TERRY L. MYERS, Bankruptcy Judge.
Farmers Grain, LLC ("Debtor" or "Farmers Grain") filed a petition for relief under chapter 11 on April 18, 2017.
In the process of administering the case, Trustee determined that causes of action to recover alleged preferential transfers should be pursued. At issue here are Trustee's complaints commencing adversary proceedings against Clarich Farms, LLC; Deseret Farms, Inc.; Frahm Farm, LLC; GW Farms, LLC; and Peterson Farms of Nyssa, Inc., (collectively the "Defendants") as reflected in the above conjoined caption. In each such action, Trustee alleges Defendants' receipt of certain funds from Debtor constitute preferential transfers under § 547(b). The five Defendants—who are represented by the same law firm—each dispute Trustee's basic allegations and contend there was no preference under § 547(b)(1)-(5) and, if there was a preference, defenses exist under § 547(c).
On January 7, 2020, each Defendant filed a motion for summary judgment under Rule 7056 (incorporating Fed. R. Civ. P. 56) and LBR 7056.1. On January 15, 2020, Trustee filed his own motion seeking summary judgment in each case. Defendants' motions and Trustee's motions came on for a consolidated hearing on February 12, 2020, and were taken under advisement following argument of counsel.
This Decision constitutes the Court's resolution of the competing motions. This Decision, and a related Order, will be entered in the docket of each of these adversary proceedings.
Based on the allegations and statements made pursuant to Rule 7008 in the complaints and Rule 7012(b) in the amended answers, and further by the express agreement of counsel for Trustee and Defendants at a joint pretrial conference on May 29, 2019, these adversary proceedings are core proceedings over which the Court exercises jurisdiction, 28 U.S.C. §§ 157, 1334, and in which it enters final orders and judgments subject to appeal, § 28 U.S.C. 158.
Summary judgment may be granted if, when the evidence is viewed in a light most favorable to the non-moving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Farmers Grain, LLC v. DC Land Operating Company, LLC (In re Farmers Grain, LLC), 2018 WL 770360, *2 (Bankr. D. Idaho Feb. 7, 2018) (citing Thorian v. Baro Enters., LLC (In re Thorian), 387 B.R. 50, 61 (Bankr. D. Idaho 2008) (internal citations omitted)). The Court cannot weigh evidence in resolving such motions but, rather, is to determine only whether a material factual dispute remains for trial. Id. A dispute is genuine if there is sufficient evidence for a reasonable fact finder to hold in favor of the non-moving party. Id. A fact is material if it might affect the outcome of the case. Id. The initial burden of showing no genuine issue of material fact rests on the moving party. If that burden can be met, the burden will shift to the nonmoving party to produce evidence that a genuine issue of material fact does exist. Id. (internal citations omitted).
In addition, summary judgment is inappropriate where, in evaluating declarations and affidavits submitted by the parties, the Court must consider credibility or the weight to be given testimony. Reynard v. Green Valley Lake Holdings, LLC (In re Resler), 2019 WL 1510335, *3-4 (Bankr. D. Idaho Mar. 4, 2019) ("It is important, and ordinarily essential, that the trier of fact be afforded the opportunity to observe the demeanor, during direct and cross-examination, of a witness whose subjective motive is at issue."). The opportunity of counsel to explore testimony through examination and cross-examination, as well as for the Court to listen to and weigh such testimony in all relevant regards, are critical aspects of adjudication.
As the Ninth Circuit once explained:
Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 861 (9th Cir. 2011). As also stated in Anderson: "[I]t is clear enough from our recent cases that at the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." 477 U.S. at 249 (citations omitted). Furthermore, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255 (citation omitted).
As noted above, each Defendant filed its motion on January 7, 2020. In support of the motion, each Defendant also filed on the same date a brief, several declarations, and a Statement of Disputed/Undisputed Facts ("Statement").
Similar filings were made in the other four adversary proceedings. The Court has reviewed them all. The Court has also evaluated the dockets in the other four cases, and found that the timing and nature of the submissions are almost identical, including virtually verbatim assertions in the declarations. While there are some differences because there are separate Defendant entities, wheat was delivered on separate dates, wheat was paid for on separate dates, and the "Defendant's declaration" came from different individuals who describe their own relationship with Farmers Grain, there was much repetition and such differences do not impact the Court's analysis of the motions for purposes of this Decision.
Trustee's complaints in these cases concern soft white wheat ("SWW") grown by Defendants. The parties agree that SWW is harvested in July of each year. At issue here is the SWW harvested by Defendants in the summer of 2016 and delivered at that time to Farmers Grain. Trustee seeks to avoid certain payments thereafter made to Defendants in 2017 prior to the April 18, 2017 petition date. To wit:
Trustee contends Farmers Grain operated a grain elevator business through which it bought, and thereafter sold, grain including SWW. Trustee contends Defendants' delivery of the grain at issue in these cases in the summer of 2016 was not a warehousing or bailment (contending, among other things, that Farmers Grain failed to comply with Oregon statutory requirements for the same).
