Townson v. Koch Farms, LLC et al
MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 12/1/2014. (JLC)
2014 Dec-01 PM 04:37
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
KOCH FARMS, LLC, et al.,
) Case No.: 4:13-CV-1703-VEH
INTRODUCTION AND PROCEDURAL HISTORY
Plaintiff Phil Townson (“Mr. Townson”) initiated this lawsuit against
Defendant Koch Farms, LLC (“Koch”),1 in the Circuit Court of DeKalb County,
Alabama, on August 5, 2013. (Doc. 1-1 at 5).2 The parties’ dispute arises out of their
commercial chicken dealings. (See generally Doc. 1-1). Koch removed the lawsuit to
federal court on September 12, 2013, on the basis of diversity jurisdiction. (Doc. 1 at
CM/ECF currently reflects that Mr. Townson has sued two defendants: Koch Farms, LLC
and Koch Farms of Chattanooga. Because Koch Farms, LLC has indicated on summary judgment
that Koch Farms of Chattanooga is not a separate entity, but rather is merely a doing business as
name, the court entered an order (Doc. 33) on November 13, 2014, directing Mr. Townson to show
cause why Koch Farms of Chattanooga should not be terminated as a party defendant. Mr. Townson
has not yet responded to this order, but the deadline for him to do so does not run until December
3, 2014. Consequently, to the extent that Koch Farms of Chattanooga is still a properly named
defendant in this lawsuit, the court’s decision on summary judgment applies equally to it.
All page references to Doc. 1-1 correspond with the court’s CM/ECF numbering system.
1; id. 2 ¶ 2).
Mr. Townson’s complaint originally contained seven counts, but after this
court’s memorandum opinion and order (Doc. 16) entered on April 22, 2014, only
Count One for breach of contract (Doc. 1-1 at 8) and Count Five for tortious
interference with a business relationship (Doc. 1-1 at 11) remain in the lawsuit. (Doc.
16 at 8).
Pending before the court is Koch’s Motion for Summary Judgment (Doc. 27)
(the “Motion”) filed on September 3, 2014. The Motion seeks a dismissal of Counts
One and Five. (Doc. 27 at 1). Koch filed a brief and evidence in support of its Motion
(Doc. 28) on September 3, 2014.3
Mr. Townson opposed the Motion (Docs. 30, 31)4 on September 24, 2014, and
Koch followed with its reply (Doc. 32) on October 7, 2014. Accordingly, the Motion
is now ready for disposition and, for the reasons explained below, is due to be granted
in part and otherwise termed as moot.
All page references to Doc. 28 correspond with the court’s CM/ECF numbering system.
All page references to Doc. 30 correspond with the court’s CM/ECF numbering system.
Koch and the Integrated Poultry Business
Koch is part of an integrated poultry process that takes chicken from the stage
of being hatched from an egg to being slaughtered and processed so that it is ready
to eat. AF No. 1.6 Koch places chicks with farmers (also known as “growers”), such
as Mr. Townson, to raise the chicks. AF No. 2. Koch buys the chicks from third-party
suppliers and retains ownership of them while the grower raises them. AF No. 3.
Keeping in mind that when deciding a motion for summary judgment the court must view
the evidence and all factual inferences in the light most favorable to the party opposing the motion,
the court provides the following statement of facts. See Optimum Techs., Inc. v. Henkel Consumer
Adhesives, Inc., 496 F.3d 1231, 1241 (11th Cir. 2007) (observing that, in connection with summary
judgment, a court must review all facts and inferences in a light most favorable to the non-moving
party). This statement does not represent actual findings of fact. See In re Celotex Corp., 487 F.3d
1320, 1328 (11th Cir. 2007). Instead, the court has provided this statement simply to place the
court’s legal analysis in the context of this particular case or controversy.
The designation “AF” stands for admitted fact and indicates a fact offered by Koch that Mr.
Townson has admitted in his written submissions on summary judgment, in his deposition testimony,
or by virtue of any other evidence offered in support of his case. Under appendix II of the court’s
uniform initial order (Doc. 5) entered on September 13, 2013, “[a]ll statements of fact must be
supported by specific reference to evidentiary submissions.” (Id. at 16). For Mr. Townson, more
specifically, this means that “[a]ny statements of fact that are disputed by the non-moving party must
be followed by a specific reference to those portions of the evidentiary record upon which the dispute
is based.” (Id. at 17). Consequently, whenever Mr. Townson has inadequately asserted a dispute over
a fact that Koch have otherwise substantiated with an evidentiary citation, the court has reviewed the
cited evidence and, if it in fact fairly supports Koch’s factual assertion, has accepted Koch’s fact. On
the other hand, whenever Mr. Townson has adequately disputed a fact offered by Koch, the court has
reviewed the evidence cited by Mr. Townson and, if it in fact fairly supports Mr. Townson’s factual
assertion, has accepted Mr. Townson’s version. The court’s numbering of admitted facts (e.g., AF
No. 1) corresponds to the numbering of Koch’s statement of undisputed facts as set forth in Doc. 28
and responded to by Mr. Townson in Doc. 30. Any other facts referenced by the parties that require
further clarification are dealt with later in the court’s opinion.
