Burdette v. Emerald Partners, LLC (In re Cascade Ag Services, Inc.)

Summarized by Bradley Pearce , Pearce Law PLLC
8 years 2 months ago

Case Type:

Business

Case Status:

Affirmed

Citation:

WW-17-1006-BKuF, WW-17-1007-BKuF (Cross-Appeals) (9th Circuit, Nov 02,2017) Not Published

Tag(s):

Ruling:

The BAP affirmed the bankruptcy court's ruling that the debtor's transfer of 2/3 of the proceeds from its 2011 blueberry crop was avoidable as a fraudulent transfer and that the intended beneficiary of that transfer was liable for such amount.

Procedural context:

The debtor's Chapter 7 trustee sued Haller Farms ("Haller"), a third-party to the production of blueberries in the "Blueberry Field." (Note, the late Fats Domino sang about getting his thrills on Blueberry Hill, not Blueberry Field. But I digress). Haller was sued as the intended beneficiary of an alleged fraudulent transfer that was used by Sakuma, the transferring party, to pay down obligations owed by Haller.

Facts:

Blueberry Field Forever (apologies to the Beatles, and actually only for 2011, not prior or subsequent years). An affiliate of the debtor leased 108 acres (the so-called Blueberry Field) from Haller Farms. Sakuma began managing the Blueberry Field, and advanced costs to Haller, to be paid from the profits generated from Blueberry Field (the BAP identified this debt as the "Sakuma debt"). During Sakuma's management of Blueberry Field, a predecessor of the debtor provided labor and materials to Sakuma for for the Blueberry Field operations. In 2011, a predecessor of the debtor managed the Blueberry Field in exchange for 1/3 of the proceeds of the blueberry harvest for Blueberry Field. Following the blueberry harvest, Sakuma paid the 1/3 to the debtor's affiliate and applied the remaining 2/3, net of Sakuma's expenses (?), against Haller's debt to Sakuma. (I know -- this doesn't make much sense -- until the trial.) At trial, the trustee argued that Haller was unjustly enriched due to the debtor's uncompensated contributions of labor and material. The bankruptcy court granted summary judgment to the trustee on unjust enrichment and actual fraudulent transfer claims. Following a trial, the bankruptcy court found that Haller was the intended beneficiary of the 2011 agreement between the debtor and Sakuma, and judgment was entered against Haller for the amount used to pay down the Sakuma debt.

Judge(s):

BRAND, KURTZ, FARIS

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