Rezac Livestock Comm'n Co. v. Pinnacle Bank, Case No. 15-cv-04958-DDC-KGS.

CourtUnited States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
Citation255 F.Supp.3d 1150
Docket NumberCase No. 15-cv-04958-DDC-KGS.
Parties REZAC LIVESTOCK COMMISSION COMPANY, INC., Plaintiff, v. PINNACLE BANK and Dinsdale Bros., Inc., Defendants.
Decision Date06 June 2017

255 F.Supp.3d 1150

PINNACLE BANK and Dinsdale Bros., Inc., Defendants.

Case No. 15-cv-04958-DDC-KGS.

United States District Court, D. Kansas.

Signed June 6, 2017

255 F.Supp.3d 1155

Michelle M. Masoner, Robert M. Thompson, Stephanie C. Bradshaw, Bryan Cave LLP, Kansas City, MO, for Plaintiff.

Thomas Randall Wright, Baird Holm LLP, Omaha, NE, Timothy A. Shultz, Goodell, Stratton, Edmonds & Palmer, LLP, Topeka, KS, Jason B. Brinkley, John O'Brien, Scott C. Sandberg, Snell & Wilmer, LLP, Denver, CO, for Defendants.


Daniel D. Crabtree, United States District Judge

Plaintiff Rezac Livestock Commission Company, Inc. accuses defendant Dinsdale Bros., Inc. of being a modern-day cattle rustler and also accuses defendant Pinnacle Bank of serving as Dinsdale's accomplice. Doc. 46. Plaintiff contends that it sold Dinsdale nearly $1 million worth of cattle in September 2015 but Dinsdale has never paid for them. So, trying to recover the money, plaintiff makes three claims against Dinsdale (breach of contract, conversion, and quantum meruit), one claim against Pinnacle Bank (conversion), and two claims against Dinsdale and Pinnacle Bank together (unjust enrichment and civil conspiracy).

Dinsdale has filed a Motion to Dismiss Second Amended Complaint seeking to extricate itself from this litigation entirely. Dinsdale's Motion argues that plaintiff's Second Amended Complaint states no claim against it and so the court should dismiss it under Federal Rule of Civil Procedure 12(b)(6). Doc. 48. After carefully reviewing the parties' submissions, the court denies Dinsdale's motion.

I. Background

Because Dinsdale brings its motion under Rule 12(b)(6), plaintiff's Second Amended Complaint ("Complaint") supplies the governing facts and the court must accept those facts as true.1 See

255 F.Supp.3d 1156

S.E.C. v. Shields , 744 F.3d 633, 640 (10th Cir. 2014).

Plaintiff Rezac Livestock Commission Company, Inc. is a Kansas corporation that sells cattle in St. Marys, Kansas.2 On September 29, 2015, a man named Charles D. Leonard attended one of plaintiff's livestock auctions at Dinsdale's direction. Dinsdale is a Nebraska corporation who buys and sells cattle. At the auction, Mr. Leonard told plaintiff that Dinsdale had sent him to the auction to fill a large order of cattle for Dinsdale. This was not uncommon for Mr. Leonard. He had purchased livestock from plaintiff on behalf of Dinsdale in the past—a fact that plaintiff knew well. For this auction, Dinsdale had given Mr. Leonard specific instructions about what cattle to purchase: "no steers over 900 lbs. and no heifers over 800 lbs." Doc. 46 ¶ 13. Mr. Leonard did as Dinsdale asked, purchasing 668 head of cattle for Dinsdale from plaintiff for a total cost of $980,361.45. Mr. Leonard wrote plaintiff a check for the full purchase price, drawn on Pinnacle Bank. He then told plaintiff that Dinsdale wanted the cattle shipped directly to two Colorado feedlots. Plaintiff complied and shipped the cattle to Colorado.

