                     United States Court of Appeals
                       FOR THE EIGHTH CIRCUIT


                               No. 01-2859/2863


Top of Iowa Cooperative, an             *
Iowa cooperative,                       *
                                        *
      Cross-Appellant/Appellee,         *
                                        * Appeals from the United States
      v.                                * District Court for the
                                        * Northern District of Iowa
Virgil E. Schewe,                       *
                                        *
      Appellant/Cross-Appellee.         *



                           Submitted: March 14, 2002
                               Filed: March 24, 2003


Before LOKEN and JOHN R. GIBSON, Circuit Judges, and GOLDBERG,1 Judge.


GOLDBERG, Judge.

     Appellant Virgil E. Schewe (“Schewe”) appeals the district court’s2 entry of
judgment as a matter of law against his claims that certain hedge-to-arrive
(“HTA”) contracts were cash forward contracts excluded from the regulations of

      1
         The Honorable Richard W. Goldberg, Judge of the United States Court of
International Trade, sitting by designation.
      2
        The Honorable Mark W. Bennett, Chief Judge, United States District
Court for the Northern District of Iowa.
the Commodity Exchange Act and not illegal futures contracts. Schewe also
appeals the district court’s denial of Schewe’s post-trial motions to alter or amend
the judgment and for judgment as a matter of law, based on the jury’s verdict that
Top of Iowa Cooperative (“Top of Iowa”) breached its fiduciary duty to Schewe;
and Schewe appeals the district court’s denial of his motion for a new trial on Top
of Iowa’s successful breach-of-contract claim. Top of Iowa cross-appeals the
district court’s denial of Top of Iowa’s motion for judgment as a matter of law on
Schewe’s breach of fiduciary duty counterclaim.

                                I. Statement of Facts

       Schewe operates a 500-acre farm in Freeborn County, Minnesota. Between
March 13 and June 28 of 1995, Schewe entered into the five subject HTAs with
Top of Iowa, a cooperative in Iowa. The HTAs called for Schewe to deliver
30,000 bushels of corn to Top of Iowa on or before December of 1995. The price
of the corn was established at the time of contract (at the Chicago Board of Trade
(“CBOT”) open market futures contract price for December of 1995, minus the
“basis”). The “basis” is Top of Iowa’s costs plus profit, and would not be set until
Schewe elected to set the basis.

       Top of Iowa sold a futures contract on the CBOT each time it entered into
an HTA with Schewe. This protected Top of Iowa from changes in the open
market cash price3 of corn at the HTA delivery date. The price of corn in a futures
contract changes with the daily open market price. If the open market price of
corn goes up, Top of Iowa must pay the margin amount4 on its futures contract to
its broker on the CBOT. Top of Iowa would recover the margin amount when

      3
          The cash price is the price of grain sold on the public open market today.
      4
        The margin amount is the difference between the current open market
price and the original futures contract price.

                                          2
Schewe delivered the corn on the HTA and Top of Iowa sold that corn at the
higher open market price. When corn prices rose throughout 1995, Top of Iowa
was required to pay margin money to maintain its futures contracts on the CBOT.5

       Schewe attempted delivery of the corn under the HTAs to Top of Iowa in
the fall of 1995; however, the elevator lacked space and the lengthy wait in line to
deliver forestalled actual delivery of the grain. The delivery date for Schewe’s
corn under the HTAs was rolled on September 26, 1995, to May of 1996. As a
result of rolling the CBOT positions to May of 1996, Schewe gained 9 ½¢ per
bushel on his HTA contracts’ prices. That same day, the CBOT positions were
rolled by buying back the December of 1995 position and selling a May of 1996
short position. Between December 4, 1995, and February 22, 1996, Schewe
delivered 20,000 bushels of corn to Top of Iowa on a cash basis, rather than
delivering pursuant to the subject HTAs. As of February 22, 1996, Schewe was
short 30,000 bushels of grain for the May of 1996 short position, and had only
10,000 bushels of grain remaining to deliver.

      On April 10, 1996, Top of Iowa notified Schewe that he was responsible for
reimbursing Top of Iowa for margin calls on the CBOT positions. Schewe
responded to Top of Iowa the following day, and the parties agreed to resolve the
dispute in court.

