PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — DO NOT DISTRIBUTE WITHOUT PRIOR AUTHORIZATION OF COUNSEL
CALDERWOOD & HARKNESS LLP Attorneys at Law 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606
MEMORANDUM
FROM: Francesca Morano, Partner Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606
TO: Thomas R. Greenfield, Chairman and Chief Executive Officer Greenfield Agricultural Partners LLC
Caleb Jennings, Director of Grain Operations GAP Grain Trading Division
CC: Samuel Eklund, Billing Partner, Calderwood & Harkness LLP Hannah Brinkley, Lead Associate, Calderwood & Harkness LLP
DATE: September 1, 2022
RE: Case Status Update — Greenfield Agricultural Partners LLC v. Prairie Basin Grain Co. et al., Circuit Court of Cook County, Illinois, Case No. 2022-L-004831
MATTER NO.: C&H Matter No. 1020-00005
PRIVILEGE LEGEND: This memorandum constitutes a privileged and confidential attorney-client communication. It is intended solely for the use of the individuals to whom it is addressed and contains information that is protected by the attorney-client privilege and/or the work product doctrine. Any dissemination, distribution, copying, or other use of this memorandum or the information contained herein by any person other than the intended recipients is strictly prohibited. If you have received this memorandum in error, please notify Francesca Morano at Calderwood & Harkness LLP immediately and destroy all copies.
I. PURPOSE OF MEMORANDUM
The purpose of this memorandum is to provide the leadership of Greenfield Agricultural Partners LLC ("GAP") with a comprehensive summary and analysis of the significant ruling entered on August 22, 2022, by the Honorable Patricia Delacroix in the Circuit Court of Cook County, Illinois, in the matter captioned Greenfield Agricultural Partners LLC v. Prairie Basin Grain Co. et al., Case No. 2022-L-004831. A copy of the Court's written Order is enclosed for your records.
This memorandum will address three principal topics. First, we explain the substance and legal significance of the Court's ruling on GAP's Motion to Strike Affirmative Defenses, which resulted in the elimination of two of the three affirmative defenses asserted by defendants Prairie Basin Grain Co. ("PBGC") and Darren K. Musgrave ("Musgrave"). Second, we discuss the practical impact of the ruling on the overall litigation posture, including GAP's prospects for obtaining summary judgment or an early resolution of this matter. Third, we outline the recommended next steps for the case, including preparation for the mandatory Case Management Conference currently scheduled for September 12, 2022, the anticipated commencement of discovery, settlement considerations, and matters relating to the enforcement of the Musgrave personal guaranty.
We believe this ruling constitutes a meaningful and favorable development in the litigation, and we look forward to discussing its implications with you at your earliest convenience.
II. BACKGROUND SUMMARY
To provide context for the Court's ruling, we briefly summarize the procedural history and factual background of this litigation.
A. Filing of the Verified Complaint
On May 9, 2022, GAP filed a four-count Verified Complaint in the Circuit Court of Cook County, Illinois, against defendants PBGC and Musgrave. The Verified Complaint asserts the following claims:
Count I — Breach of Contract (Off-Take Agreement) against PBGC. GAP alleges that PBGC breached its payment obligations under the Master Grain Purchase and Off-Take Agreement dated March 15, 2019 (the "Off-Take Agreement"), by failing to pay five invoices totaling $4,870,050.00 in principal, plus contractual interest at the rate of 1.5% per month as specified in Section 5.4 of the Off-Take Agreement.
Count II — Breach of Personal Guaranty against Musgrave. GAP alleges that Musgrave breached the Personal Guaranty of Payment attached to the Off-Take Agreement as Exhibit D (the "Musgrave Guaranty"), pursuant to which Musgrave personally guaranteed PBGC's payment obligations up to a cap of $2,000,000.
Count III — Account Stated against PBGC. GAP alleges that the five invoices at issue were presented to PBGC in the ordinary course of dealing, that PBGC received and retained the invoices without objection within a reasonable time, and that an account stated therefore arose.
