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Parker v. Farm Bureau Property & Casualty Insurance Co.

United States District Court, D. Kansas

January 22, 2018




         After plaintiffs were sued by the Kansas Wheat Alliance (KWA) for wrongfully advertising, selling, and distributing a variety of wheat for which the KWA had exclusive rights under the Plant Variety Protection Act (PVPA), plaintiffs tendered the claim to Farm Bureau. Plaintiffs had an insurance policy that covered (among other things) liability for “advertising injury.” Farm Bureau denied coverage and refused to defend the claim. Plaintiffs then settled the KWA suit and filed this action seeking reimbursement. A jury heard the evidence from September 19, 2017, to September 21, 2017, and found plaintiffs had reasonably settled a claim covered by the policy for $60, 000 and incurred attorney fees of $26, 784.27 in doing so. The court then entered judgment for plaintiffs in the amount of $86, 784.27. (Dkt. 119).

         The matter is now before the court on Farm Bureau's Motion for New Trial or for Judgment as a Matter of Law (Dkt. 123) and on plaintiffs' Motion for Attorney Fees (Dkt. 122). In the first motion, Farm Bureau argues the verdict was against the weight of the evidence. In the second motion, plaintiffs argue they are entitled to attorney fees under K.S.A. § 40-908 or § 40-256 in the amount of $431, 670.00.

         I. Motion for New Trial (Dkt. 123)

         Farm Bureau moves for a new trial under Fed.R.Civ.P. 59(a)(1)(A) or for judgment as a matter of law under Fed.R.Civ.P. 50(b). It argues the evidence demonstrated that the settlement between plaintiffs and the KWA was made to resolve injuries caused by plaintiffs' sale and distribution of Fuller seed wheat, not to resolve a claim for wrongfully advertising the seed. Farm Bureau argues the evidence is incompatible with the judgment and with the court's ruling that the policy provided no coverage for claims of wrongfully selling or distributing the seed.[1] Farm Bureau asks the court to grant one of several alternative remedies including a judgment in its favor, remittitur of the damages to $7, 000-$8, 500, or a new trial. (Dkt. 123 at 12-14).

         Judgment as a matter of law under Rule 50 may only be granted when “a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.” Fed.R.Civ.P. 50(a); In re: Cox Enterprises, Inc. v. Cox Communications, Inc., 871 F.3d 1093, 1096 (10th Cir. 2017). In other words, judgment as a matter of law is appropriate “only if the evidence points but one way and is susceptible to no reasonable inferences which may support the nonmoving party's position.” In re: Cox Enterprises, 871 F.3d at 1096 (citations omitted).

         A motion for new trial under Rule 59(a) may be granted “for any reason for which a new trial has heretofore been granted in an action at law in federal court….” Fed.R.Civ.P. 59(a)(1)(A). Such motions, which are committed to the discretion of the trial court, are not regarded with favor and are granted only with great caution. Paradigm Alliance, Inc. v. Celeritas Technologies, LLC, 722 F.Supp.2d 1250, 1258 (D. Kan. 2010). They are generally granted only “when the court believes the verdict is against the weight of the evidence, prejudicial error has occurred, or substantial justice has not been done.” Feldt v. Kan-Du Const. Corp., No. 12-1064-MLB, 2015 WL 1523905, * (D. Kan. Apr. 3, 2015).

         Under the instructions, plaintiffs were entitled to recover any sums they reasonably paid to settle the claim by KWA that they wrongfully advertised Fuller seed wheat, as well as any attorney fees incurred in defending that claim. The jury was instructed that plaintiffs were “not entitled to recover any sums they paid to settle other claims, or for attorney fees or expenses they paid for defending or settling other claims.” (Dkt. 115 at 15). The jury was further told it was a question of fact for them to determine from the evidence the extent to which the settlement was to resolve a claim of wrongfully advertising the seed as opposed to resolving other claims, and that the extent to which the settlement was for the advertising claim “depends on how the parties to the settlement viewed the relative merits of the claims at the time of settlement.” (Id. at 16).

