United States District Court, D. New Mexico
PHILMAR DAIRY, LLC; ARCH DIAMOND, LLC; MOONSTONE DAIRY, LLC; and HENDRIKA DAIRY, LLC; Plaintiffs,
ARMSTRONG FARMS and RANDY ARMSTRONG, Defendants, and RANDY ARMSTRONG, Counterclaimant,
PHILMAR DAIRY, LLC; ARCH DIAMOND, LLC; MOONSTONE DAIRY, LLC; and HENDRIKA DAIRY, LLC; Counter-defendants.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS'
MOTION FOR PARTIAL SUMMARY JUDGMENT
STEPHAN M. VIDMAR, UNITED STATES MAGISTRATE JUDGE
MATTER is before the Court on Plaintiffs' Motion for
Partial Summary Judgment [Doc. 43], filed on December 5,
2018. Defendants responded on December 27, 2018. [Doc. 55].
replied on January 10, 2019. [Doc. 60]. The parties consented
to have the undersigned conduct dispositive proceedings in
this matter. [Doc. 13]. The Court held oral argument on the
Motion on January 14, 2019. [Doc. 62] (clerk's minutes).
The Court has considered the briefing, the oral argument, the
relevant portions of the record, and the relevant law. Being
otherwise fully advised in the premises, the Court will
DENY Plaintiffs' Motion.
are dairies located in Portales, New Mexico. [Doc. 1-1] at
13. Defendant Armstrong Farms, owned by Defendant Randy
Armstrong, is a farm near Dell City, Texas, that orally
agreed to sell Plaintiffs approximately 9, 232 tons of hay
for the 2017 growing season. [Doc. 43] at 4; [Doc. 43-1] at
1-2. Over eight months, Plaintiffs incrementally paid
Defendants for the hay whenever Defendants presented them
with invoices for it. [Doc. 43-1] at 1-2; [Doc. 43-3] at 1.
Defendants then incrementally delivered it to Plaintiffs.
See [Doc. 43-3] at 2-4. Plaintiffs paid $1, 352,
391.46 in total for the hay. [Doc. 43-1] at 1-2. Defendants
stored the hay on open-air stack lots on their farm until
delivery. [Doc. 55] at 4. Defendants claim that when
Armstrong negotiated the contract with Plaintiffs'
representative, Aaron Douma, Douma orally agreed that
Plaintiffs, upon payment for the hay, would assume the risk
of loss for it while Defendants stored it on their farm.
[Doc. 55] at 6; [Doc. 55-2] at 2-3. Plaintiffs disagree. They
argue that Douma neither discussed nor agreed to those terms.
[Doc. 60] at 5; [Doc. 60-3] at 2.
May 2017 through February 2018, Defendants delivered
approximately 6, 585 tons of hay to Plaintiffs. [Doc. 1-1] at
15. Defendants claim that on August 23 or 24, 2017, a fire on
part of the farm destroyed some of the stored hay. [Doc.
43-1] at 7-8. Plaintiffs nevertheless continued to pay for
hay, and Defendants continued to deliver it to them, after
the fire. [Doc. 43-3] at 1-4. Defendants did not notify
Plaintiffs of the fire until at least one week after the
fire. [Doc. 43-1] at 7-8. Plaintiffs never received 2, 647
tons of hay, a loss Defendants attribute to the fire. [Doc.
55] at 3. Defendants refused to refund the payment for the
missing hay. [Doc. 1-1] at 16; [Doc. 55] at 4.
sued Defendants in New Mexico state court on April 26, 2018.
[Doc. 1-1] at 1. Count II of the Complaint alleges that
Defendants breached the oral contract by failing to deliver
the remaining 2, 647 tons of hay. Id. at 17.
Defendants removed the action to this Court on June 7, 2018.
[Doc. 1]. On December 5, 2018, Plaintiffs moved for partial
summary judgment with respect to their breach-of-contract
claim in Count II. [Doc. 43].
court shall grant summary judgment if the movant shows that
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). A court must deny summary judgment if a
reasonable jury could find for the non-movants. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When
applying this standard, the court must construe the evidence
in the light most favorable to the non-moving parties.
Tolan, 572 U.S. at 657. The party moving for summary
judgment has the initial burden of establishing that there is
an absence of evidence supporting the opposing party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25
(1986). If the movant meets this burden, the parties opposing
summary judgment must come forward with specific facts,
supported by admissible evidence, which demonstrate the
presence of a genuine issue for trial. Comm. for First
Amendment v. Campbell, 962 F.2d 1517, 1526 n.11 (10th
claim they are entitled to summary judgment on two grounds.
First, they argue that the risk of loss for the destroyed hay
remained with Defendants until delivery. Id. at 7-8.
Plaintiffs relatedly contend that, even if the parties
shifted the risk of loss upon payment for the hay, they paid
for the destroyed hay after the fire occurred,
meaning that the risk of loss remained with Defendants. [Doc.
43] at 8. Second, Plaintiffs argue that, under Uniform
Commercial Code (“UCC”) § 2-613, the fire
did not excuse Defendants' nonperformance of the
contract. Id. at 9- 11. Defendants counter that
Plaintiffs orally agreed to assume the risk of loss for the
destroyed hay upon payment. [Doc. 55] at 6-7. Additionally,
Defendants argue that local trade usage established that
Plaintiffs assumed the risk of loss while the hay was stored
at Defendants' farm. Id. at 7-8. For the
following reasons, the Court holds that a reasonable jury
could find that the parties orally agreed to shift the risk
of loss upon payment for the hay, making summary judgment
genuine issue of material fact exists over whether the
parties orally agreed to modify the default rule that the
risk of loss passes from a merchant seller to the buyer only
upon receipt of the goods. Because this was a contract for
the sale of goods, the UCC governs. § 55-2-102. UCC
§ 2-509, as codified in N.M. Stat. Ann. § 55-2-509,
allocates the risk of loss among parties in the absence of
(3) In any case not within Subsection (1) or (2) of this
the risk of loss passes to the buyer on the buyer's
receipt of the goods if the seller is a merchant; otherwise