1020-00005 · Greenfield Agricultural Partners · Case Management

case-management-conference-statement.docx DOCUMENT Litigation

1 / 37 → ✕

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION

PLAINTIFF'S CASE MANAGEMENT CONFERENCE STATEMENT

Plaintiff Greenfield Agricultural Partners LLC ("GAP"), by and through its attorneys, Calderwood & Harkness LLP, 225 West Wacker Drive, Suite 4000, Chicago, Illinois 60606, respectfully submits this Case Management Conference Statement pursuant to the Court's standing order on case management procedures and Illinois Supreme Court Rules, in advance of the mandatory Case Management Conference scheduled for September 12, 2022, before the Honorable Patricia Delacroix, and states as follows:

I. INTRODUCTION

This Case Management Conference Statement is submitted by Plaintiff Greenfield Agricultural Partners LLC ("GAP"), by and through its attorneys, Calderwood & Harkness LLP, pursuant to the Court's standing order and Illinois Supreme Court Rules governing case management procedures, in advance of the mandatory Case Management Conference scheduled for September 12, 2022, before the Honorable Patricia Delacroix. GAP submits this Statement to advise the Court of the nature of this action, the status of the pleadings, the parties' discovery needs, and a proposed schedule for the orderly and efficient resolution of this matter.

This is a breach-of-contract collection action arising from Defendant Prairie Basin Grain Co.'s ("PBGC") failure to pay approximately $4,870,050.00 in principal, plus accrued interest, owed under a Master Grain Purchase and Off-Take Agreement dated March 15, 2019 (the "Off-Take Agreement"), and from Defendant Darren K. Musgrave's ("Musgrave") liability under a limited personal guaranty executed in connection therewith (the "Musgrave Guaranty"). As set forth in greater detail below, the claims in this case are straightforward and arise from PBGC's failure to pay for grain that GAP delivered and PBGC accepted under the express terms of the Off-Take Agreement. The Court has already struck two of Defendants' three affirmative defenses, leaving only a failure-to-mitigate defense for resolution. GAP respectfully requests the entry of a case management order providing for an efficient discovery schedule and prompt resolution of this matter.

II. NATURE OF THE CASE

This is a commercial collection action involving the purchase and sale of agricultural commodities—specifically, #2 Yellow Corn and #1 Yellow Soybeans—under a multi-year forward-contract off-take agreement between GAP and PBGC. The case arises from PBGC's failure to pay for grain commodities delivered to and accepted by PBGC at its elevator facilities in central Illinois during the period from the third quarter of 2021 through the first quarter of 2022.

Plaintiff Greenfield Agricultural Partners LLC. GAP is a Delaware limited liability company headquartered at 1400 Grand Prairie Boulevard, Suite 800, Des Moines, Iowa 50309. GAP is engaged in large-scale grain origination, commodity trading, agricultural chemicals, and crop input supply across the Midwest. GAP maintains grain origination and trading operations in Iowa, Illinois, Indiana, Ohio, Minnesota, and Nebraska, and transacts business with grain elevators, cooperatives, ethanol plants, and end-users throughout the region. GAP's annual revenue for fiscal year 2021 was approximately $620 million. GAP is a sophisticated participant in the agricultural commodity markets and entered into the Off-Take Agreement with PBGC in the ordinary course of its business.

Defendant Prairie Basin Grain Co. PBGC is an Illinois corporation with its principal office at 4520 Harvest Road, Champaign, Illinois 61820. PBGC operates as a regional grain elevator operator, off-taker, and merchandiser serving central Illinois. PBGC owns and operates six grain elevator facilities located across Champaign, Macon, and Piatt Counties, Illinois. PBGC's business involves the receipt, storage, conditioning, and merchandising of corn, soybeans, and wheat sourced from local producers and upstream suppliers, including GAP. PBGC was, at the time the Off-Take Agreement was executed, a creditworthy counterparty with established banking and trade relationships in the region.

Defendant Darren K. Musgrave. Musgrave is the President, sole director, and 72% shareholder of PBGC, residing at 1188 Windermere Lane, Champaign, Illinois 61822. Musgrave is the controlling principal of PBGC and, in his capacity as such, negotiated and executed the Off-Take Agreement on behalf of PBGC. In addition, Musgrave executed a limited personal guaranty of PBGC's payment obligations under the Off-Take Agreement, capped at $2,000,000 (the "Musgrave Guaranty"), which was attached as Exhibit D to the Off-Take Agreement. Musgrave executed the Guaranty as a condition of GAP's agreement to enter into the Off-Take Agreement with PBGC.

III. SUMMARY OF CLAIMS

GAP's Verified Complaint, filed on May 9, 2022, sets forth four counts, as summarized below.

A. Count I — Breach of Contract (Off-Take Agreement) against PBGC

Count I alleges that PBGC breached the Off-Take Agreement by failing to pay for grain commodities delivered to and accepted by PBGC during the period from September 2021 through January 2022.

The Off-Take Agreement was executed on March 15, 2019, for a five-year term commencing on March 15, 2019 and expiring on March 14, 2024. Under the Off-Take Agreement, PBGC agreed to purchase specified minimum quantities of grain from GAP in each contract year: specifically, 1,200,000 bushels of #2 Yellow Corn and 600,000 bushels of #1 Yellow Soybeans per contract year, on a forward-contract basis. The grain was to be delivered by GAP to PBGC's elevator facilities located in Champaign, Macon, and Piatt Counties, Illinois, in accordance with delivery schedules established quarterly by agreement of the parties.

Pricing under the Off-Take Agreement was based on the Chicago Board of Trade ("CBOT") nearby futures price at the time of delivery, plus or minus a negotiated basis differential set on a quarterly basis, as detailed in Exhibit B to the Off-Take Agreement. Payment terms under the Off-Take Agreement required PBGC to remit full payment within thirty (30) days from the date of delivery and acceptance of the grain at the designated elevator facility (i.e., Net 30 days). Section 7.3 of the Off-Take Agreement provides for late payment interest at a rate of 1.5% per month (18% per annum) on any overdue amounts, calculated from the applicable due date until the date of payment.

GAP performed its obligations under the Off-Take Agreement and delivered grain to PBGC from the third quarter of 2021 through the first quarter of 2022. PBGC accepted delivery of the grain at its elevator facilities without objection. However, PBGC failed to pay five invoices issued by GAP in connection with these deliveries, totaling $4,870,050.00 in principal, as set forth in the following table:

Each of these invoices was issued by GAP to PBGC in the ordinary course of business, and each was accompanied by the applicable delivery tickets, weight certificates, and grade certifications reflecting PBGC's acceptance of the delivered grain. PBGC has made no payment on any of these invoices, and no partial payments have been received.

Accordingly, GAP seeks judgment against PBGC for the full principal amount of $4,870,050.00, plus contractual interest at 1.5% per month accruing from each invoice's respective due date through the date of judgment, plus reasonable attorneys' fees and costs pursuant to Section 12.4 of the Off-Take Agreement, which provides that the prevailing party in any action to enforce the Agreement shall be entitled to recover its reasonable attorneys' fees and litigation costs from the non-prevailing party.

