First Dakota National Bank v. Eco Energy, LLC

Filing 72

MEMORANDUM AND ORDER: FINDINGS OF FACT AND CONCLUSIONS OF LAW that the plaintiff's complaint is dismissed. A separate judgment will be entered in favor of the defendant. Ordered by Judge John M. Gerrard. (LAC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
FIRST DAKOTA NATIONAL BANK,
Plaintiff,

8:13-CV-270

vs.
ECO ENERGY, LLC f/k/a ECO
ENERGY, INC., a Tennessee limited
liability company,

MEMORANDUM AND ORDER:
FINDINGS OF FACT AND
CONCLUSIONS OF LAW

Defendant.
This matter is before the Court after a bench trial on the plaintiff's
breach of contract claim. For the reasons explained below, the Court finds
that the plaintiff has failed to establish the required elements of its claim.
Accordingly the Court will enter judgment in favor of the defendant and
dismiss the plaintiff's complaint.
BACKGROUND
This case involves an ethanol plant formerly owned and operated by
Nedak Ethanol, LLC. Prior to shutting its doors, Nedak defaulted on a
contract with the defendant, Eco Energy, for the sublease of railcars. As a
result of the default, Eco pulled its railcars from Nedak and diverted them to
other companies.
In diverting the railcars from Nedak, Eco breached its obligation under
a separate 2007 agreement between Nedak, Eco, and Nedak's lead lender,
Farm Credit Services of Grand Forks (which later became AgCountry Farm
Credit Services). Pursuant to that agreement, and as explained in more detail
below, Eco was obligated to provide Nedak's lender notice of Nedak's default
and a reasonable opportunity to cure. Because Eco failed to do so, the
plaintiff contends that the defendant breached the 2007 contract, resulting in
damages of $6,224,959.
Applying North Dakota law, this Court, in its January 12, 2015
Memorandum and Order, determined that the plaintiff had satisfied the first
two elements of its breach of contract claim: the existence of a contract (the
2007 agreement), and a breach of that contract. But the Court left the
remaining element—causation—for trial, holding that genuine issues of fact

