APB Realty, Inc. v. Georgia-Pacific LLC

948 F.3d 37

• Court: Court of Appeals for the First Circuit
• Decided: January 17, 2020
• Docket: 19-1311P
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

No. 19-1311

APB REALTY, INC.,

Plaintiff, Appellant,

v.

GEORGIA–PACIFIC LLC,

Defendant, Appellee,

LIQUIDITY SERVICES, INC.; BEASLEY FOREST PRODUCTS, INC.,

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Leo T. Sorokin, U.S. District Judge]

Before

Howard, Chief Judge, Lynch and Kayatta, Circuit Judges.

Howard B. D'Amico and Howard B. D'Amico, P.C. on brief for appellant. Nicholas D. Stellakis, Timothy J. Fazio, Shauna R. Twohig, and Hunton Andrews Kurth LLP on brief for appellee.

January 17, 2020 KAYATTA, Circuit Judge. Before our court for the second

time, this case now illustrates one important difference between

facts sufficient to make a claim plausible for pleading purposes

and facts sufficient to render a judgment against the claimant

clearly erroneous. For the following reasons, we affirm as not

clearly erroneous the district court's judgment entered after a

bench trial finding no binding contract between the parties.

I.

APB brought this breach-of-contract claim against

Georgia–Pacific after a putative deal for the sale of rail cars

fell through. In round one of this case, we considered whether

the facts alleged in APB's complaint stated a cause of action

sufficient to survive a motion to dismiss under Federal Rule of

Civil Procedure 12(b)(6). See APB Realty, Inc. v. Ga.–Pac. LLC,

889 F.3d 26, 27–29 (1st Cir. 2018). For the reader's convenience,

we repeat those alleged facts more or less verbatim as follows:

* * *

In April 2015, Georgia-Pacific let APB know that

Georgia-Pacific had eighty-eight rail cars to sell "where is, as

is." APB was interested, and extended an offer to Georgia-

Pacific's broker as follows:

Total for all 88 x Log Stake Railcars $1,636,000 (Including 16% Buyer's Premium).

- 2 - APB spoke further with Georgia-Pacific's broker,

apparently to obtain schematics on the cars. On July 23, Georgia-

Pacific's broker sent another email, stating as follows:

Per our discussion yesterday, here are the schematics for the cars, that include the manufacturer information. Our team has presented your offer to [Georgia- Pacific] for final approval, and should have an answer by close of business tomorrow. I'll let you know when the approval comes, and please don't hesitate to call if you should have any additional questions. One of [our] team members along with [Georgia- Pacific] will coordinate transfers of all of the cars upon completion of the sale.

On July 24, Georgia-Pacific's broker emailed APB once more, as

follows:

Here are the two options that [Georgia- Pacific] has brought back for us to close the deal on. Option 1, basically states that for $61K, you buy insurance that will replace as many Southern Wheels as needed to eliminate that problem. [Georgia-Pacific] will manage and take care of that issue. So after any real costs, you are paying a small percentage as insurance against the number being larger than 51 wheel sets. Option 2 is the deal with you taking responsibility for any Southern Wheels. Let me know which deal is best for you, and I'll get this closed out as early as possible next week.

The email then proceeded to summarize the options thusly:

Option 1 . . . As is, where is. Georgia- Pacific assumes responsibility for the replacement of all southern wheels if found. Customer retains responsibility for

- 3 - transportation to final destination. Proposed Offer: $1,697,000. . . . Option 2: . . . As is where is. Customer assumes responsibility for the replacement of all southern wheels if found. Customer retains responsibility for transportation to final destination. Proposed Offer: 1,636,000.

The complaint does not tell us what "Southern Wheels"

are. But the parties' communications as alleged do make clear

that Georgia-Pacific regarded them as being a problem with some of

the cars that would take on the order of $61,000 ($1,697,000 minus

$1,636,000) to eliminate.

Three days later, APB responded that it was "leaning

towards option 1, should know this afternoon," and confirmed with

Georgia-Pacific's broker one detail that apparently arose in

conversation (45 cars would "come with the free move"). Before

APB confirmed its selection, however, Georgia-Pacific's broker

emailed once again, this time with the news that Georgia-Pacific

accepted an offer to sell all 88 railcars, which was substantially higher than yours. This offer has been processed, and we expect to close on it shortly. If this high offer does not close we will come back to you and see if you have a further offer for these cars.

Adding insult to injury, APB shortly thereafter learned that the

interloping purchaser was the same company with which APB, a

broker, had been negotiating to resell the cars. In short, the

seller and the ultimate buyer cut out APB, the middle person.

- 4 - In our prior decision, we held that those alleged facts

allowed us to "plausibly infer the making and breaking of a

contract." Id. at 30. We therefore vacated the dismissal of the

complaint and remanded so that the case might proceed beyond the

pleadings. Id.

