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International Auction and Appraisal, LLC. v. R&M Metals

October 20, 2010

INTERNATIONAL AUCTION AND APPRAISAL, LLC., PLAINTIFF,
v.
R&M METALS, INC., DEFENDANT.



The opinion of the court was delivered by: Martin C. Carlson United States Magistrate Judge

(Magistrate Judge Carlson)

MEMORANDUM OPINION

I. INTRODUCTION

This case, which comes before the Court on motions for summary judgment filed by the Plaintiff (Docs.26and 32), involves hotly contested factual disputes concerning the existence and terms of an alleged oral agreement between the parties to act as partners on a $740,000 salvage and scrap operation contract. This dispute and these motions underscore two basic legal truths: First, they highlight the legal peril created by reliance upon alleged oral agreements in complex commercial transactions; and, second, they illustrate the limits of a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure as a vehicle for resolving alleged oral contractual claims that turn on competing recollections of disputed conversations that are not reduced to writing.

Because we find that disputed, and material, issues of fact preclude the entry of judgment for any party as a matter of law in this case, we will deny these motions for summary judgment.

II. STATEMENT OF FACTS*fn1

The Plaintiff, International Auction Appraisal Services, LLC (hereafter "IAAS") is an industrial auction company, which specializes in assisting industrial concerns which are downsizing in disposing of equipment and other fixed assets. (Doc. 32, Ex.B, Loeser dep. pp. 10-11). In this industry, IAAS is primarily involved in the marketing and sales of surplus equipment and machinery for these other industrial concerns. Therefore, IAAS frequently will "team up" (id.) with some other salvage or scrap business to contract the actual removal and storage of machinery, equipment and scrap materials from various industrial sites, while it sells these items. ( Id. pp. 31-33.)

In the summer of 2009, IAAS, through its managing director, Alan Loeser, learned of a business opportunity involving a company called Hanesbrands, Inc. This business proposal related to a facility formerly operated by Hanesbrand, Inc., in Eden, North Carolina. The proposal entailed acquiring, scrapping, and selling approximately $750,000 worth of equipment and metals owned by Hanesbrand at this Eden, North Carolina plant.(Id.)

IAAS and Loeser were interested in pursuing this business opportunity, and Loeser contacted an Iowa-based scrap metal firm with which he was familiar, R&M Metals, to determine if R&M would "team up" with IAAS on this salvage job. (Id.) Towards that end, Loeser, on behalf of IAAS, contacted R&M Metals' President, Roger Tompkins in the summer of 2009, and "told [Tompkins] there was an opportunity, there was a lot of stainless steel [to salvage] and [IAAS] needed help and [asked] would he be interested in teaming up with me." (Id. pp. 52.)

Tompkins, on behalf of R&M Metals, expressed an interest in teaming up on this project. Accordingly, Tompkins and Loeser met in North Carolina in the summer of 2009 to tour the Hanesbrand facility, and discuss a bid to purchase, scrap and resell this inventory of equipment, machinery and other metals. ( Id., Exs. B and E.) Following this tour, and conversations between Loeser and Tompkins, in July of 2009 a written bid was submitted to Hanesbrand to perform this work. That bid was "submitted on behalf of IAAS and Roger Tompkins of R&M Metals, Inc," ( Doc.32

Ex. A) and listed Loeser and Tompkins as "partners in this quote". (Id.) Under the terms of the written bid, the partners would purchase and remove specified machinery and scrap from the Hanesbrand facility, paying $762,511.00 for these assets in a series of installment payments. (Id.)

Having been identified as "partners"*fn2 in this July 2009 bid form, the commercial relationship between IAAS and R&M Metals dissolved into mutual recriminations by the end of August 2009. These recriminations, and this lawsuit, arose out of what is now presented as a basic, fundamental and essentially factual dispute between the parties regarding the meaning of their partnership, a partnership arrangement which was largely embodied in discussions between Loeser and Tompkins, but which was never reduced to writing.

For his part, Loeser contended that IAAS and R&M Metals were only partners in the formulation of a bid to Hanesbrand. (Doc. 32, Ex. B.) Loeser asserts that it was his expectation that, if the bid was successful, IAAS would then sub-contract the actual salvage and scrap removal work to some other company through a bidding process which would involve R&M Metals and other scrap metal removal companies. ( Id.) Because R&M had assisted in the development of IAAS' original bid, Loeser on behalf of IAAS anticipated that Tompkins and R&M would be given a chance to match the lowest competitive bid IAAS received to perform this salvage work, but it is the Plaintiff's position that IAAS never agreed with R&M to guarantee a binding commitment that this project would be given to R&M Metals to perform if IAAS was successful in bidding on this work.

In contrast, Tompkins describes the partnership between IAAS and R&M Metals in strikingly different terms. (Doc. 34, Exs. C and E.) According to Tompkins the oral understanding between the parties was that IAAS and R&M were full partners in this entire project. (Id.) Under the terms of this oral agreement, as described by Tompkins, Tompkins would be reimbursed for the actual costs of the salvage and scrap removal operation, costs which he estimated at between $100,000 and $150,000. ( Id.) After these costs were recovered, ...


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