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St. Hilaire v. Food Services of America Inc.

filed: June 18, 1996.


Appeal from SUPERIOR COURT YAKIMA COUNTY. Superior Court No: 89-2-00578-5. Date filed in Superior Court: 8/5/94. Superior Court Judge signing: MICHAEL LEAVITT.

Author: Philip J. Thompson, Concurring: Dennis J. Sweeney & Ray E. Munson

Author: Thompson

THOMPSON, J. --Food Services of America, Inc. (FSA) d/b/a Amerifresh, appeals nine separate judgments, in amounts totaling more than $300,000, on jury verdicts entered in favor of the plaintiff apple growers (growers). The growers alleged FSA violated the commission merchant act, RCW 20.01, and were negligent in handling their 1987 apple crops. FSA contends the court erred when it instructed the jury FSA (1) violated RCW 20.01.330(4) in its sales of the growers' apples to its own affiliates and, therefore, (2) was liable to the growers for gross profits received by the affiliates. FSA also contends (3) the evidence does not support the large negligence verdicts; (4)

the court erred when it denied FSA's motion to dismiss the claim of grower Florian Nordhus on the basis of accord and satisfaction; and (5) prejudgment interest should not have been awarded. We affirm in part and reverse in part.

FSA as a commission merchant receives agricultural products on consignment for processing and sale. RCW 20.01.010(6). In 1987, it entered into contracts with the various growers, in which the growers agreed to deliver their apple crops to FSA to process, pack, warehouse, store and sell the fruit on their behalf. The growers authorized FSA to sell "in such markets and at times and prices determined by [FSA] in its sole discretion." They agreed FSA could "at its discretion, sell all or portions of the crop[s] to its parent or affiliated companies." In addition, the growers approved FSA commingling their crops with crops of other growers for sale as part of a pool.

The growers were dissatisfied with FSA's returns on their apples. In March 1989, they filed suit against FSA. In their amended complaint, they alleged FSA violated the commission merchant act and was negligent in the "warehousing, processing, storing, selling and shipping of plaintiffs' fruit . . . ."*fn1 FSA countered the low returns were traceable to the fact the 1987 apple crop was the largest ever harvested in Washington, which led to storage problems, and the quality of the apples was adversely affected by high temperatures at the time of harvest.

At trial, the growers presented evidence FSA sold to its affiliate branches without obtaining the growers agreement to the sale price or promptly notifying them of the sale, in violation of RCW 20.01.330(4). Several of the growers also offered evidence FSA negligently misrepresented their returns would be higher than the statewide average, misgraded their apples, and "relidded" boxes by selling them at a higher grade than packed and not crediting the grower with a percentage of the higher grade pool.*fn2

To measure their damages for FSA's alleged negligent handling of the apples and misrepresentations as to price, the growers relied upon evidence of average statewide returns for 1987 apple sales, compiled by the Wenatchee Growers Clearing House (WGCH). FSA disputed whether the WGCH data reflected a meaningful average crop return.

The court held as a matter of law FSA had violated RCW 20.01.330(4) in sales to its affiliates. It dismissed several other claims as not supported by the evidence. The court submitted the remainder of the claims to the jury with special verdicts asking it to determine (1) the total amount of gross profits received by FSA's affiliates in reselling the growers' fruit; (2) whether FSA was negligent in its handling, packing or selling of the growers' crops in 1987; (3) if it was, whether the growers were damaged by this negligence; and (4) in what amount.*fn3

The verdict forms also asked whether FSA misrepresented the amount of returns the growers would receive if they sold through it, and whether FSA misgraded apples. The jury answered "no" to these latter questions. But it found FSA was negligent, and awarded the growers damages which totaled over $300,000. It also awarded the growers approximately $38,000 in damages for FSA's sales to its affiliates in violation of the provisions of RCW

20.01.330(4). The court entered judgments on the verdicts and allowed the growers prejudgment interest.

First, FSA contends the court erred when it held FSA violated RCW 20.01.330(4).

The commission merchant act, RCW 20.01, governs the conduct of commission merchants. The growers here contend FSA violated subsection (4) of RCW 20.01.330, which provides a merchant may lose his license if he

directly or indirectly has purchased for his own account, agricultural products received by him upon consignment without prior authority from the consignor together with the price fixed by consignor or ...

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