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Sunrise Foods International, Inc. v. Ryan Hinton Inc.

United States District Court, D. Idaho

August 8, 2019

SUNRISE FOODS INTERNATIONAL INC., Plaintiff,
v.
RYAN HINTON INC., Defendant.

          MEMORANDUM DECISION AND ORDER

          Honorable Candy W. Dale United States Magistrate Judge

         INTRODUCTION

         Currently pending before the Court is Plaintiff's motion for summary judgment, filed on April 3, 2019. (Dkt. 30.) Defendant did not respond to the motion and it is ripe for the Court's determination. Having reviewed the record, the Court finds the facts and legal arguments are adequately presented in the brief and record. Accordingly, in the interest of avoiding delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motion will be decided on the record before this Court. Dist. Idaho L. Rule 7.1(d). For the reasons that follow, the Court will grant Plaintiff's motion for summary judgment.[1]

         PROCEDURAL HISTORY

         On November 3, 2017, Sunrise Foods International, Inc. (Sunrise) filed a complaint against Ryan Hinton Inc. (Hinton). (Dkt. 1.) The complaint alleges Hinton breached its contract with Sunrise by not accepting and paying for a specified amount of certified organic corn. (Id.) Hinton filed an answer on November 28, 2017. (Dkt. 6.) On April 13, 2019, Sunrise filed its motion for summary judgment. (Dkt. 30.)

         Shortly thereafter, Hinton's attorney of record requested to withdraw. (Dkt. 31.) The Court granted the motion to withdraw, notified Hinton of its obligation to secure counsel in accordance with D. Idaho L. Rule 83.4(d), and informed Hinton that its failure to appear through newly-appointed counsel would be grounds for entry of default against it without further notice. (Dkt. 32-35.) Hinton did not respond. The Clerk entered a notice of default against Hinton on May 21, 2019. (Dkt. 38.) The Clerk entered default on May 21, 2019, per Fed.R.Civ.P. 55(a), and notice of the same was mailed to Hinton's last known mailing address. (Dkt. 36 - 40.) The Court now considers Sunrise's motion for summary judgment. (Dkt. 36.)

         FACTS

         1. Contract Formation

         Sunrise is a Canadian corporation with its principal place of business in Saskatoon, KS, Canada. Compl. ¶ 1. Hinton is an Idaho corporation owned by Mr. Ryan Hinton. Bolinger Decl. Ex. A, Hinton Dep. 12. (Dkt. 30-2 at p. 6.) Hinton is primarily a trucking company, delivering agricultural commodities and animal feed to area farmers. Bolinger Decl. Ex. 9. (Dkt. 30-3 at p. 22.) Sunrise sells certified organic corn. Pl.[s] Mot. Summ. J. (Dkt. 30-1 at p. 2.)

         Hinton entered into a contract with Sunrise in November of 2015, specifying Hinton agreed to purchase 6, 000 short tons of certified organic corn from Sunrise. (Dkt. 30-3 at p. 22.) Under the terms of the contract, Hinton would send a truck to load 500 tons of corn from ports in the Pacific Northwest each month.[2] Id. Each short ton of corn was worth $415.00. Id. The contract totaled $2, 490, 000.00. Id. The contract period began the week of October 1, 2015, and ended on September 30, 2016.[3] Id. Because Hinton was in turn selling the corn to organic dairy farmers to be used as cattle feed, the contract specified the vomitoxin level in the corn purchased from Sunrise could not exceed two parts per million. (“2 ppm”).[4] (Dkt. 30-2 at p. 8.)

         2. Vomitoxin Found in the Corn

         On December 15, 2015, Sunrise's chief executive officer, Mr. Jacob Neufeld, notified Ryan Hinton, the owner and President of Hinton, Inc., that some of the corn at Sunrise's Longview, Washington pickup site contained vomitoxin, but that the exact levels were unknown.[5] (Dkt. 30-2 at p. 17.) Mr. Neufeld informed Mr. Hinton that additional testing had been ordered. (Id. at p. 18.) He gave Mr. Hinton the option to wait for the test results, or, Sunrise could provide Hinton with different corn from the “Midwest”.[6] (Id.) Mr. Hinton elected to delay the corn pickup. (Dkt. 30-3 at p. 23.)

         On December 16, 2015, Mr. Neufeld offered to supply corn from another area of the storage facility, and suggested the industry custom of blending corn with higher vomitoxin levels with corn that had lower levels to “hide” the vomitoxin. (Id. at p. 33.) Mr. Hinton responded that his customers were “scared to death of [vomitoxin].” Id.

