Alex Lyon & Son, Sales Managers & Auctioneers, Inc. v. Leach
| Decision Date | 12 June 2020 |
| Docket Number | No. 18-0383,18-0383 |
| Citation | 844 S.E.2d 120 |
| Court | West Virginia Supreme Court |
| Parties | ALEX LYON & SON, SALES MANAGERS & AUCTIONEERS, INC., Defendant Below, Petitioner v. James R. LEACH, Plaintiff Below, Respondent |
George J. Cosenza, Esq., Cosenza Law Office, Parkersburg, West Virginia, Counsel for the Petitioner.
Matthew C. Carlisle, Esq., Theisen Brock, Marietta, Ohio, Jeffrey B. Reed, Esq., Parkersburg, West Virginia, Counsel for the Respondent.
In this appeal from the Circuit Court of Wood County we examine a narrow and complex question: how is a contract formed in an auction? This question is one of first impression in West Virginia.
As we discuss below, the circuit court properly construed the law of auctions and contracts. Because there are no genuine issues of material fact in the record below, and inquiry concerning the facts will do nothing to clarify the application of the law, we find that the circuit court correctly granted summary judgment to the plaintiff and denied summary judgment for the defendant.
This appeal involves the auction of a plot of land in Vienna, West Virginia. The defendant, Alex Lyon & Son, Sales Managers & Auctioneers, Inc., advertised and conducted the auction of the property. The plaintiff, James R. Leach, was the high bidder at the auction.
The parties agree that the defendant placed several advertisements for the sale of the property, in writing and online, and described the auction as an "absolute sale" with a minimum opening bid of $200,000. The defendant's advertisements contained "terms and conditions" that required prospective buyers to make a 10% deposit before being allowed to place a bid on the tract.1 The defendant also created an "Auction Catalog" with terms and conditions that contained a similar requirement: that prospective bidders must first provide "Cash or [a] Company Check" of the 10% deposit before bidding. Furthermore, the terms and conditions in the pre-auction advertisements and catalog required prospective bidders to provide a "Bank Letter of Guarantee" made payable to the defendant to ensure payment of the balance of the proceeds if the bidder was successful at the auction. Additionally, the pre-auction advertisements and catalog required that, before bidding, bidders must sign a "Bidders Registration Agreement" that bound them to the terms and conditions of the auction. Lastly, the advertising and catalog provided that the terms and conditions of the auction could be modified only by a statement made at the auction.2
The defendant scheduled the auction of the property to begin at 1:00 p.m. on May 21, 2016. The plaintiff arrived at the auction site early and waited. At about 12:50 p.m., the plaintiff approached the bidder's registration table and spoke to an employee of the defendant. When questioned, the employee confirmed to the plaintiff that no bidders had made a deposit or otherwise qualified to bid on the property. In reliance upon that fact, the plaintiff delivered to the defendant's employee a signed bidder's registration agreement, a copy of a bank's letter of credit, and a $20,000 check. The parties agree that the plaintiff was properly qualified to bid on the property.
Thereafter, the defendant's auctioneer (a man named Jack Lyon) began the auction. The defendant's auctioneer did not announce any new or modified terms for the auction; he simply sought bids on the property. However, another individual named Kurt Lerch joined the bidding with the plaintiff. Bidding began at $200,000, and after a brief round of increasing bids between the plaintiff and Mr. Lerch, the plaintiff won the auction with a high bid of $265,000.
The plaintiff subsequently filed this lawsuit against the defendant. The plaintiff alleged that, immediately after the auction ended, he learned that Mr. Lerch had not met the bidding requirements because he had not deposited 10% before bidding. The plaintiff's lawsuit sought damages based upon various legal theories, including breach of contract, because the defendant had permitted an unqualified bidder (Mr. Lerch) to bid on the property. The defendant responded to the lawsuit, and the parties conducted discovery.
