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Nationwide Agribusiness Insurance Company v. PGI International

Court of Appeals of Iowa

December 18, 2019


          Appeal from the Iowa District Court for Boone County, William C. Ostlund, Judge.

         Plaintiff appeals the district court's decision denying its motion for a new trial in an action for contribution. AFFIRMED.

          Amie E. Penny Sayler, David M. Dahlmeier, and Mark R. Bradford of Bassford, Remele, P.A., Minneapolis, Minnesota, for appellant Nationwide Agribusiness Insurance Company, a/s/o Farmers Cooperative Company.

          Henry A. Harmon and Mark W. Thomas of Grefe & Sidney, P.L.C., Des Moines, for appellee PGI International.

          Stephen E. Doohen of Whitfield & Eddy, P.L.C., Des Moines, for appellee Cox Manufacturing Company d/b/a Dalton AG Products, Inc.

          Daniel A. Haws and John Paul J. Gatto of HKM, PA, St. Paul, Minnesota, and Thomas J. Cahill of Cahill Law Offices, Nevada, for appellee CNH Corp. a/k/a CNH America, LLC, a/s/o DMI, Inc.

          Heard by Doyle, P.J., and Tabor and Schumacher, JJ.


         Nationwide Agribusiness Insurance Company (Nationwide) appeals the district court's decision denying its motion for a new trial in an action for contribution from PGI International (PGI), Dalton Ag Products, Inc. (Dalton Ag), and CNH Corporation. We conclude (1) the district court did not abuse its discretion in determining evidence of an OSHA violation by Farmers Cooperative Company (FCC) was relevant to the issue of FCC's negligence; (2) Nationwide has not preserved error on its claims concerning other similar incidents because it did not make an offer of proof; (3) the district court did not err in granting a directed verdict to Dalton Ag on Nationwide's design defect claim; (4) the district court did not err in granting a directed verdict to PGI on Nationwide's claim of breach of an implied warranty of fitness for a particular purpose; and (5) the district court did not err by including the Shaws on the special verdict form. We affirm the decision of the district court.

         I. Background Facts & Proceedings

         On October 29, 2011, Richard Shaw was assisting his son Michael by applying anhydrous ammonia to a field near Pilot Mound, Iowa. The anhydrous ammonia application system consisted of a tool bar, running gear, two anhydrous ammonia tanks, as well as valves and hoses. The equipment was rented from FCC. Someone, perhaps Richard, wrapped the running gear safety chain around the hose to keep the hose from dragging on the ground. As Richard made a right turn, there was no slack or give to the hose and the hose and valve were pulled apart, releasing a toxic cloud of anhydrous ammonia that engulfed the tractor that Richard was driving. Richard died as a result of the exposure to anhydrous ammonia. Michael, in attempting to assist his father, was injured by the anhydrous ammonia.

         In a previous decision in this case, we found:

In October 2011, Richard Shaw died as a result of a tragic farming accident. Richard's son, Michael, was also injured in his attempt to rescue his father. In November 2012, Farmers Cooperative Company (FCC) and its insurer, Nationwide, paid approximately $4 million to the Shaw family to settle the resulting claims. As part of that settlement, the Shaw family executed releases. In June 2013, Nationwide, as subrogee of FCC, filed suit against the Appellees, seeking contribution for the amounts paid to the Shaw family.

Nationwide Agribusiness Ins. Co. v. PGI Int'l, 882 N.W.2d 512, 514 (Iowa Ct. App. 2016).

         As set forth above, subsequent to entering into a settlement with the Shaws, Nationwide filed an action on June 4, 2013, seeking contribution from PGI, which manufactured the excess flow valve for one of the anhydrous ammonia tanks; Dalton Ag, which manufactured the running gear; and CNH, which manufactured the tool bar.[1] Nationwide brought claims of design defect against PGI and Dalton Ag, and claims against all of the defendants for failure to warn, negligence, breach of a warranty of fitness for a particular purpose, and breach of warranty of merchantability. As an affirmative defense, the defendants claimed FCC and the Shaws were negligent.

         The defendants filed motions for summary judgment, arguing that Nationwide could not seek contribution because the releases signed by the Shaw family failed to discharge the liability of the defendants, and the motion was granted by the district court. Nationwide, 882 N.W.2d at 514. We previously determined the district court improperly granted summary judgment and remanded the case. Id. at 523. On remand, the district court determined the releases should be reformed to reflect the intent of the parties to vest Nationwide with contribution rights against third-parties, including PGI, Dalton Ag, and CNH.

         Prior to the jury trial, which commenced on April 30, 2018, the district court ruled on motions in limine filed by the parties. The district court determined, "Evidence of violation of OSHA standards is admissible as evidence of negligence to all persons who are likely to be exposed to injury as a result of the violation."[2]The court further concluded, "Evidence of subsequent remedial measures taken by [FCC] is inadmissible." The court determined the Shaws would be included in the verdict form because they were claimants under Iowa Code section 668.2 (2013). The court determined evidence of other incidents of anhydrous ammonia leaks was not admissible. The court determined evidence of Dalton Ag's design change was not admissible.

         During the trial, Nationwide's expert, Duane Wolf, a mechanical engineer, testified "under some foreseeable conditions that [the excess flow] valve will not close." He stated, "The excess flow valve is a safety feature. And it's there to prevent a release in the event of a full fracture downstream. In the event that that full fracture is achieved, the flow rate is sufficient to make that flow valve close." Wolf gave the opinion PGI failed to identify "the limitations associated with their valve" and had not done adequate testing. As to Dalton Ag, he stated, "My review of the materials that came with the running gear provides no instruction with regard to how to hook up those two pipes."

         Nationwide's other expert, Dr. Thomas Schnell, a professor at the University of Iowa, testified PGI did not produce a warning for the excess flow valve. He stated Dalton Ag did not provide any warnings related to anhydrous ammonia on the running gear. Dr. Schnell also testified CNH had "shared responsibility because they're part of the overall system to warn the user about the hazards relating to the release of anhydrous general ammonia." He asserted, "In the end, in the final product, these warnings will appear in plain sight to the end user. That didn't happen in this case."

         The defendants moved for a directed verdict. The court granted a directed verdict to PGI only on the claim of breach of warranty and to Dalton Ag only on the claims of design defect and breach of warranty. On the remaining claims after hearing from twenty-one witnesses over a two-week period, the jury found PGI, Dalton Ag, and CNH were not at fault. The jury assigned fault fifty-one per cent to FCC and forty-nine percent to Richard Shaw. The jury also found the amount of the settlement was reasonable.

         Nationwide filed a motion for new trial, claiming (1) the court should not have permitted evidence of OSHA violations; (2) the court should have permitted evidence of other similar incidents; (3) the court erred by granting directed verdicts to PGI and Dalton Ag; (4) the Shaws should not have been included on the special verdict form; (5) certain jury instructions were improper; (6) counsel for PGI made an inappropriate statement during closing argument; and (7) Nationwide was prejudiced due to cumulative errors. The district court denied the motion for new trial. Nationwide now appeals.

         II. ...

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