Helena Agri-Enterprises, LLC, f/k/a Helena Chemical Company v. Robert M. Jones, Mark A. Jones, and Jones Farms

FILED
May 22 2020, 7:18 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES
Karen T. Moses Aaron D. Grant
Kevin J. Mitchell John C. Trimble
Sarah K. Noack A. Richard M. Blaiklock
Faegre Baker Daniels LLP Lewis Wagner, LLP
Fort Wayne, Indiana Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Helena Agri-Enterprises, LLC, May 22, 2020
f/k/a Helena Chemical Court of Appeals Case No.
Company, 19A-PL-2119
Appellant-Plaintiff/Counter- Appeal from the Harrison Circuit
Defendant, Court
The Honorable John T. Evans,
v. Judge
Trial Court Cause No.
Robert M. Jones, Mark A. Jones, 31C01-1512-PL-28
and Jones Farms,
Appellees-Defendants/Counter-
Claimants.
Brown, Judge.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 1 of 40
[1] Helena Agri-Enterprises, LLC (“Helena”) appeals the trial court’s judgment in
favor of Robert M. Jones, Mark A. Jones, and Jones Farms (the “Farm” and,
collectively with Robert and Mark, “Jones Farms”). Helena raises three issues
which we consolidate as:
I. Whether the trial court abused its discretion in admitting certain
testimony concerning damages and test results; and
II. Whether the trial court erred in entering judgment for damages in the
amount awarded by the jury in favor of Jones Farms.
We affirm.
Facts and Procedural History
A. Background
1. Jones Farms and INW0412 Wheat
[2] Brothers Robert and Mark operate the Farm, which their father started in
Bradford, Indiana, and which grew and sold seed wheat to the Scott Seed
Company starting in the 1960s and have produced seed wheat since then for
Voris Seeds and Limagrain. 1 In the early 2000s, Robert and Mark approached
the Indiana Crop Improvement Association (“ICIA”), a seed-certifying agency
that has its own laboratory and certifies all plants, seeds and plant parts, about
developing seed wheat. The ICIA directed them to Ag Alumni Seed (“Ag
1
Seed wheat, or wheat produced to sell its seeds to other farms, involves additional management and
requires “a lot more steps” than grain elevator wheat in order to generate quality product at higher yields.
Transcript Volume II at 195.
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Alumni”), an organization that began by taking “a little bit of seeds from the
breeders at Purdue and mak[ing] a lot of seed with it and then supply[ing] that
to growers” and which continued to be involved until the present day in the
development of new wheat varieties. Transcript Volume III at 122.
[3] For about three years, Robert and Mark traveled to Ag Alumni’s Evansville,
Indiana location, where they learned management techniques to increase grain
seed yield and other desirable qualities, including test weight. 2 In 2006, Robert
licensed from Ag Alumni a Purdue wheat variety by the name of INW0412,
which was bred to be taller and had “met the need” in southern Indiana –
where it had “really found a home” and “worked much better than it did in
other areas” – for wheat with “a little bit more straw.” 3 Id. at 129. Ag Alumni
had conducted performance trials of INW0412, and it yielded an 89.4 bushel
per acre average across five locations in 2004, and a 102 bushel per acre average
2
Test weight is the measure of the density of the grain, or weight per unit volume. Robert testified that test
weight was the main desirable quality in the wheat business and was necessary to “compete against the giants”
in the industry. Transcript Volume III at 169.
3
According to Gary Duncan, who advised Ag Alumni and helped release the wheat variety, INW0412 was a
“great yielder,” averaged in height at “39 inches” whereas typical wheat height was “30 to 36” with most in
the “35, 36 range,” and produced more straw, which was positive “[e]specially if you’re wanting it for hay.”
Exhibits Volume I at 28, 33-34. Duncan also testified a “good quality hay [was] very, very important” to
Kentucky horse breeders. Id. at 33. Jay Hulbert, the President and CEO of Ag Alumni, indicated that
additional straw was desirable for baling, a fact which was “particularly true in horse country.” Transcript
Volume III at 129.
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across nine locations in 2005, with one location in north central Indiana
yielding 142 bushels per acre. 4
[4] Jones Farms tested INW0412, conducted intensive management in strips to
understand how to handle and take it to yield, and discovered what was needed
to “go into th[e] project full bore.” 5 Id. at 171. Ag Alumni discontinued
producing INW0412 in 2012 and gave Robert the sole authorization to continue
producing and to maintain seed of that variety for sale, and Jones Farms stopped
paying royalties to Ag Alumni for the wheat seed. From 2011 to 2013, Jones
Farms sold 1,107 units of INW0412 at a minimum of $21.00 each. 6
2. The Note and the Credit Agreement
[5] In June 2013, Jones Farms executed a Promissory Note (the “Note”), which
indicated a maturity date of “6/10/2014” and that Jones Farms promised to
pay Helena, an agricultural formulator and distributor which offered chemical
products and application services, provided loans, and extended credit, a
principal amount of $1,500,000, and signed a Credit Sales and Services
Agreement (the “Credit Agreement”). Exhibits Volume I at 5. Both the Note
4
At the jury trial, the court admitted an exhibit attached to the certified transcript of the deposition of Gary
Duncan which is titled “INW0412” and indicates, under the heading “Performance,” a “5 Location Avg.
2004” of 89.4 bu/ac, a “9 Location Avg – 2005” of 102.0 bu/ac, and “142 bu/ac vs. 25R47 at132 [sic] in
North Central Indiana.” Exhibits Volume III at 128.
5
At trial, Robert indicated intense management was conducted in strips when testing, instead of across the
entire field, “so that you can see a difference and take it to yield.” Transcript Volume III at 170.
6
In the seed business, a farmer sells “50 pounds of wheat in a seed unit.” Transcript Volume II at 195.
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and the Credit Agreement were “standard forms used by Helena,” Robert was
unable to negotiate the terms of the credit arrangement, and according to the
trial testimony of Wes Belleville, Helena’s director of credit, Helena invoiced
products sales under the Credit Agreement and “paid through” the Note any
invoices that resulted. Transcript Volume II at 133, 156. The Credit
Agreement, which provided it would be governed by Tennessee law, included a
limitations provision stating in part that “in no event shall damages or any
other recovery of any kind against Helena . . . exceed the price of the specific
goods or services which cause the alleged loss, damage, injury or other claim.”
Exhibits Volume I at 7 (capitalization omitted).
[6] At some point, Jones Farms also contracted with Helena to spray its fields with
a fungicide to control head scab, an insecticide to kill insects that would
damage the wheat, and “Coron,” a foliar nitrogen that would help the plant
grow more wheat. Transcript Volume II at 118.
3. 2014 Harvest and Spraying Incident
[7] In Fall 2013, Gary Geswein of Geswein Farms, LLC, purchased wheat seed
from Jones Farms, including 60 units of the treated INW0412 at a price of $27.50
per unit. During the same season, using quality seed maintained from previous
harvests, Jones Farms planted 284 acres of INW0412 wheat “with intentions of a
seed crop” for harvest the following summer. Transcript Volume III at 97.
Robert visited the fields in early May 2014 and, at “several areas in the field,”
placed screwdrivers twelve inches apart, took “those plants” and pulled them out,
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and counted the number of “tillers there are in that area” and the number of
seeds that “would be in those spots.” 7 Id. at 175. At that point in time, he
calculated a yield “at or around 110 bushel [sic] an acre” and lowered the
estimate, “as we’d always done in the years past,” to 101 bushels an acre. Id.
[8] “[O]ne or two days” later, a spray service provider hired by Helena sprayed the
wheat seed crop using a solution that contained herbicides, or chemicals that
kill plants, in addition to the products for which Jones Farms had contracted. 8
Id. at 175. Upon noticing damage to the crop, Robert notified Helena
immediately, and Helena dispatched an agronomist in early June to investigate.
