APB Realty, Inc. v. Georgia-Pacific LLC , 889 F.3d 26 ( 2018 )

United States Court of Appeals
For the First Circuit
No. 17-1906
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. Nathaniel M. Gorton, U.S. District Judge]
Before
Torruella, Thompson, 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 Manion Gaynor & Manning LLP on brief for appellee.
May 7, 2018
KAYATTA, Circuit Judge. After a proposed deal
concerning the purchase of eighty-eight rail freight cars arguably
came to naught, APB Realty, Inc. sued Georgia-Pacific LLC for
breach of contract. Georgia-Pacific successfully moved to dismiss
the complaint for failure to state a claim upon which relief could
be granted, and APB promptly appealed. Because we find that APB's
complaint adequately pleads a claim for breach of contract by
Georgia-Pacific, we vacate the judgment and remand for further
proceedings.
I.
In reviewing a dismissal for failure to state a claim,
we draw the facts from the complaint, and we consider as well any
writings that are "fairly incorporated" in the complaint. Barchock
v. CVS Health Corp., 886 F.3d 43, 48 (1st Cir. 2018) (quoting
Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st
Cir. 2012)).
The facts alleged by APB read like a tricky example from
a first-year course in contracts. 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).
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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.
The next day, 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
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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.
Oddly, 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.
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Irked by the course of events, APB sued all involved in
Massachusetts state court, alleging that each had breached
contractual promises to APB. Defendants removed the matter to the
District of Massachusetts and moved to dismiss. All defendants
other than Georgia-Pacific were dismissed from the case on the
unopposed recommendation of a magistrate judge. APB appeals only
from the subsequent decision of the district court dismissing the
complaint against Georgia-Pacific under Federal Rule of Civil
Procedure 12(b)(6) for failure to allege facts plausibly
establishing the formation of a binding contract. APB Realty,
Inc. v. Georgia-Pacific LLC, 272 F. Supp. 3d 277, 280 (D. Mass.
2017). This appeal followed.
II.
We note at the outset that neither party argued to the
district court or to this court on appeal that Massachusetts'
version of the Uniform Commercial Code, rather than Massachusetts'
common law of contracts, should apply to this dispute. Nor does
either party suggest that Massachusetts law on the formation of
commercial contracts differs in any material manner from the law
of contracts as set forth in the American Law Institute's
Restatement (Second) of Contracts. To the contrary, both parties
cite cases decided under Massachusetts law that rely on the
Restatement. See, e.g., McGurn v. Bell Microproducts, Inc., 284
F.3d 86, 89 (1st Cir. 2002) (citing the Restatement (Second) of
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Contracts to describe Massachusetts contract law relating to
offers, counteroffers, and acceptance).
The district court agreed with APB that option 2 in
Georgia-Pacific's penultimate email was materially the same as
APB's offer. See 272 F. Supp. 3d at 280 ("Liquidity responded on
behalf [of] Georgia-Pacific, proposing two alternatives, the
second of which corresponded to the offer proposed by APB.")
(emphasis added). Georgia-Pacific challenges this conclusion only
by arguing that when APB made its offer the condition of the cars
was "unknown," while option 2 presented by Georgia-Pacific
revealed that there was a problem for which APB would have to
accept responsibility. But for purposes of a motion to dismiss it
is certainly plausible that, either in relevant usage or in the
context of the parties' dealing, an offer to buy used rail cars in
unknown condition, in response to a proffer of the cars "as is,"
already presumed that APB would be stuck with any problem,
including the Southern Wheels problem as confirmed by Georgia-
Pacific in option 2. Imagine that a homeowner leaves a lawnmower
on the curb, with a sign attached saying "For sale, as is, where
is." If her neighbor then said "I'll give you $100 for that
lawnmower," it would surely be reasonable to interpret this
exchange as an offer to purchase the lawnmower "as is," despite
the fact that the neighbor did not expressly include that language
in her offer. In this entirely plausible view, option 2's
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provision concerning responsibility for the Southern Wheels
problem simply clarified rather than amended the terms of the offer
being accepted. Williston describes just such a scenario:
"Occasionally an offeree, out of ignorance or an abundance of
caution, will insert a condition in an acceptance which merely
expresses what would otherwise be implied in fact or in law from
the offer. Because such a condition involves no qualification of
the offeree's assent to the terms of the offer, it . . . does not
preclude the formation of a contract." 2 Williston on Contracts
§ 6:15 (4th ed.); see also, e.g., In re Lamarre, 34 B.R. 264, 265–
66 (Bankr. D. Me. 1983) (citing Williston).
Although evidently agreeing with the foregoing, the
district court nevertheless found no contract had been formed
because the Georgia-Pacific email that confirmed a willingness to
do as APB offered also tendered an alternative option (a higher
price, but no Southern Wheel risk), and APB had not yet selected
either option. But the fact that Georgia-Pacific confirmed its
willingness to do what APB proposed while also offering an
alternative option does not mean that a contract was not formed.
If A offers to buy ten widgets from B for $20, and B replies that
B will be glad to sell the ten widgets for $20, or throw in an
extra ten for an extra $19 (thus selling a total of twenty widgets
for $39), the law would generally view B's response as an
acceptance of A's offer, plus an offer of a new, alternative deal
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that A can -- but need not -- accept. See Williston § 6:16
("Frequently an offeree, while making a positive acceptance of the
offer, also makes a request or suggestion that some addition or
modification be made. So long as it is clear that the offeree is
positively and unequivocally accepting the offer, regardless of
whether the request is granted or not, a contract is formed.");
see also Targus Grp. Int'l, Inc. v. Sherman, 922 N.E.2d 841, 852
(Mass. App. Ct. 2010) ("acceptance of specific terms followed by
. . . request for addition or modification does not negate
agreement . . . unless the party [offering the addition or
modification] demands assent to its request.") (citing the
Restatement and two contract law treatises).
Moving from the hypothetical to the facts before us, one
could reasonably interpret Georgia-Pacific's email as
unequivocally saying, in essence: "We accept your offer to buy
the cars, as is, at your offering price. At your election, we
will also repair a Southern Wheel problem for an additional
$61,000." Under such a reading, there would be a contract pursuant
to the originally offered terms and an offer to modify the contract
if APB so desired and agreed.
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. It may be, for example, that
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convention within the rail industry dictates that an offer to sell
"as is" does not, in fact, encompass responsibility for something
like replacement of Southern Wheels. Any such arguments, though,
rely on factual determinations not properly before the court on a
Rule 12(b)(6) motion to dismiss the complaint.
III.
Because the complaint alleges facts from which we can
plausibly infer the making and breaking of a contract, we vacate
the judgment of dismissal and remand for further proceedings.
Costs are taxed in favor of appellant APB Realty, Inc.
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