PER CURIAM.
Thomas Lesiak and Angeline Lesiak, husband and wife; Timothy Lesiak, their son; and Ronald Lesiak, Thomas Lesiak's brother, are Nebraska farmers who own land in Merrick and Nance Counties. The Lesiaks suffered a reduced corn yield in 2005, allegedly due to the overapplication of herbicide to their crops by Central Valley Ag Cooperative, Inc. (CVA). The main issues presented in this case are whether sufficient evidence existed to allow a jury to reasonably estimate the extent of the Lesiaks' damages and whether the economic loss doctrine precluded the Lesiaks from seeking relief under a negligence theory.
In early 2005, the Lesiaks began preparing for the upcoming farming season. The Lesiaks were planning on farming 20 different fields, encompassing approximately 2,000 acres of farmland. Randy Zmek, an employee for CVA, called on Thomas
The Lesiaks began to plant their corn in the spring. Following CVA's recommendation, the Lesiaks had purchased approximately 947 gallons of Guardsman Max, a herbicide, from CVA and Guardsman Max was applied to 16 of their 20 fields that year. Once the Lesiaks finished planting a field, they would notify CVA, who would then spray the field with Guardsman Max.
Guardsman Max is designed to kill a broad number of weeds in a cornfield without damaging the corn crop. In order to be effective, however, Guardsman Max must be applied at a specific rate based on a number of conditions; particularly important are the soil textures and organic content of the fields to be sprayed. The coarser the soil of the field, the less Guardsman Max was required. Also, if the field contained less than 3 percent organic matter, then less Guardsman Max was needed.
All of the Lesiaks' fields contained less than 3 percent organic matter, with the exception of a small portion of one of their fields. The record indicates that roughly 68 percent of the land consisted of coarse-textured soils and that 32 percent of the land consisted of medium-textured soils. All but one of the Lesiaks' fields contained some medium-textured soils. For coarse-textured soils with less than 3 percent organic matter, the Guardsman Max label suggested an application rate of 2.5 to 3.0 pints per acre. And for medium-textured soils with less than 3 percent organic matter, the label suggested an application rate of 3.0 to 4.0 pints per acre. It is undisputed that CVA applied Guardsman Max at a uniform rate of 4.0 pints per acre across all of the Lesiaks' fields.
On June 2, 2005, Tom Lesiak called Zmek and advised Zmek that the Lesiaks' corn crop was stunted and that he suspected chemical damage. Zmek came out to inspect the crops the day after receiving Tom Lesiak's telephone call, and he initially found nothing wrong. But, after being shown to a specific area of the field, Zmek admitted to there being chemical damage, though he did not specifically reference Guardsman Max. After Zmek's inspection in June, the Lesiaks continued to notice problems with their crop throughout the summer and reported those problems to CVA. CVA allegedly did nothing until October, when the Lesiaks began reporting their yields to CVA. At that point, CVA inspected the Lesiaks' fields, but denied any damage resulting from its application of Guardsman Max.
The Lesiaks filed this action against CVA. The Lesiaks alleged that CVA's improper application of Guardsman Max caused damage to their corn crop, decreasing their total yield. The Lesiaks asserted multiple theories of recovery, including, as relevant to this appeal, negligence, breach of implied warranty of merchantability, and breach of implied warranty of services. CVA moved for summary judgment, which the district court granted on both the implied warranty of services and negligence claims. The court found that Nebraska law did not recognize the claim
Following the Lesiaks' presentation of their case, CVA moved for a directed verdict, asserting that the Lesiaks had failed to prove the measure of the damage, if any, which resulted from the alleged overapplication of Guardsman Max to their cornfields. The court granted the motion for a directed verdict, explaining that the evidence was insufficient to allow the fact finder to determine what damage was attributable to Guardsman Max and what was attributable to a lack of irrigation. The Lesiaks appeal.
