Court Opinion

ID: 3018054
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:18:32.185875+00
Date Added: 2024-06-11T15:03:49.213622
License: Public Domain

___________

                                   No. 96-1787
                                   ___________

Ringier America, Inc.,                  *
                                        *
      Plaintiff - Appellant,            *
                                        * Appeal from the United States
      v.                                * District Court for the
                                        * District of Minnesota
Land O'Lakes, Inc.,                     *
                                        *
      Defendant - Appellee.             *
                                   ___________

                      Submitted:   November 21, 1996

                          Filed:   February 7, 1997
                                   ___________

Before BEAM and LOKEN, Circuit Judges, and MOODY,* District Judge.
                               ___________

LOKEN, Circuit Judge.

      Ringier America, Inc., printed a series of cookbooks under printing
services contracts with publisher Russ Moore & Associates ("RMA") for the
benefit of RMA's customer, Land O'Lakes, Inc. ("LOL").        RMA failed to pay
Ringier some $155,000 invoiced under those contracts.        Ringier commenced
this diversity action, asserting joint venture, unjust enrichment, and
quantum meruit claims against LOL.       The district court1 granted summary
judgment in favor of LOL, and Ringier appeals.        Having reviewed the grant
of summary judgment de novo, we affirm.

      *
       The HONORABLE JAMES M. MOODY, United States District Judge
for   the Eastern District of Arkansas, sitting by designation.
      1
      The HONORABLE DAVID S. DOTY, United States District Judge
for the District of Minnesota.
                                     I.

       Ringier claims that a December 5, 1991, agreement between RMA and LOL
created a joint venture, permitting Ringier to sue LOL, a principal, for
unpaid services performed for the joint venture.        In the December 1991
agreement, RMA and LOL undertook "to develop, publish, promote and market"
a series of magazine-style cookbooks referred to as "Classic Cookbooks,"
using LOL trademarks and tradenames.      Under the agreement, LOL determined
when to produce each cookbook, provided the recipes, and retained approval
rights over the final product.       RMA agreed to provide the essential
publishing services -- writing, editing, layout, illustrations, printing,
binding, packaging, shipping, "and all other services necessary to make the
Classic Cookbook project a 'turn key' operation for LOL."          For these
services, LOL agreed to pay RMA a specified price per unit, one-half
payable during the production process and the remainder "within thirty (30)
days of LOL's review and approval" of each completed cookbook.    RMA agreed
to reduce the agreed per unit prices by twenty percent in return for twenty
percent of LOL's cookbook profits.     Paragraph eighteen of the agreement
defined the parties' relationship:

       This Agreement is not intended and shall not be construed to
       constitute either party as the employee, joint venture or
       franchising partner, agent or legal representative of the
       other.   Neither party shall have any authority, express,
       implied or apparent, to assume or create any obligations on
       behalf of or in the name of the other party.

       Printing was the biggest expense in publishing the cookbooks, and RMA
chose Ringier for this task.   In March 1992, and again in September 1993,
RMA and Ringier entered into written agreements providing that RMA would
pay Ringier for printing services which satisfied RMA's "requirements for
production" of the Classic Cookbooks.         LOL was not a party to either
agreement.   Ringier reviewed the RMA-LOL contract before contracting with
RMA.

                                     -2-
     Under RMA's arrangement with LOL, RMA also marketed the Classic
Cookbooks.     In performing that function, RMA collected payments from
distributor Kable News Company for cookbooks sold through grocery store
magazine racks.2   After the initial cookbooks were distributed, RMA began
using revenues from cookbook sales -- which it had agreed to remit to LOL
-- to pay Ringier's invoices for cookbooks still in production, despite the
fact that LOL's payments to RMA under the December 1991 agreement were
timed to permit RMA to stay current with vendors such as Ringier.

     The Classic Cookbooks were not a financial success, which exacerbated
RMA's cash flow problems.      By the summer of 1993, RMA was seriously
delinquent in remitting sales revenues.   LOL demanded a change -- immediate
remittance of advances on sales -- rejecting RMA's request for a "float"
so that RMA could promptly pay Ringier invoices.      After this change was
implemented, RMA failed to pay Ringier for the October 1993 cookbook.   LOL
then paid Ringier directly for at least one more cookbook before retaining
another commercial printer to continue the project.   Ringier commenced this
lawsuit when neither RMA nor LOL would pay its additional $155,000 claim
for unpaid printing invoices to RMA.

     Applying Minnesota law, the district court granted summary judgment
in favor of LOL.    It rejected Ringier's joint venture claim because the
December 1991 agreement expressly disclaimed a joint venture relationship,
and because the essential element of joint control was missing.          It
rejected Ringier's claims for unjust enrichment and quantum meruit because
such relief is not available when the rights of the parties are governed
by contract.

     2
      Apparently, the December 1991 agreement between RMA and LOL
did not define their total relationship regarding the Classic
Cookbooks project. For example, the record on appeal refers to
but does not include a March 1992 agreement between RMA, LOL, and
Kable News relating to distribution. Because Ringier as
plaintiff has the burden to prove the alleged joint venture, we
assume the missing contract does not support its joint venture
theory.

                                    -3-
                                     3
                                           II.

