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Silver Creek Seed, LLC v. Sunrain Varieties, LLC

Supreme Court of Idaho

November 30, 2016

SILVER CREEK SEED, LLC, an Idaho limited liability company, Plaintiff-Counterdefendant-Respondent,
v.
SUNRAIN VARIETIES, LLC, a Delaware limited liability company, Defendant-Counterclaimant-Appellant.

         2016 Opinion No. 140

         Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Blaine County. Hon. Robert J. Elgee, District Judge.

         The judgment of the district court is affirmed.

          Beard St. Clair Gaffney PA, Idaho Falls, for appellant. John M. Avondet argued.

          Wright Brothers Law Office, PLLC, Twin Falls, for respondent. Andrew B. Wright argued.

          J. JONES, Chief Justice

         This is a contract dispute between Silver Creek Seed, LLC ("Silver Creek") and Sunrain Varieties, LLC ("Sunrain"), arising from the development of Bacterial Ring Rot ("BRR") in two of the potato varieties grown by Silver Creek for Sunrain. After a four-day trial, the jury returned a verdict awarding damages to Silver Creek. Sunrain timely appealed: (1) the district court's denial of a motion to reconsider an order granting partial summary judgment to Silver Creek; (2) the exclusion of the back side of the Idaho Crop Improvement Association ("ICIA") blue tag from evidence; (3) the admission of testimony relating to the source of the BRR; (4) alleged errors in jury instructions; (5) the award of prejudgment interest to Silver Creek and (6) the award of attorney fees and costs to Silver Creek. Both parties seek attorney fees on appeal.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In May 2012, Mark Johnson, on behalf of Silver Creek, entered into a contract with Sunrain to grow seed potatoes of several proprietary varieties for Sunrain. The contract was for the seed year 2012/2013, with the seed to be resold to Sunrain following the growing season. Previous iterations (referred to as "generations") of one of the varieties, the 84180s, had been grown in Washington State on Ebe Farms in 2010 and in Nevada in 2011. Ebe farms tested positive for BRR in 2011.

         Some of the Sunrain seed grown by Silver Creek in 2012, including the 84180s, was stored by Silver Creek at Sunrain's request over the winter of 2011. The remainder of the Sunrain seed was delivered to Silver Creek prior to planting in 2012. Silver Creek cut and planted the Sunrain seed during the 2012 crop season. The resulting harvest was placed in storage by Silver Creek. In December 2012 and March 2013, Sunrain arranged for portions of the harvest to be picked up from Silver Creek and delivered to Sunrain customers. These shipments met Idaho's certification requirements for seed potatoes. The March 2013 shipment consisted of the 84180 variety, which was sold by Sunrain to a third-party farmer. Thereafter, additional testing was conducted in contemplation of exporting a portion of the potatoes to Canada. These tests revealed the presence of BRR in the remaining 84180 and Rumba varieties. Silver Creek then conducted extensive testing on the other Sunrain potato varieties, all of which tested negative for BRR.

         The parties met to discuss the test results and possible options. Ultimately, it was decided to sell the infected potatoes as cattle feed. The infected potatoes were collected from Silver Creek and shipped accordingly. Sunrain did not divide proceeds from either the March 2013 shipment or the cattle feed shipment with Silver Creek. Sunrain also failed to pay Silver Creek for the remaining Sunrain varieties grown by Silver Creek that tested negative for BRR.

         Soon thereafter, communication between the parties broke down and Silver Creek filed suit, alleging that Sunrain had breached the contract and the implied warranties relating to the seed potatoes. Sunrain counterclaimed, alleging that Silver Creek had breached the contract by failing to pay for the seed potatoes received from Sunrain.

         Prior to trial, the district court granted Silver Creek's motion for partial summary judgment. In its order, the court held that Sunrain had accepted and was obligated to pay Silver Creek for the 84180s that had been shipped prior to the positive BRR test, and that Sunrain should have accepted and paid Silver Creek for the other varieties that tested negative for BRR.

         The case then proceeded to trial. Before the case was submitted to the jury, Sunrain moved for directed verdict on Count II of its counterclaim, which concerned payment for a portion of the seed potatoes delivered by Sunrain to Silver Creek. Silver Creek did not dispute the amount owed, so the Court granted the motion and damages associated with the counterclaim were not presented to the jury. These damages were later offset by the jury award to Silver Creek.

         The jury returned a verdict in favor of Silver Creek awarding $678, 828.60 in damages relating to the 84180 potatoes delivered prior to the discovery of BRR and the varieties that tested negative for BRR. The jury also awarded Silver Creek $81, 910.50 in damages relating to the Rumba and undelivered 84180 potatoes.

         Following the verdict, Silver Creek moved for prejudgment interest on the damages awarded to it by the jury. The court granted the motion and judgment was entered in favor of Silver Creek on March 13, 2015. Sunrain timely appealed.

         III. ISSUES PRESENTED ON APPEAL

         1. Whether the district court erred by denying Sunrain's Motion to Reconsider.

         2. Whether the district court erred by excluding evidence of the ICIA's blue certification tags.

         3. Whether the district court erred by admitting testimony related to the presence of BRR on Ebe Farms.

         4. Whether the district court erred in instructing the jury, specifically with regard to instructions 7-9, 12, and 19 and failing to instruct the jury on contract modification.

         5. Whether the district court erred in awarding Silver Creek prejudgment interest.

         6. Whether the district court erred in awarding Silver Creek attorney fees.

         7. Whether any party is entitled to attorney fees on appeal.

         IV. STANDARD OF REVIEW

         The district court's decision to grant or deny a motion for reconsideration is reviewed by this Court using the same standard of review used by the lower court in deciding the motion for reconsideration. Fragnella v. Petrovich, 153 Idaho 266, 276, 281 P.3d 103, 113 (2012). In this case, the motion was to reconsider the grant of partial summary judgment to Silver Creek. A district court must grant a motion for summary judgment if "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Frazier v. J.R. Simplot Co., 136 Idaho 100, 102, 29 P.3d 936, 938 (2001). In making the determination, all facts are construed in the light most favorable to the non-moving party. Parks v. Safeco Ins. Co. of Illinois, 160 Idaho 556, 561, 376 P.3d 760, 765 (2016).

         "A district court's evidentiary rulings will not be disturbed by this Court unless there has been a clear abuse of discretion." Navo v. Bingham Mem'l Hosp., 160 Idaho 363, 370-71, 373 P.3d 681, 688-89 (2016) (quoting Mattox v. Life Care Ctrs. of America, Inc., 157 Idaho 468, 473, 337 P.3d 627, 632 (2014)). The abuse of discretion standard requires a three-part inquiry: "(1) whether the lower court rightly perceived the issue as one of discretion; (2) whether the court acted within the boundaries of such discretion and consistent with any legal standards applicable to specific choices; and (3) whether the court reached its decision by an exercise of reason." Id.

         This Court exercises free review over the propriety of jury instructions. Mackay v. Four Rivers Packing Co., 151 Idaho 388, 391, 257 P.3d 755, 758 (2011). "[T]he standard of review of whether a jury instruction should or should not have been given, is whether there is evidence at trial to support the instruction . . . and whether the instruction is a correct statement of the law." Clark v. Klein, 137 Idaho 154, 156, 45 P.3d 810, 812 (2002) (internal citations and quotations omitted).

         An award of prejudgment interest by a trial court is reviewed for abuse of discretion. Dillon v. Montgomery, 138 Idaho 614, 617, 67 P.3d 93, 96 (2003). Similarly, the determination of a prevailing party for purposes of an award of attorney fees is reviewable using an abuse of discretion ...


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