New Mexico Court of Appeals Rules for Dairy Farmer in Stray Voltage Case

The New Mexico Court of Appeals ruled for a New Mexico dairy farm asserting claims that its herd, and profits, were impaired by stray voltage resulting from poor electrical contracting work.

Loper v. JMAR, _______, NM App 7-3-2013, announced two (2) separate decisions of importance in New Mexico law, and law affecting dairy farmers in general. The Court of Appeals opinion reversed and remanded for trial, a trial court's dismissal of the dairyman's claim. The appellate tribunal held that the case must proceed to trial.

In Loper, the dairyman hired a contractor to design, and build a new, turnkey fully operational dairy. The contractor, JMAR, subcontracted the electrical work. When the dairy was delivered and placed in use, the dairyman noticed problems with milk production. He considered and eliminated other causes, such as milking practices and nutritional needs of the cows. He then hired a separate electrician to conduct an electrical survey of the dairy. The second electrician found wiring defects and corrected them. The opinion of the dairyman's expert witness, University of Nebraska professor LaVerne Stetson, is that the wiring defects resulted in stray voltage at the dairy. This voltage affected the milk cows, and reduced their production.

The dairyman sued the general contractor and the electrical subcontractor for losses in milk production. The suit alleged negligent design and construction, and, on the electrician's part failure to properly install the electrical system.

The general contractor demanded indemnification from the electrician. The dairyman and the electrician settled their claims before trial. In the settlement, Plaintiffs agreed "to indemnify and hold [the electrician] and its insurer harmless from claims or judgment of liability…which arises in any way from the circumstances and claims set forth in the lawsuit."

The settlement continued [the dairyman] agrees to reduce any judgment which is obtained against [the general contractor and lessor] to whatever extent is necessary to extinguish any claim which [the general contractor] would otherwise have against [the electrician].

The general contractor filed a motion for summary judgment asserting that the lawsuit precluded further proceedings. At the same time, it sought to strike the testimony of Plaintiff's expert witness, Professor Stetson, claiming he was not a sufficient or qualified expert witness.

The district court sustained both defense motions and dismissed the dairyman's case. On appeal, a unanimous New Mexico Court of Appeals reversed, and remanded the case with instructions that it proceed to trial. The Court of Appeals' lengthy, thoughtful opinion, provides precedent on an issue not previously expressed by a New Mexico court, and only considered by a few courts around the country.

The doctrine of circuity has been used to resolve lawsuits as a matter of law when a plaintiff has agreed to indemnify one defendant under a settlement while pursuing damages from another with the right to indemnity from the defendant that reached settlement terms. This is done to prevent a series or circuity of lawsuits.

Loper, the dairyman, argued on appeal that he asserted negligence theories against the general contractor for negligent design, misrepresentation, negligent hiring and negligent supervision in construction of the dairy. The general contractor argued that based on traditional indemnification rules, it would be entitled to be indemnified for all these claims because it was the passive actor and Snyder was actively negligent in failing to ground the wiring system.

The Court of Appeals noted that whether it adopted the doctrine of circuity or not, in this case the dairyman's claims could not be resolved as a matter of law because the dairyman's action against the general contractor was based upon negligence in designing the electrical system, hiring and supervising the electrician, and misrepresenting that the electrician was an "expert in the business of installing electrical wiring for commercial dairies." These claims have nothing to do with any negligence by the electrician, so vicarious liability claims against the contractor were not present in the case after settlement.

The Court of Appeals held that there were substantial issues of fact related to the dairyman's claims against the general contractor. Those claims must proceed to trial. The court found that the doctrine of circuity was inapplicable except where one wrongdoer is entitled to be paid by another who has reached a settlement, if the case proceeds to trial against the second party. The wrongful acts alleged must overlap, or this does not occur. In the New Mexico case, the dairyman was permitted to keep his settlement, and can now proceed to trial against his contractor.

David A. Domina of Domina Law Group pc llo, Omaha and Felicia C. Weingartner, Albuquerque, represent the New Mexico dairyman who prevailed in the Court of Appeals.

The Court of Appeals also considered the credentials and testimony of Professor LaVerne Stetson. Professor Stetson possessed a twenty-nine (29) page professional resume, two (2) degrees in agricultural engineering, and an emphasis in the electrical aspects of agriculture, worked as an agricultural engineer for the USDA and a professor at the University of Nebraska for thirty-eight (38) years. Mr. Stetson was a member of the most elite professional organizations for agricultural and electrical engineers, and published 274 articles and papers. Six (6) of those publications related to stray voltage generally, eight (8) to electrical systems for ag buildings, and twenty-three (23) addressed electrical wiring for dairies, stray voltage in dairies, and the effects of stray voltage on dairy cows. Professor Stetson served on two (2) panels of the National Electric Code and led in the development and revision of most of the present electrical standards that apply to agriculture.

Finally, Professor Stetson helped to develop the American Society of Agricultural and Biological Engineers standards for electrical installations in rural buildings. He is the principal author of a widely recognized Midwest building service, and a key instructor in numerous stray voltage courses offered at the University of Wisconsin–Madison, and at rural power companies in South Dakota, Minnesota, Colorado, Iowa, Texas and Nebraska.

The New Mexico Court of Appeals easily concluded that Professor Stetson was qualified to offer expert opinion testimony. He concluded, in a written opinion, that the precise pinpoint source of stray voltage at the dairyman's farm could not be ascertained, but that the most probable source was the original construction by the general contractor as a result of the design of the facility. Stetson concluded, too, that the system was improperly grounded, improper selections were made of wiring materials, metal conduit, and other related items. He elaborated on great detail on the wiring deficiencies.

Professor Stetson was confident to a reasonable degree of scientific certainty, based on his engineering judgment, that the way the dairy was grounded and wired caused stray voltage in a quantity sufficient to affect milk production. The Court of Appeals agreed that Professor Stetson's opinions were sufficiently grounded in the facts of the case and relevant. It also concluded they contained significant and substantial reliability. Even though he lacked the specific information he would have liked to have seen in a perfect setting, his opinions were based upon objective facts. He thought seventy percent (70%) of his opinion was based upon engineering experience and expertise and thirty percent (30%) on objective evidence, and that his experience-based methodology had never produced erroneous results.

The Court of Appeals concluded that Professor Stetson's opinions were appropriate for the jury to hear. It remanded the case for trial in district court.

"We are pleased for the dairyman who suffered so much to have an opportunity to have his case tried," Dave Domina said. "As a kid who grew up on a dairy farm, it is a thrill to be able to help a dairyman in a time of need."

View the full court order: Rio Leche Dairy Co. v. JMAR