Summary of a Recent
Judicial Development in
Production Contracts

Legal and Equitable Claims Under Production Contract

Eric Pendergrass
National AgLaw Center Graduate Assistant

In Tyson Breeders, Inc. v. Harrison, 940 So.2d 230, the Supreme Court of Mississippi held that the circuit court, rather than the chancery court, had jurisdiction over a farmer's claims against a production company and overturned an order granting summary judgment on the issue of liability.

The farmer and the production company were engaged in a Hatching Egg Production (HEP) contract set to expire on December 31, 2002. Id. at 231. Nearly a year before its expiration, employees of the production company entered onto the farmer's property to remove the hens and did not provide the farmer with additional birds for the remainder of the contract term. Id. Shortly before the agreement was set to expire, the farmer filed a complaint in chancery court alleging that the production company breached its HEP contract. Id. The production company sought to remove the case to circuit court. Id. at 232.

With its initial decision relating to the production company's request to transfer, the chancellor ruled he would maintain jurisdiction over claims for specific performance and related equitable matters but send the legal claims to the circuit court for a determination of damages by a jury following an entry of summary judgment on the issue of liability for breach of contract. Id. However, the supreme court found that the facts of this case, including the near-expiration of the period for performance and readily-available legal remedies of damages, did not suggest the equitable remedy of specific performance. Id. at 233. Also, general issues of material fact still existed as to the farmer's performance under the contract, making the partial summary judgment inappropriate. Id.

While the chancery courts had maintained jurisdiction over breach of contract claims in the past, the Mississippi Supreme Court held that equitable claims are more appropriately brought in circuit court when they are related to a contractual relationship or other claims tied to questions of law. Id. When such a question is a mixed question of law and equity, it is more appropriate for a circuit court to hear equity claims, with its general jurisdiction, than it is for chancery court to hear law claims under its limited jurisdiction. Id. Meanwhile, monetary damages are the only adequate remedy at law for the farmer's breach of contract claim, which confers jurisdiction exclusively upon the circuit court. Id. Furthermore, the chancery court's entry of summary judgment deprived the production company of its right to a jury trial because the plaintiffs' claims involved questions of law, equity, and punitive damages. Id. Without jurisdiction and with the remaining questions of fact, the chancery court's ruling that granted summary judgment on the issue of liability was invalid and necessitated a remand to circuit court. Id.

The case was decided on October 19, 2006; this summary was posted Feb. 21, 2006.