Koch provides all of the feed, medicine, and vaccinations for the chicks, and pays the
grower an agreed-upon rate for raising the chicks. AF No. 4.
The chicks grown on Mr. Townson’s farm are known in the industry as
“pullets.” AF No. 5. Pullets are raised to lay eggs that will hatch. Id. After hatching,
those chicks then become broiler birds that are grown to be slaughtered and eaten. Id.
Pullets are of particular importance because they are the ultimate source of chicken
to be processed and sold. AF No. 6.
Due to their special breeding, pullets must be raised in a very controlled
environment. AF No. 7. More specifically, Koch requires its growers to follow strict
programs regarding the amount of light the pullets receive each day, the amount and
timing of food and water the pullets receive, and the proper temperature, humidity
and litter (i.e., floor) conditions. AF No. 8. These programs directly promote the
well-being of the pullets and maximize the number of eggs they will later lay. AF No.
Koch monitors the progress of the pullets closely through the use of field
technicians that regularly visit the farms and prepare inspection reports detailing the
condition of the birds and the grower’s compliance with the growing programs. AF
No. 10. Mike Hoggard (“Mr. Hoggard”), the pullet technician from Koch responsible
for overseeing Mr. Townson’s last flock of pullets, visited Mr. Townson’s farm at
least once per week, and sometimes three or four times per week. AF No. 11.
Koch estimates that, for a farm the size of Mr. Townson’s, it had approximately
$660,000 invested in the birds by the time that livestock was ready to be moved to
“breeder” or “laying” houses. AF No. 12
Mr. Townson’s Purchase of a Pullet Farm and Related
Mr. Townson bought a pullet farm in Ider, Alabama from Joel and Amanda
Garner in 2008. AF No. 13. Mr. Townson obtained financing for that farm purchase
from First Bank of the South (“FBS”), which loan was partially guaranteed by the
Farm Service Agency (“FSA”) of the United States Department of Agriculture. AF
No. 14. Prior to approving that financing for Mr. Townson, FBS required Koch to
provide a letter announcing that it intended to place chickens on his farm. AF No. 15.
Koch provided FBS with this letter of intent, and Mr. Townson admits he would not
have been able to get the loan from FBS to acquire the farm without it. AF No. 16.
As additional security for the loan, FBS also required Mr. Townson to execute
an assignment to FBS of Koch’s payments owed to him, and for Koch to sign an
acknowledgment of that assignment. AF No. 17. Pursuant to that agreement, Koch
provided FBS with Mr. Townson’s compensation for raising the pullets, and FBS
would, in turn, use a portion of that remittance to apply to Mr. Townson’s loan
obligation. AF No. 18. Consequently, FBS was aware of the poultry growing
arrangement between Mr. Townson and Koch. AF No. 19.
Mr. Townson’s farm, also known as “Heaveni Farm,” consisted of six pullet
houses and one male house. AF No. 20. The six pullet houses contained
approximately 10,000 pullets each, and the one male house contained approximately
5,000-8,000 fowl. AF No. 21. Thus, as a whole, Mr. Townson’s farm could house
approximately 65,000 to 68,000 chickens at a time. AF No. 22. Each flock would stay
on Mr. Townson’s farm for approximately six months. AF No. 23.
Koch and Mr. Townson would execute four separate, but similarly worded,7
contracts for each flock grown on Mr. Townson’s farm. (Doc. 28-6 at 56);8 (Doc. 28-7
at 32 at 124).9 More specifically, a separate contract existed for houses 1 and 2,
another for houses 3 and 4, another for houses 5 and 6, and one for house 7. (Doc. 286 at 56).This series of separate contracts was necessary because Koch typically
delivered and picked up the pullets two houses at a time in an effort to match
schedules with vacancies in the breeder houses, another stage of the integrated
poultry process. (See Doc. 28-7 at 32 at 123 (explaining series of contracts in
The price Mr. Townson was to receive from Koch for his growing services would vary.
All page references to Doc. 28-6 correspond with the court’s CM/ECF numbering system.
All of the first page references to Doc. 28-7 correspond with the court’s CM/ECF
conjunction with Koch’s delivery and pick up of birds and how breeder farms
typically consist of only two houses)).
