OPINION
Plaintiffs Owner Operator Independent Drivers Association, Inc. (“OOIDA”), and Carl Harp and Michael Wiese, as representatives of the certified class of owner-operators, seek to enforce a final judgment obtained in a class action brought on behalf of independent owner-operator truck drivers against a regulated motor carrier, debtor Arctic Express Inc. (“Arctic”), for maintenance escrow funds owed to the *786 owner-operators. Plaintiffs assert that defendant Comerica Bank (“Comerica”), through which Arctic kept several accounts and a revolving line of credit, holds a portion of the funds included in the judgment in breach of a statutory trust created pursuant to the Truth-in-Leasing regulations of the Motor Carrier Act, 49 U.S.C. §§ 14101-02, 14704; 49 C.F.R. § 376.12. Plaintiffs seek restitution of the maintenance escrows allegedly withdrawn unlawfully by Comerica from the trust account as a reduction on Arctic’s loan balance. On cross-motions for summary judgment, the district court granted summary judgment in favor of Comerica and denied plaintiffs’ motion. For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
I.
This lawsuit has its origins in a $5.5 million class action settlement agreement that Arctic and its affiliate, D & A Associates Ltd. (“D & A”), entered into with plaintiffs, representatives of a certified class of “owner-operators,” who independently own, lease, and operate motor carrier equipment for the transportation of commodities. OOIDA is an owner-operator business association with over 141,000 members throughout the United States and Canada. Harp and Wiese are individual owner-operators who contracted with Arctic to lease motor vehicle equipment. Arctic is a federally regulated motor carrier that provides transportation services to the shipping public. D & A is a non-carrier company that leases truck units to independent owner-operators.
The underlying basis for the class action suit was the owner-operators’ contractual arrangement with Arctic and D & A. Each owner-operator entered into two agreements with Arctic and D & A — an independent contractor agreement and a lease agreement, pursuant to which the owner-operators provided hauling services to Arctic, using tractor-trailers leased from D & A. Under the agreements, owner-operators wеre entitled as compensation to a percentage of “gross line haul revenue received from all transportation performed.” “Gross line haul revenue” is defined as “amounts received by Carrier [Arctic] from its customer for the transportation of freight.” Pursuant to the lease agreement, the individual owner-operator made weekly equipment rental payments to D & A. In addition, under Paragraph 9(a) of the lease, the owner-operator agreed to have Arctic deduct a flat fee of nine cents per mile from his or her compensation on a weekly basis for the purpose of repairing and maintaining the leased trucking equipment. 1 The maintenance payments were kept by Arctic in a maintenance escrow fund. The maintenance escrow deduction was mandatory and was taken from the owner-operator’s percentage share of the transportation charge. Paragraph 9(b) of the lease agreement provided:
Should the amount in the maintenance fund exceed corresponding expenses for maintaining the Equipment, such excess, if any, shall be paid Lessee only upon this Agreement running tо term ...; should this Agreement not run to term ..., such excess, if any, will be distributed to Lessee only if Lessee exercises its Option to Purchase as defined in Paragraph 10A.
WARNING: THE MAINTENANCE FUND IS NON-REFUNDABLE. IF THIS LEASE IS TERMINATED, BY *787 EITHER THE LESSEE OR THE LESSOR, BEFORE THE END OF THE TERM DESCRIBED IN SECTION 3, LESSEE, IS NOT ENTITLED TO ANY DISTRIBUTION FROM THE MAINTENANCE FUND EXCEPT UPON EXERCISE OF LESSEE’S OPTION TO PURCHASE.
Under the Arctic agreements, owner-operators received payment in settlement on a weekly basis. Owner-operators were issued a settlement statement — an accounting recording the division of total revenue and mileage on a load-by-load basis. The amount of the required maintenance escrow was deducted from compensation prior to payment, and the weekly settlement paid was the net of such deductions. The division of the transportation revenue was determined by the Arctic agreements and accounted for on the settlement statements.
In June 1997, the owner-operators initiated a class action suit (the “Arctic Litigation”) against Arctic and D & A in the United States District Court for the Southern District of Ohio, seeking monetary damages and other relief. The certified class of plaintiffs 2 alleged that Arctic and D & A violated the Truth-in-Leasing regulations of the Motor Carrier Act, 49 U.S.C. §§ 14101-02, 14704; 49 C.F.R. § 376 et seq., by failing to return unused maintenance escrow fund balances to the class of owner-operators whose lease agreements with Arctic did not run full term.
In a series of subsequent orders, the district court determined that the nine cents per mile collected for the purpose of maintaining leased equipment was an “escrow fund” as defined under 49 C.F.R. § 376.2(i) and, therefore, the maintenance escrow funds were subject to the requirements of the Truth-in-Leasing regulations; specifically, 49 C.F.R. § 376.12(k), which requires, inter alia, a lessee’s (the motor carrier’s) accounting of transactions related to the collected funds and the return of escrow balances to the lessor (the owner-operator) within forty-five days from the date of termination of the lease.
