United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 04-3420

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Employers Mutual Casualty Company, *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the Southern

* District of Iowa. 

Collins & Aikman Floorcoverings, Inc., *

*

Defendant - Appellant. *

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Submitted: June 22, 2005

Filed: August 16, 2005

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Before MURPHY, BYE, and SMITH, Circuit Judges.

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BYE, Circuit Judge.

This case arises out of a commercial transaction between Collins & Aikman

Floorcoverings, Inc. (Collins) and Employers Mutual Casualty Co. (EMC). EMC

alleged carpeting it purchased from Collins failed to comply with applicable

warranties. Among other defenses, Collins alleged EMC's claims were barred by

Iowa's five-year statute of limitations governing breach of warranty claims. A jury

found in favor of EMC and rejected Collins's statute of limitations defense. Collins

now appeals the district court's denial of its motion for judgment as a matter of law.

We reverse.
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I

In the mid-1990s, EMC began working on plans to build a new office building

and renovate an existing building in Des Moines, Iowa. As part of the project, EMC

solicited bids for carpeting from various carpet manufacturers, specifying the carpet

had to be durable enough for use under rolling chairs without the need for protective

floor mats. Collins's sales representative, Jim Depke, promised he could provide

carpeting to meet EMC's specifications and sold it a total of 23,931.39 yards. The

bulk of the carpeting – 21,701.39 yards – was delivered before December 31, 1996,

with the remainder – 2,230 yards – being delivered in 1998. 

In 1999, Joyce McMickle, EMC's facility coordinator, telephoned Collins and

notified it the carpeting beneath the chairs was showing signs of excess wear and

discoloration. In 2000, McMickle expressed the same concerns in a letter to Collins.

At trial, McMickle testified Depke told her Collins had never heard of such a problem

and would work "on EMC's behalf" to determine the source of the problem. In

February 2000, Depke conducted an on-site inspection and obtained samples of the

carpet for testing. 

In May 2000, Collins's representatives, including Depke and his sales manager,

Steve Broome, conducted a second walk-through inspection at which time, according

to McMickle's trial testimony, Depke or Broome again stated Collins had never

encountered this problem before and repeated the earlier promise to work "on EMC's

behalf" to determine the cause of the problems. Following the inspection, Broome

prepared a report indicating the problem with the carpet was a breakdown in the yarn

systems and it was unrelated to maintenance. Broome's report stated: "We make a

product that has a 15-year warranty. . . . I think we should step up to the plate and

honor this warranty." The next day, Broome wrote to EMC stating: "Please be

assured, that we are trying to understand why this condition has developed, since we

have not seen it occur in any previous installation." 
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On September 14, 2000, Collins offered to replace the worn sections of carpet

but EMC rejected the offer. Ten months later, on July 11, 2001, the sides again came

together to discuss the carpet problems. At this meeting, EMC formally rejected

Collins's earlier settlement offer. In response, Broome reiterated Collins's claim it did

not know the cause of the problems and again assured EMC it was continuing to

investigate the cause. On July 27, 2001, Collins wrote EMC asking to conduct yet

another inspection. EMC agreed to the additional testing and on October 2, 2001, the

parties met to discuss the results. At the meeting, Collins told EMC it believed the

carpet problems were caused by soiling and inadequate maintenance. 

Following the October 2, 2001, meeting, the parties attempted to mediate the

dispute. On August 6, 2002, after mediation proved unsuccessful, EMC filed suit.

It is undisputed the five-year statute of limitations covering 21,701.39 yards of the

carpeting (all but 2,230 yards) expired before EMC filed suit.

In its lawsuit, EMC alleged 1) breach of implied warranty of fitness for

particular purpose, 2) breach of implied warranty of merchantability, 3) breach of

express written warranty, 4) negligence, 5) negligent misrepresentation, 6)

fraudulent misrepresentation and nondisclosure, and 7) breach of oral express

warranty. Collins denied the allegations and asserted various affirmative defenses,

including failure to mitigate damages, the statute of limitations and defenses under

the Uniform Commercial Code. The case proceeded to trial and a jury returned a

verdict in favor of EMC on its claims for breach of implied warranty and breach

of express oral warranty. The jury rejected Collins's affirmative defenses and

found the statute of limitations was tolled by the doctrine of fraudulent

concealment. 

Following the verdict, Collins renewed its JAML motion and moved for a

new trial and remittitur. The District Court denied Collins's JAML motion but
1

The parties agree Iowa law controls this diversity case.

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conditionally granted the motion for new trial subject to EMC's acceptance of

remittitur in the amount of $205,186. EMC accepted the remittitur and judgment

was entered accordingly. This appeal followed. On appeal, Collins argues the

district court erred by denying its motion for JAML because 1) the evidence was

insufficient to support a finding of a fiduciary relationship, and 2) there was no

fraudulent concealment.