Each pullet agreement regularly and expressly provides that its terms and
conditions “will remain in effect until 1 Flock unless terminated pursuant to this
Contract.” (Doc. 28-12 at 6 ¶ 16).10 Thus, each pullet agreement automatically
terminated once Mr. Townson grew “1 Flock” from chicks to pullets. Each pullet
agreement also prohibits any oral amendments. Id. Instead, “[m]odification . . . may
only be accomplished by written instrument fully executed by the Producer and an
authorized representative of the Company.” Id.
Koch Becomes Concerned about Its Commercial Relationship
with Mr. Townson and Conditions Providing Him with
Future Flocks upon Making Certain Repairs and Adjustments
to His Farm.
Although Mr. Townson denies Koch’s criticisms of his performance as a pullet
grower, Koch asserts that it became dissatisfied with Mr. Townson’s services for a
variety of reasons. For example, on or about July 29, 2011, Mr. Hoggard, Jim Marsh
(“Mr. Marsh”) (Breeder Hatchery Manager for Koch), and Ed Poucher (“Mr.
Poucher”) (Chattanooga Live Operations Manager) visited Mr. Townson’s farm and,
according to Mr. Marsh, found the conditions to be disturbing. AF No. 29.
All page references to Doc. 28-12 correspond with the court’s CM/ECF numbering
Koch also met with Mr. Townson on August 11, 2011, and showed him photos
of what it deemed to be illustrative of the poor conditions on his farm. AF No. 30.
During this meeting, Koch provided Mr. Townson with a “punch list” of corrections
that it required him to make to each of the seven houses before Koch would place
additional birds on his farm. AF No. 31. Koch provided this list to Mr. Townson
around the middle of the last set of written contracts, which were the ones executed
in March 2011. AF Nos. 32, 33. In a letter dated August 17, 2011, from Mr. Marsh
to Mr. Townson, Mr. Marsh documented what the parties had discussed during their
August 11, 2011, meeting, including the requirement that “all of the items on the
housing and equipment list must be corrected prior to the next placement of birds.”
AF No. 34.
After the punch list was provided to Mr. Townson, the following status with
respect to his repair efforts were observed and documented according to Mr.
On October 18, 2011, the floors were not finished, the interior
floors were below exterior grade, and Mr. Hoggard could see under the
walls in many places. Litter from the previous flock in houses 5-7 had
not even been completely cleaned out yet;
On November 16, 2011, low areas were in houses 1-3 and
continuing drainage problems existed. Mr. Hoggard stated at the end of
his report from this visit, “Phil, Call me when you are ready for me to
come back and check.”;
As of December 12, 2011, none of the floors had been approved
in any of the houses, and the floors in houses 5-7 had still not been
completely cleaned out from the last flock. Mr. Townson had not
replaced the drops yet either;
Mr. Townson did not close on a loan for some of the repairs until
February 12, 2012, more than six months after the punch list was
provided; While Mr. Townson started working on some of the punch
items shortly after he received the list from Koch, other repair attempts
were not even started until after the loan closed;
On March 1, 2012, the floors had gotten worse, and none of them
passed the inspection. Mr. Townson also failed to appear at this
scheduled meeting; and
On or about May 12, 2012, Mr. Hoggard provided Mr. Townson
with a list of repairs that Townson had yet to complete in each house.
Such repairs included, among other things, fixing drinker frames,
installing heaters, leveling feeders, fixing light leaks, moving water
supply lines, fixing vent doors, fixing holes in the ceiling, and fixing
AF No. 38 ¶¶ a-f.11
Additionally, on or about July 16, 2012, nearly a year after the punch list had
been provided to Mr. Townson, a vendor that was installing heaters at Mr. Townson’s
farm called him to report that someone had stolen all the wiring from each chicken
house. AF No. 39. The stolen items included all copper wiring for the lighting
Mr. Townson admits that Mr. Hoggard so testified. Nevertheless, without citing to any onpoint opposing evidence, Mr. Townson vaguely and otherwise ineffectively attempts to contest the
validity of Mr. Hoggard’s testimony or other evidence offered by Koch to support its version of the
facts. Therefore, these facts are admitted by Mr. Townson on summary judgment.
fixtures, all light bulbs, all light fixtures, and all copper wiring to the fans in each
house. AF No. 40. More than 21,000 feet of lighting wire alone was stolen. AF No.
41. As a result of the theft, Mr. Townson, by his own admission, was not able to take
any birds even if he had completed the punch list. AF No. 42. Further, until the wiring
was repaired, Mr. Townson could not even continue his work on the punch list due
to a lack of any lighting in the houses. AF No. 43.
Mr. Hoggard and Mr. Marsh scheduled a meeting with Mr. Townson on
November 27, 2012, to re-evaluate the farm due to the passage of time since he had
last housed chickens. AF No. 44. When Mr. Hoggard and Mr. Marsh arrived for the
meeting, they learned from Chuck Bowman (“Mr. Bowman”), a friend of Mr.