remained as to whether AgCountry would have exercised its right to cure had
it received appropriate notice of Nedak's default.
At trial, the plaintiff presented evidence suggesting that Nedak's
lenders would have been ready, willing, and able to pay the default had
AgCountry been presented with the appropriate notice and opportunity.
Specifically, the testimony and evidence focused on three primary factors
that, the plaintiff contends, "objectively confirm that making the cure was the
only reasonable choice." Filing 60 at 3. These factors include (1) the financial
incentive to the lender, (2) the importance of preserving Nedak's railcars, and
(3) the ready availability of funds from several participating lenders.
The defendant contended, however, that AgCountry was unwilling to
pour additional money into Nedak. To support this argument, the defendant
presented evidence that Nedak, at the time of the default, was experiencing
serious financial difficulties, causing concern amongst its lenders. These
concerns prompted AgCountry to freeze Nedak's accounts, and maintain that
freeze even after discovering that Nedak had defaulted on its sublease and
was in jeopardy of losing its railcars.
After full consideration, and weighing the evidence, the Court finds
that the plaintiff has failed to satisfy its burden on causation—that is, the
Court finds that the plaintiff has not proven that AgCountry would have
exercised its right to cure Nedak's default had it received proper notice and
opportunity. Accordingly, the Court will dismiss the plaintiff's breach of
contract claim.
SUMMARY OF FACTS
1. THE CONTRACTS
(i) The Marketing Contract (2006)
In 2006, Nedak and Eco entered into an ethanol marketing agreement
(the "Marketing Contract"), under which Eco agreed to transport and sell all
of the ethanol produced by Nedak. Filing 69 at 9; ex. 2 at 1. To transport
Nedak's ethanol, Eco used railcars which it had previously leased from a
third party, Union Tank Car Company. That lease covered approximately 133
railcars, with monthly lease rates ranging from $400 to $735 per railcar. The
lease terms on the railcars varied, with some expiring as early as 2012, and
others as late as 2020. Ex. 5 at 8.
As part of the Marketing Contract, Nedak agreed to assume Eco's
financial obligation to Union Tank Car in the event that the Marketing
Contract was terminated. Specifically, the Marketing Contract provided: "If
this Agreement is cancelled for may [sic] reason, NEDAK will be responsible
to take over all rail contracts." Ex. 2 at 9.
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(ii) The Collateral Assignment (2007)
In 2007, Nedak assigned all rights and remedies under the Marketing
Contract, and all documents related thereto (collectively, the "Assigned
Documents"), to its lead lender, Farm Credit Services of Grand Forks. Ex. 1
at 1 (emphasis added). This contract (the "Collateral Assignment") also
included a provision, executed by Eco, which provided the lender a right to
notice and cure in the event of Nedak's default on the Assigned Documents.
The provision provides in relevant part:
[Eco] agrees to give Lender prompt written notice of any default
under the Assigned Documents and to allow Lender a reasonable
period of time to cure any such defaults should Lender elect to
effect such cure. . . . Consent to the foregoing assignment is
hereby granted in all respects.
Ex. 1 at 5. Farm Credit, as lead lender, held this right until it merged with
AgCountry in 2008. The right was subsequently assigned to a company called
Choice Ethanol Holdings LLC, and, ultimately, to First Dakota National
Bank. See, filing 68 at 52- 54; ex. 10 at 1; ex. 11 at 1; ex. 13 at 1-2.
(iii) The Sublease (2010)
In 2010, Nedak and Eco agreed to terminate the Marketing Contract.
To do so, the parties entered into a termination agreement, which reflected a
mutual desire for "a fair and equitable settlement with regard to the
cancellation of the rights and obligations granted under the Marketing
[Contract.]" Ex. 3 at 1. But the termination agreement was not absolute—
indeed, it reaffirmed Nedak's responsibility "to reimburse Eco the cost
associated with the lease of the ethanol railcars . . . if the [Marketing
Contract] is cancelled for any reason[.]" Ex. 3 at 1.
To fulfill this obligation, the parties entered into a separate sublease
(the "Sublease"), whereby Nedak agreed to sublease the railcars from Eco for
the same rent and for the same duration as Eco's agreement with Union
Tank Car. Ex. 5 at 1. Thus, pursuant to the Sublease, Nedak would make
monthly payments to Eco, (ex. 2 at 2), which Eco could then apply to its
outstanding balance with Union Tank Car. To this end, the terms of the
Sublease accounted for both Nedak's obligation to Eco under the Marketing
Contract, and Eco's obligation to Union Tank Car under its separate lease
agreements.
This Court, in its January 12, 2015 Memorandum and Order,
determined that the Sublease related to the Marketing Agreement, and was
therefore subject to the notice and cure provision of the 2007 Collateral
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Assignment. Filing 42 at 10. Accordingly, Eco was contractually obligated to
provide Nedak's lender "prompt written notice" of Nedak's default on the
Sublease, should it occur, and a "reasonable period of time to cure." See, filing
42 at 10; ex. 1 at 5.
(iv) Deterioration of Nedak and Eco's Relationship Under the Sublease
Nedak paid Eco pursuant to the Sublease without issue from 2010 to
2012. Filing 69 at 18, 57. By mid-2012, however, Nedak was experiencing
financial difficulties, and in early June of that year, the company decided to
idle its plant. Filing 68 at 103; filing 69 at 19. This decision was based on a
combination of internal and market factors, and was intended—at least from
Nedak's perspective—as a temporary event. Filing 69 at 37.
During the midst of its financial trouble, and shortly after its board of
directors had decided to idle the plant, Nedak received its monthly invoice
from Eco regarding the railcar sublease. See ex. 14. The invoice, which Eco
sent to Nedak on June 5, 2012, and which covered Nedak's May sublease
period, reflected a balance of $67,685.00, with payment due on or before June
13, 2012. Ex. 101; ex. 14.
Nedak did not pay the invoice, which prompted Eco, on June 14, 2012,
to e-mail Nedak regarding the outstanding balance. In that correspondence,
Kristen Hartmann, an "AR Collections Specialists" at Eco, e-mailed Michael
Beatty, Nedak's Chief Financial Officer, to "confirm the payment . . . for the
attached railcar lease fee invoice[.]" Ex. 15 at 1. Beatty responded the same
day, claiming that Nedak was "waiting on bank approvals" and that it would
"get back to [Eco]" the following week. Ex 15. On June 19, when Eco had not
yet heard back from Nedak, it sent a second e-mail—this time to Jerome
Fagerland, Nedak's President—expressing concern regarding Nedak's ability
to pay the invoice, particularly in light of Nedak's recent financial difficulties.
Ex. 16. The e-mail provided in part:
[Eco has] spoken internally concerning the shutdown situation at
Nedak. Great concern has been given to the railcars that EcoEnergy originally obtained for Nedak. As I am sure you know, the
railcar market has become extremely tight due to the crude
industry leasing many of the available cars. . . . [I]f payment is
not received [by June 20, 2012], preparations for the return of the
cars to Eco-Energy will need to begin.
Ex. 16 at 1. Fagerland responded, claiming that Nedak was "processing" the
payment, and that Eco should receive it the following day. Ex. 16 at 1.

