Timothy Stockton v. EaglePicher Technologies, LLC
4 F.4th 615
| 8th Cir. | 2021Background
- Certon Software was sold to Cyient on Jan. 23, 2017 via a Stock Purchase Agreement (SPA) governed by Delaware law; SPA §6.16 purported to automatically assign to seller Timothy Stockton the right to collect certain receivables from EaglePicher (~$1.7M), subject to three conditions subsequent (use commercially reasonable collection practices; cause no harm to Certon; not interfere with Seller Employment Agreement duties).
- Stockton filed suit against EaglePicher in Certon’s name in Sept. 2017 seeking >$1.3M; EaglePicher counterclaimed against Certon for breach and alleged reputational/business harm, seeking $2.5M.
- Cyient learned of the lawsuit in early 2019, informed Stockton the receivable had been assigned to him, and later terminated Stockton after disputes and nondisclosure of EaglePicher’s counterclaim.
- Stockton moved to substitute himself under Rule 25(c) or intervene under Rule 24(a); the district court initially denied substitution but allowed intervention; it did not at that time resolve Stockton’s standing.
- EaglePicher moved to dismiss Stockton’s intervenor complaint under Rule 12(b)(1) for lack of subject-matter jurisdiction, arguing Stockton had not proven by a preponderance that the assignment was in effect; the district court granted dismissal and Stockton appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stockton had standing to litigate Certon’s claims (i.e., whether SPA assignment was in effect) | SPA §6.16 automatically assigned the receivable to Stockton on closing, so Stockton has the right to litigate | At most one (Certon or Stockton) can have the right; Stockton failed to prove by preponderance that the assignment remained effective | Held: Stockton failed to prove the assignment was in effect; no standing; dismissal affirmed |
| Whether the district court could rely on SPA excerpts Stockton submitted (authentication) | SPA excerpts attached were sufficient evidence | Excerpts were not authenticated and therefore inadmissible | Held: Court did not decide authentication; decision rests on substantive insufficiency of the excerpts to prove the assignment |
| Whether Stockton’s conduct satisfied the SPA’s “commercially reasonable practices” condition | Filing/prosecuting the case (even in Certon’s name) was a reasonable collection method | Filing in Certon’s name after assignment and prosecuting suit without authority was not commercially reasonable | Held: Court found filing in Certon’s name post-assignment was not commercially reasonable; condition obtained |
| Whether other SPA conditions (harm to Certon; interference with employment duties) occurred, voiding the assignment | Stockton disputed that his conduct met those condition(s) | EaglePicher and Cyient showed Certon suffered reputational harm (EaglePicher counterclaim) and Stockton failed to disclose counterclaim/violated employment duties | Held: Court concluded all three conditions subsequent occurred (harm, interference, and lack of commercially reasonable practices), so assignment likely was not in effect |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires an injury in fact)
- Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (assignee can assert assignor’s injury)
- Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269 (2008) (assignees have legal title to bring assigned claims)
- Cont’l Airlines Corp. v. Am. Gen. Corp., 575 A.2d 1160 (Del. 1990) (contractual right voided upon the occurrence of a condition subsequent)
- Hicklin v. Onyx Acceptance Corp., 970 A.2d 244 (Del. 2009) (interpretation of “commercially reasonable” in commercial contexts)
- South Dakota ex rel. Barnett v. U.S. Dep’t of Interior, 317 F.3d 783 (8th Cir. 2003) (doubts on intervention are resolved for the would-be intervenor)
- ABF Freight Sys., Inc. v. Int’l Brotherhood of Teamsters, 645 F.3d 954 (8th Cir. 2011) (standard of review for subject-matter jurisdiction rulings)
- Iowa League of Cities v. E.P.A., 711 F.3d 844 (8th Cir. 2013) (party invoking federal jurisdiction bears burden of proof by preponderance)
- North Dakota ex rel. Stenehjem v. United States, 787 F.3d 918 (8th Cir. 2015) (intervenor must satisfy standing like any plaintiff)