B. Count II — Breach of Personal Guaranty against Darren K. Musgrave

Count II alleges that Musgrave is liable to GAP under the Musgrave Guaranty for PBGC's failure to pay amounts owed under the Off-Take Agreement. As noted above, Musgrave executed a limited personal guaranty (the Musgrave Guaranty, attached as Exhibit D to the Off-Take Agreement) pursuant to which Musgrave personally and unconditionally guaranteed PBGC's payment obligations under the Off-Take Agreement, up to a maximum aggregate amount of $2,000,000. The Musgrave Guaranty provides that it is a guaranty of payment, not merely of collection, and that GAP may proceed directly against Musgrave upon PBGC's default without first exhausting remedies against PBGC.

PBGC has defaulted on its payment obligations under the Off-Take Agreement. GAP has demanded payment from both PBGC and Musgrave. Musgrave has failed to honor his obligations under the Musgrave Guaranty. Accordingly, GAP seeks judgment against Musgrave individually in an amount up to $2,000,000, representing his maximum liability under the Guaranty. GAP notes that any recovery from Musgrave under Count II is not additive to the contract damages sought under Count I; rather, the Musgrave Guaranty constitutes a component of GAP's overall recovery of amounts owed by PBGC.

C. Count III — Account Stated against PBGC

Count III alleges an account stated against PBGC. Following PBGC's receipt of the five unpaid invoices, PBGC retained the invoices without objection and did not dispute the amounts stated therein. Moreover, PBGC's President, Darren K. Musgrave, acknowledged the debt in writing in a February 3, 2022 email to GAP's Senior Vice President of Grain Trading, in which Musgrave acknowledged the outstanding balance, requested forbearance, and stated that PBGC intended to satisfy the obligations once its insurance claim was resolved. PBGC's receipt, retention, and failure to object to the invoices, together with Musgrave's written acknowledgment of the debt, establish an account stated under Illinois law.

GAP seeks the full principal amount of $4,870,050.00, plus interest, on Count III.

D. Count IV — Unjust Enrichment (Alternative) against PBGC

Count IV is pleaded in the alternative to Count I. In the event the Court were to determine that the Off-Take Agreement is unenforceable for any reason, GAP alleges that PBGC was unjustly enriched by receiving and accepting delivery of 625,000 bushels of grain (consisting of 150,000 + 75,000 + 200,000 + 120,000 + 80,000 bushels of corn and soybeans) without making payment therefor. PBGC received a benefit—the grain commodities—at GAP's expense, and it would be unjust for PBGC to retain the benefit of these commodities without compensating GAP for their fair market value.

GAP seeks restitution in the amount of $4,870,050.00 on Count IV.

IV. DAMAGES SOUGHT

The damages sought by GAP in this action are as follows:

1. Total principal outstanding: $4,870,050.00, representing the aggregate unpaid balance of the five invoices described in Section III.A above.

2. Accrued contractual interest through May 9, 2022 (date of filing): Approximately $345,992.00, calculated at the contractual rate of 1.5% per month (18% per annum) from each invoice's respective due date through the date the Complaint was filed.

3. Total claimed at filing: Approximately $5,216,042.00.

4. Continuing interest accrual: Interest continues to accrue at the contractual rate of 1.5% per month on the total outstanding principal balance of $4,870,050.00, resulting in monthly interest accrual of approximately $73,050.75. Accordingly, the total damages as of the date of this Statement (September 12, 2022) exceed $5,216,042.00 and continue to increase with each passing month.

5. Reasonable attorneys' fees and costs: GAP seeks an award of its reasonable attorneys' fees and litigation costs incurred in prosecuting this action, pursuant to Section 12.4 of the Off-Take Agreement (prevailing-party fee provision).

6. Pre- and post-judgment interest: GAP seeks pre-judgment interest at the contractual rate of 1.5% per month and post-judgment interest as allowed by law.

7. Count II (Musgrave Guaranty): On Count II, GAP seeks recovery of up to $2,000,000 from Musgrave individually under the Musgrave Guaranty. This amount is not additive to the contract damages sought under Counts I and III; rather, it constitutes a component of GAP's overall recovery of the amounts owed by PBGC under the Off-Take Agreement.

V. STATUS OF PLEADINGS

A. Complaint. GAP filed its four-count Verified Complaint on May 9, 2022, initiating this action. The Complaint sets forth the four counts described in Section III above.

B. Service of Process

Service of process was completed on both Defendants on May 24, 2022, as follows:

• PBGC: Service was effected upon PBGC through its registered agent, Ridgeline Corporate Services LLC, at 77 West Washington Street, Suite 1420, Chicago, Illinois 60602, on May 24, 2022.

• Darren K. Musgrave: Personal service was completed upon Musgrave at his residence, 1188 Windermere Lane, Champaign, Illinois 61822, on May 24, 2022.

Proofs of service for both Defendants were filed with the Court.

C. Answer and Affirmative Defenses

PBGC and Musgrave, through their counsel, Bartlett, Reyes Linley CPAs LLP & Harkin LLP (Douglas M. Harkin, lead partner; Nadia C. Petrov, associate), filed a joint Answer and Affirmative Defenses on June 27, 2022. In their Answer, Defendants admitted the existence and execution of the Off-Take Agreement and the Musgrave Guaranty, but denied liability. Defendants asserted three affirmative defenses: (1) force majeure, based on the October 17, 2021 fire at PBGC's Macon County elevator facility, which Defendants contended excused PBGC's performance under the Off-Take Agreement; (2) commercial impracticability, based on the allegedly unforeseeable disruption to PBGC's operations caused by the fire; and (3) failure to mitigate damages, alleging that GAP failed to take reasonable steps to resell or otherwise dispose of the grain that PBGC did not pay for.

D. Motion to Strike Affirmative Defenses and August 22, 2022 Ruling

On July 15, 2022, GAP filed a Motion to Strike Defendants' Affirmative Defenses, supported by a memorandum of law. In its Motion, GAP argued as follows:

(1) Force Majeure (First Affirmative Defense): The force majeure clause in the Off-Take Agreement (Section 9.1) does not excuse payment obligations. By its express terms, the force majeure provision applies only to obligations of delivery and acceptance, and specifically provides that "[n]o event of Force Majeure shall excuse or suspend any obligation to make payment when due under this Agreement." Moreover, the October 17, 2021 fire at PBGC's Macon County elevator facility affected only one of PBGC's six elevator facilities and did not prevent PBGC from accepting or paying for grain delivered to its other facilities in Champaign and Piatt Counties. Each of the five unpaid invoices relates to grain that was in fact delivered to and accepted by PBGC at facilities other than the Macon County facility.

(2) Commercial Impracticability (Second Affirmative Defense): Commercial impracticability under Illinois law requires a showing of objective impossibility, not mere financial difficulty or inability to pay. See Kel-Keef Enterprises, Inc. v. Quality Components Corp., 316 Ill. App. 3d 1011, 1018 (1st Dist. 2000). PBGC's alleged financial difficulties, including losses arising from the fire and purported hedging losses, do not render performance of a payment obligation objectively impossible. Financial inability to pay a contractual obligation is not a recognized basis for the defense of commercial impracticability under Illinois law.

(3) Failure to Mitigate (Third Affirmative Defense): GAP acknowledged in its Motion that the failure-to-mitigate defense, while GAP believes it lacks factual support, was sufficiently pleaded to survive a motion to strike.

PBGC filed an opposition to the Motion to Strike on August 1, 2022. GAP filed a reply brief on August 8, 2022.

