An out-of-state bank claims that it owns radish seeds grown by more than 40 Oregon farms for a cover crop company that has not paid them.
Since March, numerous growers in Oregon’s Willamette Valley have filed grain producers’ liens against Cover Crop Solutions, claiming the Pennsylvania company owes about $6.2 million for radish seeds.
Such liens provide farmers with collateral in the event of a company’s bankruptcy filing.
Growers have said the company is apparently suffering financial difficulties due to an oversupply of radish seed in the market due to weather problems in the Midwest last year.
Northwest Bank of Warren, Pa., is now pursuing a lawsuit against farms that have filed liens, claiming that Cover Crop Solutions defaulted on a $7.2 million loan and that the bank’s security interest in the radish seeds supersedes that of the growers.
The bank is seeking to block the farms from moving or selling the crops off-site or taking back seeds that they have already delivered to cleaners.
At this point, a federal judge has denied two motions for temporary restraining orders filed by Northwest Bank, which is still pursuing a preliminary injunction. A hearing on that motion is set for Oct. 5.
Attorneys for the farms oppose a preliminary injunction against moving or selling the seed, arguing it’s prone to losing value due to the “short window” in which the radish seeds can be sold as a cover crop.
“If the price of the seed is depressed as a result of missing this market window, plaintiff’s interests will be harmed. No party would ultimately benefit,” the farms said in a court filing. “By contrast, if defendants are allowed to sell the seed now, then the value of the seed will be maximized.”
Because other farmers in the Eastern U.S. must plant cover crops in the fall, there’s only 30-45 days remaining to sell the radish seeds, the growers claim.
“Adverse market conditions could cause an immediate change in the market value of the seed reducing the value of the seed from over $1.15 per pound to $.25-$.40 per pound,” according to a court filing by the farms.
The farms argue that a preliminary injunction is unjustified because the bank won’t suffer irreparable harm if the seeds are sold, since the fundamental dispute is about money and not the crop itself.
“The best solution would be a business solution where the seed gets sold,” said Jill Foster, an attorney representing the growers.
The farms are assembling a team of litigators to prepare legal arguments countering the bank’s position, she said.
Northwest Bank’s case is “based on a misunderstanding of Oregon’s applicable agricultural lien statute,” so they shouldn’t be stopped from selling it, the growers said in a court filing.
If the preliminary injunction is granted, the bank should be required to post a $4 million bond to compensate the growers for their losses if they prevail in court, their attorneys argue.
In Northwest Bank’s complaint, the company claims it has filed the proper forms to “perfect” its collateral interest in the seeds while the farms have not.
Capital Press was unable to reach an attorney for Northwest Bank or the CEO of Cover Crop Solutions.