G W Palmer and Co Inc v. Prime Tropical Inc et al
Filing
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PERMANENT INJUNCTION filed by Judge Manuel L. Real against Prime Tropical Inc, Prime Tropical, Inc. (see attached for further details) (MD JS-6. Case Terminated) (pj)
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RICHARD GOLUBOW -- State Bar No. 160434
rgolubow@winthropcouchot.com
WINTHROP COUCHOT
PROFESSIONAL CORPORATION
660 Newport Center Drive, Suite 400
Newport Beach, CA 92660
Telephone: (949) 720-4100
Facsimile: (949) 720-4111
Kate Ellis, Pro Hac Vice
kellis@mccarronlaw.com
MCCARRON & DIESS
4530 Wisconsin Avenue, N.W., Suite 301
Washington, D.C. 20016
Telephone: (202) 364-0400
Facsimile: (202) 364-2731
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Counsel for Plaintiff G.W. Palmer & Co., Inc. and
Intervening Plaintiffs Frank Gioia d/b/a/
State Produce, West Coast Produce & Specialties, Inc.,
Sunline International, LLC, and
Cardile Bros. Mushroom Packaging, Inc.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION – LOS ANGELES
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G.W. PALMER & CO., INC., et al.
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Case No.: 2:11-CV-4730 R (AGRx)
Plaintiffs,
vs.
PERMANENT INJUNCTION
PRIME TROPICAL, INC ., JULIO CHAN,
VINCENT RAMIREZ, JR., YOLANDA
RAMIREZ, MARIA CHAN
Defendants.
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UPON CONSIDERATION of the Motion for Entry of Default Judgment as to Prime
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Tropical, Inc. and Permanent Injunction (“Motion”) filed by Plaintiff G.W. PALMER & CO.,
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INC. and Intervening Plaintiffs FRANK GIOIA d/b/a STATE PRODUCE, WEST COAST
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PRODUCE & SPECIALTIES, INC., SUNLINE INTERNATIONAL, LLC, and CARDILE BROS.
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MUSHROOM PACKAGING, INC. (collectively referred to herein as “Palmer Plaintiffs”), and
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any opposition thereto, the Court hereby
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GRANTS Palmer Plaintiffs’ Motion; and further finds as follows:
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STANDARD OF REVIEW
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The standard for granting injunctive relief in the Ninth Circuit requires the moving party to
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show: (1) there is a likelihood that Plaintiff will be successful on the merits of their claims; (2)
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there is a likelihood of irreparable harm to Plaintiff if the injunction does not issue; (3) the balance
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of the equities favors Plaintiff, and (4) the public interest would be furthered by the granting of an
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injunction. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S. Ct. 365, 374, 172 L. Ed.
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2d 249 (2008); Enyart v. Nat'l Conf. of Bar Examiners, Inc., 630 F.3d 1153 (9th Cir. 2011); Alliance
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for the Wild Rockies v. Cottrell, 622 F.3d 1045 (9th Cir. 2010). The Palmer Plaintiffs’ claims for
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relief meet each of these tests, and accordingly, should be granted in all aspects.
FINDINGS
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Plaintiff G.W. Palmer & Co., Inc. filed a civil action alleging violations of the Perishable
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Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499e(c) and other causes of action against
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Defendants Prime Tropical, Inc. (“Prime Tropical”), Julio Chan, Vincent Ramirez, Jr., Yolanda
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Ramirez, and Maria Chan. The complaint seeks an order enforcing payment from the produce trust
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established under the PACA, 7 U.S.C. § 499e(c), and damages.
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This Court has subject matter jurisdiction over this action. 7 U.S.C. § 499e(c)(5).
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On June 27, 2011, this Court entered the Consent Injunction and Agreed Order for PACA
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Claims Procedure (“PACA Order”) [Doc. 22], the terms of which were stipulated and agreed to by
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plaintiff G.W. Palmer & Co., Inc. and Defendants [Doc. 20]. The PACA Order set forth a
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procedural framework to determine the bona fide beneficiaries of the statutory trust arising under
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the PACA and for the orderly liquidation of Defendant Prime Tropical’s assets impressed with the
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PACA statutory trust. See PACA Order, p. 3. Through the process set forth in the PACA Order,
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the bona fide beneficiaries of the PACA trust were conclusively determined. See PACA Order ¶¶
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PACA impresses a statutory, non-segregated floating trust (“PACA Trust”) on all of Prime
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Tropical’s inventories of perishable agricultural commodities (“Produce”), food or products derived
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from Produce (“Products”), accounts receivable and other proceeds of the sale of Produce or
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Products, and assets commingled or purchased or otherwise acquired with proceeds of such Produce
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or Products (assets subject to the PACA Trust are hereinafter referred to as “PACA Trust Assets”) for
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the benefit of qualifying sellers to Prime Tropical. 7 U.S.C. § 499e(c)(5); Tom Lange Co. v.
