Kevin Pruisner v. Rodney Ballhagen ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-1431
Filed October 14, 2015
KEVIN PRUISNER,
Plaintiff-Appellee,
vs.
RODNEY BALLHAGEN,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Butler County, Colleen D. Weiland,
Judge.
A defendant appeals the court’s decision finding that he converted the
plaintiff’s hogs. AFFIRMED.
Gary R. Papenheim of Papenheim Law Office, Parkersburg, for appellant.
Andrew B. Howie and Michael P. Mallaney of Hudson, Mallaney, Shindler
& Anderson, P.C., West Des Moines, for appellee.
Heard by Doyle, P.J., Bower, J., and Eisenhauer S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2015).
2
EISENHAUER, Senior Judge.
Rodney Ballhagen appeals from the district court’s August 4, 2014 ruling
finding he converted hogs owned by Kevin Pruisner. Ballhagen claims Pruisner
failed to prove he owned the hogs Ballhagen sold to a packing company. He
also claims the court erred in admitting into evidence certain exhibits Ballhagen
claims contain inadmissible hearsay. Upon our review of the record, we
conclude substantial evidence supports the district court’s liability finding, and we
find no error in the court admitting the exhibits in question because they fall
within the business records hearsay exception.
I. Background Facts and Proceedings.
Starting in August 2005, Pruisner and Ballhagen entered into a contract1
for Pruisner to deliver to Ballhagen SEW 2 and feeder3 pigs on a routine basis.4
Under the terms of the contract, Pruisner paid for the feed, transportation, and
veterinary services and medication for the hogs, and Ballhagen provided daily
care until the hogs reached market weight. Pruisner paid Ballhagen a monthly
fee based on the total number of hog spaces available at Ballhagen’s facility, but
Pruisner retained ownership interest in the hogs. Ballhagen kept an inventory of
the hogs at the facility, and hogs not accounted for by the inventories and death
loss reports would be charged against Ballhagen’s next monthly payment. 5
1
In the beginning, the working arrangement was governed by an oral agreement. Later,
it was memorialized by a written contact signed in April 2006.
2
SEW means “segregated early wean,” and at this stage, the pigs weigh between eight
and fifteen pounds.
3
Feeder pigs are larger than SEW pigs, weighing between forty and eighty pounds.
4
The written contract called for approximately 2100 pigs to be delivered about every
nine weeks, weighing approximately 11 pounds.
5
While this provision providing a penalty for missing hogs was in the contract, Pruisner
never sought to enforce the penalty against Ballhagen.
3
Ballhagen was also restricted from keeping other hogs at the facilities unless
approved by Pruisner. When the hogs reached market weight, approximately six
months after being delivered to the facility as SEW pigs, Pruisner arranged to
have a truck transport the fattened hogs to market. Pruisner received a verbal
headcount and average weight report from the trucker. He later received a
written report and a check for the slaughtered hogs from the meatpacker.
The person in charge of providing the feed for the hogs, Steve Albers,
alerted Pruisner sometime in 2007 that the inventory counts were not matching
up and there may be some missing hogs. When asked about the discrepancy,
Ballhagen said the miscount was the result of hogs who were slow in gaining
weight being put in a “slush pen” when the rest of that group of hogs went to
market. Those hogs in the slush pen were held back until they achieved market
weight and then sent to market with the next load of hogs. There was no
inventory report kept of the hogs in the slush pen nor could anyone tell which
group the hogs in the slush pen came from as they were not otherwise marked.
Albers and Pruisner accepted this explanation and continued the contract until
2008.
Pruisner filed for bankruptcy in April 2008, and in the course of the
continuing investigation into the missing hogs, Pruisner contacted the hog buyer
at the Marble Rock station, Robert Wirtz. Wirtz told Pruisner that Ballhagen had
sold hogs to him over the past several years. The records from the Marble Rock
station indicated Ballhagen had sold 2864 hogs to Wirtz during the time
Ballhagen was caring for Pruisner’s hogs, between January 2006 and June 2008.
