Everkrisp Vegetables Inc. v. Tobiason Potato Co.
870 F. Supp. 2d 745
D.N.D.2012Background
- Everkrisp and Bickman Farms sue Crystal Seed and Bruce and Susan Otto over seed potatoes with bacterial ring rot; Everkrisp seeks breach of express/implied warranties, negligent misrepresentation, and strict liability damages; motion to dismiss and for summary judgment are pending; ND law and the economic loss doctrine are central; Susan Otto is conceded to have no control and should be dismissed; Bruce Otto may be personally liable only if the veil is pierced; Crystal Seed seeks summary judgment to bar tort claims and limit damages;; the Court applies the foreseeability approach to the economic loss doctrine and reviews warranty and veil-piercing issues under North Dakota law.
- Crystal Seed argues the seed was compliant with Blue Tag and ND UCC, the economic loss doctrine bars tort claims, and contractual limitations on remedies cap damages; Everkrisp contends latent defects and veil-piercing justify liability; ND seed-marking statutes shield seed producers from certain warranties; the Court must decide on summary judgment, express/implied warranty limitations, and corporate veil piercing.
- Crystal Seed’s ownership and contract terms include a 49.9%/49.9%/0.2% split and Bruce Otto’s operational control; seed lots were shipped after ND State Seed Dept. inspection with disclaimer language; seed was tested for ring rot after Everkrisp harvested; the ND statute 4-10-12.1 caps seed-producer liability; Everkrisp seeks consequential damages and potential defect theories; the Court addresses procedural posture and disposition of defendants.
- The invoices/totes contained conspicuous warranty disclaimer language; the ND UCC exclusions of implied warranties were found applicable; the limitation on remedies to the purchase price was deemed not unconscionable under North Dakota law.
- The Court references that Everkrisp’s negligent misrepresentation claim fails as no misrepresentation caused Everkrisp to contract; Tobiason was the contracting party; the Court ultimately grants Crystal Seed’s summary judgment on tort claims and limits damages, and dismisses Susan Otto; Bruce Otto’s veil-piercing claim is denied, leading to his dismissal as an individual defendant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Economic loss doctrine bars tort claims? | Everkrisp argues damages are tortories beyond pure contract relief. | Crystal Seed argues foreseeability and ND doctrine bar tort claims seeking damage to crops/land. | Economic loss doctrine applies; tort claims barred. |
| Are warranty damages limited by contract? | Everkrisp seeks damages beyond purchase price for latent defect. | ND UCC allows limitation and exclusion of warranties; invoices/tags are conspicuous. | Damages limited to purchase price; limitation not unconscionable. |
| Can Bruce Otto be personally liable (piercing corporate veil)? | Everkrisp seeks veil piercing due to control and wrongful acts. | Hilzendager factors not satisfied; corporate form preserved. | Veil piercing denied; Bruce Otto dismissed. |
| Is Susan Otto liable personally or must be dismissed? | Susan Otto had ownership/control; claims attach. | Susan Otto has no ownership/control; not liable. | Susan Otto dismissed. |
| Summary judgment on tort claims granted? | Everkrisp contends triable issues remain about origin of infection. | Record shows foreseeability and ND law bar tort claims; warranty limits apply. | Crystal Seed’s summary judgment on tort claims granted; damages limited. |
Key Cases Cited
- Dakota Gasification Co. v. Pascoe Bldg. Sys., 91 F.3d 1094 (8th Cir.1996) (foreseeability approach to economic loss doctrine)
- Leno v. K & L Homes, Inc., 803 N.W.2d 543 (N.D.2011) (economic loss doctrine generally bars tort for defective product damage to property)
- Hilzendager v. Skwarok, 335 N.W.2d 768 (N.D.1983) (veil-piercing factors for corporate disregard)
- Hagert v. Hatton Commodities, Inc., 350 N.W.2d 591 (N.D.1984) (warranty exclusions and conspicuous disclosures; implied warranties limited)
- DJ Coleman, Inc. v. Nufarm Americas, Inc., 693 F.Supp.2d 1055 (D.N.D.2010) (conscience of limitation of remedies in agricultural contexts (distinguishes from other contexts))