Around October 1, 2015—after plaintiff had shipped the cattle—Dinsdale wired funds to Pinnacle Bank to cover Mr. Leonard's check. But before Dinsdale wired the funds, it communicated with Pinnacle Bank about Mr. Leonard's financial status. Mr. Leonard owed Pinnacle Bank more than $1 million when he wrote plaintiff that $980,361.45 check. And Dinsdale knew it, because the same family owns Dinsdale and Pinnacle Bank. Plaintiff alleges that this common ownership gave Dinsdale access to information about Mr. Leonard's financial situation that it otherwise might not have had. See id. ¶ 24. Indeed, when the auction occurred, Dinsdale knew that Mr. Leonard was behind in repaying his debt to Pinnacle Bank. And, because of this knowledge, Dinsdale's bookkeeper had been told "that any payments for cattle purchased through [Mr.] Leonard would require payment directly to the sale barn," here, plaintiff. Id. ¶ 27. But Dinsdale did not pay plaintiff directly. Instead, Dinsdale decided to wire the funds to Pinnacle Bank—after Dinsdale and Pinnacle Bank "specifically discussed ... timing ... the wire to correspond with [plaintiff's] presentation of [Mr.] Leonard's check to Pinnacle Bank." Id. ¶ 29.

When Pinnacle Bank received Dinsdale's wire to Mr. Leonard's account, it "closed [Mr.] Leonard's account and set off the funds in the account against debts [that Mr.] Leonard owed to Pinnacle Bank." Id. ¶ 44. As a result, when plaintiff presented Mr. Leonard's check to Pinnacle Bank, his account had no money left in it to pay plaintiff. Plaintiff tried to cash Mr. Leonard's check twice, but both times Pinnacle Bank "refused to release the funds." Id. ¶ 36. Because no one had paid plaintiff for the cattle, it "attempted to reclaim the livestock and demanded [that] Dinsdale" return the cattle "for lack of payment." Id. ¶ 37. Dinsdale declined. In response, plaintiff filed this lawsuit on September 29, 2015, trying to recover the more than $900,000 that it claims Dinsdale still owes for the 668 head of cattle Mr. Leonard purchased.

On February 3, 2017, Dinsdale filed its Motion to Dismiss, arguing that plaintiff's Complaint fails to state a claim against it and thus should be dismissed under Federal Rule of Civil Procedure 12(b)(6). Doc. 48. The court considers Dinsdale's Motion to Dismiss under the legal standard outlined in the following section.

II. Rule 12(b)(6) Legal Standard

Rule 8(a)(2) provides that a complaint must contain "a short and plain statement

255 F.Supp.3d 1157

of the claim showing that the pleader is entitled to relief." Although this Rule "does not require ‘detailed factual allegations,’ " it demands more than "[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "Under this standard, ‘the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.’ " Carter v. United States , 667 F.Supp.2d 1259, 1262 (D. Kan. 2009) (quoting Ridge at Red Hawk, LLC v. Schneider , 493 F.3d 1174, 1177 (10th Cir. 2007) ).

On a motion to dismiss like this one, the court assumes the complaint's factual allegations are true, but need not accept mere legal conclusions as true. Id. at 1263. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements" are not enough to state a claim for relief. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

III. Analysis

Dinsdale asks the court to dismiss all five of plaintiff's claims against it because they fail to state a claim. The court considers each claim, separately, below.

A. Count I: Breach of Contract

In count one, plaintiff asserts a breach of contract claim against Dinsdale. But plaintiff never alleges that Dinsdale made any contract with it. Instead, plaintiff alleges that a sale contract existed between plaintiff and Mr. Leonard, in which Mr. Leonard agreed to pay plaintiff $980,361.45 in exchange for 668 head of cattle.3 Plaintiff alleges that Dinsdale is bound to this contract just as if it were a party because Mr. Leonard had authority as Dinsdale's agent to enter into the sale contract on Dinsdale's behalf. Finally, plaintiff alleges that Dinsdale has breached this contract by failing to pay for the cattle.

For its part in this controversy, Dinsdale contends that count one states no breach of contract claim. It advances three arguments to support this position: (1) plaintiff "lacks the contractual privity necessary to maintain a breach of contract claim against" Dinsdale; (2) "the statute of frauds bars the contract" that plaintiff alleges between it and Dinsdale; and (3) the Complaint "contains no indication of an agency relationship" between Dinsdale and Mr. Leonard. Doc. 49 at 5, 9.

Dinsdale's privity and statute of fraud arguments rely on its agency argument. In its privity and statute of fraud arguments, Dinsdale contends that plaintiff, to state a claim, must allege that a written contract exists, and that plaintiff and Dinsdale both signed the contract. Dinsdale then characterizes the Complaint as alleging only two contracts: one between Dinsdale and Mr. Leonard and one between Mr. Leonard and plaintiff. But

255 F.Supp.3d 1158

plaintiff can allege a contract exists between it and Dinsdale under an agency theory. That is, if...

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