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Douglas Group v. TF Publishing, Inc.

United States District Court, E.D. Missouri, Eastern Division

January 4, 2017

DOUGLAS GROUP, Plaintiff,
v.
TF PUBLISHING, INC. and JIM PURCELL, Defendants.

          MEMORANDUM AND ORDER

          RODNEY W. SIPPEL UNITED STATES DISTRICT JUDGE.

         Defendants TF Publishing, Inc. (TFI) and Jim Purcell move for summary judgment on all claims brought against them by Plaintiff Douglas Group. Because there are genuine issues of material fact in dispute, I will deny the motion.

         BACKGROUND

         Plaintiff Douglas Group is an investment banking firm that represents business owners in buying and selling companies. Defendant TFI sells paper calendars and related products. Defendant Purcell is TFI's president and owner.[1]The parties entered into a letter agreement (the Agreement), effective June 1, 2014, in which Douglas Group agreed to represent TFI in procuring a buyer for TFI's assets. The Agreement provided that Douglas Group would perform its services on a contingent fee basis.[2] See Agreement ¶ III.A.1, ECF No. 48‒1, Ex. A. The Agreement contained a number of provisions regarding the contingent fee, including that Purcell “is willing to sell to any capable buyer who tenders a bona fide offer at or greater than the ‘minimum acceptable sales price'” [$7 million] and that he “agrees that in the event that bona fide offers are tendered in the amount of the ‘minimum acceptable sales price' or more, the contingent fee will be due in full as calculated on such offered amounts, even if he should decide to reject all such offers.” Id. ¶ III.B.1, F. The Agreement defines an offer as “any expression of definitive intent, with the purchase price specified, even though such offer may still be subject to normal pre-closing contingencies, such as requirements for buyer due diligence to verify data represented.” See id. § III.F.

         Deborah Douglas signed the Agreement as President of Douglas Group. The Agreement contained two signature blocks for acceptance, with one reading “TF Publishing, Inc.” at the top and “Jim Purcell, President” at the bottom and the other below it reading “Jim Purcell, as an Individual.” Purcell's signature appears only once, above the line reading “President.” See id. at 8. Section III.I of the Agreement reads, “[t]he undersigned owner of the Company specifically agrees that he personally guarantees payment of fees due as outlined herein.”

         On June 5, 2015, Crofton Capital, a private equity firm, submitted a Letter of Intent regarding the proposed acquisition of TFI's assets (the Crofton Letter). See Crofton Letter, ECF No. 48‒1, Ex. B. The Crofton Letter detailed “the major terms and conditions upon which [Crofton Capital] would pursue the Acquisition, ” including a description of the cash and non-cash assets it contemplated would be paid as consideration and a provision stating that beyond the confidentiality and exclusivity provision in the Letter, “this letter is non-binding, and neither Crofton Capital nor the Seller will be legally bound unless and until definitive agreements relating to the proposed transaction are executed by the parties.” Id. at 1, 4. Defendants did not complete that deal, and they state they did not sign the Crofton Letter “due to its unacceptable contingencies and requirements, and its lack of sufficient detail.” Defs.' Statement of Facts ¶ 48, ECF No. 48. Defendants assert they terminated their Agreement with Douglas Group on July 6, 2015.

         Douglas Group filed suit against TFI and Purcell for breach of contract, alleging that though its efforts led to a bona fide offer from Crofton Capital that exceeded the minimum acceptable sales price, Defendants have refused to pay Douglas Group the $888, 200 contingency fee it earned. Douglas Group alleges Purcell personally guaranteed payment of fees due under the Agreement. Defendants now move for summary judgment, arguing judgment should be entered in their favor because the undisputed facts show Crofton Capital did not submit a bona fide offer and Purcell did not agree to personally guarantee any payment. Douglas Group opposes Defendants' motion, arguing the facts show they are entitled to a contingency fee or, at minimum, summary judgment is inappropriate because the Agreement is ambiguous and there are material facts in dispute.

