Aurora Cooperative Elevator Company v. Aventine Renewable Energy Holdings, Inc. et al

Filing 46

MEMORANDUM AND ORDER - Aventine's Emergency Motion to Enforce Stay and for Temporary Restraining Order and Preliminary Injunction (filing 34 ) is denied. Ordered by Judge John M. Gerrard. (AOA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
AURORA COOPERATIVE
ELEVATOR COMPANY,
4:12-CV-3200
Plaintiff,
vs.

MEMORANDUM AND ORDER

AVENTINE RENEWABLE ENERGY
HOLDINGS, INC., et al.
Defendants.
This matter is before the Court on the defendants' Emergency Motion
to Enforce Stay and for Temporary Restraining Order and Preliminary
Injunction.1 Filing 34. For the reasons discussed below, the defendants'
motion will be denied.
BACKGROUND
Aurora Cooperative (Aurora Co-op) is a Nebraska corporation located in
Aurora, Nebraska. Filing 1 at ¶ 1. Aventine Renewable Energy Holdings and
Aventine Renewable Energy are foreign corporations, registered to do
business in Nebraska, and Aventine Renewable Energy – Aurora West is a
limited liability company whose sole member is Aventine Holdings
(collectively, "Aventine"). Filing 1 at ¶¶ 2–4; filing 20 at ¶¶ 2–4, 60–62.
Around 2006, Aurora Co-op acquired an agri-business complex on an
industrial site just west of Aurora (the "Aurora West site"). Filing 39-21 at ¶
4. The site is bounded to the north by U.S. Highway 34, and to the south by a
Burlington Northern Santa Fe (BNSF) railroad line. Filing 39-21 at ¶ 4; filing
39-24 at 3. In June 2006, Aurora Co-op sold Aventine a large portion of the
land within the site. Filing 20-1. And in August 2006, Aventine and Aurora
Co-op entered into a series of agreements related to the development of an
ethanol plant on the land Aventine had purchased. Filing 1 at ¶¶ 8–9; filing
While captioned as a request for a TRO and preliminary injunction, Aventine's request is,
at this point, only a request for a preliminary injunction. See Williams v. Federal Home
Loan Mortg. Corp., 2013 WL 6713278, at *8 (D. Md. Dec. 18, 2013) ("A preliminary
injunction is distinguished from a TRO only by the difference in notice to the nonmoving
party and by the duration of the injunction.").
1

39-1; filing 39-21 at ¶ 6. The parties' agreements provided for the
development of roads, rail tracks, and other infrastructure needed to operate
the plant, and envisioned that Aventine would operate the plant using grain
provided by Aurora Co-op. Filing 1 at ¶ 8; filing 39-1 at 1–12; filing 39-2;
filing 39-21 at ¶¶ 5–8. Aventine constructed the plant, and Aurora Co-op
built a grain elevator and grain storage facility. Filing 39-1 at 1–11; filing 3921 at ¶¶ 5, 16.
The present dispute centers around a pair of railway tracks that
surround the Aurora West site and Aventine's ethanol plant—the "Double
Track Loop." The Loop is shaped roughly like an athletic track and consists of
two sets of railway tracks (the "Interior and Exterior Loops"). Filing 39-21 at
¶ 11; filing 39-5; filing 39-18; filing 39-22 at ¶ 6; filing 39-24 at 1–3. The
Inner and Exterior Loops are (with exceptions not relevant here) situated on
land owned by Aventine and Aurora Co-op, respectively. A service road runs
between the two tracks, and the line dividing the parties' property runs down
the middle of the road. Filing 39-21 at ¶ 11; filing 39-24 at ¶¶ 5–8 & p. 3.
On the southern border of the Aurora West site, the Double Track Loop
runs parallel to the BNSF line. A set of crossover tracks and switches connect
the Exterior Loop to the BNSF line, and another set of tracks and switches
connect the Exterior and Interior Loops. Filing 39-21 at ¶¶ 11, 13; filings 395, 39-6, and 39-7; filing 39-18; filing 39-24 at 3. In order to move from the
BNSF line to the Interior Loop (or vice versa), a railcar must pass over one
set of crossover tracks, then travel along the Exterior Loop for a short
distance (approximately 100 feet),2 then pass over another set of crossover
tracks. The Court will refer to the small portion of the Exterior Loop that lies
between the crossover tracks as the "Switching Portion."
Among the agreements signed by Aventine and Aurora Co-op in August
2006, two are particularly important to the present dispute. The first is the
Double Track Loop Easement and Use Agreement (the "Double Loop
Agreement") and the Grain Supply Agreement. Filing 39-3. Under this
agreement, Aventine and Aurora Co-op granted each other easements over
certain parcels of real estate owned by the other party and over the portion of
the Double Track Loop located on that real estate. Filing 39-3 at 2, 6–7. The
second is the Grain Supply Agreement. Filings 39-2. It is essentially a
requirements contract, whereby Aventine agreed to purchase from Aurora
Co-op, on an exclusive basis, "all of the [g]rain which Aventine requires to
operate the Aventine Ethanol Plant." Filing 39-2 at 2. The agreement allows
the Co-op to furnish the grain from its own farmer members or to procure it
This is an estimation based upon the materials currently in the record. See, filings 39-5,
39-6, and 39-7; filing 39-24 at 3. The exact length is not important at this time.
2