II

A. JAML - Standard of Review

We review the district court's denial of a motion for judgment as a matter of

law de novo using the same standards as the district court. Keenan v. Computer

Assocs. Int'l, 13 F.3d 1266, 1268 (8th Cir. 1994). A motion for judgment as a matter

of law presents a legal question to the district court and this court on appeal:

"[W]hether there is sufficient evidence to support the jury's verdict." Id. (quoting

White v. Pence, 961 F.2d 776, 779 (8th Cir. 1992)). We view the "evidence in the

light most favorable to the prevailing party and must not engage in a weighing or

evaluation of the evidence or consider questions of credibility." Id. A grant of

judgment as a matter of law is proper only if the evidence viewed according to these

standards would not permit "reasonable jurors to differ as to the conclusions that

could be drawn." Dace v. ACF Indus., Inc., 722 F.2d 374, 375 (8th Cir. 1983).

B. Fraudulent Concealment

In Iowa1 fraudulent concealment can toll the statute of limitations. To toll the

statute of limitations, the plaintiff must prove 1) "the defendant affirmatively

concealed the facts on which the plaintiff would predicate [the] cause of action," or
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2) "a confidential or fiduciary relationship exists between the person concealing the

cause of action and the aggrieved party" combined with proof the defendant breached

its duty of disclosure. Rieff v. Evans, 630 N.W.2d 278, 290 (Iowa 2001) (quoting

McClendon v. Beck, 569 N.W.2d 382, 385 (Iowa 1997)). Where a fiduciary duty

exists between the parties, mere silence may be sufficient to prove the defendant

breached its duty of disclosure. Kurtz v. Trepp, 375 N.W.2d 280, 283 (Iowa Ct. App.

1985). Here, the jury rejected EMC's claim that Collins affirmatively concealed facts

but concluded a fiduciary relationship existed, thereby creating an affirmative duty

to disclose information.

C. Fiduciary Relationship

Collins argues the doctrine of fraudulent concealment does not apply

because there was insufficient evidence to prove the existence of a fiduciary

relationship between it and EMC. We agree.

"A fiduciary relation exists between two persons when one of them is under a

duty to act for or to give advice for the benefit of another upon matters within the

scope of the relation." Kurth v. Van Horn, 380 N.W.2d 693, 695 (Iowa 1986)

(quoting Restatement (Second) of Torts § 874 cmt. a, at 300 (1979)). 

Fiduciary relationship is 

[a] very broad term embracing both technical fiduciary

relations and those informal relations which exist wherever

one man trusts in or relies upon another. One founded on

trust or confidence reposed by one person in the integrity

and fidelity of another. A "fiduciary relation" arises

whenever confidence is reposed on one side, and

domination and influence result on the other; the relation

can be legal, social, domestic, or merely personal. Such
2

Collins argues the district court erred when it submitted the question to the

jury because in Iowa the existence of a fiduciary duty is a matter of law for the court.

We disagree. In Davis v. Ottumwa Young Men's Christian Assoc., 438 N.W.2d 10,

17 (Iowa 1989), the Iowa Supreme Court reversed a grant of summary judgment

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relationship exists when there is a reposing of faith,

confidence and trust, and the placing of reliance by one

upon the judgment and advice of the other. 

Id. at 695-96 (quoting Black's Law Dictionary 564 (5th ed. 1979) (citations omitted)).

A fiduciary relationship imparts a position of peculiar

confidence placed by one individual in another. A

fiduciary is a person with a duty to act primarily for the

benefit of another. A fiduciary is in a position to have and

exercise, and does have and exercise influence over

another. A fiduciary relationship implies a condition of

superiority of one of the parties over the other. Generally,

in a fiduciary relationship, the property, interest or

authority of the other is placed in the charge of the

fiduciary. 

Id. (quoting First Bank of Wakeeney v. Moden, 262, 681 P.2d 11, 13 (Kan. 1984)

(per curiam) (emphasis in original)).

"Because the circumstances giving rise to a fiduciary duty are so diverse, any such

relationship must be evaluated on the facts and circumstances of each individual

case." Id. 

The evidence EMC presented to establish a fiduciary relationship was limited

to statements by Collins's staff indicating it would "work on EMC's behalf" to

determine the cause of the carpet problem. The district court personally felt the

evidence was insufficient to establish a fiduciary relationship but concluded it was

ultimately a jury issue.2

 We conclude, in the context of this buyer/seller relationship,
noting "[a] determination as to whether a fiduciary relationship exists would,

ordinarily, be a fact issue." See also Top of Iowa Coop. v. Schewe, 324 F.3d 627,

634 (8th Cir. 2002) (applying Iowa law and affirming the jury's finding of a fiduciary

relationship despite district court's misgivings about the sufficiency of the evidence).