The Lesiaks assign, restated and renumbered, that the district court erred in (1) directing a verdict for CVA on the basis that the Lesiaks' proof of damages was not sufficiently definite for submission to the jury, (2) allowing a motion for summary judgment to be used to dismiss individual theories of relief, (3) granting partial summary judgment on the Lesiaks' breach of implied warranty of services claim, and (4) granting partial summary judgment on the Lesiaks' negligence theory based on the economic loss doctrine.
On cross-appeal, CVA assigns, restated, that the district court erred in failing to grant CVA summary judgment on all of the Lesiaks' claims because the Lesiaks could only speculate as to the money they saved from not having to dry and transport crops which were allegedly lost.
In reviewing a trial court's ruling on a motion for directed verdict, an appellate court must treat the motion as an admission of the truth of all competent evidence submitted on behalf of the party against whom the motion is directed; such being the case, the party against whom the motion is directed is entitled to have every controverted fact resolved in its favor and to have the benefit of every inference which can reasonably be deduced from the evidence.
A court should grant summary judgment when the pleadings and evidence admitted show that no genuine issue exists regarding any material fact or the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.
We first address the Lesiaks' contention that the district court erred in directing a verdict in favor of CVA based on the Lesiaks' alleged inability to prove their damages. We address this issue first because the Lesiaks' other assigned errors are dependent on the outcome of this one. In other words, if the Lesiaks are unable to prove damages as a matter of law, then whether the district court properly granted summary judgment on the Lesiaks' various other theories of relief is irrelevant.
The Lesiaks assert that the district court erred when, at the close of the Lesiaks' case, the court directed a verdict in favor of CVA. The court determined that the jury, without speculating, would be unable to apportion the damage allegedly caused by the overapplication of Guardsman Max and damage caused by a lack of irrigation. Because the Lesiaks presented sufficient evidence to allow a jury to calculate damages to a reasonable degree of certainty and exactness, this assigned error has merit.
In making its ruling, the district court relied upon Hahn v. Weber & Sons Co.
On appeal, we explained that the farmer had the burden of proving that some or all of the damage was proximately caused by the neighbor's negligent act. In explaining the farmer's burden, we said:
We concluded that absent any evidence to properly allocate damages between the herbicide application and the lack of irrigation, "any attempt to determine what damage was attributable to vapor drift would be conjectural and speculative."
But Hahn does not speak to the propriety of a directed verdict. We have stated that a directed verdict is proper "only when reasonable minds cannot differ and can draw but one conclusion from the evidence, that is, when an issue should be decided as a matter of law."
The Lesiaks alleged that CVA applied Guardsman Max at too high a rate, which caused significant damage to their corn crop. CVA, on the other hand, asserted that other events caused the damage, including a lack of irrigation and the presence of weeds in the fields (other than those that were supposed to have been controlled by Guardsman Max). Here, the record presents sufficient evidence to allow a jury to find that Guardsman Max, as applied, had injured the Lesiaks' corn crop.
The Lesiaks called Dale Flowerday, an agronomist, as their expert witness, and his status as an expert is undisputed by the parties. Flowerday inspected five or six of the Lesiaks' fields, relying upon Tom Lesiak to show him fields representative of the entire farming operation, as Flowerday testified was customary in his profession because it is the farmer who knows his or her land best. Flowerday explained that he was able to determine the cause of the damage from reviewing the crop residue and root systems following harvest. Flowerday opined that the improper application of Guardsman Max to the Lesiaks' cornfields caused a lower yield at harvest. Flowerday noted that his opinion applied only to the Lesiaks' irrigated fields. And Flowerday also explained that he did not know whether Guardsman Max had injured the areas of the fields containing medium-textured soils, but could only be certain as to the areas of the fields containing coarse-textured soils.
