Farmers Cooperative Society Sioux Center Iowa v. Leading Edge Pork LLC
ORDER denying 77 Motion to Strike. Granting in part and denying in part 53 Motion for Summary Judgment. The court shall enter judgment in favor of FCS on its breach of contract claim, in the amount of $18,406.60, to be made payable from the court-attached funds currently held by the Clerk of Court. Assessment of all other damages and determination of the merits of Leading Edge's counterclaims remain pending for trial. Denying 70 Motion to Vacate. Signed by Judge Linda R Reade on 7/20/2017. (pac)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
FARMERS COOPERATIVE SOCIETY,
SIOUX CENTER, IOWA
LEADING EDGE PORK LLC &
LEADING EDGE PORK LLC &
FARMERS COOPERATIVE SOCIETY,
SIOUX CENTER, IOWA,
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUBJECT MATTER JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . 5
RELEVANT FACTUAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . 5
The Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Relationship Under Credit Agreement . . . . . . . . . . . . . . . . . . . . . 6
Billing Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
MOTION TO STRIKE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MOTION FOR SUMMARY JUDGMENT . . . . . . . . . . . . . . . . . . . . . . 13
Summary Judgment Standard . . . . . . . . . . . . . . . . . . . . . . . . . 13
Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Breach of contract . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Documentation modification . . . . . . . . . . . . . . . . .
Hog care modification . . . . . . . . . . . . . . . . . . . . .
Dispute resolution modification . . . . . . . . . . . . . . . .
Personal guaranty . . . . . . . . . . . . . . . . . . . . . . . .
Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MOTION TO VACATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
VIII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The matters before the court are Plaintiff Farmers Cooperative Society, Sioux
Center, Iowa’s (“FCS”) Motion for Summary Judgment (“Motion”) (docket no. 53) and
Defendants Leading Edge Pork, LLC and Brent Legred’s (collectively, “Leading Edge”)
Motion to Vacate the Prejudgment Attachment Lien (“Motion to Vacate”) (docket no. 70)1
and Motion to Strike (docket no. 77).
The Motion to Vacate is styled as a “Memorandum in Support” of the Motion to
Vacate, see Motion to Vacate at 1 (caption), and no distinct motion was separately filed.
Additionally, the Motion to Vacate references exhibits and an affidavit that were not filed
as attachments to the motion. See id. at 2-3 (citing to “Affidavit of Michael M. Sawers”
and associated exhibits). As filed, the Motion to Vacate does not comply with the local
rules of the court. See LR 7(b)(3) (“A brief must be filed as an electronic attachment to
the motion it supports under the same docket entry as the motion.”); id. (b)(4) (“If a
motion . . . permits consideration of facts not appearing of record, then the moving party
must electronically attach to the motion, and file under the same docket entry as the
motion, any affidavits, other sworn materials, photographs, or documentary evidence upon
which the moving party relies.”).
The court does not take violations of its local rules lightly, particularly where, as
here, one of the attorneys responsible for the instant violations previously failed to comply
with the local rules when seeking admission to practice pro hac vice. See generally May
10, 2017 Order (docket no. 63); see also LR 83(d)(3) (rules applying to pro hac vice
admission procedure). Nevertheless, the court will consider the Motion to Vacate as filed.
However, the court declines to consider any exhibits that are neither attached to the Motion
to Vacate nor to any other non-stricken docket filings. Counsel for Leading Edge is
instructed to review the court’s local rules and fully adhere to them in the future.
II. PROCEDURAL HISTORY
On April 11, 2016, FCS filed a petition (docket no. 3) in the Iowa District Court
for Sioux County, alleging two claims against Leading Edge: (1) seeking damages for
breach of contract; and (2) seeking an order directing Leading Edge to pay such damages
from checks co-payable to FCS and Leading Edge. On May 3, 2016, Leading Edge
removed the case, bringing the petition before the court. See Notice of Removal (docket
On July 25, 2016, on FCS’s motion, the court ordered that funds previously
attached by the Iowa District Court be transferred to the court for attachment in the instant
case. See July 25, 2016 Order (docket no. 11). The attached funds existed in the form
of ten checks issued by Tyson Fresh Meats (“Tyson”), which were purportedly co-payable
to FCS and Leading Edge, in the amount of $97,657.73. See Ex. C to Motion for Order
to Deliver Co-Payee Checks (“Tyson Checks”) (docket no. 8) at 12-23. On September 15,
2016, FCS informed the court that the Tyson Checks previously held under attachment by
the Iowa District Court were rendered void because they had not been cashed within ninety
days of issue. See Report to the Court (docket no. 16). On September 16, 2016, the court
ordered the parties to instruct Tyson to reissue a single check in the amount of $97,657.73,
representing the total of the ten Tyson Checks under attachment, and to deposit the check
with the Clerk of Court. See Sept. 16, 2016 Order (docket no. 17) at 2. On October 7,
2016, a check in the amount of $94,688.98 was deposited with the Clerk of Court,
pursuant to the attachment order. On the same date, FCS informed the court that it was
unable to deposit the full $97,657.73 amount ordered by the court because Tyson had
reissued one of the Tyson Checks—in the amount of $2,968.75—to Leading Edge pursuant
to a “‘lost check’ replacement request.” See Second Report to the Court (docket no. 25)
at 2. The details surrounding the reissue of this check remain unknown to the court.
On November 29, 2016, FCS filed a Second Amended Complaint (docket no. 44),
seeking the following relief from Leading Edge: (1) judgment on a claim of breach of
contract; (2) an order directing Leading Edge to pay damages from checks co-payable to
FCS and Leading Edge; (3) damages for collection costs, including attorney’s fees,
contemplated by the contract at issue; and (4) joint and several liability for all damages as
to Legred as guarantor of the contract at issue. On December 13, 2016, Leading Edge
filed an Answer (docket no. 46), denying liability, pleading affirmative defenses and
alleging four counterclaims against FCS.
On April 28, 2017, FCS filed the Motion. On May 19, 2017, Leading Edge filed
a Resistance (“Resistance to Motion”) (docket no. 66). On June 2, 2017, FCS filed a
Reply (“MSJ Reply”) (docket no. 73). On June 12, 2017, Leading Edge filed the Motion
to Strike, challenging certain evidence produced in the MSJ Reply materials. On June 19,
2017, FCS filed a Resistance (“Resistance to Motion to Strike”) (docket no. 78).
On February 13, 2017, Leading Edge filed a prior Motion to Vacate the PreJudgment Attachment Lien (docket no. 47). On May 2, 2017, the court struck the motion
after determining that, at the time it was filed, the attorneys that had signed and filed the
motion were not admitted to practice before the court. See May 2, 2017 Order (docket no.
