United States District Court, E.D. Arkansas, Jonesboro Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
Grain, Inc., sells or sold crop seed, fertilizer, and such to
farmers in Arkansas. Document #8 at ¶12. J. Todd Berry
is or was Success Grain's president and Glenna S. Lane is
or was its secretary and treasurer. Id. ¶13.
Success Grain purchased “crop inputs” from United
Suppliers, Inc., a company that has now merged with Winfield
Solutions, LLC. Id. ¶15. Success Grain agreed
to financing terms with United Suppliers pursuant to a credit
application, and Berry and Lane each executed personal
guarantees in favor of United Suppliers. Id.
¶¶14-17. Success Grain also granted United
Suppliers two security interests: one covered assets like
equipment and farm products, and the second was a
purchase-money security interest that covered inventory and
proceeds of the inventory. Id. ¶¶18-19.
Winfield is United Suppliers' successor-in-interest to
the financing agreement, guarantees of Berry and Lane, and
two security interests. Success Grain was also indebted to
Farm Credit Midsouth, PCA, and it granted Farm Credit
security interests in some of the same assets in which it
granted United Suppliers a security interest.
Grain sold its equipment at auction for a total amount of
$855, 775.19. Winfield commenced this suit to enforce its
security interest and the guarantees executed by Berry and
Lane and to claim its priority to the proceeds from the
equipment sale. Farm Credit also claims priority by virtue of
its security interest in the proceeds. Winfield has since
conceded that it has no claim to $328, 221.58 of the total
proceeds-leaving $527, 553.61 in dispute between Winfield and
Farm Credit. Winfield and Farm Credit have moved for summary
judgment, each arguing that its claim is superior to the
other's. Winfield also moves for summary judgment on its
breach of contract claims against Berry and Lane.
should grant summary judgment if the evidence demonstrates
that there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The moving party bears the initial burden
of demonstrating the absence of a genuine dispute for trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party
meets that burden, the nonmoving party must come forward with
specific facts that establish a genuine dispute of material
fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89
L.Ed.2d 538 (1986); Torgerson v. City of Rochester,
643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). A genuine
dispute of material fact exists only if the evidence is
sufficient to allow a reasonable jury to return a verdict in
favor of the nonmoving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202 (1986). The Court must view the evidence in the
light most favorable to the nonmoving party and must give
that party the benefit of all reasonable inferences that can
be drawn from the record. Pedersen v. Bio-Med.
Applications of Minn., 775 F.3d 1049, 1053 (8th Cir.
2015). If the nonmoving party fails to present evidence
sufficient to establish an essential element of a claim on
which that party bears the burden of proof, then the moving
party is entitled to judgment as a matter of law.
Suppliers filed financing statements for its security
interests with the Arkansas Secretary of State on July 18,
2007. Farm Credit filed a financing statement for its
security interest on June 28, 2007. Document #1-12. The
financing statement that Farm Credit filed states as follows:
This FINANCING STATEMENT covers the following collateral:
ALL GRAIN HANDLING FACILITIES AND EQUIPMENT, SCALES, CROP
DRYERS, GRAIN STORAGE FACILITIES, ELEVATORS, AUGERS,
CONVEYORS, POWER UNITS, FUEL STORAGE, ELECTRICAL CONTROLS AND
TESTING EQUIPMENT WITH REPLACEMENTS, ADDITIONS, AND SIMILAR
EQUIPMENT AND ALL GOODS THAT ARE NOW OR TO BECOME FIXTURES,
NOW OWNED OR HEREAFTER ACQUIRED.
ALL ACCOUNT RECEIVABLES, CONTRACT RIGHTS, DOCUMENTS, GENERAL
INTANGIBLES, INVENTORY, FARM PRODUCTS, EQUIPMENT, COMMODITY
INVENTORY, STORED COMMODITY INVENTORY AND PROCESSED SEED
INVENTORY, ALL SEASONAL WHEAT, RICE, COTTON, CORN, MILO, AND
SOYBEANS LOCATED AT PLANT FACILITIES.
ALL EQUIPMENT, ALL SPARE PARTS AND SPECIAL TOOLS FOR SUCH
EQUIPMENT, ALL MOTOR VEHICLES AND ALL FIXTURES NOW OWNED OR
HEREAFTER ACQUIRED AND WHEREVER LOCATED.
THIS FILING FILED AS AG LIEN.
Id. The same financing statement contained a box
designating the interest as an “AG LIEN.”
Id. Farm Credit did not check this box. Id.
On May 3, 2011, Farm Credit amended its financing statement
to clarify that its interest was a security interest and not
an agricultural lien. Document #1-13.
acknowledges that Success Grain signed a security agreement
with Farm Credit granting Farm Credit a security interest in
its equipment and other collateral, that Farm Credit gave
value to Success Grain, and that Success Grain had rights in
the collateral. See Ark. Code Ann. 4-9-203(b).
Winfield further acknowledges that Farm Credit filed its
financing statement first. Winfield's only claim to
priority is that Farm Credit's financing statement filed
on June 28, 2007, is “seriously misleading”
because the financing statement says that it is filed as an
agricultural lien. Winfield says that this error rendered
Farm Credit's filing legally insufficient to provide
notice to third-party creditors of Farm Credit's
filing of a financing statement is required for security
interests in equipment to be perfected. Ark. Code Ann. §
4-9-310(a). “[A] financing statement is sufficient only
if it: (1) provides the name of the debtor; (2) provides the
name of the secured party or a representative of the secured
party; and (3) indicates the collateral covered by the
financing statement.” Id. § 4-9-502(a). A
financing statement that “substantially”
satisfies these requirements “is effective, even if it
has minor errors or omissions, unless the errors or omissions
make the financing statement seriously misleading.”
Id. § 4-9-506(a). Priority of competing
perfected security interests in the same collateral ranks
according to the time filed. Id. §
does not argue that Farm Credit's financing statement
improperly provided the name of the debtor or the name of the
secured party. The issue in dispute here is whether Farm
Credit's inclusion of “THIS FILING FILED AS AG
LIEN” made its financing statement seriously misleading
and, thus, insufficient under Ark. Code Ann. §
4-9-502(a). This is a question of the sufficiency of the
description of the collateral. Because the proceeds at issue
are solely proceeds from equipment, the Court will limit its