Count IV — Unjust Enrichment (Alternative) against PBGC. Pleaded in the alternative, GAP alleges that PBGC received and accepted the grain deliveries corresponding to the five invoices and has been unjustly enriched by its retention of the benefit of those deliveries without payment.
B. The Unpaid Invoices
The claims arise from five unpaid invoices issued by GAP under the Off-Take Agreement, each corresponding to specific grain deliveries that were received and accepted by PBGC at its elevator facilities. The invoices are as follows:
The total principal outstanding across all five invoices is $4,870,050.00. As of the filing date, accrued contractual interest at the rate of 1.5% per month totaled approximately $345,992, bringing the total amount claimed in the Verified Complaint to approximately $5,216,042. Interest continues to accrue on the outstanding principal balance at the contractual rate.
C. Service of Process
Service of process was completed on May 24, 2022. PBGC was served through its registered agent, Ridgeline Corporate Services LLC, in accordance with Illinois law governing service upon domestic limited liability companies. Musgrave was personally served at his residence at 1188 Windermere Lane, Champaign, Illinois 61822. Both defendants appeared through counsel in a timely manner.
D. Defendants' Answer and Affirmative Defenses
On June 27, 2022, PBGC and Musgrave, through their counsel at Bartlett, Reyes Linley CPAs LLP & Harkin LLP (lead partner Douglas M. Harkin; associate Nadia C. Petrov), filed a joint Answer and Affirmative Defenses. While the Answer denied certain allegations in the Verified Complaint, it did not dispute the existence of the Off-Take Agreement, the delivery and acceptance of grain, or the issuance of the invoices. The joint filing asserted three affirmative defenses:
(1) Force Majeure. Defendants asserted that the fire at PBGC's Macon County elevator facility on October 17, 2021, constituted a force majeure event within the meaning of Section 9.1 of the Off-Take Agreement, excusing PBGC's performance obligations, including its obligation to pay the invoices at issue.
(2) Commercial Impracticability. Defendants asserted that PBGC's performance was rendered commercially impracticable due to the combined effects of the Macon County elevator fire, significant hedging losses sustained by PBGC in the fourth quarter of 2021, and general financial distress, rendering payment of the invoices objectively impracticable.
(3) Failure to Mitigate. Defendants asserted that GAP failed to take reasonable steps to mitigate its damages following PBGC's failure to pay, thereby contributing to the magnitude of the damages claimed.
E. GAP's Motion to Strike Affirmative Defenses
On July 15, 2022, Calderwood & Harkness filed GAP's Motion to Strike Affirmative Defenses pursuant to Section 2-615 of the Illinois Code of Civil Procedure, together with a detailed Memorandum in Support and a Proposed Order. The Motion argued that all three affirmative defenses were legally insufficient on their face and should be stricken. Defendants filed a Response in Opposition on August 1, 2022. GAP filed a Reply in Support on August 8, 2022. The Court heard oral argument on August 19, 2022, and entered its written ruling on August 22, 2022.
III. SUMMARY OF THE AUGUST 22, 2022 RULING
The Court's August 22, 2022 Order granted GAP's Motion to Strike in substantial part, eliminating two of the three affirmative defenses with prejudice, while allowing the third to survive. We summarize each ruling below.
A. Force Majeure Defense — Stricken with Prejudice
The Court agreed with GAP's argument that the force majeure clause contained in Section 9.1 of the Off-Take Agreement does not operate to excuse PBGC's obligation to pay for grain that was already received and accepted. In its analysis, the Court made several key findings.
First, the Court examined the text of the force majeure provision itself and determined that, by its express terms, the clause relates to obligations of performance and delivery — that is, the physical obligation to receive, handle, and transport grain — and not to the separate and independent obligation to remit payment for goods already delivered and accepted. The Court noted that Section 9.1 references "performance of obligations hereunder" in the context of delivery logistics, transportation disruptions, and acts of God affecting physical operations, and does not contain any language extending the force majeure excuse to payment obligations. The Court emphasized that force majeure provisions are construed narrowly under Illinois law and will not be read to excuse obligations beyond those specifically enumerated or clearly contemplated.
