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Herr v. Cornhusker Farms

United States District Court, D. North Dakota

March 27, 2017

Glenn Herr, Plaintiff,
Cornhusker Farms; James Husby, individually; and Zylstra Investigations, LLC, Defendants.



         On December 10, 2015, plaintiff Glenn Herr initiated the above action against defendant Cornhusker Farms (“Cornhusker”), a general partnership between James Husby and Dennis Jones, both of whom reside in the Aberdeen, South Dakota area. (Doc. Nos. 30, pp. 6-7; 30-3, pp. 4-6). Also named as defendants are James Husby in his individual capacity and Zylstra Investigations, LLC. The latter is a one-person private investigation firm owned and operated by Laura Zylstra Kaiser, a former South Dakota state criminal investigator and a graduate of the University of South Dakota School of Law. (Doc. No. 41-1, pp. 4-6). For purposes of the discussion that follows, “Zylstra” will refer either to Kaiser or her investigation firm as the context requires, keeping in mind that Herr has sued only the latter.

         In his complaint, Herr has asserted a number of claims arising out of: (1) Cornhusker having accused him of stealing a load of its soybeans in 2013 (an accusation Herr claims lacked any reasonable basis in fact); (2) Cornhusker, with the assistance of Zylstra, attempting to coerce payment for the soybeans with threats of bringing criminal charges; and (3), when that failed, Cornhusker, again with the assistance of Zylstra, causing a felony charge of theft to be brought against him that ultimately was dismissed for lack of probable cause following a preliminary hearing. (Doc. No. 1).

         Before the court now is Zylstra's motion for summary judgment seeking dismissal of the claims brought against it for: (1) negligence; (2) intentional infliction of emotional distress; (3) abuse of process; and (4) malicious prosecution. In considering this motion, the court's task is to determine whether there is a legal basis for the claims and enough evidence to allow them to go forward. In making these evaluations, the court must at this stage consider the facts in a light most favorable for Herr, including drawing all appropriate inferences in his favor. E.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         Also before the court is Herr's motion to amend his complaint to request punitive damages. As discussed later, this motion is governed by N.D.C.C. § 32-03.2-11(1) and similarly requires an evaluation of the proffered evidence in the light most favorable to Herr.


         A. The Cornhusker and Herr soybean operations

         Husby and Jones started their farming partnership by renting land in Bowdle South. In addition to farming this land, Cornhusker also farmed additional acreage in South Dakota and North Dakota, including the acreage at issue in this case that Cornhusker rented from Lydia Herr in McIntosh County, North Dakota. This acreage is located approximately 13 miles southwest of Wishek, which is the closet town. Ashley, the county seat for McIntosh County, is located approximately 19 miles to the southeast. Cornhusker's “Wishek acreage” is adjacent to some of the land that Herr farms in the area with the assistance of his son. (Doc. Nos. 30 pp. 8-9; 30-3, p. 6; 31, p. 67; 33, p.28; 41-3, p. 4).

         When Husby and Jones first rented the Wishek acreage in 2012, they sought the assistance of the Herrs to help farm it given its distance from their operation near Bowdle, some 60 miles to the south, and from Aberdeen where the two partners resided, which is somewhat further away. As is pertinent here, the Herrs did the spraying and much of the harvesting of Cornhusker's Wishek acreage for the 2012 to 2014 farming seasons. Also pertinent here is that Cornhusker and Herr both grew soybeans as part of their respective farming operations and, during 2013, the Herrs harvested both acreages. (Doc. Nos. 30, pp. 31 &39; 30-3, pp. 6-9; 41-2, pp. 5-8).

         There is evidence that, when Herr harvested Cornhusker's soybeans, the beans would be loaded into trucks and transported the same day or the next to one or more elevators in the vicinity, some of which Cornhusker had pre-existing contracts with for sale of soybeans. The same was not necessarily true for Herr's soybeans since he had on-farm storage. (Doc. Nos. 30, p. 12; 41-3, p. 11). Hence, any of beans that Herr might deliver to the elevator may have come either from the fields as the beans were being harvested or may have come from onsite storage.