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from third parties. Filing 39-2 at 5–8. Each grain purchase was to give rise to
and be governed by a separate "Grain Contract." Any dispute arising under a
Grain Contract is subject to arbitration through the National Grain and Feed
Association. Filing 39-2 at 2. Both the Double Loop and Grain Supply
Agreements are governed by Nebraska law. Filing 39-2 at 14; Filing 39-3 at
14–15.
In the summer of 2012, a dispute arose regarding one or more Grain
Contracts. Aurora Co-op alleges that in July and August 2012, Aventine
failed to pay for approximately $1,800,000 in grain that Aurora Co-op had
procured, in violation of the Grain Supply Agreement and the underlying
Grain Contracts. Filing 1 at ¶¶ 29–44; filing 39-21 at ¶ 19. On September 17,
2012, Aurora Co-op initiated an arbitration proceeding with the National
Grain Feed Association, seeking to recover these payments. Filing 39-21 at ¶
20.
Aventine contends that it was Aurora Co-op that breached the Grain
Supply Agreement (as well as another contract not at issue here), by failing
to make certain payments. Filing 20 at ¶¶ 69–76; filing 39-10. On September
18, 2012, Aurora Co-op received a letter from Aventine's CEO, stating that as
a result of Aurora Co-op's failure to make these payments, Aventine had
terminated the Grain Supply Agreement. Filing 39-10.
Aurora Co-op responded by filing the present suit. Aurora Co-op seeks,
among other things, a declaration that Aventine's purported termination of
the Grain Supply Agreement was not effective, that the agreement remains
in effect, and that Aventine, not Aurora Co-op, has breached the agreement.
Filing 1 at 14–16. Aventine counterclaimed, seeking a declaration to the
opposite effect: that Aurora Co-op had breached the Grain Supply Agreement,
which Aventine then lawfully terminated. Filing 20 at 13–14. After these
initial filings, the case was informally stayed to allow the parties to arbitrate
their disputes under the Grain Contracts. See, filings 26, 27, 28, 29, and 30.
Much like the docket in this case, Aventine's ethanol plant has
remained more or less idle since running briefly in the summer of 2012.
Filing 34-10 at ¶ 11. Aventine's president, Mark Beemer, explained that due
to the relative prices of grain and ethanol over this period, Aventine could
only have operated the plant at a loss.3 Filing 34-10 at ¶ 11. However, in the
fall of 2013, Aventine learned that it could acquire sugar at a favorable price
from the U.S. Department of Agriculture. Aventine projected that, using

Aurora Co-op has objected to several paragraphs of Beemer's declaration on foundation
and hearsay grounds. Aurora Co-op's objections are overruled as moot—even if the entirety
of Beemer's declaration is considered, Aventine is not entitled to injunctive relief at this
time.
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sugar rather than grain, it could finally produce ethanol at a profit. Filing 3410 at ¶ 12. So, Aventine contracted with the Department of Agriculture to
purchase "enough sugar to operate at full capacity for several months." Filing
34-10 at ¶ 13. The sugar was to be delivered by rail, with the first shipment
scheduled to arrive in mid-February 2014. Filing 34-10 at ¶ 16.
In January 2014, Aurora Co-op learned of Aventine's plan to produce
ethanol using sugar. Filing 39-21 at ¶ 25. In a letter dated January 28, 2014,
counsel for Aurora Co-op wrote to Aventine to address what Aurora Co-op
regarded as Aventine's "inconsistent positions" regarding the Grain Supply
and Double Loop Agreements. Filing 39-12. Aurora Co-op maintained that
pursuant to the Double Loop Agreement, the easements that it granted were
terminated immediately (along with the Double Loop Agreement itself) in the
event that either party terminated the Grain Supply Agreement. And, Aurora
Co-op asserted, without these easements, Aventine had no right to access the
Switching Portion of the Exterior Loop, which Aventine would need to use to
ship railcars between the BNSF line and the Interior Loop. Filing 39-12.
The portion of the Double Loop Agreement that Aurora Co-op relied
upon provides, in part:
The initial term of this Agreement and the easements granted
herein shall commence on August 1, 2006 . . . and shall continue
thereafter for a term of twenty (20) years . . ., except as is
expressly provided below. . . . Anything herein to the contrary
notwithstanding, this Agreement shall terminate as follows:
....
(B) Immediately in the event the then current Grain Supply
Agreement between Aurora Co-op and Aventine expires or
is terminated by either party.
Filing 39-3 at 4.
Thus, Aurora Co-op took the position that Aventine could not
simultaneously claim that it had terminated the Grain Supply Agreement in
September 2012 and continue to claim access to the easements granted by
the Double Loop Agreement. Alternatively, Aurora Co-op asserted that
Aventine's attempt to terminate the Grain Supply Agreement, while not
effective, did amount to an anticipatory repudiation of that agreement. And,
Aurora Co-op further argued, the Grain Supply and Double Loop Agreements
were inextricably linked, such that a repudiation of one excused performance
under the other. Thus, Aurora Co-op asserted that it was entitled to suspend
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performance under the Double Loop Agreement, such that it no longer had
any obligation to allow Aventine on its land. Aurora Co-op concluded the
letter by stating it would take legal action to prevent Aventine from using
any portion of the Exterior Loop, unless Aventine (1) retracted its purported
termination of the Grain Supply Agreement, and (2) stipulated to dismissal
with prejudice of its counterclaims in the present case which allege that the
agreement has been terminated. Filing 39-12.
Aventine disagreed with Aurora Co-op's legal analysis, and on
February 4, 2014, Aventine used the Switching Portion to move two railcars
from the BNSF line to the Interior Loop. Filing 39-13; filing 39-21 at ¶ 28.
That same day, Aurora Co-op filed a separate suit with this Court, essentially
seeking a declaration that its position above was correct and enjoining
Aventine from using the Exterior Loop unless Aventine retracted its position
that the Grain Supply Agreement had been terminated. Case no. 4:14-CV3032, filing 1 at 14–16.
However, that was not all Aurora Co-op did. On February 14, 2014,
Aurora Co-op locked the switches at the Exterior Track Loop, effectively
barring rail traffic from crossing between the BNSF line and the Interior
Loop. Filing 39-21 at ¶ 30. Aurora Co-op then sent a final letter to Aventine,
stating that it would remove the locks if Aventine provided written assurance
that it would comply with the Grain Supply Agreement for the duration of
this case. However, Aurora Co-op dropped its demand that Aventine also
dismiss its counterclaim alleging the agreement had been terminated. Filing
39-16 at 3. In response, Aventine filed the pending motion for preliminary
injunctive relief. Filing 34.
ANALYSIS
Aventine asks the Court to enter a preliminary injunction ordering
Aurora Co-op to remove the locks and prohibiting Aurora Co-op from
interfering with Aventine's use of the portion of the Exterior Loop it needs to
conduct its business. Aventine also argues that the present case was stayed
pending arbitration, and that Aurora Co-op's actions—filing a separate
declaratory suit and locking the tracks—violate that stay. This argument is
quickly dealt with, and so the Court turns to it first.
THE STAY PENDING ARBITRATION
Contrary to Aventine's assertion, no order has been entered staying
this case.4 Even if there were such an order, Aventine has not explained how
No motion to stay has been filed, and the Magistrate Judge's order that Aventine
references did not order a stay. Filing 27. That order simply observes that litigation had
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Aurora Co-op's acts—locking the tracks and filing a separate declaratory
action—are in any way interfering with the arbitration proceeding. First, a
stay is not an injunction, and it would not affect Aurora Co-op's out-of-court
actions. Second, Aventine's separate suit does not ask the Court to construe
or interpret the Grain Supply Agreement. In any event, at the hearing on the
present motion, counsel for Aventine conceded that whether the Grain
Supply Agreement was terminated is not an issue pending in arbitration. So,
the Court does not understand how Aurora Co-op's separate suit will
interfere with the pending arbitration. And even if it did, the matter is better
addressed in that suit.
PRELIMINARY INJUNCTION
When deciding whether to issue a preliminary injunction, the Court
weighs the four Dataphase factors: (1) the threat of irreparable harm to the
movant; (2) the state of the balance between this harm and the injury that
granting the injunction will inflict on other parties; (3) the probability that
the movant will succeed on the merits; and (4) the public interest. Johnson v.
Minneapolis Park & Recreation Bd., 729 F.3d 1094, 1098 (8th Cir. 2013);
(citing Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981)
(en banc)). A preliminary injunction is an extraordinary remedy, and the
movant bears the burden of establishing its propriety. Roudachevski v. AllAmerican Care Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011); see also H&R
Block Tax Servs. LLC v. Acevedo-Lopez, No. 13-1387, 2014 WL 539788, at *2
(8th Cir. Feb. 12, 2014).
The Court finds that, on the current record, Aventine has not
demonstrated that it will be irreparably harmed in the absence of
preliminary injunctive relief. Moreover, while there remain some factual and
legal issues warranting further development, Aventine has not shown a
sufficient likelihood of success on the merits. The Court understands that
Aventine is frustrated by Aurora Co-op's self-help measures. Even if these
actions are not (at this time) legally prohibited, they are easily characterized
as purely retributive. And if this conduct continues, it is not unreasonable to
expect that Aventine will find a way to seek further relief.
That said, while the economic harm Aventine faces is obvious, it is not
irreparable. And a showing of irreparable harm is the fundamental
prerequisite to injunctive relief—absent that, even if Aventine had presented
"a strong claim on the merits," injunctive relief would be improper.
Roudachevski, 648 F.3d at 706. The remaining factors support Aventine's
been "stayed" (by the parties) pending arbitration, and directed them to provide status
updates. See also, filing 26; filing 39-23 at ¶ 2.

