IOM Grain LLC v. ZEA Global Seeds SA et al

Filing 93

OPINION AND ORDER: DENYING 71 MOTION for Summary Judgment by Defendant Illinois Crop Improvement Association Inc; DENYING 80 RULE 12(f) MOTION to Strike Defendant's Hearsay Evidence by Plaintiff IOM Grain LLC. Court SETS Telephonic Status Conference for 2/17/2015 10:00 AM in US District Court before Judge Theresa L Springmann. Court to initiate call. Signed by Judge Theresa L Springmann on 1/14/2015. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
IOM GRAIN, LLC, f/k/a
H&B CONDITIONING, LLC,
Plaintiff,
v.
ILLINOIS CROP IMPROVEMENT
ASSOCIATION, INC.,
Defendant.

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CAUSE NO.: 1:10-CV-337-TLS

OPINION AND ORDER
This matter is before the Court on Defendant Illinois Crop Improvement Association,
Inc.’s Motion for Summary Judgment [ECF No. 71], filed on December 13, 2013. Also pending
is Plaintiff IOM Grain, LLC’s Motion to Strike [ECF No. 80] various exhibits the Defendant
offered in support of the Motion for Summary Judgment. For the reasons stated in this Opinion
and Order, the Court will deny the Defendant’s Motion for Summary Judgment and deny the
Plaintiff’s Motion to Strike.

PROCEDURAL BACKGROUND
The Plaintiff filed this action in the Jay Circuit Court, Jay County, Indiana, on August 19,
2010 [ECF No. 1], alleging (1) breach of contract against ZEA Global Seeds (“ZEA”); (2)
fraudulent misrepresentation against ZEA and the Defendant; (3) constructive fraud against the
Defendant; (4) negligent misrepresentation against the Defendant; (5) breach of fiduciary duty
against the Defendant; and (6) civil conspiracy against both ZEA and the Defendant. The
Defendant removed the case to this Court pursuant to 28 U.S.C. §§ 1332, 1441(a) and 1446 on

September 29, 2010 [ECF No. 2], and filed an Amended Notice of Removal [ECF No. 8] on
October 12, 2010, providing more complete jurisdictional information. The Defendant filed a
Motion to Dismiss on December 3, 2010 [ECF No. 14]. The Plaintiff responded by filing an
Amended Complaint on January 27, 2011 [ECF No. 22], and the Court therefore denied the
original Motion to Dismiss as moot on February 3, 2011 [ECF No. 24]. On February 28, 2011,
the Defendant filed a Motion to Dismiss [ECF No. 26]. On October 20, 2011, the Court issued an
Opinion and Order [ECF No. 34] granting dismissal of Plaintiff’s claims for constructive fraud,
negligent misrepresentation and breach of a fiduciary duty against the Defendant; while denying
dismissal for Plaintiff’s claims of breach of contract against ZEA, and fraudulent
misrepresentation and civil conspiracy against ZEA and the Defendant.
Due to difficulty in obtaining service of process on ZEA, the Plaintiff filed a motion on
January 10, 2012, to dismiss its claims against ZEA without prejudice [ECF No. 38]. On January
27, 2012, the Court issued an order granting Plaintiff’s dismissal of its claims against ZEA [ECF
No. 39].
On December 13, 2013, the Defendant filed a Motion for Summary Judgment [ECF No.
71], along with a corresponding Brief in Support of Defendant’s Motion for Summary Judgment
[ECF No. 72]. The Plaintiff responded on January 27, 2014 [ECF No. 77], and the Defendant
replied on February 10, 2014 [ECF No. 85].
On January 27, 2014, the Plaintiff also filed a motion, pursuant to Federal Rule of Civil
Procedure 12(f) [ECF No. 80], to strike various exhibits the Defendant offered in support of the
Motion for Summary Judgment, along with a corresponding Brief in Support of Plaintiff’s
Motion to Strike [ECF No. 81]. The Defendant responded on February 10, 2014, and the Plaintiff

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replied on February 19, 2014.
FACTUAL BACKGROUND
This case arises from a failed contractual relationship. The Plaintiff is an Indiana limited
liability company that supplies high quality non-GMO food grade soy beans and corn to
domestic and international markets. The sole member of the Plaintiff is Ramon Loucks, who has
been at all times relevant to this lawsuit—and remains—a citizen of Indiana. ZEA is an
Argentinian corporation that provides winter season soy bean nursery services at farms in
Argentina. Finally, the Defendant is an Illinois corporation that provides seed certification and
field services to agricultural companies throughout the world.
Complete diversity exists because no member of the Plaintiff is a citizen of the same
State as the Defendant, and the amount in controversy exceeds $75,000. (ECF No. 2; ECF No.
8.)
In early 2008, the Plaintiff and the Defendant discussed the possibility of doing business
with some of the Defendant’s business partners. Dennis R. Thompson, CEO of the Defendant,
introduced the leadership of the Plaintiff and the leadership of ZEA through a telephone
conversation and email on or about April 8, 2008.1 In his email, Thompson stated that ZEA was
a “topnotch concern[] with whom [the Defendant] has great respect.” (Pl. Ex. A, ECF No. 22–1.)
He then made specific statements about ZEA’s organization and capabilities, outlining a
potential arrangement between the Plaintiff and ZEA. In the same email, he referred to ZEA as
“ZEA Global Seeds via our Global Seed Solutions (GSS).” (Id.) Global Seed Solutions was

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Prior to the contract at issue, the Plaintiff had sought business referrals from Thompson and
conducted business related to genetic testing services with the Defendant.

