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Means v. Dietrich

United States District Court, District of Kansas

March 9, 2015

Michael Means, Plaintiff,
v.
Arthur Dietrich, et al., Defendants.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, JUDGE

Plaintiff Michael Means, a Kansas resident, has brought the present action against five Florida residents, and one resident of South Carolina, based upon his 2007 sale of a herd of lean-beef cattle. After the defendants moved to dismiss Means’s claims (which include breach of contract and conversion) for a lack of personal jurisdiction, Means filed an Amended Complaint adding a claim of conspiracy. The defendants have renewed their motions to dismiss (or to transfer the action to Florida). For the reasons providing herein, the court dismisses the claims against defendant Glenn Winburn for lack of personal jurisdiction. The court also finds that Kansas is not a proper venue as to some of Means’s claims against the other defendants. Finally, the court finds that the interests of justice strongly support a transfer of the action to the Northern District of Florida pursuant 28 U.S.C. § 1404(a).

Plaintiff’s Allegations

The Amended Complaint alleges that, in the fall of 2001, after seeing an article about Means’s Parthenais herd, Arthur and Charlotte Dietrich traveled to Means’s farm in Topeka, Kansas, to buy a Parthenais bull. Dietrich Farms, in Graceville, Florida, has been in the cattle industry for several generations, selling their Limousin cattle to the nationally branded beef company Laura’s Lean Beef Company, based in Lexington, Kentucky.

Means offered to sell a Parthenais bull for $3, 500 to $4, 000. The Dietrichs rejected the offer, and bought an unregistered Parthenais bull from a breeder in Missouri for a lesser price.

During a follow-up visit to the Topeka farm, Arthur Dietrich introduced the plaintiff to his friend George Fisher, who also sold Limousin cattle to Laura’s Lean Beef. Means helped Fisher create his own Parthenais herd through an embryo transplant program.

In 2006, Fisher and Means agreed that Fisher would care for and feed some of Means’s Kansas-based, Parthenais herd at Fisher’s farm in Chipley, Florida, in exchange for the right to buy cattle from this herd on an annual basis. Pursuant to the agreement, Fisher bought cattle at prices ranging from $2, 000 to $5, 000 In November 2007, Arthur Dietrich, on behalf of Dietrich Farms, offered to buy an 80% interest in Means’s Kansas-based, Parthenais herd. Means would keep the remaining 20% interest in each animal from the Kansas-based herd, and in all offspring. Dietrich also offered to lease ten full blood Parthenais bulls from the herd for breeding with Dietrich Farms’ Limousin herd. In addition to a lease fee, Means would also receive a 20% interest in the increased usable carcass percentage in each bull’s offspring, as it was sold for processing. These proposals were incorporated after further negotiations into a Partnership Production Agreement (PPA).

Under the PPA, Dietrich Farms agreed to pay $125, 000 for the 80% interest in 83 heads of Parthenais cattle, and to lease the ten Parthenais bulls. The plaintiff kept a 20% interest in each animal bought, in each animal’s offspring, and in the increased usable carcass percentage in each bull’s offspring where such offspring were sold for processing. The reduced sale price of the animals was $2, 400 per purebred cow, $2, 400 per purebred heifer, $3, 500 per yearling bull, $2, 000 per yearling heifer, $1, 000 per bull calf, and $1, 000 per heifer calf.

During the six years after the PPA, the cattle were worth approximately $1, 745, 800. The plaintiff’s interest was approximately $349, 160. According to the Amended Complaint, the actual value of the cattle has significantly increased due to the positive effects of the Parthenais cattle on the industry.

Means kept full ownership of the ten leased bulls. At his request, Dietrich Farms would return the bulls or replace them with the bulls’ full blood offspring. Each of the bulls was worth $5, 000 when delivered to Dietrich.

