IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION
GREENFIELD AGRICULTURAL PARTNERS LLC, a Delaware limited liability company,
Plaintiff,
v.
Case No. 2022-L-004831
Hon. Patricia Delacroix
PRAIRIE BASIN GRAIN CO., an Illinois corporation, and DARREN K. MUSGRAVE, individually,
Defendants.
PLAINTIFF'S FIRST REQUEST FOR PRODUCTION OF DOCUMENTS TO DEFENDANT PRAIRIE BASIN GRAIN CO.
Plaintiff Greenfield Agricultural Partners LLC ("GAP"), by and through its attorneys, Calderwood & Harkness LLP, pursuant to Illinois Supreme Court Rules 214 and 201 through 218, hereby requests that Defendant Prairie Basin Grain Co. ("PBGC") produce for inspection and copying the documents and categories of documents described below. PBGC shall produce all responsive documents within twenty-eight (28) days of service of this Request, at the offices of Calderwood & Harkness LLP, 225 West Wacker Drive, Suite 4000, Chicago, Illinois 60606, or at such other time and place as the parties may mutually agree upon in writing. This Request is served on September 30, 2022.
I. DEFINITIONS
As used in this Request for Production of Documents, the following terms shall have the meanings set forth below:
1. "Agreement" or "Off-Take Agreement" means the Master Grain Purchase and Off-Take Agreement dated March 15, 2019, between GAP (as Seller) and PBGC (as Buyer), including all exhibits, schedules, amendments, and addenda thereto, including without limitation the Musgrave Guaranty attached thereto as Exhibit D and the basis differential schedules attached thereto as Exhibit B.
2. "Communication" or "Communications" means any exchange of information, whether oral or written, including but not limited to letters, emails, text messages, instant messages, voicemails, memoranda, notes, and any other form of correspondence or transmission of information, regardless of the medium or format in which the exchange occurred.
3. "Document" or "Documents" shall be defined as set forth in Illinois Supreme Court Rule 201(b)(1) and shall be used in its broadest sense, including but not limited to all writings, drawings, graphs, charts, photographs, recordings, electronically stored information ("ESI"), emails, text messages, spreadsheets, databases, accounting records, ledgers, journal entries, invoices, purchase orders, delivery receipts, weight tickets, settlement statements, contracts, agreements, memoranda, correspondence, reports, presentations, meeting minutes, handwritten notes, and any other data compilations from which information can be obtained, translated, or interpreted, whether in draft or final form, regardless of whether such Document is an original, a copy, or a duplicate.
4. "Invoices" means the five invoices issued by GAP to PBGC that are the subject of this action, specifically:
(a) Invoice No. GAP-2021-3187, dated September 28, 2021, in the amount of $892,500.00;
(b) Invoice No. GAP-2021-3244, dated October 15, 2021, in the amount of $936,750.00;
(c) Invoice No. GAP-2021-3301, dated November 12, 2021, in the amount of $1,224,000.00;
(d) Invoice No. GAP-2021-3358, dated December 8, 2021, in the amount of $741,600.00; and
(e) Invoice No. GAP-2022-0042, dated January 19, 2022, in the amount of $1,075,200.00.
5. "PBGC" means Defendant Prairie Basin Grain Co. and its officers, directors, employees, agents, representatives, subsidiaries, and affiliates, including without limitation Darren K. Musgrave, Lydia R. Musgrave, and Victor P. Novotny.
6. "Heartland Prairie Bank" means Heartland Prairie Bank, N.A., headquartered at 300 East Main Street, Decatur, Illinois 62521, PBGC's senior secured lender.
7. "Triton Mutual" means Triton Mutual Insurance Co., PBGC's property insurer.
8. "Relevant Period" means the period from March 15, 2019 (the date of the Off-Take Agreement) through the date of production, unless otherwise specified in a particular Request.
9. "Person" means any natural person, corporation, partnership, limited liability company, association, governmental body, or other legal entity.
10. "You" or "Your" means Defendant Prairie Basin Grain Co.
11. "Relating to" or "Concerning" means referring to, describing, evidencing, constituting, mentioning, reflecting, connected with, commenting on, regarding, pertaining to, or being in any way legally, logically, or factually relevant to the subject matter referenced.