See Owner-Operator Indep. Drivers Ass’n, Inc. v. Arctic Express, Inc.,
In October 2003, Arctic and D & A filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the Southern District of Ohio, thus halting the Arctic Litigation. Plaintiffs allege that in December 2003, through testimony given in the bankruptcy proceedings, they first learned of Arctic’s financing arrangement with Comerica and Comerica’s actions in transferring the maintenance escrow funds out of Arctic’s depository accounts to re *788 pay amounts owed to it pursuant to its loan agreements with Arctic. The particulars of Arctic’s banking relationship with Comerica were accurately explained by the district court:
Arctic and Comerica entered into three revolving credit loan agreements (which established a revolving line of credit), one dated February 4, 1991, one dated May 3, 1993, and the other dated April 29, 1998. The loan arrangement between Arctic and Comerica was in operation continuously from February 1991 through November 1998.
For the 1991 loan agreement, Comerica agreed to lend Arctic up to $500,000 wherein several variables, including thе amount of eligible collateral, determined how much Arctic could request be advanced by Comerica at any given time. By May 1993, the revolving loan agreement increased the commitment amount to $2,000,000. By April 1998, the revolving loan agreement increased the commitment amount to $5,500,000. D & A acted as a guarantor in the event of default by Arctic. D & A was not, however, and has never been, a customer of Comerica’s and never had an account with Comerica.
At the same time as the loan agreements were in effect, Arctic maintained three accounts with Comerica: (1) a depository/operating account, (2) a zero-balance checking account (also called a controlled disbursement account), and (3) a cash collateral account. The lending relationship was as follows: when Arctic completed a shipment for a customer, Arctic would generate an invoice. If the invoice qualified as an “Eligible Account,” as defined in the loan documents, Arctic would include the invoice on its next Borrowing Base Certificate and present it to Comerica. Upon receipt of the Borrowing Base Certificate, and to the extent that the invoiced amounts were “Eligible Accounts,” Com-erica would make available to Arctic 80% of the eligible invoice for its line of credit, regardless of whether Arctic intended to use funds advanced. Arctic would then request those funds be advanced to its depository/operating account. So, for instance, if Comerica had an invoice for an Eligible Account worth $100, Comerica would extend credit of up to $80 to Arctic, which would be transferred at Arctic’s request to its depository/operating account before receipt of any payments from the customer.
When payments from customers were collected on the accounts receivables, they went directly into Arctic’s cash collateral account. Comerica had control over the funds in the cash collateral account, and Arctic could not make withdrawals from the cash collateral account. The collections from customers were applied directly to the loan balance, which increased the availability to draw on the line. The cash collateral account was monitored daily by Comerica, and the balance was applied to the loan on a daily bаsis. When the invoice amounts were collected in full, Comerica would make available to Arctic the remaining 20% of the Eligible Account through its line of credit. At that point, Arctic would have 100% of the invoice amount available in its line of credit. So, for instance, in the above scenario, if the customer paid the entire invoice, then the full $100 would be available for Arctic to draw on through its line of credit. Arctic could request those funds be transferred into its depository/operating account and use them in any manner it saw fit and for any legitimate purpose necessary to run its business.
Arctic automatically transferred money from the depository/operating account into its zero-balance account to cover checks it wrote. At all other times, the *789 zero-balance account did not carry a balance. Arctic wrote checks from its zero-balance account for any purpose it deemed necessary. Arctic authorized Comerica to debit the depository/operating account once per month to pay for accrued interest and bank fees. Otherwise, the money in the depository/operating account was for Arctic’s unencumbered use and remained at its disposal. No loan payments to Comerica were ever deducted from the depository/operating account.
Pursuant to the loan agreements, Arctic pledged as collateral for the loans, among other assets, all accounts receivable for motor carrier services provided to customers and proceeds from the accounts receivable. The primary purpose of the collateral was to provide a source for recovery of the loan balance in the event Arctic defaulted on its loan and the collateral had to be sold. Though accounts receivable collections were credited against Arctic’s loan balance, this collateral was never liquidated, as liquidation occurs in the event of a default, and there was no default by Arctic.
Owner Operator Indep. Drivers Ass’n, Inc. v. Comerica Bank,
In January 2004, plaintiffs commenced an adversary proceeding against Arctic, D & A, and Comerica in the bankruptcy court, seeking return of the escrow funds owed to the Arctic Litigation class members. The bankruptcy court lifted the automatic stay to allow the district court to complete the Arctic Litigation and liquidate the class claims, and, in May 2004, plaintiffs entered into a $5.5 million settlement agreement with Arctic and D & A, which was approved by the district court in July 2004. The settlement equaled the total amount of maintenance escrow funds, plus interest, owed by Arctic and D & A to the owner-operators; however, the settlement agreement further provided that “[i]n no event shall the [owner-operators] recover or seek to recover more than $900,000 from Arctic.” After entry of the judgment and finalization of Arctic’s plan of reorganization, the district court withdrew the bankruptcy reference over the adversary proceeding, and plaintiffs’ action against Comerica seeking enforcement of the Arctic Litigation judgment was removed to the district court.