       On April 16, 1996, the HTAs were rolled from May of 1996 to July of 1996.
This would have required Schewe to deliver 30,000 bushels of corn in July. That
same day the CBOT positions were rolled by purchasing back the May of 1996
positions and selling a July of 1996 short position. On May 31, 1996, Schewe


      5
        In a futures contract, the parties agree to pay the price of corn on the day
when the contracts expire, not the price of corn on the day the contracts are made.
Therefore, as the price of corn increases, the futures contracts’ price increases.

                                          3
wrote a letter to Top of Iowa canceling the subject HTA contracts; that same day
Top of Iowa bought back the July of 1996 CBOT short position. Because no corn
was delivered on the HTAs, Top of Iowa was not able to recover the margin
money it had paid to its broker on the CBOT.

                            II. Statement of the Case

       Top of Iowa filed suit in Iowa District Court for Winnebago County on
August 12, 1996, against Schewe, claiming Schewe had repudiated the subject
HTAs, and claiming damages corresponding to the amount Top of Iowa paid in
margin calls on short positions on the CBOT. Schewe removed this action to
Federal Court based upon 28 U.S.C. § 1332, and filed his answer and
counterclaim, and affirmative defense of illegal contract. Schewe’s counterclaims
were summarized by the district court as follows: “(1) that the HTAs were
‘securities’ within the meaning of the [Security Exchange Act] and that they were
not offered, engaged in, or sold in compliance with that Act; (2) that the HTAs are
illegal off-exchange futures contracts in violation of the Commodity Exchange Act
(“CEA”) and hence are unenforceable; (3) that Top of Iowa has violated the
Racketeer Influenced and Corrupt Organizations Act (RICO); (4) that Top of
Iowa’s actions constitute negligence, breach of fiduciary duty, and breach of
contract; and (5) that Top of Iowa has engaged in fraud and misrepresentation.”
Top of Iowa Cooperative v. Schewe, 6 F. Supp. 2d 843, 847 (N.D. Iowa 1998).
Top of Iowa filed its motion for partial summary judgment on March 12, 1998,
requesting summary judgment on Schewe’s first (1) and second (2) counts, and
Schewe’s affirmative defense of illegal contract. Id. Schewe filed a cross-motion
for summary judgment for a declaration that the HTAs were illegal futures
contracts and thus unenforceable. He also filed for dismissal of Top of Iowa’s
cause of action for failure to state a claim upon which relief can be granted
because the terms of the HTAs barred recovery of the amounts paid in margin
calls. Id. On May 25, 1998, the district court granted Top of Iowa’s motion for

                                        4
partial summary judgment, and dismissed Schewe’s cross-motions, ruling that the
HTAs were not illegal future contracts, but rather were valid “cash forward”
contracts.

       The jury trial began on April 2, 2001, on Schewe’s breach of contract claim,
and Top of Iowa’s breach of contract and breach of fiduciary duty claims. On
April 5, 2001, the jury returned a verdict in favor of Top of Iowa for $60,900 on
the breach of contract claim; against Schewe on his breach of contract claim, and
in favor of Schewe on his counterclaim of breach of fiduciary duty, with an award
of $3,400 in damages. On April 9, 2001, the district entered judgment against
Schewe for $60,900 and against Top of Iowa for $3,400.

       Schewe filed a motion for post-trial relief on April 18, 2001, seeking an
order to set aside Top of Iowa’s breach of contract judgment, an order to amend
the judgment to eliminate Top of Iowa’s judgment; an order granting Schewe’s
renewed motion for judgment as a matter of law; or an order for a new trial due to
an inconsistent and contradictory jury verdict. Top of Iowa filed its post-trial
renewed motion for judgment as a matter of law on Schewe’s breach of fiduciary
duty counterclaim. All post-trial motions were denied by the district court on June
19, 2001.

      Schewe appeals to this Court the district court’s denial of his motion for
judgment as a matter of law on the CEA claims. Schewe also appeals the district
court’s denial of his post-trial motions to alter or amend the judgment, his renewed
motion for judgment as a matter of law, and his motion for a new trial. Top of
Iowa cross-appeals its renewed motion for judgment as a matter of law on
Schewe’s breach of fiduciary duty counterclaim.