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But that payment, too, was never sent, and Eco ultimately notified
Nedak in a June 25, 2012 letter that it was terminating the Sublease. Ex. 21.
The letter cited Nedak's failure to pay the invoice as a reason for the
termination, and demanded the immediate return of all railcars. Ex. 21. Eco
sent another notice to Nedak on June 28, 2012, notifying the company that it
had "commenced the process of having the ninety-six (96) railcars . . .
returned to the Eco-Energy fleet." Ex 27. The letter also demanded payment
from Nedak in the amount of $135,370.00, which reflected its balance due for
both May and June. Ex. 27.
By July 2012, Eco had diverted the railcars from Nedak to other
companies, which, given the demand for railcars at that time, were paying
upward of $2,500 per month, per car—a rate significantly higher than
Nedak's fixed obligation under the Marketing Contract and Sublease. See
filing 69 at 65.
Nedak never resumed operations, and in January 2013, its lender,
AgCountry, foreclosed. Filing 68 at 51-52. As mentioned above, various
assignments and transactions followed, such that First Dakota holds (and is
now asserting) AgCountry's rights for any breach by Eco of the notice and
cure provisions in the Collateral Assignment. See, filing 68 at 52; exhibits 1013.
2. BREACH OF CONTRACT - CAUSATION
It is established that the Sublease was subject to the notice and cure
provision of the 2007 Collateral Assignment. Filing 42 at 10. Accordingly, Eco
was contractually obligated to notify AgCountry of Nedak's default on the
Sublease, and provide the lender an opportunity to cure. Eco, by its own
admission, failed to satisfy this obligation. But the Court left the issue of
causation for trial, finding that genuine issues of fact remained as to whether
AgCountry would have exercised its right to cure had it received appropriate
notice of Nedak's default. Filing 42 at 12-13.
The plaintiff presented evidence that AgCountry and other lenders
were ready, willing, and able to pay the default had those parties been
presented with the appropriate notice and opportunity. The defendant, for its
part, presented testimony indicating that AgCountry was unwilling to pour
additional money into its investment, as evidenced by the lender's decision to
maintain a hold on Nedak's accounts, despite its first-hand knowledge of the
default. The Court will briefly summarize the parties' evidence as presented
at trial.
The plaintiff sought to prove causation, at least in part, by focusing on
the financial incentives bearing on AgCountry to maintain and preserve the
terms of the Sublease. For example, Kevin Haselhorst, the Senior Vice
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President at First Dakota National Bank (which was a participant lender in
Nedak in 2012), testified to the lenders' discussions regarding Nedak's
decision in mid-2012 to idle its plant. According to Haselhorst, the lenders
understood Nedak's idling period to be a temporary event, in which the plant
would "go idle, not produce ethanol[,] and simply wait for margins to
improve." Filing 68 at 38-39. Given the temporary nature of this idling
period, it was imperative that Nedak maintain the terms of its lease—after
all, "if Nedak would start back up . . . producing ethanol, it needed railcars."
Filing 68 at 43.
Haselhorst also testified that, had AgCountry received proper notice of
Nedak's default, other participant lenders—including First Dakota—would
have cured in order to maintain the Sublease. On this point, Haselhorst
testified to a process whereby the lead lender (AgCountry) would notify
participant lenders through presentation or conference call regarding "major
issue[s] or servicing issue[s]" relating to Nedak, which included "loaning more
money, advancing additional money, [and] letting collateral go[.]" Filing 68 at
26-27, 32. If the update required action from the lender group, then,
according to Haselhorst, the parties would vote on the appropriate next steps.
The voting power of each lender was proportional to its interest in the
investment, and, according to Haselhorst, approving or disapproving certain
actions required a majority vote. Filing 68 at 48.
Haselhorst testified that AgCountry notified the lender group of
Nedak's plan to idle its plant, and its inability to pay bills, including the June
2012 invoice from Eco. Filing 68 at 38-39, 42. But, because AgCountry was
purportedly unaware of Eco's plan to divert the railcars in the event of nonpayment, the lenders were without sufficient information to grasp the
severity of the default, and the consequences of non-payment. Put differently,
and as Haselhorst testified at trial, knowing that a borrower has past due
accounts is one thing, "but it brings a whole new element to a lender . . . if
due to those past due accounts, there's collateral being lost or potential that it
could be lost." Filing 68 at 45.
So, according to Haselhorst, had Eco provided proper notice and
opportunity, AgCountry's memo and/or conference call to the participant
lenders would have included discussion not only of Nedak's default, but also
of the consequences of non-payment—that is, the potential for lost collateral.
Filing 68 at 44-47. Armed with complete information, the lenders would have
then voted on whether to release funds or otherwise cure Nedak's default.
And, provided the importance of the railcars to Nedak's future operation,
Haselhorst testified that—if provided the opportunity—First Dakota would,
at a minimum, have supported a plan to cure the default. Filing 68 at 47.