54). On May 26, 2017, shortly after its attorneys secured admission to practice before the
court, Leading Edge filed the present Motion to Vacate, which “largely mirrors the [prior]
Motion to Vacate at 1 n.1.
On June 1, 2017, FCS filed a Resistance
(“Resistance to Motion to Vacate”) (docket no. 72). On June 8, 2017, Leading Edge filed
a Reply (“Motion to Vacate Reply”) (docket no. 76).
Leading Edge requests oral argument on the Motion and the Motion to Vacate, but
the court finds that oral argument is unnecessary. The matters are fully submitted and
ready for decision.
III. SUBJECT MATTER JURISDICTION
FCS is an Iowa agriculture cooperative with its principal place of business in Sioux
Center, Iowa. Notice of Removal ¶ 5. Leading Edge is a Minnesota limited liability
company owned by Legred, who is a citizen of Minnesota. Id. The court has original
jurisdiction over the claims at issue because complete diversity exists between FCS and
Leading Edge and the amount in controversy exceeds $75,000.
See 28 U.S.C.
§ 1332(a)(2) (“The district courts shall have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and
costs, and is between . . . citizens of different States . . . .”).
IV. RELEVANT FACTUAL BACKGROUND
Viewing the evidence in the light most favorable to Leading Edge and affording it
all reasonable inferences, the uncontested material facts are as follows.
A. Credit Agreement
FCS produces custom livestock feed that it sells to livestock producers. Statement
of Undisputed Material Facts in Support of Motion (“FCS Facts”) (docket no. 53-2) ¶ 1.
Leading Edge owns and raises hogs as livestock. Id. ¶ 2.
On July 14, 2014, FCS and Leading Edge entered into a contract (“the Credit
Agreement”) wherein FCS agreed to sell feed to Leading Edge on a credit basis. Id. ¶ 3;
see also Appendix in Support of Motion (“FCS Appendix”) (docket no. 53-3) at 8-10.
Under the Credit Agreement, FCS created an open account from which Leading Edge
could order feed. FCS Appendix at 9. FCS then billed Leading Edge for its feed orders
on a monthly basis. See id. at 11-166. The Credit Agreement provides that a 1.5%
finance charge would accrue monthly on any unpaid balance in Leading Edge’s feed
account. Id. at 9; FCS Facts ¶ 5. The Credit Agreement further provides that FCS may
declare Leading Edge to be in default on its account if, among other things, Leading Edge
“fail[ed] to make any payment when due.” FCS Appendix at 9. The Credit Agreement
provides that, if FCS refers Leading Edge’s defaulted account “to an attorney for
collection, FCS may, to the extent permitted by applicable law, . . . collect from [Leading
Edge] FCS’s collection costs, including court costs and attorney fees.” Id. The Credit
Agreement also includes a personal guaranty from Legred, wherein he “unconditionally
guarantee[s] the full and timely payment of all amounts due from or on behalf of [Leading
Edge].” Id. at 10.
B. Relationship Under Credit Agreement
Between July of 2014 and April of 2016, Leading Edge purchased various quantities
of feed from FCS, which were charged to Leading Edge’s feed account. FCS Facts ¶ 8.
When Leading Edge ordered feed, it received a billing statement for the order. See
Leading Edge’s Statement of Additional Material Facts (“Leading Edge Facts”) (docket
no. 66-2) ¶ 3. The back side of the billing statement included dispute resolution provisions
by which Leading Edge could dispute and correct any billing errors reflected on the order.
See id.; see also Appendix in Opposition to Motion (“Leading Edge Appendix”) (docket
no. 66-3) at 10. Such language included, in part, the following:
You remain obligated to pay the parts of your bill not in
dispute, but you do not have to pay any amounts in dispute
during the time the creditor is resolving the dispute. During
that time, the creditor may not take any action to collect
disputed amounts or report disputed amounts as delinquent.
Leading Edge Appendix at 10.
When Leading Edge ordered a quantity of feed from FCS, FCS would deliver the
feed to sites specified by Leading Edge. FCS Facts ¶ 9. Leading Edge’s hogs were
housed at multiple sites and, occasionally, groups of hogs would be moved from one site
to another. See Leading Edge Appendix at 35 (describing the occurrence of “pigs [being]
moved from one barn to another barn”). Additionally, each site had multiple housing
stations, some of which housed Leading Edge’s hogs and some of which housed other hogs
not belonging to Leading Edge. See id. (discussing hogs housed at “Bins 5 and 6” within
a particular site). At each site, a caretaker would look after the hogs housed at the site,
facilitate the movement of hogs and ensure that the hogs were fed. Cf. id. (identifying
movement and feeding of hogs by a site caretaker). “Field reps” coordinated with
caretakers regarding a particular hog owner’s hogs and ensures that all such hogs were
accounted for across sites. Id. at 45. Doug Lemke was the field rep assigned to Leading
Edge’s hogs. Id.
FCS maintained a practice of acting as an intermediary between Leading Edge and
the caretakers at various sites. Id. at 68-69; see also id. at 31 (stating that FCS would
“pass monies through from the pig owner to the caretaker or the barn owner” as a
“courtesy service”). In this capacity, FCS received information from the caretakers and
reported it to Leading Edge. Id. at 68-69. Correspondingly, FCS collected yardage—i.e.
caretaking payments—from Leading Edge and delivered it to the caretakers. Id. Prior to
delivering yardage to FCS to pass through to the caretakers, Leading Edge required that
FCS provide documentation to support the yardage charges—including “scale tickets and
original invoices” and “trucking invoices and barn sheets.” See id. at 40.
Leading Edge required that FCS maintain separate accounts for each group of
Leading Edge hogs and for feed and yardage charges. Leading Edge Facts ¶ 6. Among
FCS customers, this system was unique to Leading Edge. Leading Edge Appendix at 28,
33 (describing the structure of Leading Edge’s accounts as “[a]typical” and “different than
what we standardly do [sic]”). This system required FCS to frequently reorganize Leading
Edge’s accounts, depending on the movement of hogs from one group to another and/or
from one site to another. See, e.g., id. at 21, 34. When hog movements occurred without
FCS receiving sufficient notice to create a separate account before billing Leading Edge,
Leading Edge communicated the discrepancy and delayed payment until FCS assigned the
charges to the proper accounts. Id. at 30. During the course of FCS and Leading Edge’s
relationship, FCS made numerous billing errors stemming from the structure of Leading
Edge’s accounts. Leading Edge Facts ¶ 11; see also Leading Edge Appendix at 33. In
the event of these errors, Leading Edge would bring them to FCS’s attention and FCS
would correct them if warranted. Leading Edge Facts ¶¶ 10, 12-13.