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position. As the Court has already suggested, the balance of equities favors
Aventine's position, and the balance of harms is likewise in Aventine's favor.
It is also clear that the public interest would be served by ending the
economic standstill imposed by Aurora Co-op and allowing Aventine to put its
ethanol plant to productive use. But without a showing of irreparable harm,
these factors will not support injunctive relief.
I. Irreparable Harm
To show a threat of irreparable harm, the movant must show that the
harm is certain and great and of such imminence that there is a clear and
present need for equitable relief. Roudachevski, 648 F.3d at 706. Stated
differently, the harm "must be actual and not theoretical." Brady v. Nat'l
Football League, 640 F.3d 785, 794 (8th Cir. 2011).
Aventine needs rail access to produce ethanol at a profit. Aventine can
use roads to bring in employees, tools, and some supplies, but its plant was
designed to receive feedstock and ship finished ethanol by train. Using trucks
to do this would be cost-prohibitive and impractical. Filing 34-10 at ¶ 19.
While this presents a very real harm to Aventine's bottom line, it is not
irreparable. The potential profits that Aventine has lost and the costs it has
already incurred are economic harms that can be remedied with money
damages. And harm is not irreparable when a party can be fully compensated
for its injuries through an award of damages. Gen. Motors Corp. v. Harry
Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009).
Potential economic loss will constitute irreparable harm where the loss
is so great that it threatens the very existence of a business. Packard
Elevator v. Interstate Commerce Comm'n, 782 F.2d 112, 115 (8th Cir. 1986).
Aventine, citing this proposition, argues that forcing it to "completely cease
its operations during the pendency of litigation" likewise qualifies as
irreparable harm. Filing 34-1 at 19. But the only evidence Aventine offers in
support of this claim are two sentences from Beemer, who averred that "[t]he
cost to Aventine from being closed out of access to its sources of supply and
its sales market, and the ripple effect to the broader community, absent the
intervention of the Court, are incalculable. The Aventine ethanol plant would
be crippled without rail access." Filing 34-10 at ¶ 21. These conclusory
statements are not enough to show irreparable harm.
First, showing that the plant is "crippled," i.e., that it cannot operate
efficiently without rail access, does not by itself demonstrate an existential
threat to Aventine's business. The plant has remained essentially idle since
July 2012. Filing 34-10 at ¶ 11. Aventine has not explained (much less
shown) how remaining idle while this case proceeds will result in irreparable
harm. Second, even if Beemer had actually stated that the plant would close
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or go out of business, the Court lacks the information it needs to assess such
a declaration. Aventine has not shown, for example, how much it has spent
on sugar already, and how much it still owes the Department of Agriculture.
The Court would also need to know whether Aventine could mitigate these
losses in any way, perhaps by using the sugar in another of Aventine's plants
or reselling it to another company.5 Most importantly, Aventine has not
offered any concrete evidence of the impact these losses will have on its
overall financial viability.
The economic harm that Aventine faces, while not quantified, is real
and obvious. But Aventine must "demonstrate that irreparable injury is likely
in the absence of an injunction." Winter v. Natural Resources Defense Council,
Inc., 555 U.S. 7, 22 (2008). At this time, the Court lacks any facts with which
to evaluate the nature, scope, and imminence of that harm. When weighing
the possibility of irreparable harm, courts may in some cases accept mere
arguments from "general business principles." General Motors Corp. v. Harry
Brown's, LLC, 563 F.3d 312, 319–20 (8th Cir. 2009). But the Court may also
insist upon more substantive evidence. Id. On the current record, Aventine
has given the Court no reason to believe the harm it faces is anything but a
provable economic loss.6
But there is an even more basic problem with Aventine's attempt to
demonstrate irreparable harm. Aurora Co-op has stated that it will remove
the locks and restore Aventine's rail access if Aventine agrees, for the
duration of this case, to abide by the Grain Supply Agreement. Filing 39-16
at 3. Although Aurora Co-op originally insisted that Aventine also dismiss its
counterclaim alleging that the Grain Supply Agreement has been terminated,
Aurora Co-op has since dropped that demand. Filing 39-16 at 3.
Aventine has not explained how agreeing to be bound by the Grain
Supply Agreement for the duration of this trial will cause it any, let alone
irreparable, harm. The Grain Supply Agreement is a requirements contract—
Aventine is obligated to purchase all of the grain it needs to operate the
5

