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Fantozzi Bros v. San Joaquin Tomato Growers

November 30, 2011

FANTOZZI BROS., PLAINTIFF AND APPELLANT,
v.
SAN JOAQUIN TOMATO GROWERS, INC., DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of Stanislaus County. William A. Mayhew, Judge. (Super. Ct. No. 615250)

The opinion of the court was delivered by: Detjen, J.

CERTIFIED FOR PARTIAL PUBLICATION*fn1

OPINION

The primary question presented by this appeal is whether a member of a joint venture that is paid a commission to sell, on behalf of the joint venture, produce raised by the joint venture is a "commission merchant" as defined in Food and Agricultural Code section 56105. (All further statutory references are to this code.) We hold that the trial court correctly concluded the joint venturer was not a commission merchant because, under the terms of the joint venture agreement, the joint venturer was an owner of the produce he sold. In the nonpublished portion of the opinion, we also conclude plaintiff and appellant Fantozzi Bros. has not otherwise established reversible error. Accordingly, we affirm the judgment entered on a jury verdict in favor of defendant and respondent San Joaquin Tomato Growers, Inc.

FACTS AND PROCEDURAL HISTORY

Appellant is a general partnership. For several years prior to 2004, appellant grew 75 acres of mature green tomatoes in a joint venture with respondent.*fn2 Appellant and respondent entered into the same written joint venture agreement for the 2004 growing season. Pursuant to the agreement, respondent was to contribute $600 per acre in cash or materials and supplies. (In this instance, it provided and planted the seedlings.) Appellant was to contribute use of its land, labor, equipment, and supplies to bring the crop to maturity. Respondent was to provide labor to harvest the crop and to process and pack the tomatoes for sale. In addition, respondent was to sell the tomatoes and receive a commission of 6 percent for doing so. After deducting the sales commission and reimbursing respondent for the costs of harvesting, transporting, and packing the tomatoes, appellant and respondent were to share equally the net proceeds.

In addition to other covenants and obligations set forth in the joint venture agreement, the agreement provided the following:

-Title to the tomatoes will pass from the joint venture to respondent "at the time of harvesting said crop of tomatoes, subject to the right to division of proceeds as herein set forth."

-Respondent will be the "sole judge of quality and market conditions and shall have the right to discontinue shipping whenever in its opinion the quality or market conditions do not justify shipment."

-Respondent "will attempt to obtain the best market prices and effect quick sales" and "is authorized to make whatever adjustments or to grant any allowances that in [respondent's] opinion are justifiable or necessary in order that sales be consummated ...."

Respondent began harvesting the crop at the beginning of November 2004. It rained several days and respondent stopped harvesting the field after about two-thirds of the field had been picked. The five days of harvesting resulted in 662,450 pounds of packed tomatoes.*fn3 Before harvesting resumed, a hard frost destroyed the remaining crop.

Appellant sued respondent for breach of fiduciary duty and breach of contract. The breach of fiduciary duty cause of action was premised upon allegations that respondent failed to timely harvest the tomato crop, failed to sell the tomatoes at the prevailing market price, refused to permit appellant to harvest the field itself after respondent decided not to timely finish the harvest, and engaged in self-dealing that deprived appellant of legitimate profits. The complaint alleged that the fiduciary relationship arose both from the joint venture contract and from respondent's statutory status as a commission merchant whose duties are established in sections 56271 through 56283.*fn4 The breach of contract cause of action was premised upon similar allegations concerning the failure to harvest and market the crop, together with an allegation that respondent violated the implied covenant of good faith and fair dealing by "artificially agreeing to below market sales in order to preserve [respondent's] business relationships with buyers, at the expense and in direct breach of its contractual duties" to appellant. Respondent answered and the matter came for jury trial.

Respondent moved in limine to exclude, as relevant here, all evidence that respondent was acting as a commission merchant as defined by section 56105 or that it breached the duties of a commission merchant set forth in sections 56271 through 56283. Appellant opposed the in limine motion in an original and a supplemental memorandum of points and authorities. The trial court noted the joint venture agreement indicated both parties to it were owners of the crop. It then deferred ruling on the motion. Subsequently, the trial court granted the motion, determining that the joint venture agreement did not make San Joaquin Tomato Growers, Inc. a commission merchant as defined in section 56105. Accordingly, the court refused to instruct the jury with numerous instructions proposed by appellant that stated various statutory duties of a commission merchant. The refusal to so instruct constitutes the basis for appellant's first contention on appeal.

Appellant also requested the trial court instruct the jury with CACI No. 325, concerning the required factual elements for a breach of the covenant of good faith and fair dealing. In reliance on the use note for that instruction, the trial court concluded the instruction should only be given when the plaintiff has stated a separate cause of action for breach of the covenant of good faith and fair dealing, ...


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