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Peterson v. Ferrell

Court of Appeals of Kansas.
Nov 16, 2012
288 P.3d 870 (Kan. Ct. App. 2012)

Opinion

No. 107,359.

2012-11-16

Steve PETERSON, Sam Eilert, and Randy Hlad, Appellees, v. Garland P. FERRELL, III, d/b/a 4L Grazing, LLC, Appellant.

Appeal from Butler District Court; Charles M. HART, judge. Opinion filed November 16, 2012. Affirmed in part, reversed in part, and remanded with directions. Tim Connell, of Connell & Connell, of El Dorado, for appellant. Richard E. Dietz, of Dietz & Hardman, of Osborne, for appellees.


Appeal from Butler District Court; Charles M. HART, judge. Opinion filed November 16, 2012. Affirmed in part, reversed in part, and remanded with directions.
Tim Connell, of Connell & Connell, of El Dorado, for appellant. Richard E. Dietz, of Dietz & Hardman, of Osborne, for appellees.
Before MALONE, P.J., PIERRON and BRUNS, JJ.

MEMORANDUM OPINION


PER CURIAM.

Oak Creek Land and Cattle Company, Inc., MPK Land & Livestock, LLC, Sam Eilert, and Randy Hlad entered into separate grazing contracts with Garland P. Ferrell doing business as 4L Grazing, LLC (Ferrell), in 2008. Steve Peterson was the primary shareholder of Oak Creek Land and Cattle Company, Inc. and the managing member of MPK Land & Livestock, LLC. Because Peterson, Eilert, and Hlad were not satisfied with the condition of the cattle at the end of the summer grazing season, they filed a lawsuit against Ferrell for breach of contract. After a 4–day trial, the district court determined that Ferrell had breached the grazing contracts, and it entered a judgment in favor of the plaintiffs for $240,416.90.

On appeal, we find that Peterson was not a party to the contracts and, as such, had no standing to bring this action in his personal capacity. Although there is sufficient evidence in the record to support the district court's conclusion that Ferrell breached his contracts with Eilert and Hlad, we find that the district court failed to determine the specific amount of damages incurred with respect to each of those contracts. In addition, we find that the evidence in the record does not support several of the district court's conclusions as to damages. Thus, we reverse the district court's judgment in favor of Peterson, we affirm the district court's conclusion that Ferrell breached his contracts with Eilert and Hlad, and we remand this case to the district court for a determination of the amount of damages to be awarded to Eilert and Hlad consistent with this opinion.

Fact

Oak Creek Land and Cattle Company, Inc., MPK Land & Livestock, LLC, Eilert, and Hlad entered into separate grazing contracts with Ferrell in 2008. In June or July, 2008, Eilert and Hlad signed summer custom grazing contracts with Ferrell in their personal capacities. Peterson, however, signed a summer custom grazing contract as representative of Oak Creek Land and Cattle Company, Inc ., and he signed a stocker custom grazing contract as representative of MPK Land & Livestock, LLC.

Each of the grazing contracts stated that Ferrell would “provide adequate grass and water for Owner's cattle as nature shall provide.” In addition, the contracts stated that Ferrell would “provide feed and mineral to the Owner's cattle according to the seasonal, nutritional needs of Owner's livestock.” Further, the contracts stated that Ferrell would “routinely monitor the condition of Owner's cattle and provide prudent veterinary care when necessary.” Additionally, the contracts stated that Ferrell would “maintain reasonable vigilance over Owner's cattle and manage the grazing of said cattle so as to optimize the quality of grass available to them.” Notwithstanding, the contracts did not promise any specific weight gain or pregnancy rates.

Some of the cattle covered by the contracts had wintered on Ferrell's ranch, while others were brought to his ranch at the beginning of the summer grazing season. Because Ferrell utilized a rotational grazing method to feed cattle, he divided his ranch with fences and rotated cattle between different paddocks. Generally, Ferrell would not give supplemental feed to the cattle unless the paddocks were covered with snow or ice.

