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Missouri Soybean Merchandising Council v. Agborn Genetics, LLC

Court of Appeals of Missouri, Western District, Third Division

June 27, 2017

MISSOURI SOYBEAN MERCHANDISING COUNCIL, ET AL., Appellant- Respondents,
v.
AGBORN GENETICS, LLC., Respondent-Appellant.

         Appeal from the Circuit Court of Jackson County, Missouri The Honorable Charles H McKenzie, Judge

          Before: Anthony Rex Gabbert, Presiding Judge, Victor Howard, Judge, Cynthia L. Martin, Judge

          Anthony Rex Gabbert, Judge

         Introduction

         AgBorn Genetics, LLC. (AgBorn) appeals from the judgment entered by the Circuit Court of Jackson County, Missouri, following a jury verdict in favor of Missouri Soybean Merchandising Council (Missouri Soybean) and Mid-America Research and Development Foundation (Mid-America Research) (collectively, "Plaintiffs") on Count IX of Plaintiffs' Amended Petition for unjust enrichment. AgBorn raises five points on appeal. AgBorn contends that: 1) The trial court erred in granting Plaintiffs' Motion for Partial Summary Judgment and denying AgBorn's Motion for Partial Summary Judgment as to Count VIII of the Amended Petition, because the undisputed material facts established that there was a meeting of the minds and an enforceable contract where Plaintiffs had received a schedule identifying licensed technology and royalty rates and subsequently accepted royalty payments from AgBorn; 2) The trial court erred in granting Plaintiffs' Motion for Partial Summary Judgment as to Count VII of the Amended Petition because there was a genuine dispute as to material facts, in that a schedule was attached to the Master Commercialization Agreement and the Master Commercialization Agreement was intended to grant AgBorn rights in the Licensed Technology for so long as the Plaintiffs' retained those rights; 3) The trial court erred in granting Plaintiffs' Motion for Partial Summary Judgment as to Count X[1] of the Amended Petition, because Missouri implies a standard of reasonableness when setting a price is impracticable at the time the contract is executed, and there was evidence that doing so was impracticable at the time the SA was executed; 4) The trial court abused its discretion in denying AgBorn's Motion for Leave to File a Counterclaim because leave to amend is to be freely granted and the factual basis of the Counterclaim was only recently discovered and the trial court had erroneously entered summary judgment against AgBorn, and; 5) The trial court abused its discretion in entering sanctions against AgBorn because Plaintiffs could not have been prejudiced by incurring attorney fees for third-party discovery when the third-parties were in possession of documents that were not in AgBorn's possession.

         Plaintiffs raise one point on cross-appeal. Plaintiffs contend that the trial court erred in partially denying summary judgment to Plaintiffs on Count VIII arguing that the Master Commercialization Agreement was unenforceable since its inception. We affirm.

         Factual Background

         This case involves two written instruments concerning the commercialization of certain technologies related to soybean production. Missouri Soybean is a not-for-profit organization representing Missouri soybean farmers; Mid-America Research is a not-for-profit organization which is affiliated with Missouri Soybean and supports research related to soybean production and use. AgBorn is in the business of selling soybean. In June of 2008, Plaintiffs and AgBorn signed a document titled "Master Commercialization Agreement."[2] This document states that Plaintiffs had contracted for limited exclusive technology licenses, commercialization rights, and access to trade secrets, and that Plaintiffs were giving AgBorn an exclusive sublicense for the development, manufacture, use, distribution, marketing, and sale of the technologies. In exchange, AgBorn was to use reasonable efforts to promote the sale of the licensed technology and was to pay Missouri Soybean a royalty on the collected gross sales of all products or methods covered by the licensed technology.