Plaintiffs thereafter twice amended their complaint, ultimately setting forth a single count seeking restitution or disgorgement of the maintenance escrow funds deposited by Arctic into Comerica’s accounts and purportedly used by Comerica to pay down Arctic’s indebtedness.
4
In denying, in part, Comerica’s motions to dismiss plaintiffs’ complaints, the district court opined that the funds held in escrow under 49 C.F.R. § 376.12(k) were subject to a statutory trust for plaintiffs’ benefit, and plaintiffs were entitled to pursue a common law claim against Comerica for restitution.
Owner Operator Indep. Drivers Ass’n, Inc. v. Comerica Inc.,
No. 2:05-CV-00056,
The parties filed cross-motions for summary judgment. Comerica disputed the existence and alleged breach of a statutory *790 trust and asserted statute of limitations and bona fide purchaser defenses. It maintained that if a trust attached to any of Arctic’s bank accounts, it attached to funds in the depository/operating account when the nine cents per mile was deducted by Arctic from the owner-operator’s compensation; in other words, Arctic was withholding the maintenance fees, not Comerica. Comerica asserted that the funds it credited to the Arctic loan balance from the cash collateral account were not subject to the trust because the trust did not exist yet.
Conversely, plaintiffs argued that the trust was created when funds were deposited by customers into the cash collateral account. Because the maintenance escrow fees were deducted from compensation, which was a percentage of the amount received in the cash collateral account, the escrow fees were a part of the payments deposited into the cash collateral account. Comerica, in turn, collected Arctic’s receivables, which included the maintenance escrow funds, and applied the receivables to pay down Arctic’s indebtedness. Plaintiffs therefore contended that Comerica unlawfully retained the maintenance escrow funds as a reduction on Arctic’s loan balance.
In an Opinion and Order issued on March 16, 2009, the district court granted Comerica’s motion for summary judgment and denied plaintiffs’ cross-motion.
See OOIDA v. Comerica Bank,
This Court finds that the deposits by customers into the cash collaterаl account did not create an escrow fund, because until compensation was paid to owner-operators, nothing had been withheld from (or deposited by) them. Just because owner-operators’ compensation was calculated as a percentage of the amount received by customers does not establish an escrow fund in the cash collateral account. It was only once the maintenance escrow fees were deducted (i.e. once the fees were “deposited” by the owner-operators) that an escrow fund was created.... Until the first settlement check was paid to an owner-operator, that owner-operator did not have an escrow fund account because there was nothing to withhold from the settlement amount. And only when an escrow fund came into existence was a statutory trust established that attached to all funds commingled with the escrow fund. Thereafter, the statutory trust attached to funds in the depository/operating account when the nine-cents-per-mile was deducted from owner-operator’s compensation, but did not attach to the funds in the cash collateral account.
Id. at 706 (emphasis omitted).
The district court determined that
[a]s the trust only attached to the depository/operating account, there could only be a breach of trust if either the funds deposited in that account were unlawfully encumbered (i.e. unavailable for Arctic to use to fund the maintenance escrow fund), or if funds in that account were unlawfully withdrawn.
The evidence shows that: (1) the funds in the depository/operating account, other than the funds used to pay interest and bank fees, were freely available to satisfy outstanding obligations to Plaintiffs; and (2) the interest and fees *791 charged [by Comerica] were commercially reasonable. Arctic’s deposits into the depository/operating account and Arctic’s allowance of Comerica to withdraw from that account to pay interest and fees were not in breach of trust. Comerica cannot be liable for receiving funds in breach of trust because the trustee’s transfer of funds did not constitute a breach of trust.
Id. at 706-08.
Plaintiffs now timely appeal the district court’s grant of summary judgment in favor of Comerica and the denial of their cross-motion for summary judgment.
II.
We conduct de novo review of the district court’s summary judgment order.
Med. Mut. of Ohio v. K. Amalia Enters. Inc.,
On appeal, plaintiffs maintain that the statutory trust attached when customers made payments into the cash collateral account; therefore, any money paid from that account, including funds used to pay down Arctic’s loan obligations to Comerica, included trust assets. Plaintiffs contend that Arctic breached its fiduciary duties when it used plaintiffs’ trust property to reduce its loan balance, and never drew those funds from Comerica to return plaintiffs’ maintenance escrows, in violation of the Truth-in-Leasing regulations. We agree.
