Glencore Grain Ltd. v. Seaboard Corp.

• Decision Date: 21 January 2003
• Docket Number: No. CIV.A. 01-2558-KHV.,CIV.A. 01-2558-KHV.
• Citation: 241 F.Supp.2d 1324
• Parties: GLENCORE GRAIN LIMITED, et al., Plaintiffs, v. SEABOARD CORPORATION, Defendant.
• Court: U.S. District Court — District of Kansas

241 F.Supp.2d 1324

GLENCORE GRAIN LIMITED, et al., Plaintiffs, v. SEABOARD CORPORATION, Defendant.

No. CIV.A. 01-2558-KHV.

United States District Court, D. Kansas.

January 21, 2003.

COPYRIGHT MATERIAL OMITTED

Kirk T. May, David J. Rempel, Rouse Hendricks German May PC, Kansas City, MO, for plaintiffs.

James D. Griffin, Jason R. Scheiderer, Blackwell Sanders Peper Martin LLP, Kansas City, MO, for defendant.

MEMORANDUM AND ORDER

VRATIL, District Judge.

Glencore Grain Limited, Hamilton, Bermuda and Glencore Grain Africa (Pty) Limited (collectively referred to as "Glencore") bring suit against Seaboard Corporation ("Seaboard") for breach of guaranty and promissory estoppel. This matter comes before the Court on Plaintiffs' Motion For Summary Judgment (Doc. # 33) and Defendant Seaboard Corporation's Motion For Summary Judgment (Doc. #36), both filed October 11, 2002, and Seaboard's Memorandum In Opposition To Plaintiffs' Motion For Summary Judgment And Cross Motion For Summary Judgment On The Graver And Bresky Letters (Doc. # 43) filed October 28, 2002. For reasons set forth below, the Court sustains plaintiffs' motion for summary judgment, overrules defendant's initial motion for summary judgment and sustains defendant's cross-motion for summary judgment.

I. Summary Judgment Standards

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Rule 56(c), Fed.R.Civ.P.; accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir.1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252, 106 S.Ct. 2505.

The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Hicks v. City of Watonga, Okla., 942 F.2d 737, 743 (10th Cir.1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec, Inc., 912 F.2d 1238, 1241 (10th Cir.1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The nonmoving party may not rest on its pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.

The Court must view the record in a light most favorable to the party opposing the motion for summary judgment. Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991). Summary judgment may be granted if the nonmoving party's evidence is merely colorable or is not significantly probative. Anderson, 477 U.S. at 250-51, 106 S.Ct. 2505. "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 794 (10th Cir.1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52,106 S.Ct. 2505.

II. Facts

The following facts are undisputed or, if disputed, the Court notes each party's contention.

Glencore is engaged in commodity trading. At some point before 1999, it entered into contracts to sell grain to National Milling Company ("NMC"), a milling company in Zambia. On June 12, 1997, Glencore and NMC entered into a Joint Venture Agreement ("JVA") under which NMC agreed to purchase 160,000 metric tons of white maize by June, 2000.¹ The contract provided that the maize would be stored at NMC premises under the supervision of a company called SGS,² and that NMC would "uplift" or take possession of the maize as needed. NMC could not uplift grain without a "release instruction" from Glencore, however, and Glencore required prepayment for any release. NMC bore the risk of loss or deterioration in the quality of the maize in storage.

In November of 1998, some 27,000 metric tons of maize remained in storage under the JVA. At the time, Seaboard was considering whether to purchase NMC as a going concern. On November 10, 1998, NMC and Glencore agreed that if Seaboard purchased NMC, NMC would buy all of the remaining maize for $210.00 per metric ton. On November 22, 1998, Seaboard faxed Glencore a letter to confirm that Glencore would hold the contract price at $210.00 per metric ton. A week later, on November 30, 1998, Seaboard purchased NMC as a going concern.

In December of 1998 and the following months, Mark Daniels of Glencore and Kevin Neilson of Seaboard renegotiated several contracts, including the price of the maize under the JVA. During the renegotiations, Neilson represented that Seaboard would guarantee NMC's obligations under the JVA. Glencore asserts that in renegotiating the price under the JVA, it relied on Neilson's representations to its detriment.³ See Daniels Depo. at 15:1-14 (Plaintiffs' Exhibit 5).

