Asa-Brandt, Inc. v. Adm Investor Services, Inc.
| Decision Date | 18 April 2001 |
| Docket Number | No. C01-3021-MWB.,C01-3021-MWB. |
| Citation | 138 F.Supp.2d 1144 |
| Parties | ASA-BRANDT, INC. a/k/a ASA-Brandt Partnership; Phillip ASA; Keith Brandt; Robert Becker; Dennis Cink; Duanne Dewaard; Beverly Everett; Richard Gardner; Edward A. Otis; Jim Otis; Ronald Schmidt; and Debra Schmidt, Plaintiffs, v. ADM INVESTOR SERVICES, INC.; Fac-Marc, Inc.; Agri-Plan, Inc.; Competitive Strategies for Agriculture, Ltd., and Farmers Co-Operative Society, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Nicholas P. Iavarone, Bellows & Bellows, P.C., Chicago, IL, Scott G. Buchanan, Bibler, Buchanan & Gabor, Algona, IA, Dawn Mastalir, Moore, Berenstein, Heffernan & Moeller, Sioux City, IA, for plaintiff.
Richard J. Rappaport, Amy B. Manning of Ross & Hardies, Chicago, IL, Margaret M. Prahl of Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl, L.L.P., Sioux City, IA, for defendant ADM Investor Servs., Inc.
Miranda L. Hughes of Brown, Winick, Graves, Gross, Baskerville and Schoenbaum, P.L.C., Des Moines, IA, for defendant Farmers Co-Operative Society of Wesley ("Wesley").
There is a Chinese saying that there are always three sides to the story: yours, mine, and the facts. Here, in support of or in resistance to cross-motions for summary judgment, the parties have provided the court with their respective two sides to the story. The court must determine the third side of the story from the parties' submissions and then whether summary judgment may be entered on any of the numerous claims in dispute in this litigation.
This case arises from hedge-to-arrive contracts ("HTAs"), contracts for the sale and purchase of grain, that were entered into by grain producers and grain elevators.1 On June 14, 1996, case No. C96-3148-MWB ("Gunderson"), was filed in the United States District Court for the Northern District of Illinois. Plaintiffs in Gunderson are a group of grain producers seeking declaratory judgment and other relief as described in greater detail below. Plaintiffs alleged, inter alia, that defendants engaged in the promotion and marketing of HTAs in violation of the Commodity Exchange Act, 7 U.S.C. § 1 et seq.2 Also on June 14, 1996, case No. C96-3151-MWB (Hoover), which likewise seeks declaratory judgment and other relief, was filed in the United States District Court for the Northern District of Illinois by a second group of grain producers. All of the grain producers will be referred to herein collectively as the Producers. Both the original complaints in Gunderson and Hoover asserted the same thirteen claims for relief.3
On September 25, 1996, the Honorable Suzanne B. Conlon, United States District Court Judge for the Northern District of Illinois transferred Gunderson to the Northern District of Iowa. On October 3, 1996, the Honorable James H. Alesia, United States District Court Judge for the Northern District of Illinois, transferred Hoover to the Northern District of Iowa.
Defendants ADM and the Grain Elevators subsequently moved for dismissal of the Producers' claims on a number of grounds. On April 17, 1997, the court entered its ruling on defendants' motions to dismiss and found, inter alia, that the Producers' CEA fraud claims had not been pleaded with sufficient particularity. The Producers were directed to file an amended complaint adequately pleading fraud pursuant to Federal Rule of Civil Procedure 9(b). The court further held that such an amended complaint might also rectify any inadequacies perceived in the pleading of other claims, and therefore the Producers would be permitted to replead each count.
On May 20, 1997, the court consolidated Gunderson and Hoover. On June 10, 1997, the Producers filed their First Amended Complaint in the consolidated case. The First Amended Complaint contained fifteen claims.4 Defendants ADM and the Grain Elevators again sought the dismissal of all claims asserted against them in the First Amended Complaint. In its ruling on defendants' motions to dismiss, the court again found, inter alia, that the Producers' CEA fraud claims had not been pleaded with sufficient particularity. The Producers were directed to file a second amended complaint adequately pleading fraud pursuant to Federal Rule of Civil Procedure 9(b).
