Jerry Birkel v. Hassebrook Farm Services Inc,Supreme Court of Nebraska (1985)

FACTS: In 1978, Jerry Birkel, a corn, milo, beans, and alfalfa producer, contacted Hassebrook Farm Services about upgrading his 445 acres of land operations to a new dryer and storage bin with an auxiliary auger system for transferring grains from the new dryer to an existing storage bin. Hassebrook agreed and both parties signed a contract stating Hassebrook would replace the dryer and storage bins, while installing a new auxiliary auger system in a “workmanlike manner” set to be completed in 1978. When performing the contract, Hassebrook took Birkel’s old dryer as a trade-in on the new equipment. Nearly two years later, Birkel discovered problems with the Hassebrook installed equipment and found spoiled grains in his storage bins. In August 1980, some months later, Birkel hired additional labor in a salvage operation to sort good and spoiled grains. However, despite hiring this help, Birkel couldn’t salvage 600 bushels of grain and sold the balance of the good and spoiled grains. This incurred Birkel a loss of $17,092.71. 

PROCEDURAL HISTORY: Jerry Birkel sued Hassebrook alleging Hassebrook breached their duties of the contract by delivering faulty equipment. Through previously established testimony, Hassebrook had failed to rivet part of the dryer apparatus to the concrete floor of the new facility, work characterized by witnesses at trial as “bad workmanship.” Hassebrook alleged the equipment failures and profit losses to Birkel’s poor grain management. The trial court refused to allow Birkel’s instruction on incidental and consequential damages due to Hassebrook’s breach of contract. Therefore, the trial court ruled in favor of Birkel and awarded him $12,140 for building and equipment damages and $3,800 for grain damages. Birkel appealed the trial court’s judgement of awarded damages, citing he should’ve been allowed to add evidence concerning additional costs in obtaining alternative drying and storage equipment after Hassebrook’s breach of contract. Birkel also appealed for additional expenses incurred for labor and rental equipment in salvaging the unspoiled grain in mitigation of damages. 

ISSUE(S):

• Whether additional evidence relating to obtaining alternative equipment and facilities, while the original equipment and facilities are in repair, should be heard in a court after an alleged breach of contract. 

• Whether additional evidence relating to additional expenses a party incurred should be heard in a court after an alleged breach of contract.  

HOLDING: 

• Additional evidence relating to obtaining alternative equipment and facilities, while the original equipment and facilities are in repair, should be heard in a court after an alleged breach of contract.

• Where additional evidence relating to additional expenses a party incurred should be heard in a court after an alleged breach of contract.

REASONING: The Supreme Court of Nebraska overturned the trial court’s decision to not admit evidence about Birkel’s additional expenses and alternative farming operations until the grain-drying facility was replaced by Hassebrook. The court held that a party injured by a breach of contract is entitled to all damages that are considered reasonably certain and natural to occur after a breach. To determine this rule, the court used foreseeability to analyze what damages should be awarded. Since Hassebrook failed to rivet part of the dryer apparatus to the concrete floor when performing the installation of the new equipment, the court determined this work performed by Hassebrook to be foreseeable damage and be characterized as “bad workmanship.” Because of this, the Supreme Court of Nebraska ruled that Birkel, who incurred additional expenses due to the damaged equipment, should be awarded any loss, injury, or expense incurred in reasonable efforts to minimize his injury. Therefore, Birkel is allowed to present additional evidence relating to obtaining alternative equipment and facilities as well as additional expenses he incurred due to the alleged breach of contract. 

JUDGMENT: The Supreme Court of Nebraska reversed the trial court’s judgement and remanded this case for a new trial at the trial court level.