IN THE COURT OF APPEALS OF IOWA
No. 21-0774
Filed April 27, 2022
QUALITY PLUS FEEDS, INC.,
Plaintiff-Appellee,
vs.
COMPEER FINANCIAL, FLCA,
Defendant-Appellant,
and
ETCHER FAMILY FARMS, LLC; ETCHER FARMS, INC.; AGRILAND FS, INC.;
DEWITT VETERINARY SERVICES, P.C. d/b/a DEWITT VETERINARY CLINIC;
JASON DENNING; PRECISION PUMPING, INC.; and ELMWOOD FARMS,
LLC,
Defendants.
________________________________________________________________
Appeal from the Iowa District Court for Monroe County, Daniel P. Wilson,
Judge.
A financial institution appeals the grant of summary judgment to a creditor
making a competing claim to collateral. AFFIRMED IN PART, REVERSED IN
PART, AND REMANDED.
Dustan J. Cross and Rick J. Halbur of Gislason & Hunter, LLP, New Ulm,
Minnesota, for appellant.
Thomas D. Story, Alexander M. Johnson, and Jennifer E. Lindberg of
Brown, Winick, Graves, Gross, and Baskerville, P.L.C., Des Moines, for appellee.
Heard by Bower, C.J., and Schumacher and Ahlers, JJ.
2
AHLERS, Judge.
A dairy-cattle operation failed and was liquidated. The proceeds were not
enough to satisfy the claims of all creditors, leading to this tussle between two
creditors competing for those proceeds. The district court granted summary
judgment in favor of one creditor over the other, leading to this appeal.
I. Background1
The dairy-cattle operation consists of three entities: Etcher Family Farms,
LLC (EFF); Etcher Farms, Inc. (EFI); and Elmwood Farms, LLC (Elmwood).
Compeer Financial, FLCA (Compeer) is a financial institution that has loaned
money to one or more of the entities to finance their operations since 2014. The
loans are secured by real and personal property. The unpaid loan balances
exceed the value of the proceeds at stake in this case.
Quality Plus Feeds, Inc. (Quality Plus) is a feed and nutrient dealer that
provided its product to EFF and EFI to feed to their cattle in late 2017 and early
2018. For ease of reference, we will refer to all product Quality Plus provided as
“feed.”2 Quality Plus was not paid for the feed it sold to EFF and EFI. The
proceeds at stake in this case would satisfy the unpaid balance owed to Quality
Plus. The question is whether Quality Plus has a valid claim to those proceeds.
1 The background we provide is intended for informational purposes only. It does
not bind the parties or the district court on remand.
2 See Iowa Code § 570A.1(8) (2020) (defining “feed” as “a commercial feed, feed
ingredient, mineral feed, drug, animal health product, or customer-formula feed
which is used for the feeding of livestock, including but not limited to feed as
defined in section 198.3”).
3
In March 2018, all three entities of the dairy-cattle operation filed for
chapter 11 bankruptcy. Those bankruptcy proceedings were dismissed in January
2019.
The cattle owned by EFF and EFI were sold later in 2019, yielding proceeds
totaling $1,027,904.09. Cattle owned by all three entities also produced milk that
was sold in 2019, yielding milk-sale proceeds of $317,308.51. The cattle-sale and
milk-sale proceeds totaling $1,345,212.60 are the funds over which Compeer and
Quality Plus are fighting.
Compeer claims it has a prior, perfected security interest in the collateral
and is therefore entitled to all the relevant proceeds.3 Quality Plus asserts that it
has an agricultural-supply-dealer lien in the proceeds under Iowa Code chapter
570A that has priority over Compeer’s security interests.4
Quality Plus filed this action seeking to establish its priority in the proceeds.
Compeer denied Quality Plus’s claim, asserted affirmative defenses, and asserted
a counterclaim. The counterclaim asserts claims of unjust enrichment, conversion,
and foreclosure of a security interest. The counterclaim relates to the milk-sale
proceeds and Quality Plus’s action in asserting an agricultural-supply-dealer lien
in the proceeds with respect to milk sold by Elmwood—an entity to which Quality
Plus never sold feed.
