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Court News Ohio

Third District: $5.2 Million Verdict Against Mega-Egg Farm Overturned

A $5.2 million Hardin County jury verdict against one of Ohio’s largest egg producers was overturned Monday by a state appeals court that concluded the case should have been dismissed before a jury even heard it.

The Third District Court of Appeals reversed a ruling in favor of H & C Ag. Services LLC, (doing business as LandTech) against Ohio Fresh Eggs, LLC and Trillium Farm Holdings, LLC. LandTech sued the companies arguing it had three years left on a 10-year contract to remove and sell the manure from the egg houses.

Trillium acquired the properties from Ohio Fresh Egg in 2011. LandTech alleged it has been doing business with Ohio Fresh Egg, Trillium and prior owners of the egg farms for 12 years and anticipated it would complete the remaining three years and receive a 10-year renewal when the contract was unexpectedly cancelled. LandTech estimated the value of the contracts for the next 13 years at $7 million.

LandTech filed a 10-count suit against the egg farm owners and sought a preliminary injunction to prevent the cancellation of the contract. A Hardin County Common Pleas Court denied the injunction finding that LandTech did not prove by clear and convincing evidence that it would win its lawsuit if the case went to trial because the judge could not find any provision in the 2006 contract that required the egg farms to provide all or any specific amount of manure to LandTech. LandTech proceeded to take the case to trial only on one count of breach of contract. After three days of proceedings, a jury ruled in November 2014 that the egg producers were in breach. The jury awarded LandTech $2,585,000 from each, totaling nearly $5.2 million.

The egg producers appealed the verdict to the Third District. While the egg farms raised several objections to the decision, the Third District only considered the claim that because LandTech did not specify the quantity of manure the producers were to supply, it did not have an enforceable contract.

Writing for the Third District, Judge Vernon L. Preston agreed with the egg producers’ position.

“This case never should have gone to trial,” he wrote.

Judge Preston explained that the key terms to the agreement were listed in the “service terms” portion of the contract where LandTech agreed to remove the manure, track the amounts, and bill the farms for it. It proposed “to broker all available tonnage per year of manure,” but then added a provision stating the specific quantity will be determined by both parties.

Because it was an agreement between two companies, Ohio law does not require every term of an agreement to be definite, but a description of the quantity to be purchased must be included, Judge Preston wrote. LandTech argued that it agreed to take all the manure available from the egg farms, so it had a quantity term. But Judge Preston noted that to enforce an agreement to take all that a business can supply requires the contract to be exclusively between the two. He found that nothing in the contract obligated the egg farms to sell all of the manure exclusively to LandTech or that LandTech agreed it would purchase all the manure it intended to broker exclusively from the egg farms.

“In sum, the agreement’s discussion of the quantity of manure leaves an essential term of the contract – quantity – dependent on future agreements, and the supposed quantity term is not sufficiently specific to be enforced as LandTech seeks,” he wrote.

Judge Preston found LandTech can sue for any amount it paid to take but was not provided. The case was remanded to the trial court for further proceedings.

Judge Richard M. Rogers and Stephen R. Shaw concurred in the decision.

H & C Ag Servs., L.L.C. v. Ohio Fresh Eggs, L.L.C., 2015-Ohio-3714
Appeal from: Hardin County Common Pleas Court
Judgment Appealed From Is: Reversed
Date of Judgment Entry on Appeal: September 14, 2015

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