Based on the records he maintained, Pruisner could not account for 3068 of the
4
nearly 30,000 hogs that had passed through Ballhagen’s facility during that time
period.6
Ballhagen asserted the hogs he sold at Marble Rock during this time
period were hogs he owned and raised on his father’s farm, not hogs belonging
to Pruisner. During the bankruptcy proceedings, and criminal investigation,
Ballhagen was asked to provide records demonstrating his ownership interest in
the hogs sold at the Marble Rock station, such as documents indicating when
and where the hogs were purchased, the feed or veterinarian records for the
hogs, or his financial records indicating the income generated or lost on the hog
operation. While Ballhagen did provide copies of some checks he claimed were
for the purchase of hogs,7 no other records were provided.
Prusiner filed this lawsuit alleging Ballhagen converted over 3000 of his
hogs. The case proceeded to a bench trial in April 2013. After hearing from
fourteen witnesses and receiving into evidence thousands of pages of exhibits
over a six-day trial, the court concluded,
Ballhagen has provided no trustworthy evidence to support his
proposition that he was independently raising hogs at the time. He
had access to Pruisner’s hogs at Ballhagen’s facility, and there is
no other reasonable explanation for where the hogs sold by
Ballhagen came from. Pruisner’s documentation and expert’s
analysis is consistent with the loss of a similar number of hogs.
From this the court concludes that Ballhagen converted from
Pruisner approximately 2800 hogs over the period of 2006-2008.
6
Prusiner contacted the local sheriff with this information, and theft charges were filed
against Ballhagen. After an eight-day bench trial in August 2011, the court found
Ballhagen not guilty, concluding the State failed to prove beyond a reasonable doubt
Ballhagen misappropriated, converted, or stole any hogs belonging to Pruisner.
7
Two of these checks were later revealed to be for the purchase of go-karts and go-kart
parts.
5
The court awarded Pruisner $290,000 for the hogs,8 $21,314 in interest, $50,000
in punitive damages, and court costs. Ballhagen appeals, challenging the
evidence supporting the court’s liability finding and also the court’s admission of
certain exhibits over his hearsay objections.
II. Scope and Standard of Review.
Our review of this law action is for the correction of errors at law. Iowa R.
App. P. 6.907. The court’s findings of fact carry the force of a special verdict and
are binding if supported by substantial evidence. Van Sloun v. Agans Bros. Inc.,
778 N.W.2d 174, 179 (Iowa 2010). “Evidence is substantial to support a . . .
verdict if reasonable minds would find it adequate to reach the same conclusion.”
Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 593 (Iowa 1999). We
view the evidence in the light most favorable to the verdict. Id. We will not weigh
the evidence or evaluate the credibility of witnesses, and “[e]vidence is not
insubstantial merely because it could support contrary inferences.” Keppy v.
Lilienthal, 524 N.W.2d 436, 438 (Iowa Ct. App. 1994).
We review a district court’s decision to admit evidence over a hearsay
objection for correction of errors at law. Gacke v. Pork Xtra, L.L.C., 684 N.W.2d
168, 181 (Iowa 2004).
III. Substantial Evidence.
“Conversion is the wrongful control or dominion over another’s property
contrary to that person’s possessory right to the property. In order to establish a
conversion claim, the plaintiff must establish a possessory interest in the
8
Ballhagan does not challenge the method the court used to arrive at the damage figure
or the evidence to support the same.
6
property.” Blackford v. Prairie Meadows Racetrack & Casino, Inc., 778 N.W.2d
184, 188 (Iowa 2010) (citations and internal quotation marks omitted). Ballhagen
claims Pruisner failed to prove Pruisner had a possessory interest in the hogs
Ballhagen sold at the Marble Rock station.9 Ballhagen also asserts the court
improperly shifted the burden of proof to Ballhagen to prove he owned the hogs
sold at the Marble Rock station. Ballhagen notes that the hogs did not have any
identifying characteristics showing which person owned the hogs, and he claims
Pruisner’s documentary evidence failed to prove Pruisner was missing any
hogs.10
It was undisputed Pruisner was the owner of the hogs delivered to
Ballhagen’s facilities. It was also undisputed Ballhagen sold hogs at the Marble
Rock station during the time Pruisner’s hogs were at Ballhagen’s facilities. The
hogs sold at Marble Rock were either owned by Pruisner or owned by Ballhagen.
As the documents generated by Pruisner’s hog operation were irreconcilable, the
district court turned to other evidence to determine who owned the hogs.
