Winfield Sols., LLC v. W S AG Ctr., Inc.

• Decision Date: 29 April 2019
• Docket Number: 17-cv-942-slc
• Parties: WINFIELD SOLUTIONS, LLC, Plaintiff, v. W S AG CENTER, INC., WALLACE K. GANSKE and JULIE L. GANSKE, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

WINFIELD SOLUTIONS, LLC, Plaintiff, v. W S AG CENTER, INC., WALLACE K. GANSKE and JULIE L. GANSKE, Defendants.

17-cv-942-slc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

April 29, 2019

OPINION AND ORDER

In this action arising under the court's diversity jurisdiction, plaintiff Winfield Solutions, LLC, an agricultural product supplier, has sued defendant W S AG Center, Inc. ("WSAG") and its owners, W. Kent¹ and Julie L. Ganske, seeking to collect more than $1 million in unpaid invoices and late payment fees for agricultural product delivered to and accepted by WSAG. Complaint, dkt. 1. Winfield asserts causes of action against WSAG for recovery of the balance of the purchase price due for the products and for breach of contract (Counts 1 and II), and against the Ganskes for enforcement of guaranties they executed promising to pay all amounts due under the invoices (Count III).

Winfield has moved for summary judgment, seeking an award of $1,451,535.37 in unpaid purchases and late charges due up to January 1, 2019, plus an award of additional late charges at the rate of $550.27 per day from January 1, 2019 through the date of entry of judgment. Dkt. 19. Defendants admit that WSAG owes Winfield more than $1 million plus late fees for unpaid invoices, and they can't genuinely dispute that the Ganskes are jointly liablefor the debt. Instead, they argue that WSAG is entitled to an offset equal to the value of its equity stake in two "base capital" accounts that WSAG has with Winfield. As discussed below, defendants' offset theory is not supported by either the facts or the law. Accordingly, I am granting Winfield's motion for summary judgment.

A preface to the court's findings of fact: Winfield moved for summary judgment on both liability and damages. Winfield has supported its proposed findings of fact with admissible evidence establishing the essential elements of its claims and damages. Dkts. 19, 20. In their response, WSAG and the Ganskes offer only boilerplate, general denials that fail to put into dispute Winfield's proposed facts as required by Section II D. of this court's Procedure to be Followed on Motions for Summary Judgment. Dkt. 31. Moreover, defendants did not support any of their responses with citations to admissible evidence in the record, as required by Section II E. of this court's procedure, nor did they propose their own facts.² As a result, Winfield's proposed facts are undisputed. Accord Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1313 (7^th Cir. 1995) (failure to properly contest factual assertions under local rules constitutes binding admission of those facts).

UNDISPUTED FACTS

I. WSAG's Purchases of Product from Plaintiff

Defendant W S AG Center, Inc. ("WSAG") is a Wisconsin corporation with its principal place of business located in Darlington, Wisconsin. WSAG is owned by defendants W. KentGanske and Julie Ganske. The Ganskes reside in Sun Prairie, Wisconsin and are citizens of the State of Wisconsin.

WSAG buys agricultural products for resale to farmers in Wisconsin. For many years, WSAG bought product on credit from United Suppliers, Inc., an Iowa cooperative corporation that distributes agricultural products. WSAG became an owner of the co-op and built equity through its product purchases, which it bought on credit.

Specifically, in 2006, 2009 and 2012, WSAG executed Credit Applications under which it agreed to timely pay United Suppliers' invoices or face late charges at a rate of 1.5 percent per month or 18 percent annually.³ To secure WSAG's account debt, on May 1, 2006 the Ganskes executed and delivered to United Suppliers a personal guaranty to pay all amounts due or to become due by WSAG to United Suppliers. Ledger Aff., dkt. 22, Exh. C.

In October 2015, United Suppliers partially merged with Winfield US Holdings, LLC, a holding company formed by the plaintiff in this case, Winfield Solutions, LLC ("Winfield").⁴ On March 15, 2016, the Ganskes executed another personal guaranty in which they guaranteed payment of all amounts due or to become due by WSAG to United Suppliers and/or Winfield. Ledger Aff., dkt. 22, Exh. D. On October 1, 2017, United Suppliers completed its merger with Winfield Holdings; on that same date, Winfield Holdings merged into Winfield. Thus, United Suppliers merged into and became Winfield on October 1, 2017.

