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Green Plains Renewable Energy Inc. v. Ethanol Holding Company, LLC

Superior Court of Delaware, New Castle

February 9, 2015

GREEN PLAINS RENEWABLE ENERGY INC., GREEN PLAINS WOOD RIVER LLC, and GREEN PLAINS FAIRMONT LLC, Plaintiffs,
v.
ETHANOL HOLDING COMPANY, LLC, Defendant.

Submitted: December 4, 2014

Richard L. Horwitz, Esquire, John A. Sensing, Esquire, Janine L. Hochberg, Esquire, Potter Anderson & Corroon LLP, Omri E. Praiss, Esquire (Argued), Joseph P. Conran, Esquire, Michael Degan, Esquire, Husch Blackwell LLP, Attorneys for Plaintiffs.

Steven Caponi, Esquire, Elizabeth Sloan, Esquire, Blank Rome LLP, John P. Passarelli, Esquire (Argued), Kutak Rock LLP, Attorneys for Defendant.

OPINION

Honorable Mary M. Johnston Judge

PROCEDURAL CONTEXT

Plaintiffs Green Plains Renewable Energy Inc., Green Plains Wood River LLC, and Green Plains Fairmont LLC (collectively "Green Plains") brought this action for declaratory judgment against Defendant Ethanol Holding Company LLC ("EHC"). Green Plains Renewable Energy Inc. is an Iowa corporation with its principal place of business in Omaha, Nebraska. Green Plains Wood River LLC, Green Plains Fairmont LLC, and EHC are all Delaware limited liability companies.

Green Plains seeks the Court's interpretation and construction of certain provisions of the Asset Purchase Agreement ("APA"), which was entered into between Green Plains and EHC. Green Plains alleges that EHC assumed certain liabilities under the APA, which triggers two post-closing purchase price adjustments.

On March 24, 2014, EHC filed this Motion to Dismiss ("Motion"). EHC argues that the terms of the APA are unambiguous in providing that EHC did not assume the alleged liabilities. Oral argument was heard on December 4, 2014.

PLED FACTS

For purposes of this Motion, the Court will set forth the facts in the light most favorable to the non-moving party, Green Plains.

As of September 25, 2006, certain lenders, including First National Bank of Omaha ("FNB Omaha"), made loans to Buffalo Lake Energy LLC ("Buffalo Lake") and Pioneer Trail Energy LLC ("Pioneer Trail"). These loans enabled Buffalo Lake to become the owner and operator of assets relating to the production of fuel grade denatured ethanol near Fairmont, Minnesota. The loans also enabled Pioneer Trail to become the owner and operator of assets relating to the production of fuel grade denatured ethanol near Wood River, Nebraska.

Buffalo Lake and Pioneer Trail subsequently defaulted on their loans. Rather than having FNB Omaha and the other lenders foreclose on the assets, Buffalo Lake and Pioneer Trail agreed to convey assets to EHC. This conveyance was set forth in the Deed in Lieu of Foreclosure Agreement and Joint Escrow Instructions ("DILFA") dated April 11, 2013.

EHC and its financial advisors then conducted a sale process. On November 1, 2013, EHC and Green Plains entered into the APA. Under the APA, Green Plains agreed to purchase assets from EHC, specifically the ethanol production assets transferred from Buffalo Lake and Pioneer Trail to EHC under the DILFA. Effective November 22, 2013, EHC and Green Plains entered into the Amendment to Asset Purchase Agreement ("Amendment").[1]

ANALYSIS

Standard of Review

When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must determine whether the claimant "may recover under any reasonably conceivable set of circumstances susceptible of proof."[2] The Court must accept as true all non-conclusory, well-plead allegations.[3] Every reasonable factual inference will be drawn in favor of the non-moving party.[4] If the claimant may recover under that standard of review, the Court must deny the motion to dismiss.[5]

Central Issue

The central issue that must be decided by the Court is whether EHC assumed certain liabilities pursuant to the terms of the APA. The Court's ultimate decision is dependent upon resolution of: (1) whether the APA is integrated; and (2) whether the APA is ambiguous.

If the Court finds that the APA is integrated and unambiguous, then EHC will be entitled to have Green Plains' Complaint dismissed. However, if the Court finds that the APA is either ambiguous or not fully integrated, then Green Plains will be entitled to ...


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