9
Pruisner claims on appeal that Ballhagen failed to preserve error on this claim. We
interpret Ballhagen’s claim as a challenge to the sufficiency of the evidence to support
an element of conversion. As this case was tried to the court, no specific objection or
motion was necessary to preserve error for appeal when challenging the sufficiency of
the evidence. See Iowa R. Civ. P. 1.904(2) (“But a party, on appeal, may challenge the
sufficiency of the evidence to sustain any finding without having objected to it by such
motion or otherwise.”).
10
A great deal of Ballhagen’s brief is devoted to pointing out all the inconsistencies and
discrepancies in the records Pruisner submitted in support of his claim. The district court
here noted “accurate record keeping from nursery to market is difficult. Each player in
the system kept his/its own records. Each of them contains inaccuracies and
inconsistencies, and they are not necessarily reconcilable.” The court in the criminal
action likewise found math errors and inconsistency in the records presented by the
State to prove Ballhagen stole the hogs. We conclude, consistent with every other
tribunal who has reviewed these records, the documents are confusing and
irreconcilable. There are missing records, and records seem to conflict with other
records. No person involved in this case kept accurate records. However, the district
court was still able to determine Pruisner met his burden of proof by establishing
Ballhagen was not independently raising hogs during the relevant period of time.
7
First, the court accepted into evidence the tax returns filed by Ballhagen
for the relevant years. Those returns show no income related to the sale of
livestock Ballhagen raised, despite Ballhagen’s assertions he was farrowing11 his
own sows.12 On each of the tax returns, Ballhagen reported expenses for “feed,”
along with “veterinary, breeding, and medicine,” but Ballhagen failed to produce
any receipts or other documentation to support the numbers reported in response
to discovery requests.
Ballhagen produced five checks he claimed he used to purchase hogs.
Two of those five were later discovered to be for the purchase of go-karts and
go-kart parts.13 The other three checks Ballhagen claimed were for the purchase
of seventy-five feeder pigs, sixteen gilts,14 and fourteen barrows15 for his child to
show at the fair. Ballhagen produced no invoice or receipt to document the
purchase of these pigs. This evidence falls far short of showing ownership of the
2864 hogs Ballhagen sold at Marble Rock from 2006-2008. From the third
quarter of 2005 until the first quarter of 2008, Ballhagen claimed to have farrowed
2365 pigs, but he had no documentation to support the assertion.
During the relevant time period, Ballhagen was under a duty to submit
annual financial statements for facilities loans he had with Iowa State Bank. On
the balance sheet, Ballhagen reported no “market livestock or poultry” and no
11
Farrowing refers to the act of breeding hogs.
12
There was income reported on each of the tax returns for “sales of livestock and other
items you bought for resale.”
13
The two checks to a company by the name of “L&J” totaled approximately $10,500,
and while Ballhagen admitted those checks were not for the purchase of feeder pigs, he
still maintained he purchased 550 feeder pigs from a company by the name of “L&J
Farms” during that time period, though he had no documentation to support the
assertion.
14
A gilt is a young female hog who has not yet had a litter of pigs.
15
A barrow is a male castrated hog.
8
“breeding stock.” Ballhagen’s loan officer testified if Ballhagen was selling pigs
he would have expected Ballhagen to have disclosed the pigs he owned on the
financial statements.
Ballhagen’s father, Jerry, testified he ceased his hog operation in 1994,
and since then, he has not kept any hogs on his property. Despite living at the
property, Jerry was unable to recall whether Ballhagen kept hogs there during
the years Ballhagen was custom feeding for Pruisner. Jerry testified, Ballhagen
“could have. I don’t know. I worked. I drove truck.” The tenant farmer who
farmed Jerry’s property never saw any hogs or manure at the location when he
was tending to the crop or accessing the equipment he kept in the storage shed
on the property.
The day-to-day operation of Ballhagen’s custom feeding operation was
done by Ballhagen’s employee, Jay Bacon, who has worked for Ballhagen since
2000. Despite their long-term employment relationship, Bacon had no
knowledge as to whether Ballhagen was raising his own hogs at another location.
However, he never noticed any hogs missing from the Pruisner operation either.
Steve Albers observed the condition of Jerry’s farm toward the end of the custom
feeding contract in 2008 as part of his investigation into the missing hogs. It was
his belief based on the condition of the buildings that there had not been hogs
located at the facility in a long time.
