Farmers Cooperative Co. v. Ernst & Young Inc. (In re Petition of Big Sky Farms Inc.), 512 B.R. 212

Background

Big Sky Farms, a Canadian hog operator, entered a Canadian receivership; Ernst & Young was appointed Receiver and obtained Chapter 15 recognition in the N.D. Iowa. The Receiver was ordered to sell hogs and set aside $1.5 million in proceeds for creditors.
Farmers Cooperative Company (FCC) supplied feed to Big Sky and filed a proof of claim for $120,444.51; the Receiver already paid FCC $74,045.15 and $1,506,928.04 remained in the segregated account.
FCC claims a perfected agricultural supply-dealer lien under Iowa Code § 570A for the full unpaid balance; the Receiver contends FCC’s superpriority is limited to feed sold within 31 days before filing a financing statement (per In re Shulista) and therefore only $74,045.15 (or part thereof) is perfected.
Disputes also exist over (1) whether Oyens Feed v. Primebank (Iowa Sup. Ct.) displaced Shulista’s 31-day rule; (2) how prior payments should be applied (oldest invoice rule vs. Receiver’s intended invoice); and (3) whether certain fees/wire charges are part of the “retail cost” covered by the lien.
The court held cross-motions for summary judgment in part: it concluded Oyens did not overrule Shulista, applied Iowa common-law oldest-invoice rule for payment application, found FCC has superpriority only for feed sold during the 31-day windows before financing statements (yielding $20,404.03 of superpriority here), and denied summary judgment on whether the disputed fees are part of the retail cost.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Oyens Feed overruled In re Shulista and thus whether FCC’s superpriority lien extends beyond feed sold within 31 days before filing a financing statement	Oyens signals a purposive, flexible reading favoring fluid feed markets; Shulista should be revised to allow lien for feed outside the 31‑day window	Shulista’s plain‑text reading of §570A.4 controls: perfection requires filing within 31 days of each purchase; Oyens did not address §570A.4 and therefore did not displace Shulista	Oyens did not overrule Shulista; Shulista’s 31‑day filing rule controls — FCC has superpriority only for feed sold in the 31‑day windows before financing statements
How prior payments should be applied to outstanding invoices	Apply payments to the oldest outstanding invoices first (FCC’s position)	Apply payments to the specific invoices the Receiver intended to pay (Receiver’s position)	No express agreement found; Iowa common‑law default applies — payments credited to oldest outstanding invoices first
Amount of FCC’s superpriority lien given payment application and filing dates	FCC argues applying oldest‑invoice rule preserves recent invoices (within 31 days) as unpaid and thus perfected	Receiver contends payments targeted later invoices, reducing FCC’s perfected amount	Applying oldest‑invoice rule leaves $45,918.09 unpaid but only $20,404.03 of that falls within the perfected 31‑day period (FCC’s superpriority amount)
Whether claimed fees/wire transfer charges are part of the “retail cost” covered by §570A.3	FCC contends these additional charges are part of the retail cost and thus secured by the agricultural lien	Receiver argues such fees are not part of retail cost and therefore not covered by the lien	Genuine issues of material fact exist as to both (a) the amount claimed for fees and (b) whether those charges qualify as “retail cost”; summary judgment denied on this issue

Key Cases Cited

In re Shulista, 451 B.R. 867 (Bankr. N.D. Iowa 2011) (court held agricultural superpriority under §570A limited to feed sold within 31 days before filing a financing statement)
Oyens Feed & Supply, Inc. v. Primebank, 808 N.W.2d 186 (Iowa 2011) (Iowa Supreme Court held §570A.5(3) superpriority is not limited by §570A.2(3) certified‑request defense; statutory text and selective omission controlled)
Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (summary judgment standard requiring no genuine dispute of material fact)