Robert was informed not to harvest the wheat which had been sprayed, and
wheat samples shipped to SD Ag Labs indicated contamination at levels “likely
high enough to cause crop injury.” Id. at 61. Helena charged Jones Farms for
the solution and the application.
[9] “[V]ery desperate” to locate INW0412 seeds, Robert contacted Ag Alum, which
advised that no more seeds were available, and Jones Farms attempted “no less
than ten more strains of wheat” in an effort to identify other wheat crops which
would “serve [it] well” in returning to the wheat seed business. Id. at 200. After
attorneys contacted Ag Alum regarding the instant litigation, it located in early
7
After testifying he counted “how many tillers there are in that area,” Roberts stated: “And then I count how
many – that would be how many heads that would be.” Transcript Volume III at 175.
8
The spraying service provider used by Helena had been spraying herbicides the previous day, did not
properly clean its tanks, and a “small residue of those chemicals left over” was “part [sic] sprayed on the
wheat crop at issue in this case.” Transcript Volume III at 65.
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2017 a “couple of” small, nine-year-old samples of INW0412 in the back of a
cold storage room and delivered “a very small amount of seed” to ICIA’s chief
operating officer, Joe Deford, to conduct germination tests. Id. at 130-131.
[10] Meanwhile, on August 29, 2014, Helena area manager Brian Mattingly sent
Robert an email message which stated in part:
2. 2014 Past due amount – We need to confirm when 2014
inputs will be paid. Is your banker going to cover the 2013 and
2014 balances in the operating line they are talking to Wes about?
Roughly $2.4 million?
*****
4. Wheat complaint – We cannot settle anything until the
insurance company has all of the information they need for yield
and price. We cannot do anything until we see the settlement
number for the insurance adjuster. Please submit this
information as soon as possible so we can proceed after the
insurance company submits the settlement.
Exhibits Volume I at 123. Robert responded in a message which stated: “On
item . . . #2 is Helena finance for 2014 as we discussed yesterday . . . #4 there is
no issue with us on settlement we have been waiting patiently for someone to
notify us period you witnessed that yesterday in office.” Id. The following day,
Mattingly sent a message that stated in part: “2. The way I understand it the
2014 inputs for this year’s crop need[] to be paid before we commit to financing
the 2015 inputs (starting fall business). Wes can confirm.” Id. Belleville and
Jones Farms communicated again in January and February 2015, with Jones
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Farms mentioning it was “working with another lender for our outstanding
2013 and 2014 Acct. Balances Started 1-23-15.” Id. at 125.
B. Procedural History
[11] On December 1, 2015, Helena filed a complaint against Jones Farms, which
sought recovery, plus interest and attorney fees, for breach of promissory note
and breach of credit sales and services agreement and alleged: Jones Farms
breached the Note by failing to pay a principal amount of $1,462,569.77 which
was owed by June 10, 2014; and that, as of October 23, 2015, Helena extended
credit pursuant to the Credit Agreement in the principal amount of
$1,306,974.10 plus accrued unpaid interest, an amount Jones Farms failed to
timely pay. Jones Farms filed an amended answer stating the alleged principal
amount under the Note was incorrect, “as amounts were drawn for erroneous
charges that [Helena] previously agreed were billed in error and did not
correct”; and the alleged principal amount under the Credit Agreement was
incorrect, as it reflected “erroneous charges billed to Defendant that [Helena]
agreed were billed in error and did not correct.” Appellant’s Appendix Volume
II at 34. Jones Farms also filed an amended counterclaim which sought
recovery for breach of contract, negligence, setoff, and a recoupment for any
amount owed to Helena, and demanded attorney fees, costs, and an “amount
reasonable to compensate” for damages to the 2014 seed wheat crop, the
subsequently planted 2014 corn crop, and their ability to obtain appropriate
crop insurance in the future, and for the “total destruction” of the specialty
INW0412 wheat strain for sales to Jones Farms’s future customers. Id. at 40.
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[12] On February 10, 2017, Helena filed a motion for partial summary judgment on
its claims. An attached memorandum stated that, as of December 15, 2016,
Jones Farms was indebted under the Note for a total amount of $1,702,868.40,
which reflected the principal and accrued unpaid interest in the amount of
$240,298.63, and under the Credit Agreement in the principal amount of
$1,063,072.56, plus interest in the amount of $483,092.89, for a total of
$1,546,165.45. Helena designated: an affidavit by Belleville, Helena’s credit
manager at the time, which indicated Jones Farms’s indebtedness under the
Note and Credit Agreement and stated that Jones Farms took credit advances
under the Credit Agreement from June 12, 2013, to June 10, 2014, in the
principal amount of $1,063,072.56; and a portion of Jones Farms’s answers to
Helena’s first set of interrogatories in which Jones Farms answered that any
indebtedness Helena claimed to be owed was more than offset by the damages
Jones Farms suffered from the contaminated application.
[13] On March 13, 2017, Jones Farms filed a response in opposition to Helena’s
motion for partial summary judgment and designated a report Dr. Stan Smith
(“Dr. Smith”) had prepared in response to being asked to calculate damages
resulting from the May 2014 spraying of the INW0412 wheat seed crop (“First
Report”). Dated March 13, 2017, the First Report listed information he
reviewed, including “(9) List of Jones Farms’[s] Customers” and “(11) Jones
Farms Statement of Wheat Seed Sales August 2, 2013 to September 22, 2013,”
and indicated Dr. Smith had valued the loss of the 2014 INW0412 seed crop by
calculating the expected net revenues from the crop minus the value of the non-
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incurred expenses, 9 and valued the loss of the INW0412 Seed Brand by
calculating the loss the same as one would the loss of a business. 10 Appellant’s
Appendix Volume II at 188. That same day, the court stayed Helena’s motion
pending resolution of discovery issues.
9
Specifically, the First Report stated:
Based on Jones Farms pre-ordered sales of 35,765 units of INW0412 wheat seed at a price of
$25.50 per unit, the expected gross revenues in 2014 are $912,008. For the 300 acres under
cultivation for seed wheat, Mr. Jones reports that his 2014 costs were $428.86 per acre, for a
total of $128,658. . . . At an average handling and bagging cost of $4 per unit, the total expected
handling and bagging costs for the 35,765 units of INW0412 is $143,060. The costs of
production for the INW0412 wheat seed are illustrated at $271,718, for expected net revenues of
$640,290 for 35,765 pre-sold units of seed. Mr. Jones reports that for the 2014 INW0412 seed
crop, the only expenses not incurred prior to the destruction of the crop were the harvesting,
handling, cleaning, and processing expenses. He estimates that the harvesting cost of the
INW0412 seed would have been $25.00 per acre, which is $7,500 for the 300 acres under
INW0412 cultivation. Based on the handling and bagging costs illustrated above at $143,060
for the 2014 crop, the total non-incurred costs for Jones Farms in 2014 were $150,560 after the
destruction of the INW0412 crop. For the total expected net revenues of $640,290, and non-
incurred costs of $150,560, the net loss for Jones Farms in 2014 is $489,730.
Appellant’s Appendix Volume II at 190.
10
Specifically, the First Report stated:
[I]n particular, I calculate[d] the cash flows to an investor from the net revenues of the INW0412.
The net revenues for INW0412 are estimated at $640,290 in year 2014 dollars, which I grow at the
rate of inflation of 0.73 percent in 2015, and an estimated rate of inflation of 2.0 percent in 2016
through 2018. The rate of inflation is based on the Consumer Price Index (CPI-U). . . .
From an estimated date of trial or resolution of January 1, 2018, the future estimated losses are
discounted to a net present value. The discount rate is determined using the buildup method for
the cost of capital as described in Duff & Phelps 2016 Valuation Handbook: Guide to Cost of
Capital. . . . Assuming a long-term average growth rate of 2.0 percent for CPI growth, net
discount rate is estimated a 17.80%. . . .
