Grafe Auction Company v. Quality Beef Products Cooperative et al
ORDER denying 15 Defendants' Motion to Dismiss(Written Opinion). Signed by Senior Judge David S. Doty on 10/16/2013. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-2831(DSD/SER)
Grafe Auction Company,
Quality Beef Products Cooperative
and Randall Jones, an individual,
Emily E. Duke, Esq., Jessica L. Edwards, Esq., Fredrikson
& Byron, PA, 200 South Sixth Street, Suite 4000,
Minneapolis, MN 55402 and Jeffery A. Mintz, Esq. and The
Law Offices of Jeffery A. Mintz, LLC, 3257 19th Street
N.W., Suite 4, Rochester, MN 55901, counsel for
Michael W. Haag, Esq. and Foley & Mansfield, PLLP, 250
Marquette Avenue, Suite 1200, Minneapolis, MN 55401,
counsel for defendants.
This matter is before the court upon the motion to dismiss by
defendants Quality Beef Products Cooperative (Quality Beef) and
Randall Jones (collectively, defendants). Based on a review of the
file, record and proceedings herein, and for the following reasons,
the court denies the motion.
This contractual dispute arises out of an auction by plaintiff
Grafe Auction Company (Grafe) of a kosher beef kill plant in
Buffalo Lake, Minnesota.
Compl. ¶ 5.
In 2011, Grafe contracted
with non-party MB Holding, LLC (MB Holding) to auction the plant.
The contract (Auction Contract) provided that Grafe would
purchasers and then conduct a live auction with the five highest
Edwards Aff. Ex. A, at 1.
The Auction Contract further
premium/fee” from the eventual purchaser.
Id. at 2.
advertised the auction by distributing packages (Bid Packages) to
prospective bidders with blank bid forms and copies of the auction
terms, including the buyer’s premium.
Compl. Ex. A.
On June 7, 2011, Jones submitted a sealed bid of $2 million.
Id. Ex. B.
On the bid form, Jones listed the bidder as “Randall
Jones” and the bidder company as “Quality Beef Producers Coop.”
Jones signed the bid form, acknowledging that he would “abide
by the terms and conditions of the sealed bid/auction process by
submitting this sealed bid for the property.”
Based on the
bid, defendants were selected to participate in the live auction.
Compl. ¶¶ 13-15.
At the live auction, defendants were the high
bidder, at $2.8 million.
Id. ¶ 16.
After the auction, Quality Beef entered into a sale agreement
(Sale Agreement) with MB Holding.
Id. Ex. C.
agreement as “Chairman of Board” of Quality Beef.
Jones signed the
Id. at 18.
Sale Agreement provided that “[t]he Buyer further agrees that it
shall pay Grafe Auction a premium ... equal to 10% of the Purchase
Id. at 6.
Defendants never paid the purchase price or the
Compl. ¶¶ 25-28.
The plant was later sold to
another buyer for $1.7 million and Grafe received a buyer’s premium
Compl. ¶¶ 33-34.
On July 2, 2012, Grafe filed a verified complaint in Minnesota
court, alleging a claim for breach of contract.
removed, and move to dismiss.
Standard of Review
To survive a motion to dismiss for failure to state a claim,
“a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(citations and internal quotation marks omitted).
“A claim has
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007)).
Although a complaint need not
contain detailed factual allegations, it must raise a right to
relief above the speculative level.
See Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a formulaic recitation of the elements
of a cause of action” are not sufficient to state a claim.
129 S. Ct. at 1949 (citation and internal quotation marks omitted).
The court does not consider matters outside the pleadings
under Rule 12(b)(6).
See Fed. R. Civ. P. 12(d).
however, may consider matters of public record and materials that
are “necessarily embraced by the pleadings.”
See Porous Media
Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation
and internal quotation marks omitted).
In this case, the Bid
considered, as the Bid Package and Sale Agreement are attached to
the complaint and the Auction Agreement is necessarily embraced by
Moreover, “[i]n a case involving a contract, the
court may examine the contract documents in deciding a motion to
Stahl v. U.S. Dep’t of Agric., 327 F.3d 697, 700 (8th
Cir. 2003) (citations omitted).
Breach of Contract
“In order to state a claim for breach of contract, the
plaintiff must show (1) formation of a contract, (2) performance by
plaintiff of any conditions precedent to his right to demand
performance by the defendant, and (3) breach of the contract by
Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833
(Minn. 2011) (citation omitted).