II. INSTRUCTIONS
1. Each Request shall be construed broadly and in accordance with the Illinois Supreme Court Rules so as to encompass the fullest range of responsive Documents permissible under the Rules.
2. If any Document is withheld on the basis of any privilege, including but not limited to attorney-client privilege, work-product protection, or any other applicable privilege or immunity, PBGC shall provide a privilege log in compliance with Illinois Supreme Court Rule 201(n), identifying for each withheld Document:
(a) the date of the Document;
(b) the author and/or sender of the Document;
(c) all recipients of the Document, including all persons listed on the "to" and "cc" lines;
(d) the type or nature of the Document (e.g., letter, memorandum, email, etc.);
(e) a description of the subject matter of the Document in sufficient detail to enable the Court and the parties to assess the validity of the privilege claim; and
(f) the specific privilege or protection asserted as the basis for withholding the Document.
3. If any Document that would otherwise be responsive to a Request is no longer in PBGC's possession, custody, or control, PBGC shall identify the Document with reasonable specificity, state when the Document was last in PBGC's possession, custody, or control, and describe the circumstances of its disposition, including the identity of any person or entity to whom the Document was transferred, delivered, or made available.
4. If any Document is responsive to more than one Request, it need be produced only once, provided that PBGC includes a notation or cross-reference indicating each Request to which the Document is responsive.
5. All Documents shall be produced as they are kept in the usual course of business, or shall be organized and labeled to correspond with the categories set forth in each Request, as required by Illinois Supreme Court Rule 214.
6. Electronically stored information ("ESI") shall be produced in its native format or in single-page TIFF images accompanied by load files containing searchable extracted text (or OCR text where extracted text is unavailable) and all associated metadata, at Plaintiff's election. Plaintiff reserves the right to specify the format for particular categories of ESI upon review of initial productions.
7. This Request is continuing in nature pursuant to Illinois Supreme Court Rule 214. PBGC is required to supplement its responses promptly and without the necessity of further request if additional responsive Documents are located, discovered, or created after the date of PBGC's initial production.
III. REQUESTS FOR PRODUCTION
REQUEST NO. 1 — The Off-Take Agreement and Related Contracts
All Documents constituting, relating to, or concerning the Master Grain Purchase and Off-Take Agreement dated March 15, 2019, between GAP and PBGC, including but not limited to:
(a) the fully executed Agreement, together with all signature pages;
(b) all exhibits to the Agreement, including without limitation Exhibit B (basis differential schedules) and Exhibit D (the limited personal guaranty executed by Darren K. Musgrave);
(c) all amendments, modifications, supplements, restatements, and addenda to the Agreement;
(d) all side letters, ancillary agreements, or collateral understandings entered into between GAP and PBGC in connection with, or contemporaneous to, the Agreement;
(e) all drafts, redlines, mark-ups, and comments exchanged between GAP and PBGC (or their respective counsel) during the negotiation and drafting of the Agreement; and
(f) all internal memoranda, analyses, presentations, board materials, or other Documents prepared by or on behalf of PBGC relating to the negotiation, review, approval, or execution of the Agreement.
REQUEST NO. 2 — Invoices, Payment Records, and Account Statements
All Documents relating to the five Invoices at issue in this action (Invoice Nos. GAP-2021-3187, GAP-2021-3244, GAP-2021-3301, GAP-2021-3358, and GAP-2022-0042), including but not limited to:
(a) copies of the Invoices as received by PBGC, in whatever form received (electronic or hard copy);
(b) all payment records, checks, wire transfer confirmations, ACH records, remittance advices, or other evidence of payment (or non-payment) with respect to each Invoice;
(c) all accounts payable records, ledger entries, journal entries, or general ledger postings reflecting amounts owed or paid to GAP;
(d) all internal accounting records, aging reports, and accounts payable aging schedules that reference GAP, the Invoices, or the Off-Take Agreement during the Relevant Period;
(e) all Documents reflecting the processing, routing, review, approval, coding, posting, hold, dispute, or rejection of any of the Invoices within PBGC's accounting or financial systems; and
(f) all Communications, whether internal or external, relating to the payment status of any of the Invoices.
