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IOM Grain, LLC v. Illinois Crop Improvement Association, Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

January 14, 2015

IOM GRAIN, LLC, f/k/a H&B CONDITIONING, LLC, Plaintiff,
v.
ILLINOIS CROP IMPROVEMENT ASSOCIATION, INC., Defendant.

OPINION AND ORDER

THERESA L. SPRINGMANN, District Judge.

This matter is before the Court on Defendant Illinois Crop Improvement Association, Inc.'s Motion for Summary Judgment [ECF No. 71], filed on December 13, 2013. Also pending is Plaintiff IOM Grain, LLC's Motion to Strike [ECF No. 80] various exhibits the Defendant offered in support of the Motion for Summary Judgment. For the reasons stated in this Opinion and Order, the Court will deny the Defendant's Motion for Summary Judgment and deny the Plaintiff's Motion to Strike.

PROCEDURAL BACKGROUND

The Plaintiff filed this action in the Jay Circuit Court, Jay County, Indiana, on August 19, 2010 [ECF No. 1], alleging (1) breach of contract against ZEA Global Seeds ("ZEA"); (2) fraudulent misrepresentation against ZEA and the Defendant; (3) constructive fraud against the Defendant; (4) negligent misrepresentation against the Defendant; (5) breach of fiduciary duty against the Defendant; and (6) civil conspiracy against both ZEA and the Defendant. The Defendant removed the case to this Court pursuant to 28 U.S.C. ยงยง 1332, 1441(a) and 1446 on September 29, 2010 [ECF No. 2], and filed an Amended Notice of Removal [ECF No. 8] on October 12, 2010, providing more complete jurisdictional information. The Defendant filed a Motion to Dismiss on December 3, 2010 [ECF No. 14]. The Plaintiff responded by filing an Amended Complaint on January 27, 2011 [ECF No. 22], and the Court therefore denied the original Motion to Dismiss as moot on February 3, 2011 [ECF No. 24]. On February 28, 2011, the Defendant filed a Motion to Dismiss [ECF No. 26]. On October 20, 2011, the Court issued an Opinion and Order [ECF No. 34] granting dismissal of Plaintiff's claims for constructive fraud, negligent misrepresentation and breach of a fiduciary duty against the Defendant; while denying dismissal for Plaintiff's claims of breach of contract against ZEA, and fraudulent misrepresentation and civil conspiracy against ZEA and the Defendant.

Due to difficulty in obtaining service of process on ZEA, the Plaintiff filed a motion on January 10, 2012, to dismiss its claims against ZEA without prejudice [ECF No. 38]. On January 27, 2012, the Court issued an order granting Plaintiff's dismissal of its claims against ZEA [ECF No. 39].

On December 13, 2013, the Defendant filed a Motion for Summary Judgment [ECF No. 71], along with a corresponding Brief in Support of Defendant's Motion for Summary Judgment [ECF No. 72]. The Plaintiff responded on January 27, 2014 [ECF No. 77], and the Defendant replied on February 10, 2014 [ECF No. 85].

On January 27, 2014, the Plaintiff also filed a motion, pursuant to Federal Rule of Civil Procedure 12(f) [ECF No. 80], to strike various exhibits the Defendant offered in support of the Motion for Summary Judgment, along with a corresponding Brief in Support of Plaintiff's Motion to Strike [ECF No. 81]. The Defendant responded on February 10, 2014, and the Plaintiff replied on February 19, 2014.

FACTUAL BACKGROUND

This case arises from a failed contractual relationship. The Plaintiff is an Indiana limited liability company that supplies high quality non-GMO food grade soy beans and corn to domestic and international markets. The sole member of the Plaintiff is Ramon Loucks, who has been at all times relevant to this lawsuit-and remains-a citizen of Indiana. ZEA is an Argentinian corporation that provides winter season soy bean nursery services at farms in Argentina. Finally, the Defendant is an Illinois corporation that provides seed certification and field services to agricultural companies throughout the world.

