Meyer Natural Foods v. Greater Omaha Packing Co.
925 N.W.2d 39
Neb.2019Background
- Meyer Natural Foods contracted with Greater Omaha Packing (GOP) to slaughter, process, and fabricate Meyer’s cattle; ownership of the cattle remained with Meyer.
- On April 27, 2011, GOP processed Meyer’s cattle; subsequent testing showed 37 of 211 samples were presumptively positive for E. coli O157:H7 (≈17.5%), triggering an "event day."
- GOP notified Meyer, and contaminated trim was diverted to cookers, landfills, or otherwise not returned to GOP; some product was treated to eliminate pathogens.
- Meyer sued GOP for breach of contract, breach of warranty (including that products would not be "adulterated"), breach of indemnity, failure to obtain required insurance, and related claims; GOP moved for summary judgment.
- The district court granted summary judgment for GOP, finding GOP maintained the contract-required insurance and that Meyer had accepted/failed to return the rejected product per the contract; Meyer appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GOP satisfied contract insurance requirement | Meyer: GOP's insurance excluded E. coli losses, breaching §18's requirement to "maintain property insurance" on Meyer's property | GOP: Addendum to §18 only required maintenance of property insurance on Meyer property in GOP's possession; certificate evidenced compliance | Held: Addendum language was unambiguous; GOP maintained required insurance; exclusion for E. coli did not violate written requirement |
| Whether contract required E. coli coverage / exclusions allowable | Meyer: §18 or the agreement bars exclusions for E. coli; GOP must insure against contamination losses | GOP: Nothing in the addendum or certificate required coverage for E. coli or prohibited policy exclusions | Held: No contractual requirement to include E. coli coverage; court will not rewrite contract to add such a term |
| Whether Meyer accepted the contaminated goods and UCC applicability | Meyer: Timely notified GOP and rejected nonconforming/adulterated goods; did not accept under contract or UCC | GOP: Meyer accepted/retained product (or failed to return it) and thus cannot recover; UCC remedies apply | Held: Contract is predominantly for services (not goods), so Art. 2 UCC inapplicable; independent of flawed UCC analysis, Meyer failed to return/allow rework and therefore prevented GOP from mitigating; Meyer cannot recover due to failure to follow contract remedy/mitigate losses |
| Whether GOP was negligent and liable to indemnify Meyer | Meyer: Sanitation violations around event day raise triable issue of negligence and indemnity liability | GOP: No evidence of negligence on the day Meyer’s cattle were fabricated; E. coli occurrences are known risks | Held: Meyer failed to raise evidence of negligence on the event day; summary judgment for GOP on negligence/indemnity claim was proper |
Key Cases Cited
- Continental Cas. Co. v. Calinger, 265 Neb. 557 (Neb. 2003) (summary-judgment and contract principles)
- Mennonite Deaconess Home & Hosp. v. Gates Eng’g Co., 219 Neb. 303 (Neb. 1985) (test for whether UCC article 2 applies to mixed goods/services contracts)
- Am. Home Assur. v. Greater Omaha Packing, 819 F.3d 417 (8th Cir. 2016) (discussion of E. coli O157:H7 risks in beef processing)
- Texas Food Industry Ass’n v. Espy, 870 F. Supp. 143 (W.D. Tex. 1994) (treatment of E. coli-positive samples as "adulterated")
- United States v. Lopez, 514 U.S. 549 (U.S. 1995) (limits and scope of Congress’s commerce power)