On August 22, 2022, the Court (Hon. Patricia Delacroix, J.) granted GAP's Motion to Strike with respect to the force majeure and commercial impracticability affirmative defenses. The Court found that the force majeure clause in the Off-Take Agreement unambiguously does not excuse payment obligations and that PBGC's alleged financial difficulties do not satisfy the objective impossibility standard required for commercial impracticability under Illinois law. The Court denied the Motion to Strike with respect to the failure-to-mitigate defense, allowing that defense to survive.

As a result of the Court's August 22, 2022 ruling, the sole remaining affirmative defense in this case is Defendants' claim that GAP failed to mitigate its damages.

E. No Counterclaims or Third-Party Claims

Defendants have not asserted any counterclaims, crossclaims, or third-party claims in this action. The deadline for asserting compulsory counterclaims has passed.

VI. PARTIES AND COUNSEL

A. Plaintiff. Greenfield Agricultural Partners LLC 1400 Grand Prairie Boulevard, Suite 800 Des Moines, Iowa 50309

Counsel for Plaintiff:

Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606

• Francesca Morano, Responsible Partner

• Samuel Eklund, Billing Partner

• Hannah Brinkley, Lead Associate

• Patrick Gallagher, Working Associate

B. Defendants. Prairie Basin Grain Co. 4520 Harvest Road Champaign, Illinois 61820

Darren K. Musgrave, individually 1188 Windermere Lane Champaign, Illinois 61822

Counsel for Defendants:

Bartlett, Reyes Linley CPAs LLP & Harkin LLP 200 North LaSalle Street, Suite 2500 Chicago, Illinois 60601

• Douglas M. Harkin, Lead Partner

• Nadia C. Petrov, Associate

VII. RELATED CASES

Plaintiff is not aware of any related cases pending before this Court or any other court in which GAP is a party that would affect the management or resolution of this matter.

Plaintiff is aware that PBGC's property insurer, Triton Mutual Insurance Co., is involved in a separate insurance coverage dispute with PBGC relating to the October 17, 2021 fire at PBGC's Macon County elevator facility. GAP understands that the estimated loss from the fire is approximately $3.2 million and that PBGC and Triton Mutual are in dispute over the scope of coverage. However, GAP is not a party to that action, and that insurance coverage dispute does not bear directly on this collection matter. GAP notes the existence of that dispute solely because it may be relevant to PBGC's financial condition and its ability to satisfy a judgment in this case.

VIII. PROPOSED DISCOVERY PLAN AND SCHEDULE

A. Written discovery

GAP proposes to serve its First Set of Interrogatories and First Request for Production of Documents on PBGC within approximately two weeks of this Case Management Conference, with a target service date on or before September 30, 2022. GAP's initial written discovery will be directed primarily at PBGC, as the contracting party and the entity with custody and control of the relevant business records.

In addition, GAP intends to serve Requests for Admission directed to PBGC regarding the authenticity and execution of the Off-Take Agreement and the Musgrave Guaranty, the issuance and receipt of each of the five unpaid invoices, the delivery and acceptance of the grain covered by those invoices, and the amounts owed thereunder. GAP's target date for service of Requests for Admission is on or before mid-October 2022.

GAP's discovery will focus on the following categories of information:

(a) PBGC's financial condition and assets, including current assets, receivables, inventory, real property, and other assets relevant to the enforcement and collection of any judgment;

(b) The factual basis, if any, for Defendants' surviving failure-to-mitigate affirmative defense, including any evidence that GAP could have taken reasonable steps to avoid or reduce its losses;

(c) PBGC's communications with its primary lender, Heartland Prairie Bank, N.A. (Decatur, Illinois), regarding PBGC's financial condition, the default under PBGC's credit facility, and any restructuring or workout discussions;

(d) PBGC's insurance claims relating to the October 17, 2021 fire at its Macon County elevator facility, including the status and amount of any insurance recovery; and

(e) PBGC's hedging activities and any hedging losses sustained in the fourth quarter of 2021, to the extent such losses bear on PBGC's financial condition and ability to satisfy a judgment.

GAP also anticipates serving targeted written discovery on Defendant Musgrave individually regarding his financial condition and assets, given his personal liability under the Musgrave Guaranty.

B. Depositions. GAP anticipates taking the depositions of the following individuals:

(1) Darren K. Musgrave — President of PBGC and personal guarantor. Mr. Musgrave's deposition will address PBGC's financial condition, the circumstances of non-payment, PBGC's operations following the October 2021 fire, the factual basis for the failure-to-mitigate defense, and Mr. Musgrave's personal financial condition as relevant to his liability under the Guaranty.

(2) Lydia R. Musgrave — Secretary and Treasurer of PBGC. Ms. Musgrave's deposition will address PBGC's financial records, accounts payable, and financial condition during the relevant period.

(3) Victor P. Novotny — Vice President of Operations of PBGC. Mr. Novotny's deposition will address PBGC's grain receipt and handling operations, the delivery and acceptance of the grain covered by the unpaid invoices, and operational matters relevant to the failure-to-mitigate defense.

GAP may also seek a deposition of PBGC's corporate designee under Illinois Supreme Court Rule 206(a)(1), to the extent that PBGC's individual witnesses are unable to provide testimony on topics that require designation of a corporate representative.

GAP does not anticipate that more than four to five depositions will be required in this matter.

C. Expert discovery

GAP does not anticipate the need for expert witnesses at this time. This case primarily involves the enforcement of a written contract and the calculation of liquidated damages consisting of principal amounts owed and contractual interest. The terms of the Off-Take Agreement, the invoices, and the delivery records speak for themselves.

However, if Defendants' failure-to-mitigate defense necessitates expert testimony regarding commodity market conditions during the relevant period, the availability of alternative buyers for the grain at issue, or the alternative disposition of grain, GAP reserves the right to designate one or more expert witnesses. GAP will advise the Court and opposing counsel promptly if it determines that expert testimony is necessary.

D. Proposed Schedule

GAP respectfully proposes the following discovery and case management schedule:

GAP anticipates filing a motion for summary judgment on Counts I, II, and III following the close of discovery, provided that discovery confirms the absence of genuine issues of material fact. Given the Court's August 22, 2022 ruling striking two of Defendants' three affirmative defenses, the issues remaining for disposition are narrow and well-suited to summary adjudication.

IX. SETTLEMENT AND ALTERNATIVE DISPUTE RESOLUTION

The Off-Take Agreement does not contain a mandatory arbitration clause or a mandatory mediation clause. Dispute resolution is governed by Section 13.1 of the Off-Take Agreement, which provides for exclusive jurisdiction in the courts of Cook County, Illinois, or the United States District Court for the Northern District of Illinois. The parties have not entered into any separate agreement to arbitrate or mediate the disputes at issue in this case.

Prior to filing suit, GAP engaged in the following efforts to resolve this matter:

• On February 3, 2022, PBGC's principal, Darren K. Musgrave, acknowledged the outstanding debt in an email to GAP's Senior Vice President of Grain Trading. In that email, Musgrave did not dispute the amounts owed and requested forbearance, stating that PBGC was experiencing cash-flow difficulties related to the October 2021 fire and hedging losses.

• GAP, in a good-faith effort to work with PBGC, granted PBGC a conditional 60-day forbearance, conditioned upon PBGC's payment of the oldest outstanding invoice, Invoice No. GAP-2021-3187, in the amount of $892,500.00, on or before March 1, 2022.

• PBGC failed to satisfy the condition of the forbearance by making payment of Invoice No. GAP-2021-3187 by March 1, 2022.

• On April 11, 2022, GAP made a formal pre-suit demand for full payment of all outstanding amounts owed under the Off-Take Agreement. That demand went unanswered.

