Bank seeks dismissal of radish seed lawsuit
EUGENE, Ore. — A bank accused of interfering with radish seed sales is asking a federal judge to throw out the lawsuit filed against it by Oregon farmers.
A group of Oregon radish seed growers filed a complaint earlier this year against Northwest Bank of Warren, Pa., seeking $6.7 million in lost seed value and additional storage costs.
The farmers had grown the radish seed in 2014 for Cover Crop Solutions, but the company became financially defunct before paying them for the crop.
To make matters worse for the growers, Northwest Bank filed a lawsuit against them seeking to seize the radish seed as collateral for a $7 million loan it issued to Cover Crop Solutions.
The farmers prevailed against the Northwest Bank last year, when a judge dismissed the case, and then filed their own lawsuit accusing the bank of unlawfully filing meritless liens and threatening potential buyers to prevent them from selling the radish seed.
During oral arguments in Eugene, Ore., on Sept. 7, Northwest Bank asked U.S. Magistrate Judge Jolie Russo to dismiss the lawsuit by the Radish Seed Growers’ Association and two independent farms.
The growers can’t plausibly claim the bank engaged in bad faith or improper means by trying to recover the crop, according to its motion to dismiss.
The bank has an “absolute litigation privilege” to try to collect on its loan, even if the lawsuit was unsuccessful, said Peter Hawkes, its attorney.
“It’s clear the bank had a good faith basis to assert a security interest in the seed,” Hawkes said. “They had a right to go to court and have that adjudicated.”
A federal judge held a trial to determine whether the bank held collateral in the seed and said it was not an “easy call,” he said.
While the judge ultimately ruled that farmers had a higher priority security interest in the seed, “that does not mean the bank’s argument was frivolous,” Hawkes said.
Paul Conable, attorney for the farmers, said the bank doesn’t need to be a “mustache-twisting villain” to be held liable for damages to the growers.
Rather, the bank behaved recklessly by filing invalid liens on the radish seed without conducting a rudimentary investigation of Oregon laws governing a farmer’s priority security interest in crops, Conable said.
“It didn’t bother to look before it filed those liens,” he said.
The bank admits it failed to conduct a reasonable analysis of Oregon law in a malpractice complaint it has filed against attorneys who advised on the loan, Conable said.
Even if it was the attorneys who made the mistake, that doesn’t excuse the bank from liability, he said.
“They’re responsible for the actions of their lawyers,” he said.
Similarly, people cannot avoid punishment for stealing property or committing assault because the actions were advised by a lawyer, Conable said.
“It’s a remarkable argument and also an argument that has no support in law,” he said.
The bank isn’t protected by the “absolute litigation privilege” because it hindered seed sales regardless of its lawsuit, he said.
“The interference was accomplished by filing an improper lien and sending letters to known customers,” Conable said.
Those threats and liens were not legitimized because the bank went to court against the growers, he said.
“You don’t immunize yourself from the effects of your actions by later filing a lawsuit,” he said. “There is no support for extending litigation privilege that far.”