Opinion ID: 4105752
Heading Depth: 2
Heading Rank: 5

Heading: Auction of Source 1’s Assets

Text: As the Liquidator of Source 1, Hodge prepared an auction of the company’s assets on May 18, 2012. Prehn and Hodge submitted the following bids at the auction: Lot 1: Shaker cup molds. Hodge bid $40,200. Prehn bid $96,000. Lot 2: Embroidery machines. Hodge bid $10,010. Prehn bid $9,000. Lot 3: Office Inventory. Hodge bid $6,000. Prehn bid $15,100. Lot 4: Intellectual Property (including trademarks). Hodge bid $44,200. Prehn bid $5,100. All of lots 1-4: Hodge bid $105,010. Prehn bid $125,200. Before the auction, the shaker cup manufacturer estimated that the molds were worth $40,000 to $50,000, if used to manufacture cups, but were only worth $1,900 as scrap metal. After the auction, Hodge argued that because he was the high bidder on the intellectual property in Lot 4, no one else could use the shaker cup molds without violating the intellectual property rights he purchased. Because Prehn bid on the shaker cup molds intending to use them to manufacture cups, he subsequently decided not to pay Source 1 for the lots for which he was the highest bidder. As a result, Hodge declared himself the lone bidder for the items and purchased lots 1-4 for his $105,010 bid. Hodge did not use any of the proceeds from the auction to repay the Prehn loan or to compensate Prehn for his back wages. Prehn and Bandak filed a Second Amended Complaint on June 29, 2012.