Hog Slat, Inc. v. Ebert, C99-3039 MWB.

104 F.Supp.2d 1112

HOG SLAT, INC., Plaintiff, v. Roger EBERT, Defendant.

No. C99-3039 MWB.

United States District Court, N.D. Iowa, Central Division.

July 15, 2000.

Angel A. West, Michael W. Thrall, Nyemaster, Goode, Voights, West, Hansell & O'Brien, P.C., Des Moines, IA, for Plaintiff.

Timothy J. Walker, Danette L. Kennedy, Whitfield & Eddy, P.L.C., Des Moines, IA, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

BENNETT, Chief Judge.

TABLE OF CONTENTS
I. INTRODUCTION AND BACKGROUND ................................................1114
 II. SUMMARY JUDGMENT STANDARD ..................................................1115
III. LEGAL ANALYSIS .............................................................1115
     1. Does a genuine issue of material fact exist as to whether Ebert
intended to receive any income and profits from hogs finished in the
hog finishing barn pursuant to the Hormel contract? ...................1116
     2. Is Ebert's counterclaim for lost income and profits prohibited under
the "new business rule" because it is too remote and speculative? .....1119
     3. Does Ebert's counterclaim for lost income and profits fail as a matter
of law because the Hormel contract still exists? ......................1121
     4. Does Ebert's counterclaim for lost income and profits fail as a matter
of law because Ebert allegedly would not have made any money had
he put hogs in the finishing barn? ....................................1122
 IV. CONCLUSION .................................................................1123

In this case, plaintiff Hog Slat, Inc. calls upon the court to determine whether or not defendant Ebert's counterclaim for lost income and profits is "hog-wash"—that is, whether or not there exists a genuine issue of material fact on this counterclaim.

I. INTRODUCTION AND BACKGROUND

On February 10, 1998, Roger Ebert ("Ebert") and his nephew, Joel Hansen (Hansen), entered into a hog production contract with Hormel Foods ("Hormel"). Ebert co-signed on the Hormel contract because of Hansen's young age and inexperience. In the contract, Hansen was identified as the "producer" and "owner," and Ebert was identified as the "co-signer." Thereafter, on August 20, 1998, Ebert entered into a different contract with Hog Slat, Inc. ("Hog Slat") for the construction of a 1000 head hog finishing barn in Kilkenny, Minnesota. It was anticipated that this hog finishing barn was to house and raise hogs until they were ready to be butchered, at which time the hogs would then be marketed to Hormel pursuant to the February 10, 1998, hog production contract. Hog Slat began construction of the hog barn toward the end of September, 1998. Hog Slat billed Ebert for the slats and beams that were delivered to the barn, and Ebert made payment to Hog Slat. As the construction project progressed, Hog Slat billed Ebert at intervals for additional equipment delivered and installed. Ebert refused to make payment to Hog Slat, claiming that Hog Slat failed to construct the barn according to the terms of the contract.

On April 13, 1999, Hog Slat commenced an action in the Iowa District Court for Humbolt County against Ebert for breach of contract. Thereafter, on May 11, 1999, Ebert removed this action to the United States District for the Northern District of Iowa pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1446, and counterclaimed for breach of contract and breach of warranties. In this counterclaim, Ebert asserted a claim for loss of income and profits as part of his damages. It is on this claim— lost income and profits—that Hog Slat bases its May 2, 2000, Motion for Partial Summary Judgment.

Both parties disagree about whether Ebert intended to receive any income and profits from the hogs raised in the finishing barn. Hog Slat asserts that there is no genuine issue of material fact as to the issue of lost income and profits. Specifically, Hog Slat sets forth four reasons in support of its motion for partial summary judgment on this claim. First, Hog Slat contends that at the time Ebert signed the contract with Hog Slat, Ebert never intended to run the hog operation, nor did he intend to receive or contemplate receiving any compensation or profits from the hog operation. Second, Hog Slat contends that any alleged lost income and profits cannot be proved with reasonable certainty, and, therefore, this counterclaim fails under the "new business rule." Third, Hog Slat asserts that because the hog production contract with Hormel was never terminated, Ebert could continue to produce hogs, which in turn would generate income and profits, if he wanted. Finally, Hog Slat contends that if Ebert had put hogs in the barn, Ebert would have lost money because the hog market and hog prices have been bad for the past two to three years. Therefore, Hog Slat asserts that based on the foregoing reasons, Ebert's counterclaim for lost income and profits due to the finishing barn being allegedly unfit for raising hogs, should fail as a matter of law, because no genuine issue of material fact exists on this claim.