WSAG continued to order product on credit from United Suppliers/Winfield after the merger, but fell behind on its payments in February 2016 and never caught up. WSAG failed to pay for $1,087,332.83 worth of certain products that it purchased from United Suppliers and Winfield between February 10, 2016 and March 8, 2017. As of January 1, 2019, the total amount of late charges on the balance due, calculated at the rate of 18% annually, is $364,202.54; late charges continue to accrue at the rate of $550.27 per day.

II. Plaintiff's Patronage Program

United Suppliers, now Winfield, offers a program by which its members, including WSAG, acquire equity, or "base capital," in the cooperative based on patronage. Patronage is tracked separately for members' purchases of crop-nutrient products (e.g. fertilizer) and crop-protection products (e.g. herbicides), and there are separate base capital accounts for crop-nutrients and crop-protection. Accumulation and payment of patronage is governed by United Suppliers' bylaws and policies issued by its board of directors.

United Suppliers distributes patronage annually either by issuing cash refunds, adding to a member's base capital accounts, or both. The amount of patronage actually paid to a member in cash versus added to the member's base capital account depends upon the amount in the member's base capital accounts. Patronage distributions are allocated to members with a balance of 0 - $50,000 in a 30/70 split, with 30 percent distributed in cash and the remaining 70 percent added to their base capital account. Members with a base capital balance between $50,001 and $249,999 receive their patronage in a 75/25 split, and members with a base capital balance of $250,000 or more are paid 100 percent of their patronage in cash. United Supplierssent Patronage Refund Summaries and Base Capital Summary Reports to WSAG each year from 2014-2016 that showed the balance in WSAG's two base capital accounts and any cash rebates earned.

Under Section 8.5 of United Suppliers' Amended and Restated Bylaws, a member who wants to redeem its base capital must provide a written notice to United Suppliers. Redemption of base capital is subject to redemption policies adopted by United Suppliers' Board of Directors. United Suppliers' last redemption policy, which was adopted by Winfield when it merged with United Suppliers in 2017, was set forth in a brochure entitled "StepCash Base Capital Program." This brochure was distributed to all of United Suppliers' members, including WSAG. Under the program, payments of qualified base capital are distributed to members requesting redemption pursuant to the following schedule:

a. Zero payments for the first two years;

b. Payments equal to 10% of the base capital during the third through sixth years;

c. Payments equal to 15% of the base capital during the seventh through ninth years; and

d. A payment equal to the balance of the base capital during the tenth year. Payments of non-qualified base capital are paid to members on the tenth year after a redemption request.

However, the bylaws permit the company's offers to accelerate the payout of any member's base capital account "[i]f in the opinion of the Management Team such acceleration is in the best interests of the Company."

WSAG has $250,000 in its crop-protection base capital account and $57,667 in its crop-nutrients base capital account. WSAG has never provided United Suppliers, Winfield or Land O'Lakes with any written redemption notice.

OPINION

I. Summary Judgment Standard

Summary judgment is proper only if the moving party can demonstrate "that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Federal Rule of Civil Procedure 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of establishing that no material facts are in genuine dispute; any doubt as to the existence of a genuine issue must be resolved against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 160 (1970). See also Lawrence v. Kenosha County, 391 F.3d 837, 841 (7th Cir. 2004). A moving party is entitled to judgment as a matter of law where the non-moving party "has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex, 477 U.S. at 323. "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. "As the 'put up or shut up' moment in a lawsuit, summary judgment requires a non-moving party to respond to the moving party's properly-supported motion by identifying specific, admissible evidence showing that there is a genuine dispute of material fact for trial." Grant v. Trustees of Indiana University, 870 F.3d 562, 568 (7^th Cir. 2017).

II. WSAG is Liable for the Balance of the Purchase Price

Winfield's first cause of action is for recovery of the price under the Uniform Commercial Code. Under the Code, "[t]he buyer must pay at the contract rate for any goods accepted." Wis. Stat. § 402.607(1). "When the buyer fails to pay the price as it becomes due the seller may recover . . . the price . . . [o]f goods accepted . . .". Wis. Stat. § 402.709(1)(a). Acceptance of goods occurs when, among other things, the buyer fails to effectively reject the goods or does any act inconsistent with the seller's ownership of the goods. Wis. Stat. § 402.606(1). Winfield's second cause of action is for breach of contract, which requires it to prove: (1) a valid contract; (2) breach of the contract by the defendant; and (3)...