Wallace v. Mathias

• Decision Date: 17 May 2012
• Docket Number: No. 4:12–CV–3011.,4:12–CV–3011.
• Citation: 864 F.Supp.2d 826
• Parties: Roger WALLACE, Plaintiff, v. William R. MATHIAS and Herington Livestock Market, Inc., Defendants.
• Court: U.S. District Court — District of Nebraska

864 F.Supp.2d 826

Roger WALLACE, Plaintiff,

v.William R. MATHIAS and Herington Livestock Market, Inc., Defendants.

No. 4:12–CV–3011.

United States District Court, D. Nebraska.

May 17, 2012.

Joshua E. Dethlefsen, Stephen D. Mossman, Mattson, Ricketts Law Firm, Lincoln, NE, for Plaintiff.

William R. Mathias, Herington, KS, pro se.

MEMORANDUM AND ORDER

JOHN M. GERRARD, District Judge.

This matter is before the Court on defendant William R. Mathias' Motion to Dismiss and/or Motion to Transfer (filing 14). The Court understands Mathias to be moving for dismissal pursuant to Fed.R.Civ.P. 12(b)(2) (lack of personal jurisdiction) and Fed.R.Civ.P. 12(b)(3) (improper venue). And in the alternative, Mathias moves for a change of venue pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, the Court denies all three motions.

I. BACKGROUND

This is an enforcement action brought for an order of the Department of Agriculture issued pursuant to the Packers and Stockyards Act, 7 U.S.C. § 181 et seq. For purposes of these motions, Mathias does not appear to be disputing the underlying facts; therefore, the Court derives the following narrative from the plaintiff's pleadings and evidence, particularly the findings of the Secretary of Agriculture.¹

The plaintiff, Roger Wallace, is a cattle feeder in Elkhorn, Nebraska. Filing 1 at 2. Mathias is a resident of Herington, Kansas, and at the time of the events giving rise to this case was a cattle dealer in Herington. Filing 17–1 at 22. The other defendant, Herington Livestock Market (HLM) was a corporation owned and operated by Mathias and his then-wife, based in Herington.² Filing 17–1 at 22. HLM sold livestock on a commission basis. Filing 17–1 at 22.

Wallace purchased cattle sold by HLM. The middleman for those transactions was Doug Harrington, through Harrington Cattle Company, L.L.C. (collectively, Harrington), based in Lincoln, Nebraska. Filing 17–1 at 23. Harrington had been buying cattle from HLM since HLM started operating in 1990. Filing 17–1 at 23. Beginning in 1996, Harrington had been cleared under Mathias' bond; Harrington had an agreement to pay Mathias 50¢ per head for bonding services, but did not do so. Filing 17–1 at 23. Harrington had also been buying cattle for Wallace at various locations for a number of years. Filing 17–1 at 23.

The trouble began when Harrington bought 67 steers for Wallace from HLM on July 5, 2000. Filing 17–1 at 23. HLM invoiced Harrington for $45,553. Filing 17–1 at 23–24. Harrington, in turn, invoiced Wallace, adding his commission for a total of $45,888. Filing 17–1 at 24. Wallace wired payment to Harrington, who then wrote a check to HLM. Filing 17–1 at 24. But Harrington's check bounced. Filing 17–1 at 24. So, Wallace had paid Harrington for the cattle, but Harrington had not paid HLM. HLM did not inform Wallace at that time. Filing 17–1 at 25. Mathias and his wife each said Harrington had told them that Wallace never paid him. Filing 17–1 at 28.

Harrington bought another 134 steers and 148 heifers for Wallace from HLM on Wednesday, August 2, 2000, for $172,454.50. Filing 17–1 at 24. This time, Wallace mailed a check to HLM directly. Filing 17–1 at 24. (It is not clear why Wallace paid HLM directly on this sale, but not the previous one.) On Monday, August 7, Mathias called Wallace and told him that the check had not arrived. Filing 17–1 at 24. On August 8, Mathias called Wallace again and asked that the money be wired to him, and Wallace wired $172,444.50 (the purchase price minus a wire transfer fee) to HLM. Filing 17–1 at 24.

According to Wallace, Mathias promised he would return Wallace's check after the wire transfer arrived. Filing 17–1 at 29. “ ‘Had they told me they were not going to return my check,’ ” Wallace said, “ ‘I would never have sent them another wire.’ ” Filing 17–1 at 29. But instead, on August 9, 2000, Mathias deposited Wallace's check. Filing 17–1 at 24. So, at this point, Wallace had paid for the July 5 cattle, but Harrington had not paid HLM, and Wallace had paid HLM twice for the August 2 cattle.

On August 9, 2000, Harrington bought another 65 heifers and 72 steers from HLM for Wallace, for $89,063.40. Filing 17–1 at 24. Harrington invoiced Wallace on August 10, and Wallace mailed a check directly to HLM on August 12. Filing 17–1 at 24. But on August 15, Wallace's bank informed him that his account was overdrawn. Filing 17–1 at 24. Wallace stopped payment on the check for the August 9 cattle. Filing 17–1 at 24. On the same day, Wallace received a wire transfer from HLM in the amount of $37,830.60. Filing 17–1 at 25. That amount, according to Mathias, represented what Wallace was due back after payment for the July 5 and August 9 cattle had been subtracted. Filing 17–1 at 25. (There seems to be a $2.50 discrepancy that is immaterial at this point.) Mathias only informed Wallace of the insufficient fund check he had received from Harrington after the wire transfer and check for the August 2 cattle had both cleared. Filing 17–1 at 25.

