Archer-Daniels-Midland Co. v. Country Visions Coop.

29 F.4th 956

ARCHER-DANIELS-MIDLAND COMPANY, Petitioner-Appellant,

v.COUNTRY VISIONS COOPERATIVE, Respondent-Appellee.

No. 21-1400

United States Court of Appeals, Seventh Circuit.

Argued November 29, 2021

Decided April 4, 2022

Aaron Howard Aizenberg, Attorney, Kravit, Hovel & Krawczyk SC, Milwaukee, WI, for Debtors David A. Olsen, Becky S. Olsen, Paul E. Olsen, and Cheryl R. Olsen.

William H. Burgess, John C. O'Quinn, Attorneys, Kirkland & Ellis LLP, Washington, DC, Michael B. Slade, Esq., Attorney, Kirkland & Ellis LLP, Chicago, IL, Laura Wolk, Attorney, Becket Fund for Religious Liberty, Washington, DC, for Appellant.

David G. Peterson, Attorney, Reinhart, Boerner, Van Deuren, Waukesha, WI, Frank W. DiCastri, Malinda J. Eskra, Attorneys, Reinhart Boerner Van Deuren S.C., Milwaukee, WI, for Appellee.

Amy J. Ginsberg, Attorney, Office of the United States Trustee, Milwaukee, WI, for United States Trustee.

Before Easterbrook, Scudder, and St. Eve, Circuit Judges.

Easterbrook, Circuit Judge.

In 2007 Olsen Brothers Enterprises, LLP, granted a right of first refusal (the "Right") on a parcel of land in Wisconsin to the predecessors in interest of Country Visions Cooperative. The Right had a term of ten years and entitled Country Visions to buy the parcel by matching any other person's offer, should Olsen Brothers decide to sell. Olsen Brothers soon dissolved, distributing its assets to the partners, an event that did not trigger the Right but also did not extinguish it. In 2010 the former partners filed for bankruptcy. They did not notify Country Visions, list it as a creditor, or attempt to make it a party, nor did they tell the bankruptcy judge about the Right. An agreed plan was presented to the bankruptcy court in 2011 and approved after perfunctory proceedings. Under the plan, the parcel's buyer was to acquire title free and clear of all other interests. Archer-Daniels-Midland (ADM) emerged as the parcel's new owner. No one offered Country Visions an opportunity to match the price that ADM paid.

In 2015 ADM arranged for the re-sale of the parcel, again without offering it to Country Visions, which responded with a suit in state court, demanding compensation for the violation of the Right. ADM then returned to the bankruptcy court, asking it to enforce the free-and-clear aspect of the 2011 sale by barring Country Visions from seeking any remedy in state court. ADM relied on 11 U.S.C. § 363(m), which provides:

The reversal or modification on appeal of an authorization ... of a sale or lease of property does not affect the validity of a sale or lease ... to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.

No one appealed from the order authorizing the sale to ADM, but this language has been read broadly to protect the interests of any good-faith purchaser. See In re Edwards , 962 F.2d 641 (7th Cir. 1992). That is the basis of ADM's request.

The bankruptcy court denied ADM's request, and the district court affirmed. 628 B.R. 315 (E.D. Wis. 2021). Both judges concluded that ADM had not acquired the parcel in good faith, because it knew of the Right yet failed to alert the bankruptcy judge. Country Visions filed a copy of the Right in the local real estate records; even a cursory title search would have turned it up—indeed, did turn it up. ADM had a copy of the title report and also knew that Country Visions was not a party to the bankruptcy. What's more, the bankruptcy judge concluded that ADM knew that, about a week before the sale, counsel for Country Visions got wind that something was happening and began to inquire how he could protect his client's rights. Bankruptcy Judge Kelley was tempted to deem the failure of anyone to alert her to the Right a form of fraud on the court, but she did not set aside the sale to ADM. The bankruptcy judge mentioned Fed. R. Civ. P. 60(b)(4) (applied through Fed. R. Bankr. P. 9024 ) but did not alter or vacate the judgment approving the sale to ADM. Instead she just denied ADM's proposal to stop the state litigation, which is ongoing. See Country Visions Cooperative v. Archer-Daniels-Midland Co. , 2021 WI 35, 396 Wis.2d 470, 958 N.W.2d 511 (2021) (remanding for further proceedings).

In the district court, and again in this court, the parties have devoted a lot of time and space to the question whether Country Visions knew enough, before the 2011 sale, to supply it with the notice and opportunity for a hearing required by the Due Process Clause of the Fifth Amendment. We do not address that subject, however, because statutory questions precede constitutional ones. Gulf Oil Co. v. Bernard , 452 U.S. 89, 99, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981). This is a statutory case. If ADM...