Tables 1 through 3 show the loss of earnings for Jones Farms from the destruction of the
INW0412 seed from 2014 over the next 25 years. The net loss of earnings is estimated at
$6,376,634 through year 2038, but the losses through any year may be calculated based on table 3.
For example, if Mr. Jones reports that his ongoing seed testing process could deliver a replacement
seed to market in year 2021, then the loss would be the cumulative loss of earnings through 2020
of $3,969,858. If Jones Farms is unable to deliver a seed to market until year 2025, then the loss
would be the cumulative loss of earnings through 2024 of $5,150,023.
Appellant’s Appendix Volume II at 190-191.
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[14] On April 13, 2017, Helena filed a motion for summary judgment on Jones
Farms’s counterclaims that stated Jones Farms sought damages in an amount
in excess of $3,000,000 and the Note and Credit Agreement contained a
limitation of liability and limitation of remedy barring the relief sought. The
court denied the motion in an order which found issues of material fact existed
which impacted whether the liability provision applied to Jones Farms’s claims.
[15] On March 20, 2019, Helena deposed Dr. Smith, and filed on July 23, 2019, three
motions in limine. 11 The first motion sought to exclude damages testimony,
including “any and all” evidence, exhibits, testimony, references to testimony, or
argument “in any way” which related to alleged calculated damages “based on
the anticipated sale of 35,765 units of seed wheat,” and in doing so, pointed to
the First Report and alleged Jones Farms’s “entire damages theory” hinged on
presales. Id. at 54-55. The second motion sought to exclude Dr. Smith’s
testimony on the topic of damages, alleged his opinions were based on
inadmissible evidence and not properly the subject of expert opinion, and
attached excerpts from his March 20, 2019 deposition. The third motion sought
to exclude the testimony of ICIA chief operating officer, Joe Deford, regarding a
germination test he performed on INW0412 seeds, and it stated the test was not
conducted pursuant to industry standards, its results were not reliable, and that
Deford should be barred from testifying because Jones Farms failed to disclose
11
On the same day Helena filed seven motions in limine in total concerning testimony and evidence, four of
which are not the subject of this appeal.
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him as an expert witness. To the third motion, Helena attached Jones Farms’s
April 3, 2019 Fifth Supplement to Answers to its First Set of Interrogatories in
which Jones Farms identified, as a person believed to have knowledge of any
facts relating to the litigation, Joe Deford, the “Chief Operating Officer of [ICIA]
. . . who read the germination tests performed on the INW0412 treated and
untreated seeds provided by [Ag Alum] in March 2017.” Id. at 157.
[16] On July 31, 2019, the court held a pretrial conference and heard argument on
Helena’s motions in limine. On August 8, 2019, it issued an order which:
granted the first motion concerning presold wheat testimony “such that Jones
[Farms] may not use terms such as ‘pre-sold’ or ‘pre-ordered’ without first
establishing that said wheat was sold or ordered prior to loss”; denied the
second motion concerning Dr. Smith’s testimony and stated that, “[h]owever,
regarding lost profits, [the] damages claim may include lost profits only so long
as Jones [Farms] presents evidence sufficient to allow the jury to estimate the
amount with a reasonable degree of certainty and exactness and not simply
conjecture or speculation”; and denied the third motion concerning Deford’s
testimony. Id. at 177.
[17] On August 23, 2019, Helena filed an objection and motion to strike a
supplement to discovery, which stated Jones Farms had filed an amended
expert report for Dr. Smith (“Second Report”) at the July 31, 2019 pretrial
conference that, it alleged, contained an entirely new methodology, different
monetary damages, and a new opinion not found in the First Report. It also
stated that, on August 22, 2019, Jones Farms had filed a Second Amended
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 12 of 40
Report (“Third Report”), which presented different damages figures and
calculations from the previous two reports, and Dr. Smith appeared to argue in
the Third Report that “the value of the wheat crop is based on anticipated
‘market price’ whereas he previously testified that the value was determined
based on pre-sales to established customers.” Id. at 182. Helena attached
copies of all three reports.
[18] On September 3, 2019, a five-day jury trial began, and after hearing argument
outside the presence of the jury on Dr. Smith’s reports, the court denied
Helena’s objection and motion to strike. In the jury’s presence, Robert testified
about the unique management required by a wheat seed crop like INW0412.
He testified Jones Farms had fields of INW0412 which produced a hundred
bushels or more per acre, his different treatment of the 284 acres of INW0412
compared with previous wheat crops was for the purpose of “exceed[ing] a
hundred bushels an acre,” and he was “on track” to do that with the 284 acres.
Transcript Volume IV at 19. He indicated he visited the fields “one or two days
before Helena sprayed with the aerial applicator” in May 2014 and stated that,
at that time, he calculated the yield at or around 110 bushels, which he
subsequently lowered to 101 bushels, “for benefit of the doubt,” by taking a
“percentage off . . . as we’d always done in years past.” Transcript Volume III
at 174-175. He indicated he was reasonably confident he could produce 101
bushels per acre and, when asked to use that figure to explain the level of
production he reasonably expected from the 284 acres, he answered: “It would
be 32,700 units.” Id. at 176.
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[19] Phil Needham, who worked in the wheat seed sector and owned an agriculture
agronomy consulting firm that advised globally and on wheat production,
testified “you should be able to raise 100 bushel wheat most years if it’s
intensively managed with the inputs that are associated with intensive wheat
production.” Transcript Volume II at 198. During cross-examination, he
indicated a farm could adjust yields within reason and add ten or twenty
bushels per acre of wheat “just by improving the management.” Id. at 229.
When asked about Jones Farms’s production, Needham stated he had worked
with producers that have raised hundred-bushel wheat and “again the climate is
similar, the soils are similar, the rainfall’s similar[,] the temperatures, everything
you can think about, I’m telling you that a hundred-bushel wheat is extremely
practical and possible most years.” Id.
[20] The court admitted as Helena’s Exhibit 15 a list Robert had provided during
discovery of farmers he claimed were going to buy wheat seed. During cross-
examination, Robert agreed he “had nobody” who was a guaranteed purchaser,
and the following exchange occurred:
Q . . . . So none of the people that are listed here – for example,
McAfee, who was going to buy a couple thousand bushels,
according to you – 3,000, according to you, McAfee Brothers,
they weren’t going to buy that, were they?
A No.
Q Okay. So you have absolutely no proof that anybody was
going to buy any of the 2014 –
A No.
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Transcript Volume IV at 11-12. He indicated during recross-examination he
had good prospects for the seed on the list and “many others” in Jones Farms’s
customer list base. Id. at 20. During his testimony, Geswein of Geswein
Farms, LLC, testified he bought treated wheat seed from Jones Farms in Fall
2013, including 60 units at $27.50 per unit, in 2014 his INW0412 crop did very
well, he was pleased with the quality of the INW0412, and that he would have
bought it in the future.
[21] Regarding wheat seed price and costs, Needham testified that “anybody in the
seed business would be able to sell their wheat for $25 to $30 per 50-pound
unit.” Transcript Volume II at 195. When asked about the reasonable range of
sale prices in 2014 for good quality wheat seed, he answered “$25 to $30 per 50-
pound unit would be the going price for a bag of certified, cleaned wheat in a
bag.” Id. at 203. When asked to provide a reasonable opinion on the costs
involved, figuring 284 acres in southern Indiana, he indicated that, with all the
intensive inputs, “it would be between four and five hundred dollars an acre”
and that additional post-harvest costs, including cleaning, drying, and bagging,
would amount to about five dollars per acre. Id. at 203.