                                         5
                               III. DISCUSSION

      A.    Schewe’s Motion for Judgment as a Matter of Law on the CEA
            Claim



      Schewe first challenges the district court’s order of May 25, 1998, denying
Schewe’s cross-motion that the HTAs were illegal futures contracts under the
CEA. The Court reviews the district court’s denial of summary judgment to
Schewe’s CEA claim de novo. Grain Land Coop v. Kar Kim Farms, 199 F.3d 983,
990 (8th Cir. 1999).

      In Grain Land this Court established the test for determining whether the
contracts at issue are unregulated cash-forward contracts or futures contracts
regulated by the CEA: “In order to determine whether a transaction is an
unregulated cash-forward contract, we must decide ‘whether there is a legitimate
expectation that physical delivery of the actual commodity by the seller to the
original contracting buyer will occur in the future.’” 199 F.3d at 991 (quoting
Andersons, Inc. v. Horton Farms, Inc., 166 F.3d 308, 318 (6th Cir. 1998)); see also
Haren v. Conrad Cooperative, 198 F.3d 683 (8th Cir. 1998) (“As we observed in
Grain Land, while an obligation to deliver is not necessary to place a contract
within the cash-forward exception, it is sufficient.”). The Court in Grain Land
looked to the parties’ intentions, contract terms, course of dealing, “and any other
relevant factors to determine whether the parties contemplated physical delivery.”
166 F.3d at 991.

      Schewe argues that the test set forth in Grain Land should be expanded to
include consideration of the underlying purpose of the HTAs to determine whether
they are regulated by the CEA. He alleges this will avoid the pitfall under the
Grain Land test that any agreement between a farmer and a cooperative would fall

                                         6
outside the scope of the CEA, regardless of the riskiness of the agreement. This is
simply a misreading by Schewe of the decision in Grain Land. The test articulated
in Grain Land does not hold that the businesses engaged in by the parties is
dispositive of the issue; rather, it looks to whether the parties expected delivery of
the grain. Because the Grain Land decision sets forth the legal principles for this
case, this Court looks to whether Schewe can generate a material issue of fact that
there was no intention to deliver the corn. This question is assessed taking the
evidence in the light most favorable to Schewe. See Grain Land at 990.

        As the district court found, it is clear in this case that both Schewe and Top
of Iowa expected physical delivery of the corn would occur in the future. See Top
of Iowa Cooperative v. Schewe, 6 F. Supp. 2d 843, 8355-56 (N.D. Iowa 1998).
Schewe testified that he intended to deliver the corn. The terms of the contract
contemplate delivery, and previous dealing between Schewe and Top of Iowa
consisted of cash market sales of corn by Schewe to Top of Iowa. Schewe is
engaged in the business of producing corn, and Top of Iowa purchases corn as part
of its business. Schewe cannot generate a material issue of fact that he did not
intend to deliver as defined by the test in Grain Land. Therefore, the Court affirms
the district court’s grant of summary judgment to Top of Iowa in determining that
the HTAs are outside the scope of CEA regulations.

      B.     Schewe’s Rule 59(e) Motion to Amend or Alter a Judgment

       Schewe claims that the district court erred in denying his Rule 59(e) Motion
based on the jury’s allegedly inconsistent verdicts that Top of Iowa breached its
fiduciary duty, and that Top of Iowa did not breach the contracts. We review the
district court’s denial of the Rule 59(e) Motion for abuse of discretion. Belk v.
City of Eldon, 228 F.3d 872, 877 (8th Cir. 2000).




                                          7
       Essentially, Schewe’s claim is that the jury could not have found both that
Top of Iowa breached its fiduciary duty and that Top of Iowa did not breach the
contracts. According to Schewe, if Top of Iowa breached its fiduciary duty to him
by not disclosing the risks of the HTAs, then Top of Iowa necessarily breached the
contracts. However, the jury instructions for Top of Iowa’s breach of contract
claim did not require the jury to find that Top of Iowa had not breached its
fiduciary duty to Schewe. As the district court concluded, “Schewe is attempting
to turn his breach-of-fiduciary-duty counterclaim into a claim of breach of
contract, on which he did not prevail, and/or a claim of fraudulent
misrepresentation, which he did not submit to the jury. . . .” Top of Iowa
Cooperative v. Schewe, 149 F. Supp. 2d 709, 723 (N.D. Iowa 2001). Therefore,
we affirm the district court’s denial of Schewe’s Rule 59(e) motion.

