Chapter 23 - Warranties Case Problem

• Read the case   Rothing v Kallestad  
  
  
• Explain the following case statements
• #1 - Peter and Tanya Rothing (the Rothings) brought this action to recover damages resulting from the death of nineteen horses owned by the Rothings that they alleged were fed botulism contaminated hay purchased from Arnold Kallestad (Kallestad). The Rothings sought recovery under theories of strict liability in tort, negligence and breach of contract. The District Court for the Eighteenth Judicial District, Gallatin County, granted Kallestad's Motions for Summary Judgment thereby dismissing the Rothings' Amended Complaint. The court also granted two Motions to Compel filed by Kallestad, awarded Kallestad his attorney's fees and granted Kallestad's Motion for a Protective Order regarding the determination of attorney's fees. The Rothings appeal. We affirm in part, reverse in part and remand for further proceedings consistent with this Opinion.
• #2 - The Rothings raise several issues on appeal which we have restated as follows: ¶3 1. Whether the District Court erred in concluding that hay is not a "product" for purposes of a strict liability in tort cause of action. ¶4 2. Whether the District Court erred in concluding that the Rothings' negligence claim against Kallestad fails because it was unforeseeable that the hay could cause injury and death to the Rothings' horses, thus no duty of care existed. ¶5 3. Whether the District Court erred in concluding that the Rothings' breach of contract claim against Kallestad fails because it was unforeseeable that the hay could cause injury and death to the Rothings' horses.
• #3 -   In the instant case, the Rothings' purchase of hay from Kallestad was a transaction in goods, thus it may be governed by Montana's Uniform Commercial Code (UCC) pertaining to sales if it meets the other requirements of Title 30, Chapter 2, Montana Code Annotated (1999).^[1] Section 30-2-102, MCA, provides: "Unless the context otherwise requires, this chapter applies to transactions in goods . . . ." "Goods" are defined at § 30-2-105(1), MCA, to mean: all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities . . . and things in action. "Goods" also includes the unborn young of animals and growing crops and other identified things attached to realty . . . . [Emphasis added.] Hence, as the Official Comment to § 30-2-105, MCA, provides: "The definition of goods is based on the concept of movability . . . . It is not intended to deal with things which are not fairly identifiable as movables before the contract is preformed." The hay in this case had been cut, baled and stacked and was "movable" at the time the Rothings purchased it from Kallestad.
• #4 -  In addition to the requirement that the transaction consist of the sale of "goods," the seller must meet the definition of a "merchant." A "merchant" under the UCC "means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction . . . ." Section 30-2-104(1), MCA. Whether or not a person qualifies as a merchant under the UCC is a mixed question of law and fact. Smith, 291 Mont. at 430, 968 P.2d at 726 (citing Dawkins & Co. v. L & L Planting Co., 602 So. 2d 838, 843 (Miss. 1992)). We further stated in Smith that [d]espite the split of authority on this issue, a majority of courts have held that under the Uniform Commercial Code, a farmer may be included under the definition of "merchant" in some instances. However, whether a particular farmer qualifies as a merchant cannot be determined through application of a per se rule; rather, it is a conclusion that must be reached on a case by case basis.
• #5 - Thus, in this case, if the trial court determines that Kallestad was a merchant for purposes of the sale of his hay to the Rothings, then the provisions of the UCC, and more specifically, the Implied Warranty of Merchantability, would apply to this transaction. "Unless excluded or modified [], a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind." Section 30-2-314(1), MCA
• #6 - Prior to the advent of the UCC, the common law concept of "implied warranty" developed in cases of food stuffs sold for immediate human consumption where "a warranty of soundness or wholesomeness will be implied." Larson v. Farmers Warehouse Co., 297 P. 753, 754 (Wash. 1931). Courts extended the concept of implied warranty to products to be fed to livestock, but initially limited its application to "processed and packaged" food. See, e.g., Midwest Game Co. v. M.F.A. Milling Co., 320 S.W.2d 547, 550 (Mo. 1959) (attaching implied warranty where the animal food "is not in its raw state but has been processed and packaged by the manufacturer").
• #7 - These principles were carried over into the UCC.^[2] Now, under the UCC, goods to be merchantable must be at least such as: (a) pass without objection in the trade under the contract description; and (b) in the case of fungible goods, are of fair average quality within the description; and (c) are fit for the ordinary purposes for which such goods are used; and (d) run, within the variations permitted by the agreement, of even kind, quality, and quantity within each unit and among all units involved; and (e) are adequately contained, packaged, and labeled as the agreement may require; and (f) conform to the promises or affirmations of fact made on the container or label if any. Section 30-2-314(2), MCA (emphasis added). "Surely goods are not merchantable, if in their ordinary use, the goods cause damage to the property to which they are applied or harm to the person using them." Streich v. Hilton-Davis, Div. of Sterling Drug, 214 Mont. 44, 59, 692 P.2d 440, 448 (1984).
• #8 - Furthermore, Article 2-715(2)(b), does not contain a foreseeability requirement, thus a seller "is liable for injury to person or property even if the seller did not know of or have reason to know of the buyer's intended use." James J. White & Robert S. Summers,Uniform Commercial Code vol. 1, § 10-4, 733 (5th ed., Thomson West 2006). Analogously, this Court has established that forseeability is not required in connection with causation in negligence cases. See Prindel v. Ravalli County, 2006 MT 62, 331 Mont. 338, 133 P.3d 165 ("In order to establish proximate causation, however, the specific injury to a plaintiff need not have been foreseen.") (internal quotation marks and italics omitted); Busta v. Columbus Hosp. Corp., 276 Mont. 342, 916 P.2d 122 (1996)(where this Court held that in cases which do not involve issues of intervening cause, proof of causation is satisfied by proof that a party's conduct was cause-in-fact of damage alleged, and no consideration of foreseeability is required in connection with causation). ¶38 Thus, contrary to the District Court's conclusion that all breach of contract actions in Montana require foreseeability, a breach of contract action under the UCC does not require foreseeability if injury to person or property proximately results from any breach of warranty.
• #9 -  ¶39 Accordingly, we hold that the District Court erred in granting Kallestad's Motion for Summary Judgment on the Rothings' breach of contract claim. 
• #10 - Explain who won the case and provide a conclusion