Cargill, Inc. v. Howell

Filing 22

MEMORANDUM AND OPINION by Senior Judge Thomas B. Russell on 2/27/2012; re 18 MOTION for Judgment on the Pleadings Confirming Arbitration Award filed by Cargill, Inc. ; an appropriate order shall issuecc:counsel (KJA)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CASE NO. 5:11-CV-80-R
CARGILL, INC.

PETITIONER

v.
SIDNEY HOWELL,
d/b/a SIDNEY HOWELL FARMS

RESPONDENT

MEMORANDUM OPINION
This matter is before the Court upon the Petitioner’s Motion for Judgment on the
Pleadings. Docket Number (“DN”) 18. The Respondent has not filed a Response, and the time
to respond has now passed. For the following reasons the Petitioner’s motion is GRANTED.
BACKGROUND
In January and February of 2007, the Petitioner, Cargill, Inc. (“Cargill”), and the
Respondent, Sidney Howell (“Howell”), entered into a number of contracts whereby Cargill
agreed to buy and Howell agreed to sell certain quantities of wheat and corn. DN 1-3. The
wheat was to be delivered in June of 2008, and Cargill would take delivery of the corn in
September of the same year. Id. at pp. 1, 3, 6, 9. Each contract required Howell to deliver a
specific quantity of grain and established a price that Cargill would pay for it. Id. In aggregate,
Cargill contracted to pay Howell $119,750.00 for 30,000 bushels of wheat and corn. Cargill
alleges that Howell never delivered the grain.
Each contract executed by the parties contained an arbitration clause. Id. at pp. 2, 4, 7,
10. The parties agreed that in the event of a dispute:
[T]his Contract shall be subject to the Trade Rules of the National Grain and Feed
Association (NGFA), which Trade Rules are incorporated herein by reference.
The parties agree that the sole forum for resolution of all disagreements or
disputes between the parties arising under this Contract or relating to the
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formation of this Contract shall be arbitration proceedings before NGFA pursuant
to NGFA Arbitration Rules. The decision and award determined by such
arbitration shall be final and binding upon both parties and judgment upon the
award may be entered in any court having jurisdiction thereof. Copies of the
NGFA Trade and Arbitration Rules are available from Buyer upon request and are
available at www.ngfa.org.
Id. Because Howell failed to deliver the grain, Cargill filed a complaint with the NGFA on
August 25, 2009, and sought arbitration between the parties pursuant to the terms of the
contracts. DN 1-1. The NGFA opened the arbitration and notified Howell of the proceedings on
multiple occasions.1 It explicitly notified Howell that failure to participate would result in a
default judgment against him. DN 1-5, p. 2. Howell never responded or otherwise attempted to
participate in the arbitration, however, and the NGFA entered a default against him on April 28,
2010. DN 1-5. The default awarded Cargill a judgment of $119,412.50 plus interest at the
statutory rate from the date of the award until paid. Id. at p. 3. Under the NGFA arbitration
rules, Howell had 15 days to vacate the default judgment but took no action to do so, and the
arbitration award became final on May 13, 2010. DN 1-6. There is no evidence in the record
showing that Howell has paid any part of the award since it was finalized.
On May 12, 2011, Cargill moved this Court to confirm the arbitration award pursuant to
9 U.S.C. § 9 and KRS § 417.150. DN 1. Cargill served Howell with notice of the application for
confirmation, but Howell did not respond or otherwise file an Answer as required by Federal
Rule of Civil Procedure 12(a)(1)(A)(i).2 Cargill then moved for an Entry of Default. DN 11.
The Court ultimately denied Default and ordered Howell to file an Answer. Order of Nov. 8,
2011, DN 15. Howell filed his Answer on November 15, 2011. DN 16. On January 13, 2012,
Cargill moved for Judgment on the Pleadings pursuant to Rule 12(c). DN 18. Howell has not

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The NGFA arbitration decision shows that the NGFA sent Howell four separate notices of the pending arbitration.
These notices were sent by certified mail and FedEx delivery, and the NGFA confirmed that Howell received each
notice. DN 1-5, pp.1-2.
2
Howell was properly served on June 6, 2011. DN 6.   

