Crowell v. Campbell Soup Company

264 F.3d 756 (8th Cir. 2001)

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Nature of the Case

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Facts

Beginning in 1987 and continuing until the mid-1990s, several Ps entered into broiler chicken production contracts with Herider a wholly-owned subsidiary of D. Ps were to construct, equip, and operate poultry barns in return for Herider's agreement to regularly place newborn chicks with Ps. An average barn cost roughly $ 250,000 to construct and had a 40,000 chick capacity with an approximate 60-day turnaround time for feeding the chicks to processing weight. Each P signed a written Growing Agreement and an accompanying Poultry House Financing Addendum. On May 19, 1997, Herider sent a letter to each P informing them that D would be shutting down its processing plant in Worthington, Minnesota and that Herider would cease placing flocks of chickens with Ps. Ps brought suit alleging breach of contract, fraudulent inducement, and misrepresentation, and breach of the covenant of good faith and fair dealing. Ps base their wrongful termination claim on allegations that Herider made several precontract oral promises, namely that Herider was committed to placing chicks with Ps during the useful lives of the barns, that Herider would only terminate the Growing Agreements 'for cause,' and that Herider promised certain profit projections which never came to fruition. The contracts provided that Ps were entitled to 'the reasonable cost of financing construction of a poultry house,' according to an attached schedule, in the event that Herider elected to terminate the placement of flocks with Ps prior to the placement of 35 flocks (for contracts entered into prior to 1989) or of 40 flocks (for contracts entered into thereafter). The district court prohibited parol evidence of any precontract oral promises made by Herider because it found that neither the main contracts nor the accompanying addenda were ambiguous as to Herider's right to terminate the contract without cause at any time, provided no flocks were present or scheduled to be present in the barns. The court dismissed the misrepresentation, fraudulent inducement, and rescission claims holding that Ps' reliance on the alleged oral promises was unreasonable because any such reliance was completely contradictory to the termination-at-any-time provisions of the written contracts. Both sides appealed.