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A trial court ruled correctly that three Jasper County farms could recover damages from a seed company under promissory estoppel, but the court improperly calculated those damages, the Court of Appeals of Indiana ruled Wednesday.
According to court records, Gary Hamstra Farms Inc., Woolever Farms Inc. and Klemp Farms Inc. grew seed corn for AgReliant Genetics LLC at different times between 1992 and 2017.
In 2018, AgReliant informed the three Jasper County farms that the company did not plan to grow seed corn that year, even though its agent had already spoken with the farms about setting aside acreage for the 2018 growing season.
The farms brought an action for breach of contract in March 2018.
In January 2021, the Jasper Circuit Court allowed the farms to add a claim of promissory estoppel against AgReliant.
Following a 2022 bench trial, the trial court entered judgment in favor of the farms on a theory of promissory estoppel.
The trial court also awarded damages to Hamstra in the amount of $222,771, to Woolever in the amount of $190,473 and to Klemp in the amount of $176,396. Those damages were calculated based on the net profits the farms would have earned in 2018 had they planted AgReliant’s seed corn according to their 2017 profits, minus the profits the farms actually realized in 2018.
AgReliant appealed and argued the trial court clearly erred in granting a judgment on a claim of primary estoppel. The company also claimed the trial court erred by awarding damages based on the benefit of the bargain instead of the expenses the farms actually incurred relying on AgReliant’s statements.
The appellate court ruled the trial court did not clearly err in finding the farms established the elements of promissory estoppel, but it reversed in finding the trial court did improperly award benefit-of-the-bargain damages instead of reliance damages.
The Court of Appeals remanded the case with instructions that the Jasper Circuit Court determine the farms’ reliance damages in the manner the trial court deems appropriate.
Judge Elizabeth Tavitas wrote the opinion for the appellate court.
AgReliant contended there was no evidence to support the trial court’s determination that its agent made any promises to the farms or that the company expected the farms to rely on any promise that was made.
The appellate court disagreed, with Tavitas noting the trial court could reasonably conclude AgReliant’s agent, by his word and conduct, effectively promised the farms that AgReliant would use their land to grow seed corn in the 2018 season. Specifically, AgReliant agent Clif Jones, as in past years, approached the farms during the 2017 harvest and requested that hey set aside acreage to grow AgReliant seed corn, even requesting the use of specific fields and acreage and giving maps listing the farms and fields the company wanted to use.
“Given the prior course of dealing between the parties, and Jones’s statements and conduct, the trial court could reasonably conclude that AgReliant should have known that the (farms) would rely on statements and requests made in 2017,” Tavitas wrote.
The appellate court also found ample evidence that the farms relied on AgReliant’s promises and not only set aside acreage to grow the company’s seed corn, but also delayed purchases of other seeds and fertilizers necessary to grow other crops.
But on the issue of damages, the appellate court agreed with AgReliant that the trial court should not have awarded the farms damages based on the difference of what they would have earned in net profits in 2018 had they planted the company’s seed corn and what they actually earned by growing replacement crops.
The COA rejected the farms’ argument that, given the equitable nature of the remedy of promissory estoppel, the trial court had wide latitude to determine damages.
Tavitas wrote that the Indiana Supreme Court has clearly held that only reliance damages are recoverable under a theory of promissory estoppel.
AgReliant also argued the case should be remanded with instructions that the trial court enter an award of zero damages, but the appellate court rejected that argument.
“This would obviously frustrate the purpose of the equitable remedy of promissory estoppel,” Tavitas wrote. “The (farms) would have a victory in name only — a favorable judgment under a theory of promissory estoppel with no recoverable damages. The (farms) testified that, based on their reliance on AgReliant’s promises, they lost the opportunity to receive certain discounts on seed and chemicals they would have otherwise been able to receive by purchasing such products earlier.”
Judges Terry Crone and Leanna Weissmann concurred in AgReliant Genetics, LLC v. Gary Hamstra Farms, Inc., Woolever Farms, Inc., Klemp Farms, Inc., 22A-CC-1827.
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