Kornegay Family Farms LLC v. Cross Creek Seed, Inc.
370 N.C. 23
| N.C. | 2017Background
- Cross Creek Seed sold certified tobacco seed to eight commercial North Carolina farmers in early 2014; plaintiffs later discovered the seed was mislabeled and produced "off-type" inferior, disease-prone, unmarketable plants.
- Plaintiffs filed separate actions (consolidated in Business Court) alleging sale of mislabeled seed and seeking consequential damages beyond the purchase price.
- Each seed container bore a printed limitation-of-remedies clause limiting recovery to the purchase price; Cross Creek moved for partial summary judgment enforcing those clauses under UCC Article 2 (N.C.G.S. § 25-2-719).
- The Business Court denied Cross Creek’s motions, relying on this Court’s prior decision in Gore that the North Carolina Seed Law embodies a public policy protecting farmers from catastrophic loss and renders such "skeleton warranty" clauses unenforceable in mislabeling cases.
- Cross Creek appealed, arguing UCC provisions permit enforcement of limitation clauses and that Gore is inapplicable post-UCC; the Supreme Court of North Carolina affirmed the Business Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether limitation-of-remedies clauses limiting recovery to purchase price are enforceable in mislabeling-of-seed cases | Limitation clauses are unenforceable because Seed Law embodies a public policy protecting farmers from disastrous crop loss (Gore) | UCC §25-2-719 permits limiting buyer remedies (return/price) and consequential-damages exclusions; such clauses should be enforced | Held: Unenforceable — Seed Law public policy (per Gore) precludes enforcing such limitations in mislabeled-seed cases |
| Whether the UCC displaced the Seed Law’s protection for farmers (preemption/§25-2-102) | Seed Law regulates sales to farmers and is expressly saved by §25-2-102; UCC does not impair Seed Law protections | UCC governs commercial sales and permits agreed limited remedies, so post-UCC courts should enforce limitation clauses | Held: UCC did not override Seed Law; §25-2-102 preserves Seed Law’s protections, so Gore’s analysis remains controlling |
| Whether Billings (seed case upholding disclaimers) requires a different result | Plaintiffs: Billings is distinguishable because there was no mislabeling there — buyer received the seed ordered | Defendant: Billings supports enforcing limitation clauses under the UCC | Held: Billings distinguished — it involved delivered seed that matched the order; Gore controls when mislabeling/false labeling occurs |
Key Cases Cited
- Gore v. George J. Ball, Inc., 279 N.C. 192 (interpreting Seed Law and holding limitation-of-warranty clauses unenforceable in mislabeled-seed cases)
- Billings v. Joseph Harris Co., 290 N.C. 502 (distinguished; involved disease-infected seed that matched order, not mislabeling)
- Polaroid Corp. v. Offerman, 349 N.C. 290 (presumption that legislature accepts judicial interpretation when it leaves statute unamended)