      C.     Schewe’s Rule 50 Motion for Judgment as a Matter of Law

        Schewe claims the district court erred in denying his motion for judgment as
a matter of law on Top of Iowa’s breach of contract claim. Schewe alleges that the
jury’s finding of breach of fiduciary duty by Top of Iowa means that there was no
legally sufficient evidentiary basis for two of the five elements of Top of Iowa’s
breach of contract claim. The Court reviews the denial of Schewe’s motion for
judgment as a matter of law de novo, applying the same standard as the district
court. Belk 228 F.3d at 877. “Post-verdict judgment as a matter of law is
appropriate only where the evidence is entirely insufficient to support the verdict.”
Id. at 878 (citing Greaser v. State Dep’t of Corrections, 145 F.3d 979, 984 (8th
Cir. 1998)).

       The first element of Top of Iowa’s breach of contract claim that Schewe
challenges is the “meeting of the minds on all material terms” element. Schewe’s
argument is that because the jury found that Top of Iowa breached its fiduciary
duty to Schewe to disclose the riskiness of the HTAs, there could not have been a

                                         8
meeting of the minds. Schewe’s argument fails for two reasons. First, jury
instruction number four expressly required the jury to find there was a meeting of
the minds. Both the evidence that Schewe attended Top of Iowa meetings wherein
the riskiness of HTAs was disclosed, and the testimony that Paul Nessler of Top of
Iowa disclosed the risk of rolling to Schewe support the jury’s finding that there
was a meeting of the minds. Second, the breach of fiduciary duty was a breach of
the relationship between Schewe and Top of Iowa, not a breach of the contract.
Top of Iowa had no contractual obligation to disclose the HTAs riskiness. The
jury reasonably could have found that, while Top of Iowa breached its fiduciary
duty in its relationship with Schewe, Top of Iowa disclosed all that was required in
order for there to be a meeting of the minds on the HTAs.

       The second element of Top of Iowa’s breach of contract claim that Schewe
challenges is whether “Top of Iowa has done what the contract requires or has
been excused from doing what the contract requires.” Schewe’s claim is that the
jury could not have found that Top of Iowa had done what the contract required
because the jury found that Top of Iowa did not disclose the riskiness of the HTAs
to Schewe. This argument is unpersuasive because the breach of contract claim is
not legally identical to the breach of fiduciary duty claim, and the jury reasonably
concluded, based on the evidence before it, that Top of Iowa disclosed all that the
contract required. Therefore, the district court did not err in denying Schewe’s
request for a directed verdict on his renewed motion for judgment as a matter of
law.

      D.     Schewe’s Rule 59(a) Motion for a New Trial

      Schewe’s final motion before the district court was for a new trial under
Rule 59 of the Federal Rules of Civil Procedure because the jury’s verdict was
inconsistent. The district court denied that motion, and this Court reviews that
denial under an abuse of discretion standard. Leichihman v. Pickwick Int’l, 814

                                         9
F.2d 1263, 1266-67 (8th Cir. 1987). The district court should have granted the
motion only if there was “no principled basis upon which to reconcile the jury’s
inconsistent findings.” Bird v. John Chezik Homerun, Inc., 152 F.3d 1014, 1017
(8th Cir. 1998).

       The district court did not abuse its discretion in attempting to reconcile the
verdict in a reasonable manner. See Anheuser-Busch, Inc. v. John Labatt, Ltd., 89
F.3d 1339, 1347 (8th Cir. 1996). As previously discussed, supra at III(B)and (C),
the jury could have reasonably found that Top of Iowa had breached its fiduciary
duty and that Top of Iowa had not breached the terms of the contract. Therefore,
the jury’s verdicts were not inconsistent, and the denial by the district court of
Schewe’s motion for a new trial is affirmed.

