Hsu v. Vet-A-Mix, Inc.

479 N.W.2d 336, 1991 Iowa App. LEXIS 365, 1991 WL 281409
CourtCourt of Appeals of Iowa
DecidedOctober 29, 1991
Docket90-1404
StatusPublished
Cited by1 cases

This text of 479 N.W.2d 336 (Hsu v. Vet-A-Mix, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hsu v. Vet-A-Mix, Inc., 479 N.W.2d 336, 1991 Iowa App. LEXIS 365, 1991 WL 281409 (iowactapp 1991).

Opinion

DONIELSON, Judge.

Walter H. Hsu is a professor of veterinary pharmacology at Iowa State University. W. Eugene Lloyd, president of Vet-A-Mix, Inc. of Shenandoah, Iowa, is a veterinary toxicologist. Lloyd holds a Ph.D. and served on the active faculty at Iowa State University until 1982. In the summer of 1982, Hsu approached Lloyd concerning Hsu’s idea to develop the drug Yohimbine to be used as an antidote to certain effects of the drug Xylazine. Xylazine is an analgesic medication often administered to animals prior to anesthesia. Vet-A-Mix, which is involved in the marketing of veterinary pharmaceuticals and injectable medicines, was interested in Hsu’s research.

The parties agreed that Hsu would conduct the animal research necessary to obtain FDA approval for the medications using the University’s facilities. In turn, Vet-A-Mix would provide the capital outlay to the University pursuant to a contract with the University, secure FDA approval, and then manufacture and distribute the products. The parties had three basic agreements providing for: 1) confidentiality; 2) cost-sharing with Iowa State University; and 3) royalty payments. Hsu agreed to keep his work confidential; Vet-A-Mix agreed to enter into a contract with the University wherein Vet-A-Mix would pay for the expendable supplies used in the research; and the University would supply its facilities and continue to pay Hsu’s salary.

The parties orally agreed that Hsu would receive a royalty for his work on the project, but the precise royalty terms were never agreed upon. Although two written proposals for royalty payments were submitted by Lloyd, Hsu objected to the percentages of the royalties, their duration, and their termination upon Hsu’s death.

During the years that followed, Hsu dedicated 508 hours to the project and continued to receive his University salary. At one point, Vet-A-Mix paid Hsu $7,380 for his work, but following a meeting with University officials, Hsu agreed to turn this money over to the University.

*338 The parties also had several other disagreements concerning Hsu’s performance of animal testing and his validation of results. Hsu refused to submit his raw data, and consequently, FDA approval was not expedited. Lloyd hired other researchers to reperform some of the studies. On May 27, 1986, Vet-A-Mix terminated its relationship with Hsu.

Hsu instituted these proceedings seeking damages based on breach of a constructive contract, promissory estoppel, quantum meruit and tortious interference with contractual relations. Vet-A-Mix filed a counterclaim alleging breach of contract and breach of fiduciary duty. The case was ultimately bifurcated and the issues of liability and damages were each submitted to a different judge. Judge McMinimee decided the liability issues. He denied recovery on the Vet-A-Mix counterclaim and on all of Hsu’s theories except his claim for quantum meruit recovery. On the issue of damages, Judge Baker found that Hsu could not establish how many hours he was engaged in consultation work which was separate from the cost-sharing contract between Vet-A-Mix and the University. Accordingly, the district court denied Hsu’s claim for damages. Hsu appeals.

Our scope of review in this law action is for correction of errors at law. Iowa R.App.P. 4. Findings of fact in an action tried to the court have the effect of a special verdict. Id. Therefore, such findings are binding upon us if supported by substantial evidence. Iowa R.App.P. 14(f)(1).

Hsu did not file a motion pursuant to Rule 179(b), Iowa R.Civ.P., requesting the court in either phase of the trial to enlarge or amend its findings. Therefore, on appeal, any challenge to the trial court’s findings can be based only on the issue of the sufficiency of the evidence sustaining those findings. See Iowa R.Civ.P. 179(b).

Hsu presents three arguments on appeal. His first two arguments concern the trial court’s findings of fact and conclusions of law in the liability phase of the proceedings. His third assignment of error relates to the trial court’s judgment on the issue of damages.

I.

A. Hsu’s first argument asserts the trial court erred in failing to consider and apply certain sections of the Uniform Commercial Code and the Restatement (Second) of Contracts in deciding whether Hsu breached the parties’ contract. These issues were not ruled on by the trial court, and Hsu did not bring these issues to the court’s attention by filing a 179(b) motion. Therefore these issues were not properly preserved for our review. Estate of Grossman v. McCreary, 373 N.W.2d 113, 114 (Iowa 1984).

B. Hsu’s first argument also asserts the trial court erred in finding that Hsu breached the contract because his agreement to facilitate and expedite FDA approval of the medicine implicitly required that he turn over such raw data and submit to such audits as would assist in obtaining FDA approval. However, the trial court did not rest its ruling upon this finding.

Rather, the court found that the royalty agreement between the parties was essentially an agreement to agree on the royalty compensation terms. As such, the court found the agreement too indefinite to be an enforceable contract. See, e.g., Air Host Cedar Rapids, Inc. v. Cedar Rapids Airport Commission, 464 N.W.2d 450, 453 (Iowa 1990) (“It is axiomatic that understandable or ascertainable terms are necessary ingredients for an enforceable contract.”). Accordingly, the court denied Hsu’s claim for breach of contract. The court also found the agreement was too indefinite to justify Hsu’s alleged reliance and denied his promissory estoppel claim. See National Bank v. Moeller, 434 N.W.2d 887, 889-90 (Iowa 1989).

In reference to Hsu’s duty to produce the raw data, the court stated:

Assuming for purposes of discussion that the contract were established, it is this Court’s view that Vet-A-Mix justified its nonperformance and cancellation of the contract on the ground that Hsu failed to perform conditions precedent to *339 Vet-A-Mix’s performance and materially breached the contract, (emphasis added).

Hsu does not contend the trial court erred in finding the royalty agreement fatally indefinite. Accordingly, we consider any argument he may have on this issue to be waived. Iowa R.App.P. 14(a)(3). Therefore, we affirm the trial court’s judgment that the agreement was too indefinite to be an enforceable contract or to justify Hsu’s claimed reliance.

II.

A. Hsu’s second argument challenges the trial court’s dismissal of his claim against Lloyd for tortious interference with a contractual relationship. Hsu contends the trial court applied incorrect law when it held that corporate fiduciaries have a qualified privilege to interfere with corporate business relationships so long as they are acting in good faith to protect the interests of the corporation. We affirm the trial court.

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Related

Matter of Estate of Bates
492 N.W.2d 704 (Court of Appeals of Iowa, 1992)

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479 N.W.2d 336, 1991 Iowa App. LEXIS 365, 1991 WL 281409, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hsu-v-vet-a-mix-inc-iowactapp-1991.