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ARTHUR H. RICHLAND COMPANY, Appellant, v. Edward A. HARPER and Rose B. Harper, Appellees

United States Court of Appeals for the Fifth Circuit1962-04-27No. No. 19125
302 F.2d 324

Summary

Holding. The court reversed the dismissal and remanded the case for trial, holding that the complaint stated a claim with sufficient clarity to survive a motion to dismiss, and that whether the parties' agreement constituted an exclusive right to sell versus a mere exclusive agency is a factual question to be resolved through evidence, not on the face of the pleadings.

Arthur Richland sued Edward and Rose Harper to recover a 5% commission for the sale of an Ohio business. Richland claimed the parties had entered into an oral agreement granting him an exclusive right to sell the business—meaning he would receive a commission on any sale, whether he procured the buyer or the owners did—rather than merely an exclusive agency to sell. The complaint alleged that the Harpers agreed to refer all prospective purchasers to Richland and promised him 5% of the sale price for any sale negotiated or procured by Richland, the Harpers, or any other person during the exclusive agency period.

The trial court dismissed the complaint for failure to state a claim, apparently treating Richland's allegations as conclusory statements lacking substance. The appellate court rejected this approach, reaffirming the established federal standard that a motion to dismiss should not be granted unless it appears with certainty that the plaintiff could recover no relief under any set of provable facts. The court emphasized that federal pleading rules require only a short and plain statement of the claim, not detailed factual proof, and that whether the allegations are supported by evidence is a matter for trial or summary judgment, not for dismissal on the pleadings alone.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Standard for dismissal for failure to state a claim under Federal Rules of Civil Procedure
  • Distinction between exclusive right to sell and exclusive agency under Ohio law
  • Sufficiency of pleading allegations versus evidentiary proof at motion to dismiss stage

Procedural posture

Plaintiff-appellant challenged the trial court's dismissal of his complaint for failure to state a claim upon which relief could be granted.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

JOHN R. BROWN, Circuit Judge.

This is another case proving that final disposition of a civil action on the basis of bare bones pleadings is a tortuous thing. How a standard so simply expressed, so often repeated, is apparently so often overlooked without even so much as a deferential mention of it is hard to understand. Although it seems now to be an affectation, we repeat it again, though citation of ease names as a shorthand symbol of the principle ought to be enough. We have phrased it and rephrased it in these terms. “ ‘ * * a motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proved in support of his claim * * *,’ Des Isles v. Evans, 5 Cir., 200 F.2d 614, 615,” Millet v. Godchaux Sugars, Inc., 5 Cir., 1957, 241 F.2d 264, 265. And within the very recent past the Supreme Court, which seldom has to deal with matters this close to mere procedure, has put its full approval on this approach. “ * * * [T]he Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is ‘a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests * * *," Conley v. Gibson, 1957, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80. See also Smoot v. State Farm Mutual Auto Ins. Co., 5 Cir., 1962, 299 F.2d 525.

So it is here. The complaint was for the recovery of a 5% commission for the sale of an Ohio business. As the business was not sold to a purchaser procured by plaintiff-appellant, his claim rested on the Ohio-approved doctrine of the grant of an exclusive right to sell, rather than a mere exclusive agency to sell. The distinction is recognized by Ohio in a case urged by both parties. Bell v. Dimmerling, 1948, 149 Ohio St. 165, 78 N.E.2d 49. If the contract grants a mere exclusive agency, the broker is entitled to no commission if the sale is procured by the owner, whereas if it is an exclusive right to sell, this comprehends any sales whether procured by the broker or owner.

With a precision now seldom seen, or perhaps for that matter required under F.R.Civ.P. rule 8(a), 28 U.S.C.A., this complaint spells this out in the plainest of terms. “In * * * August 1957, plaintiff * * * and defendants entered into an oral agreement whereby * * * defendants employed plaintiff to procure a purchaser * * *. [The] plaintiff was to act as the sole and exclusive agent for * * * [renewable periods of 90 days subject to 30-day notice of cancellation] * * * [and] defendants * * * agreed to refer all prospective purchasers * * * to plaintiff, thus granting to plaintiff the exclusive right to sell the properties * * * and * * agreed to pay to plaintiff as * * * compensation * * * (5%) of the total consideration to be received by them from any sale or transfer of * * * said business * * * negotiated or procured by plaintiff, * * * defendants or any other person during existence of the exclusive agency aforesaid.”

Apparently under the spell of local state practice (see Moritt v. Fine, 5 Cir., 1957, 242 F.2d 128, 132, n. 2, dissent), the defendant-appellees in support of the dismissal for failure to state a claim now assert that this was a mere conclusion of the pleader. In less austere language they state that this complaint could well be “described as a ‘bucketful of steam * * * its allegations are billowing vapor, without substance * ”

But we repeat again and again and again: this is not the test. Whether this is all steam, or whether there is some substance depends on the proof offered either on a trial or on a motion for summary judgment demonstrating that there is no genuine controversy as to this critical, decisive issue under applicable legal principles. Carss v. Outboard Marine Corp., 5 Cir., 1958, 252 F.2d 690; Camilla Cotton Oil Co. v. Spencer Kellogg and Sons, Inc., 5 Cir., 1958, 257 F.2d 162; Braniff v. Jackson Ave.-Gretna Ferry, Inc., 5 Cir., 1960, 280 F.2d 523.

Thus with another year and a half lost, this case with an evident run-of-the-mill factual controversy goes back to begin the process of determining what the facts are, not what the lawyers say they are.

Reversed and remanded.