FCS billed Leading Edge on a monthly basis, with each monthly invoice
documenting the feed orders filled during that month. See FCS Appendix at 11-166 (series
of monthly invoices). Each feed account received separate invoices, and each invoice
referenced order numbers, “lot” numbers, the sites and particular bins that received each
feed order and the quantities and ingredient composition of each feed order. See, e.g., id.
at 12 (exemplar order filled on June 25, 2015, which bore the order number 892587 and
lot number 6152015, was delivered to bins A and B at the Matt Hoffman nursery site and
consisted of 4.5 tons of feed composed of ingredients including “GR CORN,” “HI PRO
SOY” and others). The monthly invoices reflect feed orders only, and do not document
FCS’s collection of yardage paid to caretakers. See generally id. at 11-166.
C. Billing Dispute
In late-2015, Leading Edge began refusing to pay on invoices associated with its
accounts numbered 102612 and 102655. FCS Facts ¶ 11. The unpaid orders associated
with these accounts currently total $18,406.60. See id.2 Each order corresponds to feed
Although the unpaid orders total only $18,406.60, the amount in controversy is
nevertheless sufficient to trigger the court’s diversity jurisdiction. Diversity jurisdiction
must be established “either at the time the action is commenced or at the time of removal.”
Ellis v. Goldberg, No. C16-4119-MWB, 2017 WL 878232, at *3 (N.D. Iowa Mar. 6,
2017) (alteration omitted) (quoting Schubert v. Auto Owners Ins. Co., 649 F.3d 817, 822
(8th Cir. 2011)). Good faith allegations of the jurisdictional amount “will suffice to confer
jurisdiction, but the complaint will be dismissed if it ‘appears to a legal certainty that the
claim is really for less than the jurisdictional amount.’” Scottsdale Ins. Co. v. Universal
Crop Prot. All., LLC, 620 F.3d 926, 931 (8th Cir. 2010) (alteration omitted) (quoting
Kopp v. Kopp, 280 F.3d 883, 884 (8th Cir. 2002)).
Here, the parties do not challenge the sufficiency of the amount in controversy. At
the time of removal, FCS alleged that it was entitled to damages for $56,238.92 in unpaid
ordered by a caretaker on behalf of Leading Edge and delivered to a site known as the
Hoffman Site. See id. FCS made numerous payment demands for the unpaid orders,
which Leading Edge has not met. Id. ¶ 12. FCS proceeded to retain counsel for purposes
of collecting on the unpaid accounts, ultimately giving rise to the instant action. Id. ¶ 15.
V. MOTION TO STRIKE
In the Motion to Strike, Leading Edge seeks to strike an amended interrogatory
response and various affidavits submitted with the MSJ Reply. See Motion to Strike at 25.
During discovery, Leading Edge served an interrogatory request on FCS requesting
that FCS identify “any admission of fault or statement indicating responsibility or liability”
made by Leading Edge. See Leading Edge Appendix at 66. In response, FCS stated, in
On February 16, 2016, a meeting was held with Plaintiff’s
agent, Doug Lemke, and FCS personnel . . . wherein Mr.
Lemke indicated the only location in which Leading Edge was
having “problems” was the Hoffman barn.
Id. In its Resistance materials, Leading Edge cites this interrogatory response to state that
Lemke was, in fact, FCS’s agent. See, e.g., Leading Edge Facts ¶ 25; Resistance at 12.
orders, and to “finance charges and the costs of this action.” Petition at 3. Although the
amount in controversy must be “exclusive of interests and costs,” 28 U.S.C. § 1332(a),
the finance charges and costs sought by FCS in the Petition are provided for in the Credit
Agreement, see FCS Appendix at 9. Where the terms of a contract provide for recovery
of litigation costs, the probable value of such litigation costs may be considered when
determining the amount in controversy. See Scottsdale Ins. Co., 620 F.3d at 932
(analyzing an insurance policy providing for recovery of “the cost of defending” an action,
among other recovery items). When viewing the $56,238.92 in unpaid orders at the time
of removal, as well as the monthly finance charges and costs of collection provided for in
the Credit Agreement, the relevant filings do not create a “legal certainty” that the claim
is for less than $75,000. Accordingly, the court finds that the prerequisites for diversity
jurisdiction are satisfied.
In its MSJ Reply materials, FCS clarifies that its identification of Lemke as “Plaintiff’s
agent” was a scrivener’s error, and that Lemke was, in fact, Leading Edge’s agent. See
Reply to Leading Edge Facts (docket no. 73-1) at 1-2. On May 31, 2017, FCS served
Leading Edge with an amended interrogatory response, correcting the error. Supplemental
Appendix in Support of Motion (“FCS Supplemental Appendix”) (docket no. 73-2) at 3740. Leading Edge characterizes the amended response as akin to a “sham affidavit”
incapable of supporting the Motion and argues that it must be stricken. See Motion to
Strike at 2-3.
Evidence is “sham” evidence subject to being stricken if it conflicts with earliersubmitted evidence and “raise[s] only sham issues.” City of St. Joseph, Mo. v. Sw. Bell
Tel., 439 F.3d 468, 476 (8th Cir. 2006) (quoting Camfield Tires, Inc. v. Michelin Tire
Corp., 719 F.2d 1361, 1366 (8th Cir. 1983)).
Evidence raises a sham issue if it
contradicts earlier evidence for the sole purpose of generating a dispute of fact to defeat
summary judgment. See id. The amended interrogatory response is not sham evidence.
Instead, it represents FCS’s timely correction of an error made in its initial interrogatory
response. Federal Rule of Civil Procedure 26(e) provides that a party
who has responded to an interrogatory . . . must supplement
or correct its . . . response . . . in a timely manner if the party
learns that in some material respect the . . . response is
incomplete or incorrect, and if the additional or corrective
information has not otherwise been made known to the other
parties during the discovery process.
Fed. R. Civ. P. 26(e)(1)(A). FCS represents that its identification of Lemke as FCS’s
agent was an error that it learned of only when Leading Edge pointed it out in its
Resistance materials. See Resistance to Motion to Strike at 2. FCS proceeded to promptly
amend the interrogatory response to identify Lemke as Leading Edge’s agent. Compare
Leading Edge Facts ¶ 25 (citing the initial interrogatory response in materials filed on May
19, 2017), with FCS Supplemental Appendix at 39 (reflecting that FCS served its amended
interrogatory response on Leading Edge on May 31, 2017). The context of FCS’s
interrogatory response supports its characterization that it erroneously misidentified Lemke
as its own agent. Leading Edge’s interrogatory requested that FCS identify any admissions
made by Leading Edge. As such, any reference to Lemke can be understood from context
to cast Lemke as an agent of Leading Edge. In light of the foregoing circumstances, the
court finds that the amended interrogatory response is not sham evidence but is, instead,
a timely correction to an error in the prior interrogatory response and the court shall
consider it when ruling on the Motion.
