                    United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 01-2038
                                   ___________

Schaller Telephone Company,             *
                                        *
            Appellant,                  *
                                        * Appeal from the United States
      v.                                * District Court for the
                                        * Northern District of Iowa.
Golden Sky Systems, Inc.,               *
                                        *
            Appellee.                   *
                                   ___________

                             Submitted: February 13, 2002

                                 Filed: July 31, 2002
                                  ___________

Before WOLLMAN, RICHARD S. ARNOLD, and BYE, Circuit Judges.
                         ___________

WOLLMAN, Circuit Judge.

      This case deals with the aftermath of failed negotiations between Schaller
Telephone Co. (Schaller) and Golden Sky Systems, Inc. (Golden Sky) for the sale of
Schaller’s rights to provide DirecTV satellite television services in four northwest
Iowa counties. Schaller sued Golden Sky for fraudulent nondisclosure, breach of
contract, and fraudulent misrepresentation. Golden Sky counterclaimed for unjust
enrichment. The district court1 dismissed Schaller’s fraudulent nondisclosure claim

      1
        The Honorable Mark W. Bennett, Chief Judge, United States District Court
for the Northern District of Iowa.
and granted summary judgment to Golden Sky on Schaller’s breach of contract and
fraudulent misrepresentation claims and on Golden Sky’s counterclaim. Schaller has
appealed from those rulings. We affirm.2

                                          I.

       Golden Sky first expressed interest in purchasing Schaller’s DirecTV service
rights in the fall of 1998. After preliminary discussions, Golden Sky sent a formal
letter of interest to Schaller on March 9, 1999. Golden Sky’s chief rival, Pegasus
Communications Corporation (Pegasus), made a better offer shortly thereafter.
Golden Sky responded with an even better offer in a second letter of interest on May
26, 1999, in which it conditionally offered to purchase Schaller’s rights for $2,700
per subscriber for a minimum of 4,100 subscribers. In the negotiations that followed,
the price per subscriber remained the same.

       For the next several months, Golden Sky and Schaller negotiated over the
proposed transaction. Representatives of each company met several times, spoke
several times by telephone, and exchanged numerous drafts of proposed asset
purchase agreements and other documents. Ultimately, on September 23, 1999,
Golden Sky’s counsel sent a letter to Schaller stating that Golden Sky had determined
not to go through with the transaction.

       The contents of the various contacts between the parties form the basis for this
lawsuit. Schaller argues first that Golden Sky fraudulently failed to disclose
important facts to Schaller. Second, Schaller claims that the parties formed an oral
contract. Finally, Schaller claims that Golden Sky fraudulently misrepresented
certain facts.


      2
       Although included in its notice of appeal, Schaller has raised no issue on
appeal regarding the counterclaim award, and thus that award is also affirmed.

                                         -2-
                                          II.

      Schaller’s first claim is that Golden Sky failed to disclose material facts to
Schaller, specifically, that Golden Sky failed to disclose that it was unable to acquire
financing for the transaction. The district court dismissed this claim under Fed. R.
Civ. P. 12(b)(6), concluding that Schaller had not alleged any facts that would
demonstrate a special relationship between the parties that would have imposed upon
Golden Sky the duty to disclose that information to Schaller.

       We review de novo a district court’s grant of a motion to dismiss for failure to
state a claim. Kohl v. Casson, 5 F.3d 1141, 1148 (8th Cir. 1993). A complaint
should not be dismissed for failure to state a claim unless it appears beyond doubt that
the plaintiff can not prove any set of facts in support of his claim that would entitle
him to relief. Id. When analyzing the adequacy of a complaint’s allegations under
Fed. R. Civ. P. 12(b)(6), we must accept as true all of the complaint’s factual
allegations and view them in the light most favorable to the plaintiff. Id.

