United States District Court, D. Minnesota
Cargill, Incorporated, and Cargill Financial Services International, Inc., Plaintiffs,
HF Chlor-Alkali, LLC, Defendant. HF Chlor-Alkali, LLC, Plaintiff,
Cargill, Incorporation and U.S. Bank National Association, Defendants.
F. Baughman, Esq. and Paul, Weiss, Rifkind, Wharton &
Garrison LLP, and Kathryn J. Bergstrom, Esq. and Gray Plant
Mooty, counsel for plaintiffs.
Alejandro H. Cruz, Esq., Elena Steiger Reich, Esq., Peter C.
Harvey, Esq. and Patterson Belknap Webb & Tyler LLP, and
Tracy J. Van Steenburgh, Esq. and Nilan Johnson Lewis P.A.,
counsel for defendant HF Chlor-Alkali, LLC.
D. Stiteler, Esq. and Christine N. Lindblad, Esq. and Fox
Rothschild LLP, counsel for third-party defendant U.S. Bank
S. Doty, Judge.
matter is before the court upon the motion to dismiss
counterclaim by plaintiffs Cargill, Inc. and Cargill
Financial Services International, Inc. (CFSI),  the motion to
dismiss third-party complaint by third-party defendant U.S.
Bank National Association, and the motion for a preliminary
injunction by defendant HF Chlor-Alkali, LLC. Based on a
review of the file, record, and proceedings herein, and for
the following reasons, the motions to dismiss are granted and
the motion for a preliminary injunction is denied.
HF Chlor-Alkali, LLC (HFCA) was formed in November 2012 to
build and operate a chlor-alkali manufacturing facility that
produces hydrochloric acid, caustic soda, and bleach. Compl.
¶ 10. Cargill assisted HFCA in obtaining $80 million in
bond financing through the Iowa Finance Authority.
Id. ¶ 12. As part of the bond financing
agreement, U.S. Bank issued a letter of credit, guaranteeing
payment to the bond trustee, and HFCA agreed to reimburse
U.S. Bank for payments made under the letter of credit
(Reimbursement Agreement). Id. ¶¶ 15-17.
Relatedly, Cargill agreed that it would purchase the rights
and obligations of U.S. Bank under the Reimbursement
Agreement if HFCA defaulted (Put Agreement). Id.
¶ 18. HFCA also obtained over $52 million in financing
from CFSI, which it was obligated to repay with interest
(Prepayment Agreement). Id. ¶ 35. The
Prepayment Agreement provides that CFSI shall “receive
any and all amounts due under this Agreement from Cargill,
Incorporated on behalf of [HFCA] via the Assignment
Agreement.” Harvey Decl. Ex. 1 § 2.08, ECF No.
87-1. Under the Assignment Agreement, HFCA agreed to assign a
portion of its rights to payment from Cargill under the
Chemical Supply Agreement. Id. Ex. 2 at 1. In the
Chemical Supply Agreement, Cargill agreed that it would
purchase all of the caustic soda and hydrochloric acid
produced by HFCA's facility. Compl. ¶ 34.
March 1, 2016, HFCA failed to make a bond interest payment.
Id. ¶ 21. Under the letter of credit, U.S. Bank
made the bond interest payment, but HFCA did not reimburse
U.S. Bank. Id. ¶ 23. HFCA also failed to pay
quarterly fees to U.S. Bank in March and June. Id.
¶¶ 23-24. On July 15, U.S. Bank declared default
under the Reimbursement Agreement, causing the bond trustee
to declare the total amount under the bond financing, $80,
051, 125.68, due immediately. Id. ¶ 28. U.S.
Bank paid off the bonds pursuant to the letter of credit.
Id. ¶ 30. On July 21, pursuant to the Put
Agreement, Cargill paid U.S. Bank $81, 447, 000.12 in
exchange for U.S. Bank's rights and remedies against HFCA
under the Reimbursement Agreement. Id. ¶¶
31-32. Cargill now claims that HFCA owes in excess of $81,
447, 000.12 under the Reimbursement Agreement. Id.
¶ 33. Cargill further claims that HFCA defaulted under
the Prepayment Agreement by failing to make a principal
payment in June and quarterly interest payments in December,
March, and June and, therefore, owes an additional $51, 776,
432.21. Id. ¶¶ 40, 43, 102.
25, 2016, Cargill filed this suit alleging breach of contract
under the Reimbursement and Prepayment Agreements and unjust
enrichment under the Prepayment Agreement. Shortly
thereafter, Cargill moved for a preliminary injunction in the
form of an appointment of receiver, which the court denied on
September 12. See ECF No. 60.
answer, HFCA asserts a counterclaim against Cargill for
tortiously interfering with the Reimbursement Agreement.
See Answer ¶¶ 269-75, ECF No. 22. HFCA, as
third-party plaintiff, also brings claims against U.S. Bank
for: (1) aiding and abetting Cargill in its tortious
interference with the Reimbursement Agreement; (2) civil
conspiracy; and (3) breach of the implied covenant of good
faith and fair dealing. See Id. ¶¶ 276-91.
The answer also asserts a number of affirmative defenses
including that the force majeure provisions of the
parties' agreements suspended HFCA's obligations to
make payments under the Reimbursement and Prepayment
Agreements. Id. ¶¶ 124-43. Subsequently,
U.S. Bank and Cargill brought the instant motions to dismiss
the third-party claims and counterclaim.
October 28, Cargill advised HFCA that, pursuant to the
Prepayment and Assignment Agreements, it would divert funds
owed to HFCA under the Chemical Supply Agreement to CFSI.
CFSI would apply those funds to the balance owed to it by
HFCA under the Prepayment Agreement. In response, HFCA filed
this motion for a preliminary injunction seeking to: (1)
enjoin Cargill from diverting funds pursuant to the
Prepayment and Assignment Agreements and (2) require Cargill
to return previously diverted funds to HFCA.
Motion to Dismiss
Standard of Review
survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.'” Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“A claim has facial plausibility when the plaintiff
[has pleaded] factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
556 (2007)). Although a complaint need not contain detailed
factual allegations, it must raise a right to relief above
the speculative level. Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a formulaic recitation of
the elements of a cause of action” are not sufficient
to state a claim. Iqbal, 556 U.S. at 678 (citation
and internal quotation marks omitted).
court does not consider matters outside the pleadings under
Rule 12(b)(6). Fed.R.Civ.P. 12(d). The court may, however,
consider matters of public record and materials that are
“necessarily embraced by the pleadings.”
Porous Media Corp. v. Pall Corp., 186 F.3d 1077,
1079 (8th Cir. 1999) (citation and internal ...