Complete diversity exists because no member of the Plaintiff is a citizen of the same State as the Defendant, and the amount in controversy exceeds $75, 000. (ECF No. 2; ECF No. 8.)

In early 2008, the Plaintiff and the Defendant discussed the possibility of doing business with some of the Defendant's business partners. Dennis R. Thompson, CEO of the Defendant, introduced the leadership of the Plaintiff and the leadership of ZEA through a telephone conversation and email on or about April 8, 2008.[1] In his email, Thompson stated that ZEA was a "topnotch concern[] with whom [the Defendant] has great respect." (Pl. Ex. A, ECF No. 22-1.) He then made specific statements about ZEA's organization and capabilities, outlining a potential arrangement between the Plaintiff and ZEA. In the same email, he referred to ZEA as "ZEA Global Seeds via our Global Seed Solutions (GSS)." ( Id. ) Global Seed Solutions was incorporated on August 5, 2008, with the Defendant and ZEA as the sole shareholders. ( Id.; Pl. Ex. D, ECF No. 22-4.) In the April 8 email, Thompson noted that under a proposed deal, ZEA would "compensate [the Defendant] under the GSS agreement." (Pl. Ex. A.)

In the late spring and early summer of 2008, the Plaintiff and ZEA engaged in negotiations for ZEA to provide the Plaintiff's needs for high quality non-GMO food grade quality soybeans. As part of the proposed contract, ZEA would commit nearly $1 million to secure land; pay for necessary inputs and services; and grow, harvest and deliver soy beans to the Plaintiff. The Defendant-through Thompson-was involved in these negotiations. As part of this process, Thompson conducted meetings with ZEA executives individually and jointly with executives from the Plaintiff. ZEA provided an initial quote on June 20, 2008, which included a request for the Plaintiff to make an initial pre-payment. The quote was unacceptable to the Plaintiff, and negotiations continued. On June 23, 2008, ZEA told the Plaintiff via e-mail that a pre-payment was necessary because "all lines of credit have disappeared."[2] (Pl. Ex. 52, ECF No. 78-13.) On or about June 25, 2008, ZEA requested a pre-payment of $500, 000 from the Plaintiff. ZEA again referenced a lack of credit in Argentina. According to Loucks, he viewed ZEA's request as a negotiation tactic and not as a sign of financial trouble.[3] (Pl. Ex. 1 at 124.) The Plaintiff rejected ZEA's request for a pre-payment.

During subsequent negotiations, ZEA continued to request a pre-payment from the Plaintiff so that ZEA could begin performing under the proposed contract. By July 2008, Loucks said he became more amenable to ZEA's request; but at the same time, he became concerned with ZEA's financial condition. As a result, Loucks inquired of Thompson regarding ZEA's financial condition; specifically, whether ZEA was "good for the money" that ZEA was requesting from the Plaintiff. ( Id. at 176.) Thompson said he was unable to provide specific financial information about ZEA because of a confidentiality agreement. However, Thompson provided assurances that ZEA could perform under the proposed contract. Specifically, Thompson said that ZEA was "capable of doing this deal" and "capable of handling this transaction." ( Id. at 195; Def. App. A at 21, ECF. No. 73.) Thompson testified that ZEA's "ability to get financing" was included as part of his assurances.[4] Neither party disputes that Thompson was aware of the specific terms of the proposed contract. According to Loucks, Thompson's assurances were provided in July 2008.

On or about July 28, 2008, ZEA informed the Plaintiff that it would need a pre-payment that same week. The Plaintiff responded that it required financial documentation from ZEA before moving forward. The Plaintiff requested two years of balance sheets, two years of profit and loss statements, and the prior year's tax filings.

