Seale v. Miller
| Decision Date | 03 June 1988 |
| Docket Number | No. 1:87-CV-272-RHH.,1:87-CV-272-RHH. |
| Parties | Michael SEALE, Plaintiff, v. Leon MILLER, individually and as an officer and employee of Alta Verde Industries, Inc., Chip Miller, individually and as an officer and employee of Alta Verde Industries, Inc., Alta Verde Industries, Inc., Alta Verde Industries, Inc. under the doctrine of respondeat superior, and Miller Finance Company, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Georgia |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Adam Gillespie Jett, Jr., Jett & Liss, Atlanta, Ga., Rex P. Cornelison, III, Roswell, Ga., for plaintiff.
M. Jerome Elmore, Bondurant Mixson & Elmore, Atlanta, Ga., Thomas A. Harwood, Harwood & Dulin, Uvalde, Tex. for defendants.
Currently before the court in this case is defendants' motion for summary judgment, or in the alternative, for dismissal. This is a suit by a disgruntled investor who sought to shelter taxable income and sought potential profit through investing in a cattle feeding and sales program.
The plaintiff is a resident of Atlanta, Georgia. Defendant A.L. ("Leon") Miller, Jr. is a resident of Eagle Pass, Maverick County, Texas. Leon Miller is President of Alta Verde Industries Inc. and Miller Finance Company, Inc. Defendant A.L. ("Chip") Miller, III is Vice-President of Marketing for Alta Verde Industries, Inc., and Vice-President of Miller Finance Company, Inc.
Defendant Alta Verde Industries, Inc. ("Alta Verde") is a Nevada corporation doing business in Texas and engaged in the sale of cattle and cattle management services. Alta Verde produces and sells cattle feed, and enters into contracts, known as cattle feeding agreements, whereby it holds and feeds cattle for their owners' accounts. Alta Verde operates two feedlots in Eagle Pass, Texas which are separated by over fifteen miles. Alta Verde advertised its cattle feeding program in several national and local newspapers and magazines including: Barrons; The Palm Springs Desert Sun; The New York Times; The Los Angeles Times; and The Wall Street Journal. Alta Verde purchased mailing lists, and used these lists in mailing correspondence and advertising material promoting investment in the Alta Verde cattle feeding program. Alta Verde did not register the program at issue here with the Securities and Exchange Commission; the Georgia Securities Commissioner; or the Texas Securities Commission or any other securities regulating office in Texas. Defendants deny that this was required by law.
Because of the nature and volume of its advertising and solicitations, Alta Verde is unable to identify all offerees of its cattle feeding program. Alta Verde sells interests in or receives investments from investors in its Alta Verde cattle feeding program for the purpose of allowing the investor to become a bona fide cattle feeder in the business of feeding cattle to enable the investor to qualify for certain tax benefits. Alta Verde, Chip Miller and Leon Miller promote the cattle feeding program as a tax shelter offering potential tax benefits of multiple write-offs during the year of investment by the investor. A central feature in the program as promoted by the defendants is that the investor becomes a cash basis cattle feeder for tax purposes, in the legitimate business of feeding cattle for a potential profit. The program is structured so that the investor makes an initial equity investment of approximately 20% of the purchase price, and the balance is financed either through outside sources, or in the case of many of the investments, through Miller Finance.
Alta Verde purchases cattle which are in turn sold to the investor. The investor makes his equity investment in the cattle at a price which is determined by the price of the cattle at the time of purchase by Alta Verde plus the expense of feed and maintenance of those cattle prior to the investor's initial investment. The investor is provided a limited number of preselected pens from which to select his investment initially; the cattle are not automatically weighed at the time of the investment, nor at any time following, until the sale of the cattle. Defendants contend that customers have the option of requesting that their cattle be weighed, and that some customers have exercised that option. No experience is necessary for a potential investor to become a "feeder". The investor need only make the initial investment decision, approve the sales price and date at the conclusion of any particular program. The investors are not precluded from being more involved if they so desire. Alta Verde provides all feed and maintenance of the cattle for the investor and charges the investor's account with the expenses for feed and maintenance, as well as interest on the outstanding balance.
Alta Verde offers a "turnkey" program wherein it buys the cattle, feeds the cattle, and markets the cattle for the investor. According to its literature, Alta Verde charges no management fee, but instead makes a profit on the feed, much of which it grows and processes itself. Alta Verde has specialized knowledge in selecting cattle to be purchased and in fattening this cattle and uses this knowledge in caring for the purchased cattle so as to increase the value of the cattle. Alta Verde offers to provide the following: all care of the cattle; purchase of the cattle; facilities for maintaining the cattle; and expertise to maximize weight gain of the cattle in relation to the cost of maintenance. With regard to any given investor, Alta Verde typically makes the decision what cattle to buy and what price to pay. Alta Verde controls what to feed the cattle, the amounts to be given and the feeding schedule. Alta Verde decides what veterinary services, monitoring and other services are necessary, where the cattle are kept, and the number to be kept in each pen. Defendants specifically admit that Alta Verde decides when the cattle are ready for sale. Alta Verde disposes of cattle which do not perform properly with regard to weight gain.
