Court Opinion

ID: 4465312
Source: CourtListenerOpinion
Date Created: 2019-12-18 17:04:35.634927+00
Date Added: 2024-06-11T14:53:36.906304
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 18-1315
                            Filed December 18, 2019

NATIONWIDE AGRIBUSINESS INSURANCE COMPANY, AS SUBROGEE OF
FARMERS COOPERATIVE COMPANY,
     Plaintiff-Appellant,

vs.

PGI INTERNATIONAL; COX MANUFACTURING COMPANY d/b/a DALTON AG
PRODUCTS, INC., and CNH CORP. a/k/a CNH AMERICA, LLC, a/s/o DMI, INC.,
      Defendants-Appellees,

and

SQUIBB-TAYLOR INC.,
     Defendant.
________________________________________________________________

      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.
                                       2

      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.
                                            3

SCHUMACHER, Judge.

       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
                                           4

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

1
  Nationwide also sought contribution from Squibb-Taylor, Inc. and a separate settlement
agreement was reached with the company. Squibb-Taylor manufactured the excess flow
valve for the other anhydrous ammonia tank.
                                             5

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

2
    OSHA refers to the Occupational Safety and Health Act, 29 U.S.C. § 654(a)(1), (2).
                                          6

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
                                          7

prejudiced due to cumulative errors. The district court denied the motion for new

trial. Nationwide now appeals.

       II.    Motion in Limine

       A.     Nationwide contends it is entitled to a new trial because the district

court abused its discretion by ruling evidence of OSHA violations by FCC were

admissible. It claims the OSHA violation is relevant only as to FCC’s relation to its

employees and not to its relations to third-parties, such as the Shaws. “Normally,

rulings on admissibility of evidence are reviewed for an abuse of discretion.” GE

Money Bank v. Morales, 773 N.W.2d 533, 536 (Iowa 2009).

       “A ruling sustaining a motion in limine is generally not an evidentiary ruling.”

Quad City Bank & Tr. v. Jim Kircher & Assocs., P.C., 804 N.W.2d 83, 89 (Iowa

2011). “Rather, a ruling sustaining a motion in limine simply adds a procedural

step to the introduction of allegedly objectionable evidence.” Id. In general, “error

claimed in a court's ruling on a motion in limine is waived unless a timely objection

is made when the evidence is offered at trial.” Id. However, “[w]hen the court’s

ruling on a motion in limine leaves no question that the challenged evidence will or

will not be admitted at trial, counsel need not renew its objection to the evidence

at trial to preserve error.” Id. We determine the district court’s ruling on the motion

in limine in regard to the OSHA violation did not leave any question about the

admissibility of the evidence and further objection was not necessary.

       The district court relied upon Koll v. Manatt’s Transportation Co., 253
N.W.2d 265, 270 (Iowa 1977), which provides an OSHA violation “is evidence of

negligence as to all persons who are likely to be exposed to injury as a result of

the violation.” The court noted, “Plaintiff’s decedent, though not an employee [of
                                              8

defendant], was exposed to injury from the alleged violation in the instant case.

Hence a violation of OSHA and IOSHA standards was evidence of negligence on

the part of [the defendant].” Koll, 253 N.W.2d at 270. In cases that do not involve

injury to an employee, “a violation of an OSHA standard is merely ‘evidence of

negligence as to all persons who are likely to be exposed to injury as a result of

the violation.’” Wiersgalla v. Garrett, 486 N.W.2d 290, 293 (Iowa 1992) (quoting

Koll, 253 N.W.2d at 270).

       FCC employees are hired by farmers to apply anhydrous.                     The FCC

employees use nurse tanks and applicators. The same equipment is rented to

farmers, like Richard Shaw and Michael Shaw, who elect to apply the anhydrous.

The farmers that are renting the same equipment used by the FCC employees “are

likely to be exposed to injury as a result of the violation.” We conclude the district

court did not abuse its discretion in determining evidence of an OSHA violation by

FCC was relevant to the issue of FCC’s negligence.

       B.      Nationwide claims the district court abused its discretion by ruling

evidence of other similar incidents involving the defendants in this case was not

admissible. In ruling on the motion in limine, the court found evidence of other

incidents was not admissible.3

       Evidence of prior incidents may be admissible “to show the existence of a

dangerous condition.” Lovick v. Wil-Rich, 588 N.W.2d 688, 697 (Iowa 1999).

