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Duxbury v. Spex Feeds

June 15, 2004

KENT DUXBURY, ET AL., RESPONDENTS,
v.
SPEX FEEDS, INC., APPELLANT, DAVID SHANAHAN, RESPONDENT.



Fillmore County District Court. File No. C7-01-547.

Considered and decided by Wright, Presiding Judge; Schumacher, Judge; and Willis, Judge.

SYLLABUS BY THE COURT

1. Statutory regulation of grain banks under Minn. Stat. ch. 236 does not abrogate actions for warranty under the Uniform Commercial Code or for products liability.

2. Calculation of prejudgment interest, an issue determined by the district court, not the jury, is governed by Minn. Stat. § 549.09.

The opinion of the court was delivered by: Wright, Judge

Affirmed in part, reversed in part, and remanded

OPINION

Respondents-farmers brought an action against appellant-feed producer after feed manufactured by appellant caused illness in respondents' gestating sows. A jury returned a verdict in respondents' favor on their claims of negligence, products liability, consumer fraud, and breach of express and implied warranties. Appellant moved for judgment notwithstanding the verdict (JNOV), challenging both the legal and factual bases for the verdict. The district court denied the motion. We affirm in part, reverse in part, and remand.

FACTS

Respondents Ken, Vickey, Steven, and Marlys Duxbury are farmers who raise corn and hogs. In February 2000, the Duxburys' sows began having gestational problems. When veterinarians were unable to confirm that an infectious disease was the source of the problem, the Duxburys had their hogs' feed tested in spring and summer 2000. This testing showed toxins in the feed. After the Duxburys discontinued use of the feed in August 2000, their sows recovered.

The Duxburys received the suspect hog feed from appellant Spex Feeds, Inc. Spex manufactures and sells feed and feed additives. Spex also operates a "grain bank" at which farmers deposit corn and receive a proportional share of the corn commingled in the bank. In 1999, the Spex grain bank comprised deposits from 38 farmers in nine grain bins.

In 1998 and 1999, the Duxburys deposited corn in the Spex grain bank. In late 1999, the Duxburys arranged for Spex to provide hog feed from their share in the grain bank.*fn1 They allege that Spex did not take reasonable steps to control moisture levels or monitor for mold or toxins in the grain bank.

Spex manufactured the feed by grinding grain bank corn and mixing in soybean meal, medicines, and nutritional supplements. The feed additives and supplements made up approximately 12 to 14 percent of the feed. The Duxburys were charged for all components of the feed except the corn. They also were charged a fee for the grinding, mixing, and delivery of the feed.

Respondent David Shanahan, a salesperson for Spex, had been selling feed to the Duxburys since 1990. In 1997, Shanahan invested in the Duxburys' hog farming operation. In return, he received 20 percent of the sows' surviving newborn pigs. Aside from assisting the Duxburys in the course of his employment at Spex, Shanahan did not participate in the management or operation of the Duxburys' farm and did not share in their profits or losses.

In October 2001, the Duxburys brought an action against Spex. Under the terms of a stipulation between the Duxburys and Spex, Shanahan was joined as a co-defendant. According to Spex's theory, Shanahan was a joint venturer whose knowledge about Spex should be imputed to the Duxburys. The case proceeded to trial. Following Shanahan's testimony, the district court held as a matter of law that a joint venture between Shanahan and the Duxburys did not exist and dismissed the claims against Shanahan.

Later during the trial, the Duxburys called Dr. Michael Behr, a forensic economist, who testified about the losses suffered by the Duxburys. Without taking into account inflation, he determined a total loss of $246,230. He calculated an additional $39,730 to account for inflation from the time of the losses.

Following an extensive charge conference, the jury was instructed on negligence, products liability, consumer fraud, and violation of express and implied warranties. The jury returned a verdict for the Duxburys, assessed comparative fault of 90 percent to Spex and 10 percent to the Duxburys, and awarded $247,000 in damages and $25,000 in interest.

Spex brought a motion for JNOV or a new trial, which the district court denied. This appeal followed.

ISSUES

I. Is the Uniform Commercial Code's "sale" requirement satisfied when a grain bank depositor, regulated under Minn. Stat. ch. 236, purchases feed from the grain bank?

II. Did the district court err in formulating the special verdict form for the claims brought under the Minnesota Consumer Fraud Act?

III. Does the Minnesota Commercial Feed Law supply a negligence per se standard for grain bank operators?

IV. Did the district court err in concluding as a matter of law that the Duxburys and Shanahan did not ...


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