Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_12-cv-00426/USCOURTS-azd-4_12-cv-00426-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Driskill Agricultural Services Incorporated,

Plaintiff, 

v. 

Dimare Fresh Incorporated, 

Defendant.

No. CV-12-00426-TUC-RM

ORDER 

 Plaintiff Driskill Agricultural Services (“Driskill”), as assignee of Mexican 

tomato-grower Agricola Beltran (“Beltran”) and Beltran’s agent Top Yields, initiated this 

lawsuit by filing a Complaint against Defendant DiMare Fresh (“DiMare”) for breach of 

contract and breach of the duty of good faith and fair dealing. DiMare asserted 

counterclaims for breach of express warranty, breach of the warranty of merchantability, 

and breach of the warranty of fitness. On November 22, 2013, DiMare moved for 

summary judgment and Driskill moved for partial summary judgment. Pending before 

the Court is a Report and Recommendation (“R&R”) issued by Magistrate Judge Leslie 

A. Bowman that recommends denying both parties’ summary judgment motions. 

 The dispute between the parties arises out of a produce sales agreement in which 

Beltran agreed to supply DiMare with “good and marketable” tomatoes for a set price per 

box during the 2012 growing season. DiMare argues that there is no genuine dispute of 

material fact that Beltran failed to supply “good and marketable” tomatoes as required by 

the sales agreement. Driskill argues that there is no genuine dispute of material fact that 

all tomatoes presented to DiMare for delivery under the sales agreement were in “good 

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and marketable” condition and that DiMare breached the agreement by refusing to take 

delivery of the tomatoes presented. Driskill also argues that undisputed evidence 

demonstrates that DiMare clearly and unequivocally repudiated the sales agreement. 

 The Magistrate Judge found that there is a genuine dispute as to whether the term 

“good and marketable” in the sales agreement incorporated a color requirement, and 

recommended denying both parties’ summary judgment motions on this ground. The 

Magistrate Judge further found that there is a genuine issue of material fact as to whether 

DiMare’s behavior constituted an anticipatory repudiation of the sales agreement. 

 Both parties filed objections to the Magistrate Judge’s R&R. In its objections, 

DiMare argues that there is no factual dispute that a color requirement was a term of the 

sales agreement because there is no dispute that “good and marketable” tomatoes must 

meet USDA marketing standards, and USDA marketing standards require no less than 

90% of mature green tomatoes in each load to be “green and breakers” in color. Driskill 

alleges that both parties to the sales agreement understood the “good and marketable” 

requirement to mean tomatoes grading 85% or better on United States Department of 

Agriculture (“USDA”) inspection certificates, and that a color requirement was never 

agreed to by the parties. Driskill argues that the Magistrate Judge erred by relying upon 

inadmissible evidence in finding a genuine dispute as to whether the “good and 

marketable” requirement incorporated a color standard. Driskill further argues that the 

Magistrate Judge erred in finding that DiMare offered admissible evidence sufficient to 

controvert Driskill’s evidence of anticipatory repudiation. 

 I. The “Good and Marketable” Requirement 

 DiMare argues that USDA marketing standards require no less than 90% of 

mature green tomatoes in each load to be “green and breakers” in color, citing USDA 

Inspection Instructions and USDA Standards for Grades of Fresh Tomatoes. The USDA 

Inspection Instructions note that “[c]olor, ripeness and firmness are important factors in 

determining the marketability of tomatoes,” and that “practically all tomatoes are green” 

at shipping point. (Doc. 68-1, ex. 4 at 26-27). The USDA Standards provide color 

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classifications that “may be used, when specified in connection with the grade statement, 

in describing the color as an indication of the stage of ripeness of any lot of mature 

tomatoes of a red fleshed variety.” 7 C.F.R. § 51.1860. If a color classification is 

specified in connection with the grade statement, at least 90% of the tomatoes in the lot 

must be of the color specified, but there is no requirement that at least 90% of the 

tomatoes be “green and breakers” for the tomatoes to be considered “good and 

marketable.” See 7 C.F.R. § 51.1861(f). 

