W. Petroleum Co. v. Strategic Bio Energy, LLC
| Decision Date | 25 November 2013 |
| Docket Number | Civ. No. 12-2999 (PAM/TNL) |
| Parties | Western Petroleum Company, Plaintiff, v. Strategic Bio Energy, LLC, Defendant. |
| Court | United States District Courts. 8th Circuit. United States District Court of Minnesota |
This matter is before the Court on Plaintiff Western Petroleum Company's Motion for Summary Judgment on Defendant Strategic Bio Energy, LLC's counterclaims. For the reasons that follow, the Motion is granted in part and denied in part.
Plaintiff Western Petroleum Company is a Minnesota company that supplies fuel, including biodiesel, to distributors throughout the United States. Defendant Strategic Bio Energy is one such distributor, distributing ethanol and biodiesel mainly in the southeastern United States.
Western Petroleum and Strategic entered into either one or a series of oral agreements for the delivery of biodiesel by train from March through October 2012. The parties' relationship was memorialized only in "trade confirmations" generated by a third party, a broker called Progressive Fuels Limited ("PFL") that set up the dealings between Western Petroleum and Strategic. (Atmore Aff. Ex. C (Docket No. 28-1).) Western Petroleumcharacterizes each trade confirmation as a separate contract covering a specific period of time during which Western Petroleum was to deliver biodiesel to Strategic. Strategic contends that there was a single agreement requiring the periodic delivery of biodiesel over eight months.1
Western Petroleum claims in its Complaint that Strategic breached the parties' March 2012 contract by refusing to take delivery of 122,500 gallons of biodiesel it had ordered, and breached the May 2012 contract by refusing to take delivery of 1,592,500 gallons of biodiesel. Strategic counterclaimed for breach of contract, contending that Western Petroleum failed to perform its obligations under the parties' agreement(s), and for unjust enrichment.
The parties' agreement(s) required that Western Petroleum ship the biodiesel in increments throughout the month the fuel was ordered, what the parties call shipping the fuel "rateably." (See Friesen Dep. (Docket No. 28-1) at 34 ().) Because the price of the fuel fluctuated during the month but the invoice was generated at the beginning of the month, the parties agreed that they would "true-up" the invoices at the end of every month. (Oesterreich Dep. (Docket No. 28-1) at 53.) For example, if Strategic ordered 150,000 gallons of biodiesel for May, Western Petroleum's invoice would reflect the market price for that fuelas of May 1. If the price declined during the month, Western Petroleum would credit Strategic for the difference, but if the price increased, Strategic would pay the higher price. (Id.)
The difficulties between the two companies began in June 2012, when Western Petroleum's biodiesel supplier had mechanical problems and had to shut down its plant for longer than anticipated. (Edblom Dep. (Docket No. 28-1) at 21.) As a result, Western Petroleum was unable to deliver all of the biodiesel Strategic ordered for June, and had to shift the June deliveries to subsequent months. (Id. at 17.) Strategic claims that these supply issues caused one of its biggest customers, Pilot Travel Centers, to cancel its contract with Strategic, such that Strategic could not thereafter sell all of the biodiesel it had previously agreed to buy from Western Petroleum. (Friesen Dep. at 162-64.) Western Petroleum contends that the parties resolved the supply-delay issue by later agreeing to reduce by 25 rail cars the amount of biodiesel Strategic would purchase from Western Petroleum. (Atmore Aff. (Docket No. 28) Ex. G.) Western Petroleum also argues that Pilot cancelled its contract with Strategic because of price, not because of supply issues, and that Pilot decided to cancel the contract in April, two months before any supply issues arose. (Dobbins Aff. ¶ 9.)
