Rezac Livestock Commission Co. v. Pinnacle Bank
255 F. Supp. 3d 1150
D. Kan.2017Background
- Rezac Livestock sold 668 cattle (Sept. 29, 2015) purchased by Charles D. Leonard for $980,361.45; Leonard gave Rezac a check drawn on Pinnacle Bank and Rezac shipped the cattle to Colorado feedlots.
- Rezac alleges Leonard was acting as agent for Dinsdale Bros.; Dinsdale later wired funds to Pinnacle into Leonard’s account at Pinnacle Bank (common ownership alleged), and Pinnacle set off those funds against Leonard’s debts so Rezac’s check bounced.
- Rezac sued Dinsdale (breach of contract, conversion, quantum meruit) and both Dinsdale and Pinnacle (conversion, unjust enrichment, civil conspiracy) seeking payment or return of the cattle/value.
- Dinsdale moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing lack of privity/agency, statute of frauds, and insufficiency of tort claims; Rezac’s Second Amended Complaint supplies governing facts for the motion.
- The court applied Kansas law (diversity case), analyzed agency under the two-step framework endorsed in Golden Rule Ins. Co. v. Tomlinson (existence of agency; scope/authority), and evaluated whether Rezac pleaded plausible facts for each element.
- Court denied Dinsdale’s motion in full: held Rezac plausibly alleged (1) an agency relationship between Leonard and Dinsdale and (2) Leonard had actual (express and implied) authority to buy the cattle for Dinsdale; court also found conversion, quantum meruit, unjust enrichment, and civil conspiracy claims sufficiently pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rezac plausibly alleged Dinsdale is bound to the sale contract (agency/authority) | Leonard was sent by Dinsdale to purchase cattle with specific instructions and prior similar purchases; therefore he acted as Dinsdale’s agent with authority | Rezac’s allegations are conclusory; no written agency contract, no privity, statute of frauds, and check/invoices show no agency | Denied dismissal: facts alleged (direction, instructions, prior purchases, delivery to Dinsdale) support plausible inference of principal-agent relationship and actual authority (express and implied) under Kansas law |
| Whether conversion claim against Dinsdale is barred or insufficient | Rezac alleges conversion of cattle (failure to deliver or return possession), not mere debt; Rezac retained ownership right because Dinsdale failed to pay | Conversion barred because underlying rights are contractual or cattle were transferred pursuant to valid contracts; alternatively Rezac lacked present possession/right to possession when cattle shipped | Denied dismissal: conversion properly pled — retention after demand can be conversion; no contract alleged that authorized Dinsdale to keep cattle without payment; extrinsic documents not considered at 12(b)(6) stage |
| Whether quantum meruit and unjust enrichment claims may proceed together and survive dismissal | Asserted as alternative quasi-contractual remedies if contract liability fails; Rezac alleges benefit conferred on Dinsdale | Dinsdale says claims duplicative or precluded by an express contract and lack of direct benefit to Dinsdale | Denied dismissal: Kansas authority not definitive that the doctrines are identical; Rule 8 permits pleading alternative theories; existence of an express contract between Rezac and Dinsdale is disputed (agency alleged), so unjust enrichment/quantum meruit survive at this stage |
| Whether civil conspiracy claim against Dinsdale and Pinnacle survives | Alleged meeting-of-minds and overt acts (wire timed to defeat Rezac’s check) causing damages | Dinsdale: no underlying independent torts alleged against Dinsdale means conspiracy fails | Denied dismissal: independent torts (breach, conversion, quasi-contract) survive dismissal, so conspiracy elements sufficiently pled |
Key Cases Cited
- Golden Rule Ins. Co. v. Tomlinson, 335 P.3d 1178 (Kan. 2014) (adopts two-step agency analysis and discusses agency/authority under Restatement approach)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility requirement)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must contain more than labels and conclusions)
- Blewett v. Errickson, 8 P.2d 357 (Kan. 1932) (agent’s prior conduct and principal’s holding-out can support apparent/actual authority in cattle transactions)
- C. A. Karlan Furniture Co. v. Richardson, 324 P.2d 180 (Kan. 1958) (contract executed by authorized agent binds principal)
- Theis v. duPont, Glore Forgan Inc., 510 P.2d 1212 (Kan. 1973) (distinguishes actual and apparent authority doctrines)
- S.E.C. v. Shields, 744 F.3d 633 (10th Cir. 2014) (court accepts complaint facts as true on motion to dismiss)
- York v. InTrust Bank, N.A., 962 P.2d 405 (Kan. 1998) (elements of civil conspiracy under Kansas law)