        On appeal, Ringier first argues that summary judgment is improper on
its joint venture claim because the substance of the RMA-LOL relationship,
not the contract disclaimer, controls whether a joint venture was created,
and because the issue of joint control is also a fact question for the
jury.     A joint venture is a species of partnership.                         See generally
REUSCHLEIN & GREGORY, HANDBOOK   ON THE   LAW   OF   AGENCY   AND   PARTNERSHIP § 266 (1979).
Under Minnesota law, "the rules and principles applicable to a partnership
relation, with few if any material exceptions, govern and control the
rights, duties, and obligations of the parties [to a joint venture]."
Rehnberg v. Minnesota Homes, Inc., 52 N.W.2d 454, 457 (Minn. 1952).

        The general rule is that parties who are "partners as between
themselves [are] partners as to third persons."                 Moore v. Thorpe, 158 N.W.
235, 238 (Minn. 1916).       Thus, Ringier properly focuses on whether the
December 1991 agreement created a joint venture between RMA and LOL.
However, that is not the end of the inquiry.                   To bind the partnership, a
partner must act within the scope of his actual authority, or within the
scope of apparent authority with a party unaware that actual authority is
more limited.    See Minn. Stat. § 323.08 (partner carrying on partnership
business binds the partnership "unless the partner so acting has in fact
no authority to act for the partnership in the particular matter, and the
person with whom that partner is dealing has knowledge of the fact that
that partner has no such authority"); Moore, 158 N.W. at 238; First Nat'l
Bank v. Stadden, 115 N.W. 198, 199 (Minn. 1908).

        In this case, Ringier reviewed the RMA-LOL contract before agreeing
to print the Classic Cookbooks for RMA.                 The RMA-LOL contract expressly
stated that the parties were not joint venturers and that RMA had no
"authority,    express,   implied     or    apparent,          to    assume   or   create   any
obligations on behalf of or in the name of [LOL]."                            Thus, Ringier
contracted with RMA individually, knowing

                                           -4-
                                            4
that RMA had no authority to bind LOL.          In these circumstances, Ringier's
joint venture claim fails as a matter of law.          "Where one, with knowledge
of a partnership elects to contract with an individual member of the
partnership upon that member's exclusive credit, even though the contract
is for the benefit of the partnership, the member contracted with and he
alone is liable under the contract."        Nelson v. Seaboard Sur. Co., 269 F.2d
882, 891 (8th Cir. 1959), followed in Tschimperle v. Independent State
Bank, 1992 WL 138621 (Minn. App. 1992) (unpublished).

     We     also   agree   with   the   district   court   that   RMA   and   LOL   were
independent contractors, not principals in a joint venture.                    A joint
venture requires proof of contribution, joint control, sharing of profits,
and a joint venture contract.        See Rehnberg, 52 N.W.2d at 457.          Here, RMA
controlled its own activities, but LOL controlled the project, determining
how many cookbooks to publish, when to publish, what recipes to include,
and so forth.      In addition, while RMA received twenty percent of LOL's
profits, that was in lieu of part of its publishing fee, which is not
profit    sharing "in the manner consistent with a status of a joint
adventure."    Id. at 457.        Finally, while we agree that the contractual
disclaimer is not dispositive, it is strong evidence that the parties did
not intend that their cooperative undertaking create a partnership or joint
venture.

                                         III.

     Ringier further argues that it is entitled to equitable relief
because LOL reaped the benefit of printing services for which Ringier was
not paid.    The district court rejected this claim because Ringier's claim
for payment was governed by an express contract.           Ringier strives mightily
to distinguish the cases relied upon by the district court and LOL, but
Ringier cites no authority -- from Minnesota or elsewhere -- allowing
unjust enrichment or quantum meruit recovery in a similar situation.

                                          -5-
                                           5
     We conclude there are fatal flaws in Ringier's unjust enrichment
theory.    First, LOL was not unjustly enriched -- it received printing
services as part of the benefit of its bargain with RMA, a bargain LOL did
not breach.    Indeed, LOL was not enriched at all -- its relationship with
RMA ended with RMA owing LOL some $355,000.           At most, LOL adversely
affected Ringier by offsetting LOL's obligation to pay RMA for current
costs of production against amounts RMA had failed to remit for sales of
completed cookbooks.       But that offset was not unjust as between RMA and
LOL, and Ringier as an unsecured RMA creditor did not perfect a superior
right to the offset funds.

     Second, Ringier made the decision to deal exclusively with RMA,
knowing the contractual relationship between RMA and LOL.      Minnesota courts
do not apply unjust enrichment to protect a party from the consequences of
its bad bargain, even when a third party has received some benefit from the
aggrieved party's performance.      See Cox v. First Nat'l Bank, 415 N.W.2d
385, 389 (Minn. App. 1987) ("unjust enrichment was not created to protect
parties from their own bad bargains"); First Nat'l Bank v. Ramier, 311
N.W.2d 502, 504 (Minn. 1981).        Moreover, a claim of unjust enrichment
requires   proof    that    plaintiff   conferred   benefits   unknowingly   or
unwillingly.    See Holmes v. Torguson, 41 F.3d 1251, 1256 (8th Cir. 1994).
Here, Ringier knew LOL would purchase the cookbooks from RMA, yet Ringier
dealt exclusively with RMA.

     The judgment of the district court is affirmed.

     A true copy.

              Attest:

                   CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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