Ballhagen’s son, Michael, testified that he did raise hogs for 4-H for
approximately two years in 2005 and 2006. These pigs were housed at Jerry’s
farm, and Michael recalled seeing other hogs on the farm other than his fair pigs.
While he could not estimate the total number of hogs, he thought his dad had
9
about fifty sows.16 Michael also testified that after the tornado hit the area in May
2008, he no longer saw hogs at his grandfather’s farm.17 Ballhagen’s brother,
Brent, testified there were hogs at his dad’s farm until the tornado hit in 2008,
though he never counted the hogs and could not provide an estimate.
Pruisner also offered the testimony of Brian Hargens, a veterinarian who
specialized in swine and beef and who also had a hog operation. Based on his
experience and education, Hargens believed it would be very difficult to raise
over 2000 hogs from farrow to finish without vaccines, medication, or antibiotics.
Though he did admit that absent a specific health problem, a hog operation
would not require veterinary services.
Finally, Pruisner also offered the testimony of Kerry Bolt, a forensic
accountant, who analyzed both the records from the custom feeding operation
and also the financial records of Ballhagen. Bolt found it unusual Ballhagen
could not produce records to support his assertions he was raising hogs. He
analyzed Ballhagen’s bank statements and sampled checks over a four-month
period and did not find any significant payment for either hogs or feed to support
the deductions taken on the tax returns. Based on the lack of evidence to
support the purchase or feeding of the hogs from 2006 to 2008, it was Bolt’s
opinion the 2864 hogs Ballhagen sold were actually stolen from Pruisner. Also,
based on his review of Ballhagen’s tax returns and bank statements, it was Bolt’s
16
While Michael estimated there were fifty sows on the farm, Michael’s grandfather,
Jerry, testified the sow capacity for the facility was eighteen. In addition, Ballhagen’s
brother testified the farrowing house had sixteen stalls in it.
17
The sale records from the Marble Rock station indicate the last load Ballhagen sold
was on June 23, 2008. After the employee at the Marble Rock station confronted
Ballhagen about the allegations Pruisner was making, Ballhagen ceased selling hogs.
10
opinion Ballhagen was spending significantly more money than he was reporting
to have earned. After his analysis of Pruisner’s records, Bolt concluded there
were 3097 hogs unaccounted for.
After reviewing the evidence, the district court concluded Ballhagen was
not independently raising hogs and cited the following evidence to support that
conclusion.
 Ballhagen did not report income or expenses related to raising
hogs on his tax returns.
 Ballhagen did not include hogs or related assets on his bank
balance sheets.
 Ballhagen produced no feed, veterinary or other invoices or
documentation consistent with raising hogs.
 Ballhagen produced no invoices, canceled checks or other
documentation consistent with purchasing pigs.
 Ballhagen’s dad (“Jerry”) initially told an investigating deputy
that there were no hogs on his property.
 Albers saw no sign of hogs on Jerry’s property in 2008. ·
 Jerry’s tenant saw no signs of hogs on the property.
 Jay Bacon—Ballhagen’s employee who was intimately involved
with Ballhagen’s main site and who had worked with Ballhagen
for years—had no knowledge that Ballhagen was personally
raising hogs.
 The court finds against the credibility of Ballhagen’s witnesses
who testified that they helped with or observed hogs at Jerry’s
property.
 Ballhagen abruptly terminated marketing at the Marble Rock
station once he was questioned about his personal sales.
 I give credit to expert Kerry Bolt’s analysis of the documentation
in that he arrived at approximately the same number as shown
by the Marble Rock station sales records.
 I also find credible Bolt’s conclusion that Ballhagen was
spending significantly more than his reported income during the
relevant time period.
We give deference to the district court’s credibility determinations. See
Keppy, 524 N.W.2d at 438. The hogs sold at the Marble Rock station were either
owned by Ballhagen or Pruisner. Through the testimony of Bolt, Pruisner offered
11
evidence to show he was missing hogs, Ballhagen was not incurring expenses to
raise hogs, and Ballhagen was spending more money than he was reporting as
income. We conclude, based on our review of the record, substantial evidence
supports the district court’s conclusion Ballhagen converted Pruisner’s hogs.
