889 F.3d 26
1st Cir.2018Background
- Georgia‑Pacific offered 88 railcars for sale "as is, where is." APB (a broker) submitted a written offer of $1,636,000 (including buyer's premium).
- Georgia‑Pacific's broker exchanged e‑mails with APB providing schematics and presenting two closing options: Option 1 (seller assumes cost to replace a "Southern Wheels" problem for $1,697,000) and Option 2 (buyer assumes that risk for $1,636,000).
- APB indicated it was "leaning towards option 1" and inquired about logistics, but had not yet elected an option when Georgia‑Pacific's broker informed APB that Georgia‑Pacific had accepted a higher offer from a third party and expected to close.
- APB discovered the third‑party purchaser was a company APB had been negotiating with to resell the cars, allegedly cutting APB out of the deal.
- APB sued Georgia‑Pacific (and others) for breach of contract; defendants removed to federal court. The district court dismissed APB's complaint under Rule 12(b)(6) for failure to plead a plausible contract formation claim. APB appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether APB pleaded formation of a binding contract | APB says Georgia‑Pacific accepted APB's $1,636,000 "as is" offer (option 2) and only offered an alternative additional option; that acceptance created a contract | Georgia‑Pacific says APB's original offer did not include the Southern Wheels issue; option 2 added a material term, so no acceptance formed a contract | Court held complaint plausibly alleged acceptance — Georgia‑Pacific's email could be read as accepting APB's offer while offering an alternative; dismissal vacated |
| Whether a reply that accepts an offer but also proposes an alternative negates acceptance | APB argues acceptance plus an optional alternative does not prevent contract formation | Georgia‑Pacific argues the alternative showed no clear acceptance | Court held that an unequivocal acceptance coupled with a proposed alternative can form a contract; alternative is a separable offer |
| Whether industry usage or context could defeat formation at pleading stage | APB contends the communications reasonably imply "as is" included the Southern Wheels risk | Georgia‑Pacific contends rail‑industry conventions may imply otherwise, negating acceptance | Court held such contextual or industry‑usage arguments raise factual issues inappropriate to resolve on 12(b)(6) |
| Whether dismissal under Rule 12(b)(6) was proper | APB contends the complaint alleges facts to plausibly infer contract and breach | Georgia‑Pacific contends the complaint fails to plead mutual assent and definite terms | Court concluded the complaint sufficiently alleged mutual assent; dismissal vacated and case remanded |
Key Cases Cited
- Barchock v. CVS Health Corp., 886 F.3d 43 (1st Cir. 2018) (pleading standard and consideration of writings fairly incorporated into a complaint)
- Schatz v. Republican State Leadership Comm., 669 F.3d 50 (1st Cir. 2012) (what writings may be considered on a Rule 12(b)(6) motion)
- McGurn v. Bell Microproducts, Inc., 284 F.3d 86 (1st Cir. 2002) (Massachusetts contract law on offers, counteroffers, and acceptance relies on Restatement)
- Targus Grp. Int'l, Inc. v. Sherman, 922 N.E.2d 841 (Mass. App. Ct.) (acceptance of terms followed by a request for modification does not negate agreement)