Townson who had helped with some of the poultry growing on the farm, that Mr.
Townson could not attend the meeting due to an out of town work conflict.12 AF No.
45. Mr. Bowman also explained that he could not get the generator working for
houses 1-4 due to a bad battery, and that the generator for houses 5-7 would not run
due to the copper fuel line having been stolen. AF No. 46.
Koch Permanently Ends Its Commercial Relationship with
A re-evaluation of conditions on the farm occurred on December 11, 2012, at
As Mr. Townson explains, “he was forced to seek other employment to provide for his
family after Koch refused to deliver the next flock of birds.” (Doc. 30 at 6 ¶ 35).
which time Mr. Townson, Mr. Hoggard, and Mr. Marsh walked through houses 1-4.
AF No. 47. By this time, the houses had been empty for over one year and had
deteriorated further. AF No. 49. A chicken house that is idle begins oxidizing, or
rusting, “immediately.” AF No. 50.
As Mr. Townson himself noted, doors had fallen off the houses, the drinkers
had become inoperable sometime during the first year of being empty, and some of
the work he had done on the punch list had become “irrelevant.” AF No. 51. Mr.
Marsh thereafter informed Mr. Townson, in a letter dated December 12, 2012, that,
due to the further deterioration of the farm’s status, it would be necessary for Mr.
Townson to complete a revised list of repairs before Koch could supply him with
another flock of poultry. AF No. 52.
Koch also informed Mr. Townson in this correspondence that, before any
corrective actions are taken, he would need to meet with Koch to obtain approval of
a plan. AF No. 53. The revised list included such items as continuing to fix the floors
and ceilings, replacing and rehanging feeders, replacing water supply lines and
drinkers, replacing heaters, cleaning and removing debris from the light traps, and
fixing light leaks. AF No. 54.
At the time Mr. Townson received the December 12, 2012, letter, he still had
not completed all of the repairs from the original punch list Koch gave to him in
August 2011. AF No. 55. By Mr. Townson’s own admission, he never repaired the
feeders in house seven, never ran the feeders in the presence of a Koch representative,
and never had his scales calibrated by a vendor. AF No. 56.
Mr. Townson also admits that he had not finished installing heaters in
accordance with the punch list by the time the copper wire theft occurred in July
2012, and he does not believe that he finished replacing leaking supply lines. AF No.
57. Mr. Townson further concedes that he never did any of the items listed in the
December 12, 2012, letter because he “could no longer afford to make the constant
and expensive upgrades Koch continued to demand of him.” (Doc. 30 at 8 ¶ 59).
The houses remained empty and, according to Mr. Townson, inoperable. AF
No. 60. Because Mr. Townson did not respond to the December 2012 letter as
requested, Koch sent another letter to him on March 13, 2013, informing him that
Koch was permanently discontinuing the placement of chickens on his pullet farm.
AF No. 61. Mr. Townson’s lawsuit followed about five months later.
RULE 56 STANDARD
Summary judgment is proper only when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). All reasonable doubts about the facts and all justifiable inferences are resolved
in favor of the nonmovant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th
Cir. 1993).13 A dispute is genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.”Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986).
“Once the moving party has properly supported its motion for summary
judgment, the burden shifts to the nonmoving party to ‘come forward with specific
facts showing that there is a genuine issue for trial.’” International Stamp Art, Inc. v.
U.S. Postal Service, 456 F.3d 1270, 1274 (11th Cir. 2006) (citing Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L.
Ed. 2d 538 (1986)). Finally “[i]f the movant bears the burden of proof on an issue,
because, as a defendant, it is asserting an affirmative defense, it must establish that
there is no genuine issue of material fact as to any element of that defense.”
International Stamp, 456 F.3d at 1274 (citing Martin v. Alamo Community College
Dist., 353 F.3d 409, 412 (5th Cir. 2003)).
Mr. Townson’s Breach of Contract Claim
An ordinary breach of contract claim arising under Alabama law requires proof
Rule 56 was amended in 2007 in conjunction with a general overhaul of the Federal Rules
of Civil Procedure. The Advisory Committee was careful to note, however, that the changes “are
intended to be stylistic only.” Adv. Comm. Notes to Fed. R. Civ. P. 56 (2007 Amends.) (emphasis
supplied). Consequently, cases interpreting the previous version of Rule 56 are equally applicable
to the revised version.
of the following elements:
(1) the existence of a valid contract binding the parties in the action, (2)
his own performance under the contract, (3) the defendant’s
nonperformance, and (4) damages.
Southern Medical Health Systems, Inc. v. Vaughan, 669 So. 2d 98, 99 (Ala. 1995)
(citing McGinney v. Jackson, 575 So. 2d 1070, 1071-72 (Ala. 1991)). Koch contends
that it is entitled to summary judgment on Count One of Mr. Townson’s complaint
because no dispute exists that Koch fully performed under the parties’ last collection
of written contracts executed in March 2011 and that no reasonable jury could
conclude that Mr. Townson completed the requested repairs or otherwise satisfied the
conditions precedent to the formation of another breeder pullet contract with Koch.