      Iowa law recognizes a cause of action for fraudulent misrepresentation based
on nondisclosure of material facts. Sinnard v. Roach, 414 N.W.2d 100, 105 (Iowa
1987). To be actionable under Iowa law, a misrepresentation must “relate to a
material matter known to the party . . . which it is his legal duty to communicate to
the other contracting party whether the duty arises from a relation of trust, from
confidence, from inequality of condition and knowledge, or other attendant
circumstances.” Id. (quoting Wilden Clinic Inc. v. City of Des Moines, 229 N.W.2d
286, 293 (Iowa 1975)).

      The Iowa Supreme Court has stated that “[t]here is no specific test for
determining when a duty to reveal arises in fraud cases. However, . . . ‘[a]
misrepresentation may occur when one with superior knowledge, dealing with
inexperienced persons who rely on him or her, purposely suppresses the truth

                                          -3-
respecting a material fact involved in the transaction.” Clark v. McDaniel, 546
N.W.2d 590, 592 (Iowa 1996) (internal citation omitted) (quoting Kunkle Water &
Elec., Inc. v. City of Prescott, 347 N.W.2d 648, 653 (Iowa 1984)).

        The district court dismissed the fraudulent nondisclosure claim because it
found that Schaller pled no facts which would give rise to a relationship between the
parties that created a duty to disclose facts. Citing section § 551(2)(a) of the
Restatement (Second) of Torts, the district court found that Schaller and Golden Sky
were sophisticated business entities engaging in arm’s length negotiations and
determined that Iowa law does not impose a duty to disclose in such a situation.
Schaller does not dispute these rulings as such, but instead contends on appeal that
the district court incorrectly limited its analysis to one theory of a relationship
between the parties. Schaller claims that the district court should have considered
three alternative standards under which Golden Sky would have had a duty to
disclose: 1) inequality of condition and knowledge between the parties, 2) facts basic
to the transaction relied on by the other party as described in Restatement § 551(2)(e),
and 3) new knowledge acquired by Golden Sky that made its prior representations
false as described in Restatement § 551(2)(c).

      First, Schaller argues that an inequality of condition and knowledge between
the parties as to Golden Sky’s financial condition created a duty to disclose facts
regarding that condition. Schaller, however, did not plead that this inequality created
a special relationship between the parties, nor did it argue so to the district court.
Schaller’s complaint lists only the following bases for a special relationship between
the parties:

      Golden Sky’s superior knowledge of the procedure for the acquisition
      or sale of the rights to supply DIRECTV satellite television services,
      Schaller’s sharing of confidential information regarding Schaller’s
      business and financial circumstances in order to consummate a sale of
      Schaller’s satellite television rights . . ., Schaller’s forbearance from

                                          -4-
      further pursuing and securing a profitable contract for the sale of
      Schaller’s properties to Golden Sky’s competitors, and Schaller’s
      expenditure of substantial sums at Golden Sky’s request to increase
      Schaller’s subscriber base.

Schaller’s memorandum of law in response to Golden Sky’s motion to dismiss repeats
only these reasons for a special relationship. Nowhere did Schaller argue anything
regarding inequality of condition and knowledge to the district court. We will not
hear issues first raised on appeal, Cronquist v. City of Minneapolis, 237 F.3d 920,
925 (8th Cir. 2001), and so we decline to consider this argument.

        In any event this argument fails on the merits. Schaller has never alleged any
facts other than those that exist in a typical arm’s length business deal. The cases it
relies on all involve parties who rely on specific, technical expertise of the other party
or other specialized information provided by a party. See, e.g., Clark, 546 N.W.2d
at 592-93 (seller of car liable for failing to disclose that car was composed of the front
of one car and the back of another “clipped” together); Kunkle, 347 N.W.2d at 653
(plumber held liable to city for failing to disclose when asked about needed repairs
on its water system that the entire system would likely need to be replaced); Peoples
Bank & Trust Co. v. Lala, 392 N.W.2d 179, 188 (Iowa App. 1986) (bank in special
relationship with mortgagor of homestead). Schaller cites to no Iowa case holding
that a sophisticated business entity has a duty to disclose facts regarding its financial
condition to another business entity as part of an arm’s length negotiation. Cf.
Sinnard, 414 N.W.2d at 106-07 (bank officer owed no duty of disclosure to plaintiff
who pledged personal property as collateral for a loan to a corporation regarding the
debts of a corporation where the plaintiff was the secretary of that corporation);
Wilden, 229 N.W.2d at 293 (city cannot be held liable for failing to disclose to
plaintiff that it was the sole bidder on a parcel of land).

