INSURANCE-RELATED COURT CASES
Digested from case reports published online
One potato, two potato
A dispute arose from John D. Miller Jr. d/b/a John Miller Farms, Inc., and JD Miller, Inc.’s sale of seed potatoes to Johnson Farming Association, Inc. Miller operated a farm in Minto, North Dakota. During the 2015 planting season, Miller planted seed potatoes. Miller claimed that a North Dakota State Seed Department representative inspected the field where the seed was being grown on July 13, July 26, and September 3, 2015, which indicated no problems with the seed crop.
On or about September 3, 2015, Miller “killed the vines” in anticipation of and as required to harvest the seed crop. Miller harvested the crop between September 18 and September 25, 2015, and the harvested crop was immediately taken from the field to Miller’s storage facility south of Minto.
On December 31, 2015, Miller and Johnson entered into a contract for the sale of seed potatoes. The contract disclaimed any express or implied warranty of merchantability or fitness for a particular purpose and contained a limitation of consequential damages and remedies.
In June or July 2016, Johnson informed Miller of problems with some of the seed potatoes he had purchased. Johnson stated an analysis definitively showed very high levels of the herbicide glyphosate, which caused the problems with the potatoes. The potatoes did not grow properly, and Johnson alleged damages as a result.
It was undisputed that the seed potatoes were damaged because an employee of Miller’s inadvertently contaminated the potatoes with glyphosate while they were growing on Miller’s farm. In July 2016, Miller sought coverage for the loss from its insurer, Nodak Insurance Company. Nodak sent Miller a letter that denied coverage and cited a policy exclusion, which the parties alternately referred to as the “seed performance” or “failure to conform” exclusion.
In October 17, Johnson sent Miller a written demand for losses that totaled $365,593.45. Miller personally reimbursed Johnson for this amount.
In December 2018, Miller commenced an action against Nodak seeking damages after Nodak refused to provide coverage under the policies for Miller’s claim that related to damaged seed potatoes. Miller sought damages of $421,890.18, alleging breach of contract, negligence, unjust enrichment, and bad faith. Nodak answered, denying Miller’s claims and maintaining that denial of coverage was proper.
In May 2019, Nodak moved for summary judgment, arguing that Nodak properly denied coverage under an exclusion, was not negligent, and acted in good faith in denying the claim. Miller made a cross-motion for summary judgment on its claims for breach of contract, negligence, unjust enrichment, and bad faith. In January 2020, the district court denied both parties’ motions for summary judgment.
In April 2020, Nodak moved for reconsideration and clarification. In its December 2020 order, the court granted summary judgment to Nodak on Miller’s claims for negligence and unjust enrichment, but held that the exclusions relied on by Nodak to preclude Miller’s claim for coverage were inapplicable.
In November 2021, the court issued its findings of fact, conclusions of law, and order for judgment. The court held that Miller’s contract with Johnson limited damage to the stipulated contract price paid of $104,000, and the policy did not require Nodak to compensate Miller beyond the contractual liability. A final judgment was subsequently entered that awarded Miller $104,000 plus prejudgment interest of $25,216.44 for a total of $129,216.44.
Because the North Dakota Supreme Court concluded that a policy exclusion applied and precluded coverage, the court reversed the district court’s judgment.
Miller v. Nodak Insurance Company—North Dakota Supreme Court—March 3, 2023—No. 20210341.