Fleet Truck Sales, Inc. v. Quality Companies, LLC et al

Filing 124

MEMORANDUM AND ORDER - The Renewed Motion for Summary Judgment, ECF No. 113 , filed by Defendant Celadon Group, Inc., is granted. The Objection to Index and Motion to Strike, ECF No. 121 , filed by Defendant Celadon Group, Inc., is denied as moot. Celadon Group, Inc., is dismissed from this action. Ordered by Chief Judge Laurie Smith Camp. (LKO)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

FLEET TRUCK SALES, INC.,
Plaintiff,

8:16CV366

vs.
CELADON GROUP, INC., and QUALITY
COMPANIES, LLC,

MEMORANDUM
AND ORDER

Defendants.

This matter is before the Court on the Renewed Motion for Summary Judgment,
ECF No. 113, and the Objection to Index and Motion to Strike, ECF No. 121, both filed
by Defendant Celadon Group, Inc. For the reasons stated below, the Motion for Summary
Judgment will be granted and the Motion to Strike will be denied as moot.
BACKGROUND
Unless otherwise indicated, the following facts are those stated in the parties’
briefs, supported by pinpoint citations to admissible evidence in the record, in compliance
with NECivR 56.11 and Federal Rule of Civil Procedure 56.
After the Court ruled on the parties’ initial motions for summary judgment,
Memorandum and Order, ECF No. 103, the Court2 issued a Second Amended

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See NECivR 56.1(b)(1):
The party opposing a summary judgment motion should include in its brief a concise
response to the moving party’s statement of material facts. The response should address
each numbered paragraph in the movant’s statement and, in the case of any disagreement,
contain pinpoint references to affidavits, pleadings, discovery responses, deposition
testimony (by page and line), or other materials upon which the opposing party relies.
Properly referenced material facts in the movant’s statement are considered admitted
unless controverted in the opposing party’s response.
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Judge Michael D. Nelson, United States Magistrate Judge for the District of Nebraska.

Progression Order, ECF No. 106, which permitted the parties to conduct further discovery
on the remaining issues and file additional dispositive motions. Accordingly, the Court
incorporates, by reference, the background discussion from the previous Memorandum
and Order (SJ Order) and provides the following summary and additional background:
Plaintiff Fleet Truck Sales, Inc., (Fleet) entered into two purchase agreements with
Quality Equipment Sales for the sale of commercial trucks, one on September 3, 2015,
and another on September 9, 2015. Under the first purchase agreement, Fleet agreed to
sell Quality Equipment Sales 163 Volvo commercial trucks for $9,454,000 with $81,500
of the purchase price due as a cash deposit. Under the second purchase agreement,
Fleet agreed to sell Quality Equipment Sales 169 Peterbilt commercial trucks for
$10,309,000 with $84,500 of the purchase price due as a cash deposit. Fleet never
received the purchase price on either contract and contends it did not receive either of
the respective cash deposits. Accordingly, Fleet brought this action for breach of contract.
Quality Equipment Sales is not a business entity, but an assumed name used by
business entities at different times. Quality Equipment Leasing, LLC, 3 was registered to
do business under the name Quality Equipment Sales from January 30, 2008, to
November 15, 2011. ECF No. 86-1, Page ID 641, 648-49. Defendant Quality Companies,
LLC, was registered to do business under the name Quality Equipment Sales from
November 23, 2011, to September 28, 2015. ECF No. 86-1, Page ID 635-38. On
September 21, 2015, Quality Equipment Leasing, LLC, reregistered to do business under
the Quality Equipment Sales name and currently does business under that name. ECF

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In the SJ Order, the Court dismissed Quality Equipment Leasing, LLC, from this action.

