McClure v. Duggan

• Decision Date: 27 November 1987
• Docket Number: Civ. A. No. 4-84-278-E.
• Citation: 674 F. Supp. 211
• Parties: Doug McCLURE v. Richard DUGGAN.
• Court: U.S. District Court — Northern District of Texas

674 F. Supp. 211

Doug McCLURE v. Richard DUGGAN.

Civ. A. No. 4-84-278-E.

United States District Court, N.D. Texas, Fort Worth Division.

November 27, 1987.

COPYRIGHT MATERIAL OMITTED

Hill, Heard, O'Neal, Gilstrap & Goetz, Frank Hill and Marcia Wise, Arlington, Tex., for plaintiff.

Gibson, Dunn & Crutcher, Eric W. Buether, Dallas, Tex., for defendant.

MEMORANDUM OPINION AND ORDER

MAHON, District Judge.

Doug McClure, Plaintiff, has brought suit against Richard Duggan, Defendant, alleging that Duggan breached an agreement, including expressed and implied covenants, to sell Foscarini, a race horse, to McClure. McClure further alleges that Duggan's actions associated with this alleged breach support claims of fraud, Deceptive Trade Practices Act ("DTPA") violations, conversion, and breach of fiduciary duty. Defendant Duggan has moved for summary judgment, and his motion is ripe for resolution.

I. Facts

Duggan is an Irish subject, temporarily residing in Los Angeles County, California. He is involved in the purchase and resale of European race horses. McClure, a Texas resident, became acquainted with Duggan in 1983 through his trainer, Charles Marikian, who resides and works in California. In October of 1983, Duggan sold a horse by the name of Silk Sash to McClure for $65,000.

In January of 1984, McClure met with Duggan in California and stated that he desired to purchase a top caliber European race horse. In May, Duggan approached McClure's trainer, Marikian, with information that a suitable horse had become available. On June 2, 1984, McClure telephoned Duggan to discuss the possibility of purchasing Foscarini.

During the weekend of June 2, 1984, McClure met with Duggan in California where all aspects of the proposed terms for the sale of Foscarini were discussed. Duggan advised McClure that the purchase price for Foscarini would be $600,000 and that the horse was located in Ireland. Duggan's veterinarian had previously examined Foscarini and pronounced him "sound."

What occurred at this point in the negotiations is heavily disputed. McClure alleges that he and Duggan entered into an oral agreement whereby McClure would purchase Foscarini for $600,000. McClure further alleges that this oral agreement was subject to the condition that McClure's veterinarian examine Foscarini in California. If McClure's veterinarian did not approve Foscarini, McClure would have the right to reject the horse. Alternatively, if the veterinarian approved Foscarini, McClure would assume all risks associated with the horse's ownership.

Duggan flatly denies these allegations and contends that he and Duggan never entered into an agreement for the sale of Foscarini. It is Duggan's position that an agreement was never reached because McClure insisted on the right to refuse to purchase Foscarini if his veterinarian rejected the horse. Duggan alleges that McClure made a number of counter-proposals during their meeting in California, but he insists that no agreement was ever consummated.

On June 5, 1984, both Duggan and McClure contacted Louis Rowan of Rowan-Wilson Insurance Services in Pasadena, California, for the purpose of determining whether Rowan could obtain insurance on Foscarini. Two documents were prepared in connection with this request for insurance: (1) an Application for Insurance and (2) an Order for Livestock Insurance. These documents were purportedly prepared by an employee of the insurance agency. It is undisputed that Duggan did not sign either document. Mr. Rowan, at the top of the Order for Livestock Insurance, indicated that Duggan was acting as an agent for McClure. Mr. Rowan admits signing Duggan's name on the Application for Insurance and placing his own initials beside the signature. Duggan alleges that these documents were prepared without his knowledge or request.

On June 5, 1984, McClure, now in Texas, received a call from Duggan. The parties disagree as to what transpired during this phone conversation. McClure alleges that Duggan wanted another veterinarian to check Foscarini before the horse left Europe. McClure contends that Duggan was concerned that if Foscarini was disapproved by McClure's veterinarian in the United States, Duggan would be left with the burden of finding another buyer for a horse already pronounced unsound. McClure further alleges that Duggan told him not to send the purchase money and that he, Duggan, would call back to inform McClure when the funds should be sent.