REQUEST NO. 3 — Delivery and Acceptance Records
All Documents relating to the delivery, receipt, acceptance, inspection, grading, or rejection of grain delivered by GAP to PBGC under the Off-Take Agreement during the period from July 1, 2021 through March 8, 2022, including but not limited to:
(a) weight tickets and scale tickets generated at PBGC's elevator facilities;
(b) delivery receipts;
(c) Bills of Lading;
(d) grain grading certificates, quality inspection reports, and moisture test results;
(e) elevator receiving logs and intake records;
(f) warehouse receipts;
(g) any Documents reflecting the quantity, quality, grade, test weight, moisture content, foreign material percentage, or condition of #2 Yellow Corn and #1 Yellow Soybeans delivered by GAP; and
(h) any Documents reflecting any rejection, downgrade, or claim of non-conformity with respect to any grain delivered by GAP.
REQUEST NO. 4 — Communications Between PBGC and GAP
All Communications between PBGC (including its officers, directors, employees, and agents) and GAP (including its officers, directors, employees, and agents, specifically including Caleb Jennings, Director of Grain Operations) during the Relevant Period, relating to the Off-Take Agreement, the Invoices, deliveries of grain, payment obligations, forbearance, suspension of deliveries, or any dispute between the parties, including but not limited to:
(a) the written demand from Caleb Jennings to PBGC dated January 25, 2022;
(b) Darren K. Musgrave's email response dated February 3, 2022, acknowledging the debt and requesting forbearance;
(c) all Communications relating to the 60-day forbearance agreement dated February 14, 2022, including all drafts, proposals, and counterproposals exchanged in connection with the negotiation of such agreement;
(d) all Communications relating to the conditioned partial payment of March 1, 2022, including any conditions or representations made in connection therewith;
(e) all Communications relating to GAP's suspension of deliveries on or about March 8, 2022, pursuant to Section 8.2 of the Agreement; and
(f) all other Communications between the parties relating to performance, breach, default, cure, termination, or dispute resolution under the Agreement.
REQUEST NO. 5 — Financial Statements
All financial statements of PBGC for fiscal years 2020 and 2021, and any interim or quarterly financial statements prepared for fiscal year 2022 through the date of production, including but not limited to:
(a) audited or unaudited balance sheets, income statements, statements of cash flows, and statements of shareholders' equity, together with all notes, schedules, and supporting work papers thereto;
(b) all management letters and Communications from PBGC's auditors, Mercer Tidwell & Associates PC (or any other accounting firm engaged by PBGC), relating to those financial statements, including any reports on internal controls, material weaknesses, or going-concern qualifications;
(c) all internal or management-prepared financial reports, including monthly and quarterly management reports, divisional or segmental analyses, and variance analyses;
(d) all budgets, projections, forecasts, and financial models prepared by or on behalf of PBGC for fiscal years 2021, 2022, and 2023; and
(e) all Documents reflecting any restatement, adjustment, or correction to any previously issued financial statement.
REQUEST NO. 6 — Communications with Heartland Prairie Bank Regarding Default and Financing
All Communications between PBGC and Heartland Prairie Bank, N.A. (including Kenneth W. Aldrich, Senior Vice President, Agribusiness Lending, and any other officers, employees, or representatives of Heartland Prairie Bank), during the period from January 1, 2021 through the date of production, relating to:
(a) PBGC's financial condition, cash flow position, liquidity, borrowing base, financial covenant compliance, or default under any credit facility;
(b) the Revolving Credit and Term Loan Agreement dated June 1, 2018 (with an aggregate commitment of $45,000,000), and any amendments, modifications, or restatements thereof;
(c) any requests by PBGC for additional financing, increased borrowing capacity, waivers of financial covenants, forbearance, or amendments to the terms of any credit facility;
(d) Heartland Prairie Bank's declaration of default, which occurred on or about April 2022, with approximately $31,400,000 in principal and accrued interest outstanding at the time;
(e) any notices of default, reservation of rights letters, acceleration notices, or demand letters issued by Heartland Prairie Bank;
(f) any negotiations, discussions, or proposals regarding the appointment of a receiver, assignment for the benefit of creditors, or any other insolvency-related proceeding; and
(g) any Communications relating to Heartland Prairie Bank's security interest in PBGC's assets, including grain inventory, accounts receivable, equipment, and real property.