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incorporated on August 5, 2008, with the Defendant and ZEA as the sole shareholders. (Id.; Pl.
Ex. D, ECF No. 22–4.) In the April 8 email, Thompson noted that under a proposed deal, ZEA
would “compensate [the Defendant] under the GSS agreement.” (Pl. Ex. A.)
In the late spring and early summer of 2008, the Plaintiff and ZEA engaged in
negotiations for ZEA to provide the Plaintiff’s needs for high quality non-GMO food grade
quality soybeans. As part of the proposed contract, ZEA would commit nearly $1 million to
secure land; pay for necessary inputs and services; and grow, harvest and deliver soy beans to
the Plaintiff. The Defendant—through Thompson—was involved in these negotiations. As part
of this process, Thompson conducted meetings with ZEA executives individually and jointly
with executives from the Plaintiff. ZEA provided an initial quote on June 20, 2008, which
included a request for the Plaintiff to make an initial pre-payment. The quote was unacceptable
to the Plaintiff, and negotiations continued. On June 23, 2008, ZEA told the Plaintiff via e-mail
that a pre-payment was necessary because “all lines of credit have disappeared.”2 (Pl. Ex. 52,
ECF No. 78–13.) On or about June 25, 2008, ZEA requested a pre-payment of $500,000 from
the Plaintiff. ZEA again referenced a lack of credit in Argentina. According to Loucks, he
viewed ZEA’s request as a negotiation tactic and not as a sign of financial trouble.3 (Pl. Ex. 1 at

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The e-mail stated: “I suggest we discuss the payment proposal . . . with the current political
situation in Argentina, all lines of credit have disappeared and we live in a cash-only business. The reason
for the upfront payment . . . relates to the timing of our cash rent and major inputs deadlines.” (Pl. Ex. 52,
ECF No. 78–13.) According to Loucks, he interpreted “cash rent” as rent owed for farming real estate,
and “major inputs deadlines” as deadlines to pay for crop inputs (e.g., “seed, fertilizer, fuel, machinery,
labor, herbicides.”). (Pl. Ex. 1 at 114–15, ECF No. 78-1.)
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Marcelo Queijo, President of ZEA at all times relevant to the lawsuit, testified that the statements
made by ZEA could be interpreted as a method of negotiation. According to Queijo, the request for a prepayment “was [] part of [ZEA’s] negotiating the deal” and that ZEA “didn’t enter into deals unless our
clients did commit some financial support upfront.” (Pl. Ex. 2 at 134, ECF No. 78–2.) Queijo also noted
that pre-payments are customary for the type of contract at issue. (Id. at 36.)

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124.) The Plaintiff rejected ZEA’s request for a pre-payment.
During subsequent negotiations, ZEA continued to request a pre-payment from the
Plaintiff so that ZEA could begin performing under the proposed contract. By July 2008, Loucks
said he became more amenable to ZEA’s request; but at the same time, he became concerned
with ZEA’s financial condition. As a result, Loucks inquired of Thompson regarding ZEA’s
financial condition; specifically, whether ZEA was “good for the money” that ZEA was
requesting from the Plaintiff. (Id. at 176.) Thompson said he was unable to provide specific
financial information about ZEA because of a confidentiality agreement. However, Thompson
provided assurances that ZEA could perform under the proposed contract. Specifically,
Thompson said that ZEA was “capable of doing this deal” and “capable of handling this
transaction.” (Id. at 195; Def. App. A at 21, ECF. No. 73.) Thompson testified that ZEA’s
“ability to get financing” was included as part of his assurances.4 Neither party disputes that
Thompson was aware of the specific terms of the proposed contract. According to Loucks,
Thompson’s assurances were provided in July 2008.
On or about July 28, 2008, ZEA informed the Plaintiff that it would need a pre-payment
that same week. The Plaintiff responded that it required financial documentation from ZEA
before moving forward. The Plaintiff requested two years of balance sheets, two years of profit
and loss statements, and the prior year’s tax filings.
On July 29, 2008, Thompson sent an e-mail to Tom Growmark, the Chairman of the
Defendant’s Board of Directors, requesting authorization to forward ZEA the needed funds. The

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Thompson’s testimony provided: “[Question:] Did you ever discuss ZEA’s ability to get
financing []? [Answer:] Only in the context could they handle the overall project, and that would include
the total package.” (Pl. Ex. 3 at 174, ECF No. 78–3.)