      We also note that Schaller bases the arguments it raises throughout its appeal
on publicly filed information regarding Golden Sky. This information was available

                                           -5-
to Schaller at all times, and we do not believe that Iowa law recognizes a cause of
action based upon nondisclosure where the information in question was not
“peculiarly” within the knowledge of Golden Sky. See Sinnard, 414 N.W.2d at 107.

      Second, Schaller claims that Golden Sky had a duty to disclose under
Restatement (Second) of Torts § 551(2)(e), which provides that a party must disclose

      facts basic to the transaction, if he knows that the other is about to enter
      into it under a mistake as to them, and that the other, because of the
      relationship between them, the customs of the trade or other objective
      circumstances, would reasonably expect a disclosure of the facts.

Schaller did not specifically cite to this standard or use similar language in its
complaint or its memorandum of law in opposition to Golden Sky’s motion to
dismiss. It did, however, in its memorandum of law quote a district court case in
which the court discussed the standards under § 551(2)(e), Jones Distributing Co.,
Inc. v. White Consolidated Industries, Inc., 943 F. Supp. 1445, 1447-48 (N.D. Iowa
1996). Assuming that Schaller adequately called the district court’s attention to this
contention, the argument fails. As discussed above, Schaller does not allege facts
sufficient to establish a relationship between the parties or other circumstances under
which it could reasonably expect Golden Sky to disclose its financial condition. See
id. at 1476 (existence of a fact basic to the transaction that would affect a party’s
desire to enter the transaction insufficient standing alone, there also must be some
facts indicating some special relationship between the parties).

      Finally, Schaller argues that Golden Sky had a duty to disclose facts under
Restatement (Second) of Torts § 551(2)(c), which provides that a party must reveal
“subsequently acquired information that he knows will make untrue or misleading a
previous representation that when made was true or believed to be so.” Schaller
contends that early in the negotiations Golden Sky represented that it had the
financial ability to complete the deal and that upon later discovering that it had

                                          -6-
defaulted on some of its loan covenants, it became obligated to inform Schaller that
it no longer had the financial capacity to purchase Schaller’s satellite broadcast rights.
Again, however, Schaller failed to plead any facts that would support this theory or
to make any arguments to the district court regarding this theory. Schaller’s
complaint alleged only that Golden Sky “failed to disclose to Schaller that Golden
Sky was either unwilling or financially unable to complete the purchase agreement.”
Schaller never referred to any particular representations that Golden Sky made and
later discovered were false.

       In any event, the § 551(2)(c) claim is without merit. The representations by
Golden Sky listed in Schaller’s complaint do not relate to Golden Sky’s financial
ability to perform the transaction, but rather to its intention to enter a contract.

       Accordingly, the district court did not err in ruling that Golden Sky had no duty
to disclose information to Schaller, and thus it correctly dismissed the fraudulent
nondisclosure count.

                                           III.

     Next, Schaller argues that the district court erred by granting summary
judgment against it on its breach of contract claim.

       We review the district court’s grant of summary judgment de novo. Henerey
v. City of St. Charles, 200 F.3d 1128, 1131 (8th Cir. 1999). Summary judgment is
proper if the evidence, viewed in the light most favorable to the nonmoving party,
demonstrates that no genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law. Id.; Fed. R. Civ. P. 56(c).