 The only record evidence clearly specifying a 90% “green and breakers” 

requirement is the report and testimony of DiMare’s expert, Thomas A. Leming. In his 

report, Mr. Leming states: “In my opinion, DiMare could expect to receive,” under the 

sales agreement, “tomatoes with less than 15% total defects, including no more than 1% 

decay and showing no less than 90% Green & Breakers, as reflected on USDA inspection 

certificates.” (Doc. 68-1, ex. 5 at 1). Mr. Leming testified that the 15% total defects and 

90% “green and breakers” requirements were “the two criteria that, in my mind, would 

establish that tomatoes coming across the border would meet the definition of ‘good and 

marketable.’” (Doc. 72-1, ex. 3 at 28:15-20 (emphasis added)). Mr. Leming indicated 

that he “used the figure of 90 percent or more Green & Breakers” as one of the criteria 

because “the contract was for mature green tomatoes.” (Id. at 28:21-24). 

 Driskill argues that Mr. Leming’s opinion is not admissible to determine the 

parties’ intended meaning of the term “good and marketable,” and that the Magistrate 

Judge accordingly erred in relying upon it. Where, as here, a contractual term is 

ambiguous, courts applying Arizona law may admit parol evidence to clarify and explain 

the document. See Johnson v. Earnhardt’s Gilbert Dodge, Inc., 132 P.3d 825, 828 (Ariz. 

2006). Evidence of “a professional custom within a particular geographic area may be 

used to establish the terms of a contract.” Nat’l Hous. Indus., Inc. v. E.L. Jones Dev. Co., 

576 P.2d 1374, 1378 (Ariz. App. 1978). The Magistrate Judge assumed that Mr. Leming 

based his opinion regarding the meaning of the term “good and marketable” on the use of 

that term in the relevant market, but the Court has not found support in the record for that 

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assumption. Mr. Leming’s report does not demonstrate that Mr. Leming has experience 

in the particular geographical area at issue, and it does not state that Mr. Leming based 

his opinion regarding the meaning of the term “good and marketable” on professional 

custom within that area. Both Mr. Leming’s report and testimony indicate that the 90% 

“green and breakers” requirement arises from Mr. Leming’s own interpretation of the 

terms of the produce sales agreement. Expert witnesses are generally not permitted to 

provide legal opinions concerning the meaning and effect of contractual terms. See 

Energy Oils, Inc. v. Mont. Power Co., 626 F.2d 731, 737 (9th Cir. 1980) (district court 

erred by “admitting testimony of expert witnesses concerning their opinions as to the 

legal effect of the agreements and also by permitting a witness to express the subjective 

intent of the parties in entering into the agreements”); Marx & Co. v. Diners’ Club Inc., 

550 F.2d 505, 509 (2d Cir. 1977) (district court erred by allowing expert to provide “legal 

opinions as to the meaning of the contract terms at issue”); Messina v. Midway Chevrolet 

Co., 209 P.3d 147, 152-53 (Ariz. App. 2008) (trial court did not abuse discretion in 

refusing to consider expert testimony concerning the meaning of a contractual term); 

Tavilla v. Blue Cross & Blue Shield of Ariz., Inc., 2014 WL 4473638, at *4 (Ariz. App. 

Sept. 11, 2014) (trial court did not abuse discretion in refusing to consider expert opinion 

because opinion would not have assisted court in interpreting contract at issue); see also 

Taylor v. State Farm Mut. Auto. Ins. Co., 854 P.2d 1134, 1139 (Ariz. 1993) (courts 

should not consider parol evidence “that has no probative value in determining the 

parties’ intent”). 

 “When interpreting a contract . . . it is fundamental that a court attempt to 

‘ascertain and give effect to the intention of the parties at the time the contract was made 

if at all possible.’” Taylor, 854 P.2d at 1139 (quoting Polk v. Koerner, 533 P.2d 660, 662 

(Ariz. 1975)). If “parties use language that is mutually intended to have a special 

meaning, and that meaning is proved by credible evidence, a court is obligated to enforce 

the agreement according to the parties’ intent.” Id. Here, the testimony of both 

signatories to the produce sales agreement establishes that the parties intended the term 

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“good and marketable” to mean tomatoes that met the standards to grade 85% or better 

on USDA inspection. Angel Antonio Beltran Soberanes, who signed the agreement on 

behalf of Beltran, testified: 

Q. What was the requirement under that contract in terms of the quality or condition of the tomatoes? 

A. 85 percent or better. 

Q. That was your understanding when you entered into the contract? A. That is correct. 

Q. And were there any other requirements regarding quality or condition in the contract? 

A. No. 

(Doc. 75-1, ex. 4 at 68:7-15). Similarly, Sam Licato, who signed the agreement on behalf 

of DiMare, testified: 

Q. Under the terms of this Produce Sales Agreement DiMare was obligated to buy all tomatoes that were presented that were in good and marketable 

condition; is that correct? 

