NOT FOR PUBLICATION
MEMORANDUM DECISION RE: U.S. BANK'S OBJECTIONS TO CLAIMS
FREDERICK P. CORBIT, Bankruptcy Judge.
U.S. Bank National Association ("U.S. Bank") objected to five PACA
At a hearing held on January 19, 2017, the court heard testimony of Tyler J. Boswell, the chief accountant for Chelan Fresh Marketing ("Chelan Fresh"); Miguel Alvarado, a manager of Alvarado Orchards, LLC; Gary Azzano, the principal officer and owner of Azzano Farms, Inc.; Rigoberto Guzman, a general partner of Five Star Orchard and R&B Orchard; Roni DeVon, a certified public accountant who worked for Gold Digger and has provided assistance to Gold Digger's bankruptcy trustee; Greg I. Moser, Gold Digger's former general manager; and Jack Nelson, the chairman of Gold Digger's Board of Directors.
From the evidence presented, the court finds that each grower delivered to Gold Digger all the fruit they grew and harvested. Gold Digger then issued each grower a "receiving ticket" showing the number of bins of each type of fruit that the grower delivered. The grower did not present any type of invoice to Gold Digger. Rather, the grower received a ticket evidencing the amount of the perishable commodity that was delivered to be packed and processed by Gold Digger. From the time the fruit was delivered to Gold Digger, all packing, handling, and storing of the fruit was performed by Gold Digger.
After Gold Digger packed the fruit, it gave the grower a "grower packout" showing the number of boxes packed by variety, pool, size, and grade. The fruit from different growers was combined and stored. The fruit was then marketed by Chelan Fresh.
Gold Digger accounted for the fruit delivered; however, and unfortunately, Gold Digger did not pay the growers all of what they were owed. As a result, the growers filed proofs of claim and some of those claims were objected to by U.S. Bank. The claims subject to U.S. Bank's objection include:
U.S. Bank disputes the PACA claims of David Ramos, Santos Alvarez, Austin Orchard, Elias Sandoval and Parm Dhaliwal (the "Non-Member Growers").
Specifically, U.S. Bank disputes whether the PACA notices were sufficient to preserve the Non-Member Growers' rights as PACA trust beneficiaries. U.S. Bank asserts that the PACA notices were not timely and failed to provide the requisite information.
The Non-Member Growers assert notice was sufficient because each signed a Grower's Marketing Contract ("Non-Member Grower Contract") with Gold Digger and that contract included a declaration of intent to preserve PACA rights. In addition, invoices sent to the buyers of the fruit were printed with the required PACA preservation language.
History of PACA.
PACA was enacted in 1930 to prevent unfair business practices and promote financial responsibility in the fresh fruit and produce industry. See Sunkist Growers, Inc. v. Fisher, 104 F.3d 280, 282 (9th Cir. 1997). PACA has undergone several revisions because "[u]nfortunately, PACA as originally drafted was unable to provide complete protection to sellers." Middle Mountain Land & Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 1223 (9th Cir. 2002). This is because produce buyers usually purchased the grower/seller's perishable agricultural commodities on credit, and then if the buyer went bankrupt, the grower/seller usually had "no meaningful possibility of receiving . . . payment." Middle Mountain Land, 307 F.3d at 1223-24. Therefore, recognizing the public interest served by the nation's food suppliers—its farmers—Congress amended the statute in 1984 to further protect grower/sellers by establishing the PACA trust which elevated the claims of PACA trust beneficiaries ahead of all creditors, even secured creditors. Bowlin & Son, Inc. v. San Joaquin Food Serv., Inc. (In re San Joaquin Food Serv., Inc.), 958 F.2d 938, 939 (9th Cir. 1992).
The court acknowledges that PACA is a remedial statute,
Notice of intent to preserve PACA rights.
A crucial element for a PACA claim is providing notice of intent to preserve PACA rights.
Written Notice Method.
The Non-Member Growers assert that they have satisfied the Written Notice Method by individually entering into a Non-Member Grower Contract with Gold Digger. Specifically, the contract contained a clause declaring the grower's intent to preserve PACA trust rights.
