal issues presented. Higgins, 855 P.2d at 235; Ferree v. State, 784 P.2d 149, 151 (Utah 1989). "We determine only whether the trial court erred in applying the governing law and whether the trial court correctly held that there were no disputed issues of material fact." Ferree, 784 P.2d at 151 (citing Bushnell Real Estate, Inc. v. Nielson, 672 P.2d 746, 749 (Utah 1983); Bowen v. Riverton City, 656 P.2d 434, 436 (Utah 1982)).

The first issue is whether Ward's action is time-barred. The trial court found, "This action is not one for breach of contract even though the complaint was so drafted." Instead, the trial court held that this is a tort action and is therefore barred by the malpractice and product liability statutes of limitations. This conclusion is unsupported by the pleadings and the law.

Ward has pleaded a simple and straightforward breach-of-contract action. IFA contracted with Ward to apply three fertilizers and the herbicide Treflan to Ward's field. IFA breached this contract by applying an entirely different combination of chemicals than the solution contracted for. Instead of applying the solution contracted for, IFA Except for the extent of damage, the facts alleged in Ward's complaint are not disputed. Although such a fact scenario could also give rise to a tort claim, it contains all of the elements of a contract action. Ward may therefore elect in this case to waive the tort and sue on the contract. ² Nothing before us indicates that Ward has used the pleadings to manipulate or distort the gravamen of the action. Accordingly, under both Utah and Idaho limitations statutes for oral contract actions, ³ Ward's breach of contract claim was timely filed. ⁴

applied a mix of fertilizers, Treflan, and Velpar L, a herbicide, thereby causing damage to Ward's field. Ward's complaint makes no reference whatsoever to strict liability, negligence, express or implied warranty, professional standards of care, or any other duty imposed by law. Nor does Ward's action impliedly rely on any of these principles. Rather, Ward's action is based on breach of specific terms of the contract between the parties.

We next consider whether the release agreement bars Ward's claims. Releases are contractual provisions and should be interpreted according to well-developed rules of contract interpretation. See, e.g., Simonson v. Travis, 728 P.2d 999, 1001-02 (Utah 1986); Horgan v. Industrial Design Corp., 657 P.2d 751, 753 (Utah 1982). Ward argues that extrinsic evidence is necessary to understand what the parties intended to accomplish with the agreement and that consideration of extrinsic evidence is proper because the language of the agreement is ambiguous. ⁵

This court has held that as a principle of contract interpretation, the parol evidence rule has only a narrow application. Hall v. Process Instruments & Control, 890 P.2d 1024, 1026 (Utah 1995) (citing Union Bank v. Swenson, 707 P.2d 663, 665 (Utah 1985)). Simply stated, the rule operates, in the absence of invalidating causes such as fraud or illegality, to exclude evidence of prior or contemporaneous conversations, representations, or statements offered for the purpose of varying or adding to the terms of an integrated contract. Hall, 890 P.2d at 1026. Of course, "[n]o parol evidence that is offered can be said to vary or contradict a writing until by process of interpretation it is determined what the writing means." 3 Arthur L. Corbin, Corbin on Contracts § 579, at 412 (1960) [hereinafter Corbin ]. Accordingly, we have held that a court may consider extrinsic evidence if the meaning of the contract is ambiguous or uncertain. Winegar v. Froerer Corp., 813 P.2d 104, 108 (Utah 1991) (citing Faulkner v. Farnsworth, 665 P.2d 1292, 1293 (Utah 1983)); see also Hall, 890 P.2d at 1026-27 (citing Colonial Leasing Co. of New England, Inc. v. Larsen Bros. Constr., 731 P.2d 483, 487 (Utah 1986)). When determining whether a contract is ambiguous, any relevant evidence must be considered. Otherwise, the determination of ambiguity is inherently one-sided, namely, it is based solely on the " 'extrinsic evidence of the judge's own...