3 See Iowa Code § 554.9322(1) (generally setting priority among conflicting
security interest and agricultural liens on a first-in-time, first-in-right order).
4 See Iowa Code § 570A.5(3) (“A lien in livestock feed shall have priority over an
earlier perfected lien or security interest to the extent of the difference between the
acquisition price of the livestock and the fair market value of the livestock at the
time the lien attaches or the sale price of the livestock, whichever is greater.”).
4
Quality Plus and Compeer filed competing motions for summary judgment.
The district court granted Quality Plus’s motion for summary judgment and denied
Compeer’s, resulting in judgment in Quality Plus’s favor against Compeer in the
amount of $348,306.30 and foreclosure of its agricultural-supply-dealer liens in that
amount. In entering judgment, the court determined Compeer’s defenses did not
defeat Quality Plus’s claims and dismissed Compeer’s counterclaims. Compeer
appeals. Compeer asserts that Quality Plus should not have been granted
summary judgment and Compeer should have.
II. Analysis
The parties ask us to resolve nuances of the applicability of various sections
of the Iowa Code related to priority between competing perfected security interests
and agricultural-supply-dealer liens. But resolution of those nuances depends on
the facts, and the material facts have not been determined at this stage of the
proceeding. So, while the parties ask us to address issues pertaining to competing
claims of priority, we instead resolve this appeal on the basis of our rules and
standards related to summary judgment.
We review rulings on motions for summary judgment for corrections of legal
error.5 Summary judgment in a party’s favor is appropriate if that party
“demonstrates that there are no disputed issues of material fact and that
application of the law to the undisputed facts compels judgment in that party’s
favor.”6
5 Buboltz v. Birusingh, 962 N.W.2d 747, 751 (Iowa 2021).
6 Buboltz, 962 N.W.2d at 754.
5
After reviewing the affidavits7 and other supporting documentation
submitted in support of the dueling summary-judgment motions, we conclude there
are too many questions left unanswered to permit granting summary judgment to
either party. Navigating the competing priority rules in Iowa Code chapters 554
and 570A is a somewhat complex and fact-intensive exercise. In this case, it
requires consideration of which entities’ cattle were supplied with Quality Plus’s
feed and what happened to those cattle, as the lien attaches only to the cattle
consuming the feed8 and their proceeds.9 To the extent Quality Plus asserts a lien
in proceeds, the proceeds would need to be identifiable and traced to subsequent
assets.10 This would not require burdensome and intensive recordkeeping
documenting a separate lien on each animal for the amount of feed that animal
consumed,11 but it requires some level of identification of the proceeds.12
Identifying the proceeds here requires answers to questions about such things as
7 Compeer asks us not to consider one or more affidavits submitted by Quality Plus
because they are not based on the personal knowledge of the affiants, as required
by Iowa Rule of Civil Procedure 1.981(5). While there may be some merit to
Compeer’s contention, we do not need to resolve this claim, because, even if we
accept Quality Plus’s affidavits as being based on the personal knowledge of the
affiants, they are not sufficient to remove all genuine issues of material fact.
8 See Iowa Code § 570A.3(2) (limiting the feed supplier’s lien to “[l]ivestock
consuming the feed”).
9 See In re Schley, 509 B.R. 901, 914 (Bankr. N.D. Iowa 2014) (determining “that
agricultural liens extend to proceeds”).
10 See Citizens Sav. Bank v. Miller, 515 N.W.2d 7, 9 (Iowa 1994) (noting the
replacement cattle can meet the definition of proceeds if received upon disposition
of the original cattle, but the proceeds must be identifiable and “traceable” to later-
acquired assets).
11 See In re Schley, 565 B.R. 655, 661 (Bankr. N.D. Iowa 2017) (noting it would
defeat the legislative intent behind chapter 570A of maintaining a fluid feed market
if “burdensome and intensive recordkeeping” were required to track “a separate
lien on each animal for the amount of feed that that animal consumed” before a
feed dealer could establish a lien).