Generally, “[i]f in dispute, the
existence and terms of a contract are questions for the fact
Morrisette v. Harrison Int’l Corp., 486 N.W.2d 424, 427
(Minn. 1992) (citation omitted).
Formation of a contract requires
“a specific and definite offer, acceptance, and consideration.”
Thomas B. Olson & Assocs., P.A. v. Leffert, Jay & Polglaze, P.A.,
756 N.W.2d 907, 918 (Minn. Ct. App. 2008) (citation and internal
quotation marks omitted).
“Whether a contract has been formed is
judged objectively by the parties’ conduct, not by the parties’
Powell v. MVE Holdings, Inc., 626 N.W.2d 451,
460 (Minn. Ct. App. 2001) (citation omitted).
contract exists between them and Grafe.
argue that they were not a party to the Auction Agreement between
Grafe and MB Holding and that Grafe was not a party to the Sale
Agreement between Quality Beef and MB Holding. Further, defendants
argue that in the absence of such a contract, an auction company
cannot collect a commission from a defaulting purchaser.
e.g., Giovannoni v. Waple & James, 105 F.2d 108, 109 (D.C. Cir.
1939) (“[W]henever it appears that the purchaser has not agreed to
pay the broker’s commission, or has not employed the broker, the
purchaser is not liable for the commissions due the broker, nor
liable in damages to the broker resulting from his breach of the
contract of sale.” (citations omitted)).
constituted a contract.
Specifically, Grafe notes that the sealed
bid form contained a disclaimer providing that “[b]y signing below
... I fully understand that I am required to abide by the terms and
conditions of the sealed bid/auction process by submitting this
sealed bid for the property.”
Compl. Ex. B.
included a document in the Bid Packages entitled “Auction Terms,”
which included the Buyer’s Premium provision that reads, “[a] ten
percent (10%) buyer’s premium will be added to the high bid price
to equal the contract price used in the purchase agreement.
example, a bid price of $1,000,000.00 would equal a contract price
of $1,100,000.00 ($100,000 + $1,000,000).”
Id. Ex. A, at 2.
Jones’ signature on the bid form demonstrates that the defendants
agreed to be bound by the auction terms.
In consideration for
agreeing to the auction terms, the defendants were allowed to
participate in the live auction.
Moreover, the Sale Agreement1 contained a provision requiring
that Quality Beef “pay Grafe Auction a premium ... equal to 10% of
the Purchase Price.”
Compl. Ex. C, at 6.
Although Grafe was not
a party to that agreement, the provision reflects the existence of
the agreement between Grafe and defendants. See Powell, 626 N.W.2d
at 460 (“In determining whether a contract was formed, th[e] court
may look behind
circumstances in the context of the entire transaction, including
the purpose, subject matter and nature of it.” (citation and
internal quotation marks omitted)).
In sum, given the surrounding
Grafe argues in the alternative that it can sue as a thirdparty beneficiary of the Sale Agreement. Because the court finds
that Grafe has stated a plausible claim for breach of contract
based on the submitted bid form, it need not reach this argument.
circumstances of the transaction, the express terms included in the
Bid Packages and Jones’ signature on the sealed bid acknowledging
those terms, Grafe has pleaded a viable breach of contract claim
As a result, dismissal is not warranted.
Personal and Individual Capacity
Jones also argues that dismissal of the claim against him in
his personal and individual capacities is warranted, as he was
acting as the agent of a disclosed principal at all relevant times.
See Kost v. Peterson, 193 N.W.2d 291, 294 (Minn. 1971) (“Where an
agent, acting for a disclosed principal, enters into a contract ...
for and on account of his principal and in his name, the contract
is that of the principal and does not give rise to any contractual
obligation running to the agent.”).
A principal is considered
disclosed when “the third party has notice that the agent is acting
for a principal and has notice of the principal’s identity.”
Northland Temps., Inc. v. Turpin, 744 N.W.2d 398, 404 (Minn. Ct.
App. 2008) (citation and internal quotation marks omitted).
responds that the bid form was unclear as to whether Jones was
bidding in a personal or agency capacity.
Specifically, the bid
“Randall Jones” in the blank for bidder name.
Compl. Ex. B.
Moreover, Jones signed the bid form “Randall Jones” and gave no
indication that he was acting in an agency capacity.
Given these limited facts and the early stage of the proceedings,
Grafe has pleaded a plausible claim of personal and individual
liability against Jones.
Accordingly, based on the above, IT IS HEREBY ORDERED that the
motion to dismiss [ECF No. 15] is denied.
October 16, 2013
s/David S. Doty
David S. Doty, Judge
United States District Court
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