[22] Regarding the agreements and billing invoices between Helena and Jones Farms,
the court admitted as exhibits during Belleville’s testimony certain Helena
finance loan statements and individual invoices for various products that “would
have been billed out under the open account.” Id. at 133. Belleville referenced a
certain finance loan statement and indicated that $1,297,832.77 was inclusive of
interest and principal, that the amount did not become due until June 10, 2014,
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and that, “up until that time, there was nothing due and owing on this loan to
Helena.” Id. at 151. During his testimony, Robert answered in the negative
when asked if he had any ability to negotiate the terms of the credit
arrangements. He testified he received both an invoice for Helena’s aerial
application service of the products and an invoice for the spraying products
themselves. He answered affirmatively when asked if other bills were included in
Helena’s billings that were improper and should not have been charged.
[23] Jay Hulbert, the CEO of Ag Alum, testified about the 2017 discovery of
INW0412 seed in Ag Alum’s cold storage and its subsequent testing.
Following an objection by Helena’s counsel, the court indicated a request had
been made, which it approved, to pause Hulbert’s testimony to allow Deford to
testify. Deford indicated his trial testimony was pursuant to a subpoena and
that in 2017 he had been contacted by Hulbert to conduct germination tests of
INW0412. He answered in the negative when asked if he approached the
INW0412 testing in a fashion different than he had any other germination
testing. Deford commented on the germination test results: “As I recall, one lot
was treated and one was untreated. One had about a 50 percent rate, the other
about 56 or 58 percent rate, to my recollection.” Id. at 140. When asked how
those percentages compare to the standard norms for germination of good seed,
he answered: “Much, much, much lower. We would . . . think a new crop seed
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would be 90, 95, 98 percent. Oftentimes its above 95 percent.” 12 Id. When
asked to explain whether a seed that passes a germination test “necessarily
mean[s] that that seed they planted would grow into a mature, productive
plant,” he indicated a warm germination test “by its very nature is under
optimum conditions,” the ideal temperature was “different for different
species,” and that one could expect field emergence to be less than test
emergence, “[g]enerally, every time.” Id. at 141. He also testified that “vigor”
was a measure of the robustness of an individual seed lot, and that germination
tests did not measure vigor. Id. Helena’s counsel cross-examined Deford about
the difficulties of seed growing in a field, potential lower germination levels, the
test results for INW0412, and the test requirements of germination tests.
[24] Hulbert returned to testify and indicated the germination results were conveyed
to him and that “both of the samples tested were in the 50 percent range” and
“one was 56 and on was 50, which means about half the seed germinated and
grew.” Id. at 147. Hulbert testified there was not a sufficient quantity of seeds of
sufficient quality “for a farmer like the Joneses” to reestablish a wheat crop of
INW0412 and that, under the circumstances, it was the expected and prudent
decision to try to find a replacement plant. Id. During cross-examination, he
stated Ag Alum discovered 501 grams of untreated seed and 850 grams of treated
seed, which it indicated by email upon discovery it could make “available to Mr.
12
Needham testified “[m]ost states would have a state minimum to be certified of 85 or 90 percent
germination. So if a variety didn’t germinate 85 or 90 percent, you would not be considered certified.”
Transcript Volume II at 214.
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Jones so he could initiate production” and that “[t]hose are small amounts” and
“the seed is old enough that germination could be an issue, but it should be
possible over a couple of years to recover production.” Id. at 151.
[25] Dr. Smith explained the approach he took to his analysis in this case and
indicated that, “like every business loss case,” he needed information
concerning “what the business was,” “years,” “acres . . . planted and the
crops,” the quantity of “crops yield per acre,” the price per bushel, and the costs
of harvesting, bagging, and handling; that “[c]onceptually to an economist we
use the same principles”; and that the same economic principles apply whether
it was for examining citrus trees in Costa Rica or horse farms in Wisconsin.
Transcript Volume IV at 85. He stated he received much of the information
“from some paperwork that you folks provided me” and that his economic
research analyst gathered information from Robert. Id. When asked about the
economic principles for “going from here into the future,” or projecting loss
into the future, he indicated that he assumed the prices would remain, on
average, the same over time and stated that, while he could not tell the length of
time to redevelop a seed crop, he could provide losses for each year into the
future. Id. at 86. When asked if there were any other factors involved in future
calculations, he testified:
Not for future calculations, but the last seven. And I’ll just tell
you, everything I’ve talked about so far, it’s pretty
straightforward math. It’s the kind of math you can do in high
school. . . . [Y]ou know, a pound of wheat, 25 bucks a pound
times 60 pounds . . . .
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 18 of 40
The complicating factor, I think, is that once you make those
projections in the future, you need to discount them to present
cash value. . . .
Id. at 87. He stated he assumed “that those future dollars, that constant price
per week in the future, except for inflation, that those future dollars are worth
less today and a lot less,” “[s]o we’ve used . . . a very significant business
discount rate to look at the riskiness of small businesses,” and that, applying his
approach, he came to a conclusion about the loss for “2014, ’15, ’16, ’17, and
’18 through” the trial date. Id. at 87-88. Dr. Smith testified to the differences in
his three reports and indicated the Second and Third Reports were identical and
he changed the Third Report “to present evidence of 284 acres” instead of the
300 acres represented in the Second Report, which changed “literally, every
number” “by 16 divided by 300, which is about 5 percent.” 13 Id. at 94. He
testified the Second and First Reports were the same except for a typographical
error. 14 Id. The court admitted as an exhibit three tables from the Third Report
13
Dated August 21, 2019, the Third Report states it was a revision to his “July 24, 2019 and March 13, 2017
reports” and it adjusted the calculation of damages “considering evidence to be presented at trial.”
Appellant’s Appendix Volume II at 206. It states calculations “are performed using the same methodology of
the loss of profits and calculation of present value which I have employed in my prior reports regarding Jones
Farms.” Id. It also indicates: “Based on Jones Farms expected production of 32,075 units of INW0412
wheat seed available for sale at a market price of $25.50 per unit, the expected gross revenues in 2014 are
$817,912,” “[f]or the 284 acres under cultivation for seed wheat, Mr. Jones reports that his 2014 costs were
$428.86 per acre, for a total of $12,796,” and “[f]or the expected gross revenues of $817,912 and non-incurred
costs of $135,400, the loss for Jones Farms in 2014 is $682,512.” Id. at 209-210.
14
Dated July 23, 2019, the Second Report states it was an update to the March 13, 2017 report and explains:
In my March 13, 2017 report I calculated the loss in 2014 to Jones Farms by subtracting the
expenses not incurred following the destruction of the seed crop from the expected net income.
However, loss to Jones Farms in 2014 should be based on gross income, and not the net
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 19 of 40
titled “Loss of Past Earnings 2014-2019,” “Present Value of Future Earnings
2019-2038,” and “Present Value of Net Earnings Loss 2014-2038.” Exhibits
Volume III at 157-159.
[26] On September 9, 2019, the court instructed the jury in its final instructions that
Jones Farms had claimed certain defenses to Helena’s claims, Jones Farms
claimed that the “limitation of liability provision in the credit sales and services
agreement is unenforceable,” and Helena had claimed certain defenses to Jones
Farms’s counterclaims including that Jones Farms’s damages were barred by
the terms of the contracts between the parties. Transcript Volume IV at 124.
The court instructed Jones Farms had to prove by the greater weight of the
evidence that Helena’s breach of contract caused damages which “the parties
reasonably anticipated . . . when they entered into the contract.” Id. at 126.
The jury entered a verdict for Helena in the amount of $1,297,837 and a verdict
for Jones Farms in the amount of $3,699,319, and the court entered judgment
in favor of Jones Farms and against Helena in the amount of $2,401,482.
income. Jones Farms incurred expense of [sic] before the destruction of the INW0412 seed crop
which would not be compensated if the loss is based on the net income.