         LEGAL STANDARD

         In ruling on a motion for summary judgment, I must view the facts and inferences from the facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party must establish that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in its pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(c)(1), (e). “The inquiry performed is the threshold inquiry of determining whether there is the need for a trial-whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

         ANALYSIS

         The Agreement provides that Missouri law governs its interpretation. See Agreement ¶ VIII. “In Missouri, a party seeking to establish a breach of contract claim must prove: ‘(1) the existence of a valid contract; (2) the rights and obligations of each party; (3) breach; and (4) damages.'” Lafarge N. Am., Inc. v. Discovery Gp. L.L.C., 574 F.3d 973, 979 (8th Cir. 2009) (quoting Evans v. Werle, 31 S.W.3d 489, 493 (Mo.Ct.App. 2000)). The parties do not dispute that the Agreement is a valid contract, but they disagree about their rights and obligations under the contract and whether those rights and obligations were satisfied. Specifically, the parties disagree about (1) whether the Crofton Letter constituted a “bona fide offer;” (2) whether the combination of cash and non-cash assets offered met the minimum acceptable sales price; and (3) whether Purcell agreed to be individually liable for any fees owed under the Agreement.

         “‘The cardinal rule in the interpretation of a contract is to ascertain the intention of the parties and give effect to that intention.'” Id. (quoting J.E. Hathman v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. 1973)). In interpreting a contract, “[w]e first examine the plain language of the agreement to determine whether it clearly addresses the issue at hand.” Brittany Sobery Family Ltd. P'ship v. Coinmach Corp., 392 S.W.3d 46, 50 (Mo.Ct.App. 2013). “If the contract is unambiguous, then the intent of the parties is to be gathered from the contract alone, and ‘any extrinsic or parole evidence as to the intent and meaning of the contract must be excluded from the court's review.'” Lafarge, 574 F.3d at 979 (quoting Vidacak v. Okla. Farmers Union Mut. Ins. Co., 274 S.W.3d 487, 490 (Mo.Ct.App. 2008)). “Language is considered unclear, or ambiguous, if it is reasonably susceptible to more than one construction giving the words their plain and ordinary meaning as understood by a reasonable, average person.” Brittany, 392 S.W.3d at 50. “Whether a contract is ambiguous is a question of law.” Lafarge, 574 F.3d at 979. “If a contract is ambiguous, ‘then a question of fact arises as to the intent of the parties, and thus it is error to grant summary judgment.'” Id. (quoting Essex Dev., Inc. v. Cotton Custom Homes, L.L.C., 195 S.W.3d 532, 535 (Mo.Ct.App. 2006)).

         Defendants argue the Crofton Letter was not a bona fide offer. They argue the Crofton Letter was not an “expression of definitive intent, ” as the Agreement defines an offer, because it expressly stated it was non-binding, did not legally bind either side, and was full of contingencies and not so “definite in its terms that the promises and performances required by each party are reasonably certain.” See Tinucci v. R.V. Evans Co., 989 S.W.2d 181, 184 (Mo.Ct.App. 1998) (explaining the elements of offer and acceptance required to form a contract). Defendants argue the parties did not intend to make Defendants liable for a contingent fee without giving them a chance to review definite terms of the deal or actually complete the transaction, as could happen if an entity submitted a non-binding proposal and then decided unilaterally not to proceed.

         Douglas Group argues the Crofton Letter was an “expression of definitive intent” that followed extensive negotiations and detailed definite terms for a deal, had Purcell not rejected it. They point out the absence of any language in the Agreement requiring the offer to be legally binding and argue that if the parties had intended to require that an offer be binding to trigger the contingent fee, they would have said so. They also argue the Agreement contemplates that multiple bona fide offers may be made and rejected, and as such, its plain language makes clear the parties did not intend to agree that an offer sufficient to trigger the contingent fee had to be legally binding on the parties, as Purcell would not then be free to reject some offers. See Agreement ΒΆ ...


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