Soo Tractor Sweeprake Co v. Gavin/Solmonese Llc et al

REPLY BRIEF to re MOTION for Leave to Secure Depositions Regarding Resistance to 6 Motion to Dismiss

N.D. IowaMarch 28, 2017

1 IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF IOWA WESTERN DIVISION SOO TRACTOR SWEEPRAKE CO., d/b/a RADIUS STEEL FABRICATION (a Division of Soo Tractor), Plaintiff, vs. GAVIN/SOLMONESE LLC, TED GAVIN, Individually, and STEPHEN KUNKEL, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 5:17-CV-4006 PLAINTIFF’S REPLY TO DEFENDANTS’ RESISTANCE TO MOTION FOR LEAVE TO SECURE DEPOSITIONS COMES NOW, Plaintiff, Soo Tractor Sweeprake Co., d/b/a Radius Steel Fabrication (a Division of Soo Tractor) (“Soo Tractor”), and hereby states as follows in Reply regarding its Motion for Leave to Secure Depositions: On February 21, 2017, Defendants filed a Motion to Dismiss Pursuant to Rule 12(b)(1), disputing this Court’s subject matter jurisdiction. Motion to Dismiss (Doc. 6), February 21, 2017. Defendants specifically attacked the “underlying facts asserted as the basis for jurisdiction within the complaint.” Id. at 2. Defendants further noted that “in a factual attack, therefore, such as the attack waged here, the Court may take into account matters outside the pleadings…such as testimony and affidavits.” 1 Id. (citation omitted). Prejudgment discovery is appropriate when “certain facts necessary to resolving the jurisdictional inquiry are either 1 It should be noted that while in their Motion to Dismiss, Defendants approved of—and insisted on—the inclusion of extrinsic evidence, namely the Purchase Agreement, they now seek to block the inclusion of any additional extrinsic evidence which runs counter to their narrow view of the case. Compare Brief in Support of Motion to Dismiss (Doc. 6-1) at 2 (“When adjudicating motions to dismiss, ‘courts are not strictly limited to the four corners of the complaint.’”), with Reply to Resistance to Motion to Dismiss (Doc. 17), at 6 (“Anderson’s affidavit is irrelevant ‘extrinsic evidence.’”), and Resistance to Motion for Depositions (Doc. 18), at 3–4 (“No purported facts or evidence outside the four corners of the [Purchase Agreement] can be considered here.”). Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 1 of 6 2 unknown or disputed.” Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 598 (8th Cir. 2011). Defendants’ Motion to Dismiss hinges on their assertion that the Purchase Agreement, selling Soo Tractor to Soo Tractor, LLC (“New Soo”) included the assignment of this chose in action to New Soo. See Motion to Dismiss (Doc. 6). In order for an assignment of a chose in action to be valid, however, the language of assignment must specifically demonstrate the intention to assign the chose of action. Petty v. Mutual Benefit Life Ins. Co., 15 N.W.2d 613, 618 (Iowa 1944). Because the intention of the parties to the Purchase Agreement underpins the interpretation of the terms of that contract, Plaintiff has sought permission to depose Michael Kayman, the manager of New Soo, and Lin Boatwright, the liaison between Plaintiff and Mr. Kayman. Motion for Leave to Secure Depositions (Doc. 11), March 8, 2017. This testimony, alongside the Affidavit of John Anderson, Doc. 13-2, is necessary to demonstrate that neither party to the Purchase Agreement ever intended, wanted, or meant to assign Plaintiff’s right to sue Defendants through the Purchase Agreement. This question of intent is an example of a fact which is essential to resolving the jurisdictional inquiry, and therefore jurisdictional discovery is appropriate and the Court should grant Plaintiff’s Motion for Leave to Take Discovery. Viasystems, 646 F.3d at 598. Defendants’ assertion that this discovery is futile because the Purchase Agreement clearly and unambiguously assigns the chose in action is incorrect for a number of reasons. To begin with, the terms of the contract unambiguously excluded this chose in action from the items sold to New Soo in the Purchase Agreement. The ejusdem generis doctrine of contract interpretation provides that “specific words following more general words restrict ‘application of the general term[s] to things that are similar to those enumerated.’” Shatzer v. Globe Am. Cas. Co., 639 Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 2 of 6 3 N.W.2d 1, 5 (Iowa 2001). In other words, including a list of specific terms after a more general one limits the application of that general term to items of the “same kind, class or nature” as the enumerated, specifically listed items. Id. Here, the Purchase Agreement references intangible property twice. It first provides that “‘Personal Property’ shall mean all tangible and intangible personal property of the Seller,” and then goes on to list various business assets, including accounts receivable, intellectual property, and equipment. Purchase Agreement (Doc 6-2) at 1.1, February 21, 2017. None of the items in this specific list, limiting the general term “tangible and intangible property” is of the same kind, class, or nature as Plaintiff’s right to sue Defendants. Shatzer, 639 N.W.2d at 5. Similarly, the second reference to intangible property is the inclusion of “general intangibles and intellectual property.” Purchase Agreement at 1.1. This general term is again followed by a list of specific items which clarify the meaning of the general