Despite expectations of quick payouts, growers say they are still waiting for money Salyer American Fresh Foods failed to pay them before closing last year.

Growers seeking Salyer PACA money

Lawsuits in California district court allege Bank of the West, the lender suing Salyer American, Monterey, over not paying back $35 million in loans, is withholding about $2 million set aside for payments under the Perishable Agricultural Commodities Act that growers say they are entitled to.

Patricia Rynn, a Newport Beach, Calif., attorney representing eight Salinas-area growers in the lawsuit, including Mann Packing Co., Taylor Farms, and NewStar Fresh Foods, said it’s unclear why the bank is refusing to pay growers when they have legitimate claims to the money.

“We had originally thought that all our claims would be paid,” Rynn said.

According to court documents, Rynn’s clients said they haven’t been paid $1.3 million for vegetables sold to Salyer American. Other Salinas-area growers involved in the lawsuit also allege they are owed $1.7 million by Salyer American, which is under court-appointed receivership.

The company’s owner, Scott Salyer, is in federal custody on 20 felony charges in an unrelated criminal investigation.

The growers allege money for payment is being withheld by Banks of the West, in violation of PACA, so the bank can pay other creditors first, according to court documents, despite repeated demands by PACA claimants.

Bank of the West attorney Robert Kaplan did not return a request for comment. But according to court documents, Bank of the West claims it’s not liable under PACA because the bank did not receive any PACA money in the receiver’s September 2009 report, filed in November, among other reasons.

The “Bank is not and has never been in possession of the PACA trust assets to which plaintiffs claim a right,” the bank said in its filings.

Rynn said some of her clients have been paid about $437,000 but they were trade creditors with more basic documentation of their bills to Salyer American. But growers, Rynn said, have clear rights to PACA payments as well for the proceeds of their vegetables sold to Salyer American.

A hearing to set up a PACA claims procedure, which Bank of the West has objected to in court filings, is set for March 5 in San Jose.

Paul Moncrief, a Salinas-based attorney representing five growers in the case, said he expects the judge to approve the claims process to help resolve disputes between the parties and help growers recover their money.

“The receiver has set aside money to claims,” Moncrief said.

Another Salinas grower in the suit, Major Farms, is also claiming it’s owed more than $432,000 from Salyer American both in proceeds from the sale of its vegetables and in losses from discing under crops after Salyer American shut down in April 2009, said the company’s attorney, Effie Anastassiou.

“They just haven’t paid,” Anastassiou said.