United States District Court, D. Kansas
THE VICTOR L. PHILLIPS COMPANY, Plaintiff and Counterdefendant,
RONALD A. GOODWIN, Defendant and Third-Party Plaintiff,
AARON'S DEMO, LLC, Counterclaimant and Third-Party Plaintiff, IROCK CRUSHERS, LLC, Third-Party Defendant.
MEMORANDUM & ORDER
MURGUIA United States District Judge
matter comes before the court upon plaintiff The Victor L.
Phillips Company (“VLP”)'s Motion to Dismiss
Counterclaim (Doc. 7).
December 22, 2016, plaintiff brought this case against
defendant Ronald A. Goodwin, claiming (I) Breach of Contract;
(II) Action on Account; and (III) Quantum Meruit. The claims
relate to Mr. Goodwin's rental of an IROCK brand screen
from plaintiff between June 1, 2015 and August 23, 2016.
Plaintiff claims that Mr. Goodwin still owes $112, 000 for
his use of the screen, plus pre-judgment interest, attorney
fees and expenses.
January 30, 2016, Mr. Goodwin answered the complaint
asserting a counterclaim for breach of contract based on its
purchase of an IROCK TC-20 track crusher from plaintiff. Mr.
Goodwin claims that the crusher never functioned properly,
that plaintiff knew he intended to use the crusher and the
rented screen together. Because the crusher did not function,
Mr. Goodwin was unable to use the screen or crusher. Mr.
Goodwin claims that he contacted plaintiff about the issues,
asked for an engineer to fix the crusher, and that plaintiff
failed to fix the crusher, knowing that doing so would
prevent Mr. Goodwin from using the screen. Mr. Goodwin also
asserted a cross-claim for products liability against IROCK
Crushers, LLC, the manufacturer of the crusher.
April 20, 2017, Magistrate Judge Sebelius granted Aaron's
Demo, LLC's motion to intervene (Doc. 19). It was
unopposed. Intervenor defendant/crossclaimant Aaron's
Demo, LLC filed a document that incorporated by reference Mr.
Goodwin's answer, counterclaim, and crossclaim and
briefly set out a product liability claim against IROCK
court will grant a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6) only when the factual allegations
fail to “state a claim to relief that is plausible on
its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). Although the factual allegations need
not be detailed, the claims must set forth entitlement to
relief “through more than labels, conclusions and a
formulaic recitation of the elements of a cause of
action.” In re Motor Fuel Temperature Sales
Practices Litig., 534 F.Supp.2d 1214, 1216 (D. Kan.
2008). The allegations must contain facts sufficient to state
a claim that is plausible, rather than merely conceivable.
Id. “All well-pleaded facts, as distinguished
from conclusory allegations, must be taken as true.”
Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.
1984); see also Ashcroft v. Iqbal, 556 U.S. 662, 681
(2009). The court construes any reasonable inferences from
these facts in plaintiff's favor. Tal v. Hogan,
453 F.3d 1244, 1252 (10th Cir. 2006).
limited briefing claims that Mr. Goodwin does not have
standing to assert a counterclaim based on the crusher sales
agreement, because he was not a party or third-party
beneficiary to the sales agreement. Mr. Goodwin responds that
he has standing because he is the sole member of Aaron's
Demo, LLC; makes all of Aaron's Demo, LLC's
decisions; and because he signed the agreement as Aaron's
Demo, LLC's sole member. Plaintiff replied that Kansas
law prohibits Mr. Goodwin from asserting a claim on behalf of
Aaron's Demo, LLC because an LLC is treated as a separate
legal entity from its members. Plaintiff suggests that the
counterclaim could only rightfully be brought by Aaron's
Demo, LLC. Aaron's Demo, LLC is now a party to this
lawsuit. As mentioned above, plaintiff did not oppose
Aaron's Demo, LLC's motion to intervene.
sales agreement states that its terms should be interpreted
pursuant to Missouri law. (Doc. 8-1 at 2.) Both parties refer
to Verni v. Cleveland Chiropractic College, 212
S.W.3d 150 (Mo. 2007), for the general legal principles
applying to standing in a breach of contract case.
Verni provides that “[o]nly parties to a
contract and any third-party beneficiaries of a contract have
standing to enforce that contract.” Id. at
153. The Missouri Supreme Court explained that to determine
whether a party is a third-party beneficiary, the court looks
to the language of the contract itself. Id. Where
intent to benefit a third-party is not expressly established
by the contract, there is a strong presumption that the
contract was created to benefit only the contracting parties.
contract in this case is a form sales agreement. The
agreement is a two-page document that lists Aaron's Demo,
LLC as the “Company Name, ” describes the items
to be purchased (IROCK crusher and OKADA pulverizer), and the
total cash price for the sale. The agreement was signed
apparently by Mr. Goodwin, although the signature line is
hard to read. The signature line states “Buyer:
Authorized Signature.” (Doc. 8-1.) The second page of
the document contains the agreement's boilerplate terms
and conditions. Mr. Goodwin is not mentioned as an intended
beneficiary of the sales agreement.
is nothing in the agreement suggesting that the parties
intended to benefit anyone but Aaron's Demo, LLC and VLP.
Although Mr. Goodwin suggests that his alleged status as the
sole member of Aaron's Demo, LLC, his exclusive
decision-making power on behalf of the LLC, and the fact that
he signed the agreement should be sufficient for him to show
standing, the court disagrees. He cites no legal authority in
support of this argument. As the party asserting a
counterclaim, Mr. Goodwin has the burden to show he has
standing to bring a breach of contract claim. Lipari v.
U.S. Bancorp NA, 524 F.Supp.2d 1327, 1329 (D. Kan.
2007). The court finds this situation similar to
shareholders' inability to sue in their individual
capacity on behalf of a corporation, even when the individual
is the sole shareholder. Id. (citing Hutchings
v. Manchester Life & Cas. Mgmt. Corp., 896 F.Supp.
946, 947 (E.D. Mo. 1995)). Mr. Goodwin has not met his burden
to show that he has standing to bring a breach of contract
claim on Aaron's Demo LLC's behalf. Mr. Goodwin's
counterclaim is therefore dismissed; VLP's motion to
dismiss is granted in part.
court notes that Aaron's Demo, LLC is now a party to this
case and joined in the counterclaim. Aaron's Demo, LLC
does appear to have standing to sue for breach of contract.
Therefore, Aaron's Demo, LLC's counterclaim remains
viable, and VLP's motion is denied in part.
THEREFORE ORDERED that plaintiff The Victor L. Phillips
Company's Motion to Dismiss Counterclaim (Doc. 7) is
granted as to Mr. ...