12 See Citizens, 515 N.W.2d at 9.
6
whether cattle that consumed Quality Plus feed were sold, whether replacement
cattle were purchased, or whether the cattle ended up in the Elmwood herd.13 An
additional unsettled question is what the purchase price was, if any, for the cattle
sold by EFF and EFI that generated the sale proceeds fought over here. This is
important because Quality Plus could only get priority over Compeer’s prior,
perfected security interest “to the extent of the difference between the acquisition
price of the livestock and the fair market value of the livestock at the time the lien
attaches or the sale price of the livestock, whichever is greater.” 14 While some of
the cattle sold may have been born into the herd, thus giving them an acquisition
price of zero,15 it has not been conclusively established whether all or just some of
the cattle sold were born into the herd. Whether any cattle in the herd were
purchased and, if so, what the acquisition price was are additional fact questions
for which no answer is definitively provided. These unanswered questions
contribute to the need to deny summary judgment.
To some degree, Quality Plus seems to acknowledge that some of the
questions listed above remain unanswered. Quality Plus seeks to sidestep this
problem by suggesting that resolution of these questions is not a material question
13 Even though Quality Plus did not supply feed to Elmwood, Quality Plus points to
the possibility that Elmwood ended up with cattle that were subject to a Quality
Plus lien, which calls into question whether that lien continued in milk or sale
proceeds generated from those cattle. Whether that happened, and the extent to
which it happened, is just one of the many unanswered questions that contribute
to the conclusion that summary judgment is not appropriate.
14 See Iowa Code § 570A.5(3) (setting the limit of the priority of an agricultural-
supply-dealer lien).
15 See Oyens Feed & Supply, Inc. v. Primebank, 879 N.W.2d 853, 865–66 (Iowa
2016) (holding that livestock born into a farming operation have “a zero acquisition
price for purposes of Iowa Code section 570A.5(3)”).
7
of fact.16 It argues that, because the size of the contested pot ($1,345,212.60) is
so much bigger than the claimed lien ($348,306.30), even if the unanswered
questions are resolved in Compeer’s favor, all it will do is reduce the size of the
contested pot, but not to the point that the pot is too small to cover the claimed
lien. So, Quality Plus argues, the disputed facts are not material, because they
will not change the outcome.17 While we agree that the end result may be that
resolution of these factual disputes does not change the outcome, it is speculative
to reach that conclusion based on this record. The unanswered questions create
a genuine issue as to whether the contested pot is indeed bigger than the claimed
lien. We will not speculate in order to grant summary judgment.
III. Conclusion
The unanswered questions referenced above are not intended as an
exhaustive list. They simply highlight some of the important questions not
answered by this record. Before we, or the district court, can resolve the priority
disputes at issue in this case, there must be answers to the factual questions
needed to navigate the statutes. Those factual questions may need to be
answered by a trial.
Finding genuine issues of material fact that preclude the grant of summary
judgment for either party, we reverse that part of the district court’s order granting
summary judgment to Quality Plus. This reversal includes reversal of that part of
the district court’s ruling that rejected Compeer’s affirmative defenses and
16 See Iowa R. Civ. P. 1.981(3) (permitting summary judgment when “there is no
genuine issue as to any material fact” (emphasis added)).
17 See Banwart v. 50th St. Sports, L.L.C., 910 N.W.2d 540, 544 (Iowa 2018) (“A
fact is material when it might affect the outcome of a lawsuit.”).
8
dismissed Compeer’s counterclaims. Compeer’s affirmative defenses and
counterclaims are reinstated. We affirm the part of the district court’s order that
denied Compeer’s motion for summary judgment.
We remand for further proceedings consistent with this opinion after denial
of both parties’ motions for summary judgment. Costs of appeal shall be assessed
equally between Quality Plus and Compeer.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.