(Doc. 28 at 25-32).
Mr. Townson counters that Koch demanded material and excessive changes to
his farm “in direct violation of paragraph 16 [i.e., the modification provision] in the
contracts . . . .” (Doc. 30 at 21). Mr. Townson also points out that “Koch’s demands
on [him] were made during the performance of the last set of contracts.” (Doc. 30 at
21 (emphasis in original)). Thus, Mr. Townson resists Koch’s characterization of the
requirements placed on him as conditions precedent to the formation of a new set of
contracts. In sum, Mr. Townson urges that “[t]here is a question of material fact as to
whether the demand for upgrades were conditions precedent to a new set of contracts
or whether they were a breach to the existing contract.” (Doc. 30 at 22).
Alternatively, Koch maintains that, even if material factual disputes exist as to
whether a new contract for growing additional chickens was formed by the parties
and whether a breach of that agreement occurred, Mr. Townson’s recovery for
damages would be limited to his lost profits attributable to just one flock. (Doc. 28
at 32-34). In making this argument, Koch relies upon the Supreme Court of
Alabama’s decision in Goolesby v. Koch Farms, LLC, 955 So. 2d 422 (Ala. 2006) (“If
allowed to recover both the lost contract income and reliance damages, the Goolesbys
would be placed in a better economic position than if there had been full performance
of the grower contract.”).
As for Koch’s alternative position on summary judgment, Mr. Townson
maintains that his damages should not be limited to his lost income for one flock of
chickens. Instead, he contends that Goolesby does not preclude him from seeking
damages beyond lost profits, including reliance damages in the form of a payoff on
his loan(s) with FBS. In particular, Mr. Townson points out that because there was
no objection made to the trial court’s instructing the jury that the plaintiffs’
expectation interest under the poultry contract was the (only) appropriate manner to
measure their damages, the damages issue is not so firmly decided by Goolesby as
Koch otherwise suggests. (Doc. 30 at 24); see Goolesby, 955 So. 2d at 429 (“Because
the Goolesbys failed to object to that instruction, it became the law of the case.”
(emphasis added) (citing Tolar Constr., LLC v. Kean Elec. Co., 944 So. 2d 138, 146
Turning first to the viability of Mr. Townson’s breach of contract claim, Mr.
Townson does not allege (much less substantiate with any proof) that Koch withheld
the delivery of any chickens that were due to him under the March 2011 series of
contracts on account of his failure to address the punch list and make other repairs to
the farm. Instead, even a reading of the record in the light most favorable to Mr.
Townson confirms that the parties’ dispute was over the withholding of future
flock(s), not the previously negotiated and agreed-to flock covered by the March
2011 written contractual arrangement.
The court also observes that Mr. Townson’s opposition is devoid of any case
law which confirms that the punch list and other requirements placed on Mr.
Townson before Koch would deliver any future flock(s) to him constitute a breach
of the parties’ preexisting written agreement merely because of a no oral
modifications clause contained in those contracts. (Doc. 30 at 19-22). The absence
of any cited authority means that this court is not even obligated to address such an
underdeveloped and strained proposition. Cf. Flanigan’s Enters., Inc. v. Fulton
County, Ga., 242 F.3d 976, 987 n.16 (11th Cir. 2001) (holding that a party waives an
argument if the party “fail[s] to elaborate or provide any citation of authority in
support” of the argument); Ordower v. Feldman, 826 F.2d 1569, 1576 (7th Cir. 1987)
(stating that an argument made without citation to authority is insufficient to raise an
issue before the court).
Additionally, Mr. Townson makes no effort to discuss, refute, or distinguish
those Alabama authorities relied upon by Koch to support its condition precedent
affirmative defense. (Doc. 28 at 26-27). For example, CAM Investments, LLC v. Totty,
128 So. 3d 749 (Ala. Civ. App. 2013), explains:
A condition precedent is “‘[a]n act or event, other than a lapse of
time, that must exist or occur before a duty to perform something
promised arises.’” Lemoine Co. of Alabama, L.L.C. v. HLH
Constructors, Inc., 62 So. 3d 1020, 1025 n.5 (Ala. 2010) (quoting
Black’s Law Dictionary 312 (8th ed. 2004)). Because the failure of the
occurrence of a condition precedent is an affirmative defense, see
Winkleblack v. Murphy, 811 So. 2d 521, 529 (Ala. 2001); Rule 8(c), Ala.
R. Civ. P., Totty bore “ ‘ “the burden of making a prima facie showing
that [he was] entitled to summary judgment” ’ based on this defense.”