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responded.
STANDARD
After the pleadings are closed, a party may move for judgment on the pleadings pursuant
to Federal Rule of Civil Procedure 12(c). “For purposes of a motion for judgment on the
pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be
taken as true, and the motion may be granted only if the moving party is nevertheless clearly
entitled to judgment.” JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 582 (6th Cir. 2007)
(quoting Southern Ohio Bank v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 479 F.2d 478, 480
(6th Cir.1973)). While the allegations of the complaint are the primary focus in assessing a Rule
12(c) motion, “matters of public record, orders, items appearing in the record of the case, and
exhibits attached to the complaint[ ] also may be taken into account.” Barany-Snyder v. Weiner,
539 F.3d 327, 332 (6th Cir. 2008) (quoting Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir.
2001)). Legal conclusion and unwarranted factual inferences need not be accepted as true.
JPMorgan, 510 F.3d at 582 (citing Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999)). “A Rule
12(c) motion ‘is granted when no material issue of fact exists and the party making the motion is
entitled to judgment as a matter of law.’” Id. (quoting Paskvan v. City of Cleveland Civil Serv.
Comm'n, 946 F.2d 1233, 1235 (6th Cir.1991)).
DISCUSSION
Cargill moves for judgment on the pleadings and asks the Court to confirm the arbitration
award entered in its favor by the NGFA. Howell has not responded to this motion.
Cargill’s motion to confirm the arbitration award sets out the grounds for the Court’s
jurisdiction, contains a short and plain statement of the claim, and demands confirmation of the
$119,412.50 award. DN 1. Howell’s Answer states that the amount in controversy is less than

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$75,000, that he did not intend for NGFA arbitrators to decide his dispute with Cargill, and that
he tried to deliver the grain in question “at a reasonable basis/selling price, Cargill in Hickman
refused.” DN 16. The Court finds that, even taking the allegations in his Answer as true, the
evidence submitted with Cargill’s pleadings and otherwise found in the record directly
contradicts Howell. There is no material issue of fact and Cargill is clearly entitled to judgment
as a matter of law. The objections raised in Howell’s Answer are without merit, and Cargill’s
arbitration award will be confirmed.
First, Howell claims that the amount in controversy is less than $75,000. This is simply
not true. The contracts signed by Howell and Cargill are attached to Cargill’s motion to confirm
the arbitration. DN 1-3. These contracts set out the specific quantities of grain that Howell
agreed to sell and also lists a price that Cargill agreed to pay for each bushel of grain.
Multiplying the agreed upon quantities and prices shows that the contracts, in aggregate, are
valued at $119,750. There is no merit to Howell’s claim that the amount in controversy is less
than $75,000.
Second, Howell argues that he never intended for the NGFA to arbitrate his contractual
disputes with Cargill. Again, the Court finds that this objection is contradicted by the record.
The contracts signed by Howell explicitly state that they represent the entirety of the agreements
between the parties. As noted at the top of the “Purchase Terms” in each contract:
The statements below and on the reverse side are understood to be an accurate
statement of the terms and conditions of the agreement between the parties hereto.
Failure to advise [Cargill] immediately of any discrepancies, objections to or
disagreements with such terms and conditions shall constitute acceptance of these
terms and conditions.
Id. at pp. 2, 4, 7, 10. The arbitration clause follows immediately after the “entirety clause” and
states in pertinent part:

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The parties agree that the sole forum for resolution of all disagreements or
disputes between the parties arising under this Contract or relating to the
formation of this Contract shall be arbitration proceedings before NGFA pursuant
to NGFA Arbitration Rules. The decision and award determined by such
arbitration shall be final and binding upon both parties and judgment upon the
award may be entered in any court having jurisdiction thereof.
Id. In his Answer, Howell does not allege that he did not sign the contracts, that they do not
represent the entirety of the agreement, or that they are ambiguous. Instead, he merely alleges
that he did not intend for the NGFA to arbitrate any disputes arising between the parties. This is
not enough to demonstrate the presence of a material issue of fact. "[T]he cornerstone of
contract construction is to ascertain the true intentions of the parties as expressed by the
contractual language. To ascertain the parties' intent, a court must adhere to the plain meaning of
the contract if it is unambiguous.” La Quinta Corp. v. Heartland Props. LLC, 603 F.3d 327, 336
(6th Cir. 2010) (citations omitted). Based on the evidence, the Court finds that the contracts are
unambiguous and that Howell agreed to have any disputes arbitrated by the NGFA.
Finally, Howell claims that he attempted to deliver the grain “at a reasonable basis/selling
price” but “Cargill in Hickman refused.” DN 16. Again, the Court turns to the terms of the
contracts signed by Howell. Each of the four contracts plainly and explicitly quotes a price per
bushel that Cargill has agreed to pay Howell for the grain. DN 1-3, pp. 1, 3, 6, 9. Howell’s
Answer does not state that Cargill refused to pay him entirely or refused to pay the agreed upon
price. Instead, he claims they Cargill would not take the grain at a “reasonable basis/selling
price.” Although the Court must take the statements in Howell’s Answer as true, it does not
have to take as true accept unwarranted factual inferences. See JPMorgan, 510 F.3d at 582. The
Court finds that there is no material issue of fact regarding Cargill’s refusal to accept the grain at
issue.
The Court is aware that Howell is representing himself in this matter. Nevertheless,
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when a defendant “chooses to represent himself, he should expect no special treatment which
prefers him over others who are represented by attorneys.” Brock v. Hendershott, 840 F.3d 339,
343 (6th Cir. 1988). The Court has given Howell every opportunity to appear, present evidence,
and otherwise defend in this matter. The Court granted Howell nearly six months to file an
Answer and denied Cargill’s Motion for Entry of Default while waiting for him to do so. Cargill
has now moved for Judgment on the Pleadings, and Howell has, once again, refused to respond.
At this stage, the Court’s hands are tied and the pleadings and evidence before it show that
Cargill is clearly entitled to judgment because there are no material issue of fact. As such,
Cargill’s motion for judgment on the pleadings will be granted.
The final issue that the Court must address is the rate of interest that is applicable to the
arbitration award. The $119.412.50 award was finalized on May 13, 2010, and the award
provided that the “[i]nterest on the judgment shall accrue at the statutory rate available for
judgments in the applicable jurisdiction from this date until paid in full.” DN 1-6, p. 2. In its
proposed order, Cargill seeks “interest at the rate of 12% from May 13, 2010.” DN 18-1.
This Court previously addressed what rate of interest applies to an arbitration award in
Gen. Elec. Co. v. Anson Stamping Co., Inc., 426. F. Supp. 2d 579 (W.D. Ky. 2006). In general,
the Court calculates interest for two separate time periods when confirming an arbitration award.
The first period is the “post-award, pre-judgment” period. This period begins on the date the
award is finalized by the arbitrator and ends on the day the award is reduced to a judgment by the
Court. “When a federal court’s jurisdiction rests upon diversity, the award of prejudgment
interest is governed by state law.” Hale v. Life Ins. Co. of N. Am., 795 F.2d 22, 24 (6th Cir.
1986) (citing Glens Falls Ins. V. Danville Motors, Inc., 333 F.2d 187 (6th Cir. 1964)). As stated
in Anson, and as is applicable here, “the prejudgment rate to be applied in this diversity action is

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determined, not by federal law, but by state law such as KRS § 360.040.” Anson, 426 F. Supp.
2d at 597. KRS § 360.040 provides that such awards “shall bear twelve percent (12%) interest
compounded annually from its date.” For the present case, then, interest on Cargill’s arbitration
award shall be calculated daily and compounded annually at a 12% rate from May 13, 2010, until
the date of this opinion and accompanying judgment.
The Court must also consider what rate of interest applies to the “post-judgment” period
that begins to run after the arbitration award is confirmed. This rate of interest is governed by
federal law as provided in 28 U.S.C. § 1961. Under that statute, “[i]nterest shall be allowed on
any money judgment in a civil case recovered in a district court.” 28 U.S.C. § 1961. The postjudgment rate of interest “shall be calculated from the date of the entry of the judgment, at a rate
equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board
of Governors of the Federal Reserve System, for the calendar week preceding the date of the
judgment.” Id. The post-judgment interest is computed daily and compounded annually. Id. §
1961(b). For the present case, post-judgment interest will begin accruing at a rate of 0.17% as of
the date of this opinion and accompanying judgment.3
Finally, post-judgment interest will accrue on the amount of the arbitration award and any
post-award, pre-judgment interest earned on that award. This approach of paying post-judgment
interest on pre-judgment interest is well-recognized in the Sixth Circuit. See, e.g., Caffey v.
Unum Life Ins. Co., 302 F.3d 576, 586-87 (6th Cir. 2002) (recognizing that “postjudgment
interest should be awarded on the entire amount of the judgment, including any prejudgment
interest”).
Cargill’s arbitration award and pre-judgment interest will be awarded as follows. The

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The “weekly average 1-year constant maturity Treasury yield” is published by the Federal Reserve and may be
found at http://www.federalreserve.gov/releases/h15/current/.

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$119,412.50 arbitration award from May 13, 2010, will be confirmed. At a 12% per annum rate,
the award accrued $14,329.50 in interest through May 13, 2011. This amount was compounded
into the principal on May 13, 2011, for a total outstanding principle of $133,742.00. The
outstanding principal earned 12% per annum interest, or $43.97 per day, up until the date of the
judgment accompanying this opinion. After entry of judgment, the outstanding principle and
pre-judgment interest will earn post-judgment interest at a rate of 0.17% until paid.
CONCLUSION
For the foregoing reasons, Cargill’s Motion for Judgment on the Pleadings is
GRANTED and the arbitration award is CONFIRMED. An appropriate order shall issue.

February 27, 2012

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