Justia Agriculture Law Opinion Summaries

Articles Posted in US Court of Appeals for the Sixth Circuit
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An agency within the Department of Agriculture summarily approved a proposed plan for dry-bean crop insurance in Michigan based upon the mistaken belief that the terms of the proposed endorsement for the Michigan policy were identical to the terms of the endorsement for a Minnesota policy that it had approved the year before. The terms of the two endorsements were different because the Michigan endorsement contained a different pricing mechanism for determining the beans’ “harvest price” than the mechanism the agency had approved as part of the Minnesota endorsement. That difference later caused significant harm to Michigan farmers who had purchased the coverage, some of whom filed suit. In the district court, the government compounded the agency’s mistake when it mistakenly told the district court that the pricing mechanisms in the Michigan and Minnesota endorsements were the same. Based in part upon that representation, the district court granted the government summary judgment.The Sixth Circuit reversed, noting that “the government’s brief unhelpfully elides both mistakes rather than acknowledge them but Plaintiffs’ counsel on appeal has made the existence of those mistakes clear enough.” The agency violated 7 C.F.R. 400.701 when it found that the Michigan proposal presented only “non-significant changes” to the Minnesota one; the mistake was apparently inadvertent. View "Ackerman v. United States Department of Agriculture" on Justia Law

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In March 2012, Edington and his father agreed Edington would apply for a Farm Services Agency (FSA) farm operating loan and list assets belonging to his father as collateral. Edington listed as collateral many assets he did not own. In 2012, Edington also presented documents to the FSA falsely claiming he had purchased cattle from his friend. Edington defaulted on the loans; his father died. Edington did not inherit the assets listed in the security agreement. In 2019, the U.S. Attorney’s Office filed felony charges for conspiring to violate 18 U.S.C. 1014, which prohibits: “knowingly make[] a false statement or report . . . for the purpose of influencing in any way the action of the” FSA. The district court dismissed, citing the five-year statute of limitations under 18 U.S.C. 3282(a).The Sixth Circuit reversed and remanded; 18 U.S.C. 3293(1) expressly provides a 10-year limitations period for certain offenses including “a violation of, or a conspiracy to violate . . . section . . . 1014.” Section 3293 extends the statute of limitations from five to 10 years for certain crimes including a violation of and conspiracy to violate section 1014. The most recent alleged overt acts listed in the information occurred in 2012; the charges were timely. View "United States v. Edington" on Justia Law

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Through several corporations, members of the Boersen family have farmed in Michigan for several generations. After 2016's poor crop, their corporate entities could not cover their debts. One creditor, Helena, obtained a nearly 15-million-dollar judgment against the Boersen entities and family members who ran them. Much of the farm equipment was repossessed and, unable to obtain financing, the Boersens discontinued farming until 1999, when family members Stacy and Nick formed new entities, secured financing to lease the land and remaining equipment, and resumed farming. Because the original defendants could not pay their debt, Helena sued Stacy and Nick and their new companies.The Sixth Circuit affirmed summary judgment in favor of the defendants. The leases do not transfer the debtors’ assets; none of the involved entities owes any money to Helena. Stacy and Nick’s use of the family farm’s production history to obtain crop insurance does not constitute a “transfer of assets.” Neither Stacy nor Nick was an owner, manager, or shareholder of any of the Boersen entities covered by the judgment; no Boersen legacy owner or guarantor serves as an officer of or is otherwise employed by, either new company. No original Boersen defendant received anything of value from the new companies other than fair market value payments on leases. Nor was either new company used to commit a wrong against Helena. View "Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC" on Justia Law

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Burnette handles canned tart cherries. Burnette’s canned product has a shelf life of about one year. Many other cherry handlers freeze their cherries for longer shelf life. Because of the shelf-life disparity, Burnette is at a disadvantage when the USDA Cherry Industry Administrative Board caps cherry sales. Burnette filed a petition with the USDA, seeking a declaration that CherrCo, an organization that markets for its members and sets minimum prices for tart cherry products, was a “sales constituency.” Many Board members were affiliated with CherrCo; some were from the same district. Under 7 C.F.R. 930.20(g), Board members come from nine districts. In a district with multiple Board members, only one member may be from a given sales constituency. A judicial officer affirmed an ALJ’s determination that CherrCo was not a “sales constituency.” The district court reversed, reasoning that CherrCo’s members sign agreements that allow it to process, handle, pack, store, dry, manufacture, and sell its members’ cherries. CherrCo is listed as the seller for all orders. The Sixth Circuit reversed. A “sales constituency” is: [A] common marketing organization or brokerage firm or individual representing a group of handlers and growers. An organization which receives consignments of cherries and does not direct where the consigned cherries are sold is not a sales constituency. There was substantial evidence to support the administrative finding that CherrCo receives consignments of cherries but does not direct where the consigned cherries are sold. View "Burnette Foods, Inc. v. United States Department of Agriculture" on Justia Law