Aventine owns other ethanol plants in Illinois and Indiana. See filing 39-21 at ¶ 23.

Beemer also stated that the harm to Aventine would be "incalculable." Filing 34-10 at 21.
While this choice of words was likely a rhetorical flair, it at least implicitly raises another
argument, not addressed in Aventine's brief, but which is worth a brief mention.
Irreparable harm will be found where the nature of the loss makes monetary damages very
difficult to calculate. See, e.g., East St. Louis Laborers' Local 100 v. Bellon Wrecking &
Salvage Co., 414 F.3d 700, 705 (7th Cir. 2005); Tom Doherty Associates, Inc. v. Saban
Entertainment, Inc., 60 F.3d 27, 38 (2d Cir. 1995). However, this conclusory statement no
more provides satisfactory support for this argument than the argument discussed above.
Aventine has not given the Court any reason to believe it will face undue difficulty
quantifying any losses at trial.
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ethanol facility from Aurora Co-op. But as with such contracts generally,
nothing in that agreement obligated Aventine to purchase any particular
amount of grain, or any grain at all. Instead, Aventine was obligated to
purchase "such actual . . . requirements as may occur in good faith." Neb.
U.C.C. § 2-306(1). So long as Aventine decides in good faith that it does not
need any grain, there is no requirement that it buy any. See Brisbin v.
Superior Valve Co., 398 F.3d 279, 291 (3d Cir. 2005); see also, Neb. U.C.C. §
2-306 & cmt. 2; Meyer v. Sandhills Beef, Inc., 318 N.W.2d 863, 865–66 (Neb.
1982). Aurora Co-op has not suggested that Aventine's business judgment—
that it could not profitably produce ethanol using grain—was not made in
good faith. Nor does the Grain Supply Agreement require Aventine to operate
its plant using only grain. Aurora Co-op agrees that sugar is not a "grain" for
purposes of the agreement. So, provided it has a good faith basis for
purchasing sugar, as opposed to grain provided by Aurora Co-op, the Grain
Supply Agreement poses no obstacle to Aventine's plans to use sugar.
It may be that Aventine does not wish to risk exposing itself to attack
by Aurora Co-op on the grounds that the decision to purchase sugar (or to
simply not purchase any feedstock) was not made in good faith. See, e.g.,
Brisbin, 398 F.3d at 291. But it is Aventine's burden to show that it is facing
irreparable harm, and Aventine has not yet done so.
II. Likelihood of Success on the Merits
A party seeking injunctive relief need not necessarily show a greater
than fifty percent likelihood that it will prevail on the merits. Planned
Parenthood Minnesota, North Dakota, South Dakota v. Rounds, 530 F.3d 724,
731 (8th Cir. 2008). When the balance of the remaining factors tips decidedly
in the movant's favor, an injunction may issue if the movant "has raised
questions so serious and difficult as to call for more deliberate investigation,"
id., or shown that the issues raised provide a "fair ground for litigation."
Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). It follows that where
the balance of equities is closer, the movant must show a greater possibility
of success. Dataphase, 640 F.2d at 113. Because Aventine has not shown
irreparable harm, an injunction is not warranted, no matter how likely
Aventine is to succeed at trial. The Court nonetheless considers the parties'
arguments on the merits.7
The present dispute centers around the easements granted by the
Double Loop Agreement, and even more specifically, on the contractual
Doing so may help the parties and the Court focus on the issues that deserve the most
attention. And under Fed. R. Civ. P. 52(a)(2), the Court must state the findings and
conclusions that underlie its decision. See H&R Block Tax Servs., 2014 WL 539788, at *2.
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provision quoted (in part) above. Briefly stated, Aventine argues that a
correct reading of the Double Loop Agreement shows that the easements it
grants should survive even if the agreement itself is terminated. So,
regardless of what has happened to the Grain Supply Agreement, Aventine
argues that it has retained the right to use those portions of the Exterior
Loop necessary to conduct its business.
Aurora Co-op counters that the Double Loop Agreement and the
easements must survive or fall as one. Aurora Co-op also asserts that the
Grain Supply Agreement and Double Loop Agreement are inextricably
intertwined. Thus, Aurora Co-op argues, even though Aventine's purported
termination of the Grain Supply Agreement was not effective, it did
constitute an anticipatory repudiation of that agreement, which, in turn,
entitled Aurora Co-op to suspend performance under the Double Loop
Agreement.
As the parties have framed the issues, in order to determine Aventine's
probability of success on the merits, the Court need not (and has not been
asked to) determine whether the Grain Supply Agreement was terminated. If
it was terminated, Aventine must show that the easements granted within
the Double Loop Agreement nonetheless survived. Or, more accurately,
Aventine must demonstrate that this question presents a "fair ground for
litigation." Watkins, 346 F.3d at 844. If the termination was not effective, the
Court must determine whether Aurora Co-op is likely correct that it was
nonetheless entitled to suspend performance under the Double Loop
Agreement.8
Before turning to the parties' contractual arguments, the Court must
examine a more basic issue. Aventine argues that it is not clear "what, if any,
ownership interest each party has in any particular portion of the double
track loop arrangement." Filing 34-1 at 5. Instead, Aventine contends that
the parties "merely granted one another easements 'upon their respective
Sites and the portion of the Double Track Loop located thereon to the
extent [. . .] necessary to permit' their use of such track." Filing 34-1 at 5
(quoting the Double Loop Agreement, filing 39-3 at 2)). And, Aventine
asserts, "there has been no 'as-built' survey that definitively locates the

