Justia Agriculture Law Opinion Summaries

Articles Posted in Banking
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The Supreme Court affirmed the judgment of the circuit court concluding that Regions Bank and Optimum Agriculture, LLC had lien priority to crop proceeds and that Optimum Agriculture, LLC was entitled to a statutory landlord lien, holding that the circuit court did not clearly err.On appeal, AgriFund, LLC, one of the three creditors in this intercreditor dispute over lien priority to the crop proceeds, argued that its lien was superior to those held by Regions and Optimum. The Supreme Court disagreed and affirmed, holding that, under the facts and circumstances of this case, the circuit court did not clearly err in finding that AgriFund did not have priority to the proceeds and that Optimum held a landlord's lien. View "Agrifund, LLC v. Regions Bank" on Justia Law

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In 2008, Purdy borrowed from Citizens First, using his dairy cattle as collateral. Purdy refinanced in 2009, executing an “Agricultural Security Agreement" that granted Citizens a purchase money security interest in “all . . . Equipment, Farm Products, [and] Livestock (including all increase and supplies) . . . currently owned [or] hereafter acquired.” Citizens perfected this security interest by filing with the Kentucky Secretary of State. Purdy and Citizens executed two similar security agreements in 2010 and 2012, which were perfected. After the 2009 refinancing, Purdy increased the size of his herd, entering into “Dairy Cow Lease” agreements with Sunshine. The parties also executed security agreements and Sunshine filed financing statements. In 2012, milk production became less profitable. Purdy sold off cattle, including many bearing Sunshine’s brand, and filed a voluntary Chapter 12 bankruptcy petition. Both Citizens and Sunshine sought relief from the stay preventing the removal of the livestock. In 2014, the Sixth Circuit held that Citizens failed to demonstrate that the "Leases” were actually security agreements in disguise. On remand, the bankruptcy court determined that all cattle sold at a 2014 auction were subject to Citizens’ security interest. The district court affirmed, awarding Citzens $402,354.54. The Sixth Circuit affirmed; the bankruptcy court did not contravene its mandate by holding a hearing on the question of ownership. View "Sunshine Heifers, LLC v. Citizens First Bank" on Justia Law

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Between 2009 and 2012, Sunshine and Purdy, a Kentucky dairy farmer, entered into “Dairy Cow Leases.” Purdy received 435 cows to milk, and, in exchange, paid monthly rent to Sunshine. Purdy’s business faltered in 2012, and he sought bankruptcy protection. Sunshine moved to retake possession of the cattle. Citizens First Bank had a perfected purchase money security interest in Purdy’s equipment, farm products, and livestock, and claimed that its perfected security interest gave Citizens First priority over Sunshine with regard to the cattle. Citizens argued that the “leases” were disguised security agreements, that Purdy actually owned the cattle, and that the subsequently-acquired livestock were covered by the bank’s security interest. The bankruptcy court ruled in favor of Citizens, finding that the leases were per se security agreements. The Sixth Circuit reversed, noting that the terms of the agreements expressly preserve Sunshine’s ability to recover the cattle. Whether the parties strictly adhered to the terms of these leases is irrelevant to determining whether the agreements were true leases or disguised security agreements. Neither the bankruptcy court nor the parties sufficiently explained the legal import of Purdy’s culling practices or put forward any evidence that the parties altered the terms of the leases making them anything but leases. View "In re: Purdy" on Justia Law

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Farm Credit had a security interest in corn delivered to Cargill and filed suit against Cargill in replevin for the corn. The district court concluded that Farm Credit's security interest under the Food Security Act (FSA) of 1985, 7 U.S.C. 1631(e), entitled it to proceeds from the corn delivered to Cargill. The court concluded that Cargill did not dispute that Farm Credit complied with the FSA. To the extent that the U.C.C. governs priority disputes as a foundation for the FSA, Cargill's argument failed because U.C.C. 9-404 does not apply in this case. Accordingly, the court affirmed the district court's grant of summary judgment in favor of Farm Credit. View "Farm Credit Serv. v. Cargill, Inc." on Justia Law

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Plaintiffs filed suit against their sons, their former attorney, a limited liability company (SMP), and others, challenging the validity of their mortgages delivered to SMP. Without first seeking mediation, SMP counterclaimed to foreclose on a mortgage granted by Plaintiffs on their agricultural property. The district court foreclosed the mortgage and denied Plaintiffs' motion to quash or stay the sheriff's sale. The court of appeals reversed, concluding that the district court lacked subject matter jurisdiction to foreclose on the agricultural property because SMP had not first obtained a mediation release as required by Iowa Code 654A.6(1). The Supreme Court reversed, holding that SMP was not required to obtain the mediation release prior to filing a counterclaim to foreclose its mortgage. View "Schaefer v. Putnam" on Justia Law

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Consolidated Grain maintains a grain elevator in La Salle County, sold Rogowski’s crops, and gave him the proceeds by checks paid directly to him. The bank had lent money to Rogowski for which he signed a note and granted the bank a security interest in his crops and any proceeds of their sale. The bank notified Consolidated of its lien by two written notices, one covering crop years 2004 and 2005 and the other covering years 2005 and 2006. The notices listed as covered agricultural commodities “all grain on hand, all growing crops,” without listing their amount or location. The bank obtained a deficiency judgment against Rogowski in 2008, which remains unsatisfied, then sought payment from Consolidated. The trial court ruled in favor of the bank. The appellate court reversed and the supreme court affirmed. The Federal Food Security Act of 1985 provides how notices of security interests are to be worded and provides that there must be a statement of “each county or parish in which the farm products are produced or located,” The court rejected a “substantial compliance” argument and held that the notices were insufficient for failing to strictly comply with the Act. View "State Bank of Cherry v. CGB Enters., Inc." on Justia Law

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Wescott Agri-Products, Inc., a Perishable Agricultural Commodities Act (PACA)-licensed wholesale supplier of perishable agricultural commodities, sold produce to a company that later ceased business operations after Sterling State Bank seized the company's assets because it failed to make scheduled loan payments. Wescott demanded payment from the bank, claiming the bank had seized assets subject to trust under the PACA, but the bank refused. Wescott sued the bank, asserting various claims, including violations of the PACA and a conversion claim. The district court granted the bank summary judgment on Wescott's conversion claim and summary judgment in favor of Wescott on its PACA claim. Wescott then appealed the district court's denial of attorney fees on costs. The Eighth Circuit Court of Appeals affirmed, holding that the district court did not abuse its discretion by refusing to award Wescott attorney fees and costs, as the fees were excessive and unreasonable, and Wescott's unprofessional conduct in the case did not warrant an award of fees. View "Wescott Agri-Products, Inc. v. Sterling State Bank" on Justia Law