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Eurochem Trading USA Corporation v. Ganske

United States District Court, W.D. Wisconsin

August 6, 2019

EUROCHEM TRADING USA CORPORATION, Plaintiff,
v.
W. KENT GANSKE, individually and d/b/a and sole proprietor of AG CONSULTANTS, and JULIE L. GANSKE, Defendants. W. KENT GANSKE, individually and d/b/a AG CONSULTANTS, and JULIE GANSKE, Counter-Plaintiffs and Third-Party Plaintiffs, and WS AG CENTER, INC., Third-Party Plaintiffs,
v.
EUROCHEM TRADING USA CORPORATION, Plaintiff and Counter-Defendant, and EUROCHEM GROUP AG, SCOTT SIMON, IVAN BOASHERLIEV, BENTREI FERTILIZER, LLC and BEN-TREI, LTD., Third-Party Defendants.

          OPINION AND ORDER

          STEPHEN L. CROCKER MAGISTRATE JUDGE

         Plaintiff EuroChem Trading USA Corporation (“ECTUS”) brings this lawsuit to collect more than $14 million in unpaid invoices for agricultural product that it delivered to WSAG Center, Inc. (“WSAG”), an agri-business controlled by defendant W. Kent Ganske. It sued Ganske and his wife, Julie Ganske, for breach of contract, alleging that they signed an unconditional Guaranty in which they agreed to pay WSAG's debts to ECTUS. The Ganskes, joined by WSAG, filed a number of counterclaims, including fraud in the inducement and misrepresentation by ECTUS in conjunction with the Guaranty.

         While this lawsuit has been pending, ECTUS and WSAG have arbitrated their dispute over the unpaid invoices. On March 6, 2019, the arbitrator issued a Final Award, awarding ECTUS damages in the amount of $14, 283, 519.42 for breach of contract, plus pre-judgment interest, attorneys' fees, and costs. Dkt. 80-1. In an order entered on July 8, 2019, this court affirmed the Final Award. Award in hand, ECTUS now asks this court to enter summary judgment against the Ganskes on Count IV of the second amended complaint, which seeks to collect on the Guaranty. Dkt. 90.

         The Ganskes do not deny that they signed the Guaranty or that they have breached it, but they allege that the Guaranty is unenforceable because they were fraudulently induced into signing it and because it was not supported by adequate consideration. Dkts. 98-104. Specifically, W. Kent Ganske and Julie Ganske each contends that he/she signed the Guaranty only because ECTUS's representatives promised him/her certain things, knowing that those promises were false. ECTUS's representatives flatly deny making any binding promises on behalf of the company or that they had any fraudulent intent.

         Although it is highly unlikely that the Ganskes will be able to establish all the necessary elements of their fraud claim at trial, the evidence they have presented to the court is enough to stave off summary judgment. Implausible though some of their assertions may be, on summary judgment a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts. Accordingly, although it is a close call, I am denying ECTUS's motion for summary judgment against the Ganskes. I will decide this portion of the parties' dispute at the imminent bench trial. More on this at the end of the order.

         A procedural matter requires mention before setting out the facts: the Ganskes argue that the summary judgment motion is premature, reporting that they are awaiting responses to some of their discovery requests. They also suggest that they did not undertake discovery in a more timely fashion because they were awaiting the court's ruling on a motion to dismiss by third-party defendant Scott Simon. Although the Ganskes have not filed any motion to this effect, they appear to be asking the court to reset the summary judgment deadline.

         The Ganskes' objections are not well taken. The pretrial conference order establishing the deadlines in this case was issued over 16 months ago, on April 2, 2018. Plaintiff filed its summary judgment motion on April 25, 2019, one day before the dispositive motion deadline expired, so it is hardly “premature.” The pretrial conference order alerted the parties then that they “are to undertake discovery in a manner that allows them to make or respond to dispositive motions within the scheduled deadlines, ” dkt. 26 at 2, and that they were to file discovery motions promptly if they ran into unresolvable disputes, id. at 3. No party ever requested a stay of discovery and no stay has been issued. Moreover, it is puzzling and illogical for the Ganskes to have waited to take discovery from ECTUS until they knew whether Simon was in the case. The third party claims against him have nothing to do with ECTUS's collection action on the Guaranty. Accordingly, the Ganskes' informal, post-hoc request for a new summary judgment deadline is denied.