Second, the Court found that even if the fire at the PBGC Macon County elevator facility — located at 2200 County Road 1400 East, Decatur, Illinois 62521, and occurring on October 17, 2021 — could be construed as a force majeure event within the meaning of Section 9.1, it affected only one of PBGC's six elevator facilities across Champaign, Macon, and Piatt Counties. The Court observed that the destruction of a single facility did not render PBGC's remaining operations incapable of generating revenue or meeting payment obligations under the Off-Take Agreement, and therefore did not establish the causal nexus required for a force majeure excuse even under a broader reading of the clause.
Third, and critically, the Court emphasized the undisputed fact that PBGC had received and accepted all grain deliveries corresponding to each of the five invoices at issue. The grain was delivered, inspected, graded, and accepted at various PBGC facilities prior to and in some cases after the Macon County fire. The obligation to pay for grain that had already been received and accepted was unconditional under the terms of the Off-Take Agreement, and the force majeure clause could not retroactively excuse that obligation.
The Court stricken the force majeure defense with prejudice, meaning that defendants cannot re-plead or reassert this defense at any subsequent stage of the proceedings.
B. Commercial Impracticability Defense — Stricken with Prejudice
The Court likewise stricken PBGC's commercial impracticability defense, finding it legally insufficient under controlling Illinois law.
The Court held that the doctrine of commercial impracticability under Illinois law — drawing upon both the Restatement (Second) of Contracts and the Uniform Commercial Code as adopted in Illinois — requires a showing of objective impossibility of performance, not merely financial difficulty or increased cost. The Court cited well-established precedent that financial hardship, even if severe, does not satisfy the demanding standard required to invoke this defense.
In reaching its conclusion, the Court addressed the specific factual predicates upon which PBGC had relied. PBGC asserted that its financial condition had been severely impaired by: (i) the estimated $3.2 million loss resulting from the Macon County elevator fire, including physical damage to the facility, destruction of stored inventory, and related operational disruptions; (ii) approximately $6.8 million in mark-to-market hedging losses sustained in the fourth quarter of 2021, attributable to adverse commodity price movements; and (iii) alleged margin compression across PBGC's grain merchandising operations. The Court acknowledged that these losses were substantial but held that they constitute financial hardship, which is legally insufficient to establish commercial impracticability as a matter of law.
The Court further noted that the obligation at issue is a monetary obligation — the payment of invoices for grain already received — and that financial inability to pay money is not a recognized basis for the defense of commercial impracticability under any formulation of the doctrine. The law does not excuse a debtor from its payment obligations merely because the debtor lacks the funds to pay. To hold otherwise, the Court observed, would effectively transform every insolvent debtor's failure to pay into an excused non-performance, a result inconsistent with fundamental principles of contract law.
The commercial impracticability defense was stricken with prejudice.
C. Failure to Mitigate Defense — Survives
The Court declined to strike the failure-to-mitigate defense. In its analysis, the Court found that this defense raises factual questions that cannot be resolved on the pleadings alone, specifically whether GAP took reasonable steps to minimize the damages it sustained as a result of PBGC's breach.
The Court noted that the duty to mitigate is a well-recognized affirmative defense in breach-of-contract actions under Illinois law, and that the defendant bears the burden of proving both that the plaintiff failed to take reasonable steps to mitigate and that such failure resulted in avoidable damages. Because these are inherently fact-intensive inquiries, the Court concluded that the defense could not be stricken on a motion addressed solely to the legal sufficiency of the pleading.