On July 10, 2008, Ferrell fired James Nelson as his ranch manager. But on July 17, 2008, Ferrell asked Nelson to come back to finish out the summer grazing season. Although Nelson returned to Ferrell's ranch, he only worked for about a week before quitting. According to Nelson, although the cattle should have been moved to a different paddock on the day he was fired, he discovered that this had not been done upon his return to Ferrell's ranch.

In mid-August 2008, Ferrell hired Keith Long as his ranch manager. At the time Long was hired, he noted that “the cows were somewhat thin.” Similarly, Ferrell noted the cattle were thin when Long began working for him. Additionally, Peterson called Ferrell in late July or early August because he was not satisfied with the weight of some cattle that had been returned to him.

In October 2008, a veterinarian, Dr. Roger Bechtel, performed a pregnancy check on the breeding cows being grazed on Ferrell's ranch. While the pregnancy rate on the ranch had been in the mid to low 90% range in 2006 and 2007, Dr. Bechtel found the pregnancy rate to be only about 80% in 2008. Because Ferrell thought the pregnancy rate might have been a mistake, the cows were rechecked and 12 more bred cows were discovered. All totaled, 136 cows were open (not bred) out of 791, which came to a pregnancy rate of about 83%.

Dr. Bechtel also noted the cows were thinner than in the past with body scores ranging from 3s to 4s, with a few 2s. Bodying scoring is a common method used in the cattle industry to judge the nutritional needs of cattle. Although body scoring is subjective, a 1 represents cattle that are extremely emaciated and a 9 represents cattle that are extremely obese. It is generally recognized that a score of 3 or below is too low and that a score of 7 or above is too high.

After the cattle were returned to their owners, Peterson, Eilert, and Hlad filed a lawsuit against Ferrell for breach of contract. In the petition, the plaintiffs alleged that Ferrell's breach of the grazing contracts had resulted in low pregnancy rates, underweight bred cows and bulls, and inadequate weight gain on the yearling cattle. In addition, the plaintiffs sought to recover damages for four bulls that they claimed were no longer serviceable. In response, Ferrell denied that he breached the grazing contracts, and he asserted a counterclaim against the plaintiffs for the amount still due and owing under the grazing contracts.

On April 19, 2011, the district court held a 4–day bench trial. After reviewing a variety of exhibits and hearing numerous witnesses, both expert and lay, the district court granted judgment against Ferrell and in favor of the plaintiffs. The district court also granted Ferrell judgment on his counterclaim. After offsetting the amount of damages owed to Ferrell on the counterclaim, the district court granted judgment to the plaintiffs in the amount of $240,416.90.

Ferrell subsequently filed a motion to amend judgment, in which he challenged the district court's calculation of damages. Ferrell also alleged that the district court had failed to specify how he had breached the grazing contracts. On December 12, 2011, the district court reduced the amount of the judgment by $5,024, which was the amount of a credit that Ferrell had given under the stocker grazing contract. Thereafter, Ferrell timely appealed to this court.

Analysis

Peterson Lacked Standing to Bring Suit Against Ferrell

In the present case, Peterson—in his personal capacity—has asserted claims against Ferrell for breaches of two contracts, one a summer grazing contract and the other a grazing contract for stocker cattle. Ferrell argues that Peterson is not a real party in interest. We, however, find the more appropriate inquiry to be whether Peterson had standing to bring a breach of contract action against Ferrell.

Although neither party addressed standing in their briefs, we can raise the issue sua sponte because it involves a jurisdictional question. See Mid–Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, Syl. ¶ 2, 106 P.3d 483 (2005). It is well settled that whether jurisdiction exists is a question of law subject to unlimited review. See Kansas Medical Mut. Ins. Co. v. Svaty, 291 Kan. 597, 609, 244 P.3d 642 (2010).

Unfortunately, issues of standing and real party in interest are often confused. See 6A Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 1542 (2010). Because standing is an issue involving subject matter jurisdiction, it cannot be waived and it can be raised at any time. See Mid–Continent Specialists, Inc., 279 Kan. 178, Syl. ¶ 2. On the other hand, whether a party is a real party in interest does not involve jurisdiction, and it can be waived. See 13A Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 3d § 3531 (2008).

