Oregon farmers sue bank for $6.7 million in radish seed dispute

Date:05-15-2017

A group of Oregon farmers is seeking $6.7 million from a bank for allegedly interfering with sales of radish seed, causing it to lose value.

The lawsuit filed by the Radish Seed Growers’ Association against Northwest Bank is the latest installment in a saga that began with the 2015 insolvency of Cover Crop Solutions, a seed company.

Cover Crop Solutions contracted with numerous Oregon farmers to grow a proprietary variety of radish seed but was unable to pay them due to financial upheaval caused by oversupply and weather disruptions.

The seed company’s creditor — Northwest Bank of Warren, Pa. — then filed a lawsuit against the growers, demanding ownership of the radish seed as collateral for a defaulted loan taken out by Cover Crop Solutions.

In June 2016, U.S. District Judge Michael Mosman rejected the bank’s claims that it owned the seed, but that hasn’t put an end to the matter.

Northwest Bank is now simultaneously challenging Mosman’s ruling before the 9th U.S. Circuit Court of Appeals and pursuing a malpractice complaint against the law firm that advised on the loan to Cover Crop Solutions.

In the malpractice lawsuit, the bank acknowledges it had no collateral in the radish seed even as it argues otherwise before the 9th Circuit, according to the complaint filed by the Radish Seed Growers Association, representing 38 growers, and two non-member farms.

“These two positions are irreconcilable,” the complaint said.

Due to the bank’s litigation against the growers, they were unable to sell nearly 7.4 million pounds of radish seed in 2015, when it fetched roughly $1.30 per pound, the complaint said.

Aside from losing value as it aged, the radish seed also competed against crops grown in later years, so farmers were only able to sell it for 56 cents per pound or less, the plaintiffs claim.

The lawsuit aims to recover about $5.5 million in reduced seed value and another $1.25 million in storage costs and additional expenses caused by Northwest Bank’s “wrongful interference.”

The case has been assigned to U.S. Magistrate Judge Jolie Russo in Eugene, Ore.

A representative of Northwest Bank said the company doesn’t comment on pending litigation.