                                           -7-
       Iowa recognizes the validity of oral contracts, even in those cases in which the
parties intend to commit their agreement to writing. The Iowa Supreme Court has
stated:


      It is generally held an oral agreement may be enforceable, even though
      the parties contemplate that it be reduced to writing and signed, if it is
      complete as to its terms and has been finally agreed to. Under such
      circumstances the writing is merely an expression of a contract already
      made. On the other hand, the parties may intend that obligation should
      arise only upon the signing of a written instrument embodying the terms
      they have tentatively agreed to.


Faught v. Budlong, 540 N.W.2d 33, 35-36 (Iowa 1995) (emphasis in original)
(quoting Elkader Coop. Co. v. Matt, 204 N.W.2d 873, 875 (Iowa 1973)). The Faught
court cited with approval the comments to Restatement (Second) of Contracts § 27,
which provide:


             a. Parties who plan to make a final written instrument as the
      expression of their contract necessarily discuss the proposed terms of the
      contract before they enter into it and often, before the final writing is
      made, agree upon all the terms which they plan to incorporate therein.
      This they may do orally or by exchange of several writings. It is
      possible thus to make a contract the terms of which include an
      obligation to execute subsequently a final writing which shall contain
      certain provisions. If parties have definitely agreed that they will do so,
      and that the final writing shall contain these provisions and no others,
      they have then concluded the contract.


             b. On the other hand, if either party knows or has reason to know
      that the other party regards the agreement as incomplete and intends that
      no obligation shall exist until other terms are assented to or until the
      whole has been reduced to another written form, the preliminary
      negotiations and agreement do not constitute a contract.

                                         -8-
             c. Among the circumstances which may be helpful in determining
      whether a contract has been concluded are the following: the extent to
      which express agreement has been reached on all the terms to be
      included, whether the contract is of a type usually put in writing,
      whether it needs a formal writing for its full expression, whether it has
      few or many details, whether the amount involved is large or small,
      whether it is a common or unusual contract, whether a standard form of
      contract is widely used in similar transactions, and whether either party
      takes any action in preparation for performance during the negotiations.
      Such circumstances may be shown by oral testimony or by
      correspondence or other preliminary or partially completed writings.


       Although parties may make an oral contract that includes a requirement to
memorialize the contract in writing, “an agreement to agree is not a contract” in Iowa.
Whalen v. Connelly, 545 N.W.2d 284, 293 (Iowa 1996). “In order to find that an oral
contract existed, there must be sufficient evidence of its terms to ascertain the duties
and conditions established.” Audus v. Sabre Communications Corp., 554 N.W.2d
868, 871 (Iowa 1996). Generally, whether the parties intend an oral agreement to be
binding or whether they did not intend to be bound until they executed a written
agreement is a question of fact dependent upon all the circumstances present in the
particular case. Elkader, 204 N.W.2d at 875. Even though the existence of an oral
contract is usually a question of fact, judgment as a matter of law is appropriate if a
party has not offered sufficient evidence to support the existence of a contract. See,
e.g., Faught, 540 N.W.2d at 40 (length of negotiations, number of proposal and
counterproposals, and distrust between parties indicate that no reasonable person
would find that a contract existed); Desy v. Rhue, 462 N.W.2d 742, 746 (Iowa App.
1990) (where purchase agreement clearly stated that party must sign in order to be
bound, no oral contract possible).