REQUEST NO. 7 — Heartland Prairie Bank Loan Documents
All Documents constituting, relating to, or concerning PBGC's credit facilities with Heartland Prairie Bank, N.A., including but not limited to:
(a) the Revolving Credit and Term Loan Agreement dated June 1, 2018;
(b) all amendments, modifications, restatements, and supplements thereto;
(c) all security agreements, pledge agreements, and deeds of trust securing PBGC's obligations under the credit facilities;
(d) all UCC financing statements (UCC-1s and UCC-3s) filed by or on behalf of Heartland Prairie Bank;
(e) all guaranty agreements, whether personal or corporate, executed in connection with the credit facilities;
(f) all borrowing base certificates submitted by PBGC to Heartland Prairie Bank;
(g) all financial covenant compliance certificates submitted by PBGC to Heartland Prairie Bank;
(h) all default notices, acceleration notices, and demand letters issued by Heartland Prairie Bank; and
(i) all intercreditor agreements, subordination agreements, or similar Documents relating to the relative priority of claims among PBGC's creditors.
REQUEST NO. 8 — Macon County Elevator Fire — Insurance Claim Files
All Documents relating to the fire at PBGC's Macon County elevator facility, located at 2200 County Road 1400 East, Decatur, Illinois 62521, which occurred on or about October 17, 2021, including but not limited to:
(a) incident reports, internal investigation reports, and fire department or fire marshal reports;
(b) fire investigation reports prepared by any third-party investigator or expert retained by PBGC or its insurers;
(c) photographs, video recordings, and diagrams of the fire scene, damaged structures, and destroyed grain inventory;
(d) loss assessments, damage estimates, and repair or replacement cost analyses, including the estimated total loss of approximately $3,200,000;
(e) all Documents relating to the property insurance policy or policies issued by Triton Mutual Insurance Co. covering the Macon County elevator, including the policy itself, all declarations pages, endorsements, riders, premium payment records, premium billing statements, and evidence of any alleged lapse, cancellation, or non-renewal of coverage;
(f) all Communications between PBGC and Triton Mutual Insurance Co. regarding the insurance claim, coverage determination, investigation, adjustment, or denial of the claim;
(g) all Documents relating to any litigation, arbitration, or dispute between PBGC and Triton Mutual Insurance Co. regarding coverage for the Macon County elevator fire;
(h) all proof of loss submissions, sworn statements in proof of loss, and any supplemental documentation submitted to Triton Mutual in support of the claim; and
(i) any insurance proceeds received by PBGC, and any Documents reflecting the amount and disposition of such proceeds, or any amounts expected to be received.
REQUEST NO. 9 — Hedging Account Statements and Trading Records
All Documents relating to PBGC's commodity hedging activities during the period from January 1, 2021 through December 31, 2021, including but not limited to:
(a) brokerage account statements, trading confirmations, daily position reports, and monthly statements from any futures commission merchant or brokerage firm through which PBGC executed commodity futures, options, or swap transactions;
(b) margin call notices, margin account statements, margin payments (both initial and variation margin), and any Communications related to margin deficiencies;
(c) mark-to-market valuations, open trade equity reports, and realized and unrealized gain/loss summaries;
(d) all Documents reflecting PBGC's short corn futures positions, short soybean futures positions, and any other hedge positions taken in connection with PBGC's grain purchase and merchandising operations;
(e) all Documents reflecting mark-to-market losses incurred by PBGC during the fourth quarter of 2021, estimated at approximately $6,800,000;
(f) all risk management policies, procedures, guidelines, or board-approved limits governing PBGC's hedging activities, including any position limits, loss limits, or stop-loss thresholds; and
(g) all internal analyses, reports, memoranda, or presentations assessing the performance of, or losses attributable to, PBGC's hedging strategy, including any post-trade reviews or risk committee reports.