In Kansas, “a corporation is considered to be a separate legal entity, a person, not a mere extension of its owner.” Brownback and Wadley, Kansas Agricultural Law, pp. 121–22 (2d ed.1994). “Shareholders do not have standing to sue for harms to the corporation or even for the derivative harm to themselves that might arise from a ... wrong to the corporation.” Lightner v. Lightner, 46 Kan.App.2d 540, Syl. ¶ 3, 266 P.3d 539 (2011). Similarly, K.S.A. 17–7673(b) provides that a limited liability company is “a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited liability company's articles of organization.” (Emphasis added.) See Brownback and Wadley, Kansas Agricultural Law, pp. 138–40.

In the present case, because the parties could not find a copy of the 2008 summer grazing contract, they stipulated that the one Peterson signed was identical to the 2007 summer grazing contract. Moreover, Peterson admits in his brief that “[t]he 2007 cow contract was signed as Steve Peterson, President, Oak Creek Land & Cattle, Inc.” We take judicial notice that Oak Creek Land & Cattle, Inc. is a contraction of the corporation's registered name, which is Oak Creek Land & Cattle Company, Inc. See American Fence Co. v. Gestes, 190 Kan. 393, 402, 375 P.2d 775 (1962).

Peterson also admits in his brief that he signed the stocker grazing contract “on behalf of an entity named MPK, LLC.” Once again, we take judicial notice that MPK, LLC is a contraction of the limited liability company's registered name, which is MPK Land & Livestock Company, LLC. See 190 Kan. at 402. We also note that MPK Land & Livestock, LLC is listed as the “Owner” on the first page of the stocker grazing contract. Accordingly, we find that the parties to the summer grazing contract were Ferrell and Oak Creek Land & Cattle Company, Inc., and that the parties to the stocker grazing contract were Ferrell and MPK Land & Livestock Company, LLC.

It is undisputed that neither Oak Creek Land & Cattle Company, Inc. nor MPK Land & Livestock Company, LLC are parties to this litigation. In an attempt to justify his prosecution of this action in his personal capacity, Peterson argues that he, the corporation, and the limited liability corporation are one in the same. But he offers no legal support for this argument and, as such, it is deemed to be waived or abandoned. See State v. Berriozabal, 291 Kan. 568, 594, 243 P.3d 352 (2010).

Even if Peterson's argument were properly before this court, however, it disregards the fact that a corporation “has a legal personality distinct from the natural persons who make it up.” Matney v. Matney Chiropractic Clinic, 268 Kan. 336, Syl. ¶ 3, 995 P.2d 871 (2000). In other words, “a corporation is an artificial being” that “must be thought of without reference to members who compose it.” 268 Kan. at 341. The same, of course, is true of a limited liability company. See K.S.A. 17–7673(b).

Because Oak Creek Land & Cattle Company, Inc. and MPK Land & Livestock Company, LLC are separate and distinct from their shareholders and members, we conclude that Peterson does not have standing to sue Ferrell in his personal capacity-he was not a party to the contracts. As such, the district court lacked subject matter jurisdiction over the claims he asserted in this case, and it is unnecessary for us to consider the other issues relating to Peterson. We, therefore, reverse the judgment entered by the district court in favor of Peterson. Contractual Claims of Eilert and Hlad

Ferrell contends that the district court erred in concluding that he had breached his contracts with Eilert and Hlad. Specifically, Ferrell argues he was not a guarantor or insurer of the health of the cattle that were allowed to graze on his ranch. Likewise, Ferrell argues that there was no guaranty that Eilert and Hlad would end up with a particular number of bred cows. In response, Eilert and Hlad argue that one of the principal goals of the summer grazing contracts is for the cattle to gain weight. They also argue that there is a causal link between the low pregnancy rate during the summer of 2008 and the lack of nutrition Ferrell provided to the cattle.

