East Lynn Fertilizers, Inc. v. CHS, Inc.

76 UCC Rep. Serv. 2d 270 (2011)

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East Lynn Fertilizers, Inc. v. CHS, Inc.

United States District Court for the Central District of Illinois
76 UCC Rep. Serv. 2d 270 (2011)

  • Written by Tammy Boggs, JD

Facts

CHS, Inc. (defendant) sold farm fertilizers in bulk to distributors, including to East Lynn Fertilizers, Inc. (Lynn) (plaintiff). Lynn would resell fertilizer to local commercial farmers. In July 2008, the parties entered into a contract for Lynn to purchase 360 tons of anhydrous ammonia for $1,180 per ton, to be delivered as late as May 30, 2009. Lynn’s contract balance was due by March 1, 2009. Thereafter, the market price for anhydrous ammonia dropped significantly. Lynn notified CHS that Lynn wanted to modify or cancel the contract. Lynn also failed to pay the contract balance. CHS engaged in two transactions to sell a portion of the anhydrous ammonia but did not give CHS notice of those transactions. CHS used its unsold anhydrous ammonia in its own operations. One of the cover transactions was priced at $295 per ton, less than the market-price range of $320–$345 as reported in the Green Markets Report. The Green Markets Report was an industry publication that tracked market prices of anhydrous ammonia on a weekly basis by querying dealers and distributors in a given geographic area. The June 1 edition of the Green Markets Report listed the price range for anhydrous ammonia in the relevant region as $340–$370. Lynn sued CHS for return of a down payment, and CHS crossclaimed for breach of contract. The trial court granted CHS’s motion for summary judgment as to liability. The parties submitted briefs on the proper calculation of CHS’s damages. CHS’s calculation relied on market price as reported in the Green Markets Report, while Lynn offered no alternative means of determining market price but argued that the report was unreliable.

Rule of Law

Issue

Holding and Reasoning (Bernthal, J.)

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