         B. The November 2014 call by Husby and Jones accusing Herr of converting a load of soybeans harvested in 2013

         After the 2014 harvest, Husby and Jones had a phone conversation with Herr that November to discuss the spraying bill that the Herrs had presented to Cornhusker for spraying in 2014 as well the amount owed by Cornhusker for use of certain of their equipment. During this conversation, Husby and Jones claimed that Herr had misappropriated a load of Cornhusker's soybeans the year prior during the 2013 harvest. More specifically, they claimed that a load of soybeans that Herr had delivered on October 30, 2013, to the North Central Farmers Elevator in Hague, North Dakota (the “Hague elevator”) and deposited in his name came from Cornhusker's soybean acreage and not his own. (Doc. Nos. 30, pp. 14-15; 32, pp. 23-24, 32-33; 30-3, pp. 8-9; 43; 41-2, p. 7; 43, Herr call 001).

         There is evidence that, for Herr, this accusation of theft in November 2014 of a load of 2013 soybeans - more than a year after the delivery of the load in question and after the intervening 2014 harvest - came out of the blue. Relevant later is that there is some evidence that, during this phone conversation, Herr may have stated, without the benefit of looking at records and having time to reflect on the matter, that he completed the harvest of his soybeans on October 27, 2013, before starting on the same date on the Cornhusker acreage. (Doc. Nos. 30, p. 19; Doc. No. 43, Herr call 001). As discussed later, Herr later told Cornhusker's investigator prior to any criminal charge being brought that he had concluded after a review of his records that, while he had finished the bulk of his soybean harvest prior to starting on Cornhusker's acreage on October 27, there was one field that he did not finish until the morning of October 30.

         What may be of particular concern to a jury in this case are two points about the timing of the initial November 2014 phone call. One is the fact that it did not come until after the Herrs had presented Cornhusker with their bill for 2014 spraying, which Cornhusker disputed and to date has not paid. The amount of this bill was approximately $15, 000, slightly more than the value of $14, 000 that Cornhusker placed on the load of soybeans that it accused Herr of stealing. Second, despite professing to have believed that Herr had stole a load of its soybeans, Cornhusker not only did not report the suspected theft to authorities at that time, it continued to employ the Herrs to do their 2014 spraying and assist with the harvest of the 2014 crop. (Doc. Nos. 30, pp. 47; 32, pp. 23-24, 42-43; 30-3, pp.8-9; 43, Herr call 001).

         C. Cornhusker's retention of Zylstra and the questionable “evidence” provided by Husby and Jones

         When Herr would not acknowledge that the October 30, 2013 load of beans belonged to Cornhusker, Husby and Jones retained Zylstra. A jury could conclude from the evidence that follows that Zylstra was engaged not to conduct an independent investigation as to whether Herr actually stole the soybeans, but rather to put together in a package the “evidence” that Husby and Jones believed could be used to pressure Herr with a claim of theft.

         Husby and Jones first met with Zylstra at a Perkins restaurant in Aberdeen, South Dakota on December 1, 2014. During this meeting, Husby and Jones turned over some (but not all) of the certificates evidencing the deliveries of soybeans that had been harvested from Cornhusker's acreage by the Herrs in late October and the beginning of November 2013. The certificates that Husby and Jones turned over were for deliveries to the Northern Plains Cooperative Elevator at Venturia, North Dakota (the “Venturia elevator”). Husby and Jones also outlined for Zylstra why these grain certificates along with other information that they claimed was true demonstrated that the load of beans that Herr delivered to the Hague elevator on October 30, 2013, came from Cornhusker's fields. The “evidence” that appears to have been provided by Husby and Jones to Zylstra was the following:

• Husby's assertion that Herr had completed the harvest of his own soybeans on October 27, 2013, some three days prior to the October 30 load being delivered to the Hague elevator.
• Husby's claim that a widespread precipitation event blanketed the area with an inch or more of rain that began on the evening of October 28, 2013, and continued for most of the next day. According to Husby, this precipitation event caused the moisture levels of the first load of soybeans harvested after the 28th and 29th to have a higher moisture content than the soybeans harvested on October 27-28 from Cornhusker's fields and, since the load delivered by Herr to the Hague elevator on October 30 had the same moisture content as the loads that were delivered from Cornhusker's fields on October 28, that load must have come from its fields.[1]
• Husby's claim that a semi-truck full of soybeans that Cornhusker's hired hand, Miles Grein, claimed to have remembered seeing parked at the Herr farmstead at about noon on October 28, 2013, was likely the load of beans that Herr delivered to the Hague Elevator two days later.[2]
• Husby's suspicion that Herr may have committed other acts of theft of its harvested crop including a load of 2012 corn and maybe more soybeans harvested in early November 2013 after the load in question. Also, because of the number of weeds in some of their fields, he suspected that the Herrs may have been shorting Cornhusker on the amount of chemical being applied when they sprayed.