The interpretation of a contract is a question of law subject to unlimited review. See Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289 Kan. 891, 900–01, 220 P.3d 333 (2009). And “[w]hether a party breached the contract is a question of fact.” Wichita Clinic v. Louis, 39 Kan.App.2d 848, 868, 185 P.3d 946,rev. denied278 Kan. 769 (2008). We review factual findings for substantial competent evidence, and in doing so, “this court does not reweigh the evidence, resolve conflicts within the evidence, or pass on the credibility of witnesses.” Progressive Products, Inc. v. Swartz, 292 Kan, 947, 955, 258 P.3d 969 (2011). Evidence is substantial and competent when it provides a factual basis to support a reasonable conclusion; See Frick Farm Properties v. Kansas Dept. of Agriculture, 289 Kan. 690, 709, 216 P.3d 170 (2009).

The summer grazing contracts the parties entered into in this case are also known as agistment agreements. “[T]he main object of an agistment contract is the furnishing of the pastureland on which the cattle might graze and gain weight.” Lips v. Opp, 150 Kan. 745, 752, 96 P.2d 865 (1939). “It cannot be said that one pasturing cattle all summer long does not contemplate that the price of [the] cattle will be higher in the fall as well as contemplating that they will be heavier.” Degnan v. Young Bros. Cattle Co., 152 Kan. 250, 256, 103 P.2d 918 (1940); see also Hoge v. Norton, 22 Kan. 374, 379–80 (1879) (clearly a cattle owner is damaged when his cattle are returned without having obtained an ordinary increase in weight). Further, the terms of a grazing or agistment contract can impose obligations above and beyond the exercise of ordinary care. See Hughes v. Atkinson, 188 Kan. 413, 421, 362 P.2d 618 (1961).

In the present case, Ferrell was not only obligated to “provide adequate grass and water for [the cattle] as nature shall provide,” he also agreed to:

(1) “provide feed and mineral to Owners' cattle according to the seasonal, nutritional needs of Owner's livestock;”

(2) “routinely monitor the condition of the Owner's cattle and provide prudent veterinary care when necessary;” and

(3) “maintain reasonable vigilance over Owner's cattle and manage the grazing of said cattle so as to optimize the quality of grass available to them.”

Accordingly, although Ferrell suggests that the summer grazing contracts only obligated him to provide ordinary and reasonable efforts to keep the cattle alive until the end of the grazing season, the language of the contracts required more.

A review of the record reveals evidence upon which a reasonable person could conclude that the cattle needed more nutrition than what they received merely from grazing in Ferrell's paddocks. Although the timing is unclear, there is evidence in the record that some of the cattle developed a magnesium deficiency, and there was testimony presented at trial linking this deficiency to inadequate nutrition. There was also testimony presented at trial that some of the cattle may have been left in a paddock for too long, causing them to be without forage for an extended period of time.

Additionally, there was evidence presented at trial that the pregnancy rate of the cows was unusually low, which can also be a symptom of inadequate nutrition. And at the time of the pregnancy checks, Dr. Bechtel noted that the body condition scores of the cows were 3s, 4s, and even a few 2s. According to Dr. Bechtel, such low scores are primarily caused by poor nutrition. Notably, Ferrell admitted that the cows were thin in October and had below average body scores.

Although we recognize that the evidence presented at trial was conflicting, we find substantial competent evidence in the record upon which a reasonable factfinder could have concluded that Ferrell breached his contracts with Eilert and Hlad by failing to adequately provide for the nutritional needs of their cattle. See Hughes, 188 Kan. at 418–19. Certainly, Ferrell was not an insurer or guarantor of specific weight gain or pregnancy rates. But he did have a contractual duty to monitor the health and nutrition of the cattle, providing additional feed and minerals when necessary, so they would not deteriorate. Sufficiency of Findings of Facts and Conclusions of Law

Ferrell contends the district court did not make adequate findings of fact and conclusions of law to support its determination that he breached the grazing contracts with Eilert and Hlad. Specifically, Ferrell argues that the district court failed to comply with K.S.A. 60–252(a). Both K.S.A. 60–252(a) and Supreme Court Rule 165 (2011 Kan. Ct. R. Annot. 246) require the district court to make findings of facts and conclusions of law sufficient to indicate the reasons for its decision.

