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Winfield Solutions, LLC v. W S AG Center, Inc.

United States District Court, W.D. Wisconsin

April 29, 2019



          Stephen L. Crocker, Magistrate Judge.

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

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

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


         I. WSAG's Purchases of Product from Plaintiff

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

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

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

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

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

         II. Plaintiff's Patronage Program

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

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

         Under Section 8.5 of United Suppliers' Amended and Restated Bylaws, a member who wants to redeem its base capital must provide a written notice to United Suppliers. Redemption of base capital is subject to redemption policies adopted by United Suppliers' Board of Directors. United Suppliers' last redemption policy, which was adopted by Winfield when it merged with United Suppliers in 2017, was set forth in a brochure entitled “StepCash Base Capital Program.” This brochure was distributed to all of United Suppliers' members, ...

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