CVA asserts that there is no evidence establishing that Guardsman Max caused damage to the Lesiaks' crops grown in medium-textured soils, because the 4-pints-per-acre rate was within the range prescribed by the label for medium-textured soils. Notably, Flowerday did not rule out Guardsman Max as the cause of the damage to the crops grown in medium-textured soils. Rather, he simply stated that he did not know if it caused the damage, because it was applied at a rate within that prescribed by the Guardsman Max label. Flowerday did explain that he saw damage throughout the fields, on crops in both medium- and coarse-textured soils, and that the damage was simply more extensive with the crops in the coarse-textured soils. Moreover, in examining the relevant land value sheets and soils maps, Flowerday determined that a majority of the Lesiaks' land consisted of coarse-textured soils—specifically, 68 percent of the soils were coarse textured, and 32 percent were medium textured. Based on those soil compositions, and the Guardsman Max label instructions, Flowerday opined that CVA had applied Guardsman Max at too high a rate.
Thus, in Flowerday's opinion, all of the fields were coarse textured for purposes of applying herbicide. The Guardsman Max label explains that "[w]hen use rates are expressed in ranges, use the lower rates
In other words, the record contained evidence that despite the combination of coarse- and medium-textured soils in the Lesiaks' fields, CVA should have applied Guardsman Max conservatively, as if the soil were coarse textured. The record also contained evidence that the Lesiaks' crop was damaged. And the record contains evidence explaining the biological mechanism by which overapplication of Guardsman Max can cause the kind of damage that was observed in the Lesiaks' corn. In short, there was evidence from which the jury could have found that something damaged the Lesiaks' crop on coarse- and medium-textured soils, that Guardsman Max can cause that kind of damage, and that Guardsman Max was overapplied to the Lesiaks' fields. This was sufficient evidence to allow a jury to find that Guardsman Max injured the corn on both coarse- and medium-textured soils.
Flowerday's opinion was limited to the irrigated fields. Here, many of the fields contained both irrigated and nonirrigated portions and there was evidence that a lack of irrigation, among other things, caused damage to a number of fields. The issue is whether there is enough evidence in the record to allow a jury to reasonably apportion damages between each of these independent causes of yield loss. There is.
We have explained that where a growing crop is injured but not rendered entirely worthless, the damage to it may be measured by the difference between the value at maturity of the probable crop, if there had been no injury, and the value of the actual crop, less the expense of fitting for market that portion of the probable crop which was prevented from maturing by the injury.
At trial, the Lesiaks introduced exhibit 305, summarizing their estimated loss. Exhibit 305 contained the projected and actual yields for each field. Then, based on those figures, along with the price of corn and the estimated savings from not having to dry and transport a full crop, the Lesiaks estimated their loss. But the accuracy of exhibit 305 was called into question during trial. CVA asserts that exhibit 305 was unreliable and that therefore, a jury could only speculate as to the amount of damages suffered by the Lesiaks.
Specifically, CVA makes two points. First, the evidence was in conflict over what reasonable projected yields for each field would be. Second, CVA points out that the Lesiaks did not have exact records of each field's individual crop yield; instead, the Lesiaks worked from their total yield and used that number to estimate each field's yield. In effect, CVA asserts that without accurate projected yield figures, and because the Lesiaks did not track each individual field's actual yield, it would be impossible for the jury to accurately calculate damages because of the multitude of other events which caused crop loss on each field.
But that is not the case. Here, there is sufficient evidence to allow a jury to reasonably calculate damages. First, there is sufficient evidence regarding the projected yields. The soil tests each listed a yield goal ranging from 180 to 200 bushels per acre (BPA) on each field. Tom Lesiak also testified that he created a "conservative" estimate for each field, projecting an average yield of approximately 180 BPA. And exhibit 305's projected yield figures were based on the alleged promises of Zmek and the performance of other farmers' fields in the nearby area under CVA's program. The jury could choose which evidence was most credible and work from those figures.