term. Id. Specifically, it lists a number of different types of intellectual property which Soo Tractor intended to sell to New Soo, including trademarks and trade names. Id. As with the first mention of intangible property, the specific items are not of the same kind, class, or nature as Plaintiff’s right to sue. As such, the unambiguous terms of the contract demonstrate that the chose in action was not assigned. However, even if the Purchase Agreement did not unambiguously exclude the chose in action from the sale, Defendants’ argument would still fail. It is well settled in Iowa that extrinsic evidence as to the intention of the parties at the time they signed the Purchase Agreement can be considered by the Court. See Lubbers v. MDM Pork, Inc., 2016 WL 742892 (Iowa Ct. App. 2016) at *4. “Evidence of the circumstances is always admissible in aid of the interpretation of an integrated agreement. This is so even when the contract on its face is free from ambiguity.” Hamilton v. Wosepka, 154 N.W.2d 164, 169 (Iowa 1967). “Extrinsic Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 3 of 6 4 evidence may be admitted to show that a writing is…not completely clear and unambiguous as to the subject in dispute, or ambiguous with respect to the subject of the lawsuit.” Kroblin v. RDR Motels, Inc., 347 N.E.2d 430, 433 (Iowa 1984). “Extrinsic evidence that throws light on the situation of the parties, the antecedent negotiations, the attendant circumstances and the objects they were thereby striving to obtain is necessarily to be regarded as relevant to ascertain the actual significance and proper legal meaning of the agreement.” Hamilton, 154 N.W.2d at 168. Indeed, “the parol evidence rule should not be invoked to prevent a litigant the chance to prove a writing does not, in fact, represent what the parties understood to be their agreement.” First Interstate Equipment Leasing of Iowa, Inc. v. Fielder, 449 N.W.2d 100, 103 (Iowa Ct. App. 1989). Here, the Affidavit of John Anderson (Doc. 13-2) clearly states that Plaintiff never intended “general intangibles” to include their right to sue Defendants. The depositions of Mr. Kayman and Mr. Boatwright will demonstrate that New Soo, similarly, never contemplated that the right to sue Defendants was included in the term “general intangibles.” As such, the Court should allow Plaintiff to take the requested depositions because the evidence gained therefrom would, in fact, be relevant to the interpretation of the contract language, and would not be futile. Finally, Defendant argues that these depositions are unnecessary because the Court has the right to rule on the question of subject matter jurisdiction without an evidentiary hearing. When the Defendant challenges factual basis for subject matter jurisdiction, “the proper course is to request an evidentiary hearing on the issue.” Osborn v. U.S., 918 F.2d 724, 730 (8th Cir. 1990). Indeed, “because at issue in a factual 12(b)(1) motion is the trial court’s jurisdiction—its very power to hear the case—there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Id. The Court has discretion to determine what form that evidentiary hearing will take, including “[holding] a Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 4 of 6 5 hearing at which witnesses may testify.” Id. Additionally, the case Defendants rely on to support their assertion is quite distinct from this one. See Johnson v. U.S., 534 F.3d 958, 964 (8th Cir. 2008). In that case, “the parties had ample opportunity to be heard through affidavits and briefs,” and “neither party requested an evidentiary hearing.” Id. (emphasis added). Because Plaintiff requests an evidentiary hearing, and the Court’s consideration of affidavits and deposition testimony would only occur over Defendants’ strenuous objection, Johnson is inapplicable here. Instead, the Court should hold an evidentiary hearing to determine whether or not there is subject matter jurisdiction here. Alternatively, as Defendants see no reason to request an evidentiary hearing, the Court is free to conclude on the record before it presently that Defendants’ Motion to Dismiss is without merit and should be denied. WHEREFORE Plaintiff, Soo Tractor, respectfully requests that the Court grant Plaintiff permission to take the depositions of Michael Kayman and Lin Boatwright (see Doc. 11), set an evidentiary hearing on Defendants’ Motion to Dismiss (see Doc. 6), and any other relief the Court deems appropriate. Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 5 of 6 6 HEIDMAN LAW FIRM, P,L.L.C. BY: /s/ Jeff W. Wright JEFF. W. WRIGHT, AT0008716 1128 Historic 4 th Street P.O. Box 3086 Sioux City, Iowa 51102 Phone: (712) 255-8838 Fax: (712) 258-6714 E-Mail: Jeff.Wright@heidmanlaw.com PATTERSON and PRAHL, LLP BY: /s/ Charles T. Patterson Charles T. Patterson, AT0006026 P.O. Box 767 Custer, SD 57730 Phone: (605) 673-5223 Fax: (605) 673-4240 E-Mail: tpatterson@patterprahl.com ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE The undersigned certifies that on March 14, 2017, a copy of the foregoing instrument was filed electronically. Notice of this filing will be sent automatically to all parties who are registered users of the Court’s electronic case filing (ECF) system. Parties may access this filing through the Court’s system. /s/ Jeff W. Wright Case 5:17-cv-04006-LTS Document 23 Filed 03/28/17 Page 6 of 6