      E.     Top of Iowa’s Rule 50 Motion for Judgment as a Matter of Law

       Finally, Top of Iowa challenges the district court’s denial of its post-trial
motion for judgment as a matter of law on Schewe’s breach of fiduciary duty
counterclaim. The Court reviews the denial of Top of Iowa’s renewed motion for
judgment as a matter of law de novo, applying the same standard as the district
court. Belk 228 F.3d at 877. “A jury verdict must be affirmed unless, viewing the
evidence in the light most favorable to the prevailing party, we conclude that a
reasonable jury could not have found for that party.” Stockmen’s Livestock Mkt.,
Inc. v. Norwest Bank of Sioux City, 135 F.3d 1236, 1240-41 (8th Cir. 1998)
(internal quotes omitted).

      Top of Iowa argues that Schewe failed to produce any evidence supporting
elements one or two of his breach of fiduciary duty counterclaim: element (1), a
fiduciary relationship existed between Top of Iowa and Schewe, or element (2),
that Top of Iowa breached that fiduciary relationship. For the same reasons given
by the district court in its June 19, 2001, opinion, the Court affirms the district

                                         10
court’s denial of Top of Iowa’s post-trial motion for judgment as a matter of law.
See Top of Iowa, 149 F. Supp. 2d at 713-19.

       Top of Iowa first challenges the jury’s finding that a fiduciary relationship
existed between Top of Iowa and Schewe. While the district court admits it would
have reached a different verdict on this issue, the district court did find a sufficient
evidentiary basis for the jury’s verdict. Id. at 717. Under the legal standard for a
finding of fiduciary duty outlined in jury instruction number six6 the jury heard
evidence that Top of Iowa’s grain merchandiser, Paul Nessler, and general
manager, Larry Peterson, were experienced with hedging on the CBOT. The jury
heard no evidence that Schewe matched their sophistication with respect to such
complex transactions. In addition, evidence was presented that Top of Iowa was
privy to more information than was Schewe about the volatility of the corn market
and the risks of rolling the HTAs. Schewe also testified that he was encouraged to
enter the HTAs based on the advice of Top of Iowa representatives. The jury
could have found that Top of Iowa possessed superior knowledge to Schewe, that
Schewe would have relied on the advice of Top of Iowa’s representatives.
Therefore, the jury could have reasonably concluded that a fiduciary duty existed
between Top of Iowa and Schewe.

       Top of Iowa next challenges the jury’s finding that Top of Iowa breached its
fiduciary duty to Schewe. Jury instruction number six advised the jury that “[i]t is
a breach of a fiduciary duty for a fiduciary to fail to perform the duty to disclose
all material facts in dealing with the other party to permit the other party to make
an intelligent, knowing decision in such dealings.” Top of Iowa, 149 F. Supp. 2d
at 719. Schewe testified that he was not told of the risk of rolling the HTAs, or

      6
        Jury instruction number six stated, in part, that “[a] fiduciary relationship
can therefore exist when the evidence indicates that . . . there was a disparity of
business experience and an invitation to the party with lesser experience to place
confidence in the advice of the other party.” Top of Iowa, 149 F. Supp. 2d at 718.

                                          11
that he was even notified of the rolling of his HTAs. It appeared that the jury
believed this testimony over the “vigorous” and “effective” impeachment of
Schewe, and the district court was reluctant, as are we, to “invade the jury’s
rightful province.” Id. at 719 (internal quotes omitted). Therefore, the Court
affirms the district court’s denial of Top of Iowa’s motion for judgment as a matter
of law on Schewe’s breach of fiduciary duty counterclaim.

      Therefore, the denial of Top of Iowa’s renewed motion for judgment as a
matter of law on Schewe’s breach of fiduciary duty counterclaim is affirmed.

                                 IV. Conclusion

       For the foregoing reasons, the June 19, 2001, order of the district court
denying all post-trial motions is AFFIRMED. The May 25, 1998, order of the
district court granting partial summary judgment to Top of Iowa on Schewe’s CEA
claim is AFFIRMED.


A true copy.


      Attest:


               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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