Furthermore, there is sufficient evidence in the record to establish the actual yields in each field, to a reasonable degree of certainty and exactness. The names of each field, where each is located, and the number of irrigated acres may be determined by cross-referencing exhibit 58 (the names and legal descriptions of each field), exhibit 173 (land value sheets), and exhibit 220 (diagrams of certain irrigation systems). Additionally, exhibit 93 contains all of the "yield maps" for each field. A yield map is created by the combine harvester as the crop is being harvested. A yield map calculates the average BPA based on the total crop input and the speed at which the combine is traveling. The yield maps also indicate the total number of harvested acres for each field.
At trial, Tom Lesiak testified that although the yield maps are not 100 percent accurate, they were about 90 percent accurate—certainly accurate enough to be a valuable guide to farmers analyzing their crop yields. The inaccuracy stems from the lag which occurs between a change in combine speed and the subsequent update of the combine's harvesting monitor, which produces the yield maps. Additionally, there is a drop in accuracy when the combine is forced to turn around at the end of rows. This is because the harvest rate
It is undisputed that testimony adduced at trial indicates that multiple fields suffered crop loss from sources other than the alleged overapplication of Guardsman Max. But the record would allow a jury to subtract those damages out of the calculation. For example, Tom Lesiak admitted that one of his fields, the "Sigea" field, suffered a loss from a lack of irrigation. The Sigea field was center-pivot irrigated, meaning that a large circular pivot irrigated the majority of the field. Thus, the corners of the field did not receive any irrigation. But, additionally, the pivot had a few plugged nozzles which caused a small circle in the interior of the pivot circle to receive an inadequate amount of water. This resulted in a loss attributed to a lack of irrigation.
A jury could deduct that loss out without resorting to speculation or conjecture. The Sigea yield map provides extensive information, including the total number of acres harvested, the average BPA yield for the entire field, and the number of acres harvested for each BPA range. For example, the Sigea field indicates that 156.18 acres were harvested, at an estimated 128.28 BPA. Of those 156.18 acres, 35.9 acres yielded less than 90 BPA, while 16.4 acres yielded 180 or more BPA. Those 35.9 acres correspond to the areas which received inadequate or no irrigation. Without going into the mathematical specifics, a jury could estimate the Sigea field's average BPA yield without those 35.9 nonirrigated acres. In other words, a jury could estimate the average BPA yield for just the irrigated portions of the field. From there, it is a matter of comparing that yield to the projected yield and then calculating the estimated economic loss.
A similar approach could be used for each of the fields where there were multiple causes of yield loss, regardless of whether that loss was from a lack of irrigation, sandburs, or other weeds or pests. Granted, the Sigea field is one of the easier examples, compared to some of the others, but the fact remains that there is a reasonable basis for the jury to approximate the damage allegedly caused by Guardsman Max. The law does not require mathematical certainty. Instead, the law requires a reasonable estimation based on the evidence in the record and the nature of the case. And the fact that such a calculation would require some sophistication from a jury, in that they would have to sift through large amounts of evidence, does not change that burden. Although the parties could have presented expert testimony to help the jury in performing that task, it was not necessary for them to do so in order to avoid a directed verdict. Our system asks juries to make complex factual findings in many cases, and that is what the jury would have been asked to do here. There is evidence in the record which would allow a jury to find that the overapplication of Guardsman Max damaged the Lesiaks' fields and also to reasonably estimate the extent of the damage. The trial court erred in directing a verdict in favor of CVA.
The Lesiaks also assert that the district court erred in various respects at the summary judgment stage. First, the Lesiaks assert that the district court improperly considered CVA's motion for summary judgment, in essence, because CVA's motion sought to strike particular legal theories of relief rather than claims. But there is no question that the parties may, in pretrial proceedings, seek to limit the scope of the issues on which evidence may be adduced and which may be submitted
Next, the Lesiaks argue that CVA breached its implied warranty to provide its services in a workmanlike and appropriate manner. The district court found that no such warranty existed under Nebraska law, except in cases involving building and construction contracts, and granted summary judgment to CVA on this issue. The Lesiaks assign this ruling as error. But because no implied services warranty exists in a contract for agronomical services or goods under Nebraska law, the district court's ruling was correct.