Richardson v. Terry, 893 So. 2d 277, 285 (Ala. 2004) (quoting Ex parte
General Motors Corp., 769 So. 2d 903, 909 (Ala. 1999), quoting in turn
Berner v. Caldwell, 543 So. 2d 686, 691 (Ala.1989) (Houston, J.,
CAM, 128 So. 3d at 753.
Further, the Supreme Court of Alabama has clarified that “[a] condition
precedent may relate either to the formation of a contract, or to liability under it.”
Fidelity & Cas. Co. of New York v. DeLoach, 195 So. 2d 789, 793 (Ala. 1967) (citing
Williston, Contracts, Sec. 666A, 3d ed.).
Here, the court concludes that Koch has made a prima facie showing that it is
entitled to summary judgment on the affirmative defense of Mr. Townson’s failure
to satisfy several condition precedents either as they apply to the formation of a new
set of flock contracts or, to the extent a post-March 2011 contractual arrangement was
formed by the parties, as they operate to trigger Koch’s obligation to deliver a new
flock of chickens to Mr. Townson under that oral agreement. Koch having met this
prima facie hurdle, it was incumbent upon Mr. Townson to point out to the court
proof from which a reasonable jury could reject the merits of Koch’s affirmative
defense and find instead that Mr. Townson had complied with or, at least
substantially satisfied, most of these conditions precedent.
Mr. Townson does not do this. Instead, while he complains that many of the
demands placed upon him by Koch were excessive and unreasonable,14 he ultimately
boils the court’s summary judgment decision down into one of determining whether
a question of material fact exists as to “whether the demand for upgrades were
conditions precedent to a new set of contracts or whether they were a breach to the
existing contract.” (Doc. 30 at 22 (emphasis added)). Indeed, in so summarizing the
Assuming Mr. Townson is correct in his characterization of Koch’s requirements, he has
never explained to the court how such excessiveness means that his breach of contract claim survives
summary judgment if those demands do, in fact, constitute conditions precedent.
record, Mr. Townson has, in this court’s view, implicitly acknowledged that if the
record affirmatively shows that the repairs were conditions precedent to forming or
triggering a delivery obligation under a new contractual arrangement, then Koch is
entitled to summary judgment.
For those reasons stated above, this court finds that no reasonable jury could
conclude that Koch’s demands were anything but conditions precedent to either (i)
Koch’s formation of a future set of chicken grower contracts with Mr. Townson or
(ii) Koch’s obligation to deliver a flock to Mr. Townson under a newly formed (oral)
arrangement with him. Further, because of Mr. Townson’s ineffective efforts to rebut
this prima facially established defense with the existence of material matters of
disputed fact, Koch is entitled to summary judgment on Count One of Mr. Townson’s
Mr. Townson’s Tortious Interference Claim
In Count Five of his complaint, Mr. Townson alleges that Koch interfered with
the lending relationship that he had with FBS, including some loans insured by the
United States Department of Agriculture’s Farm Service Agency (“FSA”), “by not
sending [Mr. Townson] anymore flocks.” (Doc. 1-1 at 11 ¶ 49). Mr. Townson further
Accordingly, the court does not reach the merits of Koch’s alternative limit-on-damages
defense to Count One of Mr. Townson’s complaint and that portion of Koch’s Motion is due to be
termed as moot.
maintains that “[w]ithout the flocks to grow and receive compensation as previously
promised, [he] was unable to satisfy all of his obligations between [him], the [FBS]
and the FSA.” Id.
A claim of tortious interference requires proof of the following elements:
(1) the existence of a protectible business relationship; (2) of which the
defendant knew; (3) to which the defendant was a stranger; (4) with
which the defendant intentionally interfered; and (5) damage.
White Sands Group, L.L.C. v. PRS II, LLC, 32 So. 3d 5, 14 (Ala. 2009).
In seeking summary judgment on this count, Koch contends that Mr.
Townson’s claim fails with respect to the third prima facie element–Mr. Townson
cannot show that Koch was a stranger to his relationship with FBS. In making this
argument, Koch correctly points out that its absence as an express party to the loan
agreement is not determinative of its stranger status.
Instead, Alabama law provides:
Clearly, a party to a contract or a business relationship cannot be
liable for tortious interference with that contract or business
relationship. Colonial Bank v. Patterson, 788 So. 2d 134, 137 (Ala.
2000); Ex parte Blue Cross & Blue Shield, Inc., 773 So. 2d 475, 480
(Ala. 2000). Parsons makes it clear that a plaintiff asserting a
tortious-interference claim bears the burden of proving that the
defendant is a “third party” or “stranger” to the contract or business
relationship with which the defendant allegedly interfered. See also
BellSouth Mobility, Inc. v. Cellulink, Inc., 814 So. 2d 203, 212
(Ala.2001). A defendant is a party in interest to a relationship if the
defendant has any beneficial or economic interest in, or control over,
that relationship. Parsons, 849 So. 2d at 937; BellSouth, 814 So. 2d at
214; Colonial Bank, 788 So. 2d at 139; Blue Cross, 773 So. 2d at 480.