We disagree with Collins's argument that Weltzin v. Cobank, ACB, 633 N.W.2d 290,

292 (Iowa 2001), holds the existence of a fiduciary duty should be resolved in each

instance by the trial court as a question of law. In Weltzin, the Iowa Supreme Court

affirmed the trial court's grant of summary judgment on the issue, but did so because

the court found 'the facts are insufficient to support a legal conclusion that defendants

. . . have a duty to the plaintiffs under [the theory of] breach of fiduciary duty.' Id.

Thus, under Iowa law this is "ordinarily" a fact question, but when the undisputed

facts are insufficient to find a fiduciary relationship exists, the question may be

resolved by the trial court as a matter of law. 

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Collins's statements were an insufficient basis upon which to find a fiduciary

relationship.

 

We are mindful this court has previously held a fiduciary duty can arise within

a buyer/seller relationship. For example, in Asa-Brant, Inc. v. ADM Investor Serv.,

Inc., 344 F.3d 738, 741 (8th Cir. 2003), several farmers entered into complicated

hedge-to-arrive contracts (HTAs) with grain elevators for the sale and purchase of

grain. 

In an HTA, a grain producer agrees to deliver at an unspecified time a

predetermined quantity and grade of grain. The price of the grain is

determined by reference to a futures contract price established by the

Chicago Board of Trade (CBOT), plus or minus a variable component

referred to as the "basis." "Basis is the difference between the price of

the designated futures contract and the cash price for that commodity."

Grain Land Coop v. Kar Kim Farms, Inc., 199 F.3d 983, 987 (8th Cir.

1999). The basis remains unfixed, or "floating," until the farmer elects

to fix the basis, at which point the grain will be delivered. Under an

HTA, a farmer has at least two sale options on his crop: he can deliver

grain under the HTA, or he can defer delivery on (i.e., "roll") the
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contract if he thinks he can get a better price in the cash-grain market

(the current market price for grain). The buyers of the grain, usually

grain elevators, would enter into HTAs with farmers and then establish

a position equal to the contract with the farmers on the CBOT. In other

words, the elevator would agree to sell on the CBOT the grain it agreed

to purchase from the farmer. If the farmer elected to roll his HTA, the

grain elevator would buy back its position on the CBOT (as it now had

no grain to sell on that date) and would establish a new position on the

CBOT consistent with the rolled HTA.

From 1995 to 1996, the grain market experienced unexpected price

hikes. This market "inversion" created an environment where farmers

consistently could make more money selling on the cash market, and

consequently those farmers with HTA contracts continually rolled their

HTAs, as their grain was more valuable now than in the future. Grain

elevators across the country were forced to buy back expensive positions

on the CBOT and purchase less valuable futures positions. The

continual rolling added up to enormous margin costs on the HTAs. The

question of whether farmers could continually roll their contracts, and

who should pay for these large margin costs, sparked litigation

throughout the Bread Belt. 

Id. at 741-42.

The Asa-Brandt farmers were informed by the grain elevator they owed money

on the HTAs and could no longer roll the contracts. The farmers sued arguing the

elevator owed them a fiduciary duty and breached the duty by failing to adequately

advise them regarding the risks associated with HTAs. A jury found in favor of the

farmers and the elevator appealed arguing the jury's finding of a fiduciary relationship

between a buyer and seller was unprecedented and erroneous. This court affirmed,

holding 

[T]he jury in this case heard evidence that [the elevator's] manager . . .

was more experienced, more sophisticated, and more privy to

information than were the Farmers about HTAs and the risks inherent in
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their use. The Farmers also testified that they were encouraged . . . to

enter into HTAs, and that they relied upon [the manager's] advice in

executing them. 

Obviously, this fiduciary relationship did not arise through a simple

buyer/seller relationship. Rather, as the district court found, it arose

through the Farmers' reliance upon their cooperative, its manager, and

his advice to them with respect to growing and marketing their grain,

advice which included measures to improve their yield, when to sell

their grain, and most importantly, how to use HTAs to enhance the

profitability of their operations. 

Id. at 744-45. 

We do not find Asa-Brant persuasive in the context of this case. Here, there

is no compelling evidence of a fiduciary relationship between Collins and EMC. This

case involved two large, sophisticated business entities and there is no evidence of

inequality between them. Nor did Collins exercise influence over or dominate EMC.

Further, EMC does not argue it was dependent upon Collins. Rather, the sole

evidence of a fiduciary relationship comes from Collins's statement it would work on

behalf of EMC to discover the source of the carpet problems. Acting on behalf of

another may indicate a fiduciary relationship, but based on all the facts and

circumstances of this case we conclude those two statements were insufficient as a

matter of law to transform this arms-length buyer/seller business transaction into a

fiduciary relationship. 

III

The judgment of the district court is reversed and we remand with instructions

to enter judgment as a matter of law in favor of Collins.

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