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Griffith v. Clear Lakes Trout Co., Inc.

Idaho Supreme Court
152 P.3d 604 (2007)


Facts

Griffith (plaintiff) is a trout grower. Clear Lakes Trout Co., Inc. (Clear Lakes) (defendant) is a fish hatchery. For several years, Griffith purchase small fish from Clear Lakes, grew the fish to an acceptable size, and sold them back to Clear Lakes. Clear Lakes later sold the fish to its customers. In September 1998, Griffith and Clear Lakes executed a similar agreement where Clear Lakes would sell Griffith small trout in sufficient quantities to allow Griffith to grow up to two million pounds live weight of trout per year. Once the trout reached “market size,” Clear Lakes would purchase the trout back from Griffith for sale to its customers. Under this agreement, Clear Lakes was to systematically accept two shipments of trout each month. The first harvest was of the first trout to reach market size, and the second harvest was of the trout that later reached market size. Both parties agreed that it was in their interest to have “continuous and uniform delivery” of the trout by Griffith to Clear Lakes each month. The agreement between the parties was executed successfully for three years. After September 11, 2001, however, Clear Lakes’ customers began demanding larger fish. Clear Lakes began accepting deliveries from Griffith much later and in much smaller quantities, leaving Griffith with overcrowding issues in its ponds. The overcrowding produced significant stress on the fish, causing Griffith to expend a great deal of resources to care for the fish and increasing the mortality rates of the fish. Griffith’s financial problems worsened until 2003, and the parties agreed to extend the contract for a seventh year. Griffith ultimately refused to accept another shipment of small fish from Clear Lakes, and the contract was terminated. Griffith brought suit against Clear Lakes in Idaho state court seeking damages for lost profits due to its increased expenses in caring for the fish, and lack of profits from selling the fish in the sixth and seventh years of the contracts. Clear Lakes argued that no contract was formed because the parties had fundamentally different interpretations of the term “market size” of the fish. Clear Lakes argued “market size” meant whatever size of fish was demanded by its customers. Griffith argued that both parties understood the term to mean fish weighing one pound live weight. The trial court awarded damages to Griffith for lost profits for its increased costs, but not for profits lost in years six and seven of the contract. Both parties appealed.

Rule of Law

Issue

Holding and Reasoning (Schroeder, C.J.)

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