3
  Prior to trial, the court told the parties that evidence of similar circumstances concerning
Svendson, Fast, and Blazek would be excluded. The court reserved ruling on Phipps.
The written ruling stated the same, sustaining the defendants’ motion in limine “as to the
Svendson, Fast, and Blazek claims. The motion as to the Phipps case is overruled at this
time.” During the trial, the court ruled a similar incident concerning Phipps was also
inadmissible.
                                          9

Evidence of other incidents may be admissible if the “incidents occurred under

substantially the same circumstances as the incident in the present case.” Mercer

v. Pittway Corp., 616 N.W.2d 602, 612–13 (Iowa 2000). Also, “the rule allowing

evidence of similar incidents is generally limited to incidents occurring prior to the

one in question.” Id. at 615.

       The Svendson, Fast, and Blazek cases occurred after the incident involving

the Shaws. We conclude the district court did not abuse its discretion by ruling

evidence of these incidents was not admissible. See id. Additionally, as to all of

the incidents, defendants claim Nationwide did not preserve error because no offer

of proof was made to show the whether the other incidents were sufficiently similar

to be admissible. Because the district court ruled the evidence was not admissible,

Nationwide had the burden to demonstrate the substance of the evidence by an

offer of proof. See Strong v. Rothamel, 523 N.W.2d 597, 599 (Iowa Ct. App. 1994).

When no offer of proof is made, “the record is not sufficient for us to address

plaintiff’s claimed error,” and error has not been preserved. Id. We conclude

Nationwide has not preserved error on its claims concerning other similar incidents

because it did not make an offer of proof.

       III.   Directed Verdict

       Nationwide asserts the district court erred by granting a directed verdict to

Dalton Ag on the issue of design defect and to PGI on the issue of breach of

warranty of fitness for a particular purpose. It contends a directed verdict was not

appropriate because it presented substantial evidence to support its claims.

       We review the district court’s ruling on a motion for directed verdict for the

correction of errors at law. Stender v. Blessum, 897 N.W.2d 491, 501 (Iowa 2017).
                                           10

We consider “the evidence in the light most favorable to the resisting party.”

Thornton v. Am. Interstate Ins. Co., 897 N.W.2d 445, 460 (Iowa 2017). “Our role

on appeal is to decide ‘whether the trial court correctly determined [whether] there

was sufficient evidence to submit the issue to the jury.’” Dorshkind v. Oak Park

Place of Dubuque II, L.L.C., 835 N.W.2d 293, 300 (Iowa 2013) (citation omitted).

“[I]f reasonable minds can differ as to how the issue should be resolved, a jury

question is engendered,” making a directed verdict inappropriate. Miranda v. Said,

836 N.W.2d 8, 14 (Iowa 2013). Where no substantial evidence exists to support

each element of a plaintiff’s claim, the court may sustain a motion for directed

verdict. Stover v. Lakeland Square Owners Ass’n, 434 N.W.2d 866, 873 (Iowa

1989).

         A.     Nationwide made claims of design defect against PGI and Dalton Ag.

A product is considered to be defective in design

         when the foreseeable risks of harm posed by the product could have
         been reduced or avoided by the adoption of a reasonable alternative
         design by the seller or other distributor, or a predecessor in the
         commercial chain of distribution, and the omission of the alternative
         design renders the product not reasonably safe.

Parish v. Jumpking, Inc., 719 N.W.2d 540, 543 (Iowa 2006) (quoting Restatement

(Third) of Torts: Prod. Liab. § 2(b) (Am. Law Inst. 1998)).

         A transcript does not exist as to the court’s directed verdict ruling. As such,

we review the record for substantial evidence concerning this claim. “[A] plaintiff

must ordinarily show the existence of a reasonable alternative design, and that this

design would, at a reasonable cost, have reduced the foreseeability of harm posed

by the product.” Id. (citation omitted). To succeed on a claim of design defect

against the manufacture of a product, Nationwide was obligated to provide
                                         11

substantial evidence in support of each of the following elements: (1) the defendant

sold or distributed the product; (2) the defendant was engaged in the business of

selling or distributing the product; (3) the product was in a defective condition at

the time it left defendant’s control; (4) a reasonable alternative safer design could

have been practically adopted at the time of the sale or distribution; (5) the

alternative design would have reduced or avoided the foreseeable risks of harm

posed by the product; (6) the omission of the alternative design rendered the

product not reasonably safe; (7) the alternative design defect was a cause of

plaintiff’s damage; and (9) the amount of damage. Iowa Civil Jury Instruction

1000.2.

       On this issue, Nationwide’s expert, Wolf, testified:

       [I]n reviewing the deposition transcript of the Dalton representatives,
       prior to the purchase of this running gear, they had available for sale,
       I believe what they call a hose stand. It might be called a pogo stick.
       But what it is, it’s a support that could be mounted to the tongue to
       support the hose as it’s running from the nurse tank to the toolbar.
       What that would do and what that does is, one, it keeps the hose
       from dragging on the ground. But in my opinion, that also eliminates
       the perception that one may feel the need to chain up the hose
       because you’ve got that pogo stick up there holding the hose up.
       Like I said, again that product was available. It was not offered to
       [FCC].