“Findings of the trial court should be construed so as to uphold rather than defeat the judgment. That is, they must be given a liberal construction.” Dill v. Excel Packing Co., 183 Kan. 513, 521–22, 331 P.2d 539 (1958). If the findings resolve the issues presented and adequately inform parties and the appellate court of the reasons for the decision, then the requirements of K.S.A. 60–252(a) are met. ‘ “In nearly every case, the findings of fact give the parties adequate insight into how a decision is arrived at.’ “ State v. Mell, 39 Kan.App.2d 471, 491, 182 P.3d 1,rev. denied 286 Kan. 1183 (2008) (quoting In re Lett & Jackson, 7 Kan.App.2d 329, 336, 640 P.2d 1294,rev. denied 231 Kan. 800 [1982] ).

In the present case, the district court expressly set forth three provisions of the contract in the journal entry under the heading “Breach of Contract.” Moreover, the district court found that Ferrell had a contractual obligation to provide “adequate grass, water, feed, and minerals” to the cattle and to “routinely monitor the condition of the Owner's cattle and [maintain] reasonable vigilance over Owner's cattle.” And although the district court properly concluded that Ferrell was not an insurer or guarantor, it specifically found that Ferrell had “breached the aforementioned contractual duties and is responsible to Owner for certain damages.”

It is apparent from reading the journal entry in its entirety that the district court found that Ferrell had failed to provide “adequate grass, water, feed, and minerals” to meet the nutritional needs of the cattle. As such, although the findings in the present case are not exhaustive, we find that they were sufficient to put all parties and this court on notice as to the reasons for the district court's conclusion that Ferrell breached the grazing contracts. Accordingly, we conclude that the findings of fact and conclusions of law were adequate.

The remainder of the journal entry discusses the damages that the district court found had resulted from Ferrell's breach of the grazing agreements. In determining the amount of the damages, it appears that the district court relied on evidence presented at trial regarding industry standards relating to pregnancy rates and weight gain. Unfortunately, although the district court divided the damages into certain categories, it failed to itemize the damages owed to Eilert and the damages owed to Hlad. For this reason, we must remand this case to the district court for a determination of the amount of damages to be awarded to Eilert and the amount of damages to be awarded to Hlad. Measure of Damages

A determination whether the district court applied the correct measure of damages is a question of law subject to unlimited review. See Evenson v. Lilley, 43 Kan.App.2d 573, 575, 228 P.3d 420 (2010), aff'd295 Kan. 43, ––––, 282 P.3d 610 (2012). But to the extent a damage award implicates the district court's factual findings, we review the record to determine if there was substantial competent evidence to support such findings. See Louisburg Building & Development Co. v. Albright, 45 Kan.App.2d 618, 638, 252 P.3d 597 (2011), rev. granted in part on other grounds March 9, 2012.

As a general rule, when a party establishes a material breach of contract it is entitled to damages. See Freeto Construction Co. v. American Hoist & Derrick Co., 203 Kan. 741, 747, 457 P.2d 1 (1969). An award of actual damages arising from a breach of contract, however, must be proven with sufficient certainty to justify the award. See State ex rel. Stovall v. Reliance Ins. Co., 278 Kan. 777, 789, 107 P.3d 1219 (2005) (“A party is not entitled to recover damages ‘not the proximate result of the breach of contract and those which are remote, contingent, and speculative in character.’ ”) “The basic goal in awarding contract damages is to put the nonbreaching party in the position the party would have been in had the breach never occurred, without allowing that party a windfall.” Louisburg Building & Development Co., 45 Kan.App.2d at 638 (citing State ex rel. Stovall, 278 Kan. at 789).