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e-mail stated: “ZEA is tapped out for immediate cash as their cashflow for [the] upcoming
season begins in 15 days.”5 (Pl. Ex. 21, ECF No. 78–8.) When asked about this e-mail,
Thompson testified that ZEA’s “cash flow was not what they had anticipated” and as a result,
“they were looking for cash flow support.” (Pl. Ex. 3 at 186.) Thompson told Growmark that a
successful deal between the Plaintiff and ZEA would be “really big” for the Defendant, resulting
in a $50,000-70,000 commission, and commissions on future business between ZEA and the
Plaintiff, and would “demonstrate [the Defendant’s] capabilities to build unique business
relations and opportunities.” (Pl. Ex. 21.) Thompson’s e-mail also noted the risks of the
transaction.6
The Defendant then forwarded ZEA the needed funds without the Plaintiff asking it to do
so. In a July 30 email, Thompson informed the Plaintiff that the Defendant would forward the
funds to ZEA “to pull this project together this week.” (Pl. Ex. B, ECF No. 22–2.) In his email,
Thompson referred to ZEA as “our strategic partner,” and further stated that “ICIA has put a
pony in the race!!!” (Id.) Loucks responded—via email—by thanking Thompson for his action.
(Id.)
On August 2, 2008, ZEA provided the requested financial information to the Plaintiff,

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Thompson testified that he never used the phrase “tapped out for cash” during his discussions
with the Plaintiff, but that ZEA’s cash requirements were “general knowledge” to the negotiating parties:
[Question:] Did you ever tell [Plaintiff] that ZEA is tapped out for immediate cash? [Answer:] I don’t
recall saying it in those terms. But in the general nature of the entire business discussion, it was totally
understood that this was a very unique and larger project and those projects have to be funded within their
merit . . . if [pre-payments] weren’t forthcoming, that certainly would create some disruption . . . [s]o the
idea of that was very, very common and generally discussed and known by everyone.” (Pl. Ex. 3 at 193.)
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Thompson’s e-mail stated: “If ZEA should stiff [the Defendant] in the near term it will kill
prospects of launching GSS, Inc. and would happen prior to the time we would capitalize GSS, Inc.” (Pl.
Ex. 21.)

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including audited financial information for 2006 and 2007; and unaudited financial information
for 2008, which ran through June. (Id.; Pl. Ex. C, ECF No. 22–3; Pl. Ex. 54, ECF No. 78–14; Pl.
Ex. 55, ECF No. 78–15.) However, according to Loucks’ testimony, Thompson said he
possessed financial information that was not reflected in the requested financial documents, and
that he could not disclose the information due to the confidentiality agreement.7 (Pl. Ex. 1 at
201.) After receiving the assurances of Thompson and reviewing the requested financial
documents, Loucks concluded that ZEA was a “mildly profitable” company that could perform
under the contract. (Id. at 192.)
On August 4, 2008, ZEA sent the Plaintiff a “Letter of Intent” detailing, in part, a
proposed obligation for the Plaintiff to make a $100,000 pre-payment—$50,000 to be paid to
ZEA and $50,000 to be paid to the Defendant as reimbursement for their pre-payment “in
behalf” of the Plaintiff. (Pl. Ex. E, ECF. No. 22–5). On August 6, ZEA also informed the
Plaintiff that ZEA owed $7,000 to the Defendant, and requested that the Plaintiff—instead of
paying ZEA directly—forward funds to the Defendant to cancel ZEA’s outstanding balance. (Pl.
Ex. C.) Also on August 6, Thompson informed the Plaintiff via email that ZEA “really could use
the comfort of the signed document and transfer of monies.” (Pl. Ex. D) On August 7, the
Plaintiff sent a signed Letter of Intent to ZEA; and on August 15, sent the $57,000 pre-payment
to the Defendant as requested by ZEA. (Pl. Ex. E.) In addition to the $57,000 pre-payment to the
Defendant, the Plaintiff eventually provided a pre-payment of $93,000 to ZEA—$150,000 in

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Loucks’ testimony provided: [Question:] Did you think that [Thompson] knew more about
ZEA’s financial condition than what’s reflected in [the requested financial documents of ZEA]? [Answer:
Thompson] said he did. [Question:] What did he tell you that he knew? [Answer:] That he couldn’t tell us.

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total.8
In September 2008, representatives from ZEA, the Plaintiff and the Defendant met in
Argentina to finalize a contract. Thompson participated in the discussions, meeting with ZEA
executives alone and with executives from ZEA and the Plaintiff together. On September 16,
2008, ZEA and the Plaintiff signed a contract for ZEA to provide the Plaintiff with soy beans
between April and October 2009. (Pl. Ex. F, ECF No. 22–6.) The contract is written on the
Plaintiff’s letterhead, and purports to be “the final, complete and exclusive statement of the
agreement between the parties.” (Id.) The Defendant was not a party to the contract.
According to Loucks, following the signing of the contract, a dispute arose between the
Plaintiff and ZEA regarding an overdue payment for crop inputs. In December 2008, following a
meeting with ZEA representatives, Loucks said he began having concerns regarding ZEA’s
“cash flow problems.” (Pl. Ex. 1 at 278.)
In January 2009, Loucks and Thompson traveled to Argentina to review ZEA’s
operations. During this visit, Loucks was notified by ZEA representatives of “cash flow
problems” and general financial difficulties at ZEA that may impact performance of the contract.
(Id. at 282.) During this time period, Loucks said he also became aware of weather conditions
caused by heat and drought that could potentially impact crop yields. (Id. at 254.) In March
2009, the Defendant loaned $40,000 to ZEA for assistance in performing the contract. The
Defendant did not disclose the loan to the Plaintiff. Thompson said he began having concerns
about the success of the contract at this time.

