Grain Bagging Case Reinstated, Appeals Court Rules

Minnesota federal case law summary by Attorney Richard Clem: non-compete agreement.

Loftness Specialized Farm Equipment, Inc., v. Terry Twiestmeyer; Steven Hood; Twiestmeyer & Associates, Inc.. MN non-compete agreement.

Loftness Specialized Farm Equipment, Inc., is based in Minnesota and makes farm equipment. Terry Twiestmeyer and his wife are the owners of Twiestmeyer & Associates, Inc., which markets and sells grain bagging equipment for Loftness. Steven Hood's company, Hood & Company, is a sales representative for Loftness.

In 2007, Twiestmeyer and Hood came to Loftness with an idea for grain bagging equipment. They knew that end of the business becasue they were at that time selling similar equipment that was made in Argentina. Loftness, on the other hand didn't make grain bagging equipment and had no plans to do so.

Before the discussions, both T&A and Loftness signed a non-disclosure agreement, but neither Twiestmeyer nor Hood were individual parties to this agreement. Loftness agreed to keep all information confidential.

In their meeting, the parties talked about the Argentine equipment, suggested changes, and the need for the equipment in the U.S. market. People from Loftness examined the Argentine baggers, and they decided this was a market they should pursue. Loftness developed a prototype and starting selling in 2008.

The compensatioon for Twiestmeyer and Hood was initially to be 2%. This agreement was finalized in May 2008, and had a two-year term. It was never formally extended when it expired.

Loftness kept making the 2% payments until early 2011, even though the contract had expired in 2010. In January 2011, Loftness informed them that the payments would end. Loftness then sued in U.S. District Court for a declaratory judgment that its obligations had come to an end. Twiestmeyer, Hood, and T&A countersued for unjust enrichment. The trial court agreed with Loftness and ruled that Loftness's obligations had all been fulfilled.

Sorely dissatisfied with this outcome, Twiestmeyer, Hood, and T&A appealed the case to the U.S. Court of Appeals for the Eighth Circuit. They argued, first of all, that the lower court had focused on the trade secret portion of the non-compete agreement, but had ignored the actual non-compete agreement. The Court of Appeals agreed that the provisions were completely separate, and that they give rise to distinct legal claims.

The Court of Appeals did agree with Loftness that there was no claim for an alleged oral extension of the 2% agreement, since this was barred by the Statute of Frauds.

For these reasons, the Court of Appeals reversed, and sent the case back for the plaintiffs to pursue their non-compete claims.

No. 12-4049 (8th Cir. Feb. 11, 2014).

Please see the original opinion for the court's exact language.


Richard P. Clem is an attorney and continuing legal education (CLE) provider in Minnesota. He has been in private practice in the Twin Cities for 25 years. He has a J.D., cum laude, from Hamline University School of Law in St. Paul and a B.A. in History from the University of Minnesota. His reported cases include: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia v. Dow Quimica de Colombia, 988 F.2d 559, rehearing denied, 5 F.3d 530 (5th Cir. 1993), cert. denied, 510 U.S. 1041 (1994); LaMott v. Apple Valley Health Care Center, 465 N.W.2d 585 (Minn. Ct. App. 1991); Abo el Ela v. State, 468 N.W.2d 580 (Minn. Ct. App. 1991).

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