GAP is open to reasonable settlement discussions and remains willing to engage in good-faith negotiations with Defendants regarding resolution of this matter. However, GAP notes that PBGC has made no settlement overture to date, and Defendants have not proposed any payment plan, partial payment, or other resolution since the commencement of this action.

GAP does not object to participation in a settlement conference if the Court believes such a conference would be productive and directs the parties to attend one. However, GAP does not believe that this case warrants referral to mandatory mediation at this time. The claims are straightforward collection claims based on express written contracts and documented deliveries. The principal amount owed is undisputed (indeed, Musgrave acknowledged the debt in writing), and the Court has already struck two of Defendants' three affirmative defenses. GAP respectfully submits that the most efficient path to resolution is through the discovery and dispositive motion process outlined herein.

X. ESTIMATED LENGTH OF TRIAL

GAP estimates that trial, if necessary, would require approximately three (3) to five (5) days for a bench trial. The case involves primarily documentary evidence, including the Off-Take Agreement and its exhibits, the five unpaid invoices, delivery tickets, weight certificates, grade certifications, correspondence between the parties, and Musgrave's February 3, 2022 email. The number of fact witnesses is limited, and GAP does not presently anticipate the need for expert testimony.

GAP requests a bench trial. Plaintiff has not demanded a jury trial, and Defendants' Answer did not include a jury demand. Accordingly, GAP understands that this matter is set for a bench trial before the Court.

XI. OTHER MATTERS FOR THE COURT'S ATTENTION

GAP respectfully brings the following additional matters to the Court's attention, as they are relevant to the efficient management and resolution of this case:

Suspension of Deliveries. GAP suspended further deliveries under the Off-Take Agreement on March 8, 2022, pursuant to Section 8.2 of the Off-Take Agreement (Adequate Assurance of Performance). Section 8.2 provides that, upon the occurrence of an event giving rise to reasonable grounds for insecurity regarding the other party's ability to perform, the insecure party may demand in writing adequate assurance of due performance and may, if commercially reasonable, suspend its own performance until such assurance is received. GAP demanded adequate assurance of performance from PBGC on February 10, 2022. PBGC failed to provide adequate assurance, and also failed to make the required partial payment of Invoice No. GAP-2021-3187 by March 1, 2022, as required under the conditional forbearance. GAP accordingly suspended all further deliveries under the Off-Take Agreement on March 8, 2022, and has made no further deliveries since that date.

PBGC's Financial Difficulties. GAP is aware of PBGC's ongoing and significant financial difficulties, which underscore the importance of efficient case management and prompt resolution of this matter. These difficulties include, but are not limited to, the following:

(a) The October 17, 2021 fire at PBGC's Macon County elevator facility, located at 2200 County Road 1400 East, Decatur, Illinois 62521. The fire resulted in the destruction of a substantial portion of the Macon County facility, with an estimated loss of approximately $3.2 million. As noted in Section VII above, PBGC is involved in a disputed insurance coverage claim with Triton Mutual Insurance Co. regarding this loss, and the outcome and timing of any insurance recovery remain uncertain.

(b) Reports of significant hedging losses sustained by PBGC in the fourth quarter of 2021, which are believed to have further impaired PBGC's cash position and overall financial condition.

(c) PBGC's primary lender, Heartland Prairie Bank, N.A. (Decatur, Illinois), declared PBGC in default under its Revolving Credit and Term Loan Agreement in approximately April 2022. GAP understands that the outstanding balance under PBGC's credit facility with Heartland Prairie Bank is approximately $31.4 million. The status of PBGC's relationship with its lender—including whether Heartland Prairie Bank has exercised or intends to exercise remedies under the credit facility, whether a forbearance or workout agreement is in place, or whether a receivership or other enforcement proceeding is contemplated—is unknown to GAP at this time and will be a subject of GAP's discovery.

GAP acknowledges that the status of PBGC's relationship with its lender and the outcome of PBGC's insurance dispute may affect the practical collectability of any judgment obtained in this action. However, these matters do not bear on PBGC's liability or Musgrave's liability under the Guaranty, and they should not be permitted to delay the resolution of this case. To the contrary, PBGC's financial difficulties make prompt adjudication all the more important, as delay may further impair GAP's ability to recover the amounts owed.

GAP respectfully requests that the Court set a firm discovery schedule with clear deadlines and establish a timeline conducive to the efficient resolution of this matter, including a dispositive motion deadline that will permit GAP to seek summary judgment on Counts I, II, and III at the earliest practicable date.

XII. CONCLUSION

For the foregoing reasons, Plaintiff Greenfield Agricultural Partners LLC respectfully submits this Case Management Conference Statement and requests that the Court enter a case management order consistent with the proposed schedule set forth in Section VIII.D above. GAP is prepared to discuss any of the matters addressed herein with the Court and opposing counsel at the Case Management Conference and to cooperate in the formulation of a case management order that will facilitate the orderly, efficient, and just resolution of this action.

Respectfully submitted,

GREENFIELD AGRICULTURAL PARTNERS LLC, Plaintiff,

By its attorneys,

CALDERWOOD & HARKNESS LLP

By: ________

Hannah Brinkley, Lead Associate Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606 Telephone: (312) 555-7200

Email: hbrinkley@calderwoodharkness.com

Of Counsel:

Francesca Morano, Responsible Partner Samuel Eklund Patrick Gallagher Calderwood & Harkness LLP

CERTIFICATE OF SERVICE

The undersigned, an attorney, hereby certifies that on September 12, 2022, a true and correct copy of the foregoing Plaintiff's Case Management Conference Statement was served upon counsel for Defendants via the Court's electronic filing system and via email, addressed to:

Douglas M. Harkin Nadia C. Petrov Bartlett, Reyes Linley CPAs LLP & Harkin LLP 200 North LaSalle Street, Suite 2500 Chicago, Illinois 60601 dharkin@bartlettcroweharkin.com npetrov@bartlettcroweharkin.com

________________________________________

Hannah Brinkley

GREENFIELD AGRICULTURAL PARTNERS LLC, a Delaware limited liability company,

Plaintiff,

v.	Case No. 2022-L-004831
PRAIRIE BASIN GRAIN CO., an Illinois corporation, and DARREN K. MUSGRAVE, individually,	Hon. Patricia Delacroix

Defendants.

Invoice No.	Date	Commodity	Bushels	Amount	Due Date
GAP-2021-3187	09/28/2021	#2 Yellow Corn	150,000	$892,500.00	10/28/2021
GAP-2021-3244	10/15/2021	#1 Yellow Soybeans	75,000	$936,750.00	11/14/2021
GAP-2021-3301	11/12/2021	#2 Yellow Corn	200,000	$1,224,000.00	12/12/2021
GAP-2021-3358	12/08/2021	#2 Yellow Corn	120,000	$741,600.00	01/07/2022
GAP-2022-0042	01/19/2022	#1 Yellow Soybeans	80,000	$1,075,200.00	02/18/2022
Event	Proposed Deadline
Completion of fact discovery	120 days from the date of this conference (approximately January 10, 2023)
Expert disclosure and reports (if any)	30 days following close of fact discovery (approximately February 9, 2023)
Rebuttal expert disclosure and reports (if any)	30 days following initial expert disclosure (approximately March 11, 2023)
Completion of all expert discovery	60 days following close of fact discovery (approximately March 11, 2023)
Dispositive motions deadline	30 days following close of all discovery (approximately April 10, 2023)