On December 18, 1998, some 17,100 metric tons of maize remained under the JVA. On behalf of NMC, Seaboard agreed to purchase all remaining grain for $217.78 per metric ton plus interest at $0.44 per metric ton per day beginning December 19, 1998. The parties agreed that the remaining terms of the JVA would apply and that NMC would uplift all remaining maize by March 31,1999.

NMC did not uplift all remaining maize by March 31, 1999 and in fact, on April 16, 1999, some 8,280.715 metric tons remained under the JVA. NMC advised Glencore that it could sell 8,000 metric tons to the Food Reserve Agency ("FRA"), a Zambian government agency, but that it needed two weeks to pay for it.⁴ Glencore refused to release any maize without prepayment or a guaranty, and NMC therefore asked Seaboard for assistance in purchasing the grain on credit.

On April 16, 1999, Ronald Graver, director of Seaboard milling operations, faxed the following statement to Glencore: Regarding commodity purchases from [sic][NMC] from Glencore, Seaboard Corporation as 100% owner of NMC are fully aware of NMC's transactions with Glencore and support them in their performance with these transactions. Thank you for your attention to our needs and requirements at NMC. Plaintiffs' Exhibit 20 (paragraph spacing omitted). Later the same day, Dave Dannov, vice president/treasurer of Seaboard's overseas and trading group, faxed Glencore the following letter:

In the event that NMC do[es] not make payment within 14 days of the release issued 16th April 1999 for 8,000 mt of white maze supplied under the Glencore, NMC Joint Venture Agreement, Seaboard Corporation will accept liability for the payment to Glencore for the said 8,000 mt of maize or whatever lesser remaining unpaid.

Plaintiffs' Exhibit 21. The parties agree that Dannov's letter created a guaranty but dispute whether Seaboard is liable under that guaranty. Dannov wrote the letter because he thought that Graver's letter was too general and not specific to the transaction which the parties contemplated. See Dannov Deposition at 52 11.1-17 (Plaintiffs' Exhibit 6). Dannov intended the letter to be "specifically related to the potential transaction with FRA." Id. at 45 11.6-10.

On April 16, 1999, Glencore issued an invoice in the amount of $1,851,816.29 for the remaining 8,280.715 metric tons of maize, but it did not release all of the maize at that time.⁵ Instead, on April 16, 1999, it released 1,000 metric tons without requiring prepayment. See Defendant's Exhibit H. Three days later, on April 19, 1999 it released the remaining 7,280.715 metrictons—again without requiring prepayment.⁶ See Defendant's Exhibit I. Glencore issued both release instructions "to the order of National Milling Company/Seaboard Corporation."⁷ Defendant's Exhibits H and I.

By April 30, 1999, NMC had uplifted 3,764.90 metric tons of the 8,280.715 metric tons which Glencore had released on April 16 and April 19, 1999. Thus, even though NMC was required to uplift all remaining grain by March 31, 1999, some 4,515.815 metric tons remained in storage one month later, on April 30, 1999. That day, Glencore requested that by May 7, 1999, NMC pay for the 8,280.715 metric tons which it had released on April 16 and April 19,1999 (3,764.90 metric tons which NMC had uplifted but not paid for and 4,515.815 metric tons which remained in storage).

On May 7, 1999—the stated deadline for payment—Steve Bresky, vice president of Seaboard, wrote the following letter to Glencore:

.... Seaboard Corporation, through wholly-owned subsidiaries, owns 100 percent of NMC and is fully aware of NMC's transactions with Glencore and will support NMC in the performances with these transactions. This letter shall remain in full force and effect for 30 days from the date hereof.

Defendant's Exhibit K (paragraph spacing omitted). Seaboard asserts that the purpose of this letter was to provide "soft comfort" that NMC would uplift and pay for all grain within 30 days.

On May 7, 1999, Glencore wanted to continue doing business with NMC but knew that NMC was "slipping" in its performance of some contracts. It therefore issued an amended invoice for 3,764.900 metric tons—the amount which NMC had actually uplifted between April 16 and April 30, 1999. The invoice reflected that NMC had paid $800,000.00 for the 3,764.900 metric...