In contrast, Ebert contends that Hog Slat is not entitled to partial summary judgment with respect to the issue of lost income and profits because Ebert asserts that genuine issues of material fact exist regarding this claim. Specifically, Ebert asserts that as a party to the Hormel contract, he is entitled to receive income and profits from hogs produced in the Hog Slat finishing barn. Ebert also asserts that the "new business rule" does not preclude him from establishing lost income and profits with sufficient certainty. Ebert further asserts that there is evidence sufficient to create a fact question as to whether he would have realized a profit had his hog finishing barn been properly constructed.

II. SUMMARY JUDGMENT STANDARD

This court has considered in some detail the standards applicable to motions for summary judgment pursuant to FED. R.CIV.P. 56 in a number of prior decisions. See, e.g., Swanson v. Van Otterloo, 993 F.Supp. 1224, 1230-31 (N.D.Iowa 1998); Dirks v. J.C. Robinson Seed Co., 980 F.Supp. 1303, 1305-07 (N.D.Iowa 1997); Laird v. Stilwill, 969 F.Supp. 1167, 1172-74 (N.D.Iowa 1997); Rural Water Sys. # 1 v. City of Sioux Ctr., 967 F.Supp. 1483, 1499-1501 (N.D.Iowa 1997), aff'd in pertinent part, 202 F.3d 1035 (8th Cir.2000); Tralon Corp. v. Cedarapids, Inc., 966 F.Supp. 812, 817-18 (N.D.Iowa 1997), aff'd, 205 F.3d 1347 (8th Cir.2000) (Table op.); Security State Bank v. Firstar Bank Milwaukee, N.A., 965 F.Supp. 1237, 1239-40 (N.D.Iowa 1997); Lockhart v. Cedar Rapids Community Sch. Dist., 963 F.Supp. 805 (N.D.Iowa 1997). Thus, the court will not consider those standards in detail here. Suffice it to say that Rule 56 itself provides, in pertinent part, as follows:

Rule 56. Summary Judgment

(a) For Claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in the party's favor upon all or any part thereof.

(b) For Defending Party. A party against whom a claim ... is asserted ... may, at any time, move for summary judgment in the party's favor as to all or any part thereof.

(c) Motions and Proceedings Thereon. ... The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, 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.

FED.R.CIV.P. 56(a)-(c) (emphasis added). Applying these standards, the trial judge's function at the summary judgment stage of the proceedings is not to weigh the evidence and determine the truth of the matter, but to determine whether there are genuine issues for trial. Quick v. Donaldson Co., 90 F.3d 1372, 1376-77 (8th Cir.1996); Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir.1990). An issue of material fact is genuine if it has a real basis in the record. Hartnagel v. Norman, 953 F.2d 394 (8th Cir.1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). As to whether a factual dispute is "material," the Supreme Court has explained, "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Beyerbach v. Sears, 49 F.3d 1324, 1326 (8th Cir.1995); Hartnagel, 953 F.2d at 394. If a party fails to make a sufficient showing of an essential element of a claim with respect to which that party has the burden of proof, then the opposing party is "entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); In re Temporomandibular Joint (TMJ) Implants Prod. Liab. Litig., 113 F.3d 1484, 1492 (8th Cir.1997). With these standards in mind, the court turns to consideration of Hog Slat's motion for partial summary judgment on Ebert's lost income and profit counterclaim.

III. LEGAL ANALYSIS

As indicated previously, Hog Slat sets forth four reasons in support of its motion for partial summary judgment on Ebert's counterclaim of lost income and profits. Thus, the court will determine whether summary judgment is appropriate in light of Hog Slat's proffered reasons, addressing each one seriatim.

1. Does a genuine issue of material fact exist as to whether Ebert intended to receive any income and profits from hogs finished in the hog finishing barn pursuant to the Hormel contract?

Hog Slat asserts that Ebert never intended to receive any income and profits from hogs finished in the...