A federal appeals court has upheld a legal victory won by Oregon farmers who prevailed against an out-of-state bank’s lawsuit over their radish seed crop.
The 9th U.S. Circuit Court of Appeals has ruled that Northwest Bank of Warren, Pa., could not seize 7.4 million pounds of radish seed grown by the farmers as collateral for a loan to a defunct seed broker.
More than 40 growers had produced the seed but were unable to sell it when Cover Crop Solutions, the seed broker, shut down operations in 2015.
Then, Northwest Bank filed a complaint against the farmers, arguing they had to turn over the seed because it served as collateral for a $7.2 million loan issued to Cover Crop Solutions.
A federal judge dismissed that lawsuit in 2016 but the ruling was challenged before the 9th Circuit, which has now agreed that Northwest Bank had no security interest in the radish seed.
Although a licensing deal with the radish cultivar’s breeder said the seed was the property of Cover Crop Solutions, that’s irrelevant in the dispute with farmers because “the growers were not a party to that agreement,” the 9th Circuit said.
Cover Crop Solutions entered into the licensing agreement before the radish seeds were harvested and then never acquired the finished crop, so the broker had no ownership interest in it, the ruling said.
Even if the seed broker hadn’t breached its contract with growers by failing to pay them, its licensing agreement for the cultivar assigned contract rights to the breeder, the 9th Circuit said.
Capital Press was unable to reach attorneys representing the farmers or the bank.
Now that the appeal has ended, it’s likely the farmers will resume their own lawsuit against the bank seeking more than $6.7 million for lost crop value and added storage costs.
Last year, a federal judge stayed that litigation until the 9th Circuit had reached a decision in the earlier case.