First, U.S. Bank argues that the notice fails because it does not include all the information required by the statute or the regulations. The court disagrees. The relevant PACA statute requires only that the unpaid seller give "written notice of intent to preserve the benefits of the trust to the commission merchant . . . in sufficient detail to identify the transaction subject to the trust." 7 U.S.C. § 499e(c)(3). That is all the statute requires. Nothing in the PACA statute requires that the notice contain all of the information outlined in 7 C.F.R. § 46.46(f). See United States v. Caceres, 440 U.S. 741, 749 (1979) (explaining that a court must enforce agency regulations when compliance is "mandated by the Constitution or federal law"). In this case, the Non-Member Growers (the unpaid sellers) gave notice to Gold Digger (the commission merchant) of their intent to preserve PACA trust rights by signing the Non-Member Grower Contract.
Second, U.S. Bank argues that the notice was not timely. U.S. Bank argues both that the notice was too early and too late. As to the too early argument, U.S. Bank seems to assert that the notice fails because it is preemptive. Essentially, U.S. Bank asserts that the notice was premature because it sought to preserve trust rights that did not exist. During the hearing, U.S. Bank attempted to obtain testimony demonstrating that each Non-Member Grower signed the Non-Member Grower Contract prior to ever delivering fruit to Gold Digger. If this was true, then it could be argued that there would be no PACA trust at the time of the notice because the PACA trust did not arise until Gold Digger, as a commission merchant, received the perishable agricultural commodity. See § 499e(c)(2). This argument, however, was contradicted by the testimony of Roni DeVon. Ms. DeVon testified that Mr. Ramos's Non-Member Grower Contract was signed after the delivery of his fruit to Gold Digger. Given Ms. DeVon's testimony and the assertions by the Non-Member Growers that their contracts were signed after delivery of fruit to Gold Digger, and because U.S. Bank failed to present any evidence to the contrary, the court finds that the notice was not premature and the Non-Member Growers timely notified Gold Digger of their intent to preserve PACA trust rights.
U.S. Bank also argues that in order to comply with the Written Notice Method, each Non-Member Grower would have had to determine when each piece of their fruit was sold and then issue an additional notice of intent to preserve PACA rights to Gold Digger within thirty (30) days. To the extent that U.S. Bank argues that the Non-Member Growers were obligated to give subsequent and repeated notices to Gold Digger after every piece of their fruit was sold, the court finds that U.S. Bank's argument is contrary to the language and intent of the statute. Indeed, § 499e(c)(3) did not contemplate, and is not applicable, to the facts of this case and the type of relationship that existed between these parties.
The language of the relevant PACA statute at 7 U.S.C. § 499e(c)(3) highlights the difficulty when applied to these facts. Specifically, § 499e(c)(3) provides in relevant part that the "unpaid supplier, seller, or agent," in preserving its rights under PACA, is required to provide written notice of its intent to preserve the benefits of the trust to the
From the statutory language, it appears that this section of the statute applies to sales transactions between the grower and a commission merchant. Because, in a sales transaction, the grower/seller would know exactly when the fruit was sold and the grower would be invoicing the commission merchant for the sale of the fruit. In this case, the evidence and testimony presented established that Gold Digger never took title to the Non-Member Growers' fruit. Rather Gold Digger packaged and stored the fruit for the Non-Member Growers. When Gold Digger's marketing agent, Chelan Fresh, found a buyer for the fruit, the payment terms of the sale were never more than thirty (30) days. All aspects of the sale of the fruit, including procuring buyers, setting terms, invoicing the sales, and collecting payment, rested exclusively with Chelan Fresh. The Non-Member Growers possessed neither rights related to nor knowledge about any of those activities. The only information Non-Member Growers received were receiving tickets showing the number of bins of each type of fruit delivered to Gold Digger. Thus, obligating the growers to monitor and invoice the sales of their fruit after delivering it to Gold Digger, while presumably possible, is not practicable.
Additionally, U.S. Bank's timing of the additional notice (even if the court found it was required) is misguided. U.S. Bank argues that the thirty (30) days begins to accrue upon delivery of the fruit to Gold Digger by the grower. However, this is not consistent with the language of the statute. According to the statute, the timeliness of the notice of intent to preserve PACA rights depends on the date in which the "payment must be made" and this depends upon the date in which the "account is received," not necessarily delivery of the fruit. 7 C.F.R. § 46.46 (e)(1); 7 C.F.R. § 46.2(aa)(2) (emphasis added). In this case, testimony established that Gold Digger and the Non-Member Growers did not expressly agree to a time for payment in writing before entering into a transaction, therefore paragraph (c)(3)(ii) does not apply. Furthermore, paragraph (c)(3)(iii) does not apply as there is no evidence that the notice at issue occurred when a "payment instrument promptly presented for payment has been dishonored." Therefore, only paragraph (c)(3)(i) arguably applies to this case and payment was due when fruit was sold to the ultimate buyer. That time, not the time of delivery to Gold Digger, would be the applicable tracking point.