In Parsons, we concluded that a father who participated in his
son’s decisions regarding the son's health-club business was not a
stranger to the relationship between the health club and the plaintiff,
who had been discharged from his employment with the health club. In
BellSouth, we concluded that the plaintiff could not maintain a
tortious-interference action in the context of a three-way relationship,
where the parties were mutually dependent upon one another, because,
in that context, the plaintiff could not establish, as a matter of law, that
the defendant was a stranger to the relationship. We held that where a
contract would not have been consummated without the participation of
a certain party, that party is “anything but a stranger to the relationship.”
814 So. 2d at 214.
Waddell & Reed, Inc. v. United Investors Life Ins., 875 So. 2d 1143, 1154 (Ala.
As the Waddell court further explained the meaning of stranger status:
In reaching our decisions in Parsons and BellSouth, we relied
upon Georgia law. See, e.g., Atlanta Market Ctr. Mgmt. Co. v. McLane,
269 Ga. 604, 608, 503 S.E. 2d 278, 282 (1998), which this Court
embraced in Parsons and BellSouth. In Atlanta Market Center, the
Supreme Court of Georgia stated:
“After proving the existence of a contract, it is
essential to a claim of tortious interference with contractual
relations that the plaintiff establish that the defendant is a
‘third party,’ i.e., a ‘stranger’ to the contract with which the
defendant allegedly interfered. One is not a stranger to the
contract just because one is not a party to the contract, as
it has been held that the alleged interferer is not a stranger
to the contract and thus not liable for tortious interference
where the alleged interferer was the agent for one of the
parties to the contract of insurance (i.e., the underwriter),
and all the purported acts of interference were done within
the scope of the interferer’s duties as agent. Jet Air v.
National Union Fire Ins. Co., 189 Ga. App. 399, 375 S.E.
2d 873 (1988).”
269 Ga. at 608, 503 S.E. 2d at 282. The Court then concluded:
“In Jefferson–Pilot Comm. Co. v. Phoenix City
Broadcasting, 205 Ga. App. 57, 60, 421 S.E. 2d 295
(1992), the shadow of liability for tortious interference was
further diminished when the Court of Appeals reasoned
that ‘all parties to a comprehensive interwoven set of
contracts which provided for the financing, construction,
and transfer of ownership’ were not strangers, i.e., the
purchaser of a radio station was not a stranger to the
contractual relations between the radio station’s seller and
the seller’s lenders. Thus, in order for a defendant to be
liable for tortious interference with contractual relations,
the defendant must be a stranger to both the contract and
the business relationship giving rise to and underpinning
269 Ga. at 609, 503 S.E. 2d at 283.
Waddell, 875 So. 2d at 1154-55 (emphasis added).
Against this backdrop, no reasonable jury could conclude that Koch was a
stranger to Mr. Townson’s lending relationship with FBS. In particular, Koch has
established that FBS would not have made the initial loan to Mr. Townson without
his providing either a pullet contract or a letter of intent from Koch, as the integrator.
Further, the record shows that Koch faxed such a letter of intent to FBS prior to Mr.
Townson’s closing on his loan. Additionally, the record reflects that Mr. Townson’s
loan for the purchase of the farm was conditioned upon an assignment of future
payments from Koch to FBS and Koch agreed to make payments directly to FBS.
Therefore, Koch was far from a stranger and, instead, was an integral party to the
establishment of Koch and FBS’s lending relationship.16
Nor does Mr. Townson’s mere assertion that Koch was a stranger to subsequent
loans between him and FBS save his tortious interference claim. (See Doc. 30 at 17
(“Unlike the initial loan to purchase the farm, Koch was not involved in the loans for
things such as the purchase [of] a tractor.)). In suggesting this tenuous loan specific
theory, Mr. Townson offers no supporting authority.
Further, his position is irreconcilable with the Supreme Court of Alabama’s
express embracement of Georgia’s interference law, which requires a plaintiff to
establish a defendant’s distance from not only the contract, but also “the business
relationship giving rise to and underpinning the contract.” Wallace, 875 So. 2d at
1155 (quoting Atlanta Market Center, 269 Ga. at 609, 503 S.E. 2d at 283).