Leading Edge also argues that the affidavits of Sally Hoogland, Taylor Francis and
Mindi Hulshof, submitted with the MSJ Reply, must be stricken because their contents
“go far beyond the scope of [FCS’s] principal brief.” Motion to Strike at 4. In effect,
Leading Edge argues that FCS was required to anticipate issues raised by Leading Edge
in its resistance and submit evidence relating to those issues at the time it filed the Motion.
See id. (describing how Leading Edge went “to great length[s] to explain” a certain issue
in its resistance materials and faulting FCS for “fail[ing] to address that issue in its
principal summary judgment brief”). However, Leading Edge’s argument misunderstands
the court’s local rules. Local Rule 56(d) permits a moving party to file a supplemental
appendix containing “additional pleadings, depositions, answers to interrogatories,
admissions, exhibits, or affidavits” for purposes of responding to a resisting party’s
statement of additional facts. LR 56(d). There is no dispute that FCS produced evidence
relating to matters beyond those addressed in its initial motion. Cf. Resistance to Motion
to Strike at 4. However, the production of such evidence—addressing evidence produced
and arguments made by Leading Edge in the Resistance to Motion—is fully contemplated
by the court’s local rules and shall not be stricken.
With respect to Leading Edge’s challenges to five particular items contained within
FCS’s affidavits, see Motion to Strike at 4, the court finds that none of the challenges
warrant striking. Leading Edge argues that paragraph three of the Hulshof Affidavit
contains inadmissible hearsay and that paragraph eleven contains an inadmissible legal
conclusion, such that both paragraphs must be stricken. Id.; see also FCS Supplemental
Appendix at 31, 32. The purported hearsay statement is not, in fact, hearsay because it
is not offered for its truth. Rather, it provides explanatory context for the eventual
reduction in feed orders fulfilled by FCS. See Fed. R. Evid. 801(c)(2) (providing that a
hearsay statement must be offered “to prove the truth of the matter asserted in the
statement”). The purported legal conclusion is an admissible lay opinion, insofar as it is
rationally based on Hulshof’s perception as an FCS employee and clarifies the respective
duties that FCS and Leading Edge had in caring for Leading Edge’s hogs. See Fed. R.
Evid. 701 (providing the requirements for admissible lay opinion testimony).
Leading Edge next argues that the exhibits to the Francis Affidavit, consisting of
an incident report filed with the Plymouth County Sheriff’s Office and the amended
interrogatory response, must be stricken because they were not previously disclosed.
Motion to Strike at 4. The incident report demonstrates that Leading Edge’s caretaker
reported the theft of approximately 360 of Leading Edge’s hogs. FCS Supplemental
Appendix at 35-36. This exhibit squarely rebuts Leading Edge’s claim that “there was no
explanation for why [Leading Edge’s] pigs were unaccounted for.” Leading Edge Facts
Furthermore, the incident report is a matter of public record.
Supplemental Appendix at 34 (Francis stating that the incident report was made available
upon request to the Plymouth County Sheriff’s Office). With respect to the amended
interrogatory response, as discussed above, such corrected an error made in the initial
response. Local Rule 56(d) permits the production of both items with FCS’s reply
materials because they directly correspond to facts cited by Leading Edge.
Lastly, Leading Edge argues that paragraph six of the Hoogland Affidavit must be
stricken because it contains inadmissible speculation. Motion to Strike at 4; see also FCS
Supplemental Appendix at 28. In that paragraph, Hoogland states that she understood that
Leading Edge’s hogs were consuming the feed ordered by Leading Edge because Leading
Edge received the feed and the bins that held the feed regularly became empty and were
refilled. FCS Supplemental Appendix at 28. This is not speculation. Instead, it is the
well-informed lay opinion of an FCS employee, rationally based on her perceptions and
helpful to determining whether the disputed feed was, in fact, appropriately delivered to
Leading Edge’s hogs. See Fed. R. Evid. 701.
For the foregoing reasons, the particular pieces of evidence challenged by Leading
Edge shall not be stricken. Accordingly, the Motion to Strike shall be denied.
VI. MOTION FOR SUMMARY JUDGMENT
A. Summary Judgment Standard
Summary judgment is appropriate “if 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. Civ. P. 56(a). “A dispute is genuine if the evidence is such that it could cause a
reasonable jury to return a verdict for either party; a fact is material if its resolution affects
the outcome of the case.” Amini v. City of Minneapolis, 643 F.3d 1068, 1074 (8th Cir.
2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986)).
“The movant ‘bears the initial responsibility of informing the district court of the
basis for its motion,’ and must identify ‘those portions of the record which it believes
demonstrate the absence of a genuine issue of material fact.’” Torgerson v. City of
Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (alterations omitted) (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). “If the movant does so, the
nonmovant must respond by submitting evidentiary materials that set out ‘specific facts
showing that there is a genuine issue for trial.’” Id. (quoting Celotex, 477 U.S. at 324).
The court must view the record in the light most favorable to the non-moving party
and afford it all reasonable inferences. See Schmidt v. Des Moines Pub. Sch., 655 F.3d
811, 819 (8th Cir. 2011). “Where the record taken as a whole could not lead a rational
trier of fact to find for the nonmoving party, there is no genuine issue for trial,” and
summary judgment is appropriate. Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “A
complete failure by the non-moving party ‘to make a showing sufficient to establish the
existence of an element essential to that party’s case necessarily renders all other facts
immaterial.’” B.M. ex rel. Miller v. S. Callaway R-II Sch. Dist., 732 F.3d 882, 886 (8th
Cir. 2013) (alteration omitted) (quoting Celotex, 477 U.S. at 322-23).
In the Motion, FCS argues that the court should grant summary judgment in its
favor on all of the claims raised in the Second Amended Complaint. Specifically, FCS
argues that it is entitled to summary judgment on its breach of contract claim, that its
cumulative damages amount to $116,808.68, that such damages must be partially satisfied
by the court-attached funds and that Leading Edge and Legred are jointly and severally
liable for its damages. See generally Brief in Support of Motion (docket no. 53-1). The
court shall first address the breach of contract claim, including the issue of joint and
several liability, before proceeding to address the issue of damages.
Breach of contract
“Generally, to establish a claim for a breach of contract, [a plaintiff] must show[:]
‘(1) the existence of a contract; (2) the terms and conditions of the contract; (3) that it has
performed all the terms and conditions required under the contract; (4) the defendant’s
breach of the contract in some particular way; and (5) that plaintiff has suffered damages
as a result of the breach.’” Iowa Arboretum, Inc. v. Iowa 4-H Found., 886 N.W.2d 695,
706 (Iowa 2016) (formatting omitted) (quoting Iowa Mortg. Ctr., L.L.C. v. Baccam, 841
N.W.2d 107, 110-11 (Iowa 2013)).