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Thompson testified that he understood the Plaintiff’s pre-payment to be a form of credit:
[Question: The Plaintiff was] providing money to ZEA that ZEA was required to pay back later; correct?
[Answer:] That was my understanding.” (Pl. Ex. 3 at 310.)

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In May 2009, the Plaintiff requested updated financial documents from ZEA regarding its
financial condition. According to the Plaintiff, the requested financial documents indicated that
ZEA lost money between July and September 2008. (Pl. Ex. 66., ECF No. 78–17.) Queijo did
not dispute the accuracy of the financial information sent to the Plaintiff.
In summer 2009, a contractual dispute arose between ZEA and the Plaintiff concerning
export taxes. ZEA was also unable to deliver the soy beans to the Plaintiff due to a separate
contract dispute with third-party growers.9 As a result, the deal collapsed in late summer 2009.
ZEA failed to complete the contract or reimburse the Plaintiff for its $150,000 pre-payment.
The Plaintiff’s pending claims against the Defendant include fraudulent
misrepresentation and civil conspiracy. The Plaintiff alleges financial damages as well as
damage to credibility and reputation. (Am. Compl. ¶ 50.) The Defendant argues that, under
Federal Rule of Civil Procedure 56, summary judgment is appropriate because no issues of
material fact exist as to Plaintiff’s remaining claims. (Def’s Br. in Supp. of Summ. J., ECF No.
72.) The Plaintiff argues that summary judgment is not appropriate because the Plaintiff has
offered sufficient evidence to create issues of material fact. (Pl.’s Br. in Opp. to Summ. J., ECF
No. 77.)

SUMMARY JUDGMENT STANDARD
Summary judgment is warranted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

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The record shows that third-party growers refused to release the soy beans to ZEA due to a
disagreement relating to payment terms. According to Queijo’s deposition testimony, the growers refused
to release the soy beans because ZEA was unable to provide a timely payment. (Pl. Ex. 2 at 188.)

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Civ. P. 56(a). Summary judgment is the moment in litigation where the non-moving party is
required to marshal and present the court with evidence on which a reasonable jury could rely to
find in his favor. Goodman v. Nat’l Sec. Agency, Inc., 621 F.3d 651, 654 (7th Cir. 2010). A court
should only deny a motion for summary judgment when the non-moving party presents
admissible evidence that creates a genuine issue of material fact. Luster v. Ill. Dep’t of Corrs.,
652 F.3d 726, 731 (7th Cir. 2011) (citing United States v. 5443 Suffield Terrace, 607 F.3d 504,
510 (7th Cir. 2010); Swearnigen–El v. Cook Cnty. Sheriff’s Dep’t, 602 F.3d 852, 859 (7th Cir.
2010)). A court’s role in deciding a motion for summary judgment “is not to sift through the
evidence, pondering the nuances and inconsistencies, and decide whom to believe. A court has
one task and one task only: to decide, based on the evidence of record, whether there is any
material dispute of fact that requires a trial.” Waldridge v. Am. Heochst Corp., 24 F.3d 918, 920
(7th Cir. 1994). Material facts are those that are outcome determinative under the applicable law.
Smith v. Severn, 129 F.3d 419, 427 (7th Cir. 1997). Although a bare contention that an issue of
material fact exists is insufficient to create a factual dispute, a court must construe all facts in a
light most favorable to the nonmoving party, view all reasonable inferences in that party's favor,
see Bellaver v. Quanex Corp., 200 F.3d 485, 491–92 (7th Cir. 2000), and avoid "the temptation
to decide which party's version of the facts is more likely true," Payne v. Pauley, 337 F.3d 767,
770 (7th Cir. 2003) (noting that "summary judgment cannot be used to resolve swearing contests
between litigants").
As the Court addresses the legal issues presented by the Defendant’s Motion for
Summary Judgment and analyzes the facts under the governing procedural and substantive law,
the Court will consider the admissibility of the Defendant’s statements, determine whether there

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are any irrelevant, inadmissible, conclusory, or speculative assertions that should be disregarded,
and deal with them accordingly. To the extent that any of the Defendant’s statements would be
inadmissible if the Defendant were to offer them at trial, the Court will not consider them. Where
exhibits do not go to facts that are outcome determinative under the applicable law, the Court
will likewise ignore them. Additionally, the Court will operate under the principle that “it is
simply not true . . . that if a litigant presents an overload of irrelevant or nonprobative facts,
somehow the irrelevancies will add up to relevant evidence.” Gorence v. Eagle Food Ctrs., Inc.,
242 F.3d 759, 762 (7th Cir. 2001). Consequently, there is no need to strike any part of the
Defendant’s exhibits, and the Court will deny the Plaintiff’s Motion to Strike [ECF No. 80].