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Kornblum & Co (In re Kornblum & Co.), 81 F.3d 280 (2d Cir. 1996); In re Atlantic Tropical Market
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Corp., 118 B.R. 139, 142-43 (Bankr. S.D. Fla. 1990). A PACA trust exists for the benefit of all of
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Prime Tropical’s unpaid produce suppliers. 7 U.S.C. § 499e(c)(2). Although over $200,000.00 has
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been collected for the benefit of Prime Tropical’s PACA Trust Creditors, the total PACA claims are
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nearly $1.5 million, resulting in a significant shortfall in the amount due to the PACA trust creditors.
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Congress has recognized that if a PACA trust is “dissipated, it is almost impossible for a beneficiary
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to obtain recovery” from the trust. Frio Ice, S.A. v. Sunfruit, Inc., 918 F.2d 154 (11th Cir. 1990)
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(citing legislative history); Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132
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(3d Cir. 2000). Prime Tropical’s operations have wound down, but efforts to collect receivables
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and pursue third party beneficiaries of trust funds are ongoing. Additionally, there are funds on
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deposit in the Prime Tropical PACA Trust Account in the approximate amount of $67,000 for
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distribution to bona fide PACA trust creditors in this matter. Maintenance of injunctive relief over
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these assets is imperative to ensure that they are not dissipated.
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Finally, any threatened injury to PACA trust creditors of Defendants outweighs whatever
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damages the proposed injunction may cause Defendants, and the issuance of the injunction is not
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contrary to the public interest and will ensure the collection and preservation of trust assets for the
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benefit of Prime Tropical’s PACA trust creditors. 7 U.S.C. § 499e(c)(1).
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The Court finds that it is reasonable and necessary to continue the procedural framework for
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the orderly collection of Prime Tropical’s PACA Trust Assets and distribution of such trust assets to
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Prime Tropical’s bona fide PACA trust creditors.
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Based on the foregoing, IT IS HEREBY ORDERED, as follows:
I. PRELIMINARY INJUNCTION
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This Order supersedes and replaces the original Consent Injunction and Agreed Order
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for PACA Claims Procedure entered on June 27, 2011 [Doc. 22], and is binding upon the Parties
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to this action, their officers, agents, assigns, employees, banking institutions and attorneys, and all
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other persons or entities who receive actual notice of the entry of this Order.
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2.
Prime Tropical, Julio Chan, Vincent Ramirez, Jr., Yolanda Ramirez, and Maria Chan, their
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agents, employees, officers, directors, assigns, representatives, and banking institutions are
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restrained and enjoined from alienating, dissipating, paying over, or assigning any assets
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belonging to Prime Tropical including, without limitation, all assets contemplated by 7 C.F.R. §
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46.46, as interpreted by applicable case law, or withdrawing funds from the PACA Trust Account,
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except as set forth in this Order.
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3.
Upon request, during normal business hours, Prime Tropical shall provide Palmer
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Plaintiffs’ counsel, or other designated representative of Palmer Plaintiffs, with reasonable access
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to Prime Tropical’s books and records, including without limitation, all invoices, credit memos,
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accounts receivable, ledgers, insurance policies, inventory lists, accounts payable lists, customer
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lists, vendor invoices and access to Prime Tropical computers, computer software and related
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passwords.
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4.
The PACA Trust Assets subject to the bona fide PACA trust claims of Prime Tropical’s
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PACA trust creditors and in the possession of Prime Tropical as described in 7 C.F.R. § 46.46 as
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interpreted by applicable case law, shall serve as security for this injunction as required by Rule
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65(c) of the Federal Rules of Civil Procedure.
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II. MAINTENANCE OF PACA TRUST ACCOUNT
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5.
Counsel for Palmer Plaintiffs, McCarron & Diess, shall maintain the escrow account
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entitled "Prime Tropical PACA Trust Account" (“PACA Trust Account"). The PACA Trust
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Account shall continue to utilize Prime Tropical’s Federal Tax Identification Number.