The Court need not determine, for purposes of applying the Dataphase factors, whether
Aurora Co-op bears the burden of proving this argument is likely to succeed, or whether
Aventine must show it is likely to fail. Cf. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d
1146, 1158 (9th Cir. 2007). Aventine has not demonstrated irreparable harm, and so an
injunction is not warranted, regardless of the probability of success on the merits.
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double track loop arrangement on each entity's land.'"9 Filing 34-1 at 6; filing
34-10 at ¶ 9.
To the extent that Aventine is claiming that it is not clear who owns
the land beneath the Interior and Exterior Loops, its argument is not
supported by the record. Aurora Co-op has submitted the affidavit of Jai
Jason Andrist, a registered land surveyor who participated in the preparation
of the plat for the original Aurora West site in 2006 and 2007. In 2011,
Andrist directed and supervised a survey of the site, which Aurora Co-op has
also provided. Filing 39-24 at ¶¶ 1–3 & pp. 3–4. Andrist averred that (with
exceptions not relevant here), the Inner and Exterior Loops lie on land owned
entirely by Aventine and Aurora Co-op, respectively. Filing 39-24 at ¶¶ 4–8.
This is reflected in the survey. Filing 39-24 at 3. The record therefore shows
that Aurora Co-op owns all of the land beneath the Switching Portion.
The line dividing the parties' properties runs between the tracks, and
from the survey, it appears to run roughly equidistant from each track, which
would place it in the center of the service road. Filing 39-24 at ¶ 7 & p. 3;
filing 39-21 at ¶ 11. So, it follows that Aurora Co-op also owns the land
underneath the crossover tracks, from the point they leave BNSF property
until they reach the center line of the service road, with the remainder of the
crossover tracks located on Aventine's property.
Aventine has not offered any evidence to contradict these findings.
Instead, Aventine focuses on the fact that there has been no "as-built" survey
that shows the location of the crossover tracks. It is true that the 2011 survey
does not depict the crossover tracks. But the photographs submitted by
Aurora Co-op do show the crossover tracks. Filings 39-5, 39-6, and 39-7. And
the location of the crossover tracks relative to the parties' property lines is
readily apparent. Nor is there is any suggestion that the property lines have
changed since the 2011 survey. The only thing that is not clear is the location
of the switches (that is, the mechanisms which control the operation of the
crossover tracks). But that alone does not show that Aventine has any claim
to enter Aurora Co-op's land.
Aventine also argues that it is not clear who owns the relevant portions
of the tracks themselves. The parties agreed that Aventine would bear the
cost of constructing the Interior Loop and Aurora Co-op the cost of the
Exterior Loop. Filing 39-1 at 7. They split the cost of siting, permitting, and
designing all of the rail projects. Filing 39-1 at 6–7. And they split the cost of
constructing the gravel service road and all of the crossover tracks and
Along those lines, Aventine also asks that the Court order Aurora Co-op to allow Aventine
onto its property to conduct a survey. Although Aventine's motion for an injunction will be
denied, Aventine is free to reassert its survey request as a matter for discovery.
9

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switches—both the tracks from the BNSF line to the Exterior Loop and the
tracks from the Exterior Loop to the Interior Loop. Filing 39-1 at 7. The
parties also agreed to split any continuing expenses related to the crossover
tracks and switches (such as repairs and payments to BNSF). Filing 39-3 at
3. Aventine asserts that this joint contribution gave rise "to at least a fifty
percent ownership interest" in the crossover tracks and switches. Filing 34-1
at 15. But Aventine has not offered any argument to flesh out this conclusion,
nor cited any law in support. Even if Aventine has such an ownership
interest, there remains an analytical leap between an interest in the tracks
themselves and the right to run trains over those portions of the tracks
resting upon Aurora Co-op's realty.
As it stands, then, Aventine must show that the easements remain
viable in order to show a likelihood of success on the merits. Aventine's joint
ownership arguments may warrant further development, but have not been
convincingly articulated at this time. So, the Court turns to the focus of the
parties' submissions: the Double Loop Agreement.
The meaning of a contract, and whether a contract is ambiguous, are
questions of law. Big River Const. Co. v. L & H Properties, Inc., 681 N.W.2d
751, 756 (Neb. 2004). When the terms of a contract are clear, a court may not
resort to rules of construction, and the terms are to be accorded their plain
and ordinary meaning as the ordinary or reasonable person would
understand them. Id. A contract must be construed as a whole, and, if
possible, effect must be given to every part thereof. Id.
As noted above, this case centers upon one portion of the Double Loop
Agreement, namely, section 8, which provides for the term of the agreement.
That section provides as follows:
The initial term of this Agreement and the easements granted
herein shall commence on August 1, 2006 . . . and shall continue
thereafter for a term of twenty (20) years after . . ., except as is
expressly provided below or unless earlier terminated as
hereinafter provided in Section 18 below. Provided this
Agreement has not been sooner terminated, and provided further
that Aventine shall have entered into a binding Grain Supply
Agreement with Aurora Co-op pursuant to which Aventine has
agreed to purchase all of the grain required by Aventine to
operate Aventine's Ethanol Facility, as defined in the Master
Development Agreement for and during the entire term of any
such extension, Aventine shall have the right to extend this
Agreement and the easements granted herein for five (5)
additional periods of five (5) years each . . . . Anything herein to
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the contrary notwithstanding, this Agreement shall terminate as
follows:
(A) At completion of the closing, in the event Aurora Co-op
purchases the Aventine Site; or
(B) Immediately in the event the then current Grain Supply
Agreement between Aurora Co-op and Aventine expires or
is terminated by either party.
Filing 39-3 at 4 (emphasis supplied).
Both parties agree that, in the event the Grain Supply Agreement is
terminated, the Double Loop Agreement will likewise cease to operate. But
Aventine, focusing on the differences in the underlined language above,
argues that even if the Double Loop Agreement is terminated in this fashion,
the easements that it creates will continue to exist. Citing the maxim
"expressio unius est exclusio alterius" (the expression of one thing is the
exclusion of the others), Aventine argues that while the agreement
contemplates that both the Double Loop Agreement and the easements may
be extended, only the agreement terminates with the Grain Supply
Agreement. In other words, Aventine argues that the lack of the phrase "and
the easements granted herein" in the final sentence means that the
easements continue independent of the Double Loop Agreement. Filing 39-3
at 4.
The Court is not persuaded. Or, more precisely, the Court's preliminary
determination is that Aurora Co-op has advanced the more reasonable
interpretation of this provision. The Court further finds that, despite the
parties' conflicting interpretations, this provision is not ambiguous. The fact
that parties to a document have or suggest opposing interpretations of the
document does not necessarily, or by itself, compel the conclusion that the
document is ambiguous. Big River Const., 681 N.W.2d at 756. A provision of a
contract is ambiguous when, considered with other pertinent provisions as a
whole, it is susceptible of at least two reasonable but conflicting
interpretations. Krzycki v. Genoa Nat. Bank, 496 N.W.2d 916, 921 (Neb.
1993); Bedrosky v. Hiner, 430 N.W.2d 535, 539 (Neb. 1988). As the Court
explains below, the interpretation that Aventine currently advances is not
reasonable.10
The meaning of a contract and whether it is ambiguous are, as noted above, questions of
law. Big River Const., 681 N.W.2d at 756. In that sense, the Court's finding is not likely to
change. However, it is important to note that this determination is still a preliminary one.
10

