CoBank, ACB v. Printz

Filing 13

ORDER Entered by Chief Judge James E. Shadid on 4/1/13: FOR THE REASONS set forth above, the Motion to Dismiss 9 is DENIED. Defendant shall answer the Complaint within 14 days of the date of this Order. (TK, ilcd)

E-FILED

Monday, 01 April, 2013 03:48:51 PM
Clerk, U.S. District Court, ILCD

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS

CO-BANK, ACB,
Plaintiff,
v.
ROBERT PRINTZ,
Defendant.

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Case No. 12-1182

ORDER
This matter is now before the Court on Defendant Robert Printz’s (“Printz”) Motion to
Dismiss Pursuant to Rule 12(b). For the reasons set forth below, the Motion to Dismiss [9] is
DENIED.
BACKGROUND
Plaintiff, Co-Bank, ACB (“Co-Bank”), is the secured lender of Towanda Grain Co.
Cooperative and is the assignee of all of Towanda’s rights, title and interest in any claims Towanda
may have against Defendant, Robert Printz (“Printz”). Printz sold grain to Towanda and through a
series of transactions, Towanda made loan advances to Printz totaling approximately $13,147,000.
These loans were allegedly procured through Printz’s fraudulent misrepresentation and knowing
issuance of bad checks. Ultimately, Printz failed to repay approximately $4,602,983.59 in loan
advances.
After receiving Towanda’s assignment of rights, Co-Bank sued Printz in June 2010.
However, the case was dismissed without prejudice after Printz filed bankruptcy. Following the

dismissal of the bankruptcy action, Co-Bank brought this suit, alleging the same claims as those
alleged in the prior action. Printz has now moved to dismiss the Complaint. The matter is fully
briefed, and this Order follows.
DEFENDANT’S MOTION TO DISMISS
I.

Legal Standard

Courts have traditionally held that a complaint should not be dismissed unless it appears from
the pleadings that the plaintiff could prove no set of facts in support of his claim which would entitle
him to relief. See Conley v. Gibson, 355 U.S. 41 (1957); Gould v. Artisoft, Inc., 1 F.3d 544, 548 (7th
Cir. 1993). Rather, a complaint should be construed broadly and liberally in conformity with the
mandate in Federal Rule of Civil Procedure 8(f). More recently, the Supreme Court has phrased this
standard as requiring a showing sufficient “to raise a right to relief beyond a speculative level.” Bell
Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). Furthermore, the claim for relief must be
“plausible on its face.” Id.; Ashcroft v. Iqbal, 129 S.Ct. 1937, 1953 (2009).
For purposes of a motion to dismiss, the complaint is construed in the light most favorable
to the plaintiff; its well-pleaded factual allegations are taken as true, and all reasonably-drawn
inferences are drawn in favor of the plaintiff. See Albright v. Oliver, 510 U.S. 266, 268 (1994);
Hishon v. King & Spalding, 467 U.S. 69 (1984); Lanigan v. Village of East Hazel Crest, 110 F.3d
467 (7th Cir. 1997); M.C.M. Partners, Inc. V. Andrews-Bartlett & Assoc., Inc., 62 F.3d 967, 969 (7th
Cir. 1995); Early v. Bankers Life & Cas. Co., 959 F.2d 75 (7th Cir. 1992).
II.

Analysis

Printz first argues that the Complaint must be dismissed because Plaintiff only refers to his
place of residence and has therefore failed to allege diversity of citizenship. This is plainly incorrect,
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as Paragraph 6 of the Complaint plainly alleges that Printz “is a citizen of the State of Illinois.” As
the Complaint further alleges that Plaintiff is a citizen of Colorado and that the amount in
controversy exceeds $75,000.00, the requirements of diversity jurisdiction have sufficiently been
pled.
Printz next contends that the written contract between the parties requires binding arbitration.
The Federal Arbitration Act (“FAA”) clearly “embodies a strong federal policy in favor of
arbitration.” Sweet Dreams Unlimited, Inc.v. Dial-A-Mattress International, Ltd., 1 F.3d 639, 641
(7th Cir. 1993). That being said, the Seventh Circuit has cautioned that “the duty to arbitrate remains
one assumed by contract, and we will not compel parties to arbitrate disputes unless they have agreed
to do so.” Id.
The only written agreement of record in this matter is the 10/22/09 Contract of Purchase
between Printz and Towanda providing for a March 2010 Basis Contract of 200,000,000 bushels of
yellow corn. In the Contract, Printz warrants that he has good and merchantable title to the grain free
of any encumbrance, and the parties agree that the sole remedy for resolution and settlement of any
disputes “arising under this Contract” is through binding arbitration before the National Grain and
Feed Association. Co-Bank responds that the Contract only applies to the sale of grain and has
nothing to do with the loans made to Printz by Towanda.
Unlike contract language that provides for the broader arbitration of disputes “arising out of”
or “relating to” the contract, the Seventh Circuit has construed language providing for the arbitration
of disputes “arising under” the contract or “arising hereunder” to be more narrow. Id., at 641-42;
Rosenblum v. Travelbuys.com Limited, 299 F.3d 657, 663-64 (7th Cir. 2002). The “arising under”
language has been construed to refer only to disputes regarding the interpretation and performance
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of the contract itself and does not mandate the arbitration of disputes having to do with other
agreements or arrangements between the parties. Id. As such, the Court concludes that the
arbitration clause at issue here applies only to disputes regarding the interpretation and performance
of the agreement by Printz to sell grain to Towanda. To hold that the language in the 10/22/09
Contract of Purchase encompasses advance loans to Printz not even mentioned or contemplated in
the document would expand the operation of that clause beyond its express terms, as well as any
documented intent of the parties. Accordingly, the Court must conclude that the arbitration clause
does not compel arbitration of the disputes in this case, and Defendant’s Motion to Dismiss is
DENIED.
CONCLUSION
For the reasons set forth above, the Motion to Dismiss [9] is DENIED. Defendant shall
answer the Complaint within 14 days of the date of this Order.
ENTERED this 1st day of April, 2013.
s/ James E. Shadid
James E. Shadid
Chief United States District Judge

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