Leading Edge acknowledges that it has withheld payment of various charges made
to its feed account. See, e.g., Resistance to Motion at 11 (acknowledging that “Leading
Edge refused to make payments”).
However, Leading Edge argues that summary
judgment is not warranted because a genuine dispute of material fact exists with respect
to the third element of FCS’s breach of contract claim. See id. at 10-12. Specifically,
Leading Edge argues that the parties modified the Credit Agreement to require FCS to
submit documentary support for the charges made to Leading Edge’s account and to
require FCS to care for Leading Edge’s hogs. See id. According to Leading Edge, FCS’s
failure to perform pursuant to these modifications prevents FCS from recovering on its
breach of contract claim. FCS argues that any purported modifications to the Credit
Agreement are per se non-binding because the Credit Agreement contains an integration
clause, stating that it “may not be contradicted or amended by evidence of any alleged oral
agreement” and that “[o]nly written amendments . . . shall be valid and binding.” See
Reply to Leading Edge Facts ¶ 1; see also FCS Appendix at 9. Under Iowa law, “a
provision in a written contract that it can be modified or rescinded only in writing is
ineffective (subject, of course, to the doctrine of consideration and the statute of frauds).”
Whalen v. Connelly, 545 N.W.2d 284, 291 (Iowa 1996).
Therefore, the blanket
prohibition on oral amendments included in the Credit Agreement is ineffective, and the
court shall proceed to determine whether the purported modifications identified by Leading
Edge were binding on the parties.
“Where two contracts are made at different times, but where the later is not
intended to entirely supersede the first, but only to modify it in certain particulars, the two
are to be construed as parts of one contract, the later superseding the earlier one wherever
it is inconsistent.” Iowa Arboretum, 886 N.W.2d at 706 (quoting 17A Am. Jr. 2d
Contracts § 489, at 469-70 (2016)). A binding modification must satisfy the same essential
elements as a binding contract. See Ziskovsky v. Ziskovsky, 843 N.W.2d 478, 2014 WL
69620, at *4 (Iowa Ct. App. Jan. 9, 2014) (unpublished table decision) (“A written
contract may be modified by a subsequent oral agreement which has the essential elements
of a binding contract.” (quoting Berg v. Kucharo Const. Co., 21 N.W.2d 561, 567 (Iowa
1946))). As such, a binding modification requires that the parties “‘manifest mutual assent
to the terms of the contract,’ and such assent ‘usually is given through the offer and
acceptance.’” Great Lakes Commc’n Corp. v. AT&T Corp., 124 F. Supp. 3d 824, 846
(N.D. Iowa 2015) (quoting Rick v. Sprague, 706 N.W.2d 717, 724 (Iowa 2005)); see also
Gordon v. Witthauer, 138 N.W.2d 918, 921 (Iowa 1965) (“A written contract or
agreement may be altered or modified by an oral agreement if the latter has been accepted
and acted upon by the parties in such manner as would work a fraud on either party to
refuse to enforce it.” (quoting Wise v. Quina, 174 So. 2d 590, 597 (Fla. Dist. Ct. App.
1965))). Furthermore, Iowa law “clearly requires some new consideration to support the
modification of a contract.” Margeson v. Artis, 776 N.W.2d 652, 657 (Iowa 2009).
Using this rubric, the court shall analyze the purported modifications to the Credit
Agreement identified by Leading Edge.
Leading Edge points to the following evidence in support of the purported
documentation modification to the Credit Agreement: (1) a declaration from Leading
Edge’s bookkeeper that FCS agreed to provide documentation for charges made to Leading
Edge’s account “[i]n exchange for Leading Edge continuing to purchase feed,” Leading
Edge Appendix at 6; (2) deposition testimony of various FCS employees stating, in effect,
that they understood that Leading Edge refused to pay on its yardage account unless FCS
provided documentation, id. at 35 (Lorene Farquhar deposition); id. at 40 (Mindi Hulshof
deposition); id. at 43 (Kyle Boersma deposition); see also Leading Edge Facts ¶¶ 7-8. The
court questions whether Leading Edge’s continued purchase of feed is valid consideration
to support a modification. See Margeson, 776 N.W.2d at 656 (stating that acting on a
preexisting agreement does not create valid consideration for a modification). However,
assuming arguendo that the record establishes valid consideration, the court nevertheless
finds no evidence that FCS’s obligation to provide documentation applied to the feed
charges at issue in this dispute.
During the parties’ business relationship, FCS established a credit account
permitting Leading Edge to purchase feed on credit, via the Credit Agreement, FCS
Appendix at 8-10, and FCS also collected yardage fees from Leading Edge to pay the
caretakers of Leading Edge’s hogs, see Leading Edge Appendix at 31, 68-69. It is clear
from the record that FCS agreed to provide documentation to support its collection of
yardage fees. See id. at 35 (discussing “backup documentation” with respect to hog
movement from site to site); id. at 40 (agreeing that “Leading Edge wouldn’t pay bills until
they had backup documentation” when discussing yardage and barn sheets, but
emphasizing that “[t]he feed and the yardage is a separate deal”); id. at 43 (agreeing that
FCS was advised that it “need[ed] documentation that the service was provided” when
discussing payment of trucking charges). However, there is no evidence that FCS agreed
to a similar arrangement with respect to feed charges. Indeed, the feed and yardage
charges were sequestered into separate accounts, emphasizing the distinction between
FCS’s feed and yardage duties. See id. at 21 (acknowledging that “Leading Edge . . .
asked that [FCS] have a separate feed account and a yardage account for each group [of
hogs]”); see also id. at 32 (Lorene Farquhar testifying that she serviced Leading Edge’s
feed accounts, while other FCS employees serviced Leading Edge’s yardage accounts).
Thus, to the extent Leading Edge points to evidence that FCS agreed to provide
documentation of yardage charges incurred by Leading Edge, it does not necessarily follow
that FCS also agreed to provide documentation of feed charges—beyond what was
contained within the monthly invoices provided to Leading Edge, which indicate that the
disputed feed orders were placed, delivered and billed accordingly. See FCS Appendix
at 26-39, 144-45 (monthly invoices reflecting feed orders at issue); see also FCS
Supplemental Appendix at 6 (FCS employee stating that Leading Edge “never required any
additional documentation for feed charges”); id. at 26-28 (describing that all feed orders
in dispute were properly delivered). Indeed, while the record contains several allusions
to trucking bills, “barn sheets” and scale tickets, each documenting various yardage
charges, see Leading Edge Appendix at 15-16, 35, 40, the record lacks any reference to
the kinds of documentation purportedly required for feed charges.