The Lesiaks' argument presumes that their contract with CVA is a services contract. But regardless of whether the contract is for goods or services, the Lesiaks' claim fails. If the contract is determined to be a contract for the sale of goods, then Nebraska's Uniform Commercial Code controls.
If the contract is determined to be a contract for the provision of services, then the common law would control. The only circumstance under which we have found an implied services warranty in a contract for services is in the context of building and construction contracts.
The Lesiaks argue that an implied services warranty should be found here because CVA was hired to help "build" a corn crop. But it is a stretch to consider what was done here to be "building" similar to that in, for example, Moglia v. McNeil Co.
Obviously, that logic is not applicable to spraying a corn crop, for several reasons— most notably, a corn crop is not a finished product capable of having a latent defect at the time of contracting. And to conclude otherwise would be to effectively eliminate the requirement that negligence be proved and, instead, impose strict liability for the results of the vendor's performance. Thus, we conclude that it is both unnecessary and unwise to expand our application of the implied services warranty outside of the building and construction context. This assignment of error lacks merit.
Finally, the Lesiaks assert that the district court erred when it granted summary judgment on the Lesiaks' negligence claim. The court determined that the economic loss doctrine applied and that the Lesiaks could only proceed under contractual theories of relief. Because we find the doctrine inapplicable here, this assignment of error has merit.
The economic loss doctrine, generally stated, is a "judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses."
The economic loss doctrine originated in the context of products liability actions. The case attributed with the creation of the doctrine, and its modern application in courts today, is Seely v. White Motor Co.
We have adopted the doctrine, as described in East River S.S. Corp., in Nebraska.
Here, we are presented with a situation where the product, Guardsman Max, was not alleged to be defective— instead, the Lesiaks claim the product was negligently applied, resulting in damage to their corn crop. After reviewing our own case law, the case law from other jurisdictions, and the scholarly work done on the subject, we hold that the economic loss doctrine precludes tort remedies only where the damages caused were limited to economic losses and where either (1) a defective product caused the damage or (2) the duty which was allegedly breached arose solely from the contractual relationship between the parties. And economic losses are defined as commercial losses, unaccompanied by personal injury or other property damage.
Multiple rationales have been given to support the doctrine's existence. But the primary rationale, and the one that we find most compelling, is to maintain the line of demarcation between tort law and contract law.
But the opposite must also be true, and the same type of concern must also exist for tort law. While the doctrine has its place in the law of damages, it should not be interpreted so broadly as to undermine tort law and preclude tort remedies in situations which, historically, have presented viable tort cases.
To that end, we are expressly limiting the doctrine's application and take a position similar to that espoused by the Supreme Court of Florida.
Second, the doctrine also applies where the alleged breach is only of a contractual duty, and no independent tort duty exists. Again, restated, the purpose of the doctrine is to preserve the distinction between tort law and contract law. Furtherance of that purpose requires that when the alleged breach is of a purely contractual duty—a duty which arises only because the parties entered into a contract—only contractual remedies are available. This is a commonsense conclusion. If the only duty breached is a contractual one, then only contractual remedies should be available. Thus, the doctrine serves to "weed[] out cases involving nothing more than an allegedly negligent failure to perform a purely contractual duty—a duty that would not otherwise exist."
We realize that this conclusion is somewhat at odds with past statements in some of our case law. Under Nebraska law, with each contract comes an accompanying duty "`to perform with care, skill, reasonable expediency, and faithfulness the thing agreed to be done.'"
In sum, we conclude that the primary purpose of the economic loss doctrine is to maintain the separateness of tort law and contract law. Generally speaking, the doctrine limits a party's ability to recover for economic losses (or commercial losses), unaccompanied by personal injury or damage to other property, allowing recovery only under contract law. But we expressly restrict the doctrine's application to where economic losses are (1) caused by a defective product or (2) caused by an alleged breach of a contractual duty, where no tort duty exists independent of the contract itself.
