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Case Number: 3:20-cv-00159
Judge: Eli Richardson
Court: United States District Court for the Middle District of Tennessee (Davidson County)
Description: This lawsuit involves a dispute over the sale of hemp. On November 22, 2019, Plaintiff Eric Thornton and Defendant Dutch Naturals Processing, LLC (“DNP”) signed a Bill of Sale for the purchase and sale of fifty-percent of hemp biomass (“the hemp”). A copy of the Bill of Sale is provided below:
INDUSTRIAL HEMP PRODUCT BILL OF SALE
THIS BILL OF SALE ("Bill of Sale") is made and entered into as of the __ day of November 2019, by and between ERIC THORNTON ("SELLER") and DUTCH NATURALS PROCESSING LLC ("PURCHASER").
FOR AND IN the consideration of the sum of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00), to be paid as hereinafter set forth, and subject to the conditions set forth herein, SELLER hereby unconditionally and absolutely transfers, conveys and sets over to PURCHASER, without warranty or representation of any kind, express or implied, except as set forth herein, all of SELLER'S undivided FIFTY-PERCENT (50.00%) property interest in industrial hemp biomass including without limitation all industrial hemp floral material normally contained therein (the "PRODUCT"), currently owned jointly and equally by ERIC THORNTON ("SELLER") and WHXIAM SPANN ("SPANN") located at 3301 Highway 70, Bums, Tennessee, in Dickson County, Tennessee, excluding all smokable hemp at or located at 702 East College Street, Dickson, Dickson County, Tennessee, to be harvested as 2019 crop. This bill of sale is between PURCHASER and SELLER but is with acceptance and consent of SPANN (SPANN AND SELLER are jointly referred to hereafter collectively as "SPANN and THORNTON") and applies specifically to the PRODUCT to be harvested from acreage licensed by the Tennessee Department of Agriculture to SELLER and grown in accordance with such I icense by SPANN and THORNTON for.the 2019 crop year. The PRODUCT is to be delivered as set out below.
SELLER warrants and represents that the PRODUCT in which the 50% interest is being purchased hereby will meet at the time of delivery and at the time of purchase, the following specifications, terms and conditions as set forth herein:
1. The PRODUCT has been or will be delivered to one of PURCHASER'S affiliate's locations, at PURCHASER'S instructions, located at 1253 Petty Road, White Bluff, TN, 37187 or to 901 Floyd Street, Richfield, KY 42755 stripped and contained in super sacks or seed bags with handling loops, or in gaylords. SPANN, or his appointed representative, shall have complete oversight authority and management of all logistics regarding inspection, acceptance, rejection, shipping and containment of PRODUCT. SPAWN'S, or if he uses an appointed representative, then the appointed representative's decision and direction shall be final and binding on PURCHASER and SELLER.
2. A true, complete and fully accurate copy of the current state license to grow Industrial Hemp in 2019 which applies to the PRODUCT is attached hereto as Exhibit "A".
3. PURCHASER shall pay to SELLER the sum of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00), as follows: (a) the sum of TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS (5250,000.00) (the "INTIAL PAYMENT") within thirty (30) days from the execution and delivery of this Bill of Sale, and (b) the balance of ONE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($150,000.00) to be paid within seventy-five (75) days from the execution and delivery of this Bill of Sale.
4. PURCHASER shall have all control and commercial use of PRODUCT prior to INITIAL PAYMENT, but not before execution of this BELL OF SALE.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE. THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
As noted, the Bill of Sale indicates that Plaintiff would sell DNP the hemp for a total purchase price of $400,000. DNP was to pay the purchase price in two installments. The first payment of $250,000 was due within 30 days of the contract signing, and the second payment of $150,000 was due within 75 days of signing. The Bill of Sale also stated that William Spann or his appointed representative would “have complete oversight authority and management of all logistics regarding [i]nspection, acceptance, rejection, shipping and containment.” (Doc. No. 1-1).
Plaintiff delivered the hemp per DNP's instructions to 1253 Petty Road, White Bluff, Tennessee. (Doc. No. 154-4 at ¶ 10). DNP sent samples of the hemp to CannaBusiness Labs for its quality to be tested. (Doc. No. 152-5 at ¶ 15). DNP received the results of this testing and declined to proceed with the purchase of the hemp. (Doc. No. 152-5 at ¶¶ 19-21). On January 24, 2020, DNP did not make any payment to DNP as contractually required. (Doc. No. 148 at ¶ 11, Doc. No. 152-5 at ¶¶ 21, 22). That same day, Plaintiff filed this lawsuit in state court, asserting a breach-of-contract claim (Count I), a claim to pierce the corporate veil so as to hold Ridley
responsible (Count II); and a promissory-estoppel claim (Count III). The lawsuit was later removed to this Court based on diversity jurisdiction.
Outcome: Judgment in favor of Plaintiff.