Alta Verde promotes the feeding cycle as 120 to 150 days, with cattle being fed to an ideal weight. Alta Verde also solicits bids for sale of the cattle, notifies the investor as to these bids, and obtains the investor's authority to sell the cattle. Plaintiff contends that Alta Verde has power of attorney to sell the cattle without authorization. Alta Verde admits that this is its standard practice under its Cattle Feeding Agreement. However, Alta Verde contends that plaintiff never entered such a written agreement and that there is no evidence as to the contents of the alleged oral contract on this point between the parties. Alta Verde sells the cattle, subject only to authorization by the investor, and credits the investor's account with the proceeds of the sale. Alta Verde then remits any credit balance to the investor, or demands payment of any deficit in the account.
Alta Verde is a limited partner in Alta Verde Beef Pack, Ltd., a Texas limited partnership which leases facilities from Alta Verde for the purpose of slaughtering and packing beef cattle. Alta Verde Beef Pack was in operation for some portion of the period between December 1985 through August 1986 and purchased cattle from investors in the Alta Verde cattle feeding program. Purchases by Alta Verde Beef Pack of investors' cattle were portrayed by Alta Verde to potential investors in the cattle feeding program as a benefit of the program.
Defendant Miller Finance Company, Inc. ("Miller Finance") is a Texas corporation engaged solely in the business of providing cattle feeding and maintenance loans to persons who wish to purchase cattle from Alta Verde and to feed that cattle at the Alta Verde feedlots in Maverick County, Texas. Miller Finance is a wholly owned subsidiary of Alta Verde. As noted above defendants Leon and Chip Miller were officers of Miller Finance. Miller Finance had no employees, facilities, or assets apart from those of Alta Verde.
During the period from December 1985 through August 1986, a company known as KLM Industries, Inc. owned cattle personally and fed those cattle on Alta Verde's feedlots. Likewise, Leon Miller owned cattle personally through Miller Feeders, Inc. from time to time during the period from December 1985 through August 1986 and fed those cattle on Alta Verde's feedlots.
In the spring of 1985, plaintiff met an Atlanta real estate sales agent, Leland Thomas Hall, who was attempting to sell a valuable piece of property located north of Atlanta. Mr. Hall solicited plaintiff, who was a real estate broker, for assistance in selling the property. Plaintiff was successful in finding a purchaser for Mr. Hall's sales property. Plaintiff earned a commission of about $139,000.
At the time of the closing of this real estate deal and the paying of the commissions, Mr. Hall was in the process of investigating the cattle sale and feeding operation at Alta Verde as a prospective investor. Mr. Hall discussed the operation with plaintiff, and recommended that Alta Verde contact the plaintiff. Both plaintiff and Mr. Hall hoped that purchase of cattle from Alta Verde and entry into a cattle feeding agreement would allow them to defer income from the current to the next tax year. At about the same time, Alta Verde mailed basic information about the operation to plaintiff.
Plaintiff on December 12, 1985, accompanied Mr. Hall on a trip to Eagle Pass, Texas, the location of Alta Verde's feed-lots. While at Alta Verde plaintiff and Hall participated in a meeting with Chip Miller. Chip Miller understood that the plaintiff's purpose in visiting was to accompany Mr. Hall and to determine whether or not he would invest in Alta Verde cattle feeding himself. There were no private meetings between plaintiff and any of the defendants. At this meeting, plaintiff was given a copy of the Alta Verde...
To continue reading
Request your trial
-
Abrams & Wofsy v. Renaissance Inv. Corp.
...Mills Electro Minerals Corp. v. DeLong Equip. Co., 494 U.S. 1081, 110 S.Ct. 1813, 108 L.Ed.2d 943 (1990); Seale v. Miller, 698 F.Supp. 883, 898 (N.D.Ga.1988) (Hall, J.); Crawford v. Williams, 258 Ga. 806, 806, 375 S.E.2d 223 (1989); Ekstedt v. Charter Medical Corp., 192 Ga.App. 248, 248, 38......
-
De Wit v. Firstar Corp.
...authority over the investment, in that they could decide how to finance their investment and when to sell out of it. In Seale v. Miller, 698 F.Supp. 883 (N.D.Ga.1988), the district court concluded that a cattle investment scheme in which the investors took a more active role than the invest......
-
Coffee v. General Motors Acceptance Corp.
...contends that Plaintiffs are impermissibly changing their legal theory on these claims to avoid summary judgment. See Seale v. Miller, 698 F.Supp. 883, 903-04 (N.D.Ga.1988) (holding that plaintiffs could not avoid summary judgment on fraud claim by raising new allegations of fraudulent cond......
-
Arons v. Lalime
...§ 1961(1)(A). United States v. Private Sanitation Industry Ass'n, 793 F.Supp. 1114, 1129 (E.D.N.Y.1992); see also Seale v. Miller, 698 F.Supp. 883, 898 (N.D.Ga. 1988)("[S]ince a genuine issue remains as to plaintiff's ... state law fraud claims, and because plaintiff has produced evidence t......