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No. 86-1, Page ID 652. There is no evidence that Defendant Celadon Group, Inc., has
ever registered to do business under the Quality Equipment Sales name. Thus, at the
time the purchase agreements were entered into, Quality Companies, LLC, was the only
business entity registered to do business under the Quality Equipment Sales name. Each
of the foregoing registrations was completed with the Indiana Secretary of State and
publicly available.
Quality Companies, LLC, was the sole member of Quality Equipment Leasing,
LLC; Celadon Trucking, Inc.,4 was the sole member of Quality Companies, LLC; and
Celadon Group, Inc., was the parent corporation to Celadon Trucking Services, Inc.
On February 5, 2015, Dennis Kosmicki, a Fleet sales representative, emailed Eric
Meek, the Chief Operating Officer for Celadon Group, Inc., to solicit interest in purchasing
equipment. Meek responded “I will have Danny [Williams] circle back with you if we need
any stock.” ECF No. 86-11, Page ID 577. Meek also told Kosmicki that Williams should
be his point of contact because Williams was “handling all of our purchasing for used/new
currently.” Id. at Page ID 576. Williams was the Vice President of Quality Companies,
LLC. Neither Meek nor Williams explained to Kosmicki or any other Fleet representative
that Williams was an officer and representative of Quality Companies, LLC, and not
Celadon Group, Inc.
Kosmicki and Williams finalized two purchase agreements, one in March 2015 and
one in May 2015, that named Quality Equipment Sales as the purchaser. Celadon

4 Celadon Trucking, Inc., was not named as defendant in this action and Fleet often fails to
distinguish between Celadon Trucking, Inc., and Celadon Group, Inc. See Bacon v. DBI/SALA, 822 N.W.2d
14, 26 (Neb. 2012) (“[T]wo separate corporations are generally regarded as distinct legal entities even if
the stock of one is owned wholly by the other.”).

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Trucking Services, Inc., made full payment on these purchase agreements. ECF Nos.
81-20 & 81-6, Page ID 442. In September, Kosmicki and Williams finalized the two
purchase agreements at issue in this litigation naming Quality Equipment Sales as the
purchaser.