         For the purposes of deciding the pending motion, the court finds the following facts to be relevant and material.[1] They are undisputed except where otherwise noted.

         FACTS

         I. The Parties

         Plaintiff EuroChem Trading USA Corporation (“ECTUS”) is incorporated under the laws of the State of Florida and has its principal place of business in Tampa, Florida. ECTUS is a wholesaler of fertilizer and other agricultural chemicals to customers in the United States. From 2012 to 2017, ECTUS sold product to one or more agri-businesses owned or controlled by W. Kent Ganske.

         W. Kent Ganske (Ganske) and his wife, Julie Ganske, are citizens of Wisconsin. Ganske is the sole shareholder of WS AG Center, Inc., an agricultural product retailer. WSAG is incorporated and has its principal place of business in Wisconsin. Ganske also owns and operates Agricultural Consultants (AG Consultants) as a sole proprietorship.

         II. The Contracts

         Beginning in 2010, ECTUS and WSAG entered into a series of contracts for the sale of urea, phosphate and other products from ECTUS to WSAG. This case concerns nine contracts entered into between December 9, 2015 and November 18, 2016 (“the Contracts”). ECTUS timely delivered goods as provided in the Contracts, WSAG accepted delivery, and ECTUS provided invoices to WSAG for all amounts due and owing. However, in early 2016, WSAG fell behind on its payments. By November 2016, WSAG owed ECTUS more than $21 million.

         On or about November 16, 2016, ECTUS agreed to a payment schedule with WSAG for repayment of all amounts due not later than May 31, 2017, and the parties executed Addendums to the Contracts to this effect. However, in January 2017, Ganske informed ECTUS that WSAG would not be able to repay the entire debt by May 31, 2017, as it had promised. At that time, WSAG's debt to ECTUS stood around $14 million. ECTUS thereafter continued to sell product to WSAG, but only on a prepayment basis.

         III. The Guaranty

         On March 7 through 9, 2017, Ganske held meetings with Ivan Boasher, ECTUS's president, and Marc Hechler, the head of European marketing and sales for ECTUS's parent company, EuroChem Group AG, to discuss resolution of WSAG's debt. Julie Ganske was not present at these meetings. One of ECTUS's goals during these meetings was for Ganske and Julie Ganske each to sign a personal guaranty for the debt owed by WSAG.

         The parties dispute precisely what was said during the meetings. According to Boasher and Hechler, in exchange for signing the Guaranty, Ganske wanted ECTUS to agree to resume selling products to WSAG on a deferred payment basis. Boasher and Hechler say they rejected this proposal, informing Ganske that he would have to continue to prepay if he wanted product from ECTUS. According to Boasher, ECTUS would not have continued to sell product to Ganske under any circumstances, even with prepayment, without the Guaranty. Although Boasher and Hechler agree that they discussed possibly entering into an agreement for WSAG or Ganske to sell ECTUS's products on a controlled consignment basis, both men aver that they expressly told Ganske that any proposals discussed would have to be approved by EuroChem's upper management, and that neither of them had the authority to agree to specific proposals on behalf of ECTUS. Hechler and Boasher state that they also discussed how Ganske could support his business during the summer of 2017, so that when his busy season was over, he could try to sell his business to repay his debt to ECTUS.

         Ganske, on the other hand, avers that Hechler and Boasher told him that, if he signed the Guaranty, then ECTUS would immediately begin to supply WSAG with product on a “controlled consignment basis, ” a type of credit arrangement under which ECTUS would provide product to WSAG but retain a portion of the proceeds. Ganske further avers that Hechler and Boasher told him that ECTUS would eventually purchase WSAG. Ganske understood that Boasher and Hechler had authority to make these representations based on their positions at their respective companies. Aff. of W. Kent Ganske, dkt. 103, ¶ 58.

         Ganske signed the Guaranty on March 8, 2017. It states, in relevant part:

For value received, and to induce EuroChem Trading USA Corporation (“Creditor”), to continue credit accommodations to W S AG Center, Inc. and Agricultural Consultants (collectively, “Debtor”), the undersigned Guarantor jointly and severally guarantees payment of the Obligations defined below when due or, to the extent not prohibited by Law, at ...

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