R&R Auction Company, LLC v. Mueller

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
R&R Auction Company, LLC
v. Civil No. 19-cv-485-JD
Opinion No. 2019 DNH 143
Todd Mueller
O R D E R
R&R Auction, LLC brought suit against Todd Mueller, seeking
a declaratory judgment that Mueller is obligated under the
parties’ Auction Consignment Agreement to indemnify R&R Auction
for costs and fees incurred in litigation involving Mueller and
other parties. R&R Auction also brings a claim for “Express
Indemnity.” Mueller moves for judgment on the pleadings, and
R&R Auction objects.
Standard of Review
A motion for judgment on the pleadings under Federal Rule
of Civil Procedure 12(c) is addressed under the standard for a
motion to dismiss under Rule 12(b)(6). Shay v. Walters, 702
F.3d 76, 82 (1st Cir. 2012). The court takes the plaintiff’s
factual allegations as true and draws reasonable inferences in
the plaintiff’s favor. Kando v. R.I. State Bd. Of Elections,
880 F.3d 53, 58 (1st Cir. 2018). Legal conclusions are not
credited. Najas Realty, LLC v. Seekonk Water Dist., 821 F.3d
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134, 140 (1st Cir. 2016). Taken in that light, the complaint
must provide facts to support a claim that “is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Doe v.
Brown Univ., 896 F.3d 127, 130 (1st Cir. 2018).
Background
In the complaint, R&R Auction alleges that it is an auction
house located in New Hampshire that conducts live and on-line
auctions, specializing in auctions of autographed memorabilia.
Mueller and R&R Auction entered into the Auction Consignment
Agreement (“Agreement”) in November of 2010. Either then or at
another time, Mueller attempted to consign items to R&R Auction
that R&R Auction rejected because it could not verify the
authenticity of the items.
Mueller and his company, Todd Mueller Autographs LLC,
brought suit against R&R Auction, and others, in the Superior
Court of the State of California in April of 2016. Mueller
alleged claims of intentional interference with prospective
economic advantage, violation of California Business and
Professional Code § 17200, and conspiracy to commit trade libel.
The claims arose from disputes between Mueller and R&R Auction,
and others, about the authenticity or value of Mueller’s items.
On the same day, Nelson Deedle and his company,
Iconographs, Inc., also brought suit against R&R Auctions, and
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others, in California. Deedle and his company alleged the same
claims that were brought by Mueller based on allegations that
R&R Auction wrongfully refused to accept items from Deedle,
falsely claiming the items were not authentic. Deedle alleged
that R&R Auction rejected the items because of Deedle’s
relationship with Mueller.
R&R Auction resolved Deedle’s claims on March 7, 2019,
although it apparently has not yet been dismissed from the
action. R&R Auction alleges that Mueller dismissed it from
Mueller’s suit on April 3, but then moved to set aside the
dismissal. Counsel for R&R Auction appended to its objection an
order by the California court in Mueller’s case.1 In the order,
the court granted another defendant’s motion to terminate
sanctions and also dismissed Mueller’s complaint with prejudice
because Mueller threatened to kill a witness, which resulted in
a civil harassment restraining order, threatened a court
officer, and willfully violated multiple discovery orders.
R&R Auction alleges that it has incurred $250,000 in
attorneys’ fees and costs in litigating the Mueller and Deedle
suits. R&R Auction further alleges that the Agreement with
Mueller provides for reimbursement and indemnification for those
1 The court issued “Tentative Rulings” on August 19, 2019,
which apparently became orders of the court on August 22, 2019.
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fees and costs. Mueller has refused to indemnify or reimburse
R&R Auction.
Discussion
In Count I of the complaint, R&R Auction seeks a
declaratory judgment that Mueller is obligated under the terms
of the Agreement to indemnify and reimburse R&R Auction for its
fees and costs incurred in the California suits. In Count II,
titled “Express Indemnity,” R&R Auction alleges that Mueller
breached the Agreement by failing to indemnify and reimburse R&R
Auction for those fees and costs. Mueller moves for judgment on
the pleadings on both of R&R Auction’s claims, arguing that the
Agreement does not provide for reimbursement or indemnification
to R&R Auction for the fees and costs incurred in the California
suits. R&R Auction objects.