Although Kosmicki worked with Williams to finalize the agreements,

Kosmicki’s immediate supervisor, Larry Lamer, had to approve each of them. With
Williams’s approval, Patrick O’Driscoll signed the agreements on behalf of Quality
Equipment Sales.
After the September purchase agreements were executed, Williams told Fleet that
he was having trouble financing the purchase prices. On January 13, 2016, Williams sent
Kosmicki an email recommending that Fleet sell the trucks subject to the September
purchase agreements to other buyers.
Previously, in 2010, Kosmicki and Meek also finalized several similar purchase
agreements for commercial trucks between Fleet and Quality Equipment Sales. ECF No.
119-5. Paul Will, another Celadon Group, Inc., representative was also involved. As with
the March and May purchase agreements, Celadon Trucking, Inc., satisfied the payment
obligations on the 2010 purchase agreements.
STANDARD OF REVIEW
Fleet argues that the Court should construe Celadon Group, Inc.’s, Renewed
Motion for Summary Judgment as a motion under Fed. R. Civ. P. 54(b) because the
Motion asks the Court to revisit a prior ruling based on a legal argument that could have
been, but was not, raised in its initial summary judgment motion. See, e.g., Auto Servs.
Co. v. KPMG, LLP, 537 F.3d 853, 857 (8th Cir. 2008) (citing Fed. R. Civ. P. 54(b)). Yet
the Second Amended Progression Order expressly granted the parties permission to file
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another motion for summary judgment and Fleet never objected to that Order or sought
to restrict the scope of the motions. See Fed. R. Civ. P. 72; Fenney v. Dakota, Minn. &
E. R.R. Co., 327 F.3d 707, 718 (8th Cir. 2003) (citing Whitford v. Boglino, 63 F.3d 527,
530 (7th Cir. 1995) (“[T]he district court may, in its discretion, allow a party to renew a
previously denied summary judgment motion . . . .”)). Thus, recognizing that the Motion
raises an argument that could have been made in the initial motion for summary judgment,
the Court will not apply the Rule 54(b) standard of review. It will apply the standard
applicable to a Rule 56 motion for summary judgment.
“Summary judgment is appropriate when the evidence, viewed in the light most
favorable to the nonmoving party, presents no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law.” Garrison v. ConAgra Foods
Packaged Foods, LLC, 833 F.3d 881, 884 (8th Cir. 2016) (citing Fed. R. Civ. P. 56(c)).
“Summary judgment is not disfavored and is designed for every action.” Briscoe v. Cty.
of St. Louis, 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (quoting Torgerson v. City of
Rochester, 643 F.3d 1031, 1043 (8th Cir. 2011) (en banc)). In reviewing a motion for
summary judgment, the Court will view “the record in the light most favorable to the
nonmoving party . . . drawing all reasonable inferences in that party’s favor.” Whitney v.
Guys, Inc., 826 F.3d 1074, 1076 (8th Cir. 2016) (citing Hitt v. Harsco Corp., 356 F.3d 920,
923–24 (8th Cir. 2004)). Where the nonmoving party will bear the burden of proof at trial
on a dispositive issue, “Rule 56(e) permits a proper summary judgment motion to be
opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere
pleadings themselves.” Se. Mo. Hosp. v. C.R. Bard, Inc., 642 F.3d 608, 618 (8th Cir.
2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The moving party
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need not produce evidence showing “the absence of a genuine issue of material fact.”
Johnson v. Wheeling Mach. Prods., 779 F.3d 514, 517 (8th Cir. 2015) (quoting Celotex,
477 U.S. at 325). Instead, “the burden on the moving party may be discharged by
‘showing’ . . . that there is an absence of evidence to support the nonmoving party’s case.”
St. Jude Med., Inc. v. Lifecare Int’l, Inc., 250 F.3d 587, 596 (8th Cir. 2001) (quoting
Celotex, 477 U.S. at 325).
In response to the moving party’s showing, the nonmoving party’s burden is to
produce “specific facts sufficient to raise a genuine issue for trial.” Haggenmiller v. ABM
Parking Servs., Inc., 837 F.3d 879, 884 (8th Cir. 2016) (quoting Gibson v. Am. Greetings
Corp., 670 F.3d 844, 853 (8th Cir. 2012)). The nonmoving party “must do more than
simply show that there is some metaphysical doubt as to the material facts, and must
come forward with specific facts showing that there is a genuine issue for trial.” Wagner
v. Gallup, Inc., 788 F.3d 877, 882 (8th Cir. 2015) (quoting Torgerson, 643 F.3d at 1042).
“[T]here must be more than the mere existence of some alleged factual dispute” between
the parties in order to overcome summary judgment. Dick v. Dickinson State Univ., 826
F.3d 1054, 1061 (8th Cir. 2016) (quoting Vacca v. Viacom Broad. of Mo., Inc., 875 F.2d
1337, 1339 (8th Cir. 1989)).
In other words, in deciding “a motion for summary judgment, facts must be viewed
in the light most favorable to the nonmoving party only if there is a genuine dispute as to
those facts.” Wagner, 788 F.3d at 882 (quoting Torgerson, 643 F.3d at 1042). Otherwise,
where the Court finds that “the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party,” there is no “genuine issue of material fact” for trial

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and summary judgment is appropriate. Whitney, 826 F.3d at 1076 (quoting Grage v. N.
States Power Co.-Minn., 813 F.3d 1051, 1052 (8th Cir. 2015)).
DISCUSSION
The parties do not dispute that Quality Companies, LLC, was a party to the
September purchase agreements, and the Court previously held that Fleet is limited to
recovering its liquidated damages.5 SJ Order, ECF No. 103, Page ID 935-38. However,
Fleet contends Celadon Group, Inc., may also be held liable for the breach of the
September purchase agreements based on the agency theory of apparent-authority, i.e.,
that Williams acted with the apparent authority to make Celadon Group, Inc., a party to
the September purchase agreements.