So, at this point, HLM had received all the money it was due for all of the purchases. (Whether it received that money from the right party is the underlying issue in this case.) But, Wallace had paid for the July 5, 2000 cattle twice: once to Harrington, and once to HLM directly through its deduction from his overpayment for the August 2 cattle. Wallace did receive $10,000 from Harrington as a partial payment of the balance on the July 5 cattle. Filing 17–1 at 25. But that left $35,550.50 remaining. Harrington's debts were discharged in bankruptcy; he was not a party before the Department of Agriculture, nor is he a party here. Filing 17–1 at 21.

The Packers and Stockyards Act prohibits every “unjust, unreasonable, or discriminatory regulation or practice” in respect to the furnishing of stockyard services. 7 U.S.C. § 208(a). And any person complaining of anything done in violation of the Act may petition the Secretary of Agriculture, who may then investigate the matter complained of. 7 U.S.C. § 210(a). If after a hearing on a complaint the Secretary determines that the complainant is entitled to an award of damages, the Secretary shall make an order directing the defendant to pay the complainant the sum to which he or she is entitled. 7 U.S.C. § 210(e). In this case, Wallace filed a timely petition, alleging that HLM and Mathias had engaged in an unjust and unreasonable practice within the meaning of the Act. Filing 17–1 at 20; see, Rice v. Wilcox, 630 F.2d 586 (8th Cir.1980); Rowse v. Platte Valley Livestock, Inc., 597 F.Supp. 1055 (D.Neb.1984).

A hearing was held on February 10, 2005, in Kansas City, Missouri. Filing 17–1 at 21. The hearing officer found for Wallace. Given that Harrington was out of the picture, the issue was who should bear the burden of his wrongdoing. The hearing officer reasoned that U.C.C. § 2–403 was applicable.³ Filing 17–1 at 31. Under that section, a person with voidable title has power to transfer a good title to a good faith purchaser for value. Neb. U.C.C. § 2–403(1). When goods have been delivered under a transaction of purchase, the purchaser has such power even though the delivery was in exchange for a check which was later dishonored. Neb. U.C.C. § 2–403(1)(b). And any entrusting of possession of goods to a merchant who deals in goods of that kind gives him or her power to transfer all rights of the entruster to a buyer in the ordinary course of business. Neb. U.C.C. § 2–403(2).

So, the hearing officer found that with respect to the July 5, 2000, transaction, Harrington—who dealt in cattle—had ordered cattle from HLM. Filing 17–1 at 32. HLM shipped the cattle and invoiced Harrington. Filing 17–1 at 32. Harrington paid HLM by check. Filing 17–1 at 32. HLM's shipment of the cattle was, the hearing officer reasoned, entrusting the goods to Harrington, so Harrington could convey good title to Wallace. Filing 17–1 at 32. And Wallace was a buyer in the ordinary course of business. Filing 17–1 at 33; seeNeb. U.C.C. 1–201(9). The primary issue contested at the hearing was whether Harrington was actually an agent of Wallace (which would make Wallace responsible for Harrington's failure to pay); the hearing officer found that under the facts, he was not. Filing 17–1 at 38.

In sum, Wallace had paid Harrington for the July 5, 2000, cattle and acquired good title. And Wallace had an agreement with HLM not to negotiate the check sent for the August 2 cattle, the consideration for which was a wire transfer of money. Filing 17–1 at 29. HLM had breached that agreement by cashing the check, and had refused to return all the money, based on an invalid claim against Wallace. Filing 17–1 at 29. So, HLM's “offset” against the overpayment for the August 2 cattle was not legitimate. Filing 17–1 at 41. The hearing officer, on behalf of the Secretary, ordered Mathias and HLM to repay Wallace.⁴ A petition for reargument was filed, but in a decision filed December 16, 2011,⁵ the hearing officer reaffirmed the earlier findings and order. Filing 17–1 at 56.

When a defendant does not comply with an order for the payment of money under the Act, the complainant may, within 1 year, file a petition “in the district court of the United States for the district in which he resides or in which is located the principal place of business of the defendant” setting forth his or her claim, and the order of the Secretary. 7 U.S.C. § 210(f). “Such suit in the district court shall proceed in all respects like other civil suits for damages except that the findings and orders of the Secretary shall be prima facie evidence of the facts therein stated....” Id. Wallace has timely filed a petition for enforcement in this Court. Filing 1.

II. ANALYSIS

1. Personal Jurisdiction

Mathias contends that Wallace's petition should be dismissed pursuant to Fed.R.Civ.P. 12(b)(2) because haling Mathias to court in Nebraska would deny him due process. Mathias relies on the familiar 14th...