However, it is necessary that we first reexamine the district court’s threshold determination — challenged by Comerica— that 49 C.F.R. § 376.12(k) impressed the maintenance escrow funds with a statutory trust for plaintiffs’ benefit, thereby giving rise to plaintiffs’ solitary claim against Comerica for restitutionary relief stemming from Arctic’s alleged breach of trust. This is a novel issue. Comerica contends that while Arctic may have violated the terms of its contractual obligations by failing to return the maintenance escrow funds to the individual owner-operators, neither Arctic’s lease agreements nor the escrow provisions of the Truth-in-Leasing regulations refer to a “trust” in express terms; and, Comerica asserts, if Congress had intended to create a statutory trust for the benefit of the owner-operators, it would have explicitly incorporated the term “trust” into 49 C.F.R. § 376.12(k), as it has in other statutory schemes.
Regulations promulgated to effect the purpose of a statute are to be construed in accordance with the well-established principles of statutory construction:
As with all matters of regulatory interpretation, we look first to the plain and unambiguous meaning of the regulation, if any. See Henry Ford Health Sys. v. Shalala,233 F.3d 907 , 910 (6th Cir.2000) (quoting Bartlik v. U.S. Dep’t of Labor,62 F.3d 163 , 165-66 (6th Cir.1995)) (‘We read statutes and regulations with an eye to their straightforward and commonsense meanings,” and where the regulation’s language reveals an “unambiguous and plain meaning ..., our task is at an end.”).
Baptist Physician Hosp. Org., Inc. v. Humana Military Healthcare Serv., Inc.,
Although “[t]he commоn law of trusts is not binding on Congress,”
Begier v. IRS,
The “failure to expressly designate the relationship as one of trust does not necessarily negate its existence.”
In re Penn Cent. Transp. Co.,
“An escrow arrangement, like all express trusts, is a contractual relationship, in which disbursement by the trustee is conditioned upon the happening of a specified occurrence.”
In re Dameron,
These common law principles apply to the formation of statutory trusts:
A trust is created when a settlor conveys property to a trustee with a manifest intent to impose a fiduciary duty on that person requiring that the property be used for a specific benefit of others. See Restatement (Second) of Trusts §§ 2, 17, 23 & 23 cmt. (a) (1959). That Congress may create a trust through the manifestation of an intent to create a fiduciary relationship is beyond dispute. See Lassen [v. Arizona ex rel. Ariz. Highway Dep’t,385 U.S. 458 , 460 [87 S.Ct. 584 ,17 L.Ed.2d 515 ] (1967)].... Congress need not use any particular form of words in expressing its intent to create a trust, and the absence of the words “trust” or “trustee” in the conveyance is not determinative of the question of whether Congress intended to create a trust. Instead, the creation of a trust depends on whether the relevant statutory provision contains an enumeration *793 of duties which would justify a conclusion that Congress intended to create a trust relationship.
Branson Sch. Dist. RE-82 v. Romer,
There are numerous examples of statutory trusts, many of which leave no doubt as to Congress’s intent to create a trust through explicit use of that term in the language of a statute or regulation. See, e.g., the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499e(c)(2) (“Perishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions, and all inventories of food or other products derived from perishable agricultural commodities, and any receivables or proceeds from the sale of such commodities or products, shall be held by such commission merchant, dealer, or broker in trust for the benefit of all unpaid suppliers or sellers of such commodities or agents.”); the Packers and Stockyards Act (“PSA”), 7 U.S.C. § 196(b) (“All livestock purchased by a packer in cash sales, and all inventories of, or receivables or proceeds from meat, meat food products, or livestock products derived therefrom, shall be held by such packer in trust for the benefit of all unpaid cash sellers of such livestock until full payment has been received by such unpaid sellers.... ”); the Internal Revenue Code, 26 U.S.C. § 7501(a) (“Whenever any person is required to collect or withhold any internal revenue tax from any other person and to pay over such tax to the United States, the amount of tax so collected or withheld shall be held to be a special fund in trust for the United States.”). 5
In the case of other statutes and regulations, the courts have held that a statutory trust exists, despite the absence of such express terminology. For instance, in
United States v. Mitchell,
The language of these statutory and regulatory provisions directly supports the existence of a fiduciary relationship. For example, § 8 of the 1910 Act, as amended, expressly mandates that sales of timber from Indian trust lands be based upon the Secretary’s consideration of “the needs and best interests of the Indian owner and his heirs” and that proceeds from such sales be paid to owners “or disposed of for their benefit.” 25 U.S.C. § 406(a)....
Moreover, a fiduciary relationship necessarily arises when the Government assumes such elaborate control over forests and property belonging to Indians. All of the necessary elements of a common-law trust are present: a trustee (the United States), a beneficiary (the Indian allottees), and a trust corpus (Indian timber, lands, and funds).
Mitchell,
In
Branson Sch. Dist. RE-82,
the Tenth Circuit Court of Appeals held that the Colorado Enabling Act § 14, 18 Stat. 474-76 (1875), “contains a sufficient enumeration of duties to indicate Congress’s intent to create a fiduciary relationship between the state оf Colorado and its common schools with respect to the management of the school lands.”
