WESTCO AGRONOMY COMPANY, LLC., Plaintiff-Counterclaim Defendant-Appellant/Cross-Appellee,
WILLIAM S. WOLLESEN a/k/a BILL WOLLESEN; KRISTI J. WOLLESEN; WILLIAM S. AND KRISTI J. WOLLESEN REVOCABLE TRUST; JOHN W. WOLLESEN; IOWA PLAINS FARMS; and CHAD A. HARTZLER, Defendants-Appellees, IOWA PLAINS FARMS, Counterclaim Plaintiff-Third-Party Plaintiff/Cross-Appellant,
WEST CENTRAL COOPERATIVE, Third-Party Defendant-Appellant/Cross-Appellee.
from the Iowa District Court for Story County, Michael J.
appeal and cross-appeal, both sides raise a number of
challenges to the jury verdict and the court's rulings
denying a new trial and granting summary judgment. AFFIRMED
ON APPEAL; AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
F. Lorentzen, Thomas H. Walton, and Ryan W. Leemkuil of
Nyemaster Goode, P.C., Des Moines, and John A. Gerken of
Wilcox, Gerken, Schwarzkopf, Copeland & Williams, P.C.,
Jefferson, for appellants.
D. Vos and John C. Gray of Heidman Law Firm, L.L.P., Sioux
City, and Samuel L. Blatnick of Kutak Rock, LLP, Kansas City,
Missouri, for appellees.
P. Passarelli and Meredith A. Webster of Kutak Rock, LLP,
Kansas City, Missouri, pro hac vice.
by Vogel, P.J., and Vaitheswaran and McDonald, JJ.
supplier of agricultural products sued a customer for damages
after finding the customer's account contained
insufficient funds to pay for a delivery. The customer filed
counterclaims against the supplier's parent company. A
jury awarded damages on the claims and counterclaims. Both
sides raise a number of challenges to the jury verdict and
the court's rulings denying a new trial and granting
partial summary judgment.
Background Facts and Proceedings
Central Cooperative is an Iowa agricultural cooperative.
Westco Agronomy Company, L.L.C. is a wholly-owned subsidiary
of West Central formed to "streamline the delivery of
agronomy products-fertilizer, seed, chemicals-to the
farmers." We will refer to both as "Westco"
unless otherwise indicated.
Hartzler was hired by Westco as the seed department manager.
Part of his job was to increase seed sales. One of
Westco's customers was Iowa Plains Farms, owned by
William, Kristi, and John Wollesen. We will refer to the
company and its owners as IPF unless otherwise indicated.
purchased seed and fertilizer from Westco and paid Hartzler
directly, purportedly to receive better pricing. Between 2005
and 2010, Hartzler charged IPF more than $6 million. He
retained $487, 315 in "commission."
believed its payments to Hartzler were prepayments for future
products and Westco's documentation confirmed its belief.
In actuality, Hartzler booked the prepayments as payments for
currently purchased products. He charged IPF prices that were
below Westco's cost but recorded higher prices in
Westco's accounting system. The result was a
gradually-accruing deficit which, by 2010, had reached $2.1
million. Hartzler convinced IPF to write three checks
totaling approximately that amount. IPF believed the checks
represented prepayments for the 2011 crop year. Hartzler
applied the payments to the deficit.
following spring, matters came to a head. By this time,
Hartzler had resigned, and Westco told IPF it would not
release any more products due to "internal issues."
sued the Wollesens, IPF, and Hartzler, raising claims of
commercial bribery, theft, conversion, breach of fiduciary
duty, breach of duty of loyalty, ongoing unlawful conduct
under Iowa Code chapter 706A (2011), unjust enrichment,
foreclosure of an agricultural lien, and breach of contract.