Appellant’s Appendix Volume II at 199. It indicates: “For the expected gross revenues of $912,008, and non-
incurred costs of $150,560, the net loss for Jones Farms in 2014 is $761,448.” Id. Regarding the inflation and
business discount rates, the Second Report states it grew the annual net revenues at “the rate of inflation of
0.73 percent in 2015, 2.07 percent in 2016, 2.11 percent in 2017, 1.91 percent in 2018, and an estimated rate
of inflation in 2019,” the discount rate was determined using the method described in Duff & Phelps 2017
Valuation Handbook: The Guide to Cost of Capital, and that, assuming a long-term average growth rate of
2.0 percent for CPI growth, the “net discount rate is estimated at 17.71 percent.” Id. at 199-200.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 20 of 40
Discussion
I.
[27] The first issue is whether the trial court abused its discretion in admitting the
testimony of Dr. Smith concerning damages and of Deford concerning the
germination test results. The admission and exclusion of evidence falls within
the sound discretion of the trial court, and this Court reviews those decisions
only for an abuse of that discretion. Brightpoint, Inc. v. Pedersen, 930 N.E.2d 34,
38 (Ind. Ct. App. 2010) (citing Wilson v. State, 765 N.E.2d 1265, 1272 (Ind.
2002)), trans. denied. When we review for an abuse of discretion, we do not
reweigh the evidence. Id. (citing K.S. v. Marion Cty. Dep’t of Child Servs., 917
N.E.2d 158, 162 (Ind. Ct. App. 2009)). We will reverse a trial court’s decision
to admit or exclude evidence only if that decision is clearly against the logic and
effect of the facts and circumstances before the court, or the reasonable,
probable, and actual deductions to be drawn therefrom. State Farm Mut. Auto.
Ins. Co. v. Woodgett, 59 N.E.3d 1090, 1093 (Ind. Ct App. 2016)). Even if a trial
court errs in a ruling on the admissibility of evidence, this Court will reverse
only if the error is inconsistent with substantial justice. Id.
[28] Ind. Evidence Rule 702 provides:
(a) A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if the expert’s scientific, technical, or other
specialized knowledge will help the trier of fact to understand the
evidence or to determine a fact in issue.
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(b) Expert scientific testimony is admissible only if the court is
satisfied that the expert testimony rests upon reliable scientific
principles.
In adopting the rule, the Indiana Supreme Court did not intend to interpose an
unnecessarily burdensome procedure for trial courts to apply when considering
the admissibility of expert testimony. Taylor v. State, 101 N.E.3d 865, 870 (Ind.
Ct. App. 2018) (citing Sears Roebuck & Co. v. Manuilov, 742 N.E.2d 453, 460
(Ind. 2001)), reh’g denied. “Rather, the rule was meant ‘to liberalize, rather than
to constrict, the admission of reliable scientific evidence.’” Id. (citing Sears
Roebuck & Co., 742 N.E.2d at 460). In Taylor, we observed that the “specialized
knowledge” mentioned in Evidence Rule 702(a) includes more than just
scientific knowledge, and if knowledge is not “scientific,” it need not be proven
reliable by means of “scientific principles” under Evidence Rule 702(b). Id. at
871 (citing Lyons v. State, 976 N.E.2d 137, 142 (Ind. Ct. App. 2012) (citing
Malinski v. State, 794 N.E.2d 1071, 1084 (Ind. 2003))). “Rather, such evidence
is governed only by the requirements of Rule 702(a), and any weaknesses or
problems in the testimony go only to the weight of the testimony, not to its
admissibility, and should be exposed through cross-examination and the
presentation of contrary evidence.” Id. (citing Lyons, 976 N.E.2d at 142 (citing
Turner v. State, 953 N.E.2d 1039, 1050 (Ind. 2011))).
[29] Before turning to the merits of Helena’s arguments, we note the issues it is not
raising. It does not challenge the expertise of Dr. Smith, or his testimony or the
other evidence concerning the loss of Jones Farms’s past earnings or its present
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 22 of 40
value. Nor does it challenge Deford as being unqualified to have testified or
lacking the knowledge, skill, experience and training that would allow him to
have given opinion testimony on the topics of germination and germination
testing and to assist the trier of fact to determine facts at issue.
A. Dr. Smith
[30] Helena argues it was prejudiced when Jones Farms subjected it to a “trial by
ambush” and contends Dr. Smith modified his damages methodology a month
prior to trial, Appellant’s Brief at 18, and testified about an opinion disclosed
six days prior to trial with modifications “made solely” to allow him to “testify
around” the court’s ruling on Helena’s motion in limine. Appellant’s Reply
Brief at 4.
[31] The record reveals Jones Farms designated Dr. Smith’s First Report on March
13, 2017, in opposition to Helena’s motion for partial summary judgment, and
the report valuing the loss of the INW0412 seed by calculating it as one would
the loss of a business. On March 20, 2019, Helena deposed Dr. Smith. On July
23, 2019, it filed a motion in limine seeking to exclude damages testimony
relating to alleged calculated damages, pointed to the First Report, and alleged
Jones Farms’s theory of damages hinged on presales. It filed a second motion
alleging Dr. Smith’s opinions were based on inadmissible evidence and not
properly the subject of expert opinion, and attached excerpts of the deposition.
After hearing argument, the court issued an order on August 8, 2019, which
granted the first motion and precluded Jones Farms from using terms such as
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 23 of 40
“pre-sold” or “pre-ordered” without establishing the sale or order prior to loss.
Appellant’s Appendix Volume II at 177. The order denied the motion
concerning Dr. Smith’s testimony but clarified that the damages claim could
include lost profits if Jones Farms presented “evidence sufficient to allow the
jury to estimate the amount with a reasonable degree of certainty and exactness
and not simply conjecture or speculation.” Id. In August 2019, Helena filed its
objection and motion to strike the Second and Third Reports. The court denied
the motion to strike and noted it made a detailed review of the exhibits,
disagreed that a new methodology was presented, and found ultimately that the
same premium rate was reflected in both the Second and Third Reports. At
trial in September 2019, Dr. Smith explained the approach taken in the reports
and testified to the differences between them, and the court admitted three
tables from the Third Report.
[32] We note Helena does not challenge the particular methodology selected by Dr.
Smith to discount Jones Farms’s future damages, or specifically argue that the
Third Report contains figures for yield per acre, price per unit, cultivation cost,
and handling costs which differ than those used in the First and Second Reports.
To the extent Helena argues the Third Report contained prohibited references or
terms such as “pre-sold” or “pre-ordered,” we note the report includes a
determination of expected gross revenues in 2014 based on Jones Farms’s
“expected production” of INW0412 wheat seed “available for sale” at a given
market price. Id. at 209. Needham testified regarding the market price and as to
the reasonable range of sale prices in 2014 for good quality wheat seed and stated
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 24 of 40
that “anybody in the seed business would be able to sell their wheat for $25 to
$30 per 50-pound unit.” Transcript Volume II at 195. In light of the record, we
do not find Helena’s argument that it was prejudiced to be persuasive.
[33] Helena further argues the court erred in allowing Dr. Smith’s testimony
regarding future damages, which it alleges was unsupported by admissible
evidence. It contends he did not produce or provide his own opinion or take into
consideration whether Jones Farms had existing customers, historical sales, or
contracts to sell the wheat seed. It argues he did not properly calculate the 2014
net profits by using a cost per acre figure which failed to include substantial costs.
[34] At the heart of its argument, Helena contends that Dr. Smith could never have
reached the point of calculating the future damages without first relying on the
values assigned by Robert. In contending that Dr. Smith did nothing more than
repeat losses alleged by Robert, it relies on Estate of Benefiel by and Through
Benefiel v. Wright Hardware Co., Inc., in which this Court stated:
As provided in Evidence Rule 703, “Experts may testify to
opinions based on inadmissible evidence, provided that it is of
the type reasonably relied upon by experts in the field.”
