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Center Fresh Egg Farm, L.L.P. v. Natural Fertilizer Co.

Court of Appeal of Iowa

November 6, 2013

CENTER FRESH EGG FARM, L.L.P., B.E.K. POULTRY, L.L.C., and DOOYEMA & SONS, INC., Plaintiffs-Appellants/Counterclaim Defendants.
v.
NATURAL FERTILIZER COMPANY, Defendant-Appellee/Counterclaim Plaintiff NATURAL FERTILIZER COMPANY and HULL COOPERTAIVE ASSOCIATION, Plaintiffs-Appellees,
v.
SIOUX COUNTY EGG FARM, LLP, f/k/a WE 3 EGGS, LLC. Defendant-Appellant

Appeal from the Iowa District Court for Sioux County, Jeffrey A. Neary, Judge.

The egg producers appeal the district court's ruling granting summary judgment to the fertilizer companies in this action involving the interpretation of their organic fertilizer contracts.

Jason T. Madden of Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, and William S. Smith of Smith & Kramer, P.C., Des Moines, for appellants.

Jeff W. Wright of Heidman Law Firm, L.L.P., Sioux City, for appellees.

Heard by Potterfield, P.J., and Doyle and Bower, JJ.

POTTERFIELD, P.J.

This appeal involves the interpretation of contract language governing the termination of the organic fertilizer agreements between egg producers and fertilizer companies. Because we find the contract language ambiguous, we reverse the entry of summary judgment for the fertilizer companies and remand for further proceedings.

I. Background Facts and Proceedings.

On July 27, 2006, Natural Fertilizer Company (NFC), a manure management company entered into an organic fertilizer agreement to purchase and remove chicken manure from Center Fresh Egg Farm (Center Fresh).

On May 20, 2007, a second and separate organic fertilizer agreement was entered into between NFC and Hull Cooperative Association (Hull Coop) and We 3 Eggs, L.L.C. (now Sioux County Egg Farm (Sioux County)), which contained the same "term" language:

ARTICLE FIVE TERM
The term of this agreement shall be for a period of five years. This agreement shall automatically renew for an additional five year period annually, unless notice to terminate is given in accordance with the terms of this paragraph within six months prior to the expiration date. Such notice shall be in writing to the other party at the last known address. Notice given to any of the producers shall be sufficient to give notice to all of the producers, if notice is sent to 2769 410th Street, Sioux Center, IA 51250.
Either party may terminate the agreement if performance hereunder is rendered impossible or economically impractical for the Marketer due to regulatory changes that significant impact current land application procedures, or changes in the regulatory laws set forth by the Iowa Department of Natural Resources, Department of Agriculture, or other such government bodies or agencies which may result from new interpretation of such statues, administrative rules or regulations or implementations of new statues and ordinances, which may adversely affect the application procedures related to the activity anticipated under this agreement.

On October 29, 2010, Center Fresh sent a written notice to NFC that it "d[id] not intend to renew the [organic fertilizer] agreement when it comes up for renewal in 2011. . . . If you are willing to renew for one year at a time, we would ...


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