(Doc. Nos. 30, pp. 13-27; 31, pp. 94-122; 30-3, pp.9-10; 41-1; 43, Herr Calls 001 & 004).

         For all of these things, Husby and Jones had no firsthand knowledge because neither of them were around when any of the alleged events took place. (Doc. Nos. 30, pp. 13-27; 31, pp. 87-88; 30-3). As for Grein, Cornhusker's hired hand, his firsthand knowledge was also limited. The Herrs started combining the field of Cornhusker soybeans in question on October 27. Grein, who also was from South Dakota, did not arrive with his semi to help haul the harvested Cornhusker soybeans until the 28th. Grein worked that day hauling several loads of soybeans as the Herrs completed the harvest of the field in question and returned to South Dakota that evening. Hence, his firsthand knowledge was limited to what he saw on the 28th. In addition, as discussed later, he had his own personal issues with Herr. (Doc. Nos. 30, pp. 13-27; 43, Grein call).

         For reasons discussed in more detail later, a jury could conclude from the evidence now before the court that there was no reasonable basis in fact for what Husby and Jones told Zylstra (and Husby later repeated to the court) and that their theory for why the October 30 load of soybeans belonged to them was offered in reckless disregard of the truth if not with a purposeful intent to deceive. As will be discussed later, state district court Judge Narum ultimately concluded that Cornhusker's “evidence” that Herr had stolen the October 30 load of beans lacked probable cause.

         D. Evidence that Cornhusker did not turn over to Zylstra or to law enforcement

         In addition to the problems with the “evidence” supplied by Husby and Jones, it now appears clear that they did not turn over to Zylstra or later to law enforcement authorities certain information that they had in their possession that a jury could conclude was damning to their claim that Herr had stolen the October 30 load of soybeans. More particularly what appears not to have been turned over is two sets of information.

         The first set was: (1) all of Cornhusker's elevator certificates for loads of soybeans that were hauled and deposited in Cornhusker's name for what was harvested on October 27 and 28; (2) information identifying the particular field of Cornhusker beans that had been harvested on the 27th and 28th and the number of planted acres of soybeans in that field; and (3) the information that Cornhusker possessed with respect to what yields were being achieved from that field. The relevance of this kind of information is readily apparent. If the total pounds of soybeans for all of the loads that were hauled and deposited in Cornhusker's name roughly matched what was expected based on the number of planted acres and the apparent yield, then there would likely not have been a missing load of soybeans for the acreage harvested on October 27-28.

         While Husby and Jones did turn over to Zylstra three of the delivery tickets for soybeans harvested from its acreage on those two dates - one ticket for a load delivered by Herr on the morning of the 28th for soybeans harvested the day prior and two tickets for loads delivered by Grein on the 28th - all of which were delivered to the Venturia elevator, it did not turn over to Zylstra, the BCI, or McIntosh law enforcement authorities the delivery ticket for the last load of the day that was delivered by Grein to an elevator in Wishek (“Wishek elevator”). During the preliminary hearing, Herr's attorney presented evidence that, with this last load of soybeans, it appeared that all of Cornhusker's harvested soybeans had been accounted for and that, if the October 30 load was added to that, this would have resulted in a yield substantially in excess of what the evidence showed the soybeans had been running. Judge Narum found his evidence to be compelling. (Doc. Nos. 30, pp.17-25; 31, pp. 50, -51, 89-92; 41-1, pp. 15-17).

         The second set of information that Cornhusker had available to it that was not turned over to Zylstra, or anyone else, is what it had itself had sworn to under oath as having been the amounts of soybeans harvested from the field in question on October 27-28. There is evidence which suggests that, when this information is also compared to the total amounts of soybeans that were delivered and deposited in its name, including the amount of the load for the ticket it had not disclosed, that all of the soybeans that possibly could have come from Cornhusker's acreage on the 27th and the 28th were delivered to elevators and deposited in Cornhuskers's name. (Doc. Nos. 36; 36-1). This evidence only came to light when Herr was able to obtain discovery with respect to Cornhusker's crop insurance records and is in addition to that which was considered by Judge Narum.[3]

         E. Zylstra's “investigation”

         Following the initial meeting with Husby and Jones, Zylstra proceeded to make contact with the Sheriff of McIntosh County to inform her of the theft investigation and get the lowdown on Herr. Zylstra then conducted telephone interviews with Grein, Cornhusker's hired hand, and the owner of the land that Cornhusker was renting. The purpose of these interviews appears to have been to document what Husby and Jones claimed would be the evidence that would support their theory for why the October 30 load of beans belonged to Cornhusker. Zylstra also called the elevators in Hague and Venturia but obtained no more records, prepared a spreadsheet summarizing the grain certificates issued by the elevators, and did internet research on the weather for Wishek for the time period in question.

