it's great thank you right thank you i'm excited to be here this morning because as far as i know this is the st case under the perishable agricultural commodities act heard before the circuit so it's always nice to be the  moore's law firm in this case is trustee of the pack a trust court ordered by the united states district court for the benefit of sixteen suppliers that sold produce to crossroads fresh connection moore's law firm is here i don't think it really does i don't think that it kind of confuses the issues a little bit but we think our strongest arguments are as the trustee of does apply or is and we appealed only the judge's denial of the suppliers rights and we're here to enforce the suppliers rights i think that really crossroads claims against reserves are really immaterial to these issues and the suppliers have a much stronger case you just to go over the facts of the case a little bit because i think it may be what is going on here so crossroads fresh connection entered into an agreement with reserves or grocery chain in tulsa captive produce supplier and this relationship went on for about four years and as part of that relationship crossroads bought from suppliers all over the united states moved everybody was happy with the relationship until one day reserves came to crossroads inside of this was on a monday on friday you're done and you'll no longer be the produce supplier  as a result of that everything changed crossroads a lot suppliers now with that he didn't have enough money to pay their invoices and fall that's where we got involved and we filed an action in the u s district court on behalf of the sixteen suppliers firm trustee to collect those assets on behalf of the suppliers that order required anybody that was in possession of assets of crossroads to pay that money to me or as law firm that notice four hundred and nine thousand dollars when it came time to obtain payment for the four one hundred thousand we only got a check four hundred and ten zero dollars and reserve sub we're not paying the balance of the three hundred and eighty thousand because crossroads zero dollars under does quarterly rebate agreement and we're keeping that money to satisfy about a moment let me ask you question so you had a receiver reserves owed crossroads four hundred and nine thousand dollars but what would your position be if reserves talked to the principal of crossroads and said i'm not going to pay a four hundred and nine thousand dollars but i will pay you three hundred and seventy five thousand dollars and the principal said that's fine i'll take it what would your position be  if there was no grounds for that i would say that the entire amount was owed because you've been i want to assume that this was before you're involved in the case because this receivable existed before you became an all right ok and so let me let me phrase it let me see if i can change it up a little bit for you what if there were crossroads wanted to sell reserves four hundred and nine thousand worth of produce and reserve said now it's too much and crossroads says well i'll give you a ten percent discount and reserve says ok i'll take will buy it then what about them because the contract between crossroads and reserved was for that ninety percent ten percent discount the trust only applied to that ninety percent and nothing more was owed so the trust the trust is limited to the amount that researchers and titled receive or that crossroads is entitle to receive for the produce correct ok ok and this you bert raises an interesting point that i think is that the crux of this dispute and that is any contracts were right for reserves to obtain this discount on the prototypes and they're acting through the case and really the what's in their craw as they said you know hey we have this three percent rebate that is owed to us and we really owe only owed ninety seven percent of the of the produce so therefore we're taking that three percent discount and we're paying the ninety seven percent we owe and therefore we don't o any more and i think that argument is wrong it's a fallacy because that contract does not provide like the example you gave that there was a ten percent discount there was not a ten percent discount on the sales the contract in which the supplier soldiers at the very point that our research is raising in this case they are asserting a contract interest and saying that trumps the trust they're saying but it's not a contract  the only right they have to pay the agreement of rebate yeah but the rebate isn't to the rebate is a separate agreement it has nothing to do with the invoices doubt amount was invoiced by crossroads to reserves and paid independently it did not excuse or extinguish payment of so you can voices you see is very sacrosanct invoices and how they track and who gets what under the in place right that is the contract the part of the purif thing under ppaca right that is what the contract there's no you know for example there isn't an overriding master vendor agreement that says this rebate we get to set off against the amount on the invoice it's the only way we're right that reserves have to not pay the three hundred and eight thousand is under a common off that's the only thing they're doing there's no contractual right to not pay it those invoices are owed in full the practice of these pardons in the entire course of their dealing was to pay the invoices in fall and then turn around and pay the rebates separately in mind and the only way that rebate in your view could have been honor would be if somehow the producers were a part of that agree is that right i don't think that the producers had anything to do with that i'm saying if they could have yeah if they could have if they could have but that was not a that was not a contractual right that they had to to in the pardons and mind you reserves did not set this off and tell after the plenary injunction after they were notified and then only done did they set off all but eighty five thousand dollars in the st eighty five thousand dollars they set off after crossroads was out of business would your case be cleaner if the set off or a lated to a completely different  type of transaction for example if reserves had sold crossroads a truck and crossroads owed them money for this truck and reserves owed money for for produce to crossroads with your case what would your case about the set off be cleaner in that instance since there wouldn't be any relation between the produce and the amount that crossroads oh do reserves that would cleaner but i say this is no different in that the rebate had nothing to do with your mt that was owed for the produce or those and or for those invoice i don't think there is any difference other than the rebate i don't know in mind you they sucked us the party set this transaction up to work this way but there was nothing no correlation between the two they