MEMORANDUM AND ORDER
Plaintiff Cargill Meat Solutions Corporation (“Cargill”) filed suit against Defendants Premium Beef Feeders, LLC and Power Plus Beef Feeders, LLC. Cargill alleges breach of contract arising from the parties’ Cattle Procurement and Feeding Agreement. The Defendants’ answer included two counterclaims. In relevant part, Defendants’ Count I alleges breach of both contract and the implied duty of good faith and fair dealing. Count II alleges breach of fiduciary duty. Before the Court are three motions filed by Cargill in response to the Defendants’ counterclaims: (1) Cargill’s motion to dismiss the breach of fiduciary duty claim (Doc. 219); (2) Cargill’s motion for partial summary judgment on the claims for breach of contract and the duty of good faith and fair dealing (Doc. 127); and (3) Cargill’s motion to exclude expert testimony (Doc. 130). For the reasons stated below, the Court denies Cargill’s motion to dismiss and motion for partial summary judgment. The Court grants in part and denies in part Cargill’s motion to exclude expert testimony.
I. Factual and Procedural Background
The Defendants specialize in procuring, feeding, and selling cattle. The Defendants and Cargill formed an agreement in which the Defendants would process and slaughter cattle through Cargill’s processing plants. The agreement was embodied in the Cattle Procurement and Feeding Arrangement (“CPFA”) on May 24, 2011. Under the CPFA, Cargill and the Defendants were to (1) jointly hold title to all cattle purchased pursuant to the agreement; (2) share equally in the profits or losses of the cattle; and (3) jointly operate together to procure, feed, and toll process the cattle. The CPFA also contained a risk management provision that provides:
The Parties agree that Cargill will be solely responsible for determining and implementing any risk management (i.e. •hedging) strategies for the Cattle on feed with the Feedlot Vendor, and the grain associated with feeding the Cattle.
Cargill implemented hedges on cattle as early as March 2011. Cargill did not implement hedges on corn until August 2011. Farrin Watt, who handled the risk management for Cargill, stated that he would not typically wait so long to implement corn hedges. Watt explained that he was “being patient” because corn prices were high.
The CPFA resulted in significant losses for the Defendants. Due to these losses, the Defendants were unable to timely pay their debts. And when the Defendants failed to pay Cargill their share of the losses, Cargill brought suit in Kansas state
II. Legal Standard
A. Motion to Dismiss
Under Rule 12(b)(6), a defendant may move for dismissal of any claim for which the plaintiff has failed to state a claim upon which relief can be granted. Upon such a motion, the Court must decide “whether the complaint contains enough facts to state a claim to relief that is plausible on its face.”
B. Motion for Partial Summary Judgment
Summary judgment is appropriate if the moving party demonstrates that there is no genuine issue as to any material fact, and the movant is entitled to judgment as a matter of law.
III. Analysis
A. Motion to Dismiss
Cargill moves to dismiss the Defendants’ counterclaim for breach of fiduciary duty. To prove a breach of a fiduciary duty under Kansas law, the Defendants must prove that: (1) a fiduciary relationship existed between Cargill and the Defendants; (2) Cargill had a duty to the Defendants based on the fiduciary relationship; and (3) Cargill breached that duty.
“Whether a fiduciary relationship exists depends on the facts and circumstances of each case.”
Cargill argues that the Defendants have not adequately alleged either type of fiduciary relationship. The Defendants contend that they have sufficiently alleged the existence of a joint venture. Alternatively, the Defendants argue that they sufficiently alleged the existence of the second category of fiduciary relationships, one implied in law.
1. Fiduciary Relationship Specifically Created by Contract
The Defendants claim the CPFA constituted a joint venture. But Cargill argues
[The Defendants] and Cargill agree that this agreement does not, and is not intended to create a partnership. None of the Parties shall be deemed to be an agent of the other Parties. Neither [the Defendants] nor Cargill shall at anytime bind any other Party to any agreement, debt or obligation or otherwise act for any other Party. In no event will the parties be liable for any debt or obligations of the other Parties outside of the joint payments owed to third parties as described under Section 6, herein.