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The plaintiff also presented testimony from David Neubauer, President
of Tenaska Commodities. Tenaska became involved with Nedak in 2010,
when it began marketing Nedak's ethanol. Filing 68 at 90. Over time,
Tenaska developed a more active relationship with Nedak, and, in 2011 or
early 2012, it began managing the company's commodities. Filing 68 at 89-90,
97; ex. 8. As part of this arrangement, Tenaska assumed a management role
over Nedak's railcar Sublease with Eco. Filing 68 at 91-95. It also made a $5
million direct investment in Nedak, acquiring approximately 33 percent
equity in the company, and obtaining two seats on Nedak's board of directors.
Filing 68 at 95-96.
In many respects, Neubauer's testimony echoed Haselhorst's. He, too,
testified to the temporary nature of the board of director's decision to idle
Nedak's plant, and the importance of maintaining access to the railcars in the
event that Nedak reopened. Filing 68 at 99-100. Neubauer also testified to
Tenaska's attempt, in or around early July 2012, to cure the default by
advancing money to Nedak. Filing 68 at 104. Nedak then wired those funds
to Eco, but, by that time, it was too late—Eco had already diverted the cars.
The decision to advance Nedak funds, Neubauer claimed, underscored the
importance of maintaining the railcars. Filing 68 at 104-105.
The defendant, on the other hand, presented evidence that
AgCountry—the holder of the right at issue—knew not only of Nedak's
default, but also the consequences of non-payment. Rather than proactively
remedying the default, the defendant contends, AgCountry froze Nedak's
accounts, refusing to release the funds necessary to pay the June 2012
invoice.
To establish AgCountry's knowledge of Nedak's default, the defendant
called Jerome Fagerland, the former President and CEO of Nedak. Fagerland
testified that, throughout mid-2012, he kept AgCountry apprised of the
potential idling of the ethanol facility. Filing 69 at 23. Once the board
officially decided to idle the plant, Fagerland said, AgCountry placed an
immediate hold on Nedak's accounts. Filing 69 at 23. As a result, and given
the timing of these actions, Nedak was unable to pay its May invoice with
Eco. This, in turn, required Fagerland to correspond with AgCountry
regarding the possibility of releasing funds to cover the invoice.
As established at trial, this correspondence between Fagerland and
AgCountry regarding the potential release of funds occurred immediately
after Nedak's default on the May invoice. Indeed, and as mentioned above,
Eco sent Nedak an e-mail on June 14, 2012—the day after payment was
due—seeking confirmation that Nedak did, in fact, intend to pay the invoice.
Ex. 15. A Nedak employee responded to Eco the same day, claiming that the
company was "waiting on bank approvals." See, ex. 15; filing 69 at 26-27.
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Fagerland testified that this response—in particular, that it was "waiting on
bank approvals"—related to Nedak's direct request of AgCountry that it
release funds so that Nedak could pay the invoice. Filing 69 at 26. Thus,
Fagerland's testimony establishes that AgCountry had knowledge of Nedak's
default on the Sublease on or before June 14, 2012.
Fagerland also testified more generally to the link between his
correspondence with Eco, and his communications with AgCountry. For
example, and as earlier mentioned, Fagerland sent an e-mail to Eco on behalf
of Nedak on June 20, 2012, in which he claimed that Nedak was "processing"
its payment to Eco. Ex. 16. The next day, however, Fagerland informed Eco
that AgCountry had not approved the funds, and that Nedak was therefore
unable to pay. See, filing 69 at 27; ex. 18. When asked about these events,
Fagerland testified that it was simply not possible to cure the default
payment without AgCountry's assistance, and that he had specifically
requested that the lender release funds to pay the Sublease—which both
parties (AgCountry and Nedak) understood to be in default. Filing 69 at 28.
Overall, Fagerland's testimony touched on what was, in his opinion,
AgCountry's general reluctance to assist Nedak during its mid-2012 financial
downturn. Specifically, and with respect to Nedak's default on the May
invoice, Fagerland opined that AgCountry's refusal to release funds
