The opinion of the court was delivered by: G. Thomas Eisele United States District Judge
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
Presently before the Court are the Motions for Summary Judgment filed by Defendants.
Plaintiff Wildlife Farms, Inc. operated a commercial hunting facility in Casscoe, Arkansas. Between late 2004 and early 2005, Wildlife Farms was owned principally by three individuals: Daniel Barnett, Boyd Rothwell and Bill Thompson. Barnett, Rothwell, and Thompson were also majority owners of another commercial hunting facility near Brinkley, Arkansas which was known as Wildlife Farms II. Rothwell and Thompson decided to divest their interest in Wildlife Farms and negotiated an agreement ("the Redemption Agreement") whereby Plaintiff Wildlife Farms would repurchase the interests of Rothwell and Thompson in Wildlife Farms either through a refinancing or through a sale to a third party or parties. Under the terms of the Redemption Agreement, Rothwell and Thompson would receive payment for their stock in Wildlife Farms ($1.4 million), compensation for amounts paid individually by Rothwell and Thompson for the benefit of Wildlife Farms ($460,154), a sum for "their troubles" ($50,000), and Mr. Barnett's interest in Wildlife Farms
Agreement set forth certain deadlines within which Mr. Barnett was to arrange financing for the redemption of Rothwell's and Thompson's stock in Wildlife Farms' assets. If these deadlines were not met, then Rothwell and Thompson, who together owned a controlling percentage of the stock in Wildlife Farms, would be entitled to vote their shares to sell the assets of Wildlife Farms without consulting Mr. Barnett. After the Redemption Agreement was executed in May 2005, Mr. Barnett decided to pursue a sale of Wildlife Farms' business and assets rather than seek refinancing of the debt, and caused Wildlife Farms to contract with the National Auction Group to auction Wildlife Farms' assets.
The National Auction Group began advertising and soliciting bidders for an auction scheduled for August 16, 2005 in which assets were to be sold either in fractional interests or as a whole. The proposed contractual documents included in the National Auction Group packet of information were drafted such that they only contemplated a sale in fractional interests. The auction materials contemplated that the purchaser(s) would sign and agree to be bound by several ancillary agreements including an operating agreement for the Wildlife Farms Property Owners' Association, LLC, an asset sale and purchase agreement between Wildlife Farms, LLC, and the Wildlife Farms Property Owners' Association, LLC, and a management agreement between Wildlife Farms Property Owners' Association, LLC, as owner and Wildlife Farms, Inc., as Operator, all of which contemplated that the vast majority of the property would be owned not by the purchaser(s) but by a property owners' association.
Kohler Company, whose resort properties included a hunting and wilderness club, was interested in expanding its hospitality business. On or about August 13, 2005, Herbert V. Kohler, Jr., president of Kohler Company, called the National Auction Group seeking information about a property in Colorado for which he had seen an advertisement. Because National Auction Group's offices were closed at the time of the call, Mr. Kohler heard a lengthy recorded message discussing many of the properties being offered for sale by the National Auction Group, one of which was Wildlife Farms. He left a message seeking more information about the Wildlife Farms property. Around 4:25 p.m., on August 15, 2005, the day before the auction of Wildlife Farms, a series of e-mails with attachments were sent to Mr. Kohler's assistant at Kohler Company by the National Auction Group. The e-mails contained documents that were provided by National Auction Group to other potential purchasers.
On the day of the auction, Kohler Company transferred $250,000 via wire into the trust account of David M. Hargis. Mr. Kohler informed the National Auction Group representative via telephone that Kohler was only interested in Wildlife Farms as a whole. Mr. Kohler negotiated for the potential sale of Wildlife Farms in its entirety. Mr. Kohler initially proposed a sale price of $7.4 million, but then proposed a price of $8.25 million. Mr. Barnett accepted this price and cancelled the auction of Wildlife Farms.