         The internet research that Zylstra performed and sent to Cornhusker with rest of the above information has not been made a part of the record here. However, as discussed in more detail later, information was presented at the preliminary hearing that had been gathered from the National Oceanic & Atmospheric Administration (“NOAA”) and a North Dakota NDAWN reporting site that belies Husby's statements to Zylstra and others (including to the state court when he swore out the criminal complaint) about the intensity and widespread nature of precipitation that he claimed blanketed the area in question on October 28-29 and that was critical to his theory for why the October 30 load of soybeans had to have come from Cornhusker's fields. Also, when BCI Agent Kelly conducted similar weather research, the results he obtained were similar to the information presented at the preliminary hearing, which did not support Husby's weather claims. Based on the information currently before the court, a jury could conclude that Zylstra, who held herself out to be a trained and experienced investigator, would have reviewed the same sources and discovered that what Husby had claimed his research showed with respect to the weather was at best questionable if not outright wrong. Further, the jury could be concerned about the fact that, when Zylstra turned over information to the McIntosh State's Attorney, she did not include her weather research, or, even if she had not kept a copy, at least included a statement about what that research showed and did not show.

         F. Further contact by Cornhusker with McIntosh law enforcement and a plan to pressure Herr into paying for the October 30 load of soybeans

         In addition to Zylstra making contact with the McIntosh County Sheriff, there is evidence that Cornhusker did the same and this led to a discussion with the Sheriff about Cornhusker holding off on pursuing formal charges to see if it could convince (or as the jury might conclude impermissibly coerce and pressure) Herr into paying up. (Doc. No. 43, Herr call 001 at ~ 00:01:00 & ~ 00:40:00). Further, there is evidence that, to this end, Cornhusker and Zylstra developed a strategy for exerting maximum pressure on Herr to pay, which was to have Zylstra call Herr on the morning of April 7, 2015, to communicate the following: (1) things were not looking good for him based on Zylstra's “investigation” and her professional experience as a criminal investigator; (2) that both Zylstra and Cornhusker had already been in contact with the Sheriff's office, leaving the subtle impression that McIntosh law enforcement was ready to proceed on the criminal front; and (3) that he would have until 2:00 p.m. that day to commit to paying for the beans in question or criminal charges would be sought and likely would follow. (Doc. No. 43, Herr calls 001-006, numerous statements). This is also consistent with Husby purportedly having told BCI Agent Kelly that the purpose of retaining Zylstra was to “see if they can get [Herr] to crack.” (Docket No. 30-4 p. 4) (quoting an interview between Husby and Troy Kelly on June 3, 2015).

         G. Zylstra's April 7, 2015 phone conversations with Herr

         Zylstra called Herr on April 7, 2015, and that call resulted in five more calls that same day.[4] During the six phone calls, Zylstra did convey Cornhusker's theat that it would proceed with criminal charges if Herr did not commit to paying up by 2:00 p.m., which was later extended to later in the day when Zylstra's phone discussions with Herr became drawn out. Zylstra did indicate to Herr that, based on her investigation and prior law enforcement experience, things did not look good for him. Zylstra also emphasized that both she and Cornhusker had already been in contact with the Sheriff and implied that the Sheriff was on board and ready to proceed with charges. (Doc. No. 43, Herr calls 001-006, numerous statements). More particularly with respect to the latter, Zylstra at one point stated:

[Husby] has talked to the Sheriff, I have talked to the Sheriff and its all lined up, its basically a phone call away . . . .

(Doc. No. 43, Herr call 001 at ~ 00:56:30). At another point she talked about “calling off the sheriff and putting it [the criminal process] on the backburner . . . . ” (Id. at ~ 1:22) (italics added). Then, a little later, she stated that Husby “feels confident in talking with the Sheriff and having the documentation that he has” that a charge of theft would prevail. (Id. at ~ 01:45:30).

