Background
Compeer Financial and Corporate America Lending (CAL) are federally-chartered farm credit associations. In 2019, they entered a Master Participation Agreement (MPA) allowing Compeer to purchase participation interests in agricultural loans originated by CAL in California, outside Compeer’s chartered territory of Minnesota, Wisconsin, and Illinois. Under the agreement, Compeer paid CAL $58 million for a 100% participation interest in loans to Famoso Hills Ranch, with CAL obligated to remit all loan payments to Compeer.
Years later, Famoso refinanced its loans with another lender and paid CAL the remaining balance of approximately $58.2 million (the “Payoff Proceeds”). Despite contractual obligations, CAL received these funds but deliberately concealed the payoff from Compeer. CAL’s CEO Ron Cook deleted standing ACH payment information and sent a misleading wire transfer for “Famoso May payments” even though the loans had been paid off. CAL withheld the $58 million as a “negotiation tactic” in a separate contract dispute and refused Compeer’s repeated demands for payment or escrow placement.
Compeer initiated emergency and merits arbitration. Despite court orders and the emergency arbitrator’s awards, CAL repeatedly refused to place funds into escrow, eventually claiming the money had been transferred for “investment” with only partial recovery possible. The merits arbitration panel issued a Phase I award finding CAL liable for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment, ordering payment of $57.1 million plus interest, attorneys’ fees, and costs. The panel recommended appointing a receiver. CAL appealed the district court’s confirmation of the award and receiver appointment.
The Eighth Circuit affirmed both the arbitration award confirmation and receiver appointment. First, the court held the Phase I Award was “final and confirmable” despite CAL’s argument that issues remained for Phase II. The panel signaled finality by making recommendations to the confirming court, and importantly, it completely resolved liability and damages on Compeer’s Payoff Proceeds claims—the only issues CAL was permitted but failed to defend. Phase II addressed only independent counterclaims and CAL’s set-off defense, which the panel deemed duplicative and inadequate as a defense to the core claims.
Second, the court rejected CAL’s public policy defense. Although CAL argued the MPA violated the Farm Credit Act by allowing Compeer to act as a direct lender outside its territory, the court held this did not mandate vacatur. The arbitration panel granted Compeer relief on alternative grounds—breach of the implied covenant of good faith and fair dealing and unjust enrichment—which do not depend on the validity of the underlying contract. The court noted it need not resolve whether public policy exceptions survive Hall Street Associates because any potential violation was harmless; Compeer was entitled to the Payoff Proceeds regardless.
Third, on the receiver appointment, the court held the MPA’s arbitration clause—authorizing a court of competent jurisdiction to enter orders reflecting the arbitrator’s decision—superseded the general forum-selection clause naming Blue Earth County, Minnesota. The arbitrator’s recommendation for a receiver to effectuate compliance gave the district court clear authority. Finally, the court held an extraordinary remedy like a receiver was justified here given CAL’s egregious pattern of concealment, noncompliance with court orders, and misleading representations spanning months.