         On December 30, 2011, Missouri Soybean and AgBorn (Mid-America Research was not a party) signed a document titled "Sublicense Agreement."[3] This document provides that the University of Missouri and the United States Department of Agriculture jointly owned inventions regarding the development of High Oleic Acid Soybeans and that the University of Missouri had an exclusive worldwide license for those inventions, with the right to grant sublicenses to qualified commercial partners. Pursuant to that right, the University of Missouri exclusively sublicensed to Missouri Soybean all the rights granted to the university. The Sublicense Agreement provides that Missouri Soybean was sublicensing to AgBorn all rights it had been granted by the university due to AgBorn's willingness "to invest capital for the further development and testing of the inventions to bring them to commercial use for the benefit of potential users at the earliest practical date." In exchange for the exclusive sublicense, AgBorn was to pay Missouri Soybean a percentage of collected gross sales. A similar Sublicense Agreement was signed on August 1, 2013, and purported to be effective the same date as the prior Sublicense Agreement.[4]

         On May 23, 2014, Plaintiffs filed a petition against AgBorn. Plaintiffs filed an amended petition on September 11, 2014.[5] As relevant to AgBorn's claims on appeal, and set forth herein in the order raised by AgBorn, Plaintiffs alleged in Count VIII of the Amended Petition that the Master Commercialization Agreement was unenforceable because it failed to incorporate two material terms of the purported agreement, the identity of the licensed properties and the royalty rates payable to Missouri Soybean, resulting in there never being a meeting of the minds on all essential terms. Plaintiffs alleged in Count VII of the Amended Petition that the Master Commercialization Agreement was terminable at will for having no definite duration or termination provision. Plaintiffs' Amended Petition alleged in Count X that the Sublicense Agreement was unenforceable because it failed to incorporate the royalty rates payable to Missouri Soybean and, consequently, there was no meeting of the minds regarding all essential terms of the Sublicense Agreement.

         On February 12, 2017, Plaintiffs filed a Motion for Partial Summary Judgment on Counts VII, VIII, and X of the Amended Petition. That same date, AgBorn filed a Motion for Partial Summary Judgment as to Count VIII. On May 10, 2016, AgBorn filed a motion for leave to file a counterclaim. On May 20, 2016, the trial court entered a Judgment/Order granting Plaintiffs' Motion, denying AgBorn's Motion for Partial Summary Judgment, and denying AgBorn's request to amend its answer to include a counterclaim. An Amended Judgment and Order was entered on June 6, 2016, which was nearly identical to the court's previous order but clarified that the court was denying any requests to make its summary judgment rulings retroactive in nature. On June 8, 2016, the court granted in part and denied in part Plaintiffs' motion for sanctions against AgBorn; the court sanctioned AgBorn $59, 167.61 which represented attorneys' fees incurred by Plaintiffs due to AgBorn's discovery abuses. A jury trial was then conducted solely on Plaintiffs' unjust enrichment claim in Count IX which alleged that AgBorn had accepted and retained the benefit of being granted the right to commercialize the intellectual property belonging to Plaintiffs and had failed to make royalty payments or otherwise fairly compensate Plaintiffs. Trial was held from June 13, 2016, through June 15, 2016. The jury returned a verdict in Plaintiffs' favor in the amount of $602, 945.00. On July 27, 2016, an Amended Judgment responding to Plaintiffs' Motion for Interest was issued. AgBorn appeals and Plaintiffs cross-appeal.

         AgBorn's Point I

         In AgBorn's first point on appeal, AgBorn contends that the trial court erred in granting Plaintiffs' Motion for Partial Summary Judgment and denying AgBorn's Motion for Partial Summary Judgment as to Count VIII of the Amended Petition, because the undisputed material facts established that there was a meeting of the minds and an enforceable contract where Plaintiffs had received a schedule identifying licensed technology and royalty rates and subsequently accepted royalty payments from AgBorn, which either entitled AgBorn to summary judgment, or, in the alternative, precluded summary judgment against AgBorn.

         We review the grant of a summary judgment de novo. Brehm v. Bacon Tp., 426 S.W.3d 1, 3 (Mo. banc 2014). We consider the record in the light most favorable to the party against whom judgment was entered and give the non-moving party the benefit of all reasonable inferences. Id. at 3-4. Summary judgment is appropriate where there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Allen v. Continental Western Ins. Co., 436 S.W.3d 548, 551-552 (Mo. banc 2014). A material fact in the summary judgment context is one from which the right to judgment flows. Id. at 552.