Accordingly, Leading Edge has produced insufficient evidence from which to
conclude that FCS and Leading Edge modified their agreement to obligate FCS to provide
documentation supporting feed charges—as opposed to yardage charges—made to Leading
Therefore, FCS’s purported failure to provide feed-charge-related
documentation does not raise a genuine issue of material fact regarding FCS’s breach of
Hog care modification
Leading Edge’s evidence relating to FCS’s purported duty to care and account for
Leading Edge’s hogs revolves around the conduct of Doug Lemke—the field agent
overseeing the care of Leading Edge’s hogs. Specifically, Leading Edge points to a
declaration from Leading Edge’s bookkeeper that “Doug Lemke advised Leading Edge that
FCS would manage the growth and feeding of Leading Edge’s swine heard,” Leading Edge
Appendix at 8, and to the interrogatory response submitted by FCS that erroneously
identified Lemke as FCS’s agent (prior to amending the response to identify Lemke as
Leading Edge’s agent), see id. at 66. See Leading Edge Facts ¶¶ 25-27. According to
Leading Edge, Lemke obligated FCS to provide proper care and accounting for Leading
Edge’s hogs. Cf. Resistance to Motion at 12. However, even viewing the record in the
light most favorable to Leading Edge by assuming that Lemke was FCS’s agent and was
capable of contracting on FCS’s behalf, see, e.g., Leading Edge Appendix at 14-15 (emails
from FCS and Leading Edge employees implying that both parties had working
relationships and communication with Lemke); id. at 31 (FCS employee describing
Lemke’s job duties in detail); id. at 45 (FCS employee testifying that Lemke was a field
rep for Leading Edge hogs, and stating that FCS employees occasionally acted as field reps
if a customer requested it), there is no evidence that Lemke’s statements created a binding
In the declaration from Leading Edge’s bookkeeper, she states that Lemke simply
“advised” her that FCS would care for Leading Edge’s hogs. Absent evidence of any
consideration for Lemke’s apparent promise, such promise is unenforceable even if Lemke
had authority to obligate FCS and intended to do so. See Gill v. Vorhes, 885 N.W.2d 829,
2016 WL 4051643, at *12 (Iowa Ct. App. July 27, 2016) (unpublished table decision)
(“Regardless of whether [evidence reflected an intent] to accomplish a modification of the
written [contract] at issue, any purported modification would be unenforceable for lack of
consideration.”). Furthermore, Lemke’s vague oral statements that FCS would “manage
the growth and feeding” of Leading Edge’s hogs are not “sufficiently definite for a court
to determine with certainty the duties of each party.” Wagner Enters., Inc. v. John Deere
Shared Servs., Inc., 397 F. Supp. 2d 1097, 1105 (N.D. Iowa 2005) (quoting Gallagher,
Langlas & Gallagher v. Burco, 587 N.W.2d 615, 617 (Iowa Ct. App. 1998)).
In sum, Leading Edge has not generated a genuine issue of any modification
obligating FCS to care and account for Leading Edge’s hogs. Accordingly, FCS’s
purported failure to care and account for Leading Edge’s hogs does not raise a genuine
issue of material fact regarding FCS’s breach of contract claim.
Dispute resolution modification
In its briefing regarding FCS’s claim for damages, Leading Edge argues for the
existence of a third modification in the form of the dispute resolution provisions printed
on the billing statements provided to Leading Edge. See Resistance to Motion at 14-15.
To the extent Leading Edge argues that FCS failed to perform its duties under the dispute
resolution provisions, thereby raising a genuine issue of material fact regarding its breach
of contract claim, such argument fails.
The dispute resolution provisions provide that Leading Edge may dispute suspected
billing errors made by FCS as creditor. Leading Edge Appendix at 10. Upon doing so,
Leading Edge would “remain obligated to pay the parts of [its] bill not in dispute, but [it
would] not have to pay any amounts in dispute during the time the creditor is resolving the
dispute. During that time, the creditor may not take any action to collect disputed amounts
or report disputed amounts as delinquent.” Id.
For the purposes of the Motion, the court shall assume that the dispute resolution
provisions modify the overarching Credit Agreement with respect to the individual billing
statements on which they appear. Cf. Cody Foster & Co., Inc. v. Urban Outfitters, Inc.,
14-CV-80, 2015 WL 12698385, at *8 (D. Neb. Sept. 25, 2015) (analyzing a contractual
relationship consisting of “a master agreement governing the entire relationship between
the parties” and separate purchase orders creating additional obligations as to each order).
Nevertheless, Leading Edge has produced no evidence that FCS failed to perform its duties
under the dispute resolution provisions. The evidence suggests that, consistent with the
dispute resolution provisions, the parties behaved as follows: (1) Leading Edge disputed
the feed charges at issue, see, e.g., Leading Edge Appendix at 34-35; (2) FCS investigated
the disputed charges, reassigned certain charges to separately numbered accounts and,
ultimately, concluded that the charged amounts in dispute were accurately billed to Leading
Edge, see id.; see also FCS Supplemental Appendix at 6-7; and (3) after resolving the
matter to its satisfaction, FCS maintained its position that payment for the feed charges
remained due, cf. FCS Supplemental Appendix at 31 (describing FCS’s practice of
investigating and correcting or maintaining charges). Based on the evidence to this effect,
the court finds no basis for determining that FCS failed to perform its duties under the
dispute resolution provisions before declaring Leading Edge in default and initiating the
instant action. Accordingly, to the extent Leading Edge argues otherwise, such argument
fails to demonstrate a genuine issue of material fact regarding FCS’s breach of contract
In light of the foregoing, the court finds that Leading Edge has failed to generate
a genuine issue of material fact with respect to FCS’s failure to perform all the terms and
conditions of the contract between the parties. Correspondingly, FCS has demonstrated
the absence of a genuine issue of material fact with respect to its breach of contract claim.
Therefore, summary judgment is appropriate on this claim. The court shall grant the
Motion with respect to the breach of contract claim.
FCS argues that Leading Edge and Legred, as personal guarantor, should be held
jointly and severally liable for any damages incurred as a result of Leading Edge’s breach
of contract. Brief in Support of Motion at 9. Leading Edge makes no arguments with
respect to this issue. See generally Resistance to Motion.
In the Credit Agreement, Legred agreed to “jointly, severally and unconditionally
guarantee the full and timely payment of all amounts due” to FCS. FCS Appendix at 10.
“[N]o different rule obtains in construing personal guaranties than other contracts, save
that when the terms of a guaranty are once ascertained the liability of the guarantor is not
to be extended by implication.” Avnet, Inc. v. Catalyst Res. Grp., LLC, 791 F.3d 899,
902 (8th Cir. 2015) (alterations omitted) (quoting Harman v. Hartman, 160 N.W. 295, 297
(Iowa 1916)). In other words, it is a “well-established principle of Iowa law . . . that the
same rules of construction generally applicable to contracts apply equally to personal
Based on the language of the instrument, the court finds that the personal guaranty,
as signed by Legred, was entered into with the requisite mutual assent necessary to create
a valid contract. See Schaer v. Webster Cty., 644 N.W.2d 327, 338 (Iowa 2002)
(recognizing that “mutual assent is based on objective evidence” (quoting Hill-Shafer
P’ship v. Chilson Family Tr., 799 P.2d 810, 815 (Ariz. 1990))). Accordingly, pursuant
to the terms of the personal guaranty, the court finds that both Leading Edge and Legred
are jointly and severally liable for any damages incurred as a result of Leading Edge’s
breach of contract.