The question still remains whether the doctrine bars the Lesiaks' negligence claims here. It does not. It is true that the alleged breach was of a contractual duty which would not have existed but for the creation of the contractual relationship between the Lesiaks and CVA. But the damage allegedly caused by the breach was not purely economic loss; rather, CVA's actions allegedly caused damage to the Lesiaks' corn, which qualifies as "other property"—that is, property other than the property that was sold pursuant to the contract. Thus, this case is removed from the doctrine's reach.
CVA argues, however, that the doctrine should still apply to bar the Lesiaks' claim because their claim involves only their disappointed commercial expectations and that as a result, contract law should control. This "`disappointed expectations'" test has been adopted by some courts.
But we are not persuaded by the Grams court's reasoning, and we decline to adopt it here. Adoption of the "disappointed expectations" test would virtually destroy the "other property" exception espoused by the U.S. Supreme Court and adopted by this court in Dobrovolny v. Ford Motor Co.,
As noted by one author, the "disappointed expectations" test seems to create a presumption that by entering into a contract, a party's exclusive remedy for foreseeable harm (traditionally the province of tort law) is found only through contractual protection.
Furthermore, the "disappointed expectations" test is not in keeping with U.S. Supreme Court precedent. The Court addressed the scope of the "other property"
The "disappointed expectations" test does just that—it precludes tort recovery based on the mere possibility that the parties could have included a contract term dealing with the occurrence of the damage at issue. This reasoning was rejected by the U.S. Supreme Court, and we likewise reject it here. As a result, the Lesiaks' negligence claim is not barred by the economic loss doctrine, because the Lesiaks assert that CVA's conduct harmed their corn crop, which is considered "other property." Therefore, the district court erred in granting summary judgment to CVA on this issue.
On cross-appeal, CVA asserts that the Lesiaks were unable to prove the amount of money they saved from not having to dry and transport the corn that they allegedly lost; in essence, CVA claims that the Lesiaks could only speculate as to how much money they saved from having less corn to dry and transport. Therefore, CVA asserts that the district court erred in denying CVA summary judgment. But because the Lesiaks' estimation of per-bushel savings rests on competent evidence, this assignment of error is without merit.
We have held that the denial of a summary judgment motion is neither appealable nor reviewable.
Over objection, Tom Lesiak explained that the Lesiaks saved approximately $0.02 per bushel in drying costs and $0.10 per bushel in transportation costs. Adequate foundation was supplied for each figure. He explained that when a farmer deposits his crop in a grain elevator, the farmer is charged a certain amount of money based on the moisture remaining in the crop. Tom Lesiak knew the grain elevators' moisture rates in 2005 and knew the moisture levels in his corn. From those figures, he was able to approximate the amount of money saved per bushel for drying costs. With regard to the transportation costs, he explained that he was familiar with what people were charging to transport crops in 2005. Transportation costs were an expense that the Lesiaks incurred every year, including in 2005, so they knew what had been spent to transport their actual yield. Based on this information, he was able to estimate how much money was saved from not having to haul the lost yield. This information forms a reasonable basis for the jury to calculate any savings obtained by the Lesiaks in not having to dry and transport the allegedly lost yield. Further specifics, such as fuel costs or machinery use-depreciation costs, are not necessary.
We determine that the district court erred in granting a directed verdict in favor of CVA. We also find that the district court erred in granting summary judgment on the Lesiaks' negligence claim. The Lesiaks' other assigned errors, however, lack merit, as does CVA's assigned error on cross-appeal. The judgment is affirmed in part, and in part reversed and remanded for a new trial consistent with this opinion.
AFFIRMED IN PART, AND IN PART REVERSED AND REMANDED FOR A NEW TRIAL.
WRIGHT, J., not participating in the decision.
