Opinion ID: 2973187
Heading Depth: 3
Heading Rank: 2

Heading: Deere Credit Adversary Proceeding

Text: In addition, on September 17, 2003, Deere Credit filed an adversary proceeding seeking determination of the validity, priority, and extent of its liens on various crops. On October 2, 2003, 4 the complaint was amended to name additional defendants, which included the trustee and land owners believed to have rented farm ground to Erin Farms for the 2003 crop year. Deere Credit asserted a security interest in the crops produced by these land owners. Timmons Estate and Timmons Heirs were among the land owner defendants named in the amended complaint. Attorney Richard F. Meyer appeared on behalf of Timmons Estate and Timmons Heirs in the adversary proceeding. By order entered on December 19, 2003, Appellant was identified as a “proper and necessary party in [the] adversary proceeding.” (Appellant’s App. at 67, Case No. 04-8096.) According to Appellant, Erin Farms’ bankruptcy filing and Deere Credit’s initiation of the adversary proceeding led to delays in harvesting. In November and December 2003, heavy rains and flooding on Timmons Farm caused severe damage to the crops. Appellant estimates that seventyfive percent of his crop was lost due the flooding. He asserts that although the remainder of the crop survived the flooding, it subsequently was lost due to the trustee’s failure to timely harvest. The parties agree that, in the end, no grain whatsoever was harvested from Timmons Farm. On June 4, 2004, the trustee filed a motion for Order Approving the Settlement of Certain Issues in [the Deere Credit Adversary Proceeding] and Authorizing Distribution of Funds. At the time the motion was filed, the trustee was holding approximately $1.1 million of net harvest proceeds in an escrow account. Under the settlement agreement, the trustee would retain a $28,000 “carve out” from those proceeds, minus expenses. After payment of nominal amounts in settlement of other claims, the majority of the proceeds were to be distributed to Deere Credit in satisfaction of its secured claim. Notably, none of these proceeds came from crops harvested on Timmons Farm. Appellant objected to the proposed settlement and distribution of funds, and a hearing on the matter was held before the bankruptcy court on July 8, 2004. Appellant was given full opportunity to voice his objections at the hearing, and he acknowledged that the funds subject to the settlement were not proceeds from crops grown on Timmons Farm. Still, Appellant asserted that Deere Credit did not have a valid security interest in the 2003 crops grown on the farm. According to Appellant, Deere Credit’s invalid claim to his crops and the trustee’s failure to timely harvest them led to their 5 total loss. Seemingly under a “bird in the hand” theory, Appellant argued at the hearing that the trustee should not distribute funds to Deere Credit until Appellant’s potential claims against Deere Credit and the estate were litigated and resolved. The trustee, as well as the attorney for Deere Credit, assured Appellant, on the record, that the settlement would not preclude him from pursuing claims relating to the adversary proceeding and the lost crop. Furthermore, the bankruptcy court told Appellant that approval of the settlement would not prejudice his rights. At the conclusion of the hearing, the bankruptcy court approved the settlement, finding that it was in the best interest of the estate. On July 16, 2004, the bankruptcy court entered an order approving the settlement and authorizing the distribution of crop proceeds (“settlement and disbursement order”). The order specifically states that it “does not prejudice the right of [Appellant] to pursue any claim he may wish to assert in this Court or any other appropriate forum.” (Appellees’ App. at 107, Case Nos. 04-8072 and 04-8095.) Appellant filed a timely appeal of the settlement and disbursement order on July 26, 2004. Both the bankruptcy court and the Panel denied his motions to stay that order pending appeal.