Fishback Nursery, Incorporated, et al v. PNC Bank

Case Type:
Business
Case Status:
Affirmed
Citation:
No. 18-10090 (5th Circuit, Apr 10,2019) Published
Tag(s):
Ruling:
The court first consider the choice-of-law issue. The court rejected the Nurseries’ arguments that the district court erred in determining the law applicable to the parties’ lien dispute. On the merits the court found no error in the district court’s ruling that the Nurseries’ liens were not senior to PNC’s lien on the bankrupt company’s assets. The district court therefore correctly granted PNC summary judgment. Affirmed
Procedural context:
The Nurseries sued PNC in federal district court in November 2016, seeking a declaratory judgment that their liens on BFN assets were “valid, enforceable, properly-perfected, unavoidable pre-petition liens,” senior to PNC’s DIP lien, and asking the court to order PNC to turn over money to satisfy their allegedly senior liens. PNC counterclaimed for a declaratory judgment that the Nurseries lacked senior and enforceable liens. In August 2017, the parties filed cross-motions for summary judgment. The district court ruled for PNC and against the Nurseries. It is from this ruling the Nurseries appealed to the Circuit Court.
Facts:
BFN was a wholesale grower of trees, shrubs, and other plants, with headquarters in Texas and offices in Michigan, Oregon, and Tennessee. BFN filed for bankruptcy in Texas on June 17, 2016. Three of BFN’s creditors dispute the priority of their respective liens on BFN’s assets. Two of those creditors, Appellants Fishback and Surface, are commercial nurseries (collectively “Nurseries”), both located in Oregon. The third creditor, Appellee PNC, is a national bank headquartered in Pennsylvania. The Nurseries are BFN’s creditors because they sold agricultural products to BFN and took security interests in them. Fishback demands over $1.1 million for products shipped to Michigan, Tennessee, and Oregon. As to those products, Fishback filed Uniform Commercial Code (“UCC”) financing statements in Oregon and Michigan on June 21, 2016, and in Tennessee on June 28, 2016. All three statements listed the debtor’s name as “BFN Operations, LLC abn Zelenka Farms,” despite the fact that BFN’s founding documents list its name as “BFN Operations LLC.” On August 29, 2016, Fishback also filed a notice of lien in Oregon for all orders. For its part, Surface demands over $262,000 for products shipped to Michigan only. Surface filed a UCC financing statement in Michigan on June 28, 2016, which also listed the debtor’s name as “BFN Operations, LLC abn Zelenka Farms.” Surface also filed a notice of lien in Oregon on July 13, 2016. PNC is BFN’s creditor because, as early as May 2015, it loaned BFN money and took a security interest in most of BFN’s assets. During the bankruptcy proceedings, PNC also provided debtor-in-possession (“DIP”) financing so that BFN could stay in business during bankruptcy. The bankruptcy court ordered that the DIP financing would include PNC’s pre- bankruptcy loan to BNF and that PNC’s DIP lien would outrank other liens “subject and junior only to . . . valid, enforceable, properly perfected, and unavoidable pre-petition liens[.]”
Judge(s):
SMITH, DUNCAN, and ENGELHARDT, Circuit Judges.

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