A. That’s correct. 

Q. The tomatoes graded 85 percent [or] better on the USDA inspection, DiMare was obligated to do that? 

A. If they met the standards for 85 percent or better, yes. Q. So that was “yes” to my question, right? A. Yes. 

Q. And every load that was presented for purchase that was above 85 percent DiMare was obligated to purchase, correct? A. Yes. 

. . . . 

Q. And the only quality requirement set forth in this contract is that the tomatoes be in good and marketable condition, right? A. 85 percent or better, which is a number one tomato. 

(Doc. 75-1, ex. 3 at 36:21-37:10, 37:19-23). 

 There is no evidence that the parties discussed or negotiated a requirement that 

tomatoes supplied under the agreement had to be at least 90% “green and breakers” to be 

considered “good and marketable.” In fact, Mr. Licato testified that he “would never buy 

tomatoes green” and “always buy[s] them gassed.” (Doc. 75-1, ex. 3 at 78:20-21; see 

generally 77:10-78:21). This testimony generally corresponds to a sworn declaration by 

Mr. Beltran stating that, in the parties’ prior dealings, DiMare’s practice was “to monitor 

the color of the tomatoes in the warehouse, and take delivery when the load reached the 

color specification required by DiMare’s ultimate customer.” (Doc. 75-1, ex. 13 at ¶ 7). 

 Because Mr. Leming’s opinion regarding the meaning of the term “good and 

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marketable” appears to be based on his own interpretation of the parties’ contract rather 

than on professional custom in the relevant area, and because the opinion conflicts with 

the intended meaning of the term testified to by both signatories to the agreement, Mr. 

Leming’s opinion fails to create a genuine dispute as to whether the sales agreement 

incorporated a 90% “green and breakers” color requirement. It did not. 

 Nevertheless, there remains a material factual dispute regarding whether Driskill 

offered DiMare “good and marketable” tomatoes under the sales agreement. Mr. Licato 

testified that the tomatoes he inspected did not meet the standards for grading 85% or 

higher on USDA inspection. (See, e.g., Doc. 75-1, ex. 3 at 50:2-9; id. at 65:14-18). 

Though Driskill presented evidence of USDA inspection certificates reflecting scores of 

85% or better, there remain factual issues regarding whether the certificates correspond to 

loads presented to DiMare under the produce sales agreement and whether DiMare saw 

the certificates. (See, e.g., Doc. 73 at ¶¶ 13-15, 18; Doc. 75-1, ex. 3 at 65:19-25). 

Accordingly, the Court will adopt the Magistrate Judge’s recommendation to deny 

summary judgment in favor of either side on the issue of whether Beltran offered DiMare 

“good and marketable” tomatoes under the sales agreement. 

 II. Anticipatory Repudiation 

 The Magistrate Judge recommended denying summary judgment on the issue of 

whether DiMare repudiated the sales agreement. Driskill alleges that there is insufficient 

admissible evidence from which a reasonable trier of fact could find in DiMare’s favor on 

this issue. The Court agrees with the Magistrate Judge that a material issue of fact 

remains with respect to this issue. Driskill alleges that Beltran contacted Mr. Licato 30-

40 times after his last inspection of tomatoes, but Mr. Licato testified that “[n]obody ever 

talked to [him] about buying any more tomatoes” after his last inspection. (See Doc 75-1, 

ex. 3 at 50:24-51:1; see also id. at 42:12-17 (“I called him up and told him . . . ‘when you 

get the right kind of tomatoes that will make grade, call me up and we will look at them 

and if they’re good enough we’ll take them.’ And he never called me again.”). 

. . . . 

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 III. Conclusion 

 Because there remain genuine issues of material fact regarding whether Beltran 

offered DiMare “good and marketable” tomatoes under the sales agreement and whether 

DiMare repudiated the agreement, the Court agrees with the Magistrate Judge that both 

parties’ summary judgment motions should be denied. 

 Accordingly, 

IT IS HEREBY ORDERED that the Magistrate Judge’s Report and 

Recommendation (Doc. 87) is adopted in full except to the extent that it finds a genuine 

dispute regarding whether the term “good and marketable” as used in the produce sales 

agreement incorporated a color requirement of 90% “green and breakers.” 

IT IS FURTHER ORDERED that Defendant’s Motion for Summary Judgment 

(Doc. 67) is denied. 

IT IS FURTHER ORDERED that Plaintiff’s Motion for Partial Summary 

Judgment (Doc. 69) is denied. 

 Dated this 3rd day of February, 2015. 

Honorable Rosemary Márquez

United States District Judge

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