When crossbred with the Dietrich Limousin cattle, the bulls were expected to yield either a three-quarters blood or purebred Parthenais herd, with an estimated value of $828, 750. The industry would have considered this herd “purebred, ” and the cattle were eligible for registration as such. As a show of good faith, and because of his retained interest, Means agreed to pay $25, 000 for feeding the herd. This amount was credited against the purchase price.

With the help of Fisher, Means began shipping the herd to Dietrich Farms during December, 2007. The shipment continued into the following month.

Arthur Dietrich confirmed that Dietrich Farms would send the first payment to Means by January 1, 2008, and that a second installment for the balance would be sent after all the cattle were delivered. Means spoke with Gordon and Lady Dietrich about the forthcoming $50, 000 wire payment to Means’s bank account in Topeka, Kansas. Means received this payment from Dietrich Farms a few days later.

Arthur Dietrich asked Means for extra ear tags and copies of registration papers, and Means agreed. According to the Amended Complaint, Means later discovered that Charlotte Dietrich stole the original registration papers, replacing them with copies. Means was forced to spend $1, 400 to replace the original registration papers through the Parthenais Cattle Breeders Association of America.

Means refused to transfer registered title on the eighty-three head of cattle or to provide a bill of sale until Dietrich Farms provided the PPA.

In February 2008, Means, Fisher, and the Dietrichs discussed creating an entity to sell Parthenais meat products. During this same time, Michael and his wife Nancy personally delivered the last shipment of Parthenais cattle from their Kansas farm to Dietrich Farms in Florida. Previous shipments had been delivered by Stewart Trucking, Inc., a company located in Westmoreland, Kansas.

Charlotte Dietrich was primarily responsible for cataloguing and preparing the cattle directory for the Parthenais herd, using Means’s registration papers as a cross-reference. Michael Means, Nancy Means, and Arthur Dietrich aided Charlotte with this task.

On March 1, 2008, Means learned that his father passed away in Arizona. Before leaving Dietrich Farms for the funeral, Fisher, Arthur Dietrich, and Gordon Dietrich called an emergency meeting to finalize their plans for the new business entity, the American Ultralean Beef Products Company (AULB). The AULB consisted of three members: Gordon Dietrich, George Fisher, and Nancy Means.

Fisher and the Plaintiff wanted Arthur Dietrich to be the third member, but Arthur insisted that Gordon take his place. Lady Dietrich stated that she and Gordon had no interest in the cattle industry, and that Gordon only agreed to be a member in AULB because of Arthur’s insistence. Each member agreed to invest $7, 000 in AULB.

Means requested, and the members agreed, that neutral accountants and attorneys would create AULB, create forms and bills of sale, monitor AULB’s books, and help resolve potential issues between the members.

The Amended Complaint alleges that, while Lady Dietrich agreed to assume the responsibility for retaining these professionals, she never intended to do so. Instead, Gordon and Lady Dietrich hired Ben Armstrong, their personal attorney, and their personal accountants to work for AULB. Means was never able to obtain an accounting of AULB’s sales and expenses despite his repeated requests. Fisher agreed to temporarily keep the company’s books and to apply for corporate status. However, Lady Dietrich forced Fisher to turn over the books to her.

The AULB members agreed that Means would be responsible for finding customers for the company’s products. In return, he would receive a ten percent sales commission on AULB products, a further three percent commission on all AULB products influenced by his patent-pending high-omega formula, and would be reimbursed for his expenses.

Only Means, Fisher, and Gordon Dietrich were to be identified as agents on AULB’s business checking account, and the signatures of two agents were necessary to use the account. However, without Means’s knowledge, when Lady Dietrich opened the business checking account, she identified herself as an agent, and only one agent’s signature was required. Gordon Dietrich never signed the requisite paperwork with AULB’s bank to use the account, but he subsequently issued numerous checks on AULB’s behalf.

The members agreed that corporate decisions would require the approval of two of the three members. AULB’s cattle would be processed by Krehbiel’s Specialty Meats, Inc. in McPherson, Kansas. George Fisher filed AULB’s Articles of Organization with Florida’s Secretary of State on May 13, 2008.