DISCUSSION
I.

Choice of Law
The Court previously determined in its Opinion and Order Granting in Part and Denying

in Part the Defendant’s Motion to Dismiss [ECF No. 34], that the Court will apply the
substantive law of the forum state—Indiana—to this case. See Gould v. Artisoft, Inc., 1 F.3d 544,
549 n.7 (7th Cir. 1993) (“Where the parties have not identified a conflict between the two bodies
of state law that might apply to their dispute, we will apply the law of the forum state.”).

II.

Fraudulent Misrepresentation
In Indiana, a plaintiff asserting an action for fraudulent misrepresentation must prove the

following five elements:
(1) the defendant made false statements of past or existing material facts; (2) the
defendant made such statements knowing them to be false or recklessly without
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knowledge as to their truth or falsity; (3) the defendant made the statements to
induce the plaintiff to act upon them; (4) the plaintiff justifiably relied and acted
upon the statements; and (5) the plaintiff suffered injury.
Desimone v. Quicken Loans, Inc., No. 1-09-cv-01421-WTL-MJD, 2011 WL 900947, at *2 (S.D.
Ind. Mar. 15, 2011) (citing Hizer v. Holt, 937 N.E.2d 1 (Ind. Ct. App. 2010)); see also Tru-Cal,
Inc. v. Conrad Kacsik Instrument Sys., Inc., 905 N.E.2d 40, 44–45 (Ind. Ct. App. 2009) (listing
elements of fraud in the inducement).10
The Defendant argues that the Plaintiff has failed to put forth sufficient evidence on any
of the five elements of its fraudulent representation claim to create a genuine issue of material
fact. The Plaintiff argues that triable issues of material fact exist on all five elements of its
fraudulent representation claim. Viewing the evidence in the light most favorable to the Plaintiff,
and drawing reasonable inferences therefrom, the Court finds that the Plaintiff has provided
sufficient evidence to survive summary judgment.

A.

False Statements of Past or Existing Material Facts
The Defendant contends that the Plaintiff has not provided evidence of false statements

of existing fact, but rather, generalized statements and opinions related to future occurrences.
The Plaintiff has submitted evidence that the Defendant’s CEO, Thompson—at a time
when the Plaintiff manifested concerns about ZEA’s financial condition and ability to perform
under the proposed contract—provided assurances that ZEA was “capable of doing this deal”

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The Court notes that Indiana courts have also articulated the elements of fraud without the
requirement that the defendant made the fraudulent statement with the intent to induce the plaintiff to act.
See Heyser v. Noble Roman’s Inc., 933 N.E.2d 16, 19 (Ind. Ct. App. 2010); Loomis v. Ameritech Corp.,
764 N.E.2d 658, 667 (Ind. Ct. App. 2002); Wells v. Stone City Bank, 691 N.E.2d 1246, 1250 (Ind. Ct.
App. 1998).

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and “capable of handling this transaction.” Neither party disputes that Thompson was aware of
the specific terms of the proposed contract; that ZEA required financing to perform the proposed
contract, which required inputs of nearly $1 million; and that Thompson made his assurances at a
time when the Plaintiff was contemplating a substantial pre-payment, which Thompson
perceived to be a form of credit. Viewing the evidence in the light most favorable to the Plaintiff
and drawing reasonable inferences therefrom, a reasonable jury may conclude that Thompson’s
statements entailed an assurance of ZEA’s financial stability, including its creditworthiness.
The Defendant has cited a variety of cases for the proposition that generalized statements
about financial health or future performance will not support a claim of fraud. But the Court is
persuaded, viewing the evidence in the light most favorable to the Plaintiff, that a jury may
conclude that the Plaintiff’s evidence shows more than generalized statements about the financial
health or future performance of ZEA. As the Court previously noted in its Opinion and Order
Granting in Part and Denying in Part the Defendant’s Motion to Dismiss [ECF No. 34],
assurances of creditworthiness are not statements of a future occurrence. See Nightingale Home
Healthcare, Inc. v. Anodyne Therapy, LLC, No. 1:06-cv-1435-SEB-JMS, 2008 WL 4367554, at
*10 (S.D. Ind. Sept. 18, 2008) (“any representation made about the current status of [a potential
future event] would have been a statement about a contemporaneous fact.”). And they are not
generalized statements or statements of opinion. See Reginald Martin Agency, Inc. v. Conseco
Med. Ins. Co., 478 F. Supp. 2d 1076, 1089 (S.D. Ind. 2007) (presently-existing facts are
“susceptible to exact knowledge,” which “includes unqualified guarantees”) (internal quotation
marks omitted); Vaughn v. Gen. Foods Corp., 797 F.2d 1403, 1411 (7th Cir. 1986) (“An opinion
is a subjective statement of belief ‘on which no reasonable [person] should justifiably rely’”; “an