The plaintiff and the defendant subsequently filed motions for summary judgment. The plaintiff pointed out that the defendant admitted that Mr. Lerch had not placed a 10% deposit before the auction, had not signed a bidder's registration agreement, and had not offered any bank letter guaranteeing he could purchase the property. Instead, the defendant claimed that Mr. Lerch was a qualified bidder because the defendant's auctioneer, Mr. Lyon, had personally qualified Mr. Lerch to bid before the auction "by virtue of his prior relationship with the [d]efendant and Mr. Lyon."3
Moreover, the plaintiff took the deposition of Mr. Lyon, the defendant's auctioneer. Mr. Lyon testified that if the plaintiff were the only qualified bidder on the property, then the winning price would have been only $200,000. Mr. Lyon testified as follows:
On April 5, 2018, the circuit court entered an order granting summary judgment to the plaintiff and denying the defendant's motion for summary judgment. Because of the confusing language in the defendant's advertisements and catalog, the circuit court found that the sale met the definition of an "auction with reserve" because of the requirement for a minimum bid of $200,000. However, once that minimum bid was placed, the circuit court found that the defendant had advertised the sale as an "absolute auction." The circuit court then determined that when a party offers property for sale in an "absolute auction," a contract is formed between the bidder and the auctioneer with every bid, until a higher bid is offered. In other words, the auctioneer's advertising material was an offer from the auctioneer to sell the property at the price bid by the highest bidder, and the bidder accepted the offer and formed a binding contract with every bid.
Additionally, the circuit court determined that the terms of the auctioneer's offer are contained in the auction's advertising materials, and that these terms are binding on the auctioneer unless there is an effective modification by the auctioneer. Once the auctioneer sets forth the terms of the auction in advertising, bidders may rely on those advertised terms in forming bids, and both the bidder and the auctioneer (and the seller for whom the auctioneer works) are bound by those advertised terms.
Applying these rules to this case, the circuit court found that the defendant's advertisements and catalog were "clear, unambiguous and undisputed," and required bidders to make a 10% deposit of the minimum bid as well as provide a letter of credit guaranteeing that the bidder could complete the purchase. The circuit court found it was undisputed that the plaintiff met these pre-auction qualifications and that the other bidder, Mr. Lerch, did not. Accordingly, the circuit court found that a contract was formed between the plaintiff and defendant when the plaintiff properly bid $200,000 or more on the property, and the contract incorporated requirements that every bidder qualify by posting a deposit, presenting a bank letter of guarantee, and signing the bidder's registration agreement. The circuit court then found that the defendant breached the contract when it permitted someone who was not a qualified bidder to also bid on the property. As the sole qualified bidder, the circuit court concluded that the plaintiff should have been permitted to buy the property at the minimum required bid, that is, for $200,000.
Because the plaintiff (as the winning bidder against Mr. Lerch) paid $265,000 after the conclusion of the auction, the circuit court ordered the defendant to repay the plaintiff $65,000 for the excess purchase price and $3,867.50 in excess auction commission fees, plus pre- and post-judgment interest.
The defendant now appeals the circuit court's April 5, 2018, summary judgment order.
We review a circuit court's entry of summary judgment de novo. Syllabus Point 1, Painter v. Peavy , 192 W.Va. 189, 451 S.E.2d 755 (1994). "The question to be decided on a motion for summary judgment is whether there is a genuine issue of material fact and not how that issue should be determined." Syllabus Point 5, Aetna Casualty & Sur. Co. v. Federal Ins. Co. , 148 W.Va. 160, 133 S.E.2d 770 (1963).
We have repeatedly held that under Rule 56(c) of the West Virginia Rules of Civil Procedure, "[a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syllabus Point 3, id. "Summary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party[.]" Syllabus Point 4, in part, Painter , 192 W. Va. at 190, 451 S.E.2d at 756. Moreover, we have explained that:
Roughly stated, a "genuine issue" for purposes of West Virginia Rule of Civil Procedure 56(c) is simply one half of a trialworthy issue, and a genuine issue does not arise unless there is sufficient evidence favoring the non-moving party for a reasonable jury to return a verdict for that party. The opposing half of a trialworthy issue is present where the nonmoving party can point to one or more disputed "material" facts. A material fact is one that has the capacity to sway the outcome of the litigation under the applicable law.
Syllabus Point 5, Jividen v. Law , 194 W.Va. 705, 461 S.E.2d 451 (1995). Finally, we are cognizant that a plaintiff bears the burden of proof at a trial on the merits, and therefore "a plaintiff only is...
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