evidenced its efforts to minimize losses on the investment. To this end,
Fagerland testified that AgCountry "had made the decision that the ethanol
plant was not going to survive and took steps to protect [its] interest[s] a[s]
best they could." Filing 69 at 31.
The Court finds Fagerland's testimony credible and consistent with the
weight of the evidence—that is, that AgCountry's primary concern in June
2012 was cutting its losses and protecting its interests. This conclusion is
supported not only by Fagerland's first-hand account and informed opinion,
but also by the circumstances surrounding Nedak's default. In particular, the
Court cannot overlook the fact that, by all accounts, Nedak was experiencing
serious financial difficulties in 2012. Indeed, Haselhorst described Nedak—at
least as of 2012—as a company that was "burn[ing] quite a bit of cash . . .
without a lot of money coming back in[.]" Filing 68 at 38. And while there
may have been a profit motive in maintaining the railcars, the tenor and
weight of the evidence has not convinced the Court that AgCountry would
have pursued that route in the summer of 2012—or otherwise cured the
default—if it had received proper notice under the 2007 Collateral
Assignment.
The evidence also suggests that AgCountry was aware of Nedak's
default, and the potential consequences of non-payment, before Eco's decision
to divert the cars. As previously noted, Fagerland testified to discussing the
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default with an AgCountry representative as early as June 14, 2012.
Similarly, Haselhorst testified that, during mid-2012, there was "a great deal
of communication between Tenaska and Nedak and then communication
between Nedak and AgCountry[.]" Filing 68 at 69. As part of this
communication, the parties discussed the importance of Nedak paying its
bills, including the May invoice, as it prepared to idle the plant. Relatedly,
Neubauer testified that he spoke directly with AgCountry regarding Nedak's
default on the Sublease, and to the importance of paying the invoice to
maintain access to the railcars. Filing 68 at 118. Neubauer indicated that,
despite this conversation, AgCountry refused to release the funds to the
Sublease. Filing 68 at 118.
Eco was also clear in its intention to divert the railcars in the event of
non-payment. The company communicated as much to Nedak in a June 21,
2012 letter, in which Eco's transportation manager wrote that Eco would
"insist that its assets be returned" if "payment is not received or other
arrangements made." Ex. 106 at 1. In an e-mail sent the same day, the Eco
employee informed Fagerland that "if payment is not received, preparations
for the return of the cars to Eco-Energy will need to begin." Ex. 16 at 1.
Shortly thereafter, when it became clear that Nedak would not be able to pay,
Eco began diverting the cars. All 96 cars were eventually diverted to other
companies, despite Nedak's efforts in early July pay the default.1
DISCUSSION
The plaintiff claims that the defendant breached the Collateral
Assignment by failing to provide Nedak's lender with notice of Nedak's
default and a reasonable opportunity to cure that default before terminating
the Sublease. Under North Dakota law, which governs this case, the prima
facie elements of a breach of contract case are: (1) the existence of a contract;
(2) a breach of the contract; and (3) damages which flow from the breach.
WFND, LLC v. Fargo Marc, LLC, 730 N.W.2d 841, 848 (N.D. 2007).
As previously discussed, this Court held in its prior Memorandum and
Order that the plaintiff had established the first two elements of its prima
facie case. Specifically, the Court noted:
In a letter dated July 3, 2012, Nedak suggested to Eco, for the first time, that
perhaps Nedak was not yet in default under the Sublease. Ex. 32. Three days later,
Tenaska (a Nedak investor) wired $135,370 to Eco on Nedak's behalf in an attempt to cure
the default. See, ex. 34; ex. 35. Eco maintained its position that Nedak had, in fact,
defaulted on the Sublease, and continued its process of diverting the railcars to other
companies. This set of events gave rise to a separate breach of contract claim, which the
this Court resolved in the defendant's favor in the January 12, 2015 Memorandum and
Order. See filing 42 at 9-10.
1