Cargill’s argument goes as follows. Parties to a joint venture “stand in the relation of principal, as well as agent, as to one another.”
Under Kansas law parties cannot entirely preclude the creation of an agency relationship simply by disclaiming it in writing.
Because the CPFA does not legally preclude formation of an agency— and thus joint venture — relationship, the Court will consider whether the Defendants adequately allege the existence of a joint venture. Under Kansas law, “a joint venture is an association of two or more persons or corporations to carry out a single business enterprise for profit.”
(a)Joint ownership and control of property
This factor weighs in favor of the Defendants’ claim that the CPFA was a joint venture. The property was jointly owned: the CPFA provided that Cargill and the Defendants would jointly hold title to the cattle. And aspects of the operation were jointly controlled: Cargill and the Defendants were to mutually agree on the quantity of cattle and their placement into feedlots.
(b)The sharing of expenses, profits, and losses, and the determination of the division of net earnings
The second factor also weighs in favor of the Defendants. Regarding expenses, the CPFA dictated that if financing was unavailable, “the Parties shall share equally in the costs for any new cattle.” The CPFA also stated that the parties would “share equally in the profits or losses of such Cattle.”
(c)A community of control over and active participation in the management and direction of the business enterprise
This factor is less clear. In some aspects of the agreement, Cargill had exclusive control. For example, Cargill was solely responsible for the risk management prong of the agreement.' Cargill also handled all of the accounting and billed the Defendants for losses. These aspects suggest that the third factor weighs in Car-gill’s favor. On the other hand, the CPFA allowed each party to inspect and audit the other’s books and records. Such checks and balances can be evidence of a community of control over the management of the business.
(d)The intention of the parties, express or implied
This factor weighs heavily in the Defendants’ favor. In Kansas, a joint venture is an association of two corporations to carry out a single business enterprise for profit.
(e)The fixing of salaries by joint agreement
Neither the contract nor any of the Defendants’ allegations refer to a joint agree-
All told, three factors indicate that the CPFA was a joint venture, one factor weighs against such a finding, and another factor was neutral. Given these facts, the Defendants state a plausible claim that the CPFA constituted a joint venture. Accordingly, the Defendants sufficiently allege the existence of a fiduciary relationship, and Cargill’s motion to dismiss is denied.
2. Fiduciary Relationship Implied in Law
Because the Defendants adequately allege the existence of a joint venture, and therefore survive Cargill’s motion to dismiss, the Court need not determine whether a fiduciary relationship was implied in law.
B. Motion for Partial Summary Judgment
Cargill moves for summary judgment on the Defendants’ theory that Cargill’s risk management practices constituted both a breach of contract and the implied duty of good faith and fair dealing. Cargill argues that the risk management provision of the CPFA was unambiguous, and its conduct complied with the plain language. Cargill further contends that since it did not breach the plain language of the CPFA, its conduct also did not constitute a breach of the implied duty of good faith and fair dealing.
Like Cargill, the Defendants also claim that the risk management provision was unambiguous, but argue that Cargill’s reading of the plain language is erroneous. The Defendants contend that Cargill breached the risk management provision by failing immediately to implement corn hedges, speculating instead of hedging, and making unreasonable trades that do not qualify as “risk management.” In addition, the Defendants contend that Cargill breached the implied duty of good faith and fair dealing because its conduct was arbitrary and unreasonable.
1. Breach of Contract
Cargill seeks judgment on the narrow issue of whether its risk management practices breached the CPFA. So this determination turns solely on the risk management provision of the CPFA. The risk management provision reads
The Parties agree that Cargill will be solely responsible for determining and implementing any risk management (i.e. hedging) strategies for the Cattle on feed with the Feedlot Vendor, and the grain associated with feeding the Cattle.
Although both parties claim that the provision is unambiguous, they disagree as to what it actually required. Cargill places great emphasis on the terms “solely responsible” and “determining.” Cargill argues that it was given “broad authority” to handle risk management and its responsibility was to determine “what, if any, risk management strategies would be implemented.” (Emphasis in original). Cargill also downplays the significance of the phrase “risk management (i.e. hedging) strategies.” Although “i.e.” means “that is,” Cargill argues that its obligation was not strictly limited to the implementation of hedges. Rather, Cargill claims that under the risk management provision, it could exercise “discretion, authority, power, ability, or judgment to select among various risk management strategies.”