On remand, both parties moved for summary judgment. In

so doing, neither party offered any new material evidence,1 and

both agreed to the facts as alleged. In other words, they agreed

that the alleged communications took place as stated, but neither

party offered any further evidence as to how to construe those

communications in light of industry convention or as a result of

other transactions between the parties. The district court

proposed to convert the motions into a bench trial on the paper

record, and the parties agreed. The district court thereafter

issued a decision construing Georgia–Pacific's communications as

conveying an expectation that any agreement should expressly

address the Southern Wheels problem, and so no contract existed

1 Georgia–Pacific submitted an email from APB dated July 27, 2015 (three days after the critical July 24 email that either did or did not constitute an acceptance). In the July 27 email, APB referred to the July 24 email as a "counter" (i.e., counteroffer), which Georgia–Pacific argued showed that APB did not consider the deal final at that time. APB also filed an affidavit from one of its employees, Kirk Bryant, indicating his belief that the parties formed a contract by July 24 and explaining that the "counter" term did not actually indicate a contrary belief. Because the district court as factfinder assigned no weight adverse to APB based on its July 27 email, neither do we.

- 5 - because APB never timely conveyed its willingness to provide such

an express term. See Situation Mgmt. Sys., Inc. v. Malouf, Inc.,

724 N.E.2d 699, 703 (Mass. 2000) ("[T]o create an enforceable

contract, there must be agreement between the parties on the

material terms of that contract . . . ."). The court thus entered

judgment in favor of Georgia–Pacific. APB timely appealed.

II.

Courts ordinarily treat the existence of a contract as

a question of fact, see McGurn v. Bell Microprods., Inc., 284 F.3d

86, 93 (1st Cir. 2002), which we review for clear error on appeal

from a bench trial, see Sawyer Bros., Inc. v. Island Transporter,

LLC, 887 F.3d 23, 29 (1st Cir. 2018).

APB has provided no persuasive argument that the

district court committed clear error. The district court found

that, "as of the July 24 email proposing the[] two options,

Georgia–Pacific had decided it wanted responsibility for Southern

Wheels to be an express term of any agreement and that it was

unwilling to rest on an 'as is' provision." "[F]or Georgia–

Pacific," the court said, "APB's acknowledgement of the existence

of Southern Wheels was a material term." As such, the district

court found that the July 24 email did not constitute an acceptance

because the parties did not reach a mutual agreement over the

material terms, and so they did not form a contract.

- 6 - This reading of the parties' written communications

seems to us entirely reasonable. As APB claims, one could fairly

read APB's first communication as offering to buy the cars "as is,

where is." Georgia–Pacific's reply, though, did not say that it

considered the offer acceptable. Rather, it offered two options,

each of which included an express statement as to which party

assumed responsibility for the Southern Wheels. Discovery might

plausibly have shown that the express statement manifested merely

a redundant, immaterial reiteration of "as is." On the other hand,

in the absence of such evidence, one could reasonably read Georgia–

Pacific's options as each requiring something APB had not yet

offered: an express acknowledgment of the Southern Wheels problem

and of which party would take on responsibility for this problem.

In short, the record allowed a ruling in favor of either party.

APB argues that the district court failed to appreciate

that our prior appellate decision "shifted the burden" to Georgia–

Pacific to prove that no contract existed. In particular, APB

points to our observation that "Georgia–Pacific may well have

arguments that the context surrounding the communications,

evidence not yet before the court, or relevant convention and usage

lead ultimately to a conclusion that no contract was formed here."

APB Realty, 889 F.3d at 29. Thus, APB argues in effect that the

district court violated the "law of the case" doctrine by ruling

in favor of Georgia–Pacific without Georgia–Pacific's having put

- 7 - forward any substantial new evidence. See, e.g., United States v.

Vigneau, 337 F.3d 62, 67 (1st Cir. 2003); Kapche v. City of San

Antonio, 304 F.3d 493, 496 (5th Cir. 2002).

This argument ignores the fact that the procedural

posture of the case has shifted. In our first decision, we

reviewed a grant of a motion to dismiss for failure to state a

claim. Under the standard of review we apply in assessing a

challenge to such rulings, we said that we could "plausibly infer"

that the parties had formed a contract. APB Realty, 889 F.3d at

30; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). We similarly

said that "[o]ne could reasonably interpret Georgia–Pacific's

[July 24] email" as an acceptance of a contract offer. APB Realty,

889 F.3d at 29 (emphasis added). Nothing in that statement

suggests that we would not also consider a contrary interpretation

reasonable, even without any new evidence from Georgia–Pacific.

Just because a complaint states a plausible claim for relief does

not mean that the claimant has conclusively proven that claim. A

well-pleaded complaint need only "raise a reasonable expectation

that discovery will reveal evidence" supporting the claim.

Twombly, 550 U.S. at 556; see also Cardigan Mountain Sch. v. N.H.

Ins. Co., 787 F.3d 82, 88 (1st Cir. 2015). APB's subsequent

failure to produce new evidence dashed that expectation, thereby

reducing, rather than strengthening, its case.

- 8 - By reading too much into our prior ruling, APB also

misapprehends the manner in which the burden of proof rested once

the district court tried the case to a decision. As plaintiff

alleging a breach of contract, APB assumed the burden of proving

a contract and a breach. See Martin v. Vector Co., 498 F.2d 16,

25 (1st Cir. 1974); see also 2 McCormick on Evidence § 337 (8th

ed.) (explaining the difference between burden of pleading, burden

of production, and burden of persuasion).

III.

For the foregoing reasons, we affirm.

- 9 -