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When section 8 is considered in its entirety and with the agreement as
a whole, it is apparent that the easements only survive as long as the
agreement which created them. First, Aventine's reading ignores the
beginning of section 8, which synchronizes the beginning and the end of the
agreement and the easements: "[t]he initial term of this Agreement and the
easements granted herein shall commence on August 1, 2006 . . . and shall
continue thereafter for a term of twenty (20) years . . ., except as is expressly
provided below." Filing 39-3 at 4. The "below" referred to is the final sentence
and the two termination triggers: purchase of the Aventine site by Aurora Coop or termination of the Grain Supply Agreement. The first sentence sets
forth an identical time table for the agreement and the easements it creates.
Having already established that, there was no need to separately refer to the
easements in the final sentence.
There was no need to separately refer to the easements because there is
no basis in the Double Loop Agreement (or any of the parties' other
agreements) by which these easements could exist independent of the Double
Loop Agreement. The easements were granted pursuant and subject to that
agreement. And when that agreement terminates, there is nothing left to
support the easements' existence. The parties could have provided for the
easements to survive, but they did not. The termination clause contains no
exceptions for certain portions of the agreement. When the Double Loop
Agreement terminates, it does so in toto.
This reading is reinforced by other portions of the Double Loop
Agreement. Section 13, which grants "operation and use" easements, states
that each party will grant the other easements over its own premises "to the
extent reasonably required to permit the [other] to operate and use the
Double Track Loop as contemplated in this Agreement." Filing 39-3 at 7
(emphasis supplied). The remainder of the agreement contemplates that
numerous terms and conditions will apply to each party's use of the
easements. For example, the agreement provides for cost-sharing, describes
how the parties will schedule and coordinate usage of the tracks, mandates
certain insurance coverage, and requires the parties to indemnify each other
in certain cases. Filing 39-3 at 2-3, 5-6, 11-13.
But if Aventine's reading of section 8 is correct, the easements are
allowed to continue (apparently indefinitely) without any of these conditions
or protections. Aventine contends that none of these provisions needed to be
set forth in writing in order to create an easement. True, easements can be
created without expressly agreeing upon these sort of details, and the
common law and any relevant statutes will fill in the gaps. But Aventine and
Aurora Co-op went to the trouble of insisting upon these conditions, and it