Our Assessment of the Surviving Defense. While we respect the Court's ruling, it is our assessment that the failure-to-mitigate defense is factually weak and unlikely to result in a material reduction of GAP's damages at trial or on summary judgment. The key facts supporting this assessment are as follows:
• GAP suspended further grain deliveries to PBGC on March 8, 2022, pursuant to Section 8.2 of the Off-Take Agreement (Adequate Assurance of Performance), promptly after PBGC failed to make the required payment under the informal forbearance arrangement by the March 1, 2022 deadline. GAP acted decisively and did not continue to extend credit or deliver additional grain once PBGC's inability to pay became clear.
• The damages claimed by GAP relate to grain that had already been delivered and accepted by PBGC prior to GAP's suspension of deliveries. GAP is not seeking damages for future deliveries that were never made. The mitigation defense is therefore of limited relevance, as GAP cannot "un-deliver" grain that PBGC already received.
• To the extent PBGC argues that GAP should have resold the grain to alternative buyers rather than delivering it to PBGC, the record will show that all deliveries were completed before PBGC's default became apparent, and GAP could not have known at the time of delivery that PBGC would fail to pay.
Notwithstanding the relative weakness of this defense, GAP should be prepared to present evidence at trial or in connection with a motion for summary judgment demonstrating the reasonableness of its actions following PBGC's breach. We will address the evidentiary requirements in greater detail as the case progresses through discovery.
IV. PRACTICAL IMPACT OF THE RULING
The August 22, 2022 ruling is a significant and favorable development in this litigation. Its practical impact on the case may be summarized as follows.
Elimination of Substantive Defenses. The striking of the force majeure and commercial impracticability defenses eliminates the two most substantive and potentially disruptive defenses that PBGC had asserted. These were the defenses that, if credited, could have potentially excused PBGC's failure to pay entirely. Their elimination with prejudice forecloses any attempt by defendants to reassert them or to relitigate the issues underlying them.
Narrowing of the Remaining Issues. The only surviving affirmative defense — failure to mitigate — is narrow in scope and places the burden of proof squarely on PBGC. Even if PBGC were to succeed on this defense, it would not eliminate GAP's recovery; rather, it would at most reduce the damages recoverable by the amount of any losses that GAP could have reasonably avoided. Given the facts of this case, as discussed above, we believe PBGC will have significant difficulty sustaining this burden.
Liability Substantially Established. On the merits, PBGC's liability for the $4,870,050.00 in unpaid invoices is now largely established. The existence of the Off-Take Agreement is not disputed. The delivery and acceptance of the grain is not disputed. The issuance and non-payment of the invoices is not disputed. With the force majeure and commercial impracticability defenses eliminated, PBGC has no remaining legal theory that would excuse its failure to pay. The remaining disputes will center, if at all, on any factual challenges to the precise amounts owed and on the mitigation defense.
Strengthened Position for Early Resolution. The ruling significantly strengthens GAP's position for potential early resolution of this matter, whether through a negotiated settlement or through a motion for summary judgment on all or some of the counts. With the principal defenses eliminated, PBGC and Musgrave face the prospect of a substantial judgment with limited means of defense. This creates favorable conditions for settlement discussions, and it also provides a strong foundation for a motion for summary judgment on the breach-of-contract and account-stated claims.
Reinforcement of the Musgrave Guaranty. The ruling also reinforces the enforceability of the Musgrave Guaranty asserted in Count II. The Musgrave Guaranty is a guaranty of payment, not a guaranty of collection, meaning that GAP can pursue Musgrave directly without first exhausting its remedies against PBGC. Because the underlying liability of PBGC on the Off-Take Agreement is now substantially uncontested, Musgrave's exposure under the Guaranty — up to its $2,000,000 cap — is correspondingly strengthened. Musgrave's defenses, if any, will be limited to challenges specific to the Guaranty itself, and we are not aware of any basis for such a challenge on the current record.
V. NEXT STEPS
We recommend the following course of action in the coming weeks and months.
A. Case Management Conference — September 12, 2022
A mandatory Case Management Conference before the Honorable Patricia Delacroix is currently scheduled for September 12, 2022. This conference is a standard procedural event at which the Court and the parties will discuss the status of the case, the issues remaining for resolution, and the schedule for discovery and dispositive motions.
