Summary of a Recent
Judicial Development in
Animal Feeding Operations

Causation too Speculative to Award Feedlot Operator Summary
Judgment in Negligent Environmental Consulting Action

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In D B Feedyards, Inc. v. Environmental Sciences, Inc., 745 N.W.2d 593 (Ne. Ct. App. Mar. 4, 2008), the Court of Appeals for the State of Nebraska affirmed in part, reversed in part, and remanded the district court's grant of summary judgment in favor of feedlot operator's negligence claim against a consulting service. The Court of Appeals held that the consulting service did not voluntarily satisfy the trial court's judgment, and thus did not moot its appeal; the consulting service breached its duty of care to feedlot operator by not timely preparing and filing a livestock waste control facility permit, but genuine issues of material fact related to proximate causation precluded summary judgment.

Background

D B Feedyards, a feedlot operator, retained Environmental Sciences Inc., a consultant, to prepare a livestock waste control facility permit in order for the feedlot operator to construct and operate a licensed waste control facility. Id. at 598. Nebraska's Department of Environmental Quality (DEQ) required the facility permit application to be filed by December 1, 2002. Id. The consultant missed multiple deadlines established by DEQ for submission of the facility permit application. Id. Even the late applications the consultant filed with the DEQ were found to be incomplete. Id. The consultant never submitted a complete facility application to DEQ for the feedlot operator. Id.

On December 27, 2004, the United States Environmental Protection Agency (EPA) issued to the feedlot operator a compliance order and notice of violations of the federal Clean Water Act. Id. at 599. EPA threatened the feedlot operator with fines on the same day that DEQ notified the feedlot operator that its permit application was incomplete. Id. EPA fined the feedlot operator for failure to submit a timely permit application to DEQ. Id. The feedlot operator settled with EPA and incurred attorney's fees. Id. After the EPA settlement, the feedlot operator severed its ties with the consultant, hired a new consultant, and paid an additional application fee for the incomplete application submitted by the original consultant. Id.

Arguments

The feedlot operator alleged claims for breach of contract, negligence, breach of warranties, and alleged damages of $207,300 for failure to submit a timely and complete permit to construct and operate a licensed waste control facility. Id. at 598-99.

In response, the consultant affirmatively alleged that it exercised "a reasonable degree of knowledge and skill, the same ordinarily possessed by others engaged in the business or trade," and that any claim of damage was the product of actions of others not subject to the direct control of the consultant. Id. at 598. The consultant alleged that the EPA sanctions were unrelated to the services or contractual obligations of the consultant, and that the sole and proximate cause of any damages suffered by the feedlot operator was the result of its own negligence or negligence of other consultants to the feedlot operator. Id.

Analysis and Holdings

"In order to prevail in a negligence action, a plaintiff must establish the defendant's duty to protect the plaintiff from injury, a failure to discharge that duty, and damages proximately caused by the failure to discharge that duty." Id. at 606 (quoting Nat'l Am. Ins. Co. v. Constructors Bonding Co., 719 N.W.2d 297 (2006)). The district court determined that the consultant owed the feedlot operator a duty to perform its services as a reasonable professional environmental consultant with specialized knowledge, skill, training and experience, and that the consultant failed to meet this duty of care by failing to communicate in a timely manner with DEQ on behalf of the feedlot operator, failing to comply with DEQ regulations to ensure that the application filed late was at least complete, and failing to file a complete application to DEQ during its employment. Id. The court found no error in the district court findings. Id.

The court concluded that the entry of summary judgment was appropriate with regard to the district court's findings that the consultant breached the duty of care owed to the feedlot operator; however, the court held that there were disputed questions of material fact related to the issue of causation which precluded summary judgment on the issue of damages. Id. at 607-08. The burden of tying the negligence to the damages claimed remained on the feedlot operator even though the consultant was guilty of negligence as a matter of law. Id. at 608. Upon further review of the evidence, the court concluded that the consultant produced sufficient evidence to show the existence of a material issue of fact concerning the issue of causation. Id. Specifically, the court stated that the EPA documents showed that the failure to submit a proper permit application was one of the factors that precipitated the action-in other words, there was a question of fact as to whether the consultant's failure to submit the permit was a proximate cause of all the damages resulting from the EPA enforcement action. Id. at 607-08.

The case was decided on March 4, 2008.