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION
PLAINTIFF'S CASE MANAGEMENT CONFERENCE STATEMENT
Plaintiff Greenfield Agricultural Partners LLC ("GAP"), by and through its attorneys, Calderwood & Harkness LLP, 225 West Wacker Drive, Suite 4000, Chicago, Illinois 60606, respectfully submits this Case Management Conference Statement pursuant to the Court's standing order on case management procedures and Illinois Supreme Court Rules, in advance of the mandatory Case Management Conference scheduled for September 12, 2022, before the Honorable Patricia Delacroix, and states as follows:
I. INTRODUCTION
This Case Management Conference Statement is submitted by Plaintiff Greenfield Agricultural Partners LLC ("GAP"), by and through its attorneys, Calderwood & Harkness LLP, pursuant to the Court's standing order and Illinois Supreme Court Rules governing case management procedures, in advance of the mandatory Case Management Conference scheduled for September 12, 2022, before the Honorable Patricia Delacroix. GAP submits this Statement to advise the Court of the nature of this action, the status of the pleadings, the parties' discovery needs, and a proposed schedule for the orderly and efficient resolution of this matter.
This is a breach-of-contract collection action arising from Defendant Prairie Basin Grain Co.'s ("PBGC") failure to pay approximately $4,870,050.00 in principal, plus accrued interest, owed under a Master Grain Purchase and Off-Take Agreement dated March 15, 2019 (the "Off-Take Agreement"), and from Defendant Darren K. Musgrave's ("Musgrave") liability under a limited personal guaranty executed in connection therewith (the "Musgrave Guaranty"). As set forth in greater detail below, the claims in this case are straightforward and arise from PBGC's failure to pay for grain that GAP delivered and PBGC accepted under the express terms of the Off-Take Agreement. The Court has already struck two of Defendants' three affirmative defenses, leaving only a failure-to-mitigate defense for resolution. GAP respectfully requests the entry of a case management order providing for an efficient discovery schedule and prompt resolution of this matter.
II. NATURE OF THE CASE
This is a commercial collection action involving the purchase and sale of agricultural commodities—specifically, #2 Yellow Corn and #1 Yellow Soybeans—under a multi-year forward-contract off-take agreement between GAP and PBGC. The case arises from PBGC's failure to pay for grain commodities delivered to and accepted by PBGC at its elevator facilities in central Illinois during the period from the third quarter of 2021 through the first quarter of 2022.
Plaintiff Greenfield Agricultural Partners LLC. GAP is a Delaware limited liability company headquartered at 1400 Grand Prairie Boulevard, Suite 800, Des Moines, Iowa 50309. GAP is engaged in large-scale grain origination, commodity trading, agricultural chemicals, and crop input supply across the Midwest. GAP maintains grain origination and trading operations in Iowa, Illinois, Indiana, Ohio, Minnesota, and Nebraska, and transacts business with grain elevators, cooperatives, ethanol plants, and end-users throughout the region. GAP's annual revenue for fiscal year 2021 was approximately $620 million. GAP is a sophisticated participant in the agricultural commodity markets and entered into the Off-Take Agreement with PBGC in the ordinary course of its business.
Defendant Prairie Basin Grain Co. PBGC is an Illinois corporation with its principal office at 4520 Harvest Road, Champaign, Illinois 61820. PBGC operates as a regional grain elevator operator, off-taker, and merchandiser serving central Illinois. PBGC owns and operates six grain elevator facilities located across Champaign, Macon, and Piatt Counties, Illinois. PBGC's business involves the receipt, storage, conditioning, and merchandising of corn, soybeans, and wheat sourced from local producers and upstream suppliers, including GAP. PBGC was, at the time the Off-Take Agreement was executed, a creditworthy counterparty with established banking and trade relationships in the region.
Defendant Darren K. Musgrave. Musgrave is the President, sole director, and 72% shareholder of PBGC, residing at 1188 Windermere Lane, Champaign, Illinois 61822. Musgrave is the controlling principal of PBGC and, in his capacity as such, negotiated and executed the Off-Take Agreement on behalf of PBGC. In addition, Musgrave executed a limited personal guaranty of PBGC's payment obligations under the Off-Take Agreement, capped at $2,000,000 (the "Musgrave Guaranty"), which was attached as Exhibit D to the Off-Take Agreement. Musgrave executed the Guaranty as a condition of GAP's agreement to enter into the Off-Take Agreement with PBGC.
III. SUMMARY OF CLAIMS
GAP's Verified Complaint, filed on May 9, 2022, sets forth four counts, as summarized below.
A. Count I — Breach of Contract (Off-Take Agreement) against PBGC
Count I alleges that PBGC breached the Off-Take Agreement by failing to pay for grain commodities delivered to and accepted by PBGC during the period from September 2021 through January 2022.
The Off-Take Agreement was executed on March 15, 2019, for a five-year term commencing on March 15, 2019 and expiring on March 14, 2024. Under the Off-Take Agreement, PBGC agreed to purchase specified minimum quantities of grain from GAP in each contract year: specifically, 1,200,000 bushels of #2 Yellow Corn and 600,000 bushels of #1 Yellow Soybeans per contract year, on a forward-contract basis. The grain was to be delivered by GAP to PBGC's elevator facilities located in Champaign, Macon, and Piatt Counties, Illinois, in accordance with delivery schedules established quarterly by agreement of the parties.
Pricing under the Off-Take Agreement was based on the Chicago Board of Trade ("CBOT") nearby futures price at the time of delivery, plus or minus a negotiated basis differential set on a quarterly basis, as detailed in Exhibit B to the Off-Take Agreement. Payment terms under the Off-Take Agreement required PBGC to remit full payment within thirty (30) days from the date of delivery and acceptance of the grain at the designated elevator facility (i.e., Net 30 days). Section 7.3 of the Off-Take Agreement provides for late payment interest at a rate of 1.5% per month (18% per annum) on any overdue amounts, calculated from the applicable due date until the date of payment.
GAP performed its obligations under the Off-Take Agreement and delivered grain to PBGC from the third quarter of 2021 through the first quarter of 2022. PBGC accepted delivery of the grain at its elevator facilities without objection. However, PBGC failed to pay five invoices issued by GAP in connection with these deliveries, totaling $4,870,050.00 in principal, as set forth in the following table:
Each of these invoices was issued by GAP to PBGC in the ordinary course of business, and each was accompanied by the applicable delivery tickets, weight certificates, and grade certifications reflecting PBGC's acceptance of the delivered grain. PBGC has made no payment on any of these invoices, and no partial payments have been received.
Accordingly, GAP seeks judgment against PBGC for the full principal amount of $4,870,050.00, plus contractual interest at 1.5% per month accruing from each invoice's respective due date through the date of judgment, plus reasonable attorneys' fees and costs pursuant to Section 12.4 of the Off-Take Agreement, which provides that the prevailing party in any action to enforce the Agreement shall be entitled to recover its reasonable attorneys' fees and litigation costs from the non-prevailing party.
B. Count II — Breach of Personal Guaranty against Darren K. Musgrave
Count II alleges that Musgrave is liable to GAP under the Musgrave Guaranty for PBGC's failure to pay amounts owed under the Off-Take Agreement. As noted above, Musgrave executed a limited personal guaranty (the Musgrave Guaranty, attached as Exhibit D to the Off-Take Agreement) pursuant to which Musgrave personally and unconditionally guaranteed PBGC's payment obligations under the Off-Take Agreement, up to a maximum aggregate amount of $2,000,000. The Musgrave Guaranty provides that it is a guaranty of payment, not merely of collection, and that GAP may proceed directly against Musgrave upon PBGC's default without first exhausting remedies against PBGC.