Westco sought compensatory and punitive damages and requested
a jury trial. IPF asserted counterclaims and filed a
third-party petition against Westco's parent company,
West Central, raising claims of breach of contract, fraud,
negligent retention, breach of fiduciary duty, conversion,
ongoing unlawful conduct (knowing receipt of proceeds) under
section 706A.2(1)(a), ongoing unlawful conduct (negligent
empowerment) under section 706A.2(5)(b)(4), wrongful
attachment, and lost agricultural profits. Hartzler pled
guilty to federal wire fraud and did not mount a defense in
district court granted IPF's motion for summary judgment
on all but three of Westco's claims. Westco voluntarily
dismissed its breach-of-contract claim, leaving only its
claims for breach of fiduciary duty and ongoing unlawful
conduct for trial.
district court also granted Westco's motion for summary
judgment on IPF's claims for negligent retention,
conversion, ongoing unlawful conduct (negligent empowerment)
under section 706A.2(5)(b)(4), wrongful attachment, and lost
agricultural profits. With regard to the negligent
empowerment claim, the district court found the burden of
proof language in section 706A.2(5)(b)(4) unconstitutional.
The following counterclaims remained for trial: (1) breach of
contract, (2) fraudulent misrepresentation, and (3) ongoing
unlawful conduct (knowing receipt of proceeds) under section
moved for equitable issues to be tried in equity. Westco also
filed a motion for leave to file a third amended petition.
The district court denied the motions. Before jury selection
and again at the close of evidence, Westco renewed its motion
to try equitable issues by equitable proceedings. The
district court again denied the motion.
matter proceeded to trial on Westco's two claims and
IPF's three counterclaims. The jury awarded Westco $485,
315 in damages from Hartzler- an amount equal to the
"commission" Hartzler received from IPF. The jury
awarded IPF $576, 189 in damages from West Central-an amount
equal to the cost of replacement product after Westco failed
to deliver product in 2011.
renewed its motion for directed verdict and moved for
judgment notwithstanding the verdict and for new trial. IPF
filed a motion for additur and for new trial. The district
court denied the motions.
appeal, Westco contends (A) its equitable claims should have
been tried by equitable proceedings, (B) the jury rendered
inconsistent verdicts, and (C) the district court erred in
denying its motion for judgment notwithstanding the verdict.
On cross-appeal, IPF contends (A) it is entitled to a new
trial on its ongoing criminal conduct (knowing receipt of
proceeds) claim, (B) the district court erred in granting
summary judgment in favor of West Central on its ongoing
criminal conduct (negligent empowerment) claim, and (C) the
district court erred in denying IPF's motion for additur.
New Trial by Equitable Proceedings
is no right to a jury trial generally in cases brought in
equity." Weltzin v. Nail, 618 N.W.2d 293, 296
(Iowa 2000). Westco characterizes its claims that survived
summary judgment as equitable and argues they should have
been tried to the district court rather than the jury. Error
was preserved on this issue and we proceed to the merits of
the court's ruling, reviewing it for an abuse of
discretion. See Morningstar v. Myers, 255 N.W.2d
159, 161 (Iowa 1977) (stating, when both legal and equitable
issues are presented, the order of which is tried first
"is a matter which lies within the trial court's
discretion and ordinarily is to be decided on considerations
of efficiency, conservation of judicial time and avoidance of
district court concluded Westco pled its
breach-of-fiduciary-duty and ongoing-unlawful-conduct claims
as legal claims:
The ongoing criminal conduct count has been pled in tort and
likewise seeks the legal remedies of damages, both
compensatory and [treble] damages under the provisions of
Iowa Code section 706A.3(12)(b)(3). The breach of fiduciary
duty claim has been pled as a legal action. As noted by the
Iowa Supreme Court in Weltzin v. Nail, 618 N.W. 293,
299 (Iowa 2000):
A breach of fiduciary duty claim is not an individual tort in
its own right at common law . . . it is usually brought at
law, bootstrapped by a tort like negligence or fraudulent
misrepresentation (citations omitted).
(Footnote omitted.) The district court also indicated the
motion to try the claims by equitable proceedings was an
untimely effort "to resurrect" equitable claims
that were previously dismissed. We discern no abuse ...