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signature of counsel for Palmer Plaintiffs shall be required on the account; no check withdrawals,
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transfers or other disbursements shall be made or permitted without such signature. The PACA
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The
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Trust Account shall not be subject to execution, levy or attachment by any creditor without further
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order of this Court. After disbursement of the balance of funds on deposit in the PACA Trust
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Account, Counsel for Palmer Plaintiffs is authorized to close this account.
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6.
All account debtors of Prime Tropical, all financial institutions in which Prime Tropical
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has funds on deposit, and any other person or entity that may be in possession of any of Prime
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Tropical’s assets shall, upon receipt of actual notice of this Order, immediately account for and
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turn over all monies constituting PACA Trust Assets as described in 7 C.F.R. § 46.46 as
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interpreted by applicable case law in their possession, custody or control, or which come into their
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possession, custody or control, including, without limitation, non-negotiated checks, bank account
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balances, cash, and proceeds of Prime Tropical’s accounts receivable and inventory, to counsel for
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Palmer Plaintiffs for deposit into the PACA Trust Account.
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7.
The PACA Trust Assets and the PACA Trust Account are subject to the exclusive
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jurisdiction of this Court.
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transferred except as provided by this Order, upon stipulation of the parties, or further order of this
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Court.
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III. LIQUIDATION OF THE ASSETS
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Monies in the PACA Trust Account shall not be withdrawn or
Counsel for Palmer Plaintiffs, with the assistance of Defendants, shall continue to
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identify, recover and liquidate Prime Tropical’s assets pursuant to the terms of this Order for the
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benefit of Prime Tropical’s bona fide PACA trust creditors.
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9.
Counsel for Palmer Plaintiffs is authorized to execute Prime Tropical’s functions and
obligations provided for in this Order for the benefit of all potential PACA Trust beneficiaries.
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Counsel for Palmer Plaintiffs with Defendants’ assistance shall liquidate any and all
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accounts receivable or other debts owed to Prime Tropical through any commercially reasonable
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means. Counsel for Palmer Plaintiffs is authorized to seek an immediate accounting and turn over
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of any and all receivables or other debts owed to Prime Tropical paid to third parties.
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11.
Defendant Prime Tropical shall maintain the integrity and security of Prime Tropical’s
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financial records including accounts payable and receivable and cooperate with Palmer Plaintiffs’
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counsel in the collection of accounts receivable and turnover of PACA trust assets.
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IV. DISTRIBUTION OF PACA TRUST ASSETS
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Palmer Plaintiffs’ counsel shall be authorized to make further distributions to the bona
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fide PACA Creditors of Prime Tropical in accordance with the pro rata shares as set forth in the
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Second PACA Trust Chart [Doc. 114].
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the client trust account of the claimant's attorney of record. If an attorney represents more than
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one claimant, the distribution shall be made in one lump sum in the aggregate amount of all of the
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attorney's clients' distributions. Each attorney has the duty to then distribute the funds to their
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clients in accordance with the PACA Trust Chart subject to any contrary agreement among the
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attorney and his or her clients.
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V. PROCEDURAL ISSUES
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Palmer Plaintiffs shall make the distribution payable to
This Court shall exercise exclusive in rem jurisdiction over this action, the PACA Trust
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Assets, and the PACA Trust Account established pursuant to this Order. The Court also hereby
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retains jurisdiction to enter further Orders to enforce the terms of this Permanent Injunction Order.
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Counsel for Palmer Plaintiffs shall have no responsibility or obligation to any person or
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entity with respect to the PACA Trust Account, or the tasks to be performed hereunder, other than
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to comply in good faith with the terms of this Order and other Orders of this Court. Counsel for
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Palmer Plaintiffs may rely upon and shall be protected in acting or refraining from acting upon any
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statement, certificate, notice, request, consent, order or other documents (including Defendant
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Prime Tropical’s books and records) reasonably believed by counsel for Palmer Plaintiffs to be
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genuine and to have been signed or presented by the proper party or parties, or their counsel.
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Counsel for Palmer Plaintiffs shall have no duty or liability to verify any such statement,
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certificate, notice, request, consent, order or document. Counsel for Palmer Plaintiffs shall not be
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liable for any mistake of fact or error or judgment or for any act done or omitted in good faith as
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required or permitted by this or other orders of this Court. Counsel for Palmer Plaintiffs shall be
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under no obligation to institute or defend any action, suit or proceeding in connection with the
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PACA Trust Account.
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IT IS SO ORDERED
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Dated: _April 30, 2013__
___________________________________
HONORABLE MANUEL L. REAL
United States District Judge
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