Pursuant to the language of the statute, the evidence presented, and the intent of the parties, the court finds the Non-Member Growers properly notified Gold Digger of their intent to preserve their PACA rights. The court fails to see any policy goal that would be furthered by determining that the PACA claimants' notice set forth in the Non-Member Grower Contract does not satisfy the PACA statutory requirements. The allowance of the Non-Member Growers' claims is consistent with PACA.
As to U.S. Bank's argument that the notice was too late, the court assumes that U.S. Bank is referring to the PACA notice on the invoices. As discussed below, the court finds that the Invoice Method is an alternative method to preserve PACA rights and the only timing relevant to that method is whether the parties expressly agreed to payment terms beyond thirty (30) days.
The PACA statute provides for an alternate method to preserve PACA trust rights. Essentially, licensee produce sellers can accomplish this by including language required by the PACA statute on the face of their invoices to notify the buyer that the produce is sold subject to the trust. See 7 U.S.C. § 499e(c)(4).
In this case, evidence was introduced that Chelan Fresh, as marketing agent for Gold Digger, included the statutory PACA language on the invoices. See, e.g., ECF No. 229, Ex. A.
In San Joaquin Food Serv., Inc., the parties had a written agreement that extended the payment terms beyond the standard 10-day statutory provision, but the seller failed to include those terms on its invoices. 958 F.2d at 939-40. Thus, the sole issue presented was whether the failure to include the payment term on the invoice resulted in the forfeiture of rights under PACA. The PACA statute, 7 U.S.C. § 499e(c)(3), requires that "[w]hen the parties expressly agree to a payment time period different from that established by the Secretary, a copy of any such agreement shall be filed in the records of each party to the transaction and the terms of payment shall be disclosed on invoices, accountings, and other documents relating to the transaction." Id. at 940. The San Joaquin Food Serv., Inc. court found that because the parties agreed in writing to extend the payment terms, then the supplier was obligated to comply with the rest of the provision relating to the disclosure of the payment terms on invoices to preserve PACA trust rights. See id. at 940. In this case, there is no evidence to suggest that the parties agreed to a payment time different from that established by the Secretary. Because there was no agreement—oral or written—to extend the payment terms beyond the standard ten (10) days, there is no obligation to list the payment terms on an invoice.
In Enoch Packing Co. the sellers gave no notice, which is not the case here. Here, it is undisputed that the Non-Member Growers gave notice of their intent to preserve their PACA trust rights (by signing the Non-Member Grower Contract). Thus, unlike Enoch Packing Co., the dispute is the sufficiency, not the existence, of the notice.
The court finds that all relevant parties knew or should have known that the fruit in question was subject to potential PACA trust claims. Certainly the Non-Member Growers knew, Gold Digger knew, Chelan Fresh knew, and the ultimate buyer knew. The only party declaring it was unaware of the PACA claims is U.S. Bank. However, Gold Digger has a long history with U.S. Bank, and Mr. Nelson testified that, long before this bankruptcy case, he traveled to U.S. Bank's office in Portland, Oregon, to discuss Gold Digger's business with a loan officer.
The court finds that the Non-Member Growers provided appropriate notice of their intent to preserve their PACA claims. Written notice was provided to Gold Digger, the commission merchant, through the provisions of the Non-Member Grower Contract. Additionally, buyers were notified by language included on the invoices. Equity and the statute dictate that the Non-Member Growers should be paid their PACA trust claims. Growers here are exactly the type of vulnerable claimants that the PACA and its trust provisions are intended to protect. If the Non-Member Growers' PACA claims were disallowed, this result would be inconsistent with the intent of the parties and the legislative history of the PACA.
PURCHASE MONEY SECURITY INTEREST CLAIMS
With respect to the purchase money security interest claims filed by Azzano Farms, Inc., Five Star Orchard and Alvarado Orchards, LLC ("PMSI Claimants"), U.S. Bank argues that these claims should be treated as unsecured because either the entities asserting proofs of claim are different from the entities that were granted purchase money security agreements, or in the alternative, the PMSI Claimants have not met the requirements, as set forth in RCW 62A.9A-203(b), for the creation of an enforceable security agreement.