IV. Hearsay.
Next, Ballhagen challenges the court’s admission of four exhibits over his
hearsay objections. The exhibits include the summary Prusiner prepared to
document the missing hogs, Pruisner’s weekly calendars from 2005 to 2008,
Prusiner’s farm books, and Kerry Bolt’s summary of the missing hogs. He claims
the weekly calendar and the farm book contained hearsay statements making
them inadmissible. The hearsay included reports Pruisner received from truckers
and the slaughter house regarding the number of hogs slaughtered and the hogs’
weights. Because the two summary documents were based on the information
contained in the weekly calendar and the farm book, Ballhagen claims they too
are inadmissible.
Ballhagen asserts these exhibits do not fall within the business records
hearsay exception because the documents were not made by, or from
information transmitted by, a person with knowledge. Because Pruisner did not
personally observe the information he recorded in the weekly calendar and farm
book, but instead received the information from the truckers and packing plant,
Ballhagen asserts it does not fit within the business records exception to the
hearsay rule. Without this evidence, Ballhagen claims Pruisner cannot show he
is missing any hogs, and thus, Pruisner’s conversion claim fails.
12
Iowa Rule of Evidence 5.802 provides, “Hearsay is not admissible except
as provided by the Constitution of the state of Iowa, by statute, by the rules of
evidence, or by other rules of the Iowa Supreme Court.” Hearsay is defined in
rule 5.801 as “a statement, other than one made by the declarant while testifying
at the trial or hearing, offered into evidence to prove the truth of the matter
asserted.” Our rules of evidence provide certain exceptions to the hearsay rule,
one of which is:
(6) Records of regularly conducted activity. A memorandum,
report, record, or data compilation, in any form, of acts, events,
conditions, opinions, or diagnoses, made at or near the time by, or
from information transmitted by, a person with knowledge, if kept in
the course of a regularly conducted business activity, and the
regular practice of that business activity was to make the
memorandum, report, record, or data compilation, all as shown by
the testimony of the custodian or other qualified witness, or by
certification that complies with rule 5.902(11), rule 5.902(12), or a
statute permitting certification, unless the source of information or
the method or circumstances of preparation indicate lack of
trustworthiness.
Iowa R. Evid. 5.803(6). To satisfy this exception, the party seeking admission
must establish:
(1) That it is a business record;
(2) That it was made at or near the time of an act;
(3) That it was made by, or from information transmitted by, a
person with knowledge;
(4) That it was kept in the course of a regularly conducted business
activity;
(5) That it was the regular practice of that business activity to make
such a business record.
State v. Reynolds, 746 N.W.2d 837, 841 (Iowa 2008). It is the third element that
Ballhagen attacks.
When a group of hogs were ready for market, Pruisner would contact the
trucker, direct him to the proper farm, and then receive a report from the trucker
13
after the hogs were delivered to market as to the number of hogs and their
average weight. The trucker would receive this information from the packing
plant. Pruisner would then record this information on the weekly calendar. The
substance of the information transmitted, i.e., the weight and count, came from
the packer who was purchasing the hogs from Pruisner. The numbers were
conveyed to Pruisner by the trucker, who Pruisner employed to transport the
hogs to market and to report back the information. Pruisner explained the trucker
remained at the packing plant scale and had to bring the group across the scale
before he could leave the location, though the trucker did not actually do the
weighing and counting, the packing plant did.
The information recorded in the weekly calendar and farm book by
Pruisner was transmitted to him by the trucker, who had the first-hand knowledge
of the information by virtue of being present at the packing plant when the hogs
were counted and weighed. The numbers reported by the trucker were later
verified by the “kill sheet” the packing plant sent to Pruisner and the receipt that
later accompanied the check. We conclude the information Prusiner recorded in
the calendar and farm book was communicated to Prusiner by a person with
knowledge, and therefore, the business records exception to the hearsay rule
has been satisfied in this case. The trial court did not err in admitting the exhibits
challenged.
V. Conclusion.
Giving deference to the district court’s credibility determinations, we
conclude substantial evidence supports the district court’s finding Ballhagen
converted hogs belonging to Pruisner. Expert testimony supported both the
14
conclusion Prusiner was missing hogs and Ballhagen was not independently
raising hogs on his own. This supports the conclusion Pruisner was the owner of
the hogs Ballhagen sold at market. In addition, we conclude the court did not err
in admitting the weekly calendar and farm book Pruisner maintained in his
farming operation, or the summary exhibits that relied on those exhibits, as those
records met the business records hearsay exception.
AFFIRMED.