A. Auction Consignment Agreement
The Agreement includes information at the top that was
filled in by hand. Todd Mueller is identified as Consignor
#1101, with a Colorado Springs, Colorado, address. The first
paragraph of the Agreement states that R&R Auction agrees to act
as Mueller’s agent “in the sale of the property listed on the
Auction Consignment Listing. You commission us to sell your
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items to the highest bidder in our monthly telephone and
internet auction.” Doc. no. 1-1, at *2.
The other paragraphs provide terms and conditions for the
consignment and sale of items. The Agreement includes a
statement that it is to be signed and returned with the
consignment. It was signed by Mue-ller and by someone on behalf
of R&R Auction on November 5, 2010. The Auction Consignment
List was not filed with the Agreement.2
B. Interpretation of the Agreement
In support of its claims, R&R Auction relies on paragraph 2
of the Agreement that provides as follows:
2. You certify that you are the owner, have good title to,
or have been given the right to sell these items, and that
they are authentic to the best of your knowledge. If, in
the sole opinion of RRAuction, authenticity of the
consigned material and/or its ownership is unclear or in
dispute, you will indemnify both RRAuction and the buyer of
said material and hold them harmless. You shall also
reimburse RRAuction for any and all attorneys’ fees and
costs associated with defending any claim or action
pertaining to ownership or authenticity. (RRAuction
reserves the right to disclose the identity of the
consignor in the event of a question of ownership.) Should
a sold item be returned to RRAuction due to the question of
2 In its objection to Mueller’s motion, R&R Auction
challenges Mueller’s point that R&R Auction did not name the
consigned items that were at issue in the California suits. R&R
Auction accuses Mueller of failing to provide that information
in discovery in the California suits. Nevertheless, the
Agreement appears to pertain to a list of items that,
presumably, R&R Auction would have, and R&R Auction would also
know which of those items were subject to authenticity or
ownership disputes.
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proper title and/or doubtful authenticity (final decision
of authenticity to be determined by RRAuction), you agree
to reimburse RRAuction the proceeds you were previously
paid for the sale of that item. This stipulation of
reimbursement is without time limit.
Id.
Mueller contends that the indemnification and reimbursement
provisions in paragraph 2, by their terms, do not apply to the
California suits. In response, R&R Auction argues that the
provisions do apply or that the provisions are at least
ambiguous.
Because the parties dispute the meaning of the provisions
in paragraph 2, it is necessary to construe their meaning to
determine the viability of R&R Auction’s claims. The Agreement
provides, and the parties do not dispute, that it is governed by
New Hampshire law.
Under New Hampshire law, the meaning of a written agreement
is a question of law for the court to determine. Holloway Auto.
Gr. v. Giacalone, 169 N.H. 623, 628 (2017). The court gives
“the language used by the parties its reasonable meaning,
reading the document as a whole, and considering the
circumstances and the context in which the agreement was
negotiated.” Id. “The language of a contract is ambiguous if
the parties to the contract could reasonably disagree as to the
meaning of that language.” Found. for Seacoast Health v. Hosp.
Corp. of Am., 165 N.H. 168, 172 (2013). Whether an agreement is
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ambiguous is also a question of law for the court to determine.
Birch Broad., Inc. v. Capitol Broad. Corp., 161 N.H. 192, 196
(2010).
Indemnity agreements are construed under the same general
standard as all contracts.3 Kessler v. Gleich, 161 N.H. 104, 108
(2010). In addition, however, “the right to indemnity is
determined by the specific terms of the contract for indemnity.”
Gray v. Leisure Life Indus., 165 N.H. 324, 328 (2013).
Indemnity agreements are construed strictly and cannot be
broadened based on equitable considerations. Id.
