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Baja Best v. Harris Moran Seed Co.

United States District Court, S.D. California

September 3, 2014

AGRICOLA BAJA BEST, S. De. R.L. de C.V., a business entity organized under the laws of the Republic of Mexico, Plaintiff,
v.
HARRIS MORAN SEED COMPANY, a California Corporation, Defendant

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For Agricola Baja Best, S. De. R.L. de C.V., a business entity organized under the laws of the Republic of Mexico, Plaintiff: Jimmy Ray Ayers, Jr, Morgan JC Scudi, LEAD ATTORNEYS, Scudi & Ayers LLP, San Diego, CA; Adriana Gutierrez-Herrera, Scudi, Johnson and Ayers LLP, San Diego, CA.

For Harris Moran Seed Company, a California Corporation, Defendant: Brian K. Tomkiel, Colin Henry Murray, LEAD ATTORNEYS, Baker & McKenzie LLP, San Francisco, CA.

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ORDER GRANTING IN PART AND DENYING IN PART MOTIONS FOR SUMMARY JUDGMENT

[Docket Nos. 51, 52]

Hon. Roger T. Benitez, United States District Judge.

The parties have each filed a motion for summary judgment. Plaintiff Agricola Baja Best (" Baja Best" ) moves for a determination that Defendant Harris Moran Seed Company (" Harris Moran" ) is the seller of the seeds at issue in this case, that Harris Moran's warranty disclaimers and limitations of liability are unenforceable, and for summary judgment on six Harris Moran affirmative defenses. (Docket No. 51.) Harris Moran moves for summary judgment on each of Baja Best's eight claims. (Docket No. 52.) For the reasons stated below, the Motions are GRANTED in part and DENIED in part.

BACKGROUND

I. Associated Entities

Three entities are involved in this action, although only Baja Best and Harris Moran are parties.

A. Plaintiff Baja Best

Baja Best is a commercial agricultural grower of tomatoes located in Baja, California, Mexico. (Ybarguen Decl. ¶ 2.)[1] Baja Best is located in the Vizcaino area of Baja California. ( Id. ) Baja Best purchased

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the seeds that are at issue in this action. ( Id. )

B. Defendant Harris Moran

Harris Moran is an American company with its principal place of business in California. (Def.'s Mot., Decl. of Michael Sheets (" Sheets Decl." ) ¶ 3.) Harris Moran manufactures and sells seeds to third-party seed distributors and commercial growers around the world. ( Id. )

C. Semillas Harris Moran Mexicana SA de CV

Semillas is not a party to this action. Semillas Harris Moran Mexicana SA de CV (" Semillas" ) is a Mexican entity with its principal place of business in Mexico. ( Id. ) Semillas is a wholly owned subsidiary of Harris Moran and is one of four Mexican distributors through which Harris Moran sold seed during the time Baja Best purchased seeds. ( Id. ; Def.'s Opp'n, Supp. Decl. of Michael Sheets (" Sheets Supp. Decl." ) ¶ 4.) Semillas purchases seed from Harris Moran for its own inventory, generally in large quantities, and often before Semillas has arranged subsequent sales to its customers. (Def.'s Opp'n, Decl. of Nicolas Tinel (" Tinel Decl." ) ¶ 5.) Semillas determines what price to charge its customers and distributors. ( Id. ¶ 4.) Some Semillas customer complaints are directed to Harris Moran. (Sheets Decl. ¶ 5.)

II. Seed Orders

A. Communications Between Baja Best and Machado

In 2009, Manuel Ybarguen, with Baja Best, contacted a sales representative for Semillas, Jorge Machado, to discuss acquiring tomato seeds with resistance to Tomato Spotted Wilt Virus (" TSWV" ). (Def.'s Mot., Decl. of Brian K. Tomkiel (" Tomkiel Decl." ), Ex. 2 (" Ybarguen Dep." ) 66:9-25.) When Machado met with Ybarguen to discuss acquiring seeds, Machado wore a shirt and hat with Harris Moran's logo, drove a car with Harris Moran's logo on its side, and had a business card with Harris Moran's logo on it. (Ybarguen Decl. ¶ 8; Tomkiel Supp. Decl. ¶ 4, Ex. 3 [Machado Business Card].) However, this business card also lists Machado's employer as " Semillas Harris Moran Mexicana S.A. de C.V." ( Id. )

Machado recommended the Moctezuma seed because it was " armored" against diseases, including TSWV. (Pl.'s Opp'n, Decl. of Mario Soto (" Soto Decl." ) ¶ 15.) Prior to deciding which seeds to purchase for its 2010 crop cycle, Mario Soto, Baja Best's production manager overseeing tomato crop production at the time, reviewed a 2009 article advertising Espartaco and Moctezuma seed as being resistant to TSWV in an agricultural magazine entitled Productores de Hortilizas. (Tomkiel Decl., Ex. 9 (" Soto Dep." ) 83:10-84:1, 91:8-94:2.)