                                          -9-
       The district court held that the negotiations between Golden Sky and Schaller
had not ripened into an oral contract because Golden Sky repeatedly represented that
it would not be bound absent a written agreement. The district court concluded that
the evidence fell within comment b rather than comment a, to the Restatement
(Second) of Contracts § 27. Golden Sky’s two letters of interest, on March 9, 1999,
and May 26, 1999, expressly stated that the price offered was “conditional upon [a
specified number of subscribers at closing] and that the parties negotiate and execute
a mutually acceptable purchase agreement which would contain representations and
warranties standard in the industry . . . .” Both letters also stated that “[t]here are
many terms and conditions for sale which need to be agreed upon to finalize an
agreement” and “you should understand that this letter is not and is not intended to
be, construed or relied upon as a commitment on the part of [Golden Sky]. Any
commitment which we may subsequently determine to extend would be pursuant to
the definitive documentation referred to above.” Golden Sky also sent a letter of
intent on July 23, 1999, which indicated the parties’ intention to “begin immediate,
good faith negotiation between them of an ‘Asset Purchase Agreement,’ which will
embody the terms and conditions contained herein and such other conditions,
covenants, representations and warranties which may be agreed upon between the
parties and as are customary in acquisitions of this type.” Finally, a draft letter of
September 3, 1999, stated that the letter was “not to be construed as an offer from
[Golden Sky] but is instead intended to be a nonbinding expression of the parties’
intentions with respect to entering into an asset purchase agreement memorializing
the above-referenced transaction.”


       Schaller argues that the district court erred in finding that these disclaimers
conclusively established that the parties did not intend to enter an oral contract. It
argues that various other statements made by Golden Sky’s representatives indicate
that the parties had reached an oral agreement, and it contends that the district court
improperly weighed the evidence instead of viewing it in the light most favorable to


                                         -10-
Schaller. Schaller points out that on June 30, 1999, Steve Jensen, counsel for
Schaller, and Jo Ellen Linn, general counsel for Golden Sky, met in Council Bluffs,
Iowa, and agreed that Golden Sky would pay $2,700 per subscriber for up to 5,000
subscribers. Representatives of the parties met again on August 25, 1999, at which
time Schaller claims that Golden Sky represented that the deal was done, contingent
on the approval of Golden Sky’s board. On August 26, 1999, the board approved a
resolution authorizing Golden Sky’s management to go forward with negotiating and
completing the transaction. During a telephone conference on September 3, 1999,
Ronald Weary, president and CEO of Golden Sky said, “We’re going to buy your
assets. I’m a man of my word and we intend to go forward with your agreement.”
Schaller contends that all of the terms and conditions agreed to by the parties were
incorporated into a draft asset purchase agreement sent by Golden Sky to Schaller on
September 21, 1999. Then, in a letter dated September 23, 1999, Golden Sky
informed Schaller that its board had decided not to go forward with the transaction.


      We agree with the district court that these claims and the evidence presented
by Schaller do not raise issues of material fact sufficient to preclude summary
judgment. No reasonable jury would conclude, even taking the evidence in the light
most favorable to Schaller, that the parties had concluded an oral agreement.


      First, Golden Sky’s repeated written statements that it did not intend to be
bound are indistinguishable from the statements in Desy, except that Golden Sky’s
statements might more clearly indicate that it did not intend to be bound in the
absence of a signed, written agreement. See Desy, 462 N.W.2d at 746. As the district
court concluded, the evidence in this case falls within comment b to § 27, not
comment a.




                                       -11-
       Second, the other statements and actions by Golden Sky that Schaller relies on
to counteract the effect of the disclaimers are indistinguishable from those in Faught.
In Faught, the Iowa Supreme Court affirmed the trial court’s grant of judgment
notwithstanding the verdict where the parties were sophisticated business persons,
they engaged in long, complex negotiations, the deal was over a relatively large
amount of money ($130,000), one party had a boilerplate agreement it used for
similar deals, and any “reasonable person would expect that such an agreement would
usually be put in writing.” Faught, 540 N.W.2d at 40; see also Restatement (Second)
of Contracts § 27, comment c (listing factors to consider in whether it would be
reasonable to conclude that the parties intended to be bound without a signed, written
agreement). Similar factors are involved in this case. We note especially that
Schaller does not claim that the parties came to an oral agreement at any one meeting,
but instead it relies on various statements over a course of several months. After each
of the statements Schaller claims established a contract between the parties, the
parties continued to negotiate terms fundamental to the contract, most notably the
definition of “subscriber.” In the September 21 draft proposed purchase agreement,
which Schaller claims contains all the terms of the oral contract, Golden Sky made
several changes to the definition of subscriber and noted on the draft, “This section
needs work.” Furthermore, Schaller admits that its president, Steven Reimers, never
saw this draft of the agreement and acknowledges that Reimers was the only person
with the authority to bind Schaller to a contract.