R&R Auction relies on the following language, which are two
provisions in paragraph 2, to support its claims:
(1) If, in the sole opinion of R&R Auction, authenticity of
the consigned material and/or its ownership is unclear or in
dispute, you will indemnify both RRAuction and the buyer of said
material and hold them harmless.
(2) You shall also reimburse RRAuction for any and all
attorneys’ fees and costs associated with defending any claim or
action pertaining to ownership or authenticity. Mueller
construes the two provisions together.
3 Although R&R Auction characterizes the first provision as
an indemnity obligation and the second provision as a
reimbursement obligation, it did not provide any authority to
suggest that the provisions would be construed under different
standards.
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1. First Provision
In support of his motion for judgment on the pleadings,
Mueller contends that the duty to indemnify described in both
the first and second provisions arises only in the situation
when an item is consigned and then sold, the buyer disputes the
item’s ownership or authenticity, and R&R Auction incurs fees
and costs in defending the buyer’s suit. Because those were not
the circumstances in the California suits, Mueller contends the
indemnification duty does not apply. Mueller also argues that
first-party indemnity must be unmistakably clear.
R&R Auction objects to Mueller’s interpretation. It argues
that the first provision provides indemnification for costs
incurred due to claims brought by anyone against R&R Auction
that arise from forged, counterfeit, or stolen property. The
claims, R&R Auction contends, may be for “copyright or trademark
infringement, unfair trade practices, false advertising, and the
like.” Doc. no 18, at *10. R&R Auction interprets the
provision to apply in any case that involves a dispute over
Mueller’s consigned material and not to be limited to
circumstances when the consigned material is sold.
R&R Auction’s broad interpretation of the first provision
goes far beyond the specific language used in the Agreement. It
also ignores the limitation in the provision to circumstances
that involve a buyer of Mueller’s consigned materials. Because
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indemnification agreements must be strictly construed, R&R
Auction’s interpretation is not reasonable.
Contrary to R&R Auction’s broad reading of the provision,
its plain meaning is much more specific, although not as limited
as that suggested by Mueller. Taking the indemnification
provision in the context of the Agreement as a whole, it applies
to “these items,” which are the items listed on the Auction
Consignment Listing, as referenced in paragraph 1. Paragraph 2
continues on, after provisions 1 and 2, to state that Mueller
also agrees to reimburse R&R Auction for the proceeds he was
paid for the sale of any item that is returned to R&R Auction
because of questions about title or authenticity.
The indemnification obligation in provision 1 arises when
two conditions are met. First, there is a buyer for one or more
item consigned by Mueller to R&R Auction that is listed in the
Auction Consignment Listing. Second, the authenticity or
ownership of that consigned item or items is unclear or
disputed. When those conditions are met, Mueller would be
obligated to indemnify and hold harmless both R&R Auction and
the buyer of the consigned item or items for liability incurred
because the authenticity or ownership of the consigned material
was unclear or disputed.4
4 While the first provision requires a buyer for the
consigned item or items, it does not include a requirement that
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2. Second Provision
The second provision states: “You shall also reimburse
RRAuction for any and all attorneys’ fees and costs associated
with defending any claim or action pertaining to ownership or
authenticity.” Mueller does not differentiate the reimbursement
obligation from the indemnification obligation, arguing that
both require a sale to a buyer, dispute over authenticity or
ownership, and incurred fees and costs. Mueller also argues
that a provision for an award of attorneys’ fees must be
“unmistakably clear,” citing Kessler, 161 N.H. at 111.
R&R Auction contends that the second provision is an
additional “stand alone” obligation that is separate from the
first provision. In support, it argues that the use of the word
“also” shows that reimbursement for fees and costs is intended
to be in addition to the indemnification obligation. R&R
Auction also argues that “any claim or action” broadens its
application beyond the liability associated with buyers in the
first provision. Based on those observations, R&R contends that
the second provision requires reimbursement to it for defending
the consigned materials must be sold before the indemnification
obligation arises. For example, R&R Auction might incur
liability to a buyer even though a sale is never consummated or
is cancelled or voided because of a dispute about authenticity
or ownership.