didn't set it they didn't set it up as a discount they didn't set it up as the sod off against those in boy days after that ok so the reserves asserted the right or claim to this money to these rebates before you receive your t r o right i just want to make sure that that injunction ok but the but the agreement and i read the e mail was sort of good as seeming to agree that they got the whole one hundred and seventy something one thousand but that crossroads would appreciate it if they didn't take it all at once correct ok  but but and yet crossroads have the authority to make that agreement on behalf of the suppliers no and that was a breach of if this was only an agreement between crossroads and reserve those would be ok if there's nobody else involved but the problem here and also the consent exception to that you can't set off a trust against personal claim is that if there is a rd party involved now reserves or crossroads standing as a hack a trustee for suppliers it breached that trust in its rights by allowing this saga it could not abrogate the suppliers interest in that by making a sweetheart deal with with reserves so that's why we're enforcing the suppliers right because that consent has nothing to do with suppliers right what about the idea that there were two trusts there are two that i don't disagree with that there is to trust and there's one trust having to do with the that the the view that would most help you you have the suppliers they supply the crossroads buy is the product there a trustee and doesn't their interest the suppliers interest that we brought crossroads in as the plaintiff in those but if you take if you take crossroads claims out in ignore them there is one trust on behalf of suppliers and their trust asset trusts and three parties right so the trust assets of the suppliers trust with the produce that produce went to reserves reserves received the trust asset in reserves and that is what the trust asset reserves received reserves is not paid for that  asking this court for an order that orders reserves to pay that produce for the benefit of suppliers in you can you trace the the produce the produce invoices from the suppliers to crossroads and crossroads to researchers in a way where we where we know that oh you're not claiming trust funds that might be for fully paid produce it's a floating commingled trust him it doesn't matter so all the sort of the same that sort of the same thing that you have with the rebates it's a floating deal where at the end of each quarter they settle up on the same rebating money for the purchase of the same produce that was passed up by crossroads but but might but the three hundred and eight thousand rebates was not for the produce that they're paying that was for produce sales going back years if only twelve thousand over that reserves received a package trust assets in the form of produce it failed to pay for that produce and the suppliers they suppliers have us appear interested in it and reserves cut off against with the point that york your honor may not you might there is not one big trust the case law says that there are two separate trusts and we outlined those in a chart in our briefs i'm a chart guy when i'm analyzing trusts and parties i've got to put things in charts and hopefully that's helpful court the cases say the so good potato case specifically says there is not a trust from a that a can enforce directly against c that's what we have here others so good day to chip a bankruptcy case it is your honor this is a bankruptcy case it's not your honor but the issue isn't whether it's bankrupt the seed i think we can acknowledge is a whole different world absolutely different code different statutes and there's a lot of discussion about priorities and security interests and things like that we don't have that in this case we're talking about a trust what we are your honor but bankruptcy doesn't change property law i'm an old beat up chapter seven bankruptcy trustee so i apologize if i start acting like i know something about the bankruptcy code changes rights but it doesn't fundamentally change property rights or contract rights assets that are in a bankruptcy a state are determined under state law and i think that's what's so good as saying you can't analyze what's in or outside of a bankruptcy estate without looking at other wall all this other law happens to be a combination of the package trust law and state law so and that's how you get to the point you're looking at whether or not the three hundred thousand dollars i guess will talk about that number whether that was in that property and will use your the property of the estate the estate being i guess crossroads the problem or thinking about it you would say it's not even there not all of it because some of that property is really owned by researchers what's in the suppliers trust is a breach of contract claim that crossroads has against researchers if this was in state court in research didn't pay and packer wasn't involved crosswords would have to sue researchers for the money talking about something is an account receivables a shorthand label that we use but it's not really  but all that can be put into the trust or the assets of crossroads congress creates a trust it creates a trust for a purpose we talk about that a nd and then it says what's in the trust in what is in the trust are the assets sold like crossroads to researchers me the supplier trust st it's the produce the suppliers sell it across roads that produce is impressed with trust then when crossroads sells produce what's impressed with the trust is what crossroads gets back and what crossroads gets back proces is a breach of contract case at the end of the research paid a lot of money through the years as mr muir's pointed out when that money was in the hands of crossroads he was impressed with the trust but until that money gets into crossroads hands all crossroads has is two and the description of what put it into that trust is extremely broad to many not just assets but it dogs about receipt of wills or proceeds commodity noise if this is accomplishing what it appears that congress is trying to accomplish they're trying to give a priority to these  sellers of commodity and all almost looks to me like an absolute control whether you want to call it a contract whatever you call it they get it they are not being rigid that way as researchers at common law or by virtue of the agreement not dealing with a common law here counsel i think their basic right even though it's a contract dealing under the ppaca the statute that they have yes your honor but i don't think you can analyze the packer rights without also looking at what's in the trust the cases do say that packer creates a trust in where there's blanks to be filled in we looked at common law trust well you you who put your finger on right what i was sharing with my clerks that if we can still learn