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Thomason v. Randall

United States District Court, W.D. Arkansas, Texarkana Division

January 20, 2015

SCOTT THOMASON, Plaintiff,
v.
STEVE RANDALL, WARREN HANSON, STEVE FALER, SWS ENGRAVING, L.L.C, and AMERICAN LEGACY FIREARMS, INC., Defendants.

MEMORANDUM OPINION

SUSAN O. HICKEY, District Judge.

Before the Court are Defendants' Motions for Summary Judgment. (ECF Nos. 43 & 89). Defendants move to dismiss all claims against them contending that Scott Thomason lacks standing to bring these claims in his individual capacity, there was no contract between the parties, and if there was a contract, the Defendants did not breach the agreement. Plaintiff has responded. (ECF Nos. 52 & 95). Defendants have replied. (ECF No. 72). Plaintiff has filed a Sur-Reply. (ECF No. 73). The Court finds this matter ripe for consideration.

BACKGROUND

This case arises out of a business dispute involving the custom engraving of over 5, 000 commemorative guns called the "1911 Anniversary Pistols." Defendant American Legacy Firearms ("ALF") was to produce the guns under a license agreement with the National Rifle Association ("NRA"). Defendants Steve Faler and Warren Hanson operate ALF, which is headquartered in Colorado. When ALF receives an order from a customer for a commemorative gun, ALF purchases generic guns and ships them to a gun engraver for the etching. SBR Etchings, Inc. ("SBR"), located in Hope, Arkansas and founded by Defendant Steve Randall, was one of ALF's preferred engraving companies.

Plaintiff Scott Thomason was SBR's insurance agent in the late 1990s and through part of the 2000s. He and Randall remained in contact after Thomason moved and began working for another insurance company. Randall and SBR started to encounter financial difficulties in 2008, and Thomason and Randall discussed ways to increase sales. In an effort to help the company, Thomason began to take engraved samples from SBR to local events, such as the Wild Turkey Federation dinner in Hampton, Arkansas. On May 22, 2009, Thomason gave $10, 000 to SBR in exchange for one share of stock in the company. From thereon, he became more directly involved in SBR. Thomason was named Secretary of SBR on August 27, 2009. On September 4, 2009, acting in his capacity as Secretary, Thomason co-signed a promissory note for a $35, 284 loan to SBR. Although Thomason was never involved in SBR's day-to-day work of engraving guns, Thomason attended trade shows in 2009 and 2010 in an attempt to generate sales.

In the fall of 2010, the Internal Revenue Service ("IRS") notified SBR that it had a tax levy of over $675, 000 on SBR's property. Thomason paid $21, 000 to the IRS on behalf of SBR, and SBR also reached out to ALF in hopes of drumming up business in order to pay the taxes. ALF had an interest in keeping SBR in business because SBR used a better "bluing" method than other engraving companies. Around the same time, ALF was in negotiations with the NRA to obtain a license to use the NRA name for its 1911 Anniversary Pistol. The parties discussed entering into a partnership agreement in which ALF would provide the salesmanship, SBR and Randall would provide the skilled labor and expertise to engrave guns, and Scott Thomason would provide the capital. This arrangement is detailed in an email dated October 13, 2010, which Thomason refers to as the "Omnibus Agreement." (ECF No. 75, Ex. No. 3).

As an alternative plan to keeping SBR afloat, the parties discussed forming a new entity that would essentially perform the role of SBR. The new company would have access to the building and equipment owned by SBR and would hire SBR's five skilled employees. In October 2010, Defendants Faler and Hanson accompanied Thomason to a meeting with Ted Kelton at Peoples State Bank about obtaining an operating loan for the new company. Subsequently, Kelton authorized a loan for $25, 000 to Thomason.

On November 3, 2010, ALF's Faler sent two emails outlining a prospective agreement between ALF and a new entity called 3:16 Engraving, LLC ("3:16") to produce the 1911 Anniversary Pistols. On November 9, 2010, Thomason filed papers with the Arkansas Secretary of State creating 3:16. Subsequently, 3:16 hired former SBR employees, including Defendant Randall, and paid them three weeks' worth of back pay that SBR owed them. Between November 2010 and February 2011, 3:16 sent invoices to customers, including ALF, for orders received during that time period. ALF executed the license agreement with the NRA for the 1911 Anniversary Pistols on December 30, 2010, but only sent one proof to 3:16. ALF never sent any of the commemorative pistols to 3:16 for engraving.

In early 2011, ALF decided that it did not want to use 3:16 as its engraver for the 1911 Anniversary Pistols. 3:16's employees were unhappy with Thomason, whom they allege was not withholding their income taxes. Randall, Hanson, and Faler were not satisfied with the way Thomason had organized 3:16. Thomason was the sole member and they wanted membership interests in the new company. On February 11, 2011, 3:16's employees resigned and notified Thomason by text message. They also informed him of their intentions to start a new gun engraving company, SWS Engraving, L.L.C ("SWS Engraving"). SWS Engraving hired all of the former employees of 3:16 and began using the building, equipment, and supplies that had previously belonged to SBR and 3:16. SWS Engraving took over the 3:16's existing orders, and ALF hired them to engrave the 1911 Anniversary Pistols.

The Arkansas Department of Workforce Services ("DWS") received a form on February 11, 2011 notifying them that 3:16 was no longer in business. On January 14, 2012, the Arkansas Secretary of State revoked 3:16's charter for failing to pay franchise taxes. 3:16 has never filed articles of dissolution with the Secretary of State or attempted to reinstate its corporate charter.

STANDARD OF REVIEW

The standard of review for summary judgment is well established. When a party moves for summary judgment, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact, and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Krenik v. County of LeSueur, 47 F.3d 953 (8th Cir. 1995). This is a "threshold inquiry of...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 (1986); s ee also Agristor Leasing v. Farrow, 826 F.2d 732 (8th Cir. 1987). A fact is material only when its resolution affects the outcome of the case. Anderson, 477 U.S. at 248. A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252.

DISCUSSION

This suit was filed by Thomason on December 21, 2012 against Randall, Hanson, Faler, SWS Engraving, and ALF (collectively "Defendants"). Thomason alleges multiple theories for recovery: (1) breach of contract; (2) unjust enrichment or implied contract; (3) promissory estoppel; (4) piercing the corporate veil; (5) interference with contractual relationship or business expectancy; (6) civil conspiracy; (7) and fraud. Defendants move for summary judgment, contending that Thomason lacks standing to assert claims that belong to 3:16, no contract ever existed between Defendants and 3:16 or Defendants and Thomason, and that even if a contract did exist, 3:16 breached the agreement and was unable to perform. Thomason argues that he has standing to assert the claims of 3:16, there was a contract, and that ALF repudiated the contract. The Court will first examine whether Thomason has standing to ...


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