Expectation damages put the nonbreaching party in the position he or she would have been in had the contract been performed. Source Direct, Inc. v. Mantell, 19 Kan.App.2d 399, 408, 870 P.2d 686 (1994). Lost profits are recoverable as damages when reasonably assumed to have been in the parties' contemplation and provable with reasonable certainty. See MLK, Inc. v. University of Kansas, 23 Kan.App.2d 876, 886–87, 940 P.2d 1158 (1997); Jetz Service Co. v.. Salina Properties, 19 Kan.App.2d 144, 146–47, 865 P.2d 1051 (1993). The appropriateness of an award for lost profits depends on the facts and circumstances in each particular case. Vickers v. Wichita State University, 213 Kan. 614, 618, 518 P.2d 512 (1974).

In the present case, the district court found that Ferrell's breach of the grazing contracts caused the plaintiffs to end up with less bred cows, which resulted in a loss of value because an open cow is not worth as much as a bred cow. Clearly, the parties contemplated cows becoming pregnant because the contracts discuss calves born on Ferrell's land and pregnancy checks were conducted. Accordingly, we find that the district court correctly concluded that the measure of damages was the number of open cows that would have been bred but for Ferrell's breach. But, as indicated above, it is impossible to determine the amount of damages owed to Eilert and Hlad under this theory of recovery because the record is unclear about the number of open and bred cows that belonged to each of them.

Using the pregnancy rate as the measure of damages, the award of damages in this case should put plaintiffs in the same position in which they would have been had there been no breach of contract. See Source Direct, Inc., 19 Kan.App.2d at 408;Jetz Service Co., 19 Kan.App.2d at 146. Had Ferrell performed the contract, 92% of Eilert's and 92% of Hlad's cattle would have been bred. On remand, the district court must determine how many more of each of their cows should have been bred to meet that number.

Additionally, after determining the number of cows that should have been bred, the district court should only award the difference in value between bred cows and open cows. We find that awarding Eilert and Hlad a refund of their grazing fees as well as the value of a later-to-be-born calves results in a windfall. Had Ferrell performed the contract, Eilert and Hlad would have had more bred cows, an injury to which they are entitled to damages based on the difference in value between open cows and bred cows. But they are not entitled to damages for later-to-be-born calves—plaintiffs could never utilize the value of both bred cows and their calves because those things do not exist simultaneously. In effect, the district court monetarily awarded Eilert and Hlad the value of bred cows and the value of calves. This is a better position than had the contract been performed. Moreover, had Ferrell performed the contract, Eilert and Hlad would have had to pay grazing fees. Therefore, to properly put the parties in the position they would have been in had the contract been performed, Eilert and Hlad should be awarded only the difference in value of the bred cows and open cows.

We do find that body scoring is not too speculative to support the value of a damages award. Absolute certainty is not necessary in calculating damages, and in the long-established cattle business, “laws of feeding and growth, well understood by cattle men ... work out with sufficient certainty for business calculations and judicial investigations.” Vickers, 213 Kan. at 618 (quoting Hoge, 22 Kan. at 374). At the trial of the present action, a number of witnesses testified that the cattle's body scores were lower than they should have been. Dr. Bechtel made a note that at the pregnancy check, the cattle were 3s and 4s and even some 2s. Importantly, Ferrell sent Peterson an email in October 2008 advising him that the cows were thin and had below average body scores. Thus, substantial competent evidence supported the finding that the cattle's body scores were low even without pictures or weight measurements.

Testimony established that a cow needed to gain an average of 150–300 pounds to go from a body score 3 to a body score 5. Based on this evidence, the district court determined that the plaintiffs' cows needed to gain an average of 200 pounds. Given that some cows needed to gain less weight and some cows needed to gain more weight, the 200–pound average was a reasonable number and supported by substantial evidence. See Cornia v. Wilcox, 898 P.2d 1379, 1386–87 (Utah 1995).

