Joint Ventures: When Helping Out Can Create Legal Issues

In any ag community there is lot of cooperation and partnership between farming operations and the ag industries that service those operations.  Neighbors may loan equipment and labor to put in, maintain, or harvest a crop, while others do the same to care for livestock.  In some cases, an ag service may call in another provider to cover a client’s needs.  Generally, this cooperation and partnership works well and helps the farming/ranching community thrive.  However, there are situations when that cooperation can create unexpected legal obligations for the operation “helping out”.In certain circumstances, individuals or companies can create a legal partnership known as a joint venture, through their working relationship.  In a joint venture, either party may be obligated to perform under a contract that the other party entered.In Nebraska, a joint venture “exists when

1. two or more persons contribute cash, labor, or property to some common fund
2. with the intention of entering into some business or transaction
3. for the purpose of making a profit to be shared in proportion to the respective contributions and
4. each party has an equal voice in the manner of its performance and control of the agencies used therein.” Ronnfeldt Farms v. Arp, 32 Neb. App. 490 (2023).  

At first glance, the four criteria seem to require purposeful acts by each party to intentionally create the joint venture. However, each situation is fact specific, and in certain circumstances a joint venture may be unintentionally created. The issue of whether a joint venture existed was one of the central issues of the Ronnfeldt Farms lawsuit against Arp and Frosty’s Dragline, LLC.  Ronnfeldt Farms operated farrow to finish and sow facilities and contracted with Arp to provide manure pumping services at certain sites. However, in 2020 Arp was unable to pump the Ronnfeldt facility before the requested deadline. Therefore, Arp and asked Frosty’s Dragline to cover the job.  Arp and Frosty’s had a long history of assisting each other on time sensitive or large jobs but had no written agreements between them.Unfortunately, a Ronnfeldt Farms site incurred an outbreak of porcine reproductive and respiratory syndrome (PRRS) after Frosty’s serviced the site. Ronnfeldt Farms claimed Frosty’s breached the pumping contract by failing to comply with Ronnfeldt’s biosecurity protocols and brought the PRRS to the site through the pumping equipment. Ronnfeldt Farms claimed that Frosty’s was in a joint venture with Arp, and therefore, governed by the pumping contact.Luckily for Frosty’s, the District Court and the Nebraska Court of Appeals found that Frosty’s was not in a joint venture relationship with Arp as to servicing the Ronnfeldt Farms’ site. Both Courts agreed that Frosty’s and Arp met the first three criteria, but that Frosty’s did not have an equal voice when servicing the Ronnfeldt site.Frosty’s was not out of the woods yet, as the Court of Appeals sent the case back to determine whether Frosty’s was negligent in providing the pumping service.  The negligence claim was likely harder to prove than the breach of contract claim. Frosty’s avoided the direct breach of contract claim, but the issue was closer than Frosty’s or Arp ever thought possible or expected in their working relationship. The takeaway, is that when working on behalf of another, make sure “helping out” does not create legal obligations that were never intended.