         On December 22, 2015, Mr. Hinton visited Sunrise's Longview storage facility and visually inspected the corn. (Dkt. 30-2 at p. 21.) He decided he did not want the corn because of visible mold on the piles of corn. (Id. at p. 24.) The next day, Sunrise received the test results for vomitoxin which showed only some areas at its Longview facility had vomitoxin levels higher than 2 ppm. (Dkt. 30-7 at p. 4.) There were also areas of corn where the vomitoxin levels met the FDA standard for blending, which would have made it possible for Sunrise to supply Hinton with corn below the contract threshold of 2 ppm. (Id. at p. 3.) Afterward, Hinton picked up four loads of corn from the Longview storage facility on January 4, 11, 13, and 19, 2016. Id.

         3. Breach of Contract

          After January 19, 2016, Hinton stopped picking up corn from Sunrise. (Id.) Around the same time, Hinton contracted to purchase 5, 000 tons of organic corn from High Caliber Transloading & Storage, Inc. (“High Caliber”). Zuidema Decl. ¶¶ 6-7. (Dkt. 30-10 at p. 2.) Hinton paid High Caliber between $350 and $410 per short ton of organic corn. Bolinger Decl. Ex. C-1. (Dkt. 30-4 at p. 2-25; 1-24.) The pickup period began in December of 2015 and ended in October of 2016. (Id.) Sunrise attempted to contact Hinton multiple times during this same period, leaving voicemails where Sunrise offered different pickup locations, to adjust the price of the corn, to discuss Hinton's dissatisfaction, and eventually, to notify Hinton of its outstanding account balance owed to Sunrise.[7] Harris Decl. ¶ 2. (Dkt. 30-8 at p. 5.)

         On September 22, 2016, Mr. Hinton left Mr. Neufeld a voice message stating he wanted to “discuss the corn deal.” (Dkt. 30-7 at p. 39.) On September 30, 2016, the contract term ended. (Dkt. 30-3 at p. 22.) On October 4, 2016, Mr. Neufeld left Mr. Hinton a voice message, saying “we still expect you to take the tonnage. Specifically, we had very little communication from about I think January onward from you despite trying to get ahold of you....” (Dkt. 30-7 at p. 41.) On November 29, 2016, Sunrise received a letter from Hinton via its attorney, stating it did not take delivery of the remaining corn under the contract because the corn did not meet the specified vomitoxin levels. (Dkt. 30-6 at p.2-3.)

         4. Damages

         Hinton picked up and paid for 334 tons of corn from Sunrise's storage facilities. (Dkt. 30-8 at p. 2.) Sunrise sold the remaining 5, 666 tons of corn specified under the contract to other customers at a loss of $113, 806.00, because the market price for organic corn dropped after the contract with Hinton was consummated.[8] (Id. at p. 2-3.) Sunrise states that it structures its prices to make a profit of $30.00 per short ton sold. (Id.) Based on these facts, Sunrise moved for summary judgment and an award of damages in the amount of $453, 766.00.

         Sunrise argues that, because its price structure ensures a profit of $30.00 per short ton sold, it is entitled to receive additional damages for lost profits in the amount of $169, 980.00.[9] (Dkt. 30, at p. 10.) Sunrise also argues it qualifies as a “lost volume seller, ” because it would have made a profit of $169, 980.00 on the corn sold to the other diaries had it not sold the corn originally intended for Hinton to them. (Id.) In total, Sunrise argues it suffered damages in the amount of $453, 766.00 as a direct and proximate result of Hinton's breach of contract. (Id. at p. 16.)[10]

         STANDARD OF REVIEW

         1. Summary Judgment Standard

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, and other matters presented to the court show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A genuine issue of material fact will be absent if, upon “viewing the evidence and inferences which may be drawn therefrom in the light most favorable to the adverse party, the movant is clearly entitled to prevail as a matter of law.” James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008); see also, Mutual Fund Investors, Inc. v. Putnam Management Co., 563 F.2d 391, 393 (9th Cir. 1077)).

         Local Rule 7.1(e), governing motion practice in this Court, provides, “[i]n the event an adverse party fails to file any response documents required to be filed under this rule in a timely manner, such failure may be deemed to constitute a consent to the . . . granting of said motion.” When a party does not have legal representation, the Court of Appeals for the Ninth Circuit has held “an ordinary pro se litigant, like other ...


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