Similarly, in the present case, 49 C.F.R. § 376.120s), through its comprehensive delineation of responsibilities, imposes strict fiduciary obligations on motor carriers, such that it places the motor carriers in a position of trust vis-a-vis owner-operators with regard to the handling of escrow funds. 49 C.F.R. § 376.2(i) defines an “escrow fund” as “[m]oney deposited by the lessor [owner-operator] with either a third party or the lessee to guarantee performance, to repay advances, to cover repair expenses, to handle claims, to handle license and State permit costs, and for any other purposes mutually agreed uрon by the lessor and lessee.” Section 376.12(k) provides that if escrow funds are required by the terms of the lease, the lease “shall specify”:
(1) The amount of any escrow fund or performance bond required to be paid by the lessor to the authorized carrier or to a third party.
(2) The specific items to which the escrow fund can be applied.
(3) That while the escrow fund is under the control of the authorized carrier, the authorized carrier shall provide an accounting to the lessor of any transactions involving such fund. The carrier shall perform this accounting in one of the following ways:
(i) By clearly indicating in individual settlement sheets the amount and description of any deduction or addition made to the escrow fund; or
(ii) By providing a separate accounting to the lessor of any transactions involving the escrow fund. This separate accounting shall be done on a monthly basis.
(4) The right of the lessor to demand to have an accounting for transactions involving the escrow fund at any time.
(5) That while the escrow fund is under the control of the carrier, the carrier shall pay interest on the escrow fund on at least a quarterly basis....
(6) The conditions the lessor must fulfill in order tо have the escrow fund returned. At the time of the return of the escrow fund, the authorized carrier may deduct monies for those obligations incurred by the lessor which have been previously specified in the lease, and shall provide a final accounting to the lessor of all such final deductions made to the escrow fund. The lease shall further specify that in no event shall the escrow fund be returned later than 45 days from the date of termination.
49 C.F.R. § 376.12(k).
The district court construed these regulatory provisions as creating a statutory trust for the benefit of plaintiffs, holding in pertinent part:
Under the contract between Plaintiffs and Arctic, this Court found [in the Arctic Litigation] that the only reason anyone could withdraw money from Arctic’s bank account that held the escrow funds was to pay for repairs and maintenance of the individual owner operator’s leased equipment. The nature of the relationship between Arctic and Plaintiffs put Arctic in the same position with respect to the individual drivers as a trustee has toward beneficiaries of an express trust. The owner operators entrusted their money to Arctic and relied upon Arctic to safeguard it and only to distribute it *795 for legitimate purposes under the agreement.
OOIDA v. Comerica Inc.,
In reaсhing this conclusion, the district court relied in part upon
In re Intrenet, Inc.,
We agree with the district court and the Intrenet court that 49 C.F.R. § 376.12(k), when viewed in the historical context in which it was enacted, implicitly creates a statutory trust, for the benefit of owner-operators.
The Truth-in-Leasing escrow provisions stаte that they “shall be adhered to and performed by the authorized carrier.” 49 C.F.R. § 376.12. They require the lease agreements to specify the amount of the escrow; how the escrow funds can be used; allow the carrier to take amounts from the escrow only for an actual obligation incurred by the individual owner-operator consistent with the purposes specified in the agreement; require the carrier to continually account to the owner-operator for all transactions involving the escrow funds; and, at termination of the contract, mandate that the carrier return owner-operator funds to the individual driver within 45 days. 49 C.F.R. § 376.12(k)(l)-(6). Only actual obligations of the owner-operator consistent with the purposes specified in the agreement may be deducted from the escrow; otherwise, the unused contribution must be returned to the owner-operator. 49 C.F.R. § 376.12(k)(6).
“Congress’s substantive purpose in authorizing the Truth-in-Leasing regulations was to protect owner-operators.”
Owner-Operator Indep. Drivers Ass’n, Inc. v. Swift Transp. Co., Inc.,
*796 [t]he prevalent practice in truck leasing has been to require independent truckers to deposit a specified sum in escrow with the regulated carrier. The various investigations by Congress and the [ICC] flagged these accounts as a major source of problems for the independents. Delays in obtaining refund of the escrow deposits create serious cash-flow problems for the independent who wants to enter a new agreement but has substantial sums tied up in escrow funds still pending from prior agreements. Sometimes, complained the independents, the deposit was not given back at all.
Id. at 551 (citation omitted). Consequently, in 1979, the ICC promulgated the Truth-in-Leasing regulations. The stated objective of these provisions was
to promote truth-in-leasing — a full disclosure between the carriеr and the owner-operator of the elements, obligations, and benefits of leasing contracts signed by both parties; ... to eliminate or reduce opportunities for skimming and other illegal or inequitable practices [by motor carriers];’ and ... to promote the stability and economic welfare of the independent trucker segment of the motor carrier industry.
