Summary of a Recent
Judicial Development in
Production Contracts

Chicken Grower's Claims for Violations of Louisiana's
Unfair Trade Practices Act Deemed Untimely

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Miller v. Conagra, Inc., 991 So. 2d. 445, 2008 WL 4118907 (La. Sept. 8, 2008), the Supreme Court of Louisiana affirmed the Louisiana district court's award of general damages against Conagra, Inc., but reversed the judgment insofar as it found the corporation liable for violating Louisiana's Unfair Trade Practices Act, La. Rev. Stat. Ann. § 51:1401 et seq. The plaintiff chicken grower brought suit against Conagra for damages that arose from the corporation's breach of a broiler production agreement, which the grower claimed caused him to file for bankruptcy. Additionally, the grower sought treble damages and attorney's fees pursuant to corporation's alleged violation of Louisiana's Unfair Trade Practices Act.

Background

On July 23, 1993, Miller and Conagra Inc. entered into a production contract wherein the corporation agreed to provide chicks for Miller to raise. Id. at *2. In addition to the chicks, the corporation supplied Miller with feed and medicine for use exclusively on the corporation's chickens. Id. The agreement was for ten years and could be terminated by either party in writing. Id. On December 21, 1993, the corporation accused Miller of giving its chicken feed to Miller's hogs. Id. In response, the corporation gave Miller the option to either terminate the contract or face criminal charges. Id. Miller took the former option, but the termination agreement was never placed in writing. Id.

Allegedly as a result of the termination, Miller filed a Chapter 7 bankruptcy petition on February 24, 1997, which discharged his personal liabilities. Id. at *3. On July 22, 1998, Miller sued the corporation for damages resulting from its alleged breach of the production contract. Id. On March 6, 2000, Miller amended his petition adding claims against the corporation for violating the Louisiana Unfair Trade Practices Act (LUTPA). Id. Through his LUTPA claims, Miller sought treble damages and attorney's fees. Id. Six days after the trial had concluded, but before judgment was rendered, the bankruptcy trustee moved the bankruptcy court to reopen Miller's previously closed bankruptcy proceeding to add Miller's claims against the corporation to the bankruptcy estate. Id. at *3-4.

On September 14, 2005, the corporation removed the production contract litigation from Louisiana district court to bankruptcy court, arguing that it was a core proceeding related to Miller's bankruptcy. Id. at *5. The bankruptcy court disagreed with the corporation and remanded the case back to state court. Id. Subsequently, the state court rendered judgment for Miller, finding that the corporation's conduct amounted to a bad faith breach of the production contract. Id. at *7. The court held that Miller was entitled to all damages that were a direct consequence of the corporation's failure to perform, non-pecuniary damages, and treble damages and attorney's fees pursuant to LUTPA. Id. at *7-8. The corporation unsuccessfully appealed the trial court's judgment to the court of appeals. Id. at *12. Thereafter, the corporation sought a writ of certiorari from the Supreme Court of Louisiana, which was granted. Id.

Arguments

In its brief seeking a writ of certiorari, the corporation alleged that the lower court erred by not barring Miller's claims for lack of standing and lack of subject matter jurisdiction. Id. at *12. Additionally, the corporation argued that Miller's LUTPA claims were untimely. Id. at *12-13.

Miller argued that he had constitutional standing, that the court possessed appropriate subject matter jurisdiction, and that his LUTPA claims were timely filed because the corporation's breach of the production contract was a continuing tort. Id. at *27-28. The continuing trespass argument stemmed from the fact that the production contract was never terminated in writing. Id.

Analysis and Holdings

Because the corporation abandoned its standing/no-right-of-action arguments at the trial level, the court held that it could not reassert them in the instant action. Id. at *24. The court viewed the corporation's lack of subject matter jurisdiction argument as a mere repackaging of the standing/no-right-of-action argument as opposed to a valid contest to the court's jurisdiction over the subject. Id. at *24-25.

The court, however, did not agree with Miller's continuing tort argument. Id. at *28. It held that a continuing tort "is occasioned by unlawful acts, not the continuation of the ill effects of an original, wrongful act." Id. Although the corporation's actions clearly violated LUTPA, Miller only had the right pursue the action for one year. Id. at *29. The court held that the corporation's continual denial of LUTPA liability after ending their business relationship did not amount to a continuing tort as Miller asserted, and therefore, Miller's LUTPA claim was untimely. Id.

The case was decided on September 8, 2008.