Article 9. Producer’s Lien of California Food And Agricultural Code >> Division 20. >> Chapter 6. >> Article 9.

(a) Every producer of any farm product that sells any product that is grown by him or her to any processor under contract, express or implied, in addition to all other rights and remedies that are provided for by law, has a lien upon that product and upon all processed or manufactured forms of that farm product for his or her labor, care, and expense in growing and harvesting that product. The lien shall be to the extent of the agreed price, if any, for that product so sold. If there is no agreed price or a method for determining it that is agreed upon, the extent of the lien is the value of the farm product as of the date of the delivery. Any portion of that product or the processed or manufactured forms of that product, in excess of the amount necessary to satisfy the total amount owed to producers under contract, shall be free and clear of that lien.
  (b) Every producer of a flower, agricultural, or vegetable seed that sells seed that is grown by him or her, when the seed was purchased or supplied by the grower and not supplied by the dealer or an independent third party who paid for the seed, to any seed dealer under contract, express or implied, in addition to all other rights and remedies that are provided for by law, has a lien upon that product and upon all processed or manufactured forms of that product for his or her labor, care, and expense in growing and harvesting that product. The lien shall be to the extent of the agreed price, if any, for that product so sold. If there is no agreed price or a method for determining it that is agreed upon, the extent of the lien is the value of that product as of the date of the delivery. Any portion of that product or the processed or manufactured forms of that product, in excess of the amount necessary to satisfy the total amount owed to producers under contract, shall be free and clear of that lien.

Notwithstanding Section 55461, a nonprofit cooperative association acting as a producer bargaining association may assert producer's lien rights for, or on behalf of, its members.

This producer's lien attaches on all of such delivered product from the date of delivery of such farm product or any portion of it by a producer to any processor.

The producer's lien is a preferred lien prior in dignity to all other liens, claims, or encumbrances except the following:
  (a) Labor claims for wages and salaries for personal services which are rendered by any person to any processor in connection with such processing business after the delivery of any such product for processing.
  (b) The lien of a warehouseman as provided by Division 7 (commencing with Section 7101) of the Uniform Commercial Code.

Every lien which is provided for in this article is on every farm product and any processed form of the farm product which is in the possession of the processor without segregation of the product. For purposes of this chapter, any and all farm products or processed form of farm products deposited by a processor with a warehouse, whether or not warehouse receipts are given as security to a lender, shall be considered as being in the possession of the processor and subject to the lien.

The lien of a producer, unless sooner released by payment or by security which is given for the payment as provided in this article, attaches from the date of delivery of the product, or if there is a series of deliveries, it attaches from the date of the last delivery.

If suit is commenced by any such producer to enforce any lien, such lien shall remain in effect until one of the following occurs:
  (a) The payment of the agreed price or the value of such product.
  (b) Deposit of the amount of the lien or claims with the clerk of the court in which any such action is pending.
  (c) The final determination of such court proceeding.

Any lien on any product or processed product may, however, be released, to the extent the value of the claim upon such product is secured, by a surety bond or a cash deposit or other security given as provided in this article. Any producer may also release any lien which is possessed by him upon payment being made to him for the agreed or reasonable value of the product which is so sold and delivered, or upon arrangements being made for such payment which are satisfactory to the producer.

It is unlawful for any processor to remove, from this state or beyond his ownership or control, any farm product which is delivered to him, or any processed form of the farm product, to which any of the liens provided for in this chapter has attached, except for any of such product or processed product as may be in excess of a quantity on hand which is of a value that is sufficient to satisfy all existing liens. Furthermore, this section shall not prohibit the sale of any farm product or processed form of the product to which such a lien has attached, so long as the total proceeds of the sale are used to satisfy obligations to producers which are secured by a lien established pursuant to this chapter.

The director, within 15 days of the filing of a verified complaint by a producer, shall investigate any charge that a purchaser of a farm product to which a lien has attached has removed any farm product, or any processed form of a farm product, in violation of Section 55638.

Any processor that desires to secure a release of any or all of such liens on any product or processed product may do so in any of the following ways:
  (a) By paying the agreed or actual value of any farm product which is purchased by such processor within 20 days from the date of delivery of the farm product unless the date of payment is otherwise agreed upon in writing or such payment is secured other than by lien.
  (b) By depositing with the director a surety bond which is executed by such processor as principal and by a surety company which is qualified and authorized to do business in this state as surety in an amount which equals the current market value of the product or processed product which is intended by such processor to be sold or otherwise disposed of, as such value may appear by the sworn statement of such processor in accordance with quotations from the federal-state market news service or other evidence which is satisfactory to the director. The bond shall be conditioned that if the processor fails to pay up to the amount of such bond the lawful claims of all producers whose liens have been released by the bond, within 35 days after date of the bond, the surety shall be liable to and shall pay to the state on behalf of such claimants all such lawful claims as may be covered by the amount of the bond, together with costs of suit if an action is filed on the bond.
  (c) By depositing with the director a cash sum in lawful money of the United States which is expressly set apart by an instrument in writing that is signed by the processor for the purpose of guaranteeing to the extent of such sum, payment of all existing claims of producers whose liens are released by the deposit, within 35 days from the date of such deposit. The director shall be named in such instrument as trustee to carry out the purpose and intent of the instrument.
  (d) By designating, setting apart, and depositing in a public warehouse a quantity of any processed farm products and indorsing over to the director and delivering to him the warehouse receipt for such products for the purpose of guaranteeing to the extent of the value of such deposit, payment within 35 days from the date of such deposit, all existing claims of producers and labor claimants whose liens are released by it.
  (e) By securing a release from the director after payment in full for such farm product.