On August 17, Kohler Company executed a Letter of Intent and faxed it to counsel for Mr. Barnett. After signing the Letter of Intent, Kohler Company wired $657,500 to Mr. Hargis' trust account, bringing the total amount of earnest money on deposit to $907,500. On August 18, Mr. Barnett executed the Letter of Intent for Wildlife Farms. Counsel for Mr. Barnett wrote in a letter of the same date to counsel for Kohler Company that, "Transmitted with this letter is a duplicate of the proposal submitted yesterday by Mr. Herbert V. Kohler, Jr., now accepted and executed by Daniel Barnett for Wildlife Farms, Inc." The Letter of Intent is the only document signed by both parties and is between Wildlife Farms and Kohler Company only. The auction for Wildlife Farms was cancelled.
Pursuant to the Letter of Intent, Wildlife Farms agreed to negotiate exclusively with Kohler Company until August 30, 2005, toward a possible "definitive and binding Agreement." Pursuant to the Letter of Intent, the Earnest Money deposit could be refunded to Kohler Company only in the event that Wildlife Farms' "representations set forth in the offering/auction information [were] materially untrue or misleading." The Letter of Intent stated that "the proposed acquisition of Assets" was subject to the negotiation and execution of a definitive agreement. The Letter of Intent specifies that any agreement to purchase the assets was made subject to the approval of Kohler Company's Board of Directors. The Letter of Intent listed numerous "conditions precedent to closing", including: (1) delivery of all the assets free and clear of encumbrances, (2) Kohler Company's right to inspect the property, conduct testing and review information in possession of Wildlife Farms regarding the Property or Assets, (3) mutually acceptable employment agreements with select personnel, and (4) execution of the Agreement noted above. Pursuant to the Letter of Intent, Wildlife Farms agreed to negotiate exclusively with Kohler Company for a period of time in order to arrive at a definitive agreement for a purchase and sale of Wildlife Farms.
On August 25, 2005, pursuant to the terms of the Letter of Intent, Kohler Company sent a team of Kohler Company employees to inspect the property, assets, and operations of Wildlife Farms. During that inspection, Kohler Company came to believe that Wildlife Farms was suffering from declining revenues. Kohler Company also learned that Wildlife Farms II was or had been operating nearby in Brinkley, Arkansas and that Mr. Barnett and his son, Daniel Barnett, Jr., had been involved in the management of Wildlife Farms II until late in 2004. Neither Kohler Company nor Herbert V. Kohler, Jr., has ever taken possession of the Wildlife Farms property at issue in this lawsuit.
On September 27, 2005, Mr. Barnett commenced this action against Kohler Company and Mr. Kohler individually. On September 28, 2005, David M. Hargis, the attorney who had been representing Mr. Barnett and/or Wildlife Farms regarding the attempted sale and who served as the escrow agent for the earnest monies tendered by Kohler Company, filed a separate interpleader action for the purpose of sorting out potential claims to the $907,500 earnest money deposit.
II. Summary Judgment Standard
Summary judgment is appropriate only when, in reviewing the evidence in the light most favorable to the non-moving party, there is no genuine issue as to any material fact, so that the dispute may be decided solely on legal grounds. Holloway v. Lockhart, 813 F.2d 874 (8th Cir. 1987); Fed. R. Civ. P. 56. The Supreme Court has established guidelines to assist trial courts in determining whether this standard has been met:
The inquiry performed is the threshold inquiry of determining whether there is a need for trial-- whether, in other words, there are genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The Eighth Circuit set out the burdens of the parties in connection with a summary judgment motion in Counts v. M.K. Ferguson Co., 862 F.2d 1338 (8th Cir. 1988):
[T]he burden on the party moving for summary judgment is only to demonstrate, i.e., '[to] point out to the District Court,' that the record does not disclose a genuine dispute on a material fact. It is enough for the movant to bring up the fact that the record does not contain such an issue and to identify that part of the record which bears out his assertion. Once this is done, his burden is discharged, and, if the record in fact bears out the claim that no genuine dispute exists on any material fact, it is then the respondent's burden to set forth affirmative evidence, specific facts, showing that there is a genuine dispute on that issue. If the respondent fails to carry that burden, summary judgment should be granted.
Id. at 1339 (quoting City of Mt. Pleasant v. Associated Elec. Coop., 838 F.2d 268, 273-74 (8th Cir. 1988) (citations ...