Earlier Indiana cases, and other courts governed by
Rule 703, generally have found the following sorts of
information to be reasonably relied upon by experts
in various fields: hospital records, laboratory reports,
X-rays, and doctors’ medical records relied on by
medical professionals; reports by subordinates relied
upon by superiors; discussions with other experts in
the expert’s field; mental hospital records reports by
clinical psychologists and social workers, and police
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 25 of 40
reports relied upon by psychiatrists or forensic
psychologists; a report from an engineering firm
relied upon by an engineer; an autopsy report relied
upon by a pathologist; business records relied upon
by an expert in the business field; and state agency
records relied upon by a law enforcement officer.
Courts have shown considerable reluctance to find
reasonable reliance on information not prepared by
persons with specialized training, such as lay witness
statements, anonymous reports, statements by a
party, and data prepared in anticipation of litigation.
Schmidt v. State, 816 N.E.2d 925, 938-39 (Ind. Ct. App. 2004)
(quoting 13 ROBERT LOWELL MILLER, JR., INDIANA PRACTICE,
INDIANA EVIDENCE, § 703.107, 427-30 (footnotes omitted)).
There are limits to this, however, to the extent that a party
proffers opinion testimony that is merely “a conduit” for placing
“physician’s diagnoses into evidence without meaningful
opportunities for cross-examination.” Faulkner v. Markkay of
Indiana, Inc., 663 N.E.2d 798, 801 (Ind. Ct. App. 1996), trans.
denied. As our supreme court has recognized,
Some experts customarily gather information from a
variety of other experts and authoritative sources
and rely upon it in reaching their opinions. When
an expert witness’s own independent opinion is
arrived at in this manner and it is introduced into
evidence and the expert witness is subject to cross-
examination, that part of the substrata of
information which aided in the formation of the
opinion, though hearsay in nature and though not
falling within any hearsay exception, may
nevertheless be admissible for use by the trier of fact
in judging the weight of the opinion.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 26 of 40
Barrix v. Jackson, 973 N.E.2d 22, 26 (Ind. Ct. App. 2012) (quoting
Miller v. State, 575 N.E.2d 272, 274 (Ind. 1991)), trans. denied.
However, such hearsay is inadmissible where it is merely a
restatement of another’s conclusion “as a conclusory answer to
an ultimate fact in issue,” such that the veracity of the statement
is not “subject to the test of cross-examination.” Id.
Accordingly, although an expert may rely on others’ opinions as
a basis for his opinion if other experts in the field reasonably rely
on such opinions, the expert must bring his own expertise to bear
in reaching his opinion and may not simply repeat opinions of
others or announce that other experts concur with his opinion
with respect to the case. Duneland Props., LLC v. Northern Indiana
Pub. Serv., Co., 14 N.E.3d 95, 105 (Ind. Ct. App. 2014).
128 N.E.3d 485, 490-491 (Ind. Ct. App. 2019), reh’g denied, trans. denied.
[35] Here, Dr. Smith testified that, conceptually, economists use the same principles
and apply them to examine dissimilar cases. He required, like in every business
loss case, information concerning not only what the business was, but also the
“years,” “acres . . . planted and the crops,” the quantity of “crops yield per
acre,” the price per bushel, and the costs of harvesting, bagging, and handling,
which he received from paperwork provided to him and which his economic
research analyst gathered from Robert. Transcript Volume IV at 85. See also
Appellant’s Appendix II at 207 (listing “Information Reviewed” in preparation
for completing the Third Report). Importantly, he testified on how projections
are made into the future using a business discount rate, which the Third Report
also explains in its “Opinion” section. See Appellant’s Appendix Volume II at
209-211. In light of Dr. Smith’s testimony, the reports, and the methodologies
used, we cannot agree that Dr. Smith had not brought his expertise to bear in
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 27 of 40
reaching an opinion. We conclude that the court did not abuse its discretion in
admitting Dr. Smith’s testimony.
B. Joe Deford
[36] Helena argues it was prejudiced by Deford’s testimony when he was not
disclosed as an expert witness and contends Jones Farms elicited expert
testimony from him as to the manner in which the germination test was taken,
the interpretation of the test results, and the impact of those results on the
matters at issue, and that thus Jones Farms was required to disclose him as an
expert. It explains it had no reason to treat him as an expert or “to inquire as to
the opinions he might have outside the area of actual perception,” and asserts
that, “at a minimum,” it would not have been surprised at trial by his testimony
as to the importance of the never mentioned quality of “vigor.” Appellant’s
Reply Brief at 13-14.
[37] The record reveals Jones Farms identified Joe Deford as a person believed to
have knowledge relating to the litigation and as the Chief Operating Officer of
ICIA who read the germination tests performed on the INW0412 treated and
untreated seeds provided by Ag Alum in March 2017. At trial, during the
testimony of Hulbert, the CEO of Ag Alum who initiated the germination tests
and who also testified regarding the test results and the interpretation and
impact of those results, Helena’s counsel objected, and the court paused
Hulbert’s testimony upon request and allowed Deford to testify.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 28 of 40
[38] Helena points to Deford’s statement regarding the INW0412 test result
percentages as “Much, much, much lower” to the standard norms for
germination of good seed and his indications that a warm germination test offers
optimum conditions, the ideal temperature for germination was different across
species, that field emergence was generally less than test emergence, and that
“vigor” was a measure of the robustness of an individual seed lot which was not
tested by germination tests. Transcript Volume III at 140-141. We note the court
granted the request of Helena’s counsel to ask preliminary questions about the
germination test results and overruled its objection, and Helena cross-examined
Deford about the difficulties of seed growing in a field, potential lower
germination levels, the test results for INW0412, and the test requirements of
germination tests. Under these circumstances and in light of Hulbert’s testimony,
we cannot say that Helena was prejudiced by Deford’s testimony.
[39] To the extent Helena argues Deford’s testimony regarding the germination test
did not meet the requirements of Ind. Evidence Rule 702 and asserts the test was
flawed and did not meet Association of Official Soil Analysts (AOSA) standards,
and Deford admitted as such and described the test as “reliable for what
[Hulbert] wanted,” Appellant’s Brief at 27 (quoting Transcript Volume III at
139), this Court has provided that, in determining whether scientific evidence is
reliable, the trial court must determine whether such evidence appears sufficiently
valid or, in other words, trustworthy, to assist the trier of fact. See Akey v.
Parkview Hosp., Inc., 941 N.E.2d 540, 543 (Ind. Ct. App. 2011) (citing Shafer &
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 29 of 40
Freeman Lakes Environmental Conservation Corp. v. Stichnoth, 877 N.E.2d 475, 484
(Ind. Ct. App. 2007), trans. denied), trans. denied. In so doing, the trial court
must make a preliminary assessment of whether the reasoning or
methodology underlying the testimony is scientifically valid and
whether that reasoning or methodology properly can be applied
to the facts in issue.” Bennett [v. Richmond, 960 N.E.2d 782, 791
(Ind. 2012)] (quoting Shafer[, 877 N.E.2d at 484]). While there
are relevant factors to consider, “there is no specific ‘test’ or set of
‘prongs’ which must be considered in order to satisfy Evid. R.
702(b).” Hannan v. Pest Control Servs., Inc., 734 N.E.2d 674, 680
(Ind. Ct. App. 2000), trans. denied. In other words, application of
Rule 702 is not mechanical and is within the trial court’s
discretion.
McDaniel v. Robertson, 83 N.E.3d 765, 773 (Ind. Ct. App. 2017).
[40] After the court allowed Helena’s counsel to establish foundation before
addressing its objection, Deford indicated Hulbert had
wanted to use the minimum amount of seed possible for testing.
And I told him that a normal seed test for germination would be
400 seeds. He asked if we could test fewer seeds than that, and I
said, well, it wouldn’t be an official test at that point, but if all
you wanted was to know something about the viability, we could
do as little as 100 seeds. And that’s what we did.