Unsurprisingly, the Defendants’ interpretation of the risk management provision is much narrower. They contend that “sole responsibility” does not equal “sole discretion.” Under the Defendants’ reading of the provision, Cargill was obligated to perform risk management. More specifically, “Cargill had a duty to hedge.” The Defendants claim Cargill breached the risk
The interpretation of a contract is a question of law that properly may be determined on a motion for summary judgment, provided the contract is unambiguous.
The Court agrees with the Defendants that giving Cargill sole responsibility of risk management duties was not a delegation of complete discretion. “Responsibility” is “a duty, obligation, or burden.”
Under paragraph 6 of the CPFA, which relates to accounting and payments, Car-gill was required to reconcile “the hedge positions or other risk management accounts.” (Emphasis added). So just a few lines below the risk management provision, the CPFA contemplates risk management strategies other than hedging. Contrary to the risk management provision, paragraph 6 presupposes that Cargill had the authority and discretion to implement a range of risk management strategies — -hedging or otherwise. This provision contradicts a strict reading of the parenthetical “i.e. hedging.”
Collectively, the CPFA is unclear as to whether Cargill had a strict obligation to hedge, or whether it was free to implement other risk management strategies. Considering the entirety of the CPFA, both interpretations are reasonable. Therefore, as to the precise issue of what exactly the parties intended Cargill’s risk management duties to include, the CPFA is ambiguous.
When terms are ambiguous, then parol evidence may be considered in order to ascertain to parties’ intent.
2. Breach of the Implied Duty of Good Faith and Fair Dealing
Cargill moves for summary judgment on the Defendants’ theory that Cargill’s risk management practices breached the implied duty of good faith and fair dealing. Kansas law implies a duty of good faith in every contract.
Here, Cargill seeks judgment solely on the theory that its risk management practices breached the implied duty of good faith and fair dealing. The implied duty has been described as a duty to do everything necessary to carry out the contract.
Lastly, Cargill moves to exclude the opinions of the Defendants’ expert, Thomas Leffler. Cargill argues that Leffler’s opinions on risk management are improper legal conclusions, which are inadmissible under Federal Rule of Evidence 702. For the most part, the Court agrees.
An expert may not apply the law to the specific facts of the case to form legal opinions.
With that in mind, the Defendants are not completely precluded from presenting expert testimony about risk management. More specifically, expert evidence about the parties’ intent regarding the risk management provision may be relevant. Rule 702(a) of the Federal Rules of Evidence requires that an expert’s opinion “help the trier of fact to understand the evidence or to determine a fact in issue.” If a fact is not at issue, then expert testimony on that subject is unnecessary.
In sum, Cargill’s motion to exclude the Defendants’ expert testimony is granted in part and denied in part. The Defendants are • allowed to present evidence of the parties’ intent regarding the risk management provision. But Leffler’s opinions that apply the law to the specific facts of this case and seek to tell the jury what decision to reach will not be allowed. The Defendants may file a redacted expert report that is consistent with this order. But the
IV. Conclusion
For the reasons stated above, the Court denies Cargill’s motions to dismiss and for partial summary judgment. The Court denies Cargill’s motion to dismiss the Defendants’ claim for breach of a fiduciary duty because the Defendants adequately alleged the existence of a joint venture. The Court also denies Cargill’s motion for partial summary judgment because the CPFA is ambiguous, and therefore material issues of fact need to be resolved regarding the risk management provision. Lastly, the Court grants in part and denies in part Cargill’s motion to exclude the Defendants’ expert because although the expert report contained several improper legal conclusions, expert testimony may be relevant to resolve the CPFA’s ambiguity.
IT IS THEREFORE ORDERED that Cargill’s Motion to Dismiss, or in the Alternative for Judgment on the Pleadings (Doc. 219) is hereby DENIED.
IT IS FURTHER ORDERED that Cargill’s Motion for Partial Summary Judgment (Doc. 127) is hereby DENIED.