In preparation for the conference, Calderwood & Harkness will prepare and file a Case Management Conference Statement on GAP's behalf. This statement will summarize the claims asserted, the damages sought (approximately $5.2 million in principal and accrued interest as of the filing date, plus continuing interest at the contractual rate of 1.5% per month), and the current status of the pleadings in light of the August 22, 2022 ruling.
At the conference, we intend to propose a discovery schedule that provides for the completion of fact discovery within 120 to 150 days of the conference date (i.e., by approximately mid-January to mid-February 2023), with expert discovery, if any, to follow within an additional 60 days. We do not currently anticipate that expert testimony will be necessary to prove GAP's damages, as the claimed amounts are based on contractual invoices and the contractual interest rate. However, defendants may seek to retain experts in connection with their mitigation defense or to address PBGC's financial condition, and we will be prepared to respond accordingly.
We will also explore the possibility of proposing an early summary judgment briefing schedule at the conference, particularly with respect to Count I (breach of contract) and Count III (account stated), given the elimination of the principal defenses.
B. Commencement of discovery
Calderwood & Harkness intends to serve GAP's First Set of Interrogatories and First Request for Production of Documents on PBGC promptly following the Case Management Conference. Our target for service of these initial discovery requests is the end of September 2022. Discovery will be focused on several key areas:
PBGC's Financial Condition, Assets, and Bank Accounts. Understanding PBGC's current financial position is critical, not only for evaluating the company's ability to satisfy a judgment, but also for judgment enforcement purposes. We will seek production of current financial statements, bank account records, accounts receivable aging reports, and information regarding PBGC's assets, liens, and encumbrances.
PBGC's Communications with Heartland Prairie Bank, N.A. We understand that PBGC maintains a Revolving Credit and Term Loan Agreement with Heartland Prairie Bank, N.A. (aggregate commitment of $45 million; dated June 1, 2018). PBGC's default under this credit facility, if any, and the bank's response will be relevant to understanding PBGC's financial condition and the collectability of any judgment. We will seek production of correspondence, default notices, forbearance agreements, and related documentation.
Documents Relating to the Macon County Elevator Fire and Insurance Claim. While the force majeure defense has been stricken, documents relating to the October 17, 2021 fire remain relevant to the overall factual record and may bear on the failure-to-mitigate defense. In particular, we understand that PBGC submitted an insurance claim to Triton Mutual Insurance Co. in connection with the fire, and that coverage is disputed due to an alleged lapse in premium payments by PBGC. The status of this claim and any insurance proceeds recovered or expected to be recovered may be relevant to PBGC's ability to pay and to the ultimate enforcement of any judgment.
PBGC's Hedging Account Statements and Trading Records. Defendants' filings referenced approximately $6.8 million in mark-to-market hedging losses in the fourth quarter of 2021. We will seek production of hedging account statements, brokerage records, margin call notices, and related trading documentation to understand the full scope of PBGC's financial position and to assess whether any assets may be available to satisfy a judgment.
PBGC's Financial Statements. We will request PBGC's audited financial statements for fiscal years 2020 and 2021. We understand that PBGC's financial statements have historically been audited by Mercer Tidwell & Associates PC. These statements will provide a comprehensive picture of PBGC's financial trajectory and its ability to satisfy a judgment.
In addition to the interrogatories and document requests, we plan to serve Requests for Admission on PBGC. These requests will be designed to establish the authenticity of the Off-Take Agreement, the Musgrave Guaranty, and each of the five invoices at issue, thereby streamlining the proof of damages and potentially reducing the need for live testimony at trial on foundational matters.
Finally, the surviving failure-to-mitigate defense will necessitate discovery into the question of what alternative buyers or markets were available for the grain at the relevant times. We intend to address this both through discovery directed to PBGC (which bears the burden of proving that mitigation opportunities existed and were not pursued) and through the preparation of evidence from GAP's own records demonstrating the reasonableness of GAP's conduct. We are confident that this evidence will demonstrate that GAP acted promptly and reasonably in suspending deliveries and in pursuing its contractual remedies.