PBGC has defaulted on its payment obligations under the Off-Take Agreement. GAP has demanded payment from both PBGC and Musgrave. Musgrave has failed to honor his obligations under the Musgrave Guaranty. Accordingly, GAP seeks judgment against Musgrave individually in an amount up to $2,000,000, representing his maximum liability under the Guaranty. GAP notes that any recovery from Musgrave under Count II is not additive to the contract damages sought under Count I; rather, the Musgrave Guaranty constitutes a component of GAP's overall recovery of amounts owed by PBGC.
C. Count III — Account Stated against PBGC
Count III alleges an account stated against PBGC. Following PBGC's receipt of the five unpaid invoices, PBGC retained the invoices without objection and did not dispute the amounts stated therein. Moreover, PBGC's President, Darren K. Musgrave, acknowledged the debt in writing in a February 3, 2022 email to GAP's Senior Vice President of Grain Trading, in which Musgrave acknowledged the outstanding balance, requested forbearance, and stated that PBGC intended to satisfy the obligations once its insurance claim was resolved. PBGC's receipt, retention, and failure to object to the invoices, together with Musgrave's written acknowledgment of the debt, establish an account stated under Illinois law.
GAP seeks the full principal amount of $4,870,050.00, plus interest, on Count III.
D. Count IV — Unjust Enrichment (Alternative) against PBGC
Count IV is pleaded in the alternative to Count I. In the event the Court were to determine that the Off-Take Agreement is unenforceable for any reason, GAP alleges that PBGC was unjustly enriched by receiving and accepting delivery of 625,000 bushels of grain (consisting of 150,000 + 75,000 + 200,000 + 120,000 + 80,000 bushels of corn and soybeans) without making payment therefor. PBGC received a benefit—the grain commodities—at GAP's expense, and it would be unjust for PBGC to retain the benefit of these commodities without compensating GAP for their fair market value.
GAP seeks restitution in the amount of $4,870,050.00 on Count IV.
IV. DAMAGES SOUGHT
The damages sought by GAP in this action are as follows:
1. Total principal outstanding: $4,870,050.00, representing the aggregate unpaid balance of the five invoices described in Section III.A above.
2. Accrued contractual interest through May 9, 2022 (date of filing): Approximately $345,992.00, calculated at the contractual rate of 1.5% per month (18% per annum) from each invoice's respective due date through the date the Complaint was filed.
3. Total claimed at filing: Approximately $5,216,042.00.
4. Continuing interest accrual: Interest continues to accrue at the contractual rate of 1.5% per month on the total outstanding principal balance of $4,870,050.00, resulting in monthly interest accrual of approximately $73,050.75. Accordingly, the total damages as of the date of this Statement (September 12, 2022) exceed $5,216,042.00 and continue to increase with each passing month.
5. Reasonable attorneys' fees and costs: GAP seeks an award of its reasonable attorneys' fees and litigation costs incurred in prosecuting this action, pursuant to Section 12.4 of the Off-Take Agreement (prevailing-party fee provision).
6. Pre- and post-judgment interest: GAP seeks pre-judgment interest at the contractual rate of 1.5% per month and post-judgment interest as allowed by law.
7. Count II (Musgrave Guaranty): On Count II, GAP seeks recovery of up to $2,000,000 from Musgrave individually under the Musgrave Guaranty. This amount is not additive to the contract damages sought under Counts I and III; rather, it constitutes a component of GAP's overall recovery of the amounts owed by PBGC under the Off-Take Agreement.
V. STATUS OF PLEADINGS
A. Complaint. GAP filed its four-count Verified Complaint on May 9, 2022, initiating this action. The Complaint sets forth the four counts described in Section III above.
B. Service of Process
Service of process was completed on both Defendants on May 24, 2022, as follows:
• PBGC: Service was effected upon PBGC through its registered agent, Ridgeline Corporate Services LLC, at 77 West Washington Street, Suite 1420, Chicago, Illinois 60602, on May 24, 2022.
• Darren K. Musgrave: Personal service was completed upon Musgrave at his residence, 1188 Windermere Lane, Champaign, Illinois 61822, on May 24, 2022.
Proofs of service for both Defendants were filed with the Court.
C. Answer and Affirmative Defenses
PBGC and Musgrave, through their counsel, Bartlett, Reyes Linley CPAs LLP & Harkin LLP (Douglas M. Harkin, lead partner; Nadia C. Petrov, associate), filed a joint Answer and Affirmative Defenses on June 27, 2022. In their Answer, Defendants admitted the existence and execution of the Off-Take Agreement and the Musgrave Guaranty, but denied liability. Defendants asserted three affirmative defenses: (1) force majeure, based on the October 17, 2021 fire at PBGC's Macon County elevator facility, which Defendants contended excused PBGC's performance under the Off-Take Agreement; (2) commercial impracticability, based on the allegedly unforeseeable disruption to PBGC's operations caused by the fire; and (3) failure to mitigate damages, alleging that GAP failed to take reasonable steps to resell or otherwise dispose of the grain that PBGC did not pay for.
D. Motion to Strike Affirmative Defenses and August 22, 2022 Ruling
On July 15, 2022, GAP filed a Motion to Strike Defendants' Affirmative Defenses, supported by a memorandum of law. In its Motion, GAP argued as follows:
(1) Force Majeure (First Affirmative Defense): The force majeure clause in the Off-Take Agreement (Section 9.1) does not excuse payment obligations. By its express terms, the force majeure provision applies only to obligations of delivery and acceptance, and specifically provides that "[n]o event of Force Majeure shall excuse or suspend any obligation to make payment when due under this Agreement." Moreover, the October 17, 2021 fire at PBGC's Macon County elevator facility affected only one of PBGC's six elevator facilities and did not prevent PBGC from accepting or paying for grain delivered to its other facilities in Champaign and Piatt Counties. Each of the five unpaid invoices relates to grain that was in fact delivered to and accepted by PBGC at facilities other than the Macon County facility.
(2) Commercial Impracticability (Second Affirmative Defense): Commercial impracticability under Illinois law requires a showing of objective impossibility, not mere financial difficulty or inability to pay. See Kel-Keef Enterprises, Inc. v. Quality Components Corp., 316 Ill. App. 3d 1011, 1018 (1st Dist. 2000). PBGC's alleged financial difficulties, including losses arising from the fire and purported hedging losses, do not render performance of a payment obligation objectively impossible. Financial inability to pay a contractual obligation is not a recognized basis for the defense of commercial impracticability under Illinois law.
(3) Failure to Mitigate (Third Affirmative Defense): GAP acknowledged in its Motion that the failure-to-mitigate defense, while GAP believes it lacks factual support, was sufficiently pleaded to survive a motion to strike.
PBGC filed an opposition to the Motion to Strike on August 1, 2022. GAP filed a reply brief on August 8, 2022.
On August 22, 2022, the Court (Hon. Patricia Delacroix, J.) granted GAP's Motion to Strike with respect to the force majeure and commercial impracticability affirmative defenses. The Court found that the force majeure clause in the Off-Take Agreement unambiguously does not excuse payment obligations and that PBGC's alleged financial difficulties do not satisfy the objective impossibility standard required for commercial impracticability under Illinois law. The Court denied the Motion to Strike with respect to the failure-to-mitigate defense, allowing that defense to survive.