IT IS FURTHER ORDERED that Cargill’s Motion to Exclude Expert Testimony (Doc. 130) is hereby GRANTED IN PART AND DENIED IN PART.
IT IS SO ORDERED.
Notes
. Facts relevant to Cargill's motion dismiss are taken from the Defendants' First Amended Combined Answer and Counterclaim, as well as the exhibits attached thereto, and are accepted as true. With regards to Cargill's motion for partial summary judgment, the Court has set forth only those uncontroverted facts required to reach its decision, and they are related in the light most favorable to the non-moving party.
. Ridge at Red Hawk, LLC v. Schneider,
. Iqbal, 556 U.S. at 678,
. See Robbins v. Oklahoma,
. Iqbal,
. Id.
. Robbins,
. Fed. R. Civ. P. 56(a).
. Haynes v. Level 3 Commc’ns, LLC,
. Thom v. Bristol-Myers Squibb Co.,
. Id. (citing Fed. R. Civ. P. 56(e)).
. Mitchell v. City of Moore,
. Adams v. Am. Guar. & Liab. Ins. Co.,
. LifeWise Master Funding v. Telebank,
. Peterson ex rel. Peterson v. Cmty. Living Opportunities, Inc.,
. Dana v. Heartland Mgmt. Co.,
. Flight Concepts Ltd. P’ship v. Boeing Co.,
. Dana,
. Ritchie Enters. v. Honeywell Bull, Inc.,
.Id. at 1053.
. 46 Am. Jur. 2d Joint Ventures § 16 (2015).
. In re Appeal of Scholastic Book Clubs, Inc.,
. Scholastic Book Clubs,
. Woolsey v. Petroleum Prod. Mgmt., Inc.,
. Ritchie Enters.,
. Modern Air Conditioning, Inc. v. Cinderella Homes, Inc.,
. Id. at 76,
. Underground Vaults & Storage, Inc. v. Cintas Corp.,
. Modem Air Conditioning,
. Cf. Terra Venture, Inc. v. JDN Real Estate Overland Park, L.P.,
. Modern Air Conditioning,
. Duffin v. Patrick,
. Osterhaus v. Toth,
. Duffin,
. The American Heritage Dictionary of the English Language 1496 (5th ed. 2011).
. Id.
. Responsibility, Black's Law Dictionary (10th ed. 2014).
. See Marshall v. Kan. Med. Mut. Ins. Co.,
. Bruesewitz v. Wyeth LLC,
. In re A.C.G.,
. The American Heritage Dictionary of the English Language 81 (5th ed. 2011).
. Id. at 874; see also I.E., Black’s Law Dictionary (10th ed. 2014).
. Investcorp, L.P. v. Simpson Inv. Co., L.C.,
. Iron Mound, LLC v. Nueterra Healthcare Mgmt., LLC,
. Waste Connections of Kan. v. Ritchie Corp.,
. Id.
. See Cafer v. Ash,
. Law v. Law Co. Bldg. Assocs.,
. Pizza Mgmt., Inc. v. Pizza Hut, Inc., Til F.Supp. 1154, 1179 (D.Kan. 1990); see also Bonanza, Inc. v. McLean,
. Pizza Mgmt.,
. Id. at 1179.
. Warkentine v. Salina Pub. Schs., USD No. 305,
. Bonanza,
. There is an exception to the rule that a breach of the implied duty of good faith and - fair dealing must be tied to an express provision. In Kansas, the implied duty can override express contract terms where one party “has gained the ability to destroy or injure the economic interest of the other party.” In such circumstances, a claim for breach may lie even though no express provisions have been breached. See Law Co. Bldg.,
. See, E.g., A.E. v. Indep. Sch. Dist. No. 25,
. United States v. Simpson,
. Id.
. See, e.g., Emp’rs Reinsurance Corp. v. Mid-Continent Cas. Co., 202 F.Supp.2d 1212, 1219 (D.Kan.2002).
. Austin Fireworlcs, Inc., v. T.H.E. Ins. Co.,
. Wood River Pipeline Co. v. Willbros Energy Servs. Co.,
. Hartzler v. Wiley,