C. Settlement Considerations
With the force majeure and commercial impracticability defenses eliminated, the litigation landscape has shifted materially in GAP's favor. This may present an appropriate opportunity to assess whether PBGC or Musgrave would be receptive to settlement discussions.
However, any assessment of settlement prospects must be informed by PBGC's financial realities. We are mindful of reports and indications that PBGC has experienced significant financial difficulties, including the cessation of payments to trade creditors beginning in approximately January 2022. PBGC's approximate annual revenue for fiscal year 2021 is estimated at $185 million, suggesting that it is (or was) a substantial operation, but revenue alone does not indicate the availability of liquid assets to satisfy a settlement or judgment. PBGC's financial distress, the disputed insurance claim relating to the Macon County fire, and the potential default under the Heartland Prairie Bank credit facility all raise questions about collectability.
We recommend that Thomas R. Greenfield and the GAP leadership team discuss with us whether GAP wishes to (i) initiate settlement overtures to defendants or their counsel at Bartlett, Reyes Linley CPAs LLP & Harkin LLP, or (ii) proceed aggressively with discovery and seek summary judgment, using the strength of GAP's litigation position as leverage for any future settlement discussions. These approaches are not mutually exclusive; it is possible to pursue discovery vigorously while simultaneously engaging in settlement discussions, and indeed the progress of discovery often facilitates more informed and productive settlement negotiations.
We are prepared to discuss the relative merits of each approach and to assist GAP in developing a comprehensive litigation and resolution strategy.
D. Musgrave Guaranty
The Musgrave Guaranty, attached to the Off-Take Agreement as Exhibit D, provides a personal guaranty of PBGC's payment obligations up to a cap of $2,000,000. As noted above, the Guaranty is a guaranty of payment, which permits GAP to pursue Musgrave directly and without first exhausting its remedies against PBGC.
Musgrave is the sole director and 72% shareholder of PBGC. Personal service of the Verified Complaint was completed on him at his residence at 1188 Windermere Lane, Champaign, Illinois 61822. Given the elimination of the principal defenses to the underlying contract claim, Musgrave's exposure under the Guaranty is now substantial and largely unavoidable.
We believe it would be appropriate to direct discovery to Musgrave's personal assets in order to evaluate the collectability of any judgment obtained under the Guaranty. This may include requests for personal financial statements, real property records, bank and brokerage account information, and information regarding any other business interests or assets held by Musgrave individually.
For your awareness, we note that Musgrave's spouse, Lydia R. Musgrave, serves as Secretary, Treasurer, and 18% shareholder of PBGC. Additionally, Victor P. Novotny holds the remaining 10% equity interest in PBGC and serves as Vice President of Operations. While neither Lydia Musgrave nor Novotny is a party to this litigation or a guarantor of PBGC's obligations under the Off-Take Agreement, their roles within PBGC may become relevant during discovery, particularly with respect to PBGC's internal decision-making, financial management, and the circumstances surrounding the non-payment of the invoices at issue.
VI. ACTION ITEMS FOR CLIENT
At this time, no immediate action is required from GAP in connection with the August 22, 2022 ruling. However, we ask that GAP attend to the following matters on an ongoing basis:
1. Litigation Hold Compliance. GAP should continue to comply fully with the litigation hold notice issued by Calderwood & Harkness on March 28, 2022. All documents and electronically stored information ("ESI") relating to the Off-Take Agreement, dealings with PBGC and Musgrave, the five invoices at issue, forbearance correspondence, delivery and acceptance records, internal communications regarding PBGC's account, and any other materials potentially relevant to this litigation must be preserved. Destruction, alteration, or deletion of any such materials — whether in paper or electronic form — must not occur. If there are any questions regarding the scope of the litigation hold, please contact Hannah Brinkley at Calderwood & Harkness.