      In short, Schaller plucks disconnected statements from various meetings and
phone calls in an attempt to establish the existence of an oral contract. Schaller’s
theory is not tenable under Iowa law, nor does it make sense in the real world of
contract negotiation. If Schaller’s evidence were held adequate to establish an oral
contract, it would be rarely the case that any failed contract negotiation could not,
through the use of selective excerpts of the negotiations, be contorted into an oral
contract.


                                         -12-
                                          IV.


      Schaller also argues that the district court erred in granting summary judgment
to Golden Sky on Schaller’s fraudulent misrepresentation claim.


       Under Iowa law, to establish a claim for fraudulent misrepresentation, a
plaintiff must prove:


      (1) defendant made a representation to the plaintiff, (2) the
      representation was false, (3) the representation was material, (4) the
      defendant knew the representation was false, (5) the defendant intended
      to deceive the plaintiff, (6) the plaintiff acted in reliance on the truth of
      the representation and was justified in relying on the representation, (7)
      the representation was a proximate cause of plaintiff’s damages, and (8)
      the amount of damages.


Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 400 (Iowa 2001).


       Additionally, the Federal Rules of Civil Procedure require a plaintiff to plead
“the circumstances constituting fraud . . . with particularity.” Fed. R. Civ. P. 9(b).
We interpret this rule of pleading “in harmony with the principles of notice pleading.”
Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001). Although
a pleading alleging fraud need not provide anything more than notice of the claim, it
must contain “a higher degree of notice, enabling the defendant to respond
specifically, at an early stage of the case, to potentially damaging allegations of
immoral and criminal conduct.” Id. Thus, a plaintiff must plead “‘such matters as the
time, place and contents of false representations, as well as the identity of the person
making the misrepresentation and what was obtained or given up thereby.’” Id.
(quoting Bennett v. Burg, 685 F.2d 1053, 1062 (8th Cir. 1982), adhered to on reh’g

                                          -13-
710 F.2d 1361 (8th Cir.) (en banc)). “[C]onclusory allegations that a defendant’s
conduct was fraudulent and deceptive are not sufficient to satisfy the rule.”
Commercial Property v. Quality Inns, 61 F.3d 639, 644 (8th Cir. 1995).


       The district court engaged in a lengthy, most thorough analysis of Schaller’s
pleadings and interrogatory responses in an attempt to determine the basis of
Schaller’s fraud claim. Schaller pled that certain representations made by Golden Sky
were fraudulent, listed a limited set of those representations in response to an
interrogatory asking for the basis for its fraud claim, and then included in an unsworn
amendment to its interrogatory answer new representations that were not set forth in
either the complaint or the first interrogatory answer. The district court considered
only the information in Schaller’s first set of interrogatory answers to be properly
before the court, holding that Schaller was bound to the allegations in its sworn
interrogatory answers and so waived any allegations in its complaint that were not
contained in its interrogatory answers. We need not reach the merits of this ruling,
because we conclude that Schaller did not introduce sufficient evidence to prevent
summary judgment on any of the allegations in its complaint.


       We agree with the district court that the only paragraph in Schaller’s complaint
that could arguably be read to plead with the requisite particularity that Golden Sky
misrepresented its ability to enter the contract is paragraph seven, which relates only
to Golden Sky’s letter of May 26, 1999. None of Schaller’s evidence would prove
that on May 26, 1999, Golden Sky knew that it could not obtain financing to
complete the transaction. Thus, summary judgment was properly entered against
Schaller on the claim of fraudulent misrepresentation.


      The judgment is affirmed.



                                         -14-
A true copy.


      Attest:


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




                          -15-
