Nickey Gregory Co., LLC v. AgriCap, LLC
United States Court of Appeals for the Fourth Circuit
597 F.3d 591 (2010)
Produce suppliers Nickey Gregory Company and Poppell's Produce (plaintiffs) sold perishable produce on short-term credit to distributor Robison Farms under the statutory trust protections of the Perishable Agricultural Commodities Act (PACA). Robison Farms later obtained a line of credit from AgriCap (defendant) secured by its accounts receivable, and when Robison Farms defaulted on both its debts to the suppliers and its line of credit, AgriCap collected on the receivables to satisfy its loan while the suppliers went unpaid. The suppliers sued, arguing the receivables AgriCap collected were actually PACA trust assets belonging to them as unpaid sellers, and the district court agreed; AgriCap appealed.
Whether unpaid sellers of perishable agricultural commodities hold priority under PACA over a buyer's other secured creditor, even one that collected accounts receivable pledged to it as loan collateral.