         In addition, Zylstra made other statements to Herr during the course of the conversations on April 7 that a jury might also conclude were impermissibly threatening and coercive, particularly in the context in which they were delivered. These included:

• Zylstra telling Herr that the mere bringing of the criminal charge would irretrievably damage his reputation, even if he later proved his innocence, including stating that once a criminal charge is brought:
then you are going to be arrested, then you are going to be booked in, then you are going to have it all over the newspaper - the whole world is going to know. And, there is no stopping it. A lot of times people will remember that you were arrested; people don't ever remember the outcome of the case. People don't get that. It is pretty hard to take that back - innocent or not. That stigma stays with a person.
(Id. at ~ 01:39:20) (interjections by Herr omitted).[5]
• Zylstra multiple times emphasizing the severity of the criminal charge and that he may be facing jail time. For example, at one point she stated that the theft of the soybeans in question would be a Class B felony punishable by imprisonment for up to 10 years, a fine of up to $20, 000 fine, or both - a “serious deal.” (Id. at ~ 00:47:25). Also, at another point she stated that Husby's position was that “you take this offer [Husby's offer to forgo seeking criminal charges if Herr agreed to pay up] or pay the money [as result of being found guilty] and be looking at felony time.” (Doc. No 43, Herr call 004 at ~ 00:04:25) (emphasis added).
• Repeatedly emphasizing to Herr that he would facing an arrest if criminal charges went forward. For example, in addition to the statement set forth above, Zylstra stated at another point during the first conversation that if “charges will come out, a warrant of for your arrest will come out and then you have to prove your innocent [sic] in court.” (Doc. No. 42, Herr call 001 at 01:38:20). Then later she stated in another call that Husby's position was that it was “not going to be so good a situation for you if he goes forward though the court system and deal with the arrest and all that stuff.” (Doc. No. 43, Herr call 004 at ~ 00:18:00).
• Zylstra telling Herr that, if things were not resolved that day, there likely would more than just the one load of beans involved, that everything would be gone through going back to 2012, and that he might very well have to face multiple felony charges as a result. At one point during the first call, she stated:
His [Husby's] intent if it goes to the Sheriff's office, if it gets to that point, he wants everything to be combed through going all the way back to 2012, going through corn, going through beans, going through everything . . . .
(Doc. No. 43, Herr call 001 at ~ 00:29:30). Then, after Herr asking whether Husby was claiming there were other thefts. She responded: “That is what he is saying.” (Id. at ~ 00:30:31). This was followed shortly by:
Next step would be is to have subpoenas issued to all of the grain elevators -- you know -- anywhere grain or beans -- anywhere it could have been --subpoenas back to 2012 . . . .
(Id. at ~ 00:31:30). Then a little later:
I wouldn't -- I wouldn't be calling to talk with you here if I did not think there was an issue. * * * * I would have backed out of the investigation if I did not think there is something here. * * * * And you know I have seen it -- and um I am not accusing you here -- but what I have seen in law enforcement if there is an issue as far as a theft, that it is not one time. * * * * But if it happened once, it probably happened twice.
(Id. at ~ 00:46:00). And still later, if the criminal process goes forward:
I mean a Class B felony. And possibly multiple. I mean that that's the thing. It won't be just this one issue looked at. If there's other discrepancies - you know . . . .
(Id. at ~ 01:40:20). Finally, in the fourth call after Herr complained that what was going on amounted to extortion, Zylstra stated in response:
And, well, he [Husby] feels there this isn't the one time, there is the October 30th, he feels there is another issue on November 4, and he thinks in going back there is going to be other issues.
(Doc. No. 43, Herr call 004 at ~ 00:17:36).
• Telling Herr he would have no civil recourse if he was wrongly charged because Husby would be protected by the fact that the prosecutor will have brought the charge and the prosecutor, in turn, would have immunity. (Id. Herr call 001 at ~ 01:41:20).
• Finally, during the last phone call on June 7 after Herr stated he could not agree to what Husby was proposing and that it felt like extortion, Zylstra stating the following:
Well I will go forward then with information that we have talked about today and just share that with the Sheriff and it doesn't look good. * * * * As far as all the evidence and where we are at, it does not look good for you.
(Doc. No. 43, Herr call 006 at ~ 00:01:40) (emphasis added). And then after Herr again stated he believed this to be extortion on the part of “you guys” [meaning Cornhusker and Zylstra] and that he could not agree, Zylstra stated in one last attempt:
Ok, he [Husby] just wanted to pass on that he will be meeting with the ...

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