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unqualified guarantee is ‘an objective statement of fact’ upon which reliance may be justified.”)
(quoting Whiteco Props. Inc. v. Thielbar, 467 N.E.2d 433, 437 (Ind. Ct. App. 1984)). Instead,
statements of creditworthiness relate to a presently-existing condition, which is capable of
calculation.
To illustrate, the Court finds the reasoning in Reginald Martin to be persuasive. 478 F.
Supp. 2d 1076. In Reginald Martin, the plaintiff alleged that the defendant insurance company
made statements that it was “financially stable” and “profitable,” id. at 1087, when in fact “it
was hemorrhaging millions of dollars.” Id. at 1090. The court denied the defendant’s summary
judgment motion because it found the defendant’s statements to be actionable in fraud.
Thompson’s statements are similar to the statements in Reginald Martin. At a time when the
Plaintiff manifested concerns regarding ZEA’s financial condition, Thompson offered
unqualified guarantees that ZEA was able to perform the contract, which according to
Thompson’s testimony, encompassed an assurance that ZEA could obtain financing. If the truth
is that ZEA was not creditworthy at the time the assurances were made, then Thompson’s
statement was a false statement of material fact, and the Plaintiff’s evidence is sufficient to
survive summary judgment.
Alternatively, the Defendant argues that the Plaintiff has failed to put forth evidence that
Thompson’s statements were, in fact, false. The Defendant asserts that, at the time Thompson’s
assurances were made, “ZEA’s financial condition was such that it would have been able to do
the things reflected in [the proposed contract].” (Def. Br. in Supp. of Summ. J. at 12.) However,
the Plaintiff has submitted financial documentation from ZEA allegedly indicating that ZEA was
losing money between July and September of 2008—an apparent reversal from the Plaintiff’s

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prior appraisal of ZEA as a “mildly profitable” company. The Plaintiff has also submitted an email sent by Thompson to the Chairman of the Defendant’s Board of Directors on July 29, 2008,
in which Thompson described ZEA as being “tapped out of cash,” a characterization of ZEA’s
financial condition that, again, allegedly conflicts with the Plaintiff’s prior appraisal of ZEA.
When viewing the summary judgment record in a light most favorable to the Plaintiff, the Court
cannot, as a matter of law, conclude that Thompson’s statements were true when made.11
Accordingly, the Plaintiff has submitted sufficient evidence to create a triable issue as to whether
Thompson’s statements were false.

B.

False Statements Made Knowingly or Recklessly
Next, the Defendant argues that the Plaintiff has failed to show that Thompson’s

statements of existing material fact were made knowingly or recklessly.
Viewing the evidence in the Plaintiff’s favor, a reasonable jury may conclude that
Thompson knew or should have known that ZEA lacked the requisite financial stability to
perform the contract. Thompson testified that, by August 2008, he was never told of ZEA’s
“financial problems.” However, throughout Loucks’ deposition testimony, he states that
Thompson possessed financial information related to ZEA—before and after the signing of the
parties’ contract—that he was unable to disclose due to a confidentiality agreement. According

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The Defendant further argues that the contract failed “because of acts outside of the control of
anyone.” (Def. Br. in Supp. of Summ. J. at 11) (“[t]he mere occurrence of events that render a previous
statement false in hindsight is simply not actionable.”). However, the Plaintiff has submitted evidence to
create a reasonable inference that, at the time Thompson made his assurances, ZEA lacked the requisite
financial stability to perform the proposed contract. The separate question as to why the contract failed
relates to causation, which the Court discusses below.

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to Loucks, Thompson expressly stated that he possessed financial information not reflected in
the financial documents sent to the Plaintiff in August 2008.
Aside from Loucks’ testimony, other evidence shows that the extent of Thompson’s
knowledge is a material fact in dispute. At all times relevant to this lawsuit, the Defendant was a
business partner and co-shareholder with ZEA via Global Seed Solutions, and Dennis Thompson
was the Defendant’s CEO. The Plaintiff has shown instances where the Defendant and ZEA
exchanged information or transacted business related to the contract at issue, without a
disclosure to the Plaintiff. Most notably, the Defendant provided a $40,000 loan to ZEA—with
the express purpose of assisting with the performance of the contract—which was never
communicated to the Plaintiff. The Defendant’s business relationship with ZEA, coupled with
Thompson’s express statements regarding ZEA’s financial condition, create a reasonable
inference that, if in fact ZEA lacked the requisite financial stability, Thompson would have
known that when he made the assurances.
Accordingly, a reasonable jury may conclude that Thompson knew, or recklessly
disregarded, that his statements were false.

C.