Celadon Group, Inc.’s, Motion for Summary

Judgment argues Celadon Group, Inc., should be dismissed from this action because
there is insufficient evidence to support that theory of liability.
An agency relationship arises where “the principal ‘manifests assent’ to the agent
that the agent will ‘act on the principal’s behalf and subject to the principal’s control[,]’ and
the agent “consents so to act.” RM Campbell Indus., Inc. v. Midwest Renewable Energy,
LLC, 886 N.W.2d 240, 251 (Neb. 2016) (quoting Koricic v. Beverly Enters.—Neb., Inc.,
773 N.W.2d 145, 150 (Neb. 2009). The relationship “may be implied from the words and
conduct of the parties and the circumstances of the case evidencing an intention to create
the relationship irrespective of the words or terminology used by the parties to
characterize or describe their relationship.” RM Campbell Indus., 886 N.W.2d at 251-52.

5 The liquidated damages provision contained in each of the September purchase agreements
states “the parties agree that liquidated damages in an amount equal to the Cash Deposit shall be paid by
either party who breaches this contract.” ECF No. 81-10, Page ID 570-73. The parties dispute whether
the cash deposits were paid.

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“Apparent authority is authority that is conferred when the principal affirmatively,
intentionally, or by lack of ordinary care causes third persons to act upon an actor’s
apparent authority.” Kohout v. Bennett Constr., 894 N.W.2d 821, 828 (Neb. 2017). An
agent’s “power to affect the principal’s legal relationships with third parties[,]” through
apparent authority, “arises from, and is limited to, the principal’s manifestations to those
third parties about the relationships.” Id. Thus, “apparent authority for which a principal
may be liable exists only when the third party’s belief is traceable to the principal’s
manifestation and cannot be established by the actor’s acts, declarations, or conduct.”
Id. The third party’s belief that an agent is apparently acting with proper authority must
also be reasonable. Koricic, 773 N.W.2d at 152. Whether an agency relationship exists
and whether an agent had the apparent authority to act on the principal’s behalf are
factual questions. Id. at 149, 152.
In the SJ Order, the Court concluded that although the September purchase
agreements expressly stated Williams had the authority to sign the agreements for Quality
Equipment Sales, the February email correspondence between Kosmicki and Meek
raised a factual question as to whether Fleet reasonably believed Williams was acting
with the apparent authority to make Celadon Group, Inc., a party to the September
purchase agreements. ECF No. 103, Page ID 943-44. Based on Nebraska Supreme
Court precedent, Celadon Group, Inc., now raises an argument that was not, but could
have been, raised in its initial summary judgment motion regarding Williams’s apparent
authority to enter into the September purchase agreements on Celadon Group, Inc.’s,
behalf.

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Citing Franksen v. Crossroads Joint Venture, Celadon Group, Inc., argues Fleet
cannot establish that Williams had the apparent authority to act on Celadon Group, Inc.’s,
behalf because Fleet should have inquired about Williams’s authority. 515 N.W.2d 794,
801 (Neb. 1994). In Franksen, the Nebraska Supreme Court explained that “[o]ne who
is placed on inquiry as to an agent’s or employee’s authority, and who has reasonable
means of making inquiry, occupies the same position in law as if he had actual knowledge
of the employee’s lack of authority, because he is charged with knowledge of the facts
which the inquiry would have developed.”

Id.

Because the September purchase

agreements stated Williams had the authority to sign the agreements on behalf of the
purchaser, and the agreements listed Quality Equipment Sales as the purchaser, Celadon
Group, Inc., contends Fleet was put on inquiry regarding Williams’s authority to make
Celadon Group, Inc., a party to the agreements.