As a result of Leading Edge’s breach of contract, FCS argues that it is entitled to
$116,808.68 in damages, plus an additional 18% in interest. Brief in Support of Motion
at 7-8. Specifically, FCS argues that it is entitled to $18,406.60 in unpaid invoices, plus
a 1.5% finance charge applied to that sum (per the Credit Agreement), plus attorney’s fees
incurred as collection costs (per the Credit Agreement), arriving a total recovery of
$116,808.68. See id. at 3-4, 7-8. Leading Edge acknowledges that, to the extent FCS is
entitled to recovery, it is entitled to the $18,406.60 in unpaid invoices plus the 1.5%
finance charge. See Resistance to Motion at 13. However, Leading Edge argues that FCS
is not entitled to recover attorney’s fees. See id. at 13-19. Leading Edge argues that the
governing terms of the parties’ contractual relationship do not permit recovery of
attorney’s fees, that documentation supporting the amount of FCS’s attorney’s fees was
untimely produced and, when produced, the documentation was insufficient to establish
the amount requested. See id.
“The party seeking damages has the burden to prove them.” Sun Valley Iowa Lake
Ass’n v. Anderson, 551 N.W.2d 621, 641 (Iowa 1996). “There is a distinction between
proof of the fact that damages have been sustained and proof of the amount of those
damages.” St. Malachy Roman Catholic Congregation of Geneseo v. Ingram, 841 N.W.2d
338, 352 (Iowa 2013) (quoting Pavone v. Kirke, 801 N.W.2d 477, 495 (Iowa 2011)). “If
the uncertainty merely lies in the amount of damages sustained, recovery may be had if
there is proof of a reasonable basis from which the amount can be inferred or
approximated.” Id. (alteration omitted) (quoting Pavone, 801 N.W.2d at 495). “‘Thus,
some speculation on the amount of damages sustained is acceptable,’ but a plaintiff cannot
recover overly speculative damages.”
Id. (quoting Pavone, 801 N.W.2d at 495).
Typically, “[t]he amount of damages awarded is a jury function.” Williams v. Barnhill,
791 N.W.2d 429, 2010 WL 3894454, at *7 (Iowa Ct. App. Oct. 6, 2010) (unpublished
At the summary judgment stage, the court finds that FCS has proven only that it is
entitled to $18,406.60 in unpaid invoices as a matter of law. See FCS Appendix at 5-6
(charting unpaid invoices); see also id. at 26-39, 144-45 (invoices detailing unpaid feed
deliveries ordered by Leading Edge). Because there is no particularized accounting or
documentation detailing the amount of other damages—the finance charges assessed3 and
attorney’s fees accrued as collection costs—they are overly speculative at this stage and
shall be submitted to the jury. Cf. id. at 167 (summarily accounting for lump sum finance
charge and attorney’s fees damages).
Leading Edge argues that FCS is not entitled to any attorney’s fees as a matter of
law, due to the operation of the dispute resolution provisions printed on the billing
statements provided by FCS.
See Resistance to Motion at 14-15.
argument fails. While it is true that the dispute resolution provisions make no mention of
While the Credit Agreement unmistakably provides for the accrual of a 1.5%
finance charges, such charges accrue on a monthly basis and are calculated based on the
overdue amounts as they exist in any given month. See FCS Appendix at 9. Because
Leading Edge has apparently made certain payments on its feed account since the
commencement of this litigation, see, e.g., id. at 167 (showing several payments made
after the state court petition was filed on April 11, 2016), the overdue amounts in any
given month would have fluctuated accordingly, thereby impacting the accrual of the
finance charges. Absent a detailed accounting of the activity in Leading Edge’s feed
account, the court cannot accurately determine at this stage the amount of finance charges
to which FCS is entitled. See St. Malachy, 841 N.W.2d at 352 (recognizing that plaintiffs
must prove both entitlement to damages and the amount to which they are entitled).
FCS’s recovery of attorney’s fees, see Leading Edge Appendix at 10, the Credit
Agreement unmistakably does, see FCS Appendix at 9. To whatever extent the dispute
resolution provision may modify the Credit Agreement by amending new terms to the
Credit Agreement, Iowa Arboretum, 886 N.W.2d at 706; Cody Foster & Co., 2015 WL
12698385, at *8, its silence on the recovery of attorney’s fees does not simply erase the
valid provision included in the Credit Agreement. As such, the court finds that recovery
of attorney’s fees may be appropriate, to the extent a reasonable basis for such damages
is proved to the jury.
Leading Edge also argues that FCS may not recover attorney’s fees because it has
failed to “produce any of the actual underlying bills associated with those attorney’s fees”
during discovery and argues that the court should prevent recovery as a discovery sanction.
See Resistance to Motion at 13-14. The court agrees that FCS’s failure to produce
sufficient documentation for its attorney’s fees precludes recovery for such damages at the
summary judgment stage. However, the court declines to sanction FCS for its purported
failure to produce such documentation during discovery. The parties have indicated to the
court that discovery remains ongoing in this case, despite the mutually agreed-upon
discovery deadlines and the looming trial date. Compare Scheduling Order and Discovery
Plan (docket no. 13) (providing for a discovery deadline of March 22, 2017), and March
31, 2017 Order (docket no. 52) (extending the discovery deadline to April 28, 2017), with
Joint Motion to Extend Deadline for Filing Motions in Limine (docket no. 83) (informing
the court that the parties will “take a limited number of depositions” in late-July of 2017).
The court finds that, to the extent FCS’s failure to provide sufficient documentation of its
attorney’s fees violated Federal Rule of Civil Procedure 26, such violation is harmless due
to the ongoing nature of the parties’ discovery. See Fed. R. Civ. P. 37(c) (providing the
availability of sanctions for “fail[ure] to provide information” under Rule 26, “unless the
failure was substantially justified or harmless”).
However, the lack of sufficient
documentation for FCS’s attorney’s fees, as well as the calculation and assessment of
finance charges, nevertheless precludes summary judgment with respect to such damages.