On May 28, 1998, the Producers filed their Second Amended Complaint in the consolidated case.5 The Second Amended Complaint asserts the following fifteen claims: Counts I and II allege violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), under 18 U.S.C. § 1962(c), by ADM, CSA, FAC-MARC, and Agri-Plan; Count III alleges a RICO violation, under 18 U.S.C. § 1962(c), by Titonka; Count IV alleges a RICO violation, under 18 U.S.C. § 1962(c), by ADM; Count V alleges fraud in violation of § 4b of the Commodity Exchange Act ("CEA"), 7 U.S.C. § 6b, against ADM and CSA; Count VI alleges that the HTAs are illegal because they violate §§ 4(a) and 4(d) of the CEA, 7 U.S.C. §§ 6(a) and 6(c); Count VII seeks declaratory judgment of the rights of the parties to the HTAs, a declaration that the HTAs are illegal, void, and unenforceable, because they violate §§ 4(a)-(c) of the CEA, 7 U.S.C. §§ 6(a)-(c), § 2(1) of the Securities Act of 1933, 15 U.S.C. § 77b(1), and § 3(a)(10) of the Securities Act of 1934, 15 U.S.C. § 78c(a)(10); Count VIII alleges a violation of the CEA, 7 U.S.C. § 6d, by the defendant grain elevators; Count IX alleges a violation of the CEA, 7 U.S.C. § 6o(1), by Titonka, FCE Bode Co-op, Buffalo Center, West Bend, Cylinder Co-op, FCS and Farmer's Co-op; Count X alleges a state-law claim for recission of the HTA contracts against defendant Grain Elevators; Count XI alleges a state-law claim of breach of fiduciary duty against ADM, FAC-MARC, Agri-Plan, and CSA; Count XII alleges a state-law claim for breach of fiduciary duty against the defendant Grain Elevators; Count XIII alleges a state-law claim of fraudulent misrepresentation against ADM, FAC-MARC, Agri-Plan, CSA and Titonka; Count XIV alleges a state-law claim for breach of contract against the defendant Grain Elevators; Count XV alleges a state-law claim for negligence against the defendant Grain Elevators. Defendant ADM again moved to dismiss all claims asserted against it in the Second Amended Complaint. The court granted ADM's motion to dismiss as to that portion of Count VI which is based on claims of excessive speculation because the court concluded that no private cause of action exists under the excessive speculation provisions found in 7 U.S.C. § 6a. The court also granted ADM's motion with respect to the Producers' claims for punitive damages under 7 U.S.C. § 25(3)(b). Finally, ADM's motion was granted with respect to the Producers' claim of negligence found in Count XV because the Producers' negligence claim is only asserted against the Grain elevator defendants. In all other respects, ADM's motion to dismiss was denied.
On January 15, 2001, following a scheduling hearing, the court ordered that these cases be arranged into four separate trials: one trial for all plaintiffs with claims pending against defendant Wesley; one trial for all plaintiffs with claims pending against defendant Titonka; one trial for all plaintiffs with claims pending against defendants Ledyard, West Bend Cooperative Company ("West Bend"), Farmers Cooperative Elevator ("Woden"), Bode Cooperative ("Bode"), and Cylinder Cooperative Elevator ("Cylinder"); and one trial for all plaintiffs with claims pending against defendant Farmers Cooperative Elevator of Buffalo Center ("Buffalo Center"). Subsequently, pursuant to Federal Rule of Civil Procedure 21, the court ordered that these two cases be realigned into four separate cases. The first such case is presently before the court and consists of all plaintiffs with claims pending against defendant Wesley: Asa-Brandt, Inc. a/k/a Asa-Brandt Partnership; Philip Asa; Keith Brandt; Robert Becker; Dennis Cink; Duane DeWaard; Beverly Everett; Richard Gardner; Edward A. Otis; Jim Otis; Ronald Schmidt; and Debra Schmidt. The defendants in the Wesley case consist of Wesley; ADM...
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Asa-Brandt, Inc. v. Adm Investor Services, Inc.
...Farmers had failed to present sufficient evidence to support their agency allegations against ADM. Asa-Brandt, Inc. v. ADM Investor Servs., Inc., 138 F.Supp.2d at 1165-69 (N.D.Iowa 2001). It partially granted Wesley's motions for summary judgment,10 but allowed the case against Wesley to co......