PMSI Claimants are the same as, or are predecessors of, the Growers.
U.S. Bank argues that the PMSI Claimants do not have secured claims because the claimants are distinct from the entities who were granted security interests in fruit sold to Gold Digger. Based on the evidence presented, the court disagrees. Rather, the evidence presented by the PMSI Claimants shows that the entities are so intertwined and share so many commonalities that they cannot be separated and should be treated as successor entities. See WASH. REV. CODE § 62A.1-103 (noting that principles of equity supplement U.C.C. provisions unless specifically displaced). Additionally, a successor to a secured claim need not re-perfect a lien. See Hergert v. Bank of the West (In re Hergert), 275 B.R. 58 (2002). Therefore, this court rejects U.S. Bank's argument that the PMSI Claimants are not the entities that now hold rights as secured creditors.
The court finds that although the names may have changed slightly as to the PMSI Claimants, U.S. Bank could not have been materially led astray by the changes. See In re Copper King Inn, Inc., 918 F.2d 1404 (9th Cir. 1990) (explaining that the accuracy of a secured party's name is relevant only if a hypothetical creditor could be materially led astray by an error in, or omission of, the secured party's name).
First, Azzano Farms, Inc. filed proof of claim number 32, but it was Azzano Orchards, LLC named in the Joinder Agreement, named in the Marketing Contract, and named as the secured party on the UCC financing statement. However, Gary Azzano was the owner and operator of both Azzano Orchards, LLC and Azzano Farms, Inc. Azzano Orchards, LLC and Azzano Farms, Inc. conducted the same business, and the "Inc." was the successor to all of the "LLC's" assets and business operations. Moreover, the transition from "LLC" to "Inc." is not a surprise to any of the parties because the transition was formally approved by the Gold Digger Board of Directors on January 14, 2015. Lastly, no party argued that the address used for Azzano Farms, LLC and Azzano Farms, Inc. are different.
Second, Five Star Orchard filed proof of claim number 43 and is named as the secured party in the UCC financing statement, but it was R&B Orchard named in the Joinder Agreement and in the Marketing Contract. However, Five Star Orchard and R&B Orchard are both general partnerships, with Rigoberto Guzman as a general partner and the manager. Additionally, on June 2, 2014, Mr. Guzman sent a letter to Gold Digger requesting the name of his business be changed from R&B Orchard to Five Star Orchard, and Gold Digger's Board of Directors approved the name change at a regularly conducted meeting held on August 26, 2014. [ECF No. 207, Exs. 3 & 5]. The type of business operated under the names of R&B Orchard and Five Star Orchard are the same and the operating assets are the same. There are only two partners in Five Star Orchard, and those two partners were two of the three partners in R&B Orchard. The third partner in R&B Orchard was bought out by the other two and did not take with him any of the operating assets. Lastly, no party argues that the addresses used for Five Star Orchard and R&B Orchard are different than that of Mr. Guzman.
Finally, as to Alvarado Orchards, LLC, in 2012, it was Miguel Alvarado who signed the Marketing Contract and the Joinder Agreement, and who is named as the secured party on the UCC financing statement. Mr. Alvarado's business has never changed, but in 2014 the name of the business became Alvarado Orchards, LLC, which is owned and managed by Mr. Alvarado. On August 26, 2014, Gold Digger's Board of Directors recognized and approved the change from Miguel Alvarado to Alvarado Orchards, LLC. Proof of claim number 54 was filed in the name of Alvarado Orchards, LLC, which the court finds to be the successor to the business of Miguel Alvarado. Lastly, no party argues that the address used for Miguel Alvarado is different from the one used for Alvarado Orchards, LLC.
The three above-described successions were well known to the representatives of Gold Digger and any interested party, like U.S. Bank, that took reasonable steps to monitor Gold Digger's business operations. No credible evidence was presented that convinced this court that a party may have been led astray by the name changes and successions of the PMSI Claimants. In sum, every interested party understood that the PMSI Claimants, as successors to the parties named in the original agreements, held a valid security interest in fruit sold to Gold Digger.
The PMSI Claimants hold valid and perfected security interests.