Owner-Operator Indep. Drivers Ass’n, Inc. v. Ledar Transp.,
No. 00-0258-CV-W-2-ECF,
These circumstances surrounding the enactment of the escrow regulation reinforce our conclusion that a fiduciary relationship exists between the carrier and the owner-operators, effectively placing the motor carrier in the same position as the trustee of an express trust.
7
Section 376.12(k), with its remedial purpose, parallels the trust provisions of the PSA and the PACA in its goal of protecting the interests of an important segment of national commerce — in this case, the livelihood of independent truck drivers.
See, e.g., Overton Distribs., Inc. v. Heritage Bank,
Comerica nonetheless argues that because § 376.12(k) permits the commingling of funds and calls for the payment of interest on the escrow funds, these provisions evidence a debt rather than a trust. While in some circumstances the payment of interest may indicate a debtor-creditor relationship, it is by no means determinative.
In re Penn Central,
Under the Truth-in-Leasing regulations, the payment of interest at a set rate on the escrow funds was required by thе ICC to make the owner-operators whole; it was not negotiated by the drivers in consideration for a loan to the carrier. See Lease and Interchange of Vehicles, 131 M.C.C. at 153-54; Lease and Interchange of Vehicles, 129 M.C.C. at 726-27. It therefore does not contradict a trust relationship.
Likewise, contrary to Comerica’s argument, the absence of a requirement that the carrier segregate escrow funds is not determinative of whether a trust was intended and, in this case, merits little weight in enforcing plaintiffs’ rights. The proposed requirement to segregate escrow funds was deleted by the ICC from the final version of § 376.12(k) to “assist the lessors in meeting their own, often pressing needs for ready cash.”
Lease and Interchange of Vehicles,
129 M.C.C. at 725. Additional safeguards, in the form of more rigorous accounting requirements, were added, and the modification did not serve to enhance the carriers’ interest in these funds.
Id.
at 726. The commingling of the escrow funds with other monies therefore does not, under these circumstances, defeat a trust relationship.
See Begier,
In sum, as the district court properly determined, the premise upon which plaintiffs’ claim against Comerica depends — the existence of a statutory trust— is sound, thus paving the way for plaintiffs’ action for restitutionary relief against Comerica. 8
III.
The question remains whether plaintiffs can recover the escrow funds impressed with a statutory trust from Com-erica. The regulations provide no express guidance in this regard, but common law trust principles do:
[I]t has long been settled that when a trustee in breach of his fiduciary duty to the beneficiaries transfers trust proper *798 ty to a third person, the third person takes the property subject to the trust, unless he has purchased the property for value and without notice of the fiduciary’s breach of duty. The trustee or beneficiaries may then maintain an action for restitution of the property (if not already disposed of) or disgorgement of proceeds (if already disposed of), and disgorgement of the third person’s profits derived therefrom.
Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc.,
In the case at hand, the district court held that the prerequisite breach of trust by Arctic did not occur so as to expose Comerica to liability. The court found that plaintiffs’ trust interest in the funds on deposit with Comerica did not attach to plaintiffs’ percentage interest in Arctic’s accounts receivable deposited in the cash collateral account; rather, the trust attached to funds in the depository/operating account at the time that Arctic paid owner-operator compensation net of the maintenance escrow deduction.
OOIDA v. Comerica Bank,
In the absence of on-point authority, case law addressing the priority rights of secured creditors to funds impressed with a statutory PACA trust is instructive. PACA trusts were created by Congress to correct the perceived inequity to unsecured produce sellers caused by financing arrangements between produce purchasers and their lenders, by giving the sellers precedence over the claims of secured creditors.
See Overton Distribs., Inc.,
In Nickey Gregory, the sellers of perishable agricultural commodities brought suit under the PACA to recover sums owed to them for the sale of produce to Robison *799 Farms, LLC, a bankrupt produce distributor. The defendant, AgriCap, LLC, was a finance company that provided secured financing to Robison Farms for working capital. Id. at 594. The plaintiffs sought to disgorge the proceeds of Robison Farms’ accounts receivable held by Agri-Cap as collateral to secure repayment of monies advanced by AgriCap to Robison Farms. Id. The plaintiffs claimed that PACA created a trust for their benefit over the proceeds of their produce, including the accounts receivable that Robison Farms used for collateral in its arrangement with AgriCap, and, therefore, they possessed a superior interest in the proceeds held by AgriCap. Id. The Fourth Circuit Court of Appeals agreed, stating:
When Robison Farms transferred a receivable to AgriCap, AgriCap advanced, as a loan, 80% of the receivable’s face vаlue. When AgriCap collected on the receivable, ... it retained (1) 80% as repayment of the loan; (2) a collection fee of 1.5%; and (3) interest at a rate of the lesser of 12% or 6% over prime for the period during which the 80% amount was outstanding. It then remitted the balance to Robison Farms. AgriCap was thus only a lender and collection agent, not a purchaser of the accounts receivable that assumed the risks of collecting on the receivables. Because these substantive aspects of the transaction are inconsistent with an outright sale of the assets, we agree with the district court that the transaction was in its essence a loan in the form of a revolving line of credit secured by accounts receivable.