If all lawful claims of the producers have been paid in accordance with this article by any processor, any product which is released by such action may be sold, transported, or otherwise disposed of.

If a bond, cash deposit, or security is given to the director by any processor as provided in this article, such processor may sell, transport, or otherwise dispose of the product or processed product to the value which is represented by such security as such value may appear by the sworn statement of such processor in accordance with quotations from the federal-state market news service or other evidence satisfactory to the director.

The director may accept such bond, if approved by him, and such other security. If the claims or any of them are not paid in accordance with the condition of such security, the director may, on proof being made to his satisfaction of the amounts which are due such claimants, pay all such unpaid claims insofar as possible out of the deposit money, or proceeds from any sale made by him of any securities or processed products which are given as security.

If a bond has been given as security, the director shall notify the principal and surety of any default on the part of the principal under the bond, and make demand for payment on behalf of such unpaid claimants. If payment is not made, the director may take any legal action he may deem necessary to enforce payment under such bond.

If the director has received warehouse receipts for any processed product as security, and the processor giving them has failed to pay the claims in accordance with the terms of such security, the director may sell such security with or without notice, and in such manner as he shall determine.

All claims in relation to payment shall have equal standing and payment shall be prorated if necessary among the claimants.

This article does not prevent the director if in his opinion the rights of all of the claimants are fully protected, as provided for in this article, from issuing a certificate in the name of the department and signed by him which releases any specific lot or quantity of any product or processed product from all liens of the claimants. No security which is held by the director shall, however, be released by him to any processor unless and until it is made to appear to his satisfaction that all claims have been fully paid, or that the rights of all of the claimants are fully protected. A fee of five dollars ($5) shall be paid to the director for issuing any certificate or release which is provided for in this section.

This article does not impair or affect the right of any claimant that possesses a lien to maintain a personal action to recover such debt against a processor, either in an action to foreclose his lien or in a separate action. He is not required to state in his affidavit to procure an attachment that his demand is not secured by a lien.

The judgment, if any, which is obtained by the plaintiff in such personal action, or personal judgment which is obtained in such lien action, does not impair or merge any lien right or claim which is held by such plaintiff. Any money, however, which is collected on the judgment shall be credited on the amount of such lien or claims in any action which is brought to enforce the lien or in any action which is filed pursuant to this article by the director.

In an action that is filed by any such lien claimant, the defendant processor may file with the court in which the action is pending a surety bond in an amount that is sufficient to cover the demand of plaintiff's complaint, including the costs, whereupon the court may order the release of a portion or the whole of any product or processed product upon which the lien of plaintiff has attached.

Such processor may also, on motion duly noticed, introduce evidence to the court before whom any such action is pending to the effect that he has sufficient security or money on deposit with the director to protect the lien or other rights of plaintiff. If he does so, the court may order the release of a portion or the whole of such product upon which the lien of plaintiff is attached, and deny to plaintiff any recovery in such action. Such action by the court does not, however, prejudice any other rights or remedies which are possessed by the plaintiff.

The plaintiff in an action which is brought to foreclose any of the liens which are provided for in this article may, in a proper case, and upon proper allegations, secure an injunction against the processor in accordance with the provisions of Chapter 3 (commencing with Section 525), Title 7, Part 2 of the Code of Civil Procedure to restrain the doing of any acts on the part of such processor which are designed to or which would, in effect, remove any processed product in his possession or under his control and upon which valid liens exist, beyond the process of the court, to plaintiff's injury.

If in a court proceeding to foreclose such lien, it is found and determined by the court that there is no cash, bond, or other deposit placed with the director as security for the payment of any of the lien claims as set out in the complaint, the judgment of foreclosure shall be against a sufficient quantity in value of such farm product or processed product in the possession or under the control of the defendant processor, as may be necessary to satisfy such claim or render judgment and declare forfeited any bond which is deposited in the court by such processor to secure the lawful claims of the plaintiff as determined by the court.

All actions filed by the director or producers against any processor for the foreclosure of the liens or other security which are provided for in this article may be consolidated by the court and all persons that are necessary to a determination of such action may be made parties to such actions. Any judgment which is rendered shall determine the lawfulness of the amount of each claim as represented by the pleadings.