As a result of the Court's August 22, 2022 ruling, the sole remaining affirmative defense in this case is Defendants' claim that GAP failed to mitigate its damages.
E. No Counterclaims or Third-Party Claims
Defendants have not asserted any counterclaims, crossclaims, or third-party claims in this action. The deadline for asserting compulsory counterclaims has passed.
VI. PARTIES AND COUNSEL
A. Plaintiff. Greenfield Agricultural Partners LLC 1400 Grand Prairie Boulevard, Suite 800 Des Moines, Iowa 50309
Counsel for Plaintiff:
Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606
• Francesca Morano, Responsible Partner
• Samuel Eklund, Billing Partner
• Hannah Brinkley, Lead Associate
• Patrick Gallagher, Working Associate
B. Defendants. Prairie Basin Grain Co. 4520 Harvest Road Champaign, Illinois 61820
Darren K. Musgrave, individually 1188 Windermere Lane Champaign, Illinois 61822
Counsel for Defendants:
Bartlett, Reyes Linley CPAs LLP & Harkin LLP 200 North LaSalle Street, Suite 2500 Chicago, Illinois 60601
• Douglas M. Harkin, Lead Partner
• Nadia C. Petrov, Associate
VII. RELATED CASES
Plaintiff is not aware of any related cases pending before this Court or any other court in which GAP is a party that would affect the management or resolution of this matter.
Plaintiff is aware that PBGC's property insurer, Triton Mutual Insurance Co., is involved in a separate insurance coverage dispute with PBGC relating to the October 17, 2021 fire at PBGC's Macon County elevator facility. GAP understands that the estimated loss from the fire is approximately $3.2 million and that PBGC and Triton Mutual are in dispute over the scope of coverage. However, GAP is not a party to that action, and that insurance coverage dispute does not bear directly on this collection matter. GAP notes the existence of that dispute solely because it may be relevant to PBGC's financial condition and its ability to satisfy a judgment in this case.
VIII. PROPOSED DISCOVERY PLAN AND SCHEDULE
A. Written discovery
GAP proposes to serve its First Set of Interrogatories and First Request for Production of Documents on PBGC within approximately two weeks of this Case Management Conference, with a target service date on or before September 30, 2022. GAP's initial written discovery will be directed primarily at PBGC, as the contracting party and the entity with custody and control of the relevant business records.
In addition, GAP intends to serve Requests for Admission directed to PBGC regarding the authenticity and execution of the Off-Take Agreement and the Musgrave Guaranty, the issuance and receipt of each of the five unpaid invoices, the delivery and acceptance of the grain covered by those invoices, and the amounts owed thereunder. GAP's target date for service of Requests for Admission is on or before mid-October 2022.
GAP's discovery will focus on the following categories of information:
(a) PBGC's financial condition and assets, including current assets, receivables, inventory, real property, and other assets relevant to the enforcement and collection of any judgment;
(b) The factual basis, if any, for Defendants' surviving failure-to-mitigate affirmative defense, including any evidence that GAP could have taken reasonable steps to avoid or reduce its losses;
(c) PBGC's communications with its primary lender, Heartland Prairie Bank, N.A. (Decatur, Illinois), regarding PBGC's financial condition, the default under PBGC's credit facility, and any restructuring or workout discussions;
(d) PBGC's insurance claims relating to the October 17, 2021 fire at its Macon County elevator facility, including the status and amount of any insurance recovery; and
(e) PBGC's hedging activities and any hedging losses sustained in the fourth quarter of 2021, to the extent such losses bear on PBGC's financial condition and ability to satisfy a judgment.
GAP also anticipates serving targeted written discovery on Defendant Musgrave individually regarding his financial condition and assets, given his personal liability under the Musgrave Guaranty.
B. Depositions. GAP anticipates taking the depositions of the following individuals:
(1) Darren K. Musgrave — President of PBGC and personal guarantor. Mr. Musgrave's deposition will address PBGC's financial condition, the circumstances of non-payment, PBGC's operations following the October 2021 fire, the factual basis for the failure-to-mitigate defense, and Mr. Musgrave's personal financial condition as relevant to his liability under the Guaranty.
(2) Lydia R. Musgrave — Secretary and Treasurer of PBGC. Ms. Musgrave's deposition will address PBGC's financial records, accounts payable, and financial condition during the relevant period.
(3) Victor P. Novotny — Vice President of Operations of PBGC. Mr. Novotny's deposition will address PBGC's grain receipt and handling operations, the delivery and acceptance of the grain covered by the unpaid invoices, and operational matters relevant to the failure-to-mitigate defense.
GAP may also seek a deposition of PBGC's corporate designee under Illinois Supreme Court Rule 206(a)(1), to the extent that PBGC's individual witnesses are unable to provide testimony on topics that require designation of a corporate representative.
GAP does not anticipate that more than four to five depositions will be required in this matter.
C. Expert discovery
GAP does not anticipate the need for expert witnesses at this time. This case primarily involves the enforcement of a written contract and the calculation of liquidated damages consisting of principal amounts owed and contractual interest. The terms of the Off-Take Agreement, the invoices, and the delivery records speak for themselves.
However, if Defendants' failure-to-mitigate defense necessitates expert testimony regarding commodity market conditions during the relevant period, the availability of alternative buyers for the grain at issue, or the alternative disposition of grain, GAP reserves the right to designate one or more expert witnesses. GAP will advise the Court and opposing counsel promptly if it determines that expert testimony is necessary.
D. Proposed Schedule
GAP respectfully proposes the following discovery and case management schedule:
GAP anticipates filing a motion for summary judgment on Counts I, II, and III following the close of discovery, provided that discovery confirms the absence of genuine issues of material fact. Given the Court's August 22, 2022 ruling striking two of Defendants' three affirmative defenses, the issues remaining for disposition are narrow and well-suited to summary adjudication.
IX. SETTLEMENT AND ALTERNATIVE DISPUTE RESOLUTION
The Off-Take Agreement does not contain a mandatory arbitration clause or a mandatory mediation clause. Dispute resolution is governed by Section 13.1 of the Off-Take Agreement, which provides for exclusive jurisdiction in the courts of Cook County, Illinois, or the United States District Court for the Northern District of Illinois. The parties have not entered into any separate agreement to arbitrate or mediate the disputes at issue in this case.
Prior to filing suit, GAP engaged in the following efforts to resolve this matter:
• On February 3, 2022, PBGC's principal, Darren K. Musgrave, acknowledged the outstanding debt in an email to GAP's Senior Vice President of Grain Trading. In that email, Musgrave did not dispute the amounts owed and requested forbearance, stating that PBGC was experiencing cash-flow difficulties related to the October 2021 fire and hedging losses.
• GAP, in a good-faith effort to work with PBGC, granted PBGC a conditional 60-day forbearance, conditioned upon PBGC's payment of the oldest outstanding invoice, Invoice No. GAP-2021-3187, in the amount of $892,500.00, on or before March 1, 2022.
• PBGC failed to satisfy the condition of the forbearance by making payment of Invoice No. GAP-2021-3187 by March 1, 2022.
• On April 11, 2022, GAP made a formal pre-suit demand for full payment of all outstanding amounts owed under the Off-Take Agreement. That demand went unanswered.
