## Facts

- Rezac Livestock Commission Company, Inc., a Kansas livestock auction company, sold cattle at an auction in St. Marys, Kansas.
- Dinsdale Bros., Inc., a Nebraska cattle buyer/seller, allegedly directed Charles D. Leonard to attend Rezac’s September 29, 2015 auction and buy cattle for Dinsdale.
- Rezac alleged Leonard previously bought livestock from Rezac on Dinsdale’s behalf and that Rezac knew of that practice.
- Dinsdale allegedly gave Leonard detailed buying limits (including weight restrictions) and shipping instructions to Colorado, which Leonard relayed to Rezac.
- Leonard purchased 668 head of cattle for $980,361.45 and paid Rezac with a check drawn on his account at Pinnacle Bank.
- Rezac shipped the cattle as instructed; the cattle were delivered to Colorado.
- Pinnacle dishonored Leonard’s check for insufficient funds, and Rezac was not paid.
- Rezac alleged Dinsdale wired funds into Leonard’s account but that proceeds were diverted to satisfy Leonard’s obligations to Pinnacle; Rezac also alleged overlapping family ownership between Dinsdale and Pinnacle.
- Rezac sued Dinsdale for breach of contract, conversion, and quantum meruit, and sued Dinsdale and Pinnacle for unjust enrichment and civil conspiracy (and Pinnacle separately for conversion).
- Dinsdale moved to dismiss the second amended complaint under Rule 12(b)(6) for failure to state a claim.

## Issues

1. Whether Rezac plausibly alleged an agency relationship authorizing Leonard to bind Dinsdale, supporting a breach-of-contract claim against Dinsdale.
2. Whether Rezac plausibly stated claims against Dinsdale for conversion and quantum meruit arising from Dinsdale’s alleged receipt and retention of the cattle without payment.
3. Whether Rezac plausibly stated unjust enrichment and civil conspiracy claims against Dinsdale (and conspiracy involving Pinnacle) based on alleged coordinated conduct surrounding the dishonored check and payment routing.

## Decision

- The court denied Dinsdale’s Rule 12(b)(6) motion in full.
- The court held the complaint plausibly alleged Leonard acted with actual authority (or at least raised a plausible agency theory), allowing Rezac to plead a contract with Dinsdale through Leonard’s auction purchases.
- The court held Rezac plausibly alleged conversion by Dinsdale based on allegations that Dinsdale obtained dominion and control over the cattle inconsistent with Rezac’s rights after nonpayment.
- The court held Rezac plausibly alleged quantum meruit and unjust enrichment in the alternative to contract because Rezac conferred a substantial benefit that Dinsdale accepted and retained without payment.
- The court held Rezac plausibly alleged civil conspiracy between Dinsdale and Pinnacle, permitting an inference of an agreement and overt acts causing Rezac’s loss.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true, draws reasonable inferences for the plaintiff, and asks whether the claims are plausible under Twombly/Iqbal.
- A principal may be bound by a contract formed through an agent acting with actual authority; detailed instructions, prior dealings known to the third party, and conduct consistent with direction can support a plausible agency allegation at the pleading stage.
- Conversion may be plausibly alleged where a defendant is claimed to have exercised dominion and control over property (or its proceeds) in a manner inconsistent with the plaintiff’s rights, and disputes over title or entitlement generally are not resolved on the pleadings when fact dependent.
- A plaintiff may plead contract and quasi-contract theories in the alternative at the motion-to-dismiss stage; alleging a conferred benefit, acceptance/retention, and injustice from nonpayment can state quantum meruit/unjust enrichment.
- Civil conspiracy may be pleaded through circumstantial facts supporting an inference of an agreement, a meeting of the minds to accomplish an unlawful objective, overt acts, and resulting injury; direct proof of an explicit agreement is not required at the pleading stage.

## Conclusion

The court allowed Rezac’s claims against Dinsdale to proceed because the second amended complaint plausibly alleged that Leonard purchased and shipped the cattle as Dinsdale’s agent and that Dinsdale (and allegedly Pinnacle) participated in conduct that resulted in Dinsdale receiving the cattle without Rezac being paid, supporting contract, conversion, quasi-contract, and conspiracy theories.


Rezac Livestock Commission Co. v. Pinnacle Bank, 255 F. Supp. 3d 1150 (D. Kan. 2017)