U.S. Bank argues, even if the court finds the PMSI Claimants are successors to the entities that signed the original contracts, the PMSI Claimants should be treated as unsecured because none of them have met the requirements of RCW 62A.9A-203(b) to perfect their security interest. The court disagrees.
The three operative agreements.
There are three operative agreements for each PMSI Claimant: (1) an Intercreditor Agreement, with an effective date of December 31, 2011, that was signed by both Gold Digger and U.S. Bank; (2) a Joinder Agreement that was signed by each PMSI Claimant, or predecessor, in order for each PMSI Claimant to become a party to the Intercreditor Agreement; and (3) a Grower's Marketing Contract ("Marketing Contract") that was signed by Gold Digger and each PMSI Claimant or predecessor. Also, each of the PMSI Claimants filed a UCC financing statement.
The Intercreditor Agreement provides on the first page, in part B of the "Background" section, that:
Section 2 of the Intercreditor Agreement provides:
Section 3.2 of the Intercreditor Agreement provides for a "waterfall" provision.
Section 6.1 of the Intercreditor Agreement provides that "[t]he Bank will not contest in any proceeding (including, without limitation, an Insolvency Proceeding) the validity, enforceability, perfection, or priority of any Grower Liens on the Common Collateral."
The Joinder Agreement, in the form attached to the Intercreditor Agreement and approved by U.S. Bank, was signed by the predecessors of the three PMSI Claimants, and provides:
The Joinder Agreement was signed by: Gary Azzano on behalf of Azzano Orchards on December 10, 2011 [ECF No. 191, Ex. 2]; Rigoberto Guzman on July 29, 2013, as a general partner of R&B Orchard, which is the predecessor to Five Star Orchard in which Mr. Guzman is also a general partner [ECF No. 207, Ex. 2]; and Miguel Alvarado, the owner and manager of Alvarado Orchards, LLC, on June 11, 2012 [ECF No. 222, Ex. 2].
The Marketing Contract, in the form approved by U.S. Bank, and in the form signed by Gold Digger and the predecessors of the three PMSI Claimants, provides:
The Marketing Contract was signed by: Gold Digger and Gary Azzano on behalf of Azzano Orchards on December 10, 2011; Gold Digger and Rigoberto Guzman, who is a general partner in both R&B Orchard and Five Star Orchard, on May 28, 2013; and Gold Digger and Miguel Alvarado on June 11, 2012.
PMSI Claimants provided value.
U.S. Bank asserts that the requirements of RCW 62A.9A-203(b)(1) were not met by any of the PMSI Claimants because none of them provided value to Gold Digger. This argument lacks merit. Based on numerous declarations, testimony at the January 19, 2017 hearing, and the proofs of claim, the court finds that substantial value was provided to Gold Digger by each of the PMSI Claimants or their predecessors.
Adequate description of collateral.
U.S. Bank also argues that the PMSI Claimants' agreements did not adequately describe the collateral. Based on the careful reading of the parties' agreements, and consideration of the testimony, the court finds that all of the requirements for a valid security agreement, including an adequate description of the collateral, exist for each of the PMSI Claimants. Moreover, the description of the collateral included in each of the security agreements proved workable — Ms. DeVon was able to use the parties' agreements and documents to allocate collateral proceeds from the sale of fruit to the three PMSI Claimants.
The PMSI Claimants perfected prior to Gold Digger's bankruptcy.
The security agreements for all of the PMSI Claimants were perfected, prior to Gold Digger's bankruptcy, by the filing of UCC financing statements with the Washington State Department of Licensing. The financing statement, which named Azzano Orchards, LLC as the secured party, was filed on June 28, 2012, the financing statement for Five Star Orchard was filed on March 7, 2016, and the financing statement for Miguel Alvarado was filed on June 28, 2012. Each financing statement names Gold Digger as the debtor and describes the collateral as:
Also, and importantly, each UCC financing statement included a provision for an acknowledgment copy to be sent to U.S. Bank.
Between the Intercreditor Agreements, Joinder Agreements, Marketing Contracts, and UCC financing statements, the court finds that each PMSI Claimant has a valid, and perfected, security agreement.
U.S. Bank waived the requirement for authenticated notification.
U.S. Bank also argues that PMSI Claimants' liens are junior to the lien of U.S. Bank because there was no "authenticated notification" of the PMSI liens as required by RCW 62A.9-324(b).
