Lol Finance Co. v. Paul Johnson & Sons Cattle Co. Inc.

• Decision Date: 23 December 2010
• Docket Number: No. 4:09CV3224.,4:09CV3224.
• Citation: 758 F.Supp.2d 871
• Court: U.S. District Court — District of Nebraska
• Parties: LOL FINANCE COMPANY, Plaintiff,v.PAUL JOHNSON & SONS CATTLE CO., INC., First National Bank of Omaha, Robert P. Johnson, Keri J. Maloley, John Doe and ABC Company, Defendants.Paul Johnson & Sons Cattle Co., Inc., Third–Party Plaintiff,v.Maverick Feeders, Inc., Shon Sawyer and Julie Sawyer, Third–Party Defendants.

758 F.Supp.2d 871

LOL FINANCE COMPANY, Plaintiff,

v.PAUL JOHNSON & SONS CATTLE CO., INC., First National Bank of Omaha, Robert P. Johnson, Keri J. Maloley, John Doe and ABC Company, Defendants.Paul Johnson & Sons Cattle Co., Inc., Third–Party Plaintiff,

v.Maverick Feeders, Inc., Shon Sawyer and Julie Sawyer, Third–Party Defendants.

No. 4:09CV3224.

United States District Court, D. Nebraska.

Dec. 23, 2010.

Jonathan C. Miesen, Stoel, Rives Law Firm, Minneapolis, MN, for Plaintiff.Thomas O. Kelley, William F. Hargens, McGrath, North Law Firm, Omaha, NE, for Defendants.David A. Domina, Mark D. Raffety, Domina Law Firm, for Defendants and Third–Party Plaintiff.Shawn M. Nichols, Steven W. Sanford, Cadwell, Sanford Law Firm, Sioux Falls, SD, for Third–Party Defendants.

MEMORANDUM AND ORDER

RICHARD G. KOPF, District Judge.

The plaintiff, LOL Finance Company (“LOLFC” or “LOL”), claims (1) that the defendants, Paul Johnson & Sons Cattle Co., Inc. (“PJSCC”), Robert P. Johnson (“Johnson”), and Keri J. Maloley (“Maloley”), converted cattle and proceeds from sales of cattle in which LOLFC held a security interest; (2) that sales proceeds were also converted by the defendant, First National Bank of Omaha (“FNBO”); (3) that all of the defendants ¹ conspired to convert the cattle and sales proceeds; and (4) that LOLFC is entitled to replevin certain proceeds that were deposited into an escrow account pursuant to a temporary restraining order.² See Amended Complaint (filing 19). LOLFC has moved for summary judgment on all claims and requests the court to award it (1) the escrowed funds in the principal amount of $630,290.28; (2) additional damages for net sales proceeds in the principal amount of $1,496,152.49; and (3) prejudgment interest. See Plaintiff's Motion for Summary Judgment (filing 153). I find that LOLFC is entitled to summary judgment on the replevin claim for the escrowed funds, but I shall not order the payment of such funds to LOLFC until the conclusion of this case. I also find that LOLFC is entitled to summary judgment on the conversion claim for the full amount of damages requested, but only against PJSCC and Johnson. In all other respects the motion will be denied.

PJSCC claims in a third-party complaint that the owners of the cattle, Maverick Feeders, Inc. (“Maverick”), and Shon and Julie Sawyer (collectively, “the Sawyers”), have a contingent liability for feed bills and the cost of defending this action if LOLFC prevails on its claims. See Third–Party Complaint (filing 26). No motion has been filed with respect to these contingent claims.

Maverick and the Sawyers claim (1) that PJSCC breached its contract to custom feed the cattle; (2) that the defendants converted the cattle and sales proceeds; (3) that PJSCC and Johnson committed fraud and deceit; and (4) that the defendants conspired to convert the cattle and proceeds. See Answer to Third–Party Complaint, Counterclaim and Cross–Claim (filing 40) and Amended Counterclaim and Cross–Claim (filing 204).³ The second claim relates to counts 1 and 2 of LOLFC's amended complaint,⁴ while the fourth claim corresponds to count 3. Maverick and the Sawyers do not make any claim regarding the escrowed funds.

PJSSC, Johnson, and Maloley have joined in filing a motion for summary judgment (filing 165) concerning all claims alleged against them in LOLFC's amended complaint and in the counterclaim and cross-claims of Maverick and the Sawyers. These defendants argue that LOLFC does not have a perfected security interest in the cattle and proceeds because the collateral description in its security agreement and financing statement is insufficient. PJSSC also claims to have a prior security interest. No argument is made regarding the claims alleged by Maverick and the Sawyers. This motion for summary judgment will be denied in its entirety.