In addition, the original agreement(s) provided that Strategic would buy the renewable identification numbers, or RINs, that came with the biodiesel. (Atmore Aff. Ex C.) RINs have value independent of the fuel itself and are often bought and sold separate from the fuel. According to Strategic, Western Petroleum began withholding the RINs from its deliveries in August 2012 and at the same time the market for RINs started declining, causing Strategicto lose money because of the delay in providing the RINs. (Answer ¶ 3.) The parties thereafter agreed that Western Petroleum would purchase the RINs back from Strategic for a certain price that was above market value at the time of the agreement, but allegedly less than the market value of the RINs in August 2012. (Friesen Dep. at 135-36.) Western Petroleum contends that this agreement constituted an accord and satisfaction for all of Strategic's claims, or at least any claim Strategic had arising out of the alleged failure to supply RINs. Strategic disputes that the RINs purchase agreement satisfied any of its claims against Western Petroleum.
Finally, Strategic claims that Western Petroleum refused to true-up invoices in July and after, thus depriving Strategic of $400,000 worth of credit. (Friesen Dep. at 90.) Strategic also contends that Western Petroleum refused to credit Strategic for $600,000 in tax credits it received from the state of Georgia. (Id. at 97-99.)
Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The Court must view the evidence and inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). However, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of everyaction." Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).
The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 323; Enter. Bank, 92 F.3d at 747. A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials, but must set forth specific facts in the record showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
Western Petroleum contends that Minnesota law should apply to the parties' dispute. Strategic does not take issue with that contention, but the parties cite both Minnesota and Georgia law to support their arguments. Because they seem to agree that there is no substantial difference between the two states' laws as applied to the facts of this case, the Court will rely on Minnesota law in its discussion below.
Many of Western Petroleum's contentions in this Motion depend on discounting or disbelieving the deposition testimony of Von Friesen, Strategic's owner. Western Petroleum contends that e-mail exchanges belie Friesen's testimony with respect to many of Strategic's claims. But e-mails are almost inherently ambiguous, and Friesen's testimony is his understanding of those e-mail exchanges. The fact that his understanding differs from Western Petroleum's understanding is not a reason to disregard Friesen's testimony and does not render that testimony inadmissibly contradictory. Rather, the differences between his and Western Petroleum's understanding is a factual dispute that is not appropriately resolved ona motion for summary judgment.
Western Petroleum's first argument is that, by continuing to take delivery under the contracts and continuing to pay the amounts due under the contract for June delivery, Strategic has waived any claim for breach of the contract. Strategic argues that the issue of waiver is one of fact that the Court cannot resolve on a motion for summary judgment.
While waiver is at times a factual issue, at other times the waiver is so clear and unambiguous that courts have resolved the issue as a matter of law. For example, the Minnesota Court of Appeals found that an employee who signed a document acknowledging a non-compete covenant and agreeing to be bound by it could not thereafter claim that his former employer had first breached the contract, thereby releasing him from the non-compete. Creative Commc'n Consultants, Inc. v. Gaylord, 403 N.W.2d 654, 657 (Minn. Ct. App. 1987). Similarly, a company that had agreed to purchase Vikings tickets pursuant to a statute that was subsequently repealed could not as a matter of law prevail on its claim that the repeal constituted a breach of its agreement to purchase when the company had, for years after the repeal, continued to operate under the agreement and had indicated in writing its belief that the statute's repeal did not affect its purchase obligations under the agreement. Metro. Sports Facilities Comm'n v. Gen'l Mills, Inc., 460 N.W.2d 625, 630 (Minn. Ct. App. 1990).
Here, however, the evidence is more equivocal than in the cases discussed above. Strategic continued to accept deliveries of biodiesel and continued to pay amounts due, but throughout August, September, and October, the e-mail exchanges indicate disputes as to how much biodiesel should be shipped, how much Western Petroleum was owed, and what credits Western Petroleum should be giving to Strategic. This is not an unequivocal waiver of Strategic's claim of breach, and a jury must determine whether Strategic in fact intended to waive Western Petroleum's alleged breaches. Western Petroleum's Motion on this point is denied.
Western Petroleum also contends that the evidence establishes that Pilot...
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