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does not make sense for the easements to continue, apart from them, absent
some affirmative statement to that effect.
The Court is not persuaded by Aventine's invocation of the expressio
unius principle. This rule of interpretation "is based on logic and common
sense. It expresses the learning of common experience that when people say
one thing they do not mean something else." Metzger v. DaRosa, 805 N.E.2d
1165, 1172 (Ill. 2004); see also 2A N. Singer, Sutherland on Statutory
Construction § 47:25 (7th ed. 2013). The Court will not use the rule to reach a
result which, as shown above, runs counter to common sense and the parties'
intent, as reflected in the contract as a whole.
Aventine presents several additional arguments in support of its
interpretation, but none are convincing. First, Aventine presses the flip side
of its expressio unius argument. Unless Aventine's interpretation is adopted,
it argues, the phrase "and the easements granted herein" which appears
twice in the section 8, is rendered superfluous. If possible, the Court must
give effect to every part of the parties' agreement. Hearst-Argyle Properties,
Inc. v. Entrex Communication Services, Inc., 778 N.W.2d 465, 470 (Neb.
2010). But Aventine's interpretation is not necessary to give effect to these
phrases. The initial uses of the phrase were necessary to show that the
Agreement and easements were meant to begin and end together. But having
established that point, there was no need to continue stating "and the
easements granted herein" ad nauseam.
Next, Aventine points to the "survival" clause of the Double Loop
Agreement, which provides that all terms and conditions of the agreement
which, "by their terms contemplate or require performance which is to extend
beyond or occur after the termination of this Agreement shall not be deemed
to expire on termination, but shall instead survive termination." Filing 39-3
at 16. Aventine argues that this suggests the easements were intended to
survive termination of the agreement. This argument would be more
convincing if there were no other parts of the contract that contemplated
ongoing operation. But that is not the case. For example, the indemnification
provisions require the parties to reimburse one another for covered liabilities,
regardless of when the acts giving rise to liability occur or when the liability
is established. Filing 39-3 at 11–13. More importantly, the survival clause
only applies to portions of the agreement which "by their terms contemplate
or require performance" extending beyond termination of the agreement.
Filing 39-3 at 16 (emphasis supplied). As such, it provides no independent
basis to infer that the easements survive termination.
Aventine next points to a similar "term" provision in the "NELLC
Easement Agreement." That agreement, signed on the same day as the
Double Loop Agreement, was executed between Aurora Co-op, Aventine, and
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Nebraska Energy, LLC (NELLC), a limited liability company owned by
Aventine. Filing 34-8. NELLC owns a small portion of the land under the
Double Track Loop. Filing 39-24 at ¶¶ 5–6 & pp. 3–4. NELLC agreed to grant
Aventine and Aurora Co-op an easement over its land to construct and
operate the Double Track Loop.11 Filing 34-8 at 3. The term section of the
agreement provides, in relevant part:
The initial term of this Agreement and the easement granted
herein shall commence on August 1, 2006 . . . and shall continue
thereafter for a term of ninety-nine (99) years . . ., except as is
expressly provided below . . . . Anything herein to the contrary
notwithstanding, the easement granted herein and this
Agreement shall terminate as follows:
A. As to Aventine only, at completion of the closing, in the
event Aurora Co-op purchases the Aventine Premises.
Filing 34-8 at 3 (emphasis supplied).
Aventine argues that this shows the parties knew how to draft an
agreement that provides for immediate termination of an easement under
certain circumstances, and the fact that similar language was not contained
in the Double Loop Agreement shows its easements were meant to survive.
But the NELLC agreement is not a useful comparator. Besides involving a
third party who did not sign the Double Loop Agreement, it deals with a
different situation. Under the NELLC agreement, Aurora Co-op will retain
its easement and the Agreement will survive, as between Aurora Co-op and
NELLC, even if Aventine is no longer in the picture. In the NELLC
agreement, the parties needed to make it clear that Aurora Co-op would
retain its easement and that the agreement would carry on. There was no
need for such specificity in the Double Loop Agreement.

The Court is not permitted to consider extrinsic evidence to explain the terms of a
contract that is not ambiguous. Spanish Oaks, Inc. v. Hy-Vee, Inc., 655 N.W.2d 390, 403
(Neb. 2003). Nor may the Court consider extrinsic evidence when deciding whether
ambiguity exists. Sack Bros. v. Great Plains Co-op., Inc., 616 N.W.2d 796, 804 (Neb. 2000).
But the NELLC agreement was part of a related series of contracts between Aventine and
Aurora Co-op, and instruments made in reference to and as part of a transaction are to be
considered and construed together. Norwest Corp. v. State, Dept. of Ins., 571 N.W.2d 628,
634 (Neb. 1997). All of these agreements were part of one transaction: the development and
operation of the ethanol plant. So, the Court considers the NELLC agreement without
running afoul of the bar on extrinsic evidence.
11

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Aventine next contends that Aurora Co-op's reading of the Double Loop
Agreement allows Aurora Co-op to seize what amounts to complete control
over the crossover tracks and switches, which will result in a forfeiture of
Aventine's property interest in the tracks and switches. Aventine cites
Connecticut Fire Ins. Co. v. Jeary, 83 N.W. 78, 79 (Neb. 1900), for the
proposition that "forfeiture clauses are to be looked upon with ill favor" and
that courts will strictly construe contracts to avoid a forfeiture. Again, the
Court is not persuaded. First, as noted above, Aventine has failed to
articulate the nature of its property interest. Second, Jeary arose in the
insurance context. Id. The rule for which Aventine cites Jeary was used to
avoid the harsh results of denying coverage based upon a mere "technical
defense" that "operate[d] as a trap to enable the company to receive its
premium," and would come as a surprise to the insured who had acted in fair
reliance on the policy. Id. Aventine has not explained why or how this rule
should apply to the present context; nor does section 8 strike the Court as a
trap for the unwary. Finally, given the Court's understanding of the Double
Loop Agreement as a whole, there is no way to arrive at Aventine's
interpretation merely by giving the clause a "strict construction." Rather, the
Court would be put in the position of re-writing the parties' entire agreement.
In a related vein, Aventine argues that the parties could not have
intended to reach such an inequitable result. Aventine maintains that Aurora
Co-op breached the Grain Supply Agreement, which entitled Aventine to
terminate the agreement. And it would be fundamentally unfair, Aventine
argues, for Aurora Co-op to be able to take advantage of its own breach of the
Grain Supply Agreement by taking complete control of the Double Loop,
terminating Aventine's easement rights, and causing Aventine to forfeit its
ownership interest in the tracks.12 Filing 34-1 at 16. The parties could not
have intended such an inequitable result, Aventine argues, and so this
portion of the Double Loop Agreement must have been the result of a mutual
mistake. Therefore, Aventine urges the Court to reform the contract to
express the parties' true intention—that the easements survive termination.
Contract reformation is an equitable remedy which allows the Court to
correct a mutual mistake by the parties to a contract that prevented the
contract from expressing their true intent. R and B Farms, Inc. v. Cedar
Valley Acres, Inc., 798 N.W.2d 121, 128 (Neb. 2011). Mutual mistake exists
where there has been a meeting of the minds of the parties and an agreement

However, nothing obligated Aventine to terminate the Grain Supply Agreement simply
because it believed Aurora Co-op was in breach. Aventine could have sued for damages and
suspended its own performance under that agreement without terminating it and
triggering the end of the Double Loop Agreement.
12

