No cause of action against purchaser under state consumer protection law

Benz Farm, LLP v. Cavendish Farms, Inc., --- N.W.2d ----, 2011 WL 4089954 (N.D.)

Benz sued Cavendish for breach of contract and violation of the North Dakota Unlawful Sales or Advertising Practices Act. Benz sells potatoes and Cavendish processes potatoes. The parties contracted for Benz to provide and Cavendish to buy 263,000 hundredweight of potatoes, to be stored after harvest by Benz until Cavendish directed they be delivered to its processing plant. They also entered into a written credit agreement for Cavendish to provide financing for Benz. There were quality provisions in the agreement.

Problems meeting the quality standards developed, and Benz sued, alleging among other things that Cavendish had, among other things, agreed to accept deliveries on certain dates, but failed to do so sufficiently, causing inefficiencies and additional expenses for Benz. The Unlawful Sales or Advertising Practices Act prohibits the use “by any person of any deceptive act or practice, fraud, false pretense, false promise, or misrepresentation, with the intent that others rely thereon in connection with the sale or advertisement of any merchandise,” allowing private lawsuits by any person against any person “who has acquired any moneys or property by means of any practice declared to be unlawful in this chapter.”

Here, Benz was the seller, and the court found that there was no statutory basis for holding purchasers liable under the Act. The act bars deception “in connection with the sale” of merchandise, and sale is defined as “any sale, offer for sale, or attempt to sell any merchandise for any consideration.” It doesn’t mention a purchase, offer to purchase, or attempt to purchase.

Because of provisions in the parties’ contracts, Benz was also required to pay Cavendish’s attorneys’ fees.