Conolly v. Clark

• Decision Date: 11 August 2006
• Docket Number: No. 05-3558.,05-3558.
• Parties: Kelly CONOLLY, Appellant, v. James D. CLARK, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

457 F.3d 872

Kelly CONOLLY, Appellant, v. James D. CLARK, Appellee.

No. 05-3558.

United States Court of Appeals, Eighth Circuit.

Submitted: April 21, 2006.

Filed: August 11, 2006.

Paul D. Lundberg, argued, Sioux City, IA, for appellant.

Michael C. Cox, argued, Omaha, NE (Daniel J. Fischer, Omaha, NE, on the brief), for the appellee.

Before WOLLMAN, HANSEN, and BENTON, Circuit Judges.

HANSEN, Circuit Judge.

Kelly Conolly, a citizen of Iowa, brought this diversity-based breach of contract suit against James D. Clark, a citizen of Nebraska, claiming that Clark breached an oral agreement to allow Conolly to purchase all of the common stock of Clark Brothers Transfer, Inc. The district court¹ granted summary judgment to Clark, and Conolly appeals.

In the summary judgment context, we review the district court's grant of summary judgment de novo, viewing the facts and the inferences to be drawn from them in the light most favorable to the nonmoving party and applying the same standards as the district court. Mershon v. St. Louis Univ., 442 F.3d 1069, 1073 (8th Cir.2006). "Summary judgment is appropriate if the record `show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Id. (quoting Fed.R.Civ.P. 56(c)). The district court found the following facts to be undisputed for purposes of summary judgment.

Conolly worked as a terminal manager for Clark Brothers Transfer, Inc., a trucking company. James Clark was the company's president and majority shareholder. In early 2003, Conolly began discussing with Clark the possibility of Conolly purchasing the company. After months of negotiating, they executed a confidentiality agreement on October 17, 2003, which enabled Conolly to obtain financial information about the company for evaluation purposes. In a letter, Clark asked Conolly to provide a written offer to purchase within 10 to 14 days of October 28, 2003. On November 12, 2003, Conolly sent an expressly non-binding letter of intent that did not include an offer to purchase. The letter stated in part that the transaction would be structured to include a purchase price, yet to be determined, as well as an assumption of liabilities, employment agreements, and a covenant not to compete, all yet to be determined.

Clark and Conolly met again on November 13, 2003, to discuss the purchase, and they orally agreed upon a purchase price of $15,500,000 for the stock, but all other terms of the acquisition were left to be negotiated later. Clark requested that Conolly send him an offer in the form of a "letter of intent" within two weeks, a period ending on December 1, 2003. On January 6, 2004, Conolly's attorney sent Clark a letter indicating that Conolly was interested in purchasing the company "pursuant to the terms contained in this non-binding letter of intent." (Appellant's App. at 61.) The letter set forth how the transaction would be structured-including a purchase price, an assumption of liabilities, a statement that employment agreements would be determined later, and a covenant not to compete. In conclusion, the letter again stated that it was a non-binding letter and did not represent a binding commitment by either party. A formal acceptance form was attached, but it was never signed by either Conolly or Clark. On February 16, 2004, Clark elected to sell the company to another buyer for approximately $30,500,000.

Conolly brought this breach of contract claim, invoking the district court's diversity jurisdiction and alleging that Clark had breached an oral agreement entered into on November 13, 2003. The district court granted Clark's motion for summary judgment, concluding that the oral agreement did not form a contract under Nebraska law. There is no dispute that Nebraska law governs this contract dispute, and we review the district court's interpretation of state law de novo. See Salve Regina Coll. v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Fairbrook Leasing, Inc. v. Mesaba Aviation, Inc., 408 F.3d 460, 464 (8th Cir. 2005).

On appeal, Conolly argues that the district court erred by concluding as a matter of law that the parties' oral agreement of November 13, 2003, was not sufficiently definite to form a binding contract. "[I]n order to establish an express contract there must be a definite proposal and an unconditional and absolute acceptance thereof." Viking Broad. Corp. v. Snell Publ'g Co., 243 Neb. 92, 497 N.W.2d 383, 386 (1993). Additionally, under Nebraska law, when considering whether the parties intended to be bound by a contract, the evidence "is to be viewed objectively, not subjectively." Id. Except in the clearest of cases, the question of whether the parties intended to contract is a factual one to be resolved by the finder of fact. Gerhold Concrete Co. v. St. Paul Fire and Marine Ins. Co., 269 Neb. 692, 695 N.W.2d 665, 672 (2005). However, "[w]hen the provisions of an alleged contract being sued upon are so cursory, indefinite, and conditional as to fail as a matter of law to establish an objective intent on the part of the parties to be bound thereby, no factual issues exist," Solar Motors, Inc. v. First Nat'l Bank of Chadron, 249 Neb. 758, 545 N.W.2d 714, 720 (1996), and summary judgment is appropriate. See Viking Broad. Corp., 497 N.W.2d at 386; see also Diesel Power Equip., Inc. v. ADDCO, Inc., 377 F.3d 853, 857 (8th Cir.2004).

Conolly argues that judgment as a matter of law was not justified because the terms of the oral agreement were sufficiently definite to demonstrate an objective intent to be bound in contract. Conolly asserts that Clark agreed to the purchase price and agreed that both the structure of the deal and other details could be worked out, and Conolly states that he and Clark shook hands to confirm their intentions. We note that "an `agreement to agree' is not enforceable in Nebraska," Gerhold Concrete Co., 695 N.W.2d at 672, and "`[a] contract is not formed if the parties contemplate that something remains to be done to establish contractual arrangements or if elements are left for future arrangement.'" Diesel Power Equip., Inc., 377 F.3d at 857 (quoting Neb. Nutrients, Inc. v. Shepherd, 261 Neb. 723, 626 N.W.2d 472, 499 (2001)).

The undisputed documentary evidence of subsequent ongoing negotiations indicates that the terms of the oral agreement were not sufficiently...