On July 29, 2008, Thompson sent an e-mail to Tom Growmark, the Chairman of the Defendant's Board of Directors, requesting authorization to forward ZEA the needed funds. The e-mail stated: "ZEA is tapped out for immediate cash as their cashflow for [the] upcoming season begins in 15 days."[5] (Pl. Ex. 21, ECF No. 78-8.) When asked about this e-mail, Thompson testified that ZEA's "cash flow was not what they had anticipated" and as a result, "they were looking for cash flow support." (Pl. Ex. 3 at 186.) Thompson told Growmark that a successful deal between the Plaintiff and ZEA would be "really big" for the Defendant, resulting in a $50, 000-70, 000 commission, and commissions on future business between ZEA and the Plaintiff, and would "demonstrate [the Defendant's] capabilities to build unique business relations and opportunities." (Pl. Ex. 21.) Thompson's e-mail also noted the risks of the transaction.[6]

The Defendant then forwarded ZEA the needed funds without the Plaintiff asking it to do so. In a July 30 email, Thompson informed the Plaintiff that the Defendant would forward the funds to ZEA "to pull this project together this week." (Pl. Ex. B, ECF No. 22-2.) In his email, Thompson referred to ZEA as "our strategic partner, " and further stated that "ICIA has put a pony in the race!!!" ( Id. ) Loucks responded-via email-by thanking Thompson for his action. ( Id. )

On August 2, 2008, ZEA provided the requested financial information to the Plaintiff, including audited financial information for 2006 and 2007; and unaudited financial information for 2008, which ran through June. ( Id.; Pl. Ex. C, ECF No. 22-3; Pl. Ex. 54, ECF No. 78-14; Pl. Ex. 55, ECF No. 78-15.) However, according to Loucks' testimony, Thompson said he possessed financial information that was not reflected in the requested financial documents, and that he could not disclose the information due to the confidentiality agreement.[7] (Pl. Ex. 1 at 201.) After receiving the assurances of Thompson and reviewing the requested financial documents, Loucks concluded that ZEA was a "mildly profitable" company that could perform under the contract. ( Id. at 192.)

On August 4, 2008, ZEA sent the Plaintiff a "Letter of Intent" detailing, in part, a proposed obligation for the Plaintiff to make a $100, 000 pre-payment-$50, 000 to be paid to ZEA and $50, 000 to be paid to the Defendant as reimbursement for their pre-payment "in behalf" of the Plaintiff. (Pl. Ex. E, ECF. No. 22-5). On August 6, ZEA also informed the Plaintiff that ZEA owed $7, 000 to the Defendant, and requested that the Plaintiff-instead of paying ZEA directly-forward funds to the Defendant to cancel ZEA's outstanding balance. (Pl. Ex. C.) Also on August 6, Thompson informed the Plaintiff via email that ZEA "really could use the comfort of the signed document and transfer of monies." (Pl. Ex. D) On August 7, the Plaintiff sent a signed Letter of Intent to ZEA; and on August 15, sent the $57, 000 pre-payment to the Defendant as requested by ZEA. (Pl. Ex. E.) In addition to the $57, 000 pre-payment to the Defendant, the Plaintiff eventually provided a pre-payment of $93, 000 to ZEA-$150, 000 in total.[8]

In September 2008, representatives from ZEA, the Plaintiff and the Defendant met in Argentina to finalize a contract. Thompson participated in the discussions, meeting with ZEA executives alone and with executives from ZEA and the Plaintiff together. On September 16, 2008, ZEA and the Plaintiff signed a contract for ZEA to provide the Plaintiff with soy beans between April and October 2009. (Pl. Ex. F, ECF No. 22-6.) The contract is written on the Plaintiff's letterhead, and purports to be "the final, complete and exclusive statement of the agreement between the parties." ( Id. ) The Defendant was not a party to the contract.

According to Loucks, following the signing of the contract, a dispute arose between the Plaintiff and ZEA regarding an overdue payment for crop inputs. In December 2008, following a meeting with ZEA representatives, Loucks said he began having ...


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