[T]he distinction between a sale and a loan controls the issue of whether Agri-Cap purchased the assets free of the PACA trust or merely held the assets to collateralize its loans to Robison Farms, in which case the receivables would have remained subject to the PACA trust and would have been required, by the terms of regulations, to be made “freely available” to pay obligations to commodities sellers. 7 C.F.R. § 46.46(d)(1). Because we conclude that the transaction in this case was a loan, we also conclude that the accounts receivable and their proceeds never left the PACA trust and that therefore the accounts receivable and their proceeds had to be made available for payment first to the claims of unpaid PACA creditors, such as [plaintiffs]. The district court therefore ruled properly that AgriCap must disgorge from the assets of the PACA trust amounts sufficient to pay unpaid PACA creditors.
Id. at 603 (emphases removed).
The Fourth Circuit rejected AgriCap’s contention that “whether the transaction was a loan is not important so long as the transaction was commercially reasonable,”
id.
at 604,
9
and affirmed the judgment in favor of the plaintiffs because AgriCap failed to establish that it was a bona fide purchaser for value and without notice.
Id.
at 605, 608.
See also A & J Produce Corp. v. Bronx Overall Econ. Dev. Corp.,
*800
The rationale of the Fourth Circuit’s decision in Nickey Gregory is transferable to the case at bar, which involves a similar revolving loan agreement secured by Arctic’s accounts receivable. Arctic granted Comerica a security interest in its accounts receivable, inventory, and other assets, including real estate, as collateral for the loan. The funds Comerica advanced to Arctic were not funds paid directly from Arctic’s customers, but a formula-based credit determined by the value of the accounts receivable and other assets of Arctic. Pursuant to the Advance Formula Agreements executed in conjunction with the loan agreements, the formula for calculating the line of credit included, among other assets, eighty percent of the value of Arctic’s eligible accounts receivable.
Under the terms of the loan, Arctic submitted to Comerica a list of customer invoices that quаlified as “eligible accounts,” as defined by the loan documents. Upon receipt of this submission, deemed a “borrowing base certificate,” Comerica would make eighty percent of the eligible invoice amounts available to Arctic by transferring the funds, at Arctic’s request, to the depository/operating account. When payment was received from Arctic’s customers, the accounts receivable were deposited into Arctic’s cash collateral account, controlled solely by Comerica, either directly by remittance from the customer or by Arctic after receipt of payment from the shipping customer. Comerica processed the deposits to the cash collateral account on a regular basis, applying the funds directly to the loan balance. Comerica made the remaining amount available to Arctic, either by transferring the amount to Arctic’s operating account or increasing Arctic’s availability under the line of credit. Arctic could request that such funds be transferred into its depository/operating account for its use for any legitimate purpose necessary to run its business.
As its operating expenses came due, Arctic applied to Comerica to borrow only amounts sufficient to cover its current obligations. Checks were issued before funds were drawn on the fine of credit. To cover checks written on the controlled-disbursement account, Arctic automatically transferred money from the depository/operating account, requested a draw on its line of credit, or both. The debit from the checks and the credit from the advance both posted against the operating account. At all other times, the controlled-disbursement account did not carry a balance. Among the checks written from the controlled-disbursement account were the owner-operators’ weekly settlement payments; Arctic borrowed from Comerica only the net amount owed — the owner-operators’ percentage share of the transportation revenue, less deductions that included the nine cents per mile for the maintenance escrow fund.
*801
We agree with plaintiffs that their trust interest in the maintenance escrows attached when the customers’ payment for services, Arctic’s accounts receivable, were deposited in the cash collateral account. The district court’s conclusion that the statutory trust attached to funds in the depository/operating account when the nine cents per mile was deducted from owner-operators’ compensation, but did not attach to the funds in the cash collateral account, is illusory. Although the funds flowed to Arctic from its receivables, and Arctic had discretionary, “unencumbered” use of the funds in the depository/operating account, the funds themselves were not unencumbered. The accounts receivable deposited into the cash collateral account were taken by Comerica and applied directly to reduce Arctic’s outstanding loan balance. Thus, whether the draw on the line of credit passed through an operating account before directly funding the checks is immaterial. Arctic compensated the owner-operators for an amount net of the maintenance escrow, and, instead of funding the escrows through its line of credit, it applied the trust funds to reduce its loan balance, without returning the unused escrow funds to plaintiffs as required under 49 C.F.R. § 376.12(k). By operation of the loan agreements, Comerica collected the nine cents per mile in maintenance escrows along with Arctic’s receivables and, in sweeping Arctic’s cash collateral account, used the maintenance escrows to repay amounts borrowed by Arctic under the loan agreements. Consequently, Arctic breached its trust obligations to plaintiffs by encumbering the escrow funds, and dissipating the trust assets, through its lending relationship with Comerica. Comerica must therefore disgorge the trust property received in breach of trust unless it can establish a viable defense.
