- Ag Docket
The plaintiffs financed their purchase of a part ownership of a Nebraska feedlot via a loan from the defendant. The plaintiffs also obtained an operating loan of $2.5 million from the defendant to finance the purchase of cattle to be fed at the feedlot. The loan terms required the plaintiffs to provide the defendant with a monthly inventory report. The plaintiffs later sought an additional loan from the defendant to buy corn to feed cattle at the feedlot. The plaintiffs guaranteed the loans. The plaintiffs relied on the feedlot manager to manage sales of cattle and the cattle inventory, but later discovered that there were approximately 5,000 fewer head of cattle at the feedlot than there should have been. The manager was fired, and the operating loan was terminated due to "insufficient assets in relation to liabilities" and the defendant demanded full payment of the loan. Several months later the feedlot filed bankruptcy and the plaintiffs filed a proof of claim seeking to recover over $2 million from the feedlot. The plaintiffs also sued the defendant based on an allegation that defendant's loan officer had promised to go to the feedlot monthly to count cattle. In essence, the plaintiff blamed the defendant for the shortage of cattle at the feedlot. The plaintiffs also claimed that they bought more feed than necessary because of the loan officer misleading them as to the amount of cattle at the feedlot. The court granted summary judgment for the defendant on all claims. On the negligence issue, the court noted that Kansas courts have held that lenders do not owe any duty of care to borrowers under Kansas law, and that there was no history or course of dealing that would apply to hold the defendant liable. On the negligent/fraudulent misrepresentation issue, the court determined that the evidence showed that the plaintiffs did not justifiably rely on any representations of the defendant to their detriment. The court also noted that the plaintiff was responsible for tracking inventory and reporting it to the defendant and that the defendant was not responsible for counting cattle at the feedlot. Thus, there was no breach of the duty of good faith and fair dealing. Page v. Farm Credit Services of America, PCA, No. 13-2073-RDR, 2014 U.S. Dist. LEXIS 108018 (D. Kan. Aug. 6, 2014).
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