         Plaintiffs' Amended Petition alleged in Count VIII that the Master Commercialization Agreement was unenforceable because it failed to incorporate two material terms of the purported agreement -- the identity of the licensed properties and the royalty rates payable to Missouri Soybean -- resulting in there never being a meeting of the minds on all essential terms. The trial court agreed and granted summary judgment to Plaintiffs. AgBorn contends on appeal that subsequent documents and Plaintiffs' acceptance of royalties filled in the missing material terms of the agreement. We disagree.

         In short, the Master Commercialization Agreement was designed to grant AgBorn the right to commercialize specific technologies held by Plaintiffs in exchange for royalty payments. The Master Commercialization Agreement indicates that Plaintiffs had contracted for limited exclusive technology licenses, commercialization rights, and access to trade secrets, "all of which summarized in Schedule A which is attached hereto and made part of this Agreement." The license agreements and commercialization rights set forth in Schedule A were to be collectively referred to as "Licensed Technology." The Master Commercialization Agreement provides that, "[a]s the parties expect changes in the number of limited exclusive technology licenses and commercialization rights during the term of this Agreement they agree to amend Schedule A at reasonable intervals but not less than biannually during the term of this Agreement." According to the agreement, any variations, modifications, or alterations of the Master Commercialization Agreement required a writing signed by each party. The agreement provided that it could be executed in counterparts which, when taken together would constitute an original of the agreement. If executed in counterparts, the parties were to promptly circulate a copy to be signed by all parties.

         The Master Commercialization Agreement further provides that Plaintiffs were giving AgBorn an exclusive sublicense for the development, manufacture, use, distribution, marketing, and sale of the Licensed Technology set forth in Schedule A. In exchange for those rights, AgBorn was to use reasonable efforts to promote the sale of the licensed technology and was to pay Missouri Soybean a royalty on the collected gross sales of all products or methods covered by the Licensed Technology. The royalty rates were to be "dependent on the specific technology according to classification as attached in Exhibit B which is hereby unincorporated[6] by reference and made part of this Agreement."

         All parties acknowledge that neither a Schedule A, nor an Exhibit B, were attached to the Master Commercialization Agreement at the time of its inception. There were documents existing at the time of the agreement labeled "SCHEDULE A" and "EXHIBIT B, " however neither of these were attached to the Master Commercialization Agreement and neither included the information that the Master Commercialization Agreement specified that these documents were to include. The document titled SCHEDULE A includes the words, "(TABLE OF LICENSED PROPERTIES), " but is otherwise blank. The document titled EXHIBIT B includes the words, "(Royalty rate by classification), " but lists no royalty rates. EXHIBIT B further lists different hypothetical options that could be used to establish royalty rates for "Varieties, " "Traits, " and "Molecular engineering."

         "Under Missouri law, the essential elements of a contract are: (1) competency of the parties to contract; (2) subject matter; (3) legal consideration; (4) mutuality of agreement; and (5) mutuality of obligation." Building Erection Services Co. v. Plastic Sales & Mfg. Co., Inc., 163 S.W.3d 472, 477 (Mo. App. 2005). At issue here is the fourth element, mutuality of agreement. This requires that the parties have "'a mutuality of assent or a meeting of the minds on the essential terms of a contract."' Id. (quoting Ketcherside v. McLane, 118 S.W.3d 631, 635 (Mo. App. 2003)). Whether there was a meeting of the minds is a fact question for the trier of fact. Tom's Agspray, LLC v. Cole, 308 S.W.3d 255, 259 (Mo. App. 2010). Here, however, both parties agreed that the material facts were not in dispute and presented the trial court with competing summary judgment motions.[7] Plaintiffs contended that the Master Commercialization Agreement was ineffective because the identity of the licensed properties and the royalty rates payable to Missouri Soybean were missing from the June 2008 agreement. Agborn contended that ...


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