REQUEST NO. 10 — PBGC Asset and Liability Records
All Documents reflecting PBGC's total assets and total liabilities as of December 31, 2021, June 30, 2022, and September 30, 2022, including but not limited to:
(a) balance sheets as of each of the foregoing dates;
(b) schedules of assets, including real property, personal property, machinery and equipment, grain inventory, accounts receivable, cash and cash equivalents, and investments;
(c) schedules of liabilities, including secured debt, unsecured trade payables, accrued liabilities, and all other outstanding obligations;
(d) any appraisals, valuations, or assessments of PBGC's grain elevator facilities in Champaign, Macon, and Piatt Counties, Illinois, prepared by any appraiser, broker, or consultant;
(e) any Documents prepared in connection with efforts to sell, lease, or otherwise dispose of any of PBGC's assets;
(f) any Documents prepared in connection with efforts to refinance, restructure, or reorganize PBGC's operations or indebtedness; and
(g) any solvency analyses, insolvency assessments, or going-concern evaluations prepared by or on behalf of PBGC.
REQUEST NO. 11 — Bank Accounts and Cash Flow Records
All Documents reflecting PBGC's bank accounts, including but not limited to:
(a) bank statements for all accounts maintained by PBGC at any financial institution, for the period from October 1, 2021 through the date of production;
(b) deposit records, deposit slips, and records of funds received;
(c) cancelled checks, check images, and check registers;
(d) wire transfer records, including incoming and outgoing wire transfer confirmations;
(e) ACH transaction records, including debits and credits;
(f) all internal cash flow reports, daily cash position reports, cash flow projections, and treasury management reports for the period from October 1, 2021 through the date of production; and
(g) all Documents reflecting the opening, closing, or modification of any bank account during the same period.
REQUEST NO. 12 — Communications Regarding GAP's Claim and the Invoices
All internal Communications within PBGC (including Communications between or among Darren K. Musgrave, Lydia R. Musgrave, Victor P. Novotny, and any other PBGC officer, director, employee, or agent) relating to:
(a) the Invoices and any amounts owed to GAP;
(b) GAP's demands for payment, whether formal or informal;
(c) PBGC's decision not to pay, or inability to pay, the Invoices, including the reasons therefor;
(d) the forbearance negotiations with GAP in January and February 2022, including the 60-day forbearance agreement dated February 14, 2022;
(e) GAP's suspension of deliveries on or about March 8, 2022, under Section 8.2 of the Off-Take Agreement;
(f) the commencement or potential commencement of this litigation; and
(g) any assessment of PBGC's exposure, liability, or potential damages arising from GAP's claims.
REQUEST NO. 13 — PBGC's Payments to Other Trade Creditors
All Documents sufficient to identify all payments made by PBGC to trade creditors (other than GAP) during the period from October 1, 2021 through March 31, 2022, including but not limited to:
(a) accounts payable ledgers, subledgers, and aging reports;
(b) check registers and payment logs;
(c) wire transfer records and ACH payment records;
(d) payment authorization forms, vouchers, and approval records; and
(e) any Documents, including memoranda, emails, or other Communications, reflecting PBGC's prioritization, scheduling, or allocation of payments among trade creditors during the period in which the Invoices were outstanding and unpaid.
REQUEST NO. 14 — Force Majeure and Affirmative Defenses
All Documents that PBGC relied upon, or intends to rely upon, in support of any affirmative defense asserted or previously asserted in this action, including but not limited to:
(a) the force majeure defense, including any and all Documents relating to the alleged impact of the October 17, 2021 Macon County elevator fire on PBGC's ability to perform its obligations under the Off-Take Agreement, including its ability to pay the Invoices;
(b) the commercial impracticability defense, including any Documents relating to changed economic conditions, market disruptions, or other circumstances allegedly rendering performance impracticable;
(c) the failure to mitigate defense, including any Documents suggesting, evidencing, or tending to show that GAP failed to take reasonable steps to mitigate its damages, including Documents relating to alternative buyers, resale opportunities, or market conditions for #2 Yellow Corn and #1 Yellow Soybeans during the Relevant Period; and
(d) any other affirmative defense raised or reserved in PBGC's Answer.
The Court's Order dated August 22, 2022, stricken the force majeure and commercial impracticability defenses. This Request nevertheless seeks Documents relating to those withdrawn defenses, as well as the surviving failure-to-mitigate defense, for the purpose of completeness and to the extent such Documents may be relevant to any issue in this action.
