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Eleventh Circuit Rules on Food Distribution Contract Dispute

Top view of worker standing by apple fruit crates in organic food factory warehouse.

On Monday, the Eleventh Circuit issued its decision in Calloway v. Oakes Farm Inc. The action involved breach of contract claims and counterclaims between C-Squared Farms (C-Squared), a produce farmer, and Oakes Farms, Inc. (Defendant) C-Squared’s  contractually designated “exclusive sales agent.” The court

The Northern District of Alabama found in favor of Defendant, and C-Squared appealed. The Eleventh Circuit affirmed the rulings of the district Federal jurisdiction was based upon diversity of citizenship, and the federal courts applied Alabama law.

The parties entered into the contract in issue in 2018.  “Under the contract, C-Squared agreed to grow produce that Oakes would sell to third parties in exchange for a fee.” The Eleventh Circuit notes several contractual undertakings by Defendant: “Among other things, Oakes agreed to provide a Quality Control Assistant, labor for harvesting and ‘Growers Advances.’”

At the trial court level, the parties filed “competing” motions for summary judgment. Plaintiffs argued in its motion that Defendant “breached the contract by failing to 1) provide a quality control assistant 2) provide harvesters and 3) issue the August 15 [2018] Growers Advance. C-Squared argued that these failures amounted to a repudiation of the contract by Oakes, excusing any further performance by C-Squared.”

The defendant argued in its motion “that C-Squared breached its contract in one of two ways:1) by treating the contract as continuing after it filed suit but failing to continue performing its obligations; or 2) by repudiating the contract or rescinding without giving Oakes prior notice of the alleged breach and an opportunity to cure.”

The district court granted the defendant partial summary judgment. After that decision, “the only remaining issue was whether Oakes’s failure to issue the August 15 Growers Advance amounted to breach. And if so, whether C-Squared provided Oakes with notice and an opportunity to cure.” Without giving such notice, “then its decision to file suit and sever all communications could be considered a repudiation of the contract, excusing any further performance by Oakes.” After a bench trial, the district court found in favor of Defendant.

On appeal, the Eleventh Circuit reviewed the district court’s granting of partial summary judgment on a de novo basis. In contrast, the Eleventh Circuit reviewed the issues actually tried in the district court under a “clear error” standard. Quoting its own precedent, the court stated, “We review ‘factual findings made by a district court after a bench trial for clear error, which is a very deferential standard of review.’ “  

The Eleventh Circuit upheld both the trial court’s granting summary judgment and its “post-trial rulings,” finding that “C-Squared filed suit, cut off all communications, and hired replacement sales agents” instead of offering any opportunity to cure the controversy at issue.

The plaintiffs are represented by Klinowski Damiano and Maynard Cooper & Gale, while the defendants are represented by Bracci Law and Littler Mendelsohn.

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