False Statements Made to Induce Plaintiff Action
Next, the Defendant argues that the Plaintiff’s evidence is insufficient to show that

Thompson made the statements with the intent to induce the Plaintiff’s action.
The Plaintiff has submitted evidence that ZEA and the Defendant, through Thompson,
made persistent requests for the Plaintiff to provide a pre-payment and sign the proposed
contract. Just prior to the Plaintiff’s signing of a “Letter of Intent,” ZEA informed the Plaintiff

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on or about July 28, 2008 that it needed a pre-payment that same week. And on August 6, after
Thompson made his assurances to the Plaintiff, he informed the Plaintiff via email that ZEA
“really could use the comfort of the signed [Letter of Intent] and transfer of monies.” A
reasonable jury may infer that Thompson’s assurances were aimed at inducing the Plaintiff’s
commitment.
The Defendant argues that it had no financial incentive to induce the Plaintiff to commit
to a failed contract. However, the Plaintiff need not show the Defendant’s knowledge that the
contract would fail. The Plaintiff need only show that the Defendant misrepresented an existing
fact—ZEA’s financial condition—to induce the Plaintiff’s action. See Desimone, 2011 WL
900947, at *2 (S.D. Ind. Mar. 15, 2011) (citing Hizer, 937 N.E.2d 1).
Viewing the evidence in a light most favorable to the Plaintiff, a reasonable jury may
conclude that the Defendant made false statements to induce the Plaintiff’s actions.

D.

False Statements Causing Justifiable Reliance and Plaintiff Action
The Defendant further urges that the Plaintiff either did not rely on Thompson’s

statements about the financial health of ZEA, or if it did rely on such statements, its reliance was
unreasonable because the Plaintiff made independent inquiries during the contract negotiations,
requested specific financial information from ZEA, and personally viewed ZEA’s operations in
Argentina.
To support a fraud claim, the Plaintiff must plead that it actually relied on a fraudulent
representation, and that its reliance was justifiable. Hizer, 937 N.E.2d at 5. “However, the
reasonableness of a party’s reliance generally becomes a question of fact where the record

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evidence is susceptible [] to more than one interpretation.” Reginald Martin, 478 F. Supp. 2d at
1090. Indiana courts have long held reliance unreasonable where a party blindly trusts another,
where the facts are “equally open to the observation of both parties,” and where the party
claiming fraud, “had he exercised ordinary prudence, could have attained correct knowledge.”
Pugh’s IGA, Inc. v. Super Food Servs., Inc., 531 N.E.2d 1194, 1198–99 (Ind. Ct. App. 1988)
(citation omitted). The Defendant cites many cases in support of these basic principles. But the
evidence, when viewed in a light most favorable to the Plaintiff, shows that the question of
reliance is not appropriate for determination on summary judgment.
The Defendant argues that the Plaintiff “devoted six and half months to doing its own due
diligence” and “us[ed] every conceivable tool at its disposal,” and therefore, it did not rely on
Thompson’s statements. (Def. Br. in Supp. of Summ. J. at 22). But Loucks testified that the
Plaintiff did, in fact, rely upon Thompson’s statements. According to Loucks, “the grain trade is
based on referrals” and “reputations,” and that assurances from “trusted individuals” is a
common practice with the Plaintiff. (Pl. Ex. 1 at 37–38.) Furthermore, the context of the
Plaintiff’s alleged reliance is important. Loucks allegedly sought Thompson’s assurances in July
2008, just prior to the Plaintiff’s decision to make a prepayment and sign the contract. Because
the Court “may not make credibility determinations, weigh the evidence, or decide which
inferences to draw from the facts” on a summary judgment motion, the question here as to
whether the Plaintiff relied on Thompson’s assurances is a “job[] for a factfinder.” Pauley, 337
F.3d at 770 (7th Cir. 2003); see also Betaco, Inc. v. Cessna Aircraft Co., 32 F.3d 1126, 1138 (7th
Cir. 1994); Sarsha v. Sears, Roebuck & Co., 3 F.3d 1035, 1041 (7th Cir. 1993).
A material dispute also arises regarding the reasonableness of the Plaintiff’s reliance. The

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record shows that Thompson is a seasoned executive to a corporation that supplies services to
agricultural companies around the world—a professional stature known to the Plaintiff at all
relevant times of this lawsuit. The Plaintiff also knew that the Defendant was a business partner
of ZEA. When accounting for Thompson’s acumen in the international agriculture business, the
Defendant’s business relationship with ZEA, and Thompson’s statements related to undisclosed
financial information, a reasonable inference is created that Thompson may have possessed
superior knowledge of ZEA’s financial condition. The Defendant argues that the Plaintiff’s
reliance is unreasonable because Loucks is a “highly experienced businessperson with decades
of experience in domestic and international agricultural business.” (Def. Br. in Supp. of Summ.
J. at 20.) But even so, Thompson testified that the Plaintiff lacked the “background and
understanding of working in the international arena on the production, the management, and the
business arrangements that were required in Argentina.” (Pl. Ex. 3 at 110.) On this record, a
reasonable jury may conclude that information to resolve the truth or falsehood of Thompson’s
statements was not “equally open to the observation of both parties,” Pugh’s IGA, 531 N.E.2d at
1199, and thus, Plaintiff’s reliance on Thompson’s statements was reasonable.
Alternatively, the Defendant argues that ZEA put the Plaintiff on notice of its cash
requirements throughout the contract negotiations. The Defendant is correct that a party cannot
receive information rebutting the misrepresentation, then continue to rely on the
misrepresentation, and still claim a fraudulent inducement. Peterson Indus., Inc. v. Lake View
Trust & Sav. Bank, 584 F.2d 166, 168–69 (7th Cir. 1978); Dixie-Portland Flour Mills, Inc. v.
Nation Enters., 613 F. Supp. 985, 990 (N.D. Ill. 1985). However, the evidence does not lead to a
conclusion that the Plaintiff received information rebutting Thompson’s assurances. After