RCW 62A.1-102(3) provides a general rule that provisions in the Uniform Commercial Code (such as RCW 62A.9-324(b) the provision U.S. Bank relies on in this case) may be "varied by agreement." That is exactly what happened here. As set forth above, section 2 of the Intercreditor Agreement specified that the provisions of the Intercreditor Agreement "will remain in full force and effect irrespective of . . . [a]ny conflicting provision of the applicable Uniform Commercial Code or other applicable law." Moreover, section 3.2, the "waterfall" provision, provides that the growers' claims are senior to those of U.S. Bank to all of the proceeds from the sale of fruit other than those proceeds attributable to specific charges, such as the "GDA Charges" that result from Gold Digger storing and packing the fruit.
The court finds that U.S. Bank was given notice of the PMSI claims and waived any objection to the PMSI Claimants' right to a priority as set forth in the "waterfall" provision that was used in calculating the GAE Amounts. Therefore, U.S. Bank's argument, which is based on RCW 62A.9-324(b), is not supported by the evidence presented.
U.S. Bank cannot avoid a preferential transfer.
Finally, U.S. Bank argues that the secured claim of Five Star Orchard should be avoided because Five Star Orchard's UCC financing statement was filed within 90 days before Gold Digger filed its bankruptcy petition. Although U.S. Bank's claim objections are voluminous, this particular objection is limited to two sentences. The objection in its entirety is:
[ECF No. 320, p. 16, ll. 11-15]. Five Star's response is equally brief:
[ECF No. 342, p. 12, ll. 3-6].
Neither U.S. Bank nor Five Star Orchard focused their argument on the text of 11 U.S.C. § 547, which provides in section (b) that it is "the trustee [who] may avoid any transfer" as a preference. Since U.S. Bank is not the trustee in this case, the court dismisses U.S. Bank's objection without having to review the exceptions to the preference rules raised by Five Star Orchard.
Four claimants filed a timely proof of claim in an amount that exceeded the GAE Amount determined by Roni DeVon. Because the court finds the best evidence as to the amount of claims is the impartial report prepared by Roni DeVon, the court concludes that: the secured claim of Azzano Farms, Inc. should be limited to the GAE Amount of $77,148.57; the PACA claim of Santos Alvarez should be limited to the GAE Amount of $4,172.68; the secured claim of Alvarado Orchards, LLC should be limited to the GAE Amount of $12,839.26; and the PACA claim of Parm Dhaliwal should be limited to the GAE Amount of $2,515.41.
In the four other instances, the claimant timely filed a proof of claim in an amount less than the GAE Amount, but then, more than two months prior to the hearing, but after the claims bar date, filed an amended claim equal to the GAE Amount. The amended proofs of claim changed the amounts slightly after the claimants had the benefit of Roni DeVon's accounting, but were similar in all other respects. As a result, the court finds that the original claim provided fair notice of the conduct, transactions, and occurrences that formed the basis of the amended claim. In such instances, it has long been established in the Ninth Circuit that an amendment to a timely filed proof of claim "relates back" to the filing date of the original. See, e.g., In re Jackson, 541 B.R. 887, 891 (B.A.P. 9th Cir. 2015). Therefore, the court concludes that: the PACA claim of David Ramos should be allowed in the amount of $106,495.87; the secured claim of Five Star Orchard should be allowed in the amount of $15,211.71; the PACA claim of Austin Orchard should be allowed in the amount of $1,651.27; and the PACA claim of Elias Sandoval should be allowed in the amount of $23,423.12.
Based on the reasons set forth above, the court will enter an order allowing the PACA claims and the PMSI secured claims in the amounts identified above. At this time, the court renders no opinion on any party's right to attorney fees. Requests for attorney fees, if any, can be made by subsequent motion.
Id. at 20217. Further, citing American Banana, Patterson Foods, and other cases, the USDA explained that in recent years "several federal courts have invalidated the trust rights of unpaid creditors because these creditors agreed . . . after default on payment, to accept payments over time from financially troubled buyers," based on interpretations of 7 C.F.R. § 46.46(e)(2). Id. The USDA disagreed with these judicial interpretations of the statute and regulations, stating, "[i]t is our interpretation that § 46.46(e)(2), like paragraph (e)(1) of the regulations . . . addresses pre-transaction agreements only." Id. (citations omitted). In explaining the amendment, the USDA emphasized the broad trust rights that PACA provides:
Id. at 20217-18.