FNBO has filed three separate motions regarding the claims for conversion and conspiracy alleged in counts 2 and 3 of LOLFC's amended complaint and counts 2 and 4 of Maverick and the Sawyers' cross-claim. See Defendant FNBO's Motion for Summary Judgment on Claims Asserted by Plaintiff LOL Finance Co. (filing 168), Motion for Summary Judgment on Claims Asserted by Third–Party Defendant Maverick Feeders, Inc. (filing 169), and Motion to Dismiss Maverick Feeders, Inc.'s Crossclaim (filing 206).⁵ FNBO argues (1) that it has a priority interest in sales proceeds that were deposited by PJSCC in a checking account at FNBO and then transferred to FNBO to pay down PJSCC's loans; (2) that the conversion claim fails because the cattle sales proceeds were irreversibly commingled with other deposited funds; (3) that Maverick and the Sawyers cannot recover consequential damages; (4) that LOLFC cannot recover prejudgment interest; and (5) that LOLFC does not have a valid security interest.

FNBO's first motion for summary judgment will be granted in part and denied in part. With respect to count 2 of LOLFC's amended complaint, the motion will be granted insofar as it is claimed that FNBO converted funds deposited in PJSCC's checking account by applying the funds to pay down PJSCC's loans. The motion will be denied, however, to the extent it is alleged that FNBO aided and abetted the conversion committed by PJSCC. The motion also will be denied with respect to count 3 of LOLFC's amended complaint (conspiracy claim). Because Maverick and the Sawyers filed an amended pleading with leave of court after FNBO filed the second motion for summary judgment, that motion is technically moot.⁶ As discussed next, however, FNBO's motion to dismiss Maverick and the Sawyers' amended pleading will be converted into a motion for summary judgment. Treated as such, the motion will be granted in part and denied in part with respect to the conversion claim, and will be denied with respect to the conspiracy claim.

Preliminary Procedural Issues

FNBO's motions for summary judgment were filed on September 24, 2010. Maverick and the Sawyers filed an opposing brief and index of evidence on September 30, 2010. Their amended counterclaim and cross-claim was filed on November 3, 2010. FNBO's motion to dismiss the amended pleading was filed on November 12, 2010. It reads, in part:

Defendant, First National Bank of Omaha (“FNBO”), pursuant to Fed.R.Civ.P. 12(b)(6), hereby moves for the dismissal of the Amended Crossclaim filed against FNBO by Maverick Feeders, Inc. in the above captioned action for the reason that it fails to state a claim upon which relief can be granted. In support of this Motion, FNBO offers its Brief in Support of FNBO's Rule 12(b)(6) Motion to Dismiss Crossclaim filed herewith which incorporates FNBO's previously filed Brief in Support of its Summary Judgment Motion (Filing No. 175) and Reply Brief in Support of Motion for Summary Judgment (Filing No. 202). In addition, FNBO offers the Evidence Index of FNBO in Support of its Summary Judgment Motion (Filing No. 174) and Evidence Index of FNBO in Opposition to LOL Finance Motion for Summary Judgment (Filing No. 191) in support of FNBO's Motion to Dismiss Maverick Feeders, Inc.'s Crossclaim. Because FNBO has presented to the Court matters outside the pleadings in support of this Motion, FNBO respectfully requests that the Court treat FNBO's Motion as one for summary judgment under Rule 56 as permitted by Fed.R.Civ.P. 12(d).

(Filing 206, at 1–2.)

On November 22, 2010, Maverick filed a brief in opposition to the motion to dismiss, stating that it “resists the motion on the grounds and for the reasons set forth in the resistance to the summary judgment motion (Dkt. # 200) and record citations therein,....” (Filing 218, at 1–2.) ⁷ Maverick did not object to FNBO's request that its motion be treated as one for summary judgment.

As requested by FNBO, the Rule 12(b)(6) motion to dismiss will be treated as a Rule 56 motion for summary judgment. See Fed.R.Civ.P. 12(d) ( “If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.”). Because the issues presented by the motion to dismiss are identical to those presented by the previously filed motion for summary judgment, and because Maverick and the Sawyers have fully responded to FNBO's arguments and evidence, I conclude that the motion may be considered under Rule 12(d) without further notice. See Riehm v. Engelking, 538 F.3d 952, 962 n. 5 (8th Cir.2008) (plaintiffs had constructive notice of district court's treatment of defendants' motion to dismiss as motion for summary judgment where plaintiffs introduced and relied on material outside complaint); Madewell v. Downs, 68 F.3d 1030, 1048 (8th Cir.1995) (lack of formal notice that district court will treat Rule 12(b)(6) motion to dismiss as motion for summary judgment is harmless where nonmoving party has submitted evidence in opposition to motion).

PJSCC, Johnson, and Maloley also filed their motion for summary judgment in advance of Maverick's amended pleading, on September 16, 2010. The motion is now moot insofar as it requests that “the Court render summary judgment in favor of each [the defendants], individually, ... on all third party claims of the Third Party Defendants against them, or any of them.” (Filing 165, at 1.) On November 29, 2010, PJSCC, Johnson, and Maloley responded to Maverick and the Sawyers' amended counterclaim and cross-claim by filing an “Answer [to] Amended Counterclaim of Maverick et al Against PJSCC And Answer to Cross Claims Against Defendants (# 204) And Fed.R. Civ. P. 12b Motion.” (Filing 221, at 1.) This filing purportedly includes both an answer and a Rule 12(b)(6) motion to dismiss, but the defendants state in a footnote that “[n]o separate Brief is filed with this Motion and no ruling prior to trial is requested. The...