GAP is open to reasonable settlement discussions and remains willing to engage in good-faith negotiations with Defendants regarding resolution of this matter. However, GAP notes that PBGC has made no settlement overture to date, and Defendants have not proposed any payment plan, partial payment, or other resolution since the commencement of this action.
GAP does not object to participation in a settlement conference if the Court believes such a conference would be productive and directs the parties to attend one. However, GAP does not believe that this case warrants referral to mandatory mediation at this time. The claims are straightforward collection claims based on express written contracts and documented deliveries. The principal amount owed is undisputed (indeed, Musgrave acknowledged the debt in writing), and the Court has already struck two of Defendants' three affirmative defenses. GAP respectfully submits that the most efficient path to resolution is through the discovery and dispositive motion process outlined herein.
X. ESTIMATED LENGTH OF TRIAL
GAP estimates that trial, if necessary, would require approximately three (3) to five (5) days for a bench trial. The case involves primarily documentary evidence, including the Off-Take Agreement and its exhibits, the five unpaid invoices, delivery tickets, weight certificates, grade certifications, correspondence between the parties, and Musgrave's February 3, 2022 email. The number of fact witnesses is limited, and GAP does not presently anticipate the need for expert testimony.
GAP requests a bench trial. Plaintiff has not demanded a jury trial, and Defendants' Answer did not include a jury demand. Accordingly, GAP understands that this matter is set for a bench trial before the Court.
XI. OTHER MATTERS FOR THE COURT'S ATTENTION
GAP respectfully brings the following additional matters to the Court's attention, as they are relevant to the efficient management and resolution of this case:
Suspension of Deliveries. GAP suspended further deliveries under the Off-Take Agreement on March 8, 2022, pursuant to Section 8.2 of the Off-Take Agreement (Adequate Assurance of Performance). Section 8.2 provides that, upon the occurrence of an event giving rise to reasonable grounds for insecurity regarding the other party's ability to perform, the insecure party may demand in writing adequate assurance of due performance and may, if commercially reasonable, suspend its own performance until such assurance is received. GAP demanded adequate assurance of performance from PBGC on February 10, 2022. PBGC failed to provide adequate assurance, and also failed to make the required partial payment of Invoice No. GAP-2021-3187 by March 1, 2022, as required under the conditional forbearance. GAP accordingly suspended all further deliveries under the Off-Take Agreement on March 8, 2022, and has made no further deliveries since that date.
PBGC's Financial Difficulties. GAP is aware of PBGC's ongoing and significant financial difficulties, which underscore the importance of efficient case management and prompt resolution of this matter. These difficulties include, but are not limited to, the following:
(a) The October 17, 2021 fire at PBGC's Macon County elevator facility, located at 2200 County Road 1400 East, Decatur, Illinois 62521. The fire resulted in the destruction of a substantial portion of the Macon County facility, with an estimated loss of approximately $3.2 million. As noted in Section VII above, PBGC is involved in a disputed insurance coverage claim with Triton Mutual Insurance Co. regarding this loss, and the outcome and timing of any insurance recovery remain uncertain.
(b) Reports of significant hedging losses sustained by PBGC in the fourth quarter of 2021, which are believed to have further impaired PBGC's cash position and overall financial condition.
(c) PBGC's primary lender, Heartland Prairie Bank, N.A. (Decatur, Illinois), declared PBGC in default under its Revolving Credit and Term Loan Agreement in approximately April 2022. GAP understands that the outstanding balance under PBGC's credit facility with Heartland Prairie Bank is approximately $31.4 million. The status of PBGC's relationship with its lender—including whether Heartland Prairie Bank has exercised or intends to exercise remedies under the credit facility, whether a forbearance or workout agreement is in place, or whether a receivership or other enforcement proceeding is contemplated—is unknown to GAP at this time and will be a subject of GAP's discovery.
GAP acknowledges that the status of PBGC's relationship with its lender and the outcome of PBGC's insurance dispute may affect the practical collectability of any judgment obtained in this action. However, these matters do not bear on PBGC's liability or Musgrave's liability under the Guaranty, and they should not be permitted to delay the resolution of this case. To the contrary, PBGC's financial difficulties make prompt adjudication all the more important, as delay may further impair GAP's ability to recover the amounts owed.
GAP respectfully requests that the Court set a firm discovery schedule with clear deadlines and establish a timeline conducive to the efficient resolution of this matter, including a dispositive motion deadline that will permit GAP to seek summary judgment on Counts I, II, and III at the earliest practicable date.
XII. CONCLUSION
For the foregoing reasons, Plaintiff Greenfield Agricultural Partners LLC respectfully submits this Case Management Conference Statement and requests that the Court enter a case management order consistent with the proposed schedule set forth in Section VIII.D above. GAP is prepared to discuss any of the matters addressed herein with the Court and opposing counsel at the Case Management Conference and to cooperate in the formulation of a case management order that will facilitate the orderly, efficient, and just resolution of this action.
Respectfully submitted,
GREENFIELD AGRICULTURAL PARTNERS LLC, Plaintiff,
By its attorneys,
CALDERWOOD & HARKNESS LLP
By: ________
Hannah Brinkley, Lead Associate Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606 Telephone: (312) 555-7200
Email: hbrinkley@calderwoodharkness.com
Of Counsel:
Francesca Morano, Responsible Partner Samuel Eklund Patrick Gallagher Calderwood & Harkness LLP
CERTIFICATE OF SERVICE
The undersigned, an attorney, hereby certifies that on September 12, 2022, a true and correct copy of the foregoing Plaintiff's Case Management Conference Statement was served upon counsel for Defendants via the Court's electronic filing system and via email, addressed to:
Douglas M. Harkin Nadia C. Petrov Bartlett, Reyes Linley CPAs LLP & Harkin LLP 200 North LaSalle Street, Suite 2500 Chicago, Illinois 60601 dharkin@bartlettcroweharkin.com npetrov@bartlettcroweharkin.com
________________________________________
Hannah Brinkley
GREENFIELD AGRICULTURAL PARTNERS LLC, a Delaware limited liability company,
Plaintiff,
v. | Case No. 2022-L-004831
PRAIRIE BASIN GRAIN CO., an Illinois corporation, and DARREN K. MUSGRAVE, individually, | Hon. Patricia Delacroix
Defendants.
Invoice No. | Date | Commodity | Bushels | Amount | Due Date
GAP-2021-3187 | 09/28/2021 | #2 Yellow Corn | 150,000 | $892,500.00 | 10/28/2021
GAP-2021-3244 | 10/15/2021 | #1 Yellow Soybeans | 75,000 | $936,750.00 | 11/14/2021
GAP-2021-3301 | 11/12/2021 | #2 Yellow Corn | 200,000 | $1,224,000.00 | 12/12/2021
GAP-2021-3358 | 12/08/2021 | #2 Yellow Corn | 120,000 | $741,600.00 | 01/07/2022
GAP-2022-0042 | 01/19/2022 | #1 Yellow Soybeans | 80,000 | $1,075,200.00 | 02/18/2022
Event | Proposed Deadline
Completion of fact discovery | 120 days from the date of this conference (approximately January 10, 2023)
Expert disclosure and reports (if any) | 30 days following close of fact discovery (approximately February 9, 2023)
Rebuttal expert disclosure and reports (if any) | 30 days following initial expert disclosure (approximately March 11, 2023)
Completion of all expert discovery | 60 days following close of fact discovery (approximately March 11, 2023)
Dispositive motions deadline | 30 days following close of all discovery (approximately April 10, 2023)