         The jury's conclusion that the entire $60, 000 was paid to resolve the wrongful advertising claim was not outside the bounds of reason. The KWA complaint included allegations that plaintiffs wrongfully advertised Fuller seed wheat in violation of KWA's rights under the PVPA and thereby caused harm to KWA. As the court noted on summary judgment, plaintiffs' “advertisement of Fuller wheat for sale, standing alone, was an infringement of KWA's exclusive right to market Fuller wheat, ” and plaintiffs “thus caused an ‘advertising injury' within the meaning of the policy….” (Dkt. 95 at 15). The jury heard Brett Parker's testimony that the KWA did not offer him a breakdown of its claimed damages or distinguish between damages from advertising the seed and selling or distributing it, and that in Parker's mind “it all triggered off of the advertising it….” Nothing in the Parker-KWA settlement agreement or consent judgment indicated any particular breakdown or allocation of damages.

         The jury also heard testimony that Parker obtained the Fuller seed wheat from Steve Hirt, that Hirt never advertised the seed, and that the KWA sued Parker but did not sue Hirt. The jury could reasonably draw an inference that Parker's advertising of the seed was a factor in the KWA seeking damages from him.[2]

         The jury also heard testimony from Daryl Strouts, a KWA witness, who said the KWA was not seeking and did not suffer any damages from the advertisement. But the KWA's complaint against plaintiffs can be construed as seeking damages from the advertisement. Moreover, Strouts testified that his job included monitoring advertisements for protected varieties of wheat, and that when he found such an ad he would forward it to the KWA's attorney for action, as he did with plaintiffs' advertisement. As a result of the advertisement, the KWA commenced an undercover buy of Fuller seed from plaintiffs and subsequently brought the lawsuit alleging, among other things, a violation of the PVPA based upon the advertisement. Moreover, despite Strouts' testimony that the advertisement played no part in the KWA settlement, an attorney for the KWA stated in a February 2014 letter (Exh. 25) that, insofar as the amount of any settlement payment was concerned, the KWA had to recover its substantial costs of investigation and legal fees because Parker “was publically advertising federally protected varieties of wheat seed for sale, and [KWA] has a legal duty to police infringement of its intellectual property.”

         The court instructed the jury that the amount of the settlement attributable to the advertising claim was a question of fact for it to determine. The instructions placed the burden of allocating the settlement on the plaintiffs, although some case law suggests the burden should be on the insurer in such circumstances.[3] The jury apparently resolved the question by viewing the evidence and all reasonable inferences in plaintiffs' favor, as was its prerogative. It may have viewed the settlement of the advertising claim as effectively inseparable from the other claims. Farm Bureau cites no particular evidence or fact precluding the jury's finding. Regardless of how another jury might have weighed the evidence, this jury's conclusion is not without support in the record, and the court concludes the verdict does not warrant a new trial, a judgment in Farm Bureau's favor, or any other relief. The matter was submitted to a jury because the degree to which the KWA settlement was based upon the advertising claim presented a genuine issue of fact and because the parties could not agree upon an allocation of the settlement.

         Farm Bureau additionally argues the judgment should be reduced to $7, 000 or $8, 500, which it contends are the amounts for which plaintiffs could have settled the KWA suit but for plaintiffs' failure to name the suppliers and recipients of the Fuller wheat. The court expressed some concern about that issue prior to trial (Dkt. 121 at 6), but ultimately concluded the jury “can consider that evidence in determining whether the eventual settlement requiring Parker to pay $60, 000 was reasonable [and] whether he failed to mitigate his damages….” (Id. at 8). Plaintiffs' assertion at trial that he “couldn't” agree to the KWA's initial settlement offers appeared to be based on the negative consequences he would suffer by exposing his neighbors to liability, rather than on any factual or legal barrier to making the settlement, but again, the court concludes that the reasonableness issue was for the jury, rather than the court, to resolve. The court cannot substitute its judgment for the jury on what is essentially a factual question.

         Farm Bureau also seeks a new trial based on what it contends was “the plaintiffs' pervasive and misleading arguments regarding insurance coverage.” (Dkt. 123 at 14-18). The argument is based in part on evidentiary rulings by the court and in part on arguments by plaintiffs and their counsel that Farm Bureau treated them unfairly, with the trial allegedly becoming “a ...

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