Consequently, consistent with Wallace’s framework, Koch’s instrumental
involvement at the inception of Mr. Townson’s lending relationship with FBS
extends Koch’s non-stranger status to those subsequent equipment and other farm-
Mr. Townson has apparently abandoned any tortious interference theory tied to the FSA,
the insurer of Mr. Townson’s initial loan with FBS, as his opposition brief focuses solely upon his
relationship with FBS. However, these foregoing reasons similarly establish that Koch was not a
stranger to the commercial relationship shared between Mr. Townson and FSA–without Koch’s letter
of intent there would have been no loan to Mr. Townson by FBS for the FSA to insure.
related loans arising out of that same commercial relationship.
To the extent that Mr. Townson seeks to avoid summary judgment in his
opposition brief by linking his tortious interference claim against Koch to his
relationships with other banks, these efforts are unavailing because his complaint
limits his allegations to the negative impact on his financial relationship with FBS.
From a procedural standpoint, the Eleventh Circuit has made it unmistakably clear
that “[a] plaintiff may not amend her complaint through argument in a brief opposing
summary judgment.” Gilmour v. Gates, McDonald and Co., 382 F.3d 1312, 1315
(11th Cir. 2004) (citing Shanahan v. City of Chicago, 82 F.3d 776, 781 (7th Cir.
1996)). Gilmour dealt with a plaintiff who was attempting to assert a new claim at the
summary judgment stage. Gilmour, 382 F.3d at 1314-15.
Additionally, a more recent decision by the Eleventh Circuit cites to Gilmour
and confirms that a district court’s consideration of any critical amendment asserted
merely as part of the briefing process is disfavored.
The current practice in some district courts—especially in the
summary judgment setting—is to ignore what the respective parties
alleged in their complaint and answer and to consider their claims and
defenses as depicted in the memoranda they filed in support of or in
opposition to a motion for summary judgment. As is the situation here,
the claims and defenses presented in the memoranda supporting or
opposing summary judgment are not presented in the complaint and
answer with the specificity required by the Federal Rules of Civil
Procedure and the Supreme Court’s decisions in Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007), and
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868
(2009); rather, they are presented in a shorthand fashion. The result is
that on appeal we have difficulty in determining whether the district
court, in granting summary judgment, ruled on the claims and defenses
as stated in the complaint and answer or as stated in the memoranda
submitted to the court on summary judgment, as if the pleadings had
been amended by implied consent.
We encountered this dilemma most recently in
GeorgiaCarry.Org, Inc. v. Georgia, 687 F.3d 1244 (11th Cir. 2012),
cert. denied, ___ U.S. ___, 133 S. Ct. 856, 184 L. Ed.2 d 656 (2013).
There, in their motion for summary judgment, the plaintiffs sought to
eliminate a critical deficiency in the allegations of their amended
complaint by including additional facts. The defendants did not object
to this tactic on the ground that the plaintiffs were, in effect, seeking to
amend their complaint. And the district court, in ruling on the
sufficiency of the complaint, appeared to have considered the additional
facts as if they had been alleged in the complaint. In affirming the
district court’s dismissal of the claim at issue, we refused to consider
these additional facts, citing precedent that precludes a plaintiff from
amending its complaint “through argument at the summary judgment
phase of proceedings.” Id. at 1258 n. 27. “At the summary judgment
stage, the proper procedure for plaintiffs to assert a new claim is to
amend the complaint in accordance with Fed. R. Civ. P. 15(a).” Gilmour
v. Gates, McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004).
This court’s precedent foreclosed Well–Come’s attempt to amend
its complaint at the summary judgment stage without seeking leave of
court pursuant to Rule 15(a)(2). Accordingly, the District Court should
have disposed of Well–Come’s claim with a statement that Well–Come
failed to establish that ASRRG and ASIS issued a commercial general
liability policy and excess/umbrella liability policy to Flintlock LLC, as
alleged in paragraphs 6 and 7 of its complaint. We affirm the court’s
judgment on that ground. Krutzig v. Pulte Home Corp., 602 F.3d 1231,
1234 (11th Cir. 2010) (“This court may affirm a decision of the district
court on any ground supported by the record.”).
Flintlock Const. Servs., LLC v. Well-Come Holdings, LLC, 710 F.3d 1221, 1227-28
(11th Cir. 2013) (emphasis added).
Mr. Townson’s complaint does not advance any tortious interference theory
against Koch that is tied to his failed relationships with other banks. Thus, Gilmour
and Flintlock procedurally foreclose Mr. Townson from belatedly attempting to
amend his complaint in such a critical manner through his briefing. Consequently, for
all these reasons, summary judgment is due to be entered in favor of Koch on Count
Five of Mr. Townson’s complaint.
For the reasons explained above, Koch’s Motion is due to be granted in part
and otherwise termed as moot. Further, Mr. Townson’s complaint is due to be
dismissed with prejudice. The court will enter a separate final judgment order
consistent with this memorandum opinion.
DONE and ORDERED this 1st day of December, 2014.
VIRGINIA EMERSON HOPKINS
United States District Judge
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