See Nickey Gregory,
IV.
Comerica argues that it is a bona fide purchaser for value and therefore takes the property free of the trust. Even if property was transferred in breach of trust, general trust principles permit a bona fide purchaser to retain such property.
C.H. Robinson Co. v. Trust Co. Bank, N.A.,
For the reasons succinctly set forth by the Fourth Circuit in Nickey Gregory Co., Comerica cannot avail itself of the bona fide purchaser defense because it is not a bona fide purchaser “for value”:
AgriCap contends that it received Robi-son Farms’ accounts receivable “for value” because each time Robison Farms transferred a receivable to AgriCap, AgriCap paid Robison Farms 80% of the receivable’s face value. This argument, however, fails for the same reason that AgriCap is incorrect to characterize the transaction as a sale rather than a loan. AgriCap did not purchase the account *802 receivable but merely held it as collateral for the 80% loan and as collection agent. It thеrefore was not a purchaser for value, having never become owner of the receivable.
Nickey Gregory Co.,
V.
Comeriea also argues that plaintiffs’ claim is barred by the applicable statute of limitations. We review this question of law de novo.
CMACO Auto. Sys., Inc. v. Wanxiang Am. Corp.,
The district court determined that this action is governed by Ohio Rev.Code § 2305.09, which provides for a four-year statute of limitations for the “recovery of personal property, or for taking or detaining it.”
See OOIDA v. Comerica Bank,
In actions where there is no applicable federal statute of limitations, “[although state law sets the length of the statute of limitations, federal law establishes when the statute of limitations begins to run.”
Winnett v. Caterpillar, Inc.,
Comeriea argues that plaintiffs were on notice of their claim against Corn-erica no later than June 30, 1997, when they filed suit in the Arctic Litigation. Plaintiffs, on the other hand, maintain that because they did not learn of Comerica’s involvement until December 2, 2003, during the bankruptcy proceedings, and brought suit in January 2004, their action is not time barred.
In its detailed analysis of the evidence pertaining to this issue, the district court found that settlement checks issued by Arctic to individual owner-operators, drawn on Comerica’s account and dating back to 1992, contained information relating solely to the payment of net compensation and did not reveal any credit relationship between Arctic and Comeriea.
OOIDA v. Comerica Bank,
Based upon this record, we agree with the district court that genuine issues of material fact exist which preclude a ruling, as a matter of law, on Comerica’s statute of limitations defense. The district court correctly ruled that this is a question for the trier of fact to resolve.
VI.
For the foregoing reasons, we affirm in part and reverse in part the district court’s judgment and remand for further proceedings consistent with this opinion.
Notes
. As the vehicles aged during the lease term, the cost of maintenance rose. Thus, Arctic used the savings garnered from the flat fee at the front end of the lease to cover the higher costs of maintenance at the end of the lease term.
.
See Owner Operator Indep. Drivers Ass’n, Inc. v. Arctic Express, Inc.,
No. 2:97-CV-750,
. In late 1998, Arctic transferred its loans to Congress Financial and terminated its banking relationship with Comerica. Id. at 696-97. Arctic used funds from its new line of credit with Congress Financial to pay off its outstanding loan balance of $4.7 million to Comerica. Id. at 697.
. Plaintiffs are not seeking to recover any funds withheld before the 1993 loan was executed.
. For other examples of statutory trusts, see generally G.G. Bogert & G.T. Bogert, The Law of Trusts and Trustees § 246 (rev. 2d ed. 1984).
. The
Intrenet
court accurately observed that, consistent with trucking industry practices, "the regulations contemplate an escrow regardless of who holds the funds.”
In re Intrenet, Inc.,
. Comerica’s reliance on
In re Brock,
Nos. 08-01493-JDP, 08-6087,
. Our conсlusion that the Truth-in-Leasing regulations create a statutory trust eliminates the need to consider plaintiffs’ alternative constructive trust theory and renders inappo-site plaintiffs’ comparison to the interline trust doctrine, pursuant to which "transportation and freight charges, when collected [by one [interline] motor carrier on behalf of another for services that the latter has performed], are held in trust for the [latter carrier].”
Parker Motor Freight, Inc. v. Fifth Third Bank,
. The court found the cases upon which Agri-Cap relied to be distinguishable because they either involved a factoring relationship in which the receivables were actually sold and the commercial reasonableness of the sale was therefore a legitimate consideration,
see Boulder Fruit Express & Heger Organic Farm Sales v. Transp. Factoring Inc.,