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Sunrise, an Ohio agricultural cooperative, owns one-third of Lund, which sells crop insurance. Sunrise pays “patronage,” a rebate, to its Ohio and Michigan members based on how much Lund insurance they buy. The Risk Management Agency (RMA) within the USDA, administers Federal Crop Insurance Corporation (FCIC) programs. Patronage payments were prohibited until 2000, when Congress authorized some rebating if permitted under state law. Congress changed course in 2008, prohibiting patronage payments with a grandfather clause, 7 U.S.C. 1508(a)(9)(B)(iii) stating that the prohibition does not apply to a patronage dividend paid: “by an entity that was approved by the [FCIC] to make such payments for the 2005, 2006, or 2007 reinsurance year.” From 2008-2016, Sunrise was approved to pay patronage as a “grandfathered” entity. In 2016, another farming cooperative, Trupointe, merged into Sunrise. Trupointe had 4100 members, did not sell crop insurance, and was not eligible to pay patronage. Sunrise argued to the RMA that under Ohio law and federal tax law, when one company merges into another, the surviving company is the same entity that existed before the merger. The RMA disagreed, concluding that the merger would make Sunrise ineligible to pay patronage and defining “entity” to mean the same entity that it approved for any of the 2005-2007 reinsurance years, with the same structure and relative size; any mergers would be considered a different entity, regardless of name or how taxed. The Sixth Circuit held that the agency was not permitted to impose additional eligibility requirements on approved entities that are unmoored from the statute. View "Sunrise Cooperative v. United States Department of Agriculture" on Justia Law

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Perkins has actively operated a 200-acre Kentucky farm since 1970. Her operation expanded to cultivate approximately 9,500 acres in various partnerships. Perkins encountered financial trouble in 2014. The partnerships filed Chapter 11 bankruptcy cases. Perkins retired from teaching. The Chapter 11 bankruptcies were dismissed after liquidating substantially all of the partnerships’ assets and making over four million dollars of payments to BB&T. In 2016 Perkins sought Chapter 12 bankruptcy protection. Creditors' proofs of claim totaled $4,012,908.79. In the preceding year, Perkins received $279,000 of gross income from her farm, $764,472 from her partnerships, $161,571 of capital gains from equipment sales, and $132,360 from wages, pension, and social security. BB&T objected to her plan, which projected that $18,950 could be paid annually to unsecured creditors over the plan’s five-year life and that a Chapter 7 liquidation would produce no payments to unsecured creditors. The plan proposed to pay BB&T annual installments over 20 years at 4.5% interest. The bankruptcy court rejected BB&T’s objection and confirmed the plan. The Bankruptcy Appellate Panel affirmed. Chapter 12 relief, 11 U.S.C. 109(f), is available to family fishermen and family farmers, defined as an “individual . . . engaged in a farming operation whose aggregate debts do not exceed $4,153,150,” and who receives more than half of her gross income from “such farming operation.” The bankruptcy court properly found Perkins to be a family farmer and confirmed the plan as feasible, providing proper treatment to secured claims, and meeting the best interests of creditors test. View "In re: Perkins" on Justia Law

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Perkins has actively operated a 200-acre Kentucky farm since 1970. Her operation expanded to cultivate approximately 9,500 acres in various partnerships. Perkins encountered financial trouble in 2014. The partnerships filed Chapter 11 bankruptcy cases. Perkins retired from teaching. The Chapter 11 bankruptcies were dismissed after liquidating substantially all of the partnerships’ assets and making over four million dollars of payments to BB&T. In 2016 Perkins sought Chapter 12 bankruptcy protection. Creditors' proofs of claim totaled $4,012,908.79. In the preceding year, Perkins received $279,000 of gross income from her farm, $764,472 from her partnerships, $161,571 of capital gains from equipment sales, and $132,360 from wages, pension, and social security. BB&T objected to her plan, which projected that $18,950 could be paid annually to unsecured creditors over the plan’s five-year life and that a Chapter 7 liquidation would produce no payments to unsecured creditors. The plan proposed to pay BB&T annual installments over 20 years at 4.5% interest. The bankruptcy court rejected BB&T’s objection and confirmed the plan. The Bankruptcy Appellate Panel affirmed. Chapter 12 relief, 11 U.S.C. 109(f), is available to family fishermen and family farmers, defined as an “individual . . . engaged in a farming operation whose aggregate debts do not exceed $4,153,150,” and who receives more than half of her gross income from “such farming operation.” The bankruptcy court properly found Perkins to be a family farmer and confirmed the plan as feasible, providing proper treatment to secured claims, and meeting the best interests of creditors test. View "In re: Perkins" 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