Justia Agriculture Law Opinion Summaries

Patricia Lee, a debtor, defaulted on her mortgage held by U.S. Bank on a 43-acre property in Georgia, which she used as her principal residence and also leased to a farming company. In an attempt to restructure her debts, Lee filed a voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code. She proposed a reorganization plan that included payments to U.S. Bank. However, U.S. Bank moved for relief from the automatic stay that had been triggered by Lee's bankruptcy filing, arguing that the anti-modification provision in Chapter 11 prevented the bankruptcy court from approving a plan that modified U.S. Bank's claim.The bankruptcy court agreed with U.S. Bank, concluding that the anti-modification provision applied because the property was Lee's principal residence, regardless of its additional use as farmland. The court granted U.S. Bank's motion for relief from the automatic stay, effectively allowing the bank to foreclose on Lee's property. Lee appealed this decision to the district court, which affirmed the bankruptcy court's order.The United States Court of Appeals for the Eleventh Circuit affirmed the lower courts' decisions. The appellate court held that the anti-modification provision in Chapter 11 has three requirements: the security interest must be in real property; the real property must be the only security for the debt; and the real property must be the debtor's principal residence. The court found that all three requirements were met in this case, as U.S. Bank's claim was secured by Lee's real property, which was the only security for the debt and was used by Lee as her principal residence. The court rejected Lee's argument that the property's additional use as farmland should exempt it from the anti-modification provision. View "Lee v. U.S. Bank National Association" on Justia Law

Appellant Spring Valley Produce, Inc. (SVP) is a creditor of Chapter 7 debtors Nathan and Marsha Forrest (the Forrests). The Forrests owe a pre-petition debt for produce which they are seeking to discharge. SVP initiated this adversary proceeding, seeking a declaration that the debt was nondischargeable under Section 523(a)(4). The bankruptcy court granted the Forrests’ motion to dismiss and held that Section 523(a)(4) does not apply to Perishable Agricultural Commodities Act (PACA) related debts. At issue on appeal is whether the Bankruptcy Code’s exception to discharge in 11 U.S.C. Sections 523(a)(4) applies to debts incurred by a produce buyer who is acting as a trustee under PACA.   The Eleventh Circuit affirmed the bankruptcy court’s order dismissing SVP’s claims because Section 523(a)(4) does not accept debts incurred by a PACA trustee from discharge. The court explained debts incurred by a produce buyer acting as a PACA trustee are not excepted from discharge under Section 523(a)(4). While a PACA trust does identify a trustee, beneficiary, and trust res, thus satisfying the first step of our analysis, it does not impose sufficient trust-like duties to fit the narrow definition of a technical trust under Section 523(a)(4). PACA does not impose the duties to segregate trust assets and refrain from using trust assets for a non-trust purpose, which are strong indicia of a technical trust. Instead, a PACA trust more closely resembles a constructive or resulting trust, which do not fall within Section 523(a)(4)’s exception to discharge. View "Spring Valley Produce, Inc., et al v. Nathan Aaron Forrest, et al" on Justia Law

Statewide harvests and hauls fruit from about 1,500 fields for Florida farmers. It does not own any of the lands it harvests. In 2014-2017, Statewide employed mostly temporary foreign guest workers as its seasonal harvest workers, through the federal H-2A program, which requires a labor contractor to provide workers with housing, either three meals a day or “free and convenient cooking and kitchen facilities,” and other basic housing amenities including laundry facilities. Statewide provided its workers with cooking facilities instead of meals and with transportation from housing to a grocery store, laundromat, and bank. Statewide employed Ramirez and Santana as crew leaders during the harvest seasons; they also drove the workers to and from housing and the grocery store, laundromat, and bank. These weekly trips lasted approximately four hours. Ramirez and Santana worked up to 80 hours a week. Neither received overtime compensation.They sued under the Fair Labor Standards Act, 29 U.S.C. 201, for unpaid overtime compensation for the driving trips. Statewide argued that those activities fell under the agricultural work exemption from the overtime requirements, section 213(b)(12). The Eleventh Circuit affirmed in favor of the crew leaders. Statewide is not a farmer; it “did not own, lease, or control the farms or crops harvested. To be exempt from the overtime requirements, the driving trips must have been “performed . . . on a farm.” They occurred off a farm and were not physically tied to a farm. View "Ramirez v. Statewide Harvesting & Hauling, LLC" on Justia Law

Autauga, a cooperative that pools and markets farmers’ cotton, claims that the Crosbys breached a marketing agreement when they failed to deliver their promised cotton for 2010 and sought liquidated damages ($1,305,397) under the agreement’s liquidated-damages provision, which provides: the Association shall be entitled to receive for every breach of this agreement for which such equitable relief is unavailable, liquidated damages in an amount equal to the difference between (a) the price of such cotton on the New York futures market during the period beginning with the date of breach or default by the Grower (taking into account the grade, staple, and micronaire of such cotton) and ending with the final delivery by the Association of cotton sold during that year, and (b) the highest price per pound received by the Association for the membership cotton (of the same or nearest grade, staple, and micronaire) sold by it from the same year’s crop. The Eleventh Circuit held that, under Alabama law, the provision that Autauga seeks to enforce is not a valid liquidated-damages clause but an impermissible penalty that is void and unenforceable. There is no evidence that the liquidated-damages formula here bears any relation to Autauga’s probable loss. View "Autauga Quality Cotton Association v. Crosby" on Justia Law