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Because the Sublease qualified as an "Assigned Document," Eco
was obligated to give Nedak's lender notice of Nedak's default
and a reasonable opportunity to cure. Eco does not dispute that it
failed to do so. First Dakota has therefore established the first
two elements of its breach of contract claim: the existence of a
contract and a breach of that contract.
Filing 42 at 12. But the Court left the issue of causation for trial, noting that,
based on the evidence presented at that time, "[a] jury could reasonably find
for either party." Filing 42 at 12-13.
Before applying these elements to the relevant findings of fact, the
Court will address separate issues raised by the parties with respect to the
remaining element of the plaintiff's claim.2 First, the defendant encourages
the Court to draw an adverse inference based on the plaintiff's "failure to
present testimony from Randy Aberle of AgCountry, as to the action
AgCountry would have taken had Eco-Energy provided it with written notice
of Nedak's default." Filing 71 at 15. In other words, the defendant contends
that because the contractual right at issue belongs to AgCountry, the plaintiff
should have produced testimony from a representative of the lender
regarding its intention to cure Nedak's default. Because the plaintiff failed to
do so, the defendant argues, the Court should infer that AgCountry's
testimony, if presented, would be adverse to Nedak. Filing 71 at 15.
The Court is aware that, in certain circumstances, an adverse inference
may be warranted when a "party fails to produce the testimony of an
available witness on a material issue in the case[.]" Kostelec v. State Farm
Fire and Cas. Co., 64 F.3d 1220, 1229 (8th Cir. 1995). But the Court need
not, and will not, draw such an inference, particularly in light of existing
evidence which supports the defendant's position.
The plaintiff has renewed an argument that it presented at summary
judgment regarding causation. See, filing 60 at 2; filing 40 at 23-25.
Specifically, the plaintiff contends that it need only establish that Nedak's
lender "was owed a notice, did not receive one, and lost the opportunity to
preserve its collateral as a result." Filing 60 at 3. In this respect, the plaintiff
argues that the issue as presented at trial—whether AgCountry would have
stepped in and cured Nedak's default—is "inherently speculative," and
requires "reconstructive history." Filing 60 at 2. Accordingly, the plaintiff
The Court has also considered the parties' objections at trial as to the relevance of certain
exhibits and testimony. Although the Court did not rely on this evidence in reaching its
decision, those objections will be overruled.
2