At the same March 1st emergency meeting, Lady Dietrich stated she would send the second installment payment for Means’s cattle and would personally draft the PPA. She signed and mailed a check for the second installment payment in March 2008. The check identifies Dietrich Farms as the bank customer. Lady Dietrich included a letter to Means stating:

Enclosed is the check for the second and final payment for the cattle. The amount of $ 51693.57 represents final payment of $50, 000.00; plus ½ of the freight bill; minus $30.00 for wire transfer fees. I hope you find this amount agreeable.
For future paperwork that we need to handle when you return to Florida, we are working on a contract that states the details of our arrangement concerning the cattle purchase. We need to know what the 20% ownership dollar amount is in case something happens to you.
We hope that your return to Kansas & Arizona was pleasant. Please accept our condolences on the death of your father.

See you soon, Lady

Means was disheartened by Dietrich Farm’s failure to provide a written PPA, but because Dietrich Farms was an established family-owned cattle business, he believed he could continue to monitor his cattle through AULB. The ultimate sale of AULB cattle would occur after successful breeding, which would take between four and six years.

Despite their express agreement, and despite a specific agreement as to the terms of their arrangement and relationship, Dietrich Farms never sent the PPA. Because of this, Means never transferred registered title on the 83 head of cattle to Dietrich Farms, nor did he provide a bill of sale to Dietrich Farms.

Dietrich Farms refused Means’s subsequent demands for an accounting of the entire Parthenais herd (the 83 head of cattle sold to Dietrich, the ten leased bulls, and all offspring). Instead, without Means’s knowledge, Dietrich Farms sold all of these Parthenais cattle to Laura’s Lean Beef, or used them to breed cattle which were sold to Laura’s. Means never received any payments from these sales.

Dietrich Farms also never paid Means for the leased Parthenais bulls, and never returned the bulls. The Amended Complaint alleges upon information and belief that the bulls were sold to other producers. Further, Fisher and Dietrich Farms overshipped Limousin meat for processing with the representation that it was Parthenais meat.

While Means was finding customers for AULB’s Parthenais and Parthenais-influenced meat and was caring for his wife, George Fisher and Dietrich Farms were shipping meat to Krehbiel’s in McPherson, Kansas for processing.

AULB’s principal customer was the Cancer Treatment Center of America in Tulsa, Oklahoma, which purchased the Parthenais meat products for its reputed health benefits.

Without Means’s knowledge, Fisher and Dietrich Farms began shipping more meat to Krehbiel’s than AULB’s customers were ordering. Means demanded they stop excess shipments, which was causing unnecessary expenses to AULB. Because of the excess, Means had to buy a freezer and shelving for installation at Krehbiel’s. After the freezer filled, Krehbiel’s had ship meat to other locations for storage In February 2009, Krehbiel’s informed Means that AULB had an unpaid processing bill for $44, 000, that it would not process any more meat until the bill was paid, and it would begin to sell AULB’s stored meat to cover the bill.

AULB refused to pay the bill, so Means had to take out a personal loan to cover the expense. AULB never reimbursed Means for the loan, which Means paid off in 2011.

In addition, Fisher and Dietrich Farms shipped their personal Limousin cattle to Krehbiel’s for processing, falsely characterizing them as Parthenais.

After the Cancer Treatment Center of America found it had served Limousin steaks to its guests and residents, it stopped buying Parthenais meat products.

In June 2009, Fisher and Lady Dietrich admitted that they were paying themselves an extra $10, 000 per load of cattle shipped to Krehbiel’s for processing.

Bills of sale were not created for all of the loads that Fisher and Dietrich Farms sent to Krehbiel’s, and Fisher and Dietrich Farms kept the proceeds from some of these sales.

Ultimately, AULB was unable to sell all of the meat shipped to Krehbiel’s, since the meat had a two-year ...


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