On June 6, 1984, McClure alleges that Duggan called him and stated "Do not wire the money. The horse will not `vet.'" McClure did not tender the purchase money.

Duggan categorically denies McClure's assertions. Duggan contends that after McClure returned to Texas, Duggan and he discussed McClure's insistence that McClure's veterinarian have the right to inspect and reject Foscarini prior to McClure's obligation to purchase the horse. Duggan insists that McClure continued to assert this condition and, therefore, Duggan informed McClure that he was unwilling to enter into an agreement for the sale of Foscarini. Duggan also denies making the alleged June 6th representation that Foscarini would not "vet."

Foscarini was later sold by Duggan to another purchaser. McClure filed this action. In November of 1984 Foscarini won the Hollywood Derby, conferring winnings of $175,000 upon the horse's new owners.

II. Summary Judgment Issues

A Court may grant summary judgment only if "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The movant bears the burden of proof, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970), and all inferences drawn from the underlying facts must be viewed in the light most favorable to the nonmovant. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356-57, 89 L.Ed. 2d 538 (1986). The moving party, however, is not required to produce evidence which negates the claims or allegations of its opponent, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986); rather, it may merely point out the absence of such evidence. Id. To avoid summary judgment, the nonmovant must then do more than simply cast "some metaphysical doubt" upon the relevant facts. Matsushita, 106 S.Ct. at 1356. The opponent must produce significant probative evidence which supports its complaint. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968); Joe Regueira, Inc. v. American Distilling Company, Inc., 642 F.2d 826, 829 (5th Cir.1981). If the record demonstrates that the trier of fact could not rationally find for the nonmovant, then no genuine issue of material fact exists, and the moving party is entitled to summary judgment as a matter of law. Matsushita, 106 S.Ct. at 1356.

A. Conflict of Laws Issues

While federal law governs the procedural standard of review for Defendant Duggan's Motion for Summary Judgment, Erie Railroad v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938), the law of the forum state controls substantive issues. Rosenberg v. Celotex Corp., 767 F.2d 197, 199 (5th Cir.1985). State substantive law includes a state's conflict of laws rules. Klaxon Co. v. Stentor Electric Co., 313 U.S. 487, 491, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). This means that a federal district court is bound by the choice of law rules in which it sits. Randall v. Arabian American Oil Co., 778 F.2d 1146, 1152 n. 9 (5th Cir.1985). Therefore, the choice of law rules of Texas apply to this case.

The Texas Supreme Court has set forth the principle controlling choice of law determinations: "in all choice of law cases, except those contract cases in which the parties have agreed to a valid choice of law clause, the law of the state with the most significant relationship to the particular substantive issue will be applied to resolve that issue." Duncan v. Cessna, 665 S.W. 2d 414, 421 (Tex.1984) (emphasis added). As will be seen, the issues which bear on the outcome of this case will require the application of laws of different states.

B. Contract Claims

According to the Duncan standard, the Court must consider the contacts each jurisdiction had with the contract which is the subject matter of this lawsuit. Id. When examining the contact that a jurisdiction has with a transaction, a number of factors are considered: the place of contracting; the place of negotiation of the contract; the place of performance of the contract; and, the domicile or residence of the parties to the transaction. Restatement (Second) of Conflict of Laws § 188.

In this case, several factors mitigate strongly in favor of the application of California law to McClure's contract claims. Contract negotiations for the purchase of Foscarini occurred in California. If the alleged agreement was ever reached between McClure and Duggan, the deal would have been finalized in California. It is undisputed that if Foscarini was to be delivered to McClure, delivery was to take place in California. McClure insisted that Foscarini be examined by a veterinarian in California. Both Duggan and McClure's trainer, Marikian, are California residents. Efforts to procure insurance for Foscarini occurred in California through a local agent. These facts convince the Court that California is the jurisdiction with the most significant relationship to the alleged contract. Thus, California law will be applied when determining McClure's contract claims.¹

1. The Statute of Frauds

No dispute exists concerning the sales price for Foscarini. Duggan offered the horse for sale for $600,000. Thus the alleged sale of Foscarini to McClure is subject to the statute of frauds requirement set forth in section 2201(1) of the California Commercial Code ("UCC"). See, e.g., Scott v. Hjelm, 188 Mont. 375, 613 P.2d 1385 (1980) (UCC...