Producers Livestock Credit Corporation v. Revier Brand Group, LLC

Background

Producers Livestock Credit Corporation (PLCC) made multiple loans to Revier Cattle Company (RCC) in 2020 for cattle purchases. The loans were secured by livestock, feed inventory, cattle-feeding supplies, and their proceeds. Thomas Revier, Libby Revier, and Revier Farms Partnership also signed guaranties. After RCC defaulted, PLCC obtained a $2,592,881.95 judgment against RCC, Thomas Revier, and Libby Revier.

RCC had separately borrowed from Great Western Bank in 2010 and 2011. Those loans were secured by feedlot real property and personal property, including equipment. The loans were later sold to Sandton Credit Solutions Master Fund IV, LP. BRR Properties, LLC, purchased the loans from Sandton in December 2021 for $8,740,000.

PLCC alleged that Revier Farms Partnership, RCC, and Thomas and Libby Revier transferred unencumbered real property, mortgages, and sale proceeds to BRR to help fund BRR’s purchase of the loans, without receiving value in return. PLCC also alleged that BRR, RCC, Revier Farms Partnership, and others created MNR, LLC, and Olivia Farms, LLC, to operate the feedlot and farm while separating those operations from RCC’s and Revier Farms Partnership’s financial obligations.

According to PLCC, RCC transferred the feedlot property to BRR through a deed in lieu of foreclosure, and MNR then leased the property from BRR. PLCC alleged that BRR collected rent before foreclosing on the property without applying the rent to the Sandton debt. PLCC also alleged that MNR and Olivia Farms used equipment owned by RCC or Revier Farms Partnership without paying rent, that the rights to those rents were transferred to BRR without consideration, and that MNR used approximately $1,325,266.57 in RCC-owned cattle feed without providing value in return.

PLCC asserted fraudulent-transfer claims under Minnesota Statutes sections 513.44(a)(1), 513.44(a)(2), and 513.45, as well as a civil-conspiracy claim. BRR moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim.

Court’s analysis

At the motion-to-dismiss stage, the court assumed the complaint’s factual allegations were true and drew reasonable inferences in PLCC’s favor. The court explained that the complaint needed enough factual content to make the claims plausible, rather than merely possible or speculative.

Count 1: Actual-intent fraudulent transfer

Count 1 alleged transfers made with actual intent to hinder, delay, or defraud a creditor under Minnesota Statutes section 513.44(a)(1). BRR argued that PLCC had not identified the property involved in the alleged approximately $4 million transfer with the particularity required by Rule 9(b). The court rejected BRR’s narrow reading of the amended complaint, concluding that the complaint described the transfers and incorporated those allegations into Count 1.

BRR also argued that PLCC’s allegation that the transferors received no value was conclusory. The court disagreed and stated that it could reasonably infer that, if BRR did not provide value for the transferred property and proceeds, BRR did not apply those amounts to the Sandton debt.

BRR further argued that the feedlot property and related rents were not “assets” under the Minnesota Uniform Voidable Transactions Act because they were fully encumbered by valid liens. The court stated that it could not determine at this stage whether the property, rents, or other proceeds contained equity. PLCC had plausibly alleged that BRR retained rents and other property or proceeds that were not applied to the Sandton debt. The court therefore denied BRR’s motion to dismiss Count 1.

Count 6: Transfer without reasonably equivalent value

Count 6 alleged fraudulent transfers under Minnesota Statutes section 513.44(a)(2), which concerns transfers made without receiving reasonably equivalent value. PLCC alleged that RCC transferred the feedlot property to BRR for less than $3,000; that RCC, Revier Farms Partnership, and Thomas and Libby Revier transferred mortgages and real-property proceeds without consideration; and that RCC and Revier Farms Partnership transferred rights to equipment rents without consideration.

BRR repeated its argument that the property was fully encumbered. The court again stated that it needed more information about the value of the secured assets, which assets were used to satisfy the Sandton debt, and whether BRR acquired assets that were not used to satisfy that debt without providing reasonable value.

BRR also argued that the transferors received reasonably equivalent value through a promise that BRR would temporarily refrain from liquidating personal-property collateral. PLCC disputed that argument and alleged that BRR did not actually refrain from enforcing its interests. The court found a factual dispute about the alleged forbearance that could not be resolved on a motion to dismiss. It also found factual disputes about whether RCC and Revier Farms Partnership had rights in the equipment and rents. The court denied BRR’s motion to dismiss Count 6.

Count 7: Insolvency-based fraudulent transfer

Count 7 alleged that transfers were made without reasonably equivalent value while the transferors were insolvent or became insolvent as a result, under Minnesota Statutes section 513.45. PLCC alleged that RCC, Revier Farms Partnership, and Thomas and Libby Revier transferred land-sale proceeds and mortgages without consideration, and that RCC transferred the feedlot property and rights to equipment rents without equivalent value.

BRR made arguments concerning the encumbered property, rent rights, and deed in lieu of foreclosure. The court rejected those arguments for the reasons given in its analysis of Counts 1 and 6. BRR also argued that it was not a subsequent transferee of the rent rights. The court concluded that PLCC alleged BRR received the rights to the rents themselves, not merely economic benefits, and therefore treated PLCC’s allegations as asserting that BRR was a direct transferee. The court denied BRR’s motion to dismiss Count 7.

Count 9: Civil conspiracy

PLCC alleged that BRR, Olivia Farms, MNR, RCC, Revier Farms Partnership, and Thomas Revier conspired to establish MNR and Olivia Farms as fraudulent successors to RCC and Revier Farms Partnership and to transfer assets away from creditors for the benefit of the alleged participants.

The court explained that, under Minnesota law, civil conspiracy is not an independent cause of action. It requires an underlying tort and can expand the number of people who may be liable for that underlying conduct. BRR argued that PLCC had not pleaded an underlying tort. The court found that PLCC alleged violations of the Minnesota Uniform Voidable Transactions Act, including actual-intent fraudulent transfer, which can serve as the underlying tort for a civil-conspiracy claim. The court denied BRR’s motion to dismiss Count 9.

Disposition

The court denied BRR Properties, LLC’s motion to dismiss. The order did not determine whether PLCC will prevail on its fraudulent-transfer or civil-conspiracy claims. It determined only that PLCC’s amended complaint stated claims that could proceed beyond the dismissal stage.