       Robert Cox, the owner of Dalton Ag, testified Dalton Ag sold a hose stand

that would keep the hose off the ground, and the hose stand could be considered

a safety device. The cost of the hose stand was less than $100. The hose stand

was not a standard item sold with the running gear manufactured by Dalton Ag, in

part because Dalton Ag was concerned it would lose sales if the item was included.

The hose stand was available to consumers, but Dalton Ag did not advertise it.

       In considering a design defect claim, the Iowa Supreme Court stated:
                                         12

              Plaintiff put on evidence that defendant knew, at the time it
       manufactured the husking bed, that farmers often attempted to
       unplug the husking rollers while they were operating. Expert
       testimony supported the plaintiff’s contention that the defendant
       could have installed an emergency stop device for less than $50 and
       that at the time defendant designed the Unisystem such devices
       appeared on other machines that incorporated rollers, such as
       printing presses.

Hillrichs v. Avco Corp., 514 N.W.2d 94, 97 (Iowa 1994). Unlike Hillrichs, there is

no evidence in this case that other manufacturers of running gear for anhydrous

tanks used a hose stand. See id. at 98 (“Proof that the defendant comported with

the state of the art of the time of manufacture is a defense to a design defect

claim . . . .”). Wolf testified a rig he observed that was manufactured by a different

company “did not come with a pogo stick.” Wolf further testified that at the time of

the sale, the Dalton Ag running gear design was state of the art and also admitted

that he knew that the running gear went through a vending house and he had no

knowledge of whether Dalton Ag offered a pogo stick as part of the sale of the

running gear to the vending house.

       After full review of the record, we conclude the district court did not err in

granting a directed verdict to Dalton Ag on Nationwide’s design defect claim.

       B.     Nationwide contends the district court erred by granting a directed

verdict to PGI on the claim of breach of an implied warranty of fitness for a

particular purpose. Nationwide asserts there was substantial evidence to show

PGI knew the particular purpose for the excess flow valves it produced—the

application of anhydrous ammonia—but the excess flow valves were not fit for this

purpose, as they did not close under some foreseeable conditions.

       This claim arises from Iowa Code section 554.2315, which provides:
                                         13

              Where the seller at the time of contracting has reason to know
       any particular purpose for which the goods are required and that the
       buyer is relying on the seller's skill or judgment to select or furnish
       suitable goods, there is unless excluded or modified under section
       554.2316 an implied warranty that the goods shall be fit for such
       purpose.

       In order to prevail on a claim of breach of an implied warranty of fitness for

a particular purpose, a plaintiff must show (1) the defendant had reason to know

of the plaintiff’s particular purpose; (2) the defendant had reason to know the

plaintiff was relying on the defendant’s skill or judgment to furnish suitable goods;

and (3) the plaintiff in fact relied on the defendant’s skill or judgment to furnish

suitable goods. Renze Hybrids, Inc. v. Shell Oil Co., 418 N.W.2d 634, 637 (Iowa

1988). The Iowa Supreme Court has stated:

              A “particular purpose” differs from the ordinary purpose for
       which the goods are used in that it envisages a specific use by the
       buyer which is peculiar to the nature of his business whereas the
       ordinary purposes for which goods are used are those envisaged in
       the concept of merchantability and go to uses which are customarily
       made of the goods in question.

Id. (quoting U.C.C. § 2-315, cmt. 2 (Am. Law Inst. & Unif. Law Comm’n 1977)).

       A warranty of fitness for a particular purpose “is based on a special reliance

by the buyer on the seller to provide goods that will perform a specific use

envisaged and communicated by the buyer.” Van Wyk v. Norden Labs., Inc., 345
N.W.2d 81, 84 (Iowa 1984). A case “turns on what the seller had reason to know—

both as to the buyer’s particular purpose and as to the buyer’s reliance on the

seller’s skill and judgment.” Id. at 85. “While a purchaser need not show he

advised the seller of the particular purpose in purchasing the goods, he must

nevertheless show that the seller had reason to know of that purpose.” Bergquist

v. Mackay Engines, Inc., 538 N.W.2d 655, 658 (Iowa Ct. App. 1995).
                                         14

       In a case involving cattle vaccines, the court noted, “The plaintiffs, as

owners of the cattle, and the defendant, had no direct dealing with regard to the

vaccine.” Van Wyk, 345 N.W.2d at 84–85. Because there was no evidence the

seller had any “reason to know of any purpose for the plaintiffs’ use of the vaccine,

other than its ordinary use, or that the buyer was relying on the seller's skill and

judgment in providing it,” the court concluded it was improper to submit the issue

of implied warranty of fitness for a particular purpose to the jury under these

circumstances.    Id. at 85–86; see also Bergquist, 538 N.W.2d at 659 (“We

conclude plaintiff did not sufficiently show defendant was aware of his particular

purpose for using the goods, and therefore, the issue of warranty of fitness for a

particular purpose should not have been submitted to the jury.”).