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argues that "such proof should be unnecessary for First Dakota to prevail,
because a breaching party's speculative contentions about the effect of an
unissued notice should not defeat judgment." Filing 60 at 2.
To the extent that the plaintiff asks this Court to overlook a required
element of its breach of contract claim—that is, causation—the Court will
decline to do so. While the Court agrees that the nature of this dispute
requires an element of 20/20 hindsight, that is not unusual in a contract
dispute and it does not alter the necessary legal analysis with respect to the
defendant's alleged breach of contract.
Nor is the Court persuaded by the two cases cited by the plaintiff in
support of its position. First, the plaintiff cites Lemuel v. Admiral Ins. Co.,
414 F. Supp. 2d 1037 (M.D. Ala. 2006) for the proposition that "a breaching
party's speculative contentions about the effect of an unissued notice should
not defeat judgment." Filing 60 at 2. But the plaintiff's reliance on this case is
misplaced. Indeed, to the extent that the Lemuel court addresses speculation
vis-à-vis damages or causation, it is in the context of the standards governing
summary judgment, not established principles of contract law: the plaintiff in
Lemuel attempted to resist summary judgment by contending without
supporting evidence that the defendant who had been deprived of notice
might not have acted on the notice. Id. at 1068. In this respect, the Lemuel
court's holding reaffirms the basic principle that a plaintiff cannot defeat a
defendant's motion for summary judgment with speculative assertions that
are unsupported by any record evidence. Lemuel, 414 F. Supp. 2d at 1068
(citing Woods v. Paradis, 380 F. Supp. 2d 1316, 1330 (S.D. Fla. 2005)). But as
described above, this dispute, unlike Lemuel, contains ample evidence to
support the defendant's position with respect to causation.
The plaintiff also cites Andrews v. Sotheby Int'l Realty, Inc., 2014 WL
626968 (S.D.N.Y. Feb. 18, 2014) for the same proposition. But that case, too,
is inapplicable to this dispute. In Andrews, the plaintiff sued his employer for
breach of contract, arguing that the company failed to provide him proper 6month notice, as was allegedly required by his employment contract, prior to
his termination. To establish damages—a required element of the claim—the
plaintiff argued that, had he received proper notice, he "could have explored"
other opportunities. Id. at *6. The court determined that the plaintiff's vague
assertion was "speculative" and therefore "insufficient to sustain [the]
claim[.]" Id. But if Andrews is applicable at all, it supports the defendant's
position that the plaintiff carries the burden of proving that a lack of
contractual notice caused its damages. To this end, the Andrews court cites
caselaw for the proposition that a plaintiff's "speculative optimism,
concerning what 'could have and would have' happened, cannot substitute for
facts evincing direct causation and actual damages." Id. (emphasis added)
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(citing Boccardi Capital Sys., Inc. v. D.E. Shaw Laminar Portfolios, L.L.C.,
2009 WL 362118, at *6 (S.D.N.Y. Feb 9, 2009)). Andrews does not support the
proposition for which it is cited by the plaintiff.
As a final matter, although the Court need not revisit the findings of
fact that support this conclusion, it is worth noting that the contractual right
at issue has, at all relevant times, belonged to AgCountry. And while the
plaintiff presented evidence as to how other lenders would have responded—
such as Tenaska and First Dakota—it failed to satisfy its burden with
respect to the actual holder of the right.
CONCLUSION
The Court finds that the plaintiff has failed to meet its burden on the
final element of its breach of contract claim. Although Eco failed to satisfy its
obligation under the 2007 Collateral Assignment, the evidence is insufficient
to allow this Court to conclude that AgCountry would have exercised its right
to cure had it received written notice. Accordingly, the plaintiff's claim is
dismissed.
IT IS ORDERED:
1.

The plaintiff's complaint is dismissed.

2.

A separate judgment will be entered in favor of the
defendant.

Dated this 8th day of November, 2016.
BY THE COURT:

John M. Gerrard
United States District Judge

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