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any claim pertaining to authenticity or ownership regardless of
who brings the claim and whether or not an item was sold.
Provision 2 imposes a reimbursement obligation for fees and
costs incurred by R&R Auction in defending any claim or action
pertaining to ownership or authenticity of items consigned by
Mueller and listed on the Auction Consignment Listing. The
reimbursement obligation is not expressly limited to a claim or
action brought by a buyer. The obligation, however, is limited
to claims or actions brought against R&R Auction in which the
plaintiff disputes the ownership or authenticity of an item
consigned by Mueller and listed in the Auction Consignment
Listing. Taken in the context of the agreement as a whole,
including the requirement that Mueller certify his good title
and the authenticity of the items, the reimbursement obligation
arises with respect to claims and actions brought by someone
other than Mueller who disputes the ownership or authenticity of
the items Mueller consigned.
C. Claims
In both the declaratory judgment and breach of contract
claims, R&R Auction alleges that Mueller breached the Agreement
by failing to indemnify and reimburse it for the costs and fees
incurred in the California suits. Mueller moves for judgment on
the pleadings on the ground that the Agreement does not require
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him to provide indemnification or reimbursement for those costs
and fees.
As alleged by R&R Auction in the complaint, the California
suits involved claims by Mueller and Deedle against R&R Auction,
and others. Because neither Mueller nor Deedle, nor their
companies, was a buyer of the items Mueller consigned under the
Agreement, the first provision does not apply to the fees and
costs incurred in the California suits.
Mueller and Deedle claimed that the defendants, including
R&R Auction, intentionally interfered with the plaintiffs’
prospective economic advantage, engaged in unlawful or unfair
business practices, and conspired to commit trade libel, which
involves false, disparaging, and defamatory statements.5 R&R
Auction further alleges that Mueller’s claims were based on
allegations that R&R Auction wrongfully rejected or disparaged
his items as inauthentic. Deedle alleged that R&R Auction
5 R&R Auction did not submit copies of the complaints filed
in the California suits or other pleadings or filings to provide
any detail about the claims made there. The only decisions from
the cases available on Westlaw are two unpublished and uncitable
decisions by the Court of Appeal on the defendants’ anti-SLAPP
motion, Deedle v. Collectors Universe, Inc., 2017 WL 6379941
(Cal. Ct. App. Dec. 14, 2017), and Mueller v. Collectors
Universe, Inc., 2017 WL 6379940 (Cal. Ct. App. Dec. 14, 2017).
Those opinions explain that the suits allege that the
defendants, including R&R Auctions, conspired to remove Deedle’s
company and Mueller and his company from the business of buying
and selling memorabilia by improperly refusing to authenticate
their items.
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wrongfully refused to accept items for consignment from him
based on false claims that the items were not authentic and
based on his relationship with Mueller. Deedle also alleged
that he lost business from Mueller because R&R Auction
improperly rejected items he provided to Mueller to be consigned
to R&R Auction.
The reimbursement obligation in provision 2 does not apply
to Mueller. The claims alleged by Deedle and his company do not
challenge the ownership or authenticity of the items Mueller
consigned under the Agreement. Instead, as alleged by R&R
Auction, Deedle alleges that his business opportunities were
harmed because R&R Auction would not do business with him. To
the extent Deedle alleged that R&R Auction’s actions arose from
concerns about its dealings with Mueller, including the
ownership or authenticity of items he consigned to R&R Auction,
that connection is far too attenuated to fall within the
reimbursement obligation.
Therefore, the California suits do not trigger the duty to
indemnify under the first provision or the duty to reimburse
fees and costs under the second provision.
Conclusion
For the foregoing reasons, Mueller’s motion for judgment on
the pleadings (document no. 17) is granted.
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R&R Auction’s claims against Mueller are dismissed.
The clerk of court shall enter judgment accordingly and
close the case.
SO ORDERED.
______________________________
Joseph A. DiClerico, Jr.
United States District Judge
September 3, 2019
cc: Counsel of Record
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