B. Levels of Resistance

As alleged by Baja Best in the FAC, Harris Moran identifies four different levels of resistance of plant varieties to pest or pathogen infection: 1) Immunity (" I" ); Resistance (" R" ); Intermediate Resistance (" IR" ); and Susceptible (" S" ). The four levels are defined as follows:

Immunity. Plant varieties which are not subject to attack or infection by a specific pest/pathogen are considered immune.
Resistance. Not as strong as immunity; two levels of resistance of defined.
Resistance (R): plant varieties that restrict the growth and development of the specific pest or pathogen under normal pest or pathogen attack when compared to susceptible varieties. These plant varieties can exhibit some

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symptoms or damage under heavy pest or pathogen pressure. Plant varieties with Resistance (R) are not immune to the pest/pathogen.
Intermediate Resistance (IR): plant varieties that restrict the growth and development of the specified pest/pathogen, but may exhibit a greater range of symptoms or damage compared to resistant varieties. Intermediate resistance plant varieties will usually show less severe symptoms or damage than susceptible plant varieties when grown under similar environmental conditions and/or pest/pathogen pressure, but may have heavy damage under heavy pressure. Plant varieties with Intermediate Resistance (IR) are not immune to the pest/pathogen.
Susceptible is defined as the inability of a plant variety to restrict the growth and development of a specified pest/pathogen. Plant varieties that are susceptible will show damage when infected and are more likely to have heavy damage under moderate levels of pest/pathogen pressure.

(FAC ¶ ¶ 8-9.)

C. Seed Trials

Machado provided samples of a number of different varieties of Harris Moran's seed. (Ybarguen Dep. 82:4-25.) Baja Best's personnel, including Soto, conducted a field trial on four of Harris Moran's seed varieties, Ramses, Cuauhtemoc, Espartaco, and Mectezuma, in addition to seeds from other companies. (Soto Dep. 62:8-63:4, 66:10-67:22, 68:11-69:3.) The Moctezuma, Espartaco, and Cuauhtemoc varieties did not show any problems with viral diseases during the trial. ( Id. at 62:11-63:4, 66:13-67:22, 68:13-69:3.)

D. Seed Orders

Baja Best placed three total orders for Harris Moran seed with Semillas. The first, for Espartacto and Cuahtemoc seeds, was in late 2009; Moctezuma was unavailable. (Soto Dep. 78:11-14, 79:2-10, 80:13-81:3.; Ybarguen Dep. 103:2-12.) A second order, for Moctezuma seeds, was placed in 2010. (Soto Dep. 280:2-5, 287:23-288:6.) These 2010 commercial crops were ultimately successful. (Ybarguen Dep. 104:6-105:7.)

In late November 2010, Baja Best placed a third order with Semillas through Machado for the seed at issue in this action. (Ybarguen Decl. ¶ 3.) The order consisted of the Moctezuma and Espartaco varieties with a total cost of $90,177.00. ( Id. ¶ 3.) Baja Best paid for the seeds prior to delivery. ( Id. ¶ 10.)

The invoices for all three orders contained both the name and company information for Semillas and Harris Moran's logo. (Ybarguen Decl. ¶ 9, Ex 2 [Copy of Invoice].) A booklet containing warranty disclaimers and a limitation of liability were attached to the seed packets for all three orders. (Sheets Decl. ¶ 6.)

E. Crop Treatment

By December 2010, the seeds at issue in this action were in Baja Best's possession and Baja Best began preparing the seeds for cultivation. (Soto Dep. 215:1-218:23; 219:18-221:4.) Baja Best's preparations included a hot water treatment process requiring the seed to soak in hot water maintained at a specific temperature for a specific period of time. (Sheets Supp. Decl. ¶ 7.) Semillas employee Christian Pulido witnessed Baja Best's personnel, Soto and Zoilo Haro, perform the hot water treatment upon the seed at issue. (Tomkiel Supp. Decl., Ex. 7 (" Haro Dep." ) 75:17-25.) Pulido informed Soto and Haro that the treatment would void any guarantees

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relating to the seed because Harris Moran would not take responsibility for any seed subjected to treatments other than those Harris Moran provided itself. (Tomkiel Supp. Decl., Ex. 8 (" Pulido Dep." ) 54:18-55:12; Soto Dep. 220:6-221:4.)

F. Crop

The crop showed signs of disease early on that spread rapidly. (Ybarguen Decl. ¶ 19.) In response to Baja Best's complaints about the crop, Machado and Pulido visited the fields numerous times between January 2011 and April 2011 and collected information about the crop. (Pulido Dep. 71:2-12, 122:16-25.) Samples were taken for testing, although the results of the testing were not provided to Baja Best. (Ybarguen Decl. ¶ 20.) Ultimately, Baja Best lost close to 90% of its 2011 tomato crop to TSWV. ( Id. ¶ 23.) Baja Best alleges damages reaching approximately one million dollars. ( Id. )

Baja Best filed its First Amended Complaint against Harris Moran, alleging: (1) breach of contract; (2) breach of express warranty; (3) breach of implied warranty of merchantability; (4) breach of implied warranty of fitness for a particular purpose; (5) products liability; (6) negligence; (7) negligent misrepresentation; and (8) fraud.[2]

LEGAL STANDARD

Summary judgment is appropriate when " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). " Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . . The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). " [W]hen the parties submit cross-motions for summary judgment, each motion must be considered on its own merits." Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (internal quotation marks omitted).

A moving party bears the initial burden of showing there are no genuine issues of material fact. Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007) (citing T.W. Elec. Serv., Inc. v. P. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987)). The moving party can do so by negating an essential element of the non-moving party's case, or by showing that the non-moving party failed to make a showing sufficient to establish an element essential to that party's case, and on which the party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 91 ...


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