REQUEST NO. 15 — Musgrave Guaranty
All Documents relating to the limited personal guaranty executed by Darren K. Musgrave (the "Musgrave Guaranty"), attached as Exhibit D to the Off-Take Agreement, including but not limited to:
(a) the fully executed Musgrave Guaranty, together with all signature pages;
(b) any amendments, modifications, supplements, or waivers relating to the Musgrave Guaranty;
(c) all Communications regarding the Musgrave Guaranty between Darren K. Musgrave and PBGC, GAP, or any third party;
(d) all Documents reflecting Darren K. Musgrave's personal financial condition, assets, liabilities, income, or net worth, to the extent such Documents are in PBGC's possession, custody, or control; and
(e) all Documents reflecting any consideration, discussion, or analysis of the scope, enforceability, or potential liability under the Musgrave Guaranty.
REQUEST NO. 16 — Corporate Records
All Documents constituting or relating to PBGC's corporate governance and ownership structure, including but not limited to:
(a) PBGC's articles of incorporation, certificate of incorporation, and all amendments thereto;
(b) PBGC's bylaws and all amendments thereto;
(c) all shareholder agreements, operating agreements, buy-sell agreements, or voting agreements among PBGC's shareholders;
(d) all minutes of meetings of the board of directors and shareholders from January 1, 2021 through the date of production;
(e) all written consents in lieu of meetings of the board of directors or shareholders from January 1, 2021 through the date of production;
(f) all Documents reflecting the ownership of PBGC stock, including stock certificates, stock ledgers, and records of any transfers, including without limitation the current ownership structure (Darren K. Musgrave — 72%; Lydia R. Musgrave — 18%; Victor P. Novotny — 10%); and
(g) all Documents relating to any proposed or contemplated sale, merger, acquisition, dissolution, liquidation, or wind-down of PBGC, including any letters of intent, term sheets, offering memoranda, or due diligence materials.
REQUEST NO. 17 — Communications with Counsel Regarding This Action
To the extent not protected by attorney-client privilege, work-product doctrine, or any other applicable privilege or immunity, all Communications between PBGC and Bartlett, Reyes Linley CPAs LLP & Harkin LLP (including Douglas M. Harkin, Nadia C. Petrov, and any other attorneys, paralegals, or staff at the firm) relating to this action, the Off-Take Agreement, the Invoices, or GAP's claims against PBGC or Darren K. Musgrave.
PBGC shall provide a detailed privilege log for any Documents withheld on the grounds of attorney-client privilege or work-product protection, in compliance with Illinois Supreme Court Rule 201(n) and the Instructions set forth above.
REQUEST NO. 18 — Basis Differential Schedules and Pricing Records
All Documents relating to the basis differentials established quarterly under Exhibit B to the Off-Take Agreement, including but not limited to:
(a) all quarterly basis differential schedules for the third quarter of 2021 through the first quarter of 2022;
(b) all underlying pricing calculations, worksheets, and supporting data used to determine the applicable basis differentials;
(c) all references to Chicago Board of Trade ("CBOT") nearby futures prices used in the determination of contract prices under the Agreement;
(d) all Communications between GAP and PBGC regarding pricing, basis differentials, or settlement terms for the deliveries at issue;
(e) all Documents reflecting the per-bushel prices for the grain reflected in the Invoices, including #2 Yellow Corn at $5.95 per bushel, $6.12 per bushel, and $6.18 per bushel, and #1 Yellow Soybeans at $12.49 per bushel and $13.44 per bushel; and
(f) all Documents reflecting any disputes, objections, or proposed adjustments to the basis differentials or per-bushel pricing during the period from July 1, 2021 through March 8, 2022.
REQUEST NO. 19 — Insurance Policies (General)
All insurance policies maintained by PBGC at any time during the Relevant Period, including but not limited to:
(a) commercial general liability insurance policies;
(b) property and casualty insurance policies (in addition to those identified in Request No. 8);
(c) directors and officers liability insurance policies;
(d) errors and omissions insurance policies;
(e) umbrella and excess liability insurance policies;
(f) any other insurance policies that may provide coverage for the claims asserted in this action, for PBGC's obligations under the Off-Take Agreement, or for losses sustained by PBGC during the Relevant Period; and