       As in the directed verdict involving Dalton Ag, a transcript does not exist as

to the court’s directed verdict ruling against one of the counts against PGI. As

such, we review the record for substantial evidence concerning this claim. There

was no direct communication between FCC and PGI. FCC did not buy the excess

flow valve from PGI, but rather from a third-party supplier. FCC relied entirely upon

their supplier for expertise as to proper equipment for their purpose. The evidence

did not show PGI had reason to know FCC’s particular purpose in using the excess

flow valve, which would be a “specific use by the buyer which is peculiar to the

nature of his business.” See Renze Hybrids, 418 N.W.2d at 637. PGI did not know

the ultimate purchaser of the excess flow valve or the “particular purpose” the

ultimate purchaser had for the valve. In addition, the evidence did not show PGI

had reason to know if FCC was relying on PGI’s skill and judgment in the use of

the excess flow valve. See Van Wyk, 345 N.W.2d at 85. After full review of the
                                         15

record, we conclude the district court did not err in granting a direct verdict to PGI

on Nationwide’s claim of breach of an implied warranty of fitness for a particular

purpose.

       IV.    Special Verdict Form

       Nationwide claims the district court erred by including the Shaws on the

special verdict form. It asserts the Shaws should not have been included in the

special verdict form because they were not parties to the lawsuit. Our review of

challenges to a special verdict form is for the correction of errors at law. Beachel

v. Long, 420 N.W.2d 482, 484 (Iowa Ct. App. 1988).

       Section 668.3(1)(a) states:

              Contributory fault shall not bar recovery in an action by a
       claimant to recover damages for fault resulting in death or in injury to
       person or property unless the claimant bears a greater percentage
       of fault than the combined percentage of fault attributed to the
       defendants, third-party defendants and persons who have been
       released pursuant to section 668.7, but any damages allowed shall
       be diminished in proportion to the amount of fault attributable to the
       claimant.

       Under chapter 668, the term “party” means (1) a claimant, (2) a person

named as a defendant, (3) a person who has been released pursuant to section

668.7, and (4) a third-party defendant. Iowa Code § 668.2; Pepper v. Star Equip.,

Ltd., 484 N.W.2d 156, 160 (Iowa 1992). To the extent an entity is a “party” to a

lawsuit, “it may be allocated a percentage of fault under section 668.3(2)(b).”

Pepper, 484 N.W.2d at 160.

       The Shaws entered into a release with FCC. Section 668.7 states:

               A release, covenant not to sue, or similar agreement entered
       into by a claimant and a person liable discharges that person from
       all liability for contribution, but it does not discharge any other
       persons liable upon the same claim unless it so provides. However,
                                         16

       the claim of the releasing person against other persons is reduced
       by the amount of the released person's equitable share of the
       obligation, as determined in section 668.3, subsection 4.

(Emphasis added.) Under section 668.7, the Shaws, as entities who entered into

a release, would be considered claimants.

       In this case, Nationwide is asking for contribution from other alleged

tortfeasors. Section 668.5 provides:

               A right of contribution exists between or among two or more
       persons who are liable upon the same indivisible claim for the same
       injury, death, or harm, whether or not judgment has been recovered
       against all or any of them. It may be enforced either in the original
       action or by a separate action brought for that purpose. The basis
       for contribution is each person’s equitable share of the obligations,
       including the share of fault of a claimant, as determined in
       accordance with section 668.3.

(Emphasis added.) See also Caldwell v. Holiday Lake Owners’ Ass’n, Inc., No.

12-2191, 2013 WL 3830217, at *4 (Iowa Ct. App. July 24, 2013) (“Section 668.5

sets the basis for contribution as ‘each person's equitable share of the obligations,

including the share of fault of a claimant, as determined in accordance with section

668.3.’”). Thus, in determining the amount of contribution, the fault of claimants

should be considered.

       Based on the provisions in chapter 668, we conclude the district court did

not err by including the Shaws on the special verdict form.

       We affirm the decision of the district court.

       AFFIRMED.