The Court finds this argument

persuasive.
Fleet argues it reasonably believed it was contracting with Celadon Group, Inc.,
when it entered into the September purchase agreements and that Williams had the
apparent authority to enter into those contracts on Celadon Group, Inc.’s, behalf. If that
was Fleet’s belief, however, Fleet was “put on inquiry” as to whether it was actually
contracting with Celadon Group, Inc., and whether Williams had the apparent authority to
enter into the agreements on Celadon Group, Inc.’s, behalf when the agreements
expressly stated otherwise. The agreements listed Quality Equipment Sales as the
purchaser and stated Williams had the authority to execute them on behalf of Quality
Equipment Sales. Id. Celadon Group, Inc., has never registered to do business under
the Quality Equipment Sales name and it was not holding itself out as doing business
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under that name. SJ Order, ECF No. 103, Page ID 940-941 (finding that one statement
on a Celadontrucking.com webpage was insufficient evidence to establish that Celadon
Group, Inc., was holding itself out as doing business as Quality Equipment Sales). Thus,
the Court concludes that Fleet was put on inquiry, and had reasonable means of making
inquiry, as to whether Williams had the apparent authority to execute the September
purchase agreements on Celadon Group, Inc.’s, behalf. As such, Fleet is charged with
actual knowledge of the fact that Quality Equipment Sales was an assumed name
officially registered to Quality Companies, LLC, and that Williams did not have the
authority to execute the agreements on Celadon Group, Inc.’s, behalf. Franksen, 515
N.W.2d at 801.
The parties’ course of dealing further supports this conclusion.

Prior to the

September purchase agreements, Kosmicki and Williams finalized the March and May
purchase agreements between Fleet and Quality Equipment Sales. Celadon Trucking,
Inc.—not Celadon Group, Inc.—satisfied the payment obligation on both.

Celadon

Trucking, Inc., also satisfied the payment obligations on the 2010 purchase agreements
between Fleet and Quality Equipment Sales. ECF No. 119-5. Celadon Group, Inc., was
not listed as the purchaser on any of these agreements and it never made payment on
them. This course of dealing put Fleet on inquiry as to whether Williams had the authority
to make Celadon Group, Inc., liable for the September purchase agreements.

To

presume Williams had such authority would be inconsistent with the parties’ prior course
of dealing.
Fleet argues that it is commercially unreasonable, “absurd,” and contrary to
Nebraska law to “suggest[ ] that Fleet should have investigated Celadon[ ] [Group, Inc.’s]
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corporate status and filings with the Indiana Secretary of State . . . .” Pl.’s Br., ECF No.
118, Page ID 1050. The Court does not make that suggestion. Rather, based on the
undisputed facts in the record, the Court finds that Fleet was at least placed on inquiry
regarding Williams’s authority to enter into the September purchase agreements on
Celadon Group, Inc.’s behalf. Fleet is therefore, as a matter of Nebraska law, charged
with knowledge of Williams’s lack of authority with respect to Celadon Group, Inc. It is
also charged with knowledge of the fact that Quality Equipment Sales was an assumed
name registered to Quality Companies, LLC.
CONCLUSION
Based on the face of the September purchase agreements and the parties’ prior
course of dealing, the Court finds that Fleet was put on inquiry regarding Williams’s
authority. Therefore, as a matter of Nebraska law, Fleet is charged with knowledge of the
fact that Williams did not have authority to execute the September purchase agreements
on Celadon Group, Inc.’s, behalf and that Quality Equipment Sales was an assumed
name registered to Quality Companies, LLC. As such, Fleet’s agency theory of apparent
authority does not establish Celadon Group, Inc.’s, liability for the agreements, and
Celadon Group, Inc., will be dismissed from this action.
IT IS ORDERED:
1.

The Renewed Motion for Summary Judgment, ECF No. 113, filed by
Defendant Celadon Group, Inc., is granted;

2.

The Objection to Index and Motion to Strike, ECF No. 121, filed by
Defendant Celadon Group, Inc., is denied as moot; and

3.

Celadon Group, Inc., is dismissed from this action.
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Dated this 11th day of September, 2018.

BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge

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