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Hoover's Hatchery, Inc. v. Utgaard - 447 N.W.2d 684 (Iowa Ct. App. 1989)


To grant a directed verdict, a trial court must find that the evidence is insufficient as a matter of law to sustain the allegation brought. A directed verdict is appropriate in cases where each element of the claim is not supported by substantial evidence. A mere scintilla of evidence is not sufficient to require denial of a motion for directed verdict. The trial court is vested with considerable discretion in determining whether evidence is sufficient.


Plaintiff Hoover's Hatchery filed a lawsuit against defendant Utgaard's Hatchery for breach of contract, fraud, negligent misrepresentation, promissory estoppel, and equitable estoppel. The trial court dismissed the fraud claim and concluded that defendant had breached a "requirements contract." The trial court determined that plaintiff had suffered significant losses. However, the trial court also determined that plaintiff had failed to mitigate its damages; therefore, the trial court awarded it only 30 percent of its total damages. Both parties appealed. Defendant contended that no requirements contract was established because plaintiff knew defendant would be acquiring some chicks from sources other than plaintiff.


Did the trial court err in directing a verdict for defendant hatchery, which contended the parties did not enter into a requirements contract, in plaintiff hatchery's action for fraud? 




The Court of Appeals of Iowa held that there was substantial evidence in the record to support the trial court's conclusion that plaintiff Hoover’s was aware of the intention of defendant Utgaard's to accept fewer chicks than originally estimated. Because plaintiff's evidence was insufficient to establish the element of intent necessary to a fraud action, the Court held that the trial court did not err in directing a verdict for defendant and in dismissing plaintiff's fraud claim. 

Next, the Court rejected defendant's arguments that, as a matter of law, the agreement could not have constituted a requirements contract between the parties. The Court found sufficient evidence to support the trial court's determination that the parties had entered into a requirements contract. Nothing in the statutory language of the applicable statute suggested that exclusivity is a prerequisite to the establishment of a requirements contract.

Finally, the Court affirmed the reduction of damages. Substantial evidence supported the trial court's conclusion that plaintiff was aware of defendant's intention to accept fewer chicks than originally estimated, and yet plaintiff failed to mitigate its losses in response to these breaches. 

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