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reviewing ZEA’s financial documents, Loucks determined that ZEA was “mildly profitable” and
capable of performing under the proposed contract. Although ZEA notified Loucks of its cash
requirements due to the credit situation in Argentina, Loucks perceived ZEA’s cash requests as a
negotiation tactic—a perception that was validated by ZEA’s President during his deposition
testimony. Alternatively, a reasonable jury may also find that ZEA’s representations related to
issues unique to Argentina’s credit market, as opposed to issues related to ZEA’s overall
financial condition.
Because the Court “must construe all facts in the light most favorable to the non-moving
party and draw all reasonable and justifiable inferences in favor of that party,” Bellaver, 200
F.3d at 491–92, the Court finds that the Plaintiff has submitted sufficient evidence to create a
triable issue of material fact on whether its reliance was reasonable.

E.

False Statements Caused Plaintiff Injury
Lastly, the Defendant argues that the allegedly false statements did not proximately cause

the Plaintiff’s injury. A tortious act is the proximate cause of an injury if the injury is a “natural
and probable consequence which, in light of the circumstances, should reasonably have been
foreseen or anticipated.” City of Portage v. Lindbloom, 655 N.E.2d 84, 86 (Ind. Ct. App. 1995)
(citing McKinney v. Public Service Co. of Indiana, Inc., 597 N.E.2d 1001, 1005 (Ind. Ct. App.
1992)). Proximate causation is “generally an issue for the trier of fact and may be decided as a
matter of law only when the facts are undisputed and lead to but a single inference.” PNC Bank
Nat. Ass’n v. Pence, 2010 WL 3947516 (S.D. Ind. 2010) (citing Palmer & Sons Paving, Inc. v.
N. Ind. Pub. Serv. Co., 758 N.E.2d 550, 557 (Ind. Ct. App. 2001))).

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The Plaintiff has submitted evidence that, prior to making a pre-payment and signing the
contract, the Plaintiff relied on Thompson’s assurances of ZEA’s ability to perform the contract.
According to Loucks’ testimony, but for Thompson’s assurances, the Plaintiff would not have
provided a pre-payment or signed the contract. The Plaintiff has also submitted evidence to show
a reasonable jury that ZEA’s failure to perform was forseeable. Thompson’s e-mail to the
Defendant’s Board Chairman described ZEA as being “tapped out for cash” and explicitly
referenced the risk of providing a loan to ZEA.
The Defendant contends, nonetheless, that unforseeable events—namely, economic
conditions, weather patterns, and the actions of third parties—were the actual causes of the failed
contract and Plaintiff’s alleged damages. But the Defendant also appears to admit that ZEA
would have performed the contract if third-party growers had released the soy beans to ZEA.
(Def. App. A at 21.) Both parties have offered conflicting evidence to explain the circumstances
surrounding the grower’s actions. The Plaintiff has submitted evidence to show that the thirdparty growers’ actions were spurred by ZEA’s financial condition; specifically, ZEA’s inability
or perceived inability to pay the growers. Given this record, the forseeability of damages is a
material fact that cannot be resolved at the summary judgment stage.
After examining the summary judgment record, the Court finds the Plaintiff has
submitted sufficient evidence to create triable issues of fact as to whether the Defendant
committed fraudulent representation. The Defendant’s motion for summary judgment will be
denied with respect to the Plaintiff’s fraudulent representation claim.

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III.

Civil Conspiracy
Indiana law recognizes a cause of action for damages resulting from a conspiracy.

Indianapolis Horse Patrol, Inc. v. Ward, 217 N.E.2d 626, 628 (Ind. 1966). A conspiracy is
defined as “a combination of two or more persons, by concerted action, to accomplish an
unlawful purpose or to accomplish some purpose, not itself unlawful, by unlawful means.” Id.
(citations omitted). Civil conspiracy is not an independent cause of action, but must be pled with
an underlying tort. Heyser, 933 N.E.2d at 20 (citing Winkler v. V.G. Reed & Sons, Inc., 638
N.E.2d 1228, 1234 (Ind. 1994)).
The Defendant argues that summary judgment should be granted against the Plaintiff on
its underlying tort claim—fraudulent misrepresentation—and accordingly, summary judgment
should be granted against the civil conspiracy claim as well. Because the Court concludes that
the Plaintiff provided sufficient evidence to survive summary judgment on its fraudulent
misrepresentation claim, the civil conspiracy claim survives as well. The Defendant’s Motion for
Summary Judgment will also be denied with respect to that claim.
CONCLUSION
For the foregoing reasons, the Court DENIES the Defendant’s Motion for Summary
Judgment [ECF No. 71], and DENIES the Plaintiff’s Motion to Strike [ECF No. 80]. The Court
SETS a telephonic status conference for February 17, 2015, at 10:00 AM. The Court will initiate
the call.
SO ORDERED on January 14, 2015.

s/ Theresa L. Springmann
THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
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