Transcript Volume III at 136. While Deford explained an official test was a
statistical analysis “based on the number of seeds needed to get an inference of
germination” and that 400 seeds would be appropriate statistically to make the
inference, he also indicated he approached the INW0412 testing in the same
fashion he had any other germination testing, he used the same procedures as
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 30 of 40
other tests, everything was “the same except the number of seeds that we tested,”
and the test results would be considered reliable and accurate. Id. at 137. In
response to Helena’s counsel’s preliminary question of whether, based on his
testimony of using 100 seeds, he still felt it was a reliable test, he answered:
For what [Hulbert] wanted, I think that was a reliable finding. It
wasn’t an official test. But because of the amount of seeds, he
didn’t want them destroyed – is my understanding anyway, he
didn’t want to destroy that many . . . seeds, knowing that that’s
all the seed that exists, in his possession anyway. So we did what
Jay asked, and that was to perform that 100-seed test just to give
him an idea about what that lot might – you know, what level of
viability it might have.
Id. at 139. Under these circumstances, we cannot say the trial court failed to
make a preliminary assessment of whether the underlying methodology was
scientifically valid and whether the methodology properly could be applied to
the facts in issue. We find no abuse of discretion.
II.
The next issue is whether the trial court erred in entering judgment for damages
in the amount awarded by the jury in favor of Jones Farms. This Court has
explained:
We afford a jury’s damage award great deference on appeal. Sims
v. Pappas, 73 N.E.3d 700, 709 (Ind. 2017). In considering whether
a jury verdict is excessive, we do not reweigh the evidence and
look only to the evidence and reasonable inferences that may be
drawn therefrom that support the verdict. West v. J. Greg Allen
Builder, Inc., 92 N.E.3d 634, 643 (Ind. Ct. App. 2017), trans. denied
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 31 of 40
(2018). If there is any evidence in the record which supports the
amount of the award, even if it is variable or conflicting, the award
will not be disturbed. Sandberg Trucking, Inc. v. Johnson, 76 N.E.3d
178, 189 (Ind. Ct. App. 2017). . . . An award is not excessive
unless the amount cannot be explained upon any basis other than
prejudice, passion, partiality, corruption, or some other element of
improper consideration. Sims, 73 N.E.3d at 709.
Carney v. Patino, 114 N.E.3d 20, 31 (Ind. Ct. App. 2018), trans. denied.
“Appellate courts will not substitute their idea of a proper damage award for
that of the jury.” Sears Roebuck and Co., 742 N.E.2d at 462 (quoting Prange v.
Martin, 629 N.E.2d 915, 922 (Ind. Ct. App. 1994), trans. denied). “We will not
deem a verdict to be the result of improper considerations unless it cannot be
explained on any other reasonable ground.” Id. “We cannot invade the
province of the jury to decide the facts and cannot reverse unless the verdict is
clearly erroneous.” Id. (quoting Annee v. State, 256 Ind. 686, 690, 271 N.E.2d
711, 713 (1971), reh’g denied).
[41] Helena argues the court erred when it allowed testimony as to Jones Farms’s lost
profits and that no evidence supports Jones Farms’s claimed damages.
Specifically, it points to exhibits of Jones Farms’s sales and production reports
used to determine royalty payments for years 2008 through 2014 and reports
from submitted crop insurance applications showing production history for fields
“on which Jones planted wheat [from] 1991 through 2016” and contends
historical yield data demonstrates the actual yield of INW0412 never reached 101
bushels per acre. Appellant’s Brief at 36. It also contends Jones Farms had no
customers or contacts to which it would sell INW0412, no person or entity listed
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 32 of 40
by Robert “was actually an INW0412 customer,” and the fair market value for
the 2013-2014 wheat seed was considerably lower than $25.50 per unit. Id. at 30.
It asserts that the grain elevator would be the only reliable market without any
customers and thus that, when construing the evidence in Jones Farms’s favor,
the “2014 crop loss could not exceed $85,625,” or “27,250 bu. * $4.50/bu” minus
$37,000 of rental costs. Id. at 37-38.
[42] Consequential damages may include lost profits. Berkel & Co. Contractors, Inc. v.
Palm & Associates, Inc., 814 N.E.2d 649, 659 (Ind. Ct. App. 2004). If a party is
seeking damages for lost profits, the award must be confined to lost net profits.
L.H. Controls, Inc. v. Custom Conveyor, Inc., 974 N.E.2d 1031, 1043 (Ind. Ct. App.
2012). An award of damages for lost profits is proper if the evidence is
sufficient to allow the trier of fact to estimate the amount with a reasonable
degree of certainty and exactness. Id. However, lost profits need not be proved
with mathematical certainty. Id. Lost profits are not impermissibly uncertain
where there is testimony that, while not sufficient to put the amount beyond
doubt, is sufficient to enable the factfinder to make a fair and reasonable finding
as to the proper damages. Id. Any doubts and uncertainties as to proof of the
exact measure of damages must be resolved against the defendant. Id. It is
wholly improper, however, for a trier of fact to project past profits indefinitely
into the future without evidence that the projection was at least reasonably
certain. Id. Also, an award of damages for lost profits cannot be based upon
mere conjecture or speculation. Id.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 33 of 40
[43] The record reveals Robert’s testimony about the various management
techniques about which Jones Farms became educated and which it began to
implement in anticipation of increasing seed yield, test weight, and other
desirable qualities; that Jones Farms applied the management techniques to 284
acres of INW0412 in 2014 for the purpose of exceeding a hundred bushels an
acre; and that he was reasonably confident that the 2014 crop would produce
101 bushels per acre. Needham testified about reasonable yields for a properly
managed wheat seed crop in southern Indiana in 2014 and that “100 bushel
wheat” is possible “most years” given intensive management and appropriate
inputs. Transcript Volume II at 198. To the extent Helena points to reports
determining royalty payments and showing production for wheat fields, we
note Needham’s cross-examination testimony that a farm could add ten or
twenty bushels per acre of wheat just by improving management. The record
further reveals INW0412, which was bred to be taller, had “met the need” in
southern Indiana for a wheat with more straw. Transcript Volume III at 129.
Jones Farms sold 1,107 units of INW0412 from 2011 to 2013. Robert indicated
he had additional prospects for INW0412 in a customer list base, and Geswein
testified Geswein Farms bought INW0412 wheat seed, its crop did well in
2014, he was pleased with the quality of the INW0412, and that he would have
bought it in the future. Regarding wheat seed price, Geswein Farms purchased
treated INW0412 wheat seed for $27.50 per unit, Jones Farms sold 1,107 units
at a minimum of $21.00 each, and Needham testified, regarding the reasonable
range of sale prices in 2014 for good quality wheat seed, that $25 to $30 per 50-
pound unit would be the going price.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 34 of 40
[44] In addition, Dr. Smith explained his economic analyses and approach, and
Jones Farms presented the calculations of the loss of past earnings from 2014 to
2019, the present value of future earnings from 2019 to 2038, and the present
value of net earnings loss from 2014 to 2038. Based upon the record, and in
light of our standard of review, we conclude the jury award to Jones Farms was
adequately supported to a reasonable degree of certainty and fell within the
scope of the evidence presented.
[45] To the extent Helena argues the Credit Agreement limited Jones Farms’s
remedies to monetary damages not in excess of the purchase price, we note that
Helena moved for summary judgment on this issue, that the trial court denied
the motion and found “issues of material fact exist which impact whether the
limitation of liability provision is applicable to Jones Farms’s claims,” and that
the jury was instructed as to the Credit Agreement’s limitation of liability
provision, as well as that Jones Farms, on one hand, had claimed it was
unenforceable and Helena, on the other hand, had claimed that it barred Jones
Farms’s damages. Appellant’s Appendix Volume II at 43. Jones Farms argues
that, under Tennessee law, a limitation of liability provision in a contract may
be held unenforceable and cites a 2017 order from the United States District
Court for the Western District of Tennessee which states a “clause in a contract
may be substantively or procedurally unconscionable when the contract terms
are unreasonably harsh or one party lacks meaningful choice during the
bargaining process.” Beijing Fito Medical Company, Ltd. v. Wright Medical
Technology, Inc., No. 2:15-cv-02258-JPM-TMP, 2017 WL 5170126, at *8 (W.D.