The primary contention of each Defendant is that it was not a "creditor" of Debtor because the SWW was not "sold" to Debtor and, thus, it did not receive a transfer, as a creditor, on account of an antecedent debt, as required under § 547(b)(1) and (2). Instead, Defendants posit that Farmers Grain was a "grain storage facility" and would, under a "statutory bailment relationship," store the grain delivered by each Defendant until such time as that Defendant (which regularly monitored the market price for the commodity) directed that it be sold. Defendant then would receive the value of the grain, priced as of such date, less a calculated "storage fee." Defendants also assert several defenses in the event the Court were to determine they were creditors and the § 547(b) requirements were met. They argue (a) they had a statutory lien under applicable state law and thus were not unsecured creditors, (b) the storage and sale was consistent with the parties' ordinary course of business; and/or (c) the sale of the grain and payment to Defendants constituted a contemporaneous exchange. See, e.g., § 547(c)(1)-(3).
As noted, Defendants submitted a declaration of Chester Millsap. See, e.g., Case No. 19-06009-TLM at Doc. No. 27. In it, Millsap states he was an employee of Farmers Grain and his job included "handling contracts for commodities delivered to Farmers Grain for sale, and handling scale tickets and other documents for commodities delivered to Farmers Grain." Id. at 2. He also states that "Farmers Grain both purchased and stored commodities." Id. at 2. He explains:
Id. Millsap says that he, with the input of Galen Jantz (the principal of Farmers Grain), would track the market price for unpriced commodities "nearly every day" and he would receive calls from farmers from time to time "to determine the price of their unpriced commodity on a given day." Id. Then:
Id. at 2-3.
Millsap, however, also executed a declaration that was filed by Trustee. See, e.g., Case No. 19-06009-TLM at Doc. No. 33. It added to the statements made in the declaration he provided Defendants. Id. at 2. He explained the harvest of SWW in July of each year "generated large amounts of truck deliveries to Farmers Grain's bins or elevators[.]" Id. He also declared that "[t]he deliveries of one growers [sic] SWW in July were co-mingled with all other SWW deliveries from other growers. Farmers Grain never segregated, tracked, or labelled any delivered SWW received from or for any specific grower, except for one or two instances of weevil infestations." Id. He further explained:
Id. at 2-3.
Id. at 3. In addition, Millsap again addressed the question of warehousing grain:
Id. at 3-4.
Consistent with LBR 7056.1, the parties provided the Statements setting forth alleged undisputed facts in support of their respective motions. They also filed responses to the other's Statements, contending that certain allegedly undisputed facts were in fact disputed.
In short, the Statements, and the responses thereto, track the wholly contrary positions taken by the litigants. Having reviewed the Statements at length, the Court is confident that only a small subset of factual assertions in the Statements could be legitimately claimed to be "undisputed" by both parties.
There are certain documents submitted that reflect actual sales of commodities by farms, including some Defendants, to Farmers Grain. See, e.g., Adv. Proc. No. 19-6009-TLM, Doc. No. 32 (Trustee's Declaration) at 70 and 72 (2015 crop buy-sell "wheat contracts" by GW Farms); 80, 96 and 112 (same, by Deseret Farms); at 89 (same, by Frahm Farm); and 95 (same, by Peterson Farms). However, none of Trustee's Declarations provide similar "wheat contracts" in connection with SWW deliveries in 2016 by Defendants. And, there are documents submitted by Defendants that purport to be storage settlements. See, e.g., Adv. Proc. No. 19-06010-TLM, Doc. No. 26 (Declaration of James Farmer of Deseret Farms at 4-7 and 13 (addressing 2016 storage and settlement).
Under the authorities earlier outlined, the Court should not be expected to mine submissions to determine on its own the absence of genuine issue of material fact. The burden, as noted, rests on the movant to establish there is no genuine issue of disputed fact. Here, while Defendants and Trustee filed Statements alleging undisputed facts supporting their motions, the responses to those Statements manifest significant material dispute. Moreover, the Millsap Declarations create their own factual questions, which are not resolved by the other declarations, nor assuaged by counsels' competing arguments.
As this Court stated when denying competing motions for summary judgment in Gugino v. Clark's Crystal Springs Ranch, LLC (In re Clark), 2014 WL 2895428, *2 (Bankr. D. Idaho June 25, 2014):
So, too, here. The Court's decision in Reynard is also apropos:
Reynard, 2019 WL 1510335 at *5.
For the foregoing reasons, the Court finds and concludes both motions will be denied. While it has outlined several of the disputes, of fact and law, that appear to be implicated by the motions and their supporting and opposing submissions, the Court has reached no conclusions and has not reached or made any factual findings. None should be assumed from the very summary outline above. In Zazzali v. Goldsmith (In re DBSI Inc.), 2013 WL 1498365, *5 (Bankr. D. Idaho Apr. 11, 2013), this Court explained:
The Court has attempted to keep its necessary discussion of the context of this dispute free from any such suggestion.
An order will be entered on this Decision in each of these five adversary proceedings denying both Trustee's and Defendants' summary judgment motions.