Unfortunately, there was not substantial competent evidence in the record to judge how much it cost to put 200 pounds of weight gain on a cow. “The burden of proving damages rests on the plaintiff.” Belot v. U.S.D. No.497, 27 Kan.App.2d 367, 370, 4 P.3d 626 (2000). A property owner is competent to testify as to the value of his or her property, but he or she cannot “parrot the opinions of experts as support for his or her fair market value.” Manhattan Ice & Cold Storage v. City of Manhattan, 294 Kan. 60, 75–76, 274 P.3d 609 (2012); see State v. Robinson, 4 Kan.App.2d 428, 430, 608 P.2d 1014 (1980). Peterson testified that it costs $.80 per pound of gain for each of the bred cows, and the district court accepted and used that figure to calculate damages to all the plaintiffs. But Peterson said that his figure was based off of Dr. K.C. Olson's calculations, which apparently Peterson obtained from a conversation that occurred over a year prior to trial. At trial, however, Dr. Olson testified to calculations resulting in much lower costs. Peterson's $.80 figure was not his own, and no other evidence in the record supports that figure. As such, this award was unsupported, and it will need to be determined on remand with respect to Eilert and Hlad.

The district court also must correct its damages award with respect to the rehabilitation of Eilert and Hlad's bulls, which was also based off of the $.80 per pound figure. Not only did Dr. Olson never testify to the $.80 per pound figure, he indicated that figures would differ as between cows and bulls. To award damages for this injury on remand, the district court must determine how many bulls belonged to Eilert and Hlad individually and the cost to rehabilitate them.

With respect to the unserviceable bulls, whether to award salvage value or replacement cost concerns the measure of damages, over which this court has unlimited review. Evenson, 43 Kan.App.2d at 575. In contrast, the appropriate value of the replacements appears to be a question of fact, which is reviewed for substantial competent evidence. Louisburg Building & Development Co., 45 Kan.App.2d at 638.

The award for the value of “virgin bulls” to replace the four bulls that were lost as a result of the breaches was appropriate. The bulls that died were between 4 and 6 years old. The court specifically asked about a bull's life expectancy; Peterson testified that bulls are serviceable from 6–8 years and live about 8–10 years before they need to be salvaged. Moreover, he claimed that bulls are in best breeding condition when they are from 4–6 years of age. And although it was possible to purchase used bulls, Ferrell's own expert testified that it is recommended that cattle producers never buy used bulls because of the risk they may carry trichomoniasis, which is a venereal disease that will harm pregnancy rates if it gets into the herd. As such, the district court did not err in concluding that plaintiffs lost four serviceable bulls due to Ferrell's breach, which meant the replacement cost of “virgin bulls” was the appropriate measure of damages. Neither party disputed that at the time the value of a “virgin bull” was $4,500. On remand, the district court must determine if any of these four bulls were Eilert's or Hlad's and award damages accordingly.

In conclusion, we dismiss Peterson from the suit for lack of standing, as he was not a party to any contract in this case, and we vacate all damages the district court awarded to him. We affirm the district court's conclusion that Ferrell breached his contractual obligations with Eilert and Hlad, respectively. We affirm the district court's measure of damages concerning the 92% pregnancy rate standard. But we remand to determine the appropriate amount of damages to Eilert and Hlad individually, keeping in mind that the appropriate value should only be the $600 difference between an open cow and a bred cow. As well, we remand to determine the cost to rehabilitate the bred cows from their inadequate weight gains and to determine the specific amounts owed to Eilert and Hlad individually, based on how many of the bred cows belonged to each of them. We affirm the amount of the award with respect to the dead and salvaged bulls but remand to determine which parties owned which bulls and to allocate damages accordingly. Additionally, we remand the award on the cost to rehabilitate the bulls from their inadequate weight gains; again, the district court should determine how many bulls Eilert and Hlad individually owned and allocate the award accordingly.

Affirmed in part, reversed in part, and remanded with directions.


Summaries of

Peterson v. Ferrell

Court of Appeals of Kansas.
Nov 16, 2012
288 P.3d 870 (Kan. Ct. App. 2012)
Case details for

Peterson v. Ferrell

Case Details

Full title:Steve PETERSON, Sam Eilert, and Randy Hlad, Appellees, v. Garland P…

Court:Court of Appeals of Kansas.

Date published: Nov 16, 2012

Citations

288 P.3d 870 (Kan. Ct. App. 2012)