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actually entered into, but the agreement in its written form does not express
what was really intended by the parties. Id. at 129. To overcome the
presumption that an agreement correctly expresses the parties' intent, the
party seeking reformation must offer clear and convincing evidence of such a
mistake. Id.
Aventine has not offered any evidence of a mutual mistake. This is
reason enough to deny reformation. See id. at 130. Moreover, Aurora Co-op
has presented evidence that there was no mistake in drafting the termination
clause. Aurora Co-op's president and CEO, George Hohwieler, was involved
in the negotiation of the Grain Supply and Double Loop Agreements. Filing
39-21 at ¶ 14. Hohwieler averred that "[t]he right to access the BNSF
railroad to and from the ethanol plant was tied to the existence of an
exclusive grain supply agreement at every step of the negotiations with
Aventine." Filing 39-21 at ¶ 15. And Hohwieler explained that the
termination clause was an important part of the overall agreement; Aurora
Co-op wanted to be certain that Aventine had a strong incentive to abide by
its obligations under the Grain Supply Agreement. Filing 39-21 at ¶ 15.
The fact that one of the parties to a contract denies that a mistake was
made does not prevent a finding of mutual mistake or prevent reformation. R
and B Farms, 798 N.W.2d at 128. But there is nothing unreasonable about
Hohwieler's explanation, and Aventine has offered no evidence to rebut his
account.
Aventine next argues that the parties "simply did not contemplate the
disposition of the double track loop's infrastructure or their respective
ownership and use rights of any portions of it in the event some or all of their
agreements with each other dissolved." Filing 34-1 at 17. Aventine seeks to
characterize this as "the unusual case of a contract that was sufficiently
definite in forming a binding agreement but failed to clarify the parties'
rights and duties in the event of a contingency that they both assumed would
not occur." City of Scottsbluff v. Waste Connections of Nebraska, Inc., 809
N.W.2d 725, 748 (Neb. 2011). In such a case, where the parties have not
agreed upon a term which is essential to a determination of their rights and
duties, courts will supply a term which is reasonable in the circumstances,
and which "'comports with community standards of fairness and policy.'" Id.
at 749 (quoting Restatement (Second) of Contracts § 204 cmt. d (1981)).
The rule set forth in City of Scottsbluff cannot be stretched to support
Aventine's position, and the Court will not rewrite the parties' contract. In
City of Scottsbluff, the court was asked simply to supply a missing price term.
Id. at 749–50. Here, by contrast, Aventine asks the Court to fundamentally
change the parties' bargain. The Court is not in the position to determine, on
behalf of the parties, how to manage the easements now that relations have
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hit a rocky patch. This is a question of a different order of complexity than
deciding upon a reasonable price. It is not the Court's role to rewrite the
contract to reflect its own view of a fair bargain. Id. at 748.
Finally, the Court turns to Aurora Co-op's counter-argument: that
Aventine's attempt to terminate the Grain Supply Agreement amounted to
an anticipatory repudiation, which entitled Aurora Co-op to suspend
performance under the Double Loop Agreement. An anticipatory repudiation
or breach of contract is one committed before the time has come when there is
a present duty of performance and is the outcome of words or acts evidencing
an intention to refuse performance in the future. Sack Bros. v. Tri-Valley Coop., Inc., 616 N.W.2d 786, 795 (Neb. 2000). And where two agreements are
"inextricably intertwined," a breach of one agreement may excuse
performance under the other. Gary's Implement, Inc. v. Bridgeport Tractor
Parts, Inc., 702 N.W.2d 355, 370 (Neb. 2005).
If Aventine was not entitled to terminate the Grain Supply Agreement,
then its letter, purporting to do so, was clearly an expression of its intent to
refuse performance in the future. Thus, the only question is whether the two
agreements were inextricably linked. The Court finds that they were; or,
more precisely, that Aurora Co-op has demonstrated a sufficient likelihood of
proving this point at trial. The Double Loop Agreement could not be much
more clear on the matter: it only existed to further the exchange of grain,
ethanol, and ethanol byproducts under the Grain Supply Agreement, and
only lasted so long as the Grain Supply Agreement remained in effect. Cf.,
id.; Norwest Corp., 571 N.W.2d at 634. While the Court does believe this
issue could benefit from further development, there is no need to dwell on it
further at this time. Aventine has not provided any persuasive argument to
the contrary, and the entire issue may be moot if it is first determined that
Aventine was entitled to terminate the Grain Supply Agreement.
Overall, the Court finds that Aventine has not demonstrated a
significant likelihood of success on the merits. However, there remain some
issues of fact and law that are sufficiently complex and uncertain to warrant
further development. If Aventine had made a showing of irreparable harm,
those issues might have been enough to present a fair ground for litigation.
III. The Remaining Dataphase Factors
The Court finds that both the balance of harms and public interest
favor a grant of injunctive relief. However, as noted above, this is not enough
in the absence of irreparable harm.
Aurora Co-op argues that if the injunction is issued, it will be harmed
because Aventine will be trespassing upon its real property, which in some
circumstances may be considered an irreparable harm. See, e.g., F. Burkart
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Mfg. Co. v. Case, 39 F.2d 5 (8th Cir. 1930). But Aurora Co-op's real,
underlying argument seems to be that its ability to block Aventine's rail
access is invaluable leverage, which Aurora Co-op needs to help ensure that
Aventine will pay what Aurora Co-op alleges it is owed under the Grain
Supply Agreement. Even if the Court accepts Aurora Co-op's arguments,
these harms simply do not stack up against the economic harm that Aventine
faces. The Court also notes that, to the extent that Aventine is able to make a
profit producing some ethanol, it is more, not less likely that Aurora Co-op
will be able to collect any judgment it might obtain against Aventine.
Granting the injunction may also serve the public interest. If Aventine
were able to profitably operate the plant, the public benefits would be
immediate and concrete. Aventine has shown that it would need to hire
approximately 15 new employees to run the plant. Filing 34-10 at ¶ 15. The
economic impact would not end there. BNSF would receive additional
revenue from the traffic and the Department of Agriculture would have a
buyer for its excess sugar. Instead, Aventine's Aurora plant sits idle.
The parties' current predicament is certainly not ideal. But despite
that, and however much the equities of the situation potentially favor
Aventine, injunctive relief is not available at this time. Accordingly,
IT IS ORDERED:
1.

Aventine's Emergency Motion to Enforce Stay and for
Temporary Restraining Order and Preliminary Injunction
(filing 34) is denied.

Dated this 6th day of March, 2014.
BY THE COURT:

John M. Gerrard
United States District Judge

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