Court of Appeals of Indiana | Opinion 19A-PL-2119 | May 22, 2020 Page 35 of 40
Tenn. 2017) (citing Larry E. Parrish, P.C. v. Dodson, Cause No. M2011-00349-
COA-R3-CV (Tenn. Ct. App. Sept. 29, 2011)).
[46] Tennessee Code § 47-2-719, titled “Contractual modification or limitation of
remedy,” provides:
(1) Subject to the provisions of subsections (2) and (3) of this section
and of the preceding section on liquidation and limitation of
damages:
(a) the agreement may provide for remedies in addition to or
in substitution for those provided in this chapter and may limit
or alter the measure of damages recoverable under this chapter, as by
limiting the buyer’s remedies to return of the goods and repayment of
the price or to repair and replacement of nonconforming goods
or parts; and
(b) resort to a remedy as provided is optional unless the
remedy is expressly agreed to be exclusive, in which case it is
the sole remedy.
(2) Where circumstances cause an exclusive or limited remedy to fail of its
essential purpose, remedy may be had as provided in chapters 1-9 of this title.
(3) Consequential damages may be limited or excluded unless the
limitation or exclusion is unconscionable. Limitation of consequential
damages for injury to the person in the case of consumer goods is
prima facie unconscionable but limitation of damages where the loss
is commercial is not.
(emphasis added). The comments following the statute explain:
1. Under this section parties are left free to shape their remedies
to their particular requirements and reasonable agreements
limiting or modifying remedies are to be given effect.
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However, it is of the very essence of a sales contract that at least
minimum adequate remedies be available. If the parties intend to
conclude a contract for sale within this Article they must accept
the legal consequence that there be at least a fair quantum of
remedy for breach of the obligations or duties outlined in the
contract. Thus any clause purporting to modify or limit the
remedial provisions of this Article in an unconscionable manner
is subject to deletion and in that event the remedies made
available by this Article are applicable as if the stricken clause
had never existed. Similarly, under subsection (2), where an
apparently fair and reasonable clause because of circumstances
fails in its purpose or operates to deprive either party of the
substantial value of the bargain, it must give way to the general
remedy provisions of this Article.
*****
3. Subsection (3) recognizes the validity of clauses limiting or
excluding consequential damages but makes it clear that they
may not operate in an unconscionable manner. Actually such
terms are merely an allocation of unknown or undeterminable
risks. The seller in all cases is free to disclaim warranties in the
manner provided in Section 2-316.
Tenn. Code Ann. 47-2-719 cmts. 1, 3. Thus, Tennessee permits the limitation of
remedies unless circumstances cause the remedy to fail of its essential purpose;
specifically, commercial parties may limit or exclude consequential damages
unless the limitation or exclusion is unconscionable. Even if the provision would
survive an unconscionability review, we find that the Credit Agreement’s
limitation fails of its essential purpose. See Baptist Memorial Hosp. v. Argo Const.
Corp., 308 S.W.2d 337, 346 (Tenn. Ct. App. 2009) (“Failure of essential purpose
as codified in Tennessee Code Annotated § 47-2-719 ‘is concerned with the
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essential purpose of the remedy chosen by the parties, not with the essential
purpose of the code or of contract law, or of justice and/or equity.’”) (quoting
Arcata Graphics Co. v. Heidelberg Harris, Inc., 874 S.W.2d 15, 28 (Tenn. Ct. App.
1993) (citing 1 JAMES J. WHITE & ROBERT S. SUMMERS, UNIFORM
COMMERCIAL CODE § 12-10 (3d ed.), reh’g denied, appeal denied), appeal denied.
That is, in the agricultural context, the refund of the price of the specific goods or
services in this case is a “totally inadequate” remedy. Nomo Agroindusrial SA DE
CV v. Enza Zaden North Am., 492 F. Supp. 2d 1175, 1181 (D. Ariz. 2007); see also id.
(noting the “true value of the seeds only comes from the crop yielded,” which is
“preceded by considerable time and cost expended by the farmer,” and finding
the “lost growing season and the accompanying loss of profits” due to the
defendant’s defective seeds was not compensated by replacing or refunding the
price of the seeds). Accordingly, we do not disturb the award on this basis.
[47] Additionally, Helena asserts that its own damages award was improper and
contends Robert admitted in his testimony to owing over two million dollars,
the Note provides for payment of interest and attorney’s fees, the jury did not
specify the amount of damages under the Credit Agreement, and that, given the
jury award of $1,297,837 under the Note, “it stands to reason that the jury
awarded at least $703,000 under the Credit Agreement” which was deducted
under a theory of recoupment from the total judgment in Jones Farms’s favor.
Appellant’s Brief at 41. It argues that alternatively, under an account stated
theory, it is entitled to the full amount listed on its invoices and statements and
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contends Jones Farms “never disputed the combined balance over $2.8 Million
as of late 2015, when the Complaint was filed.” Id. at 42.
[48] We note that Helena did not file a motion for judgment on the evidence or a
motion to correct error. The Indiana Supreme Court has held that a claim of
insufficiency of the evidence supporting a verdict “may not be initially raised on
appeal in civil cases if not previously preserved in the trial court by either a
motion for judgment on the evidence filed before judgment or in a motion to
correct error.” Sims v. Pappas, 73 N.E.3d at 709 n.6 (citing Henri v. Curto, 908
N.E.2d 196, 207-208 (Ind. 2009)). Even assuming that this issue is not waived,
we do not find Helena’s arguments require reversal. The jury was able to
consider the loan statements and individual invoices for various products which
Helena presented, as well as the testimony of Helena’s director of credit, who
indicated that $1,297,832.77 was the interest and principal due on June 10,
2014. The jury awarded $1,297,837 to Helena in damages, which we conclude
was within the evidence presented. See Sears Roebuck and Co., 742 N.E.2d at 462
(“Our inability to actually look into the minds of the jurors is, to a large extent,
the reason behind the rule that we will not reverse if the award falls within the
bounds of the evidence.”) (quoting Annee v. State, 256 Ind. 686, 690, 271 N.E.2d
711, 713 (1971)). To the extent Helena argues an account stated theory applied
and that Jones Farms did not dispute the amount owed prior to trial, we note
that, before recovering on the theory of account stated, there must have been
prior dealings between the parties, and after an examination of all the items by
each of the parties, they must have “mutually agreed upon the items of the
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account, and that the balance struck is just and due from the party against
whom it is stated.” Jasper Corp. v. Manufacturers’ Appraisal Co., 153 Ind. App.
457, 460, 287 N.E.2d 781, 782 (1972) (citing Bosson v. Brash, 63 Ind. App. 86,
114 N.E. 6, 7 (1916)), reh’g denied. Furthermore an account stated “arises only
when each party to the transaction views the account as a final adjustment of
the respective demands between them.” Brazier v. Maple Lane Apartments I, LLC,
45 N.E.3d 442, 455 n.8 (Ind. App. Ct. 2015) (citing MHC Surgical Ctr. Assocs.,
Inc. v. State Office of Medicaid Policy & Planning, 699 N.E.2d 306, 310 (Ind. Ct.
App. 1998)), reh’g denied, trans. denied. Based upon the record, we do not
interfere with the jury award.
[49] For the foregoing reasons, we affirm the trial court.
[50] Affirmed.
Najam, J., and Kirsch, J., concur.
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