See, e.g., Pool & Spa Concepts, L.L.C. v. Russett, 829 N.W.2d 193, 2013 WL 750130,
at *3-4 (Iowa Ct. App. Feb. 27, 2013) (unpublished table decision) (affirming district
court’s finding that there was no reasonable basis for damages, where the plaintiff “offered
no delineation” of the work performed and the value of such work); Eldon C. Stutsman,
Inc. v. Rogers, 787 N.W.2d 479, 2010 WL 2602171, at *3, *7 (Iowa Ct. App. June 30,
2010) (unpublished table decision) (finding that amount of crop-related damages are overly
speculative where the counter-claimant merely estimated the damages without introducing
“any photographic evidence” or “prior or subsequent years’ crop yield information from
which to compare his [damaged] yields”).
In light of the foregoing, the court shall grant the Motion with respect to damages
in the amount of $18,406.60, representing the face value of the unpaid invoices, but the
court shall deny the Motion with respect to damages relating to the assessment of finance
charges and attorney’s fees. The amount of such damages must be proven to the jury at
VII. MOTION TO VACATE
In the Motion to Vacate, Leading Edge argues that the $94,688.98 currently under
attachment is excessive and requests that the court discharge $73,718.51 of the attached
funds. See Motion to Vacate at 1. Leading Edge also requests an award of attorney’s fees
incurred during the pursuit of the Motion to Vacate. Id.
Attachment is a creature of statute, “unknown to the common law.” Estate of Lyon
ex rel. Lyon v. Heemstra, 779 N.W.2d 494, 2010 WL 200454, at *2 (Iowa Ct. App. Jan.
22, 2010) (unpublished table decision) (quoting Edwards v. Tracy, 212 N.W. 317, 318
(Iowa 1927)). Iowa law provides that, on a defendant’s motion, the court may discharge
a previously ordered “attachment or any part thereof” if cause is shown “that the
attachment should not have issued, or should not have been levied on all or some part of
the property held.” Iowa Code § 639.63. “If more property is attached in the aggregate
than the plaintiff is entitled to, the surplus must be abandoned . . . .” Id. § 639.18. “Any
surplus of the attached property and its proceeds shall be returned to the defendant.” Id.
Leading Edge argues that it is entitled to the discharge of $73,718.51 of the attached
funds because it represents a surplus beyond what FCS is entitled to under Iowa law. See
Motion to Vacate at 1. According to Leading Edge, the attachment should be no greater
than $20,970.47,4 which it claims represents the amount of purported default on its account
and the only debt presently due. See id. at 5 (arguing that, unlike the amount in default,
the collection fees incurred by FCS are “not matured”). Leading Edge further argues that
the attachment should not cover the $33,985 in attorney’s fees incurred by FCS in pursuit
of collection or any other additional funds. Id. FCS argues that the amount of attached
funds need not correspond precisely to the $20,970.47 that remains in default. See
Resistance to Motion to Vacate at 4. FCS emphasizes that, at the time the attachment was
ordered, Leading Edge had an outstanding balance of $63,407.05, and claims that Leading
Edge is not entitled to the release of attached funds simply because they reduced the
outstanding balance with partial payments. See id. at 4-5. FCS further argues that its
attorney’s fees remain subject to attachment because Leading Edge remains in default on
its account, requiring FCS to continue accumulating fees and costs to secure repayment.
Id. at 5.
As an initial matter, the court notes that the figures identified by Leading Edge in
the Motion to Vacate appear to be outdated. In the Motion to Vacate, Leading Edge refers
Leading Edge refers to “$20,974” as the amount of funds purportedly in default.
Motion to Vacate at 5. This appears to be an error. Compare id. with id. at 1, 3
(referring to “$20,970.47” in funds relating to FCS’s claims).
to $20,970.47 as the amount in default and $33,985 as the accrued attorney’s
fees—amounting to $54,955.47 in then-accumulated damages. See Motion to Vacate at 1,
3; see also Resistance to Motion to Vacate at 5 (referring to $20,970.47 as the amount in
default). In light of the evidence submitted for purposes of summary judgment, the court
finds that the amount in default is, in fact, $18,406.60, see FCS Appendix at 5-6 (charting
unpaid invoices); see also id. at 26-39, 144-45 (invoices detailing unpaid feed deliveries
ordered by Leading Edge), and finds that FCS alleges additional damages, consisting of
attorney’s fees and finance charges, amount to $98,402.08—totaling $116,808.68 in
presently alleged damages, see id. at 167. The court shall rely on these figures from the
summary judgment materials when assessing the merits of the Motion to Vacate.
The debt secured by attachment covers “that which is due or owing from one person
to another; that for which a person is held, or which he is bound to pay.” Estate of Lyon,
2010 WL 200454, at *2 (quoting Raver v. Webster, 3 Iowa 502, 512 (1856)). Under the
Credit Agreement, “[i]f [Leading Edge] defaults and FCS refers [Leading Edge] to an
attorney for collection, FCS may . . . charge [Leading Edge] or collect from [Leading
Edge], FCS’s collection costs, including court costs and attorney fees.”
Appendix at 9. Under the Credit Agreement, FCS is entitled to attorney’s fees from
Leading Edge upon the satisfaction of two conditions precedent: (1) Leading Edge
defaulting and (2) FCS retaining an attorney to pursue collection. Leading Edge defaulted
by “fail[ing] to make a payment when due,” id. (defining “default” within contract), and
FCS retained an attorney to pursue collection via the instant action, see Iowa Code
§ 537.7102(4) (defining “debt collection” as “an action . . . in the collection or attempted
collection of a debt”). Because both conditions precedent are satisfied—and, furthermore,
because the court has found as a matter of law that FCS has succeeded on its breach of
contract claim—the Credit Agreement provides that attorney’s fee are presently due,
subject to a jury determination of the amount to which FCS is entitled. As such, they are
subject to attachment. FCS is entitled to the recovery of $18,406.60 and has calculated
alleged attorney’s fees and finance charges totaling $98,402.08. Because the cumulative
anticipated recovery exceeds the $94,688.98 currently under attachment, the court finds
that continued attachment of such funds is warranted. See Estate of Lyon, 2010 WL
200454, at *2 (referring to attachment as “an execution by anticipation” (quoting Edwards,
212 N.W. at 318)). Accordingly, the court shall deny the Motion to Vacate.
In light of the foregoing, the court ORDERS as follows:
Leading Edge’s Motion to Strike (docket no. 77) is DENIED;
FCS’s Motion for Summary Judgment (docket no. 53) is GRANTED IN
PART and DENIED IN PART. The court shall enter judgment in favor of
FCS on its breach of contract claim, in the amount of $18,406.60, to be
made payable from the court-attached funds currently held by the Clerk of
Court. Assessment of all other damages and determination of the merits of
Leading Edge’s counterclaims remain pending for trial;
Leading Edge’s Motion to Vacate (docket no. 70) is DENIED.
IT IS SO ORDERED.
DATED this 20th day of July, 2017.
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