how to diagram a sentence we're going to figure out exactly how what this really says though i appreciate what you said in absolutely judge of mr mirrors is a pack a pro and i am a pack a rookie sometimes being a rookies an advantage because you start from the statute in you cut it out just like you said you try to get to what the answers are well back to the cutting up i mean the language just talks about all transactions all and tori's any receive a bulls or proceeds from the sale of such commodities or products well this the trust if there can be a side deal between these two guys and the supplier never gets the money never gets the proceeds well they're just cut off because these two have an agreement whatever the agreement is is what the agreement is right if it's for zero dollars ninety cents on the dollar that's the contract the creation of the imposition of the trust can't improve crossroads rights crossroads rights or the rights that it had against researchers they're all due respect so your focus here is really on the rights of crossroads you really don't want to talk about the rights of the suppliers your own or the suppliers or certainly the beneficiaries of the suppliers trust but they can assert packet trust claims directly against researchers right  i don't know about that but you say that isn't a isn't it sort of a pretty problem it's you can't the suppliers can't leap frog directly to reserves they can they have to they have to take what crossroads house that's correct your honor it's examined it pretty is exactly what the case law says and when you can cut up the statute in trust for the benefit of all unplayed unpaid suppliers of such commodities involved in the transaction singular not involved in all transactions all the way to the end of a time because i think what happens not a pack a pro is that you have lots of these multiple transactions your honor i think we're at different spots i'm in the last line of two i'm not i'm in the middle of see two it's in trust for the benefit of trust law right create a beneficiary who's the beneficiary trust is created for the benefit of all unpaid suppliers involved in the transaction and so that's where the pretty concept comes in congress didn't say that all and buyer miss a transaction you're talking about what the last transaction that occurred before this business relationship folded each r narrow view it's the view of the statute with all due respect your honor each or should we read it more broadly to import the intent behind the statute well the ultimate a the ultimate intent behind the statute your honor isn't to cover transactions like this at all is say again the ultimate intent of the statutes pretty clear in this not to affect transactions like this one before your honor's at all congress wanted to protect suppliers when purchasers of produce granted liens in their assets to secure lenders that's a big change right most secure transaction law the bank gets its lien on the property millions paid suppliers don't the suppliers have this right that was created but that purpose your honor if you're looking to the underlying purpose is pretty clearly set forth in section one identifies a burden says the burden is when buyers grant or cede me income or or give lenders a security interest in then the collateral so you would read you would read the purpose  very narrow way it's basically to to protect suppliers against a relationship by crossroads and reserves that may involve a security interest or a bank or something like that that's what the statute says judge in of course we're talking about the specifics of this case one interesting thing when you do drill down to the cases that are cited by the plaintiffs proceed by by yours most of those cases do involve this the exact kind of transaction that congress was talking about conflicts in priority between secured lenders and borrowers that's not what we have here so if  that's how you would read this and the lesson and tell there's a security interest that would fall directly within the verbiage this c one provision that's the only protection that the suppliers have if there's a security interest they can get around that but they can't get around a set off your honor i think i would be a little less aggressive with my argument than that in say that when the courts trying to interpret trusts in trying to decide these rights of the parties that the courts should look at the purpose and say ok really doesn't fit within the stated purpose now maybe there's another transaction out there that it's completely uncleanly the in two that's not in front of us and so i apologize your honor i don't i don't have a better answer to me counsel it is in front of us because of that's what's bothering me you keep saying well look at that statute you look at n resealable that's reason i told you while ago if i construe this is broadly as what i appeared to read that's that's you you've got a road to hold a comic convince me differently i mean a little bit against what protect against what the loss of money now your honor to protect against income transactions where the supplier encumbers or gives haven't you're on it have not you agree yes yes so in the statutory language though where it says talks about them not receiving payment for goods is talking about them not receiving payment from crossroads it's not talking about the not receiving payment from reserves right there's there's no case law at there that says everybody in the chain has a trust duty to everybody else in the chain and mr muir has talked about let me perry's produce you guys are going to be surprised that i would prefer that you not follow any parries produce and that's one of the things that i think that case doesn't analyze correctly is it doesn't realize that there are multiple trusts in the so you're opposing counsel describe that relationship a sort of a floating one and do you see or or will the record bear out that the rebate issue was part of the floating transactions between reserves and crossroads am terribly sorry or i don't quite understand the question i'm trying i mean it seems to me that the rebate issue is is intertwined with the sale and payment of produce between crossroads and reserves and i'm just trying to make sure that the rebate issue is not somehow some separate deal that doesn't have to do with the produce transactions that's correct your honor i think per the stipulation the only business dealings between reserves and crossroads were produce and so the rebates were rebates on produce in the big sense of all produce that was sold between the parties for the rebates were were tied to produce sales the rebates were tied to probate to program to produce sales are talking about trust and so we all started talking about probate your honor yes that's correct notice thank you very much appreciate it thank you both for your arguments this morning the case is submitted