2. Document Gathering. Caleb Jennings, as Director of Grain Operations, should be prepared to assist Calderwood & Harkness with gathering documents responsive to any discovery requests that PBGC may serve on GAP. We anticipate that defendants will serve their own written discovery requests in the coming months, and timely and thorough responses will be important to maintaining GAP's credibility and litigation position.
3. Direct Communications from Opposing Parties or Counsel. GAP should promptly advise Calderwood & Harkness of any direct communications received from PBGC, Musgrave, or their counsel at Bartlett, Reyes Linley CPAs LLP & Harkin LLP (200 North LaSalle Street, Suite 2500, Chicago, Illinois 60601; lead partner Douglas M. Harkin; associate Nadia C. Petrov). All communications relating to the litigation or to the underlying dispute should be directed through counsel, and GAP personnel should refrain from engaging in direct substantive discussions with defendants or their representatives without first consulting with Calderwood & Harkness.
4. Strategy Discussion. We request that Thomas R. Greenfield or Margaret A. Greenfield-Wu (President and Chief Operating Officer of GAP) contact Francesca Morano at their earliest convenience to discuss GAP's settlement posture and overall litigation strategy in light of the August 22, 2022 ruling. The decisions regarding settlement approach, discovery priorities, and the timing of any summary judgment motion will benefit from input from GAP's leadership, and we want to ensure that our litigation strategy is fully aligned with GAP's business objectives and risk tolerance.
VII. CONCLUSION
The August 22, 2022 ruling by the Honorable Patricia Delacroix represents a significant and favorable development in this litigation. Two of PBGC's three affirmative defenses — force majeure and commercial impracticability — have been eliminated with prejudice, leaving only the relatively narrow failure-to-mitigate defense, on which PBGC bears the burden of proof and which, in our assessment, is factually weak given the record as we understand it.
The case is now well-positioned for the next phases of litigation, including aggressive discovery aimed at establishing the full extent of PBGC's liability and financial condition, and the potential filing of a motion for summary judgment on GAP's breach-of-contract, account-stated, and guaranty claims. The elimination of the principal defenses substantially strengthens GAP's negotiating position in the event that settlement discussions are pursued.
Calderwood & Harkness will continue to keep GAP promptly informed of all material developments in this matter. We will provide a further update following the Case Management Conference scheduled for September 12, 2022.
Should you have any questions regarding this memorandum or the Court's ruling, please do not hesitate to contact us at your convenience.
Francesca Morano, Partner Calderwood & Harkness LLP 225 West Wacker Drive, Suite 4000 Chicago, Illinois 60606 Direct: (312) 555-4821
Email: fmorano@calderwoodharkness.com
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Francesca Morano Responsible Partner
Date: September 1, 2022
Enclosures:
1. Copy of the Court's August 22, 2022 Order on GAP's Motion to Strike Affirmative Defenses (Hon. Patricia Delacroix, Circuit Court of Cook County, Illinois, Case No. 2022-L-004831)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — DO NOT DISTRIBUTE WITHOUT PRIOR AUTHORIZATION OF COUNSEL
| Invoice No. | Commodity | Quantity | Price per Bushel | Total Amount | Due Date |
| GAP-2021-3187 | #2 Yellow Corn | 150,000 bu | $5.95 | $892,500.00 | 10/28/2021 |
| GAP-2021-3244 | #1 Yellow Soybeans | 75,000 bu | $12.49 | $936,750.00 | 11/14/2021 |
| GAP-2021-3301 | #2 Yellow Corn | 200,000 bu | $6.12 | $1,224,000.00 | 12/12/2021 |
| GAP-2021-3358 | #2 Yellow Corn | 120,000 bu | $6.18